Exhibit 2.06
STOCK PURCHASE AGREEMENT
AMONG
LAWGIBB GROUP, INC.,
LAW INTERNATIONAL, INC.,
XXXX INTERNATIONAL HOLDINGS, INC.,
XXXXXX ENGINEERING GROUP INC.,
XXXXXX ENGINEERING, INC.,
XXXXXX ENGINEERING UK LIMITED
AND
XXXXXX ENGINEERING FRANCE SAS
DATED AS OF APRIL 28, 2001
Table of Contents
Page
ARTICLE 1 DEFINITIONS.................................................2
SECTION 1.1. Definitions.................................................2
ARTICLE 2 PURCHASE OF STOCK...........................................9
SECTION 2.1. Purchase and Sale of UK Shares and Africa Shares............9
SECTION 2.2. Dividend...................................................10
SECTION 2.3. Purchase and Sale of Company Shares........................10
SECTION 2.4. Escrow.....................................................10
SECTION 2.5. Closings...................................................11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND THE
COMPANY SUBSIDIARIES.......................................11
SECTION 3.1. Title to Shares............................................11
SECTION 3.2. Organization, Existence and Power..........................11
SECTION 3.3. Subsidiaries...............................................12
SECTION 3.4. Authorization..............................................12
SECTION 3.5. Corporate Records..........................................12
SECTION 3.6. Governmental Authorization.................................13
SECTION 3.7. Non-Contravention..........................................13
SECTION 3.8. Capitalization.............................................13
SECTION 3.9. Company Reports and Financial Statements...................14
SECTION 3.10. Accounts Receivable and Unbilled Work in Progress..........15
SECTION 3.11. Absence of Undisclosed Liabilities.........................15
SECTION 3.12. Permits....................................................15
SECTION 3.13. Absence of Certain Changes.................................16
SECTION 3.14. Litigation.................................................17
SECTION 3.15. Employee Benefit Plans.....................................17
SECTION 3.16. Labor and Employment Matters...............................19
SECTION 3.17. Taxes......................................................19
SECTION 3.18. Compliance with Laws.......................................21
SECTION 3.19. Finders' Fees..............................................21
SECTION 3.20. Environmental Compliance...................................21
SECTION 3.21. Insurance; Bonds...........................................22
SECTION 3.22. Takeover Statutes..........................................22
SECTION 3.23. Material Contracts........................................23
SECTION 3.24. Related Party Transactions.................................25
SECTION 3.25. Real Estate................................................25
SECTION 3.26. Government Contracting, Investigations and Actions.........26
SECTION 3.27. Foreign Corrupt Practices..................................27
SECTION 3.28. Relations with Suppliers and Customers.....................27
SECTION 3.29. Intellectual Property......................................27
SECTION 3.30. Title to Assets............................................28
SECTION 3.31. Accuracy of Representations................................28
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE BUYERS...............28
SECTION 4.1. Organization, Existence and Power..........................28
SECTION 4.2. Authorization..............................................29
SECTION 4.3. Governmental Authorization.................................29
SECTION 4.4. Non-Contravention..........................................29
SECTION 4.5. Litigation.................................................29
SECTION 4.6. Investment Representations.................................29
SECTION 4.7. Financing..................................................30
SECTION 4.8. Accuracy of Representations................................30
ARTICLE 5 COVENANTS OF THE SELLING PARTIES...........................30
SECTION 5.1. Conduct of the Business....................................30
SECTION 5.2. Noncompetition.............................................32
SECTION 5.3. Use of Names...............................................33
SECTION 5.4. Access to Information......................................33
SECTION 5.5. Notices of Certain Events..................................33
SECTION 5.6. Return of Information......................................34
SECTION 5.7. Resignation of Directors and Officers......................34
SECTION 5.8. Directors and Officers Insurance...........................34
SECTION 5.9. Supplements to Disclosure Letter...........................34
ARTICLE 6 COVENANTS OF THE BUYERS....................................34
SECTION 6.1. Return of Information......................................34
SECTION 6.2. Notices of Certain Events..................................34
SECTION 6.3. Consents and Approvals.....................................35
SECTION 6.4. Use of Names...............................................35
SECTION 6.5. Agreement Regarding Lex....................................35
SECTION 6.6. Lease and Other Indemnities................................35
ARTICLE 7 MUTUAL COVENANTS...........................................35
SECTION 7.1. Further Assurances.........................................35
SECTION 7.2. Publicity..................................................36
SECTION 7.3. Antitrust Filings..........................................36
SECTION 7.4. Section 338(h)(10) Election................................36
SECTION 7.5. Post-Closing Insurance.....................................36
SECTION 7.6. Confidentiality............................................37
SECTION 7.7. Post-Closing Cooperation...................................37
ARTICLE 8 CONDITIONS TO CLOSING......................................38
SECTION 8.1. Conditions to Obligations of the Buyers....................38
SECTION 8.2. Conditions to Obligation of the Selling Parties............40
ARTICLE 9 INDEMNIFICATION............................................41
SECTION 9.1. Agreement to Indemnify.....................................41
SECTION 9.2. Survival of Representations, Warranties and Covenants......43
SECTION 9.3. Notice and Procedure.......................................44
SECTION 9.4. Treatment of Indemnity Payments............................46
ARTICLE 10 TERMINATION................................................46
SECTION 10.1. Grounds for Termination....................................46
SECTION 10.2. Effect of Termination......................................47
ARTICLE 11 MISCELLANEOUS..............................................47
SECTION 11.1. Notices....................................................47
SECTION 11.2. Amendments; No Waivers.....................................48
SECTION 11.3. Expenses...................................................49
SECTION 11.4. Entire Agreement/No Third Party Beneficiaries..............49
SECTION 11.5. Arbitration................................................49
SECTION 11.6. Belgium Assets.............................................50
SECTION 11.7. Successors and Assigns.....................................50
SECTION 11.8. Governing Law..............................................50
SECTION 11.9. Counterparts; Effectiveness................................50
SECTION 11.10. Severability...............................................51
SECTION 11.11. Headings...................................................51
SECTION 11.12. Construction...............................................51
Exhibit List
Exhibit A List of Company Persons Deemed to Have Knowledge
Exhibit B Escrow Agreement
Exhibit C Resignation of Directors
Exhibit D Coverage, Amounts and Limits of ERP Insurance
Exhibit E Form of Opinion of Long, Xxxxxxxx & Xxxxxx LLP
Exhibit F Form of Opinion of Xxxxxx Xxxx & Xxxxxxxx LLP
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of April 28,
2001, and is by and among LAWGIBB GROUP, INC., a Georgia corporation ("Parent"),
Law International, Inc., a Georgia corporation and wholly owned subsidiary of
Parent ("Law International"), and XXXX INTERNATIONAL HOLDINGS, INC., a Delaware
corporation and a wholly-owned subsidiary of Law International (the "Company"),
on the one hand; and XXXXXX ENGINEERING GROUP INC., a Delaware corporation
("Jacobs"), XXXXXX ENGINEERING, INC., a Delaware corporation and a wholly-owned
direct or indirect subsidiary of Jacobs ("US Acquisition Subsidiary"), XXXXXX
ENGINEERING UK LIMITED, a United Kingdom company and a wholly-owned direct or
indirect subsidiary of Jacobs ("UK Acquisition Subsidiary"), and XXXXXX
ENGINEERING FRANCE SAS, a French company and a direct or indirect wholly-owned
subsidiary of Jacobs ("Africa Acquisition Subsidiary"), on the other hand.
RECITALS
WHEREAS, the Company, directly and indirectly through its subsidiaries is
engaged in the business of international engineering consultancy, specifically
in the areas of transportation, civil and structural engineering, water and
wastewater, environmental and geo-technical services, infrastructure, building
and building services, information technology, defense, finance and commerce
(the "Business");
WHEREAS, the Company desires to sell, and UK Acquisition Subsidiary desires
to buy, all of the issued and outstanding capital stock (collectively, the "UK
Shares") of XXXX HOLDINGS LTD. ("Xxxx UK"), XXXX PETERMULLER & PARTNERS (MIDDLE
EAST) LTD. and XXXX PETERMULLER & PARTNERS (EUROPE) LTD., each of which is a
United Kingdom company and a wholly-owned subsidiary of the Company, and XXXX
OVERSEAS (JERSEY) LTD., a Jersey company and wholly-owned subsidiary of the
Company (collectively, the "UK Companies");
WHEREAS, the Company desires to sell, and Africa Acquisition Subsidiary
desires to buy, all of the issued and outstanding capital stock (the "Africa
Shares") of Xxxx Africa Consulting Engineers Ltd., a Cyprus company and
wholly-owned subsidiary of the Company ("Xxxx Africa"); and
WHEREAS, Law International desires to sell, and US Acquisition Subsidiary
desires to buy all of the issued and outstanding capital stock of the Company
(the "Company Shares").
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties and covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings given:
"AAA" has the meaning set forth in Section 11.5(a).
"Acquiring Third Party" has the meaning set forth in Section 5.2(a).
"Affiliate" means, with respect to any Person, whether before or after the
Closings, any Person directly or indirectly controlling, controlled by or under
direct or indirect common control with such other Person, through the ownership
of all or part of any Person and any Person defined as an "affiliate" under any
Applicable Law.
"Africa Acquisition Subsidiary" has the meaning set forth in the Preamble.
"Africa Shares" has the meaning set forth in the Recitals.
"Agreement" has the meaning set forth in the Preamble.
"Annual Statements" has the meaning set forth in Section 3.9(a).
"Applicable Insurance" has the meaning set forth in Section 9.2(b).
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, judgment, decree or other
requirement which is legally binding (including any Environmental Law) of any
Governmental Authority applicable to such Person or any of its Affiliates or
Plan Affiliates or any of their respective properties, assets, officers,
directors, employees, consultants or agents (in connection with such officer's,
director's, employee's, consultant's or agent's activities on behalf of such
Person or any of its Affiliates or Plan Affiliates).
"Bank Debt" means Debt under any lines of credit of Xxxx UK with Bank of
America, N.A. and under Xxxx Africa's 12.5 million Rand line of credit with
Nedbank.
"Benefit Arrangement" means any material benefit arrangement covering any
current or former stockholder, officer, director, employee, Affiliate,
consultant or agent of the Company or any Affiliate of the Company and the
beneficiaries of any of them, that is not an Employee Benefit Plan, including,
without limitation, (a) each employment or consulting agreement, (b) each
arrangement providing for insurance coverage or workers' compensation benefits,
(c) each incentive bonus or deferred bonus arrangement, (d) each arrangement
providing termination allowance, severance, continuation pay, indemnification or
similar benefits, (e) each equity compensation plan, (f) each deferred
compensation plan and (g) each compensation policy and practice maintained by
the Company or any Affiliate of the Company.
2
"Benefit Plan" means an Employee Benefit Plan or Benefit Arrangement.
"Business" has the meaning set forth in the Recitals.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in Los Angeles, California are authorized or required by
law to close.
"Buyers" means US Acquisition Subsidiary, UK Acquisition Subsidiary, Africa
Acquisition Subsidiary and Jacobs.
"Buyer Indemnitees" has the meaning set forth in Section 9.1(a).
"Claim Notice" means any written notification of a Third Party Claim by an
Indemnified Party to an Indemnifying Party pursuant to Section 9 hereunder.
"Closings" means the Initial Closing and the Subsequent Closing.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" has the meaning set forth in the Preamble.
"Company Balance Sheet" has the meaning set forth in Section 3.9.
"Company Employee" means any employee of the Company or any Company
Subsidiary at the time of the Initial Closing.
"Company Material Adverse Effect" or the term "material" or any variations
thereof used in conjunction with the Company or the Company Subsidiaries means
(i) any material adverse change in, or a material adverse effect on, the assets,
liabilities, business or operations of the Company and the Company Subsidiaries
taken as a whole in an amount in excess of Five Hundred Thousand Dollars
($500,000), individually (or aggregated with substantially similar matters), or
(ii) any event or circumstance that would prevent, materially hinder or
materially delay the consummation of the transactions contemplated by this
Agreement.
"Company Purchase Price" has the meaning set forth in Section 2.3(b).
"Company Shares" has the meaning set forth in the Recitals.
"Company Subsidiaries" has the meaning set forth in Section 3.3.
"Confidentiality Agreement" has the meaning set forth in Section 7.6.
"Consolidated Net Equity" means the amount by which (a) the consolidated
assets of the Company and the Company Subsidiaries (net of reserves appropriate
under GAAP, consistently applied for all relevant periods) on such date are
greater than (b) the consolidated liabilities of the Company and the Company
Subsidiaries on such date, in each such case as determined in accordance with
GAAP and applied in a manner consistent with that used to prepare the Company
Balance Sheet. If, as of any date, the amount referred to in clause (b) of the
immediately preceding sentence is greater than the amount referred to in clause
(a) of such sentence, the amount of Consolidated Net Equity as of such date
shall be a negative number.
3
"Contract" means any contract, agreement, license, lease, sales or purchase
order or other legally binding commitment or understanding, whether written or
oral, to which the Company or the Company Subsidiaries is a party relating to
the Business.
"Debt" means (i) any indebtedness of the Company or any of the Company
Subsidiaries, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or other similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing capitalized lease obligations, (ii) any balance deferred and
unpaid of the purchase price of any property, except any such balance that
constitutes an accrued expense or account payable, in each case referred to in
this clause (ii) incurred in the ordinary course of business, (iii) all
indebtedness of others secured by a Lien on any asset of the Company or any
Subsidiary of the Company (whether or not such indebtedness is assumed by the
Company or any Subsidiary of the Company) and, (iv) to the extent not otherwise
included by clauses (i) through (iii), any guaranty by the Company or any of the
Company Subsidiaries of any indebtedness of any Person, other than the Company
or one or more of the Company Subsidiaries; provided, however, that Debt shall
not include performance bonds, guarantees, indemnities or letters of credit (or
reimbursement agreements in respect thereof) of the Company or of the Company
Subsidiaries for work performed or to be performed by the Company or the Company
Subsidiaries.
"Debt Prepayment Amount" means the aggregate amount in Dollars paid by
Parent or Law International to a Third Party (which in no event shall include
any Affiliate of any of the Selling Parties) after December 29, 2000 to reduce
any Debt of the Company or the Company Subsidiaries owed to such Third Party,
but only to the extent that such payment is made out of funds other than funds
of the Company or the Company Subsidiaries.
"Deductible Amount" has the meaning set forth in Section 9.1(c).
"Disclosure Letter" means the Disclosure Letter from Parent to Jacobs of
even date herewith.
"Disputing Party" has the meaning set forth in Section 11.5.
"Dividend" has the meaning set forth in Section 2.2.
"Election" has the meaning set forth in Section 7.4(a).
"Election Deadline" has the meaning set forth in Section 7.4(a).
"Employee Benefit Plan" means any employee benefit plan, as defined in
Section 3(3) of ERISA, that is sponsored or contributed to by the Company or any
ERISA Affiliate thereof covering employees or former employees of the Company.
4
"Employee Pension Benefit Plan" means any employee pension benefit plan, as
defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA, other
than a Multiemployer Plan.
"Employment Agreements" has the meaning set forth in Section 3.15(a).
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, or treaty; all judicial, administrative,
and regulatory orders, judgments, decrees and authorizations; and common law
relating to: (A) the protection, investigation, remediation, or restoration of
the environment or natural resources, (B) the handling, use, storage, treatment,
disposal, release or threatened release of any Hazardous Substance, (C) the
creation of a cause of action for damages to persons or property due to noise,
odor, pollution or contamination or (D) the protection of the health and safety
of employees or the public.
"Equity Securities" has the meaning set forth in Section 3.8(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERP Coverage" has the meaning set forth in Section 7.5.
"Escrow Account" has the meaning set forth in Section 2.1(b).
"Escrow Agent" means ABN AMRO Trust Company (Jersey) Limited or any
successor thereto.
"Escrow Agreement has the meaning set forth in Section 2.4.
"Escrow Amount" has the meaning set forth in Section 2.4.
"Excess ERP Coverage" has the meaning set forth in Section 9.1(e).
"Facilities" " has the meaning set forth in Section
3.25(a)(ii).
"Financial Statements" has the meaning set forth in Section 3.9(a).
"Foreign Antitrust Law" means the Fair Trading Xxx 0000, the European
Merger Regulation or any substantially similar Applicable Law affecting the
transactions contemplated by this Agreement.
"Forms" has the meaning set forth in Section 7.4(a).
"GAAP" means accounting principles generally accepted in the United States
of America.
"Xxxx Africa" has the meaning set forth in the Recitals.
"Xxxx Names" has the meaning set forth in Section 5.3.
5
"Xxxx UK" has the meaning set forth in the Recitals.
"Governmental Authority" means any foreign, domestic, federal, territorial,
state or local (i) government or governmental authority or any regulatory,
administrative or other governmental agency, or any political or other
subdivision, department or branch of any of the foregoing or (ii) court,
arbitrator or similar tribunal or forum.
"Hazardous Substance" means any substance, material, or waste that is: (A)
listed, classified or regulated in any concentration pursuant to any applicable
Environmental Law; (B) any petroleum hydrocarbon, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance, material, or waste which may be
the subject of regulatory action by any Governmental Authority pursuant to any
applicable Environmental Law.
"Indemnified Party" means any Person entitled to indemnification under
Article 9.
"Indemnifying Party" means any Person obligated to indemnify another Person
under Article 9.
"Indemnity Notice" means a written notification of a claim for indemnity
under Article 9 (other than a Third Party Claim), made by an Indemnified Party
to an Indemnifying Party pursuant to Section 9.3(b).
"Initial Closing" has the meaning set forth in Section 2.1(a).
"Initial Closing Date" has the meaning set forth in Section 2.5.
"Intellectual Property Rights" has the meaning set forth in Section 3.29.
"Interim Escrow Date" has the meaning set forth in Section 2.4.
"Interim Statements" has the meaning set forth in Section 3.9(a).
"Jacobs" has the meaning set forth in the Preamble.
"Knowledge of the Company" or "to the best knowledge of the Company" means
the actual knowledge of the persons listed on Exhibit A hereto.
"Law International" has the meaning set forth in the Preamble.
"Leases" has the meaning set forth in Section 3.25(a)(ii).
"Leased Property" has the meaning set forth in Section 3.25(a)(ii).
"Legal Proceeding" has the meaning set forth in Section 3.14.
"Lex" has the meaning set forth in Section 6.5.
6
"Lien" means, with respect to any asset, any mortgage, title defect or
objection, lien, pledge, security interest, equity, claim, covenant, condition,
hypothecation, restriction, encumbrance or charge of any kind in respect of such
asset.
"Losses" means any and all damages, claims, costs, losses, liabilities,
expenses or obligations (including Taxes, interest, penalties, court costs,
costs of preparation and investigation, and reasonable attorneys', accountants'
and other professional advisors' fees and expenses), net of any insurance
proceeds actually received pursuant to the procedures set forth in Section
9.1(b), and only after taking into account and crediting the full amount of any
accruals, allowances and reserves applicable to the specific Loss in question
recorded on the books and records of the Company and the Company Subsidiaries as
of the Initial Closing.
"material" means with respect to any Person other than the Company and the
Company Subsidiaries an event, change or effect which is material in relation to
the assets, liabilities, business or operations of such Person (and its
subsidiaries, if any) taken as a whole or on the ability of such Person to
perform its obligations hereunder.
"Maximum R&W Indemnification" has the meaning set forth in Section 9.1(d).
"Multiemployer Plan" means a multiemployer plan, as defined in Section
3(37) and 4001(a)(3) of ERISA.
"Multiple Employer Plan" means any Employee Benefit Plan sponsored by more
than one employer, within the meaning of Sections 4063 or 4064 of ERISA or
Section 413(c) of the Code.
"Notice Period" has the meaning set forth in Section 9.3(a)(i).
"Outside Date" has the meaning set forth in Section 10.1(d).
"Overlap Period" has the meaning set forth in Section 9.1(a)(3).
"Owned Property" has the meaning set forth in Section 3.25(a)(i).
"Parent" has the meaning set forth in the Preamble.
"Permitted Liens" means (a) Liens, taxes, assessments and other
governmental charges not yet due and payable, (b) statutory, mechanics',
laborers' and materialmen liens arising in the ordinary course of business for
sums not yet due, (c) statutory and contractual landlord liens under leases
pursuant to which the Company or a Company Subsidiary is a lessee and not in
default and (d) such other imperfections of title as do not materially detract
from the value or otherwise interfere with the present use of any of the
Company's or any Company Subsidiary' respective properties or otherwise impair
their respective business operations.
"Permits" has the meaning set forth in Section 3.12.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust, estate or other entity or organization, including a
Governmental Authority.
7
"Plan Affiliate" means, with respect to any Person, any employee benefit
plan or arrangement sponsored by, maintained by or contributed to by any such
Person, and with respect to any employee benefit plan or arrangement, any Person
sponsoring, maintaining or contributing to such plan or arrangement.
"Prohibited Xxxx Business" means architectural, design, engineering,
construction management, program management and consulting services performed on
rail, transportation, development or utilities projects, but in no event shall
include geotechnical, testing, or environmental services.
"Purchase Price" has the meaning set forth in Section 2.3(c).
"Qualified Loss" has the meaning set forth in Section 9.1(c).
"Scheduled Contracts" has the meaning set forth in Section 3.23(a).
"Section 338 Election Notice" has the meaning set forth in Section 7.4(a).
"Securities Act" means the Securities Act of 1933, as amended, and any
rules or regulations promulgated thereunder.
"Seller Indemnitees" has the meaning set forth in Section 9.1(f).
"Selling Parties" means each of Parent, Law International and the Company.
"Shares" means, collectively, the Company Shares, the UK Shares and the
Africa Shares.
"Share Encumbrances" means any liens, charges, claims, options, pledges,
rights of other parties, voting trusts, proxies, stockholder or similar
agreements, encumbrances or restrictions of any nature whatsoever with respect
to the Shares.
"Subsequent Closing" has the meaning set forth in Section 2.3(a).
"Subsequent Closing Date" has the meaning set forth in Section 2.5.
"Subsequent Material Contract" has the meaning set forth in Section
5.1(a)(iii).
"Subsidiary Purchase Price" has the meaning set forth in Section 2.1(b).
"Takeover Statute" has the meaning set forth in Section 3.22.
"Target Companies" means each of the UK Companies and Xxxx Africa.
"Tax" or "Taxes" means all taxes, charges, fees, levies, or other like
assessments, including without limitation income, gross receipts, ad valorem,
value added, premium, excise, real property, personal property, windfall profit,
sales, use, transfer, license, withholding, employment, payroll, and franchise
taxes imposed by any Governmental Authority, irrespective of whether imposed
directly or indirectly, as a successor or transferee liability, as a joint and
several liability pursuant to Section 1.1502-6 of the U.S. Treasury Regulations
or comparable provisions of state, local or foreign law; and shall include any
interest, fines, penalties, assessments, or additions to tax resulting from,
attributable to, or incurred in connection with any such Taxes or any contest or
dispute thereof.
8
"Tax Return" means all returns, reports, statements, forms or other
materials or information required to be filed with any Governmental Authority
having the power or authority to levy or assess Taxes.
"Third Party" means any Person not a Party to this Agreement.
"Third Party Claim" has the meaning set forth in Section 9.3.
"UK Acquisition Subsidiary" has the meaning set forth in the Preamble.
"UK Companies" has the meaning set forth in the Recitals.
"UK Shares" has the meaning set forth in the Recitals.
"US Acquisition Subsidiary" has the meaning set forth in the Preamble.
ARTICLE 2
PURCHASE OF STOCK
SECTION 2.1. Purchase and Sale of UK Shares and Africa Shares.
(a) On the terms and subject to the conditions set forth herein, at the
initial closing (the "Initial Closing"): (i) the Company shall, or shall cause
its nominees to, sell, transfer, convey, assign and deliver to UK Acquisition
Subsidiary, free and clear of all Share Encumbrances, and UK Acquisition
Subsidiary shall purchase, acquire and accept from the Company or the Company's
nominees, as applicable, the UK Shares, and (ii) the Company shall cause its
nominees to, sell, transfer, convey, assign and deliver to Africa Acquisition
Subsidiary, free and clear of all Share Encumbrances, and Africa Acquisition
Subsidiary shall purchase, acquire and accept from the Company's nominees, the
Africa Shares. At the Initial Closing, the Company shall deliver to UK
Acquisition Subsidiary and the Africa Acquisition Subsidiary, respectively,
certificates evidencing the UK Shares and the Africa Shares, together with a
form of transfer, and such other instruments as may be reasonably requested by
each of them to transfer full legal and beneficial ownership of such UK Shares
and Africa Shares to UK Acquisition Subsidiary and the Africa Acquisition
Subsidiary, respectively, free and clear of all Share Encumbrances.
(b) At the Initial Closing, (x) UK Acquisition Subsidiary shall pay
Seventeen Million Seven Hundred Fifty Thousand Dollars ($17,750,000) plus the
Debt Prepayment Amount to the Company for the UK Shares and (y) Africa
Acquisition Subsidiary shall pay Eight Million Seven Hundred Thousand Dollars
($8,700,000) to the Company for the Africa Shares; provided, however, that out
of the foregoing amounts otherwise payable to the Company at the Initial
Closing, UK Acquisition Subsidiary shall pay to the Escrow Agent at the Initial
Closing the aggregate sum of Five Million Dollars ($5,000,000) (the "Escrow
Amount"), in accordance with the terms of the Escrow Agreement. The aggregate
amount of (x) and (y) is referred to herein as the "Subsidiary Purchase Price."
The above payments shall be made by wire transfer of immediately available funds
to, as the case may be, an account designated by the Company and an account
designated by the Escrow Agent (the "Escrow Account"), in each case, in writing
prior to the Initial Closing.
9
(c) The parties hereto agree that the Escrow Amount shall be deposited with
the Escrow Agent pursuant to the terms of the Escrow Agreement and shall only be
released in accordance with the terms of the Escrow Agreement.
SECTION 2.2. Dividend. Immediately following the Initial Closing, the
Company shall issue a cash dividend (the "Dividend") in an amount equal to the
difference between the Subsidiary Purchase Price and the Escrow Amount to Law
International, by wire transfer to an account designated in writing by Parent
prior to the Initial Closing. The parties agree that the Dividend is to be
retained by Parent or Law International.
SECTION 2.3. Purchase and Sale of Company Shares.
(a) As soon as practicable after the Company has issued the Dividend, but
in no event later than one (1) Business Day following the Initial Closing, the
parties shall conduct the subsequent closing (the "Subsequent Closing"). On the
terms and subject to the conditions set forth herein, at the Subsequent Closing,
Law International shall sell, transfer, convey, assign and deliver to US
Acquisition Subsidiary, free and clear of all Share Encumbrances, and US
Acquisition Subsidiary shall purchase, acquire and accept from Law
International, all of the Company Shares. At the Subsequent Closing, Law
International shall deliver to US Acquisition Subsidiary certificates evidencing
the Company Shares duly endorsed for transfer and such other instruments as may
be reasonably requested by Xxxxxx to transfer full legal and beneficial
ownership of such Company Shares to US Acquisition Subsidiary, free and clear of
all Share Encumbrances.
(b) At the Subsequent Closing, US Acquisition Subsidiary shall pay to Law
International by wire transfer of immediately available funds to an account
designated in writing by Parent prior to the Subsequent Closing an amount equal
to Three Hundred Fifty Thousand Dollars ($350,000) (the "Company Purchase
Price").
(c) The sum of the Subsidiary Purchase Price and the Company Purchase Price
is hereinafter referred to as the "Purchase Price".
SECTION 2.4. Escrow. On the Initial Closing Date, each of Parent, Law
International, the Company, US Acquisition Subsidiary, UK Acquisition
Subsidiary, Africa Acquisition Subsidiary, Xxxxxx and the Escrow Agent shall
enter into an agreement providing for the escrow arrangements with respect to
the Escrow Amount, in the form of Exhibit B hereto (the "Escrow Agreement"). The
Escrow Agreement shall provide for a 3-year term, and, among other terms, shall
provide that on the date eighteen (18) months after the Initial Closing Date
(the "Interim Escrow Date"), the Escrow Agent shall release to Parent, or
otherwise in accordance with the terms of the Escrow Agreement, a sum equal to
the positive difference, if any, between (x) the aggregate amount of any funds
remaining in the Escrow Account as of the Interim Escrow Date, and (y) the sum
of (a) the aggregate amount of any unpaid indemnification claims pending as of
the Interim Escrow Date in connection with a claim for indemnification pursuant
to Section 9.1 and (b) Three Million Dollars ($3,000,000).
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SECTION 2.5. Closings. The Initial Closing shall take place at the offices
of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx
on May 3, 2001, or such other date as to which Xxxxxx and Parent may agree in
writing (the "Initial Closing Date"). The Subsequent Closing shall take place at
the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx, at such time as set forth in Section 2.3(a), or such other date as
to which Xxxxxx and Parent may agree in writing (the "Subsequent Closing Date").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND THE COMPANY
SUBSIDIARIES
As inducement to the Buyers to enter into this Agreement and to consummate
the transactions contemplated herein, each of the Selling Parties, jointly and
severally, represent and warrant, as of the date of this Agreement and as of the
Initial Closing Date, to each of the Buyers that:
SECTION 3.1. Title to Shares. Law International is the sole owner of record
and beneficial owner of the Company Shares, and except as set forth in Section
3.1 of the Disclosure Letter, the Company is the sole owner of record and
beneficial owner of the UK Shares and the Africa Shares. Except as set forth in
Section 3.1 of the Disclosure Letter, such Shares are free and clear of all
Share Encumbrances, and each of Law International and the Company has, or will
have at the Initial Closing or the Subsequent Closing, as the case may be, the
full and unrestricted right, power and authority to sell and transfer such
Shares to the respective Buyers. Upon delivery of certificates evidencing such
Shares to the respective Buyers, together with a form of transfer and payment by
the Buyers to Law International or the Company, respectively, pursuant to the
terms hereof, the Buyers will acquire good and marketable title to and complete
ownership of such Shares, representing all of the issued and outstanding capital
stock of the Company and the Target Companies, respectively, free and clear of
any Share Encumbrance of any nature whatsoever, subject only to the registration
of such Share transfers, duly stamped, in the register of members of such
companies.
SECTION 3.2 Organization, Existence and Power. Each of the Selling Parties
is a corporation (or equivalent) duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of formation and has all
corporate powers and all licenses, authorizations, consents and approvals
required to own or lease its properties or carry on its business as now
conducted. Each of the Selling Parties is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not reasonably be expected to have a
Company Material Adverse Effect. Each of the Selling Parties has heretofore
delivered to the Buyers true and complete copies of their respective charter
documents as currently in effect.
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SECTION 3.3. Subsidiaries. Section 3.3 of the Disclosure Letter sets forth
a true and complete list of all of the Company's direct and indirect
subsidiaries (the "Company Subsidiaries"). Such list sets forth the jurisdiction
of incorporation, the authorized capital stock, the number of shares duly issued
and outstanding, the number of such shares owned by the Company or another of
the Company Subsidiaries and the name of any Third Parties who own any of such
shares and the number of shares so owned. Except as set forth in Section 3.3 of
the Disclosure Letter, all shares of capital stock of the Company Subsidiaries
are (i) duly authorized and validly issued, (ii) are validly outstanding, fully
paid and nonassessable, (iii) were not issued in violation of any preemptive
rights or rights of Third Parties, and (iv) are owned by the Company, directly
or indirectly through wholly owned subsidiaries of the Company, free and clear
of any Share Encumbrances. Except as set forth in Section 3.3 of the Disclosure
Letter, the Company (i) does not have any direct or indirect subsidiaries other
than the Company Subsidiaries, and (ii) other than in the ordinary course of
business of the Company, has not made any advances to or investments in, and
does not own any securities of or other interests in, any Person other than the
Company Subsidiaries.
Each of the Company Subsidiaries is a company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, has the requisite power to own or lease its properties and carry on
its business as now being conducted, and is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure so to
qualify would not reasonably be expected to have a Company Material Adverse
Effect. The Company has heretofore made available to the Buyers true and
complete copies of the each of the Company Subsidiaries' charter documents as
currently in effect.
SECTION 3.4. Authorization. The execution, delivery and performance of this
Agreement and the Escrow Agreement by the Selling Parties and the consummation
by each of the Selling Parties of the transactions contemplated under this
Agreement and the Escrow Agreement are within the Selling Parties ' respective
corporate (or equivalent) powers and have been duly authorized by all necessary
action on their parts, including all necessary shareholder action on the part of
their respective shareholders. This Agreement and the Escrow Agreement have been
duly and validly executed by the each of the Selling Parties and constitutes the
legal, valid and binding agreement of each of the Selling Parties enforceable
against each of them in accordance with its terms, except (a) as rights to
indemnity hereunder may be limited by federal or state securities laws or the
public policies embodied therein, (b) as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
enforcement of creditors' rights generally, and (c) as the remedy of specific
performance and other forms of injunctive relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
SECTION 3.5. Corporate Records. The minute books, transfer books and stock
ledgers of the Company and each of the Company Subsidiaries are complete and
accurate in all material respects and contain accurate and complete records of
all material actions previously taken by the board of directors and committees
of the board of directors and the shareholders of the Company and the Company
Subsidiaries. The Company and the Company Subsidiaries have maintained (and
given the Buyers and their agents access to) their respective books, records and
accounts, which are complete and correct and accurately reflect the activities
of the Company and the Company Subsidiaries, and which have been kept in
accordance with sound business practices.
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SECTION 3.6. Governmental Authorization. The execution, delivery and
performance by the Selling Parties of this Agreement and the Escrow Agreement
require no action by, consent or approval of, or filing with, any Governmental
Authority.
SECTION 3.7. Non-Contravention. Except as set forth in Section 3.7 of the
Disclosure Letter, the execution, delivery and performance of this Agreement or
the Escrow Agreement by the Selling Parties do not and will not (a) contravene
or conflict with the respective charter documents of the Selling Parties or any
Company Subsidiary; (b) contravene or conflict with or constitute a material
violation of any provision of any Applicable Law binding upon or applicable to
the Selling Parties, the Business or the Shares; (c) result in the creation or
imposition of any Lien or any Tax on any of the assets of the Company or any
Company Subsidiary; or (d) except as is not reasonably likely to have a Company
Material Adverse Effect, result in a violation or breach of, or constitute a
default under, or give rise to a right of termination, amendment, cancellation
or acceleration of any right or obligation of the Company or any Company
Subsidiary or to a loss of any benefit to which the Company or any Company
Subsidiary is entitled under any provision of any note, bond, mortgage,
indenture, lease, agreement, contract or other instrument binding upon the
Company or to which the Company or such Company Subsidiary is a party or any
license, franchise, permit or other similar authorization held by the Company or
such Company Subsidiary or to which the Company or such Company Subsidiary is a
party.
SECTION 3.8. Capitalization.
(a) The authorized capital stock of the Company consists of One Thousand
(1,000) shares of common stock, of which One Thousand (1,000) shares are issued
and outstanding, all of which are owned by Law International. The authorized and
outstanding capital stock of each of the Target Companies is set forth in
Section 3.8(a) of the Disclosure Letter.
(b) All such issued and outstanding shares of capital stock of the Company
(i) have been duly authorized and validly issued, (ii) are validly outstanding,
fully paid and nonassessable and (iii) were not issued in violation of any
preemptive rights or rights of Third Parties. Except as set forth in Section
3.8(b) of the Disclosure Letter, neither the Company, nor any of the Company
Subsidiaries holds any of its issued and outstanding shares of capital stock in
its treasury, and there are not, and on the Initial Closing Date and the
Subsequent Closing Date there will not be, outstanding (i) any options,
warrants, rights of first refusal or other rights to purchase from the Selling
Parties or the Company Subsidiaries, any capital stock of the Company or the
Company Subsidiaries, (ii) any securities convertible into or exchangeable for
shares of such stock or (iii) any other commitments of any kind for the issuance
of additional shares of capital stock or options, warrants or other securities
of the Company or any of the Company Subsidiaries (such shares, options,
warrants, rights of first refusal or other rights, convertible securities,
exchangeable securities or other commitments are referred to herein collectively
as "Equity Securities"). Except as set forth in Section 3.8(b) of the Disclosure
Letter, there is no contract, right or option outstanding to require the Company
or any of the Company Subsidiaries to redeem, purchase or otherwise reacquire
any Equity Securities of the Company, and there are no preemptive rights with
respect to any Equity Securities of the Company.
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(c) Except as set forth in Section 3.8(c) of the Disclosure Letter, there
are no shareholders agreements, investors' rights agreements, voting trusts or
other agreements or understandings to which any of the Selling Parties or the
Company Subsidiaries is a party or by which any of the Selling Parties or the
Company Subsidiaries is bound relating to the voting of, or placing any
restrictions on, any shares of the capital stock of the Company or any of the
Company Subsidiaries.
SECTION 3.9. Company Reports and Financial Statements.
(a) Section 3.9(a) of the Disclosure Letter contains true and complete
copies of the unaudited consolidated and consolidating balance sheets and
related consolidated and consolidating statements of operations and retained
earnings for the Company and the Company Subsidiaries for the years ended
December 31, 1999 and December 29, 2000 (the "Annual Statements") and the
consolidated and consolidating balance sheets and related consolidated and
consolidating statements of operations for two-month periods ended as of March
3, 2000 and March 2, 2001, and for the three-month period ended March 30, 2001,
(the "Interim Statements" and, together with the Annual Statements, the
"Financial Statements"). The December 29, 2000 balance sheet is referred to
herein as the "Company Balance Sheet."
(b) Each of the Financial Statements (i) has been prepared based on the
books and records of the Company and the Company Subsidiaries in accordance with
GAAP, subject in the case of the Interim Statements to year-end adjustments,
consistent with past practice and with each other and present fairly the
consolidated financial condition and consolidated results of operations of the
Company and the Company Subsidiaries as of the dates or for the periods
indicated; (ii) contains and reflects all necessary adjustments, accruals,
provisions and allowances for a fair presentation of the Company's financial
condition and the results of the Company's operations for the periods covered by
such Financial Statements, subject in the case of the Interim Statements to
year-end adjustments; (iii) to the extent applicable, contains and reflects
adequate provisions for all reasonably anticipated liabilities for all Taxes
with respect to the periods then ended and all prior periods; and (iv) with
respect to contracts and commitments for the sale of goods or the provision of
services by the Company and the Company Subsidiaries, contains and reflects
adequate reserves for all reasonably anticipated losses and costs and expenses
in excess of expected receipts, subject in the case of the Interim Statements to
normal year-end adjustments which, in the aggregate, will not have a Company
Material Adverse Effect.
(c) The Annual Statements were subject to customary audit procedures by
Ernst & Young LLP in connection with issuing its audit report on the audited
consolidated financial statements of Parent, and except as otherwise set forth
in Section 3.9(c) of the Disclosure Letter, the results shown on such financial
statements were included in the consolidated financial statements of Parent
without changes or adjustments.
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(d) The Company and the Company Subsidiaries have discharged their
respective accounts payable and other current liabilities and obligations
relating to the Business consistent with their respective past practices. There
are no accounts payable and other current liabilities and obligations relating
to the Business of Ten Thousand Dollars ($10,000) or greater that are materially
past due.
(e) As of the date hereof, the Consolidated Net Equity is, and as of the
Initial Closing Date and the Subsequent Closing Date, the Consolidated Net
Equity will be, no less than the sum of (i) Twenty Million Dollars ($20,000,000)
and (ii) any Debt Prepayment Amount.
SECTION 3.10. Accounts Receivable and Unbilled Work in Progress. All
accounts receivable and unbilled work in progress of the Company and the Company
Subsidiaries are reflected properly on their respective books and records, and
represent valid and enforceable obligations arising from bona fide transactions
in the ordinary course of business, fully collectible in the ordinary course of
business, in each case net of any (x) bad debt reserves (including any general
bad debt reserve) and (y) negative work in progress specifically allocated to
such account receivable or unbilled work in progress recorded on the respective
books of the Company and the Company Subsidiaries, without cost in collection
efforts therefor. Such accounts receivable and unbilled work in progress are
subject to no defenses, claims or rights of setoff, and such accounts receivable
are, and when billed the unbilled work in progress will be, fully collectible in
the ordinary course of business net of (w) the bad debt reserves (including any
general bad debt reserve) and (z) negative work in progress specifically
allocated thereto recorded on the respective books of the Company and the
Company Subsidiaries without cost of collection efforts therefor. Except as set
forth in Section 3.10 of the Disclosure Letter, (i) no account debtor is
delinquent in its payment by more than ninety (90) days, (ii) no account debtor
has, to the best knowledge of the Company, refused or threatened to refuse to
pay its obligations for any reason, (iii) no account debtor is, to the best
knowledge of the Company, insolvent or bankrupt, and (iv) no account receivable
is pledged to any Third Party.
SECTION 3.11. Absence of Undisclosed Liabilities. Except as set forth in
Section 3.11 of the Disclosure Letter and except for liabilities or obligations
which are accrued or reserved against in the Company Balance Sheet (or reflected
in the notes thereto), or which were incurred after the date of the Company
Balance Sheet in the ordinary course of business and consistent with past
practices or in connection with the transactions contemplated by this Agreement,
the Company and the Company Subsidiaries do not have any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of a nature
required by GAAP (consistently applied for all relevant periods) to be reflected
in, reserved against or otherwise described in the Company Balance Sheet (or
reflected in the notes thereto).
SECTION 3.12. Permits. The Company and the Company Subsidiaries hold all
approvals, authorizations, certificates, consents, licenses, orders and permits
and other similar authorizations of all Governmental Authorities (and all other
Persons) necessary for the operation of the Business as currently operated or
affecting or relating in any way to the Business (the "Permits"), and Section
3.12 of the Disclosure Letter sets forth, to the best knowledge of the Company,
all material Permits. Except as set forth in Section 3.12 of the Disclosure
Letter, each Permit is valid and in full force and effect in all material
respects, and none of the material Permits will be terminated or become
terminable or impaired in any material respect as a direct result of the
transactions contemplated hereby.
15
SECTION 3.13. Absence of Certain Changes. Except as set forth in Section
3.13 of the Disclosure Letter, since the Company Balance Sheet Date, the Company
and the Company Subsidiaries have conducted their respective businesses in the
ordinary and usual course and there has not been:
(a) any event, occurrence, state of circumstances or facts or change in the
Company or the Company Subsidiaries that has had or that may be reasonably
expected to have, either alone or together, a Company Material Adverse Effect;
(b) any incurrence, assumption or guarantee by the Company or any of the
Company Subsidiaries of any outstanding amount of indebtedness for borrowed
money or any other liabilities of any nature, whether or not accrued, contingent
or otherwise;
(c) any (i) payments by the Company or any of the Company Subsidiaries in
respect of Debt of the Company or any of the Company Subsidiaries or in
satisfaction of any liabilities of the Company or any of the Company
Subsidiaries, other than for payment of any Debt Prepayment Amount in the
ordinary course of business or (ii) creation, assumption or sufferance of the
existence of (whether by action or omission) any Lien on any assets reflected on
the Company Balance Sheet, other than Permitted Liens;
(d) other than for distributions between and among the Company
Subsidiaries, any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company or the
Company Subsidiaries, or any repurchase, redemption or other acquisition by the
Company of any outstanding shares of capital stock or other ownership interests
in the Company or the Company Subsidiaries;
(e) any material damage to or loss of any asset or property used in the
Business, whether or not covered by insurance;
(f) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of the Company Subsidiaries relating to
their respective assets or businesses (including the acquisition or disposition
of any assets) or any loss or relinquishment by the Company or any of the
Company Subsidiaries of any material contract or other material right, other
than transactions and commitments in the ordinary course of business in
accordance with their customary practices;
(g) any change by the Company in its accounting principles, methods or
practices or in the manner it keeps its books and records or any change by the
Company of its current practices with regards to sales, receivables, payables or
accrued expenses, except as required by GAAP, consistently applied for all
relevant periods;
(h) any increase in (or commitment, oral or written, to increase) the rate
or terms (including, without limitation, any acceleration of the right to
receive payment) of compensation payable or to become payable by the Company or
any of the Company Subsidiaries to their directors, officers, employees or
consultants, other than customary increases in the ordinary course of business;
16
(i) any increase in (or commitment, oral or written, to increase) the rate
or terms (including, without limitation, any acceleration of the right to
receive payment) of any bonus, insurance, pension or other employee benefit plan
or contract, payment or arrangement made to, for or with any director, officer,
employee or consultant of the Company or any of the Company Subsidiaries, other
than customary increases in the ordinary course of business;
(j) any loan to or guarantee or assumption of any loan or obligation on
behalf of any director, officer, stockholder or, to the best knowledge of the
Company, any employee of the Company or any Company Subsidiary;
(k) any change in employee relations which has or is reasonably likely to
have a Company Material Adverse Effect or a material adverse effect on the
relationships between the employees and management of the Company;
(l) to the best knowledge of the Company, any notification by any
significant customer of the Company or the Company Subsidiaries indicating any
intention to stop, or materially decrease the rate of, buying goods or services
from the Company or the Company Subsidiaries or to change its current business
relationship with the Company or the Company Subsidiaries (but excluding any
customers whose Contracts have been completed in accordance with their
respective terms, with respect to those completed Contracts only); or
(m) any negotiation or agreement by or on behalf of the Selling Parties to
do any of the things described in this Section 3.13.
SECTION 3.14. Litigation. Except as set forth in Section 3.14 of the
Disclosure Letter, there is no action, suit, claim, investigation or proceeding
(each a "Legal Proceeding") pending against, or to the best knowledge of the
Company, threatened against or affecting, the Company or any of the Company
Subsidiaries or any of their respective assets before any Governmental Authority
which would reasonably be expected to result in Losses in excess of One Hundred
Fifty Thousand Dollars ($150,000) or which in any manner challenges or seeks to
prevent, enjoin, alter or delay the transactions contemplated hereby. To the
best knowledge of the Company, no event has occurred and no circumstance, matter
or set of facts exist which would constitute a valid basis for the assertion by
any Person of any Legal Proceeding, other than those set forth in Section 3.14
of the Disclosure Letter, which would reasonably be expected to result in Losses
in excess of One Hundred Fifty Thousand Dollars ($150,000). There is no
outstanding or, to the best knowledge of the Company, threatened, judgment,
injunction, order, consent or decree of any Governmental Authority against the
Company, any Company Subsidiary or any of their respective assets. Section 3.14
of the Disclosure Letter sets forth a general description of the damages or
other relief sought in all Legal Proceedings described therein.
SECTION 3.15. Employee Benefit Plans
(a) Section 3.15(a) of the Disclosure Letter sets forth (i) a list of all
Contracts (other than standard form letter agreements provided pursuant to
subsection (ii)), providing for employment, consulting, severance pay,
continuation pay, termination pay, director, officer or employee
indemnification, nondisclosure, non-competition, or other similar agreements of
any nature whatsoever, and a written summary of any oral Contracts covering such
matters (collectively, with the letter agreements set forth in the Section
3.15(a) of the Disclosure Letter, the "Employment Agreements") between the
Company or the Company Subsidiaries, on the one hand, and any current or former
stockholder, officer, director, employee, consultant or agent of the Company or
any Company Subsidiary, on the other hand, that are currently in effect, and
(ii) a copy of any standard form letter agreements relating to any of the
foregoing and a description of any exceptions to, or deviations from, any such
standard forms. Except as set forth in Section 3.15 of the Disclosure Letter,
there are no Employment Agreements or other similar agreements to which the
Company is a party under which the transactions contemplated by this Agreement
(i) will require any payment by the Company, the Company Subsidiaries or the
Buyers or any consent or waiver from any Person, or (ii) will result in any
change in the nature of any rights of any Person under any such Employment
Agreement. To the best knowledge of the Company, there are no noncompetition or
nondisclosure agreements or similar agreements between any employee, officer or
director of the Company or any Company Subsidiary, on the one hand, and any
third party, on the other hand, or by which any such employee, officer or
director is bound that has been breached, or may reasonably be expected to be
breached, by the activities of such employee, officer or director on behalf of
the Company or any Company Subsidiary.
17
(b) Section 3.15(b) of the Disclosure Letter sets forth all Benefit Plans
of the Company and the Company Subsidiaries. With respect to each such Benefit
Plan, the Selling Parties have made available to the Buyers true and correct
copies of (i) all governing instruments and related agreements, including a
written description of any Benefit Plan not set forth in writing, (ii) any
reports required to be filed since January 1, 1998 with any Governmental
Authority and any accountant's opinions, if applicable, for each Benefit Plan,
(iii) any qualifications, determination or similar letters or authorizations
obtained from any Governmental Authority with respect to each Benefit Plan and
(iv) if applicable, the most recently prepared financial statements of each
Benefit Plan.
(c) Except as set forth in Section 3.15(c) of the Disclosure Letter,
neither the Company, the Company Subsidiaries, nor any of their Affiliates
sponsors or, within the last five (5) years, has sponsored, maintained,
contributed to, or incurred an obligation to contribute to, any Employee Pension
Benefit Plan. Neither the Company, the Company Subsidiaries nor any of its
Affiliates sponsors or has ever sponsored, maintained, contributed to, or
incurred an obligation to contribute to any Multiemployer Plan or to a Multiple
Employer Plan.
(d) Except as set forth in Section 3.15(d) of the Disclosure Letter, no
individual shall accrue or receive additional benefits, service or accelerated
rights to payments of benefits under any Benefit Plan, including the right to
receive any parachute payment, or become entitled to severance, termination
allowance or similar payments as a direct result of the transactions
contemplated by this Agreement.
(e) Each Benefit Plan has been maintained in all material respects, by its
terms and in operation, in accordance with Applicable Law, and there has been no
violation of any reporting or disclosure requirement imposed by Applicable Law.
18
(f) To the extent permitted under Applicable Law, each Benefit Plan can be
amended or terminated at any time, without consent from any other party and
without liability other than for benefits accrued as of the date of such
amendment or termination. The Company, the Company Subsidiaries and their
Affiliates have made full and timely payment of all amounts required to be
contributed or paid as expenses under the terms of each Benefit Plan and
Applicable Law (or have no liability for late payments), and the Company, the
Company Subsidiaries and their Affiliates shall continue to do so through the
Subsequent Closing.
SECTION 3.16. Labor and Employment Matters.
(a) Except as set forth in Section 3.16(a) of the Disclosure Letter, no
collective bargaining agreement or similar labor agreement exists that is
binding on the Company or the Company Subsidiaries and, except as set forth in
Section 3.16(a) of the Disclosure Letter, no petition has been filed or
proceedings instituted by an employee or group of employees with any labor
relations board or similar authority under Applicable Law seeking recognition of
a bargaining representative. Section 3.16(a) of the Disclosure Letter sets forth
any organizational effort that, to the best knowledge of the Company, is
currently being made or threatened or has been made since January 1, 1998 by or
on behalf of any labor union to organize any employees of the Company or the
Company Subsidiaries.
(b) Except as set forth in Section 3.16(b) of the Disclosure Letter, (i)
there is no labor strike, slow down or stoppage pending or, to the best
knowledge of the Company, threatened, against or directly affecting the Company
or the Company Subsidiaries, (ii) no grievance or arbitration proceeding arising
out of or under any collective bargaining agreement or similar labor agreement
is pending, and, to the best knowledge of the Company, no claims therefor exist,
and (iii) none of the Company or the Company Subsidiaries, nor any of their
respective Affiliates, has received any notice or has any knowledge of any
threatened labor or employment dispute, controversy or grievance or any other
unfair labor practice proceeding or breach of contract claim or discrimination
complaint or charge or action with respect to claims of, or obligations to, any
employee or group of employees of the Company or the Company Subsidiaries.
(c) Each of the Company and the Company Subsidiaries has complied in all
material respects with all Applicable Law, rules and regulations relating to the
employment of labor and those relating to hours, wages, collective bargaining
and the payment and withholding of Taxes and other sums as required by
appropriate Governmental Authorities.
(d) Section 3.16(d) of the Disclosure Letter sets forth a list of the names
of all employees of the Company or the Company Subsidiaries currently employed
who receive One Hundred Fifty Thousand Dollars ($150,000) or more per year in
compensation and indicates the current salary or wage rate of each such
employee. All of the salaries, wages and benefits of all employees of the
Company and the Company Subsidiaries have been paid by the Company or the
Company Subsidiaries, as the case may be, when due for all periods through the
date hereof, and, as of the Initial Closing Date and the Subsequent Closing
Date, will have been paid by the Company or the Company Subsidiaries when due
for all periods through such dates.
SECTION 3.17. Taxes. Except as set forth in Section 3.17 of the Disclosure
Letter:
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(a) The Company and the Company Subsidiaries have timely filed all Tax
Returns required to have been filed by them and all such Tax Returns are true,
correct and complete in all respects; each affiliated group with which any of
the Company and the Company Subsidiaries files a consolidated or combined Tax
Return has filed all such Tax Returns that it was required to file for each
taxable period during which any of the Company and the Company Subsidiaries was
a member of the group and all such consolidated and combined Tax Returns were
correct and complete in all respects; none of such Tax Returns contains a
disclosure statement under Section 6662 of the Code (or any predecessor statute)
or any similar provision of state, local or foreign law.
(b) All Taxes due and payable by the Company and the Company Subsidiaries
(whether or not shown on any Tax Return) have been timely paid in full or
reflected as a reserve on the Company Financial Statements.
(c) The charges, accruals and reserves for Taxes (including deferred Taxes)
currently reflected on the Financial Statements were adequate to cover all
unpaid Taxes accruing or payable by the Company and the Company Subsidiaries in
respect of taxable periods that end on or before the date of each such Company
Financial Statement.
(d) There are no audits or administrative proceedings, court proceedings or
claims pending against the Company or any of the Company Subsidiaries with
respect to any Taxes and no assessment, deficiency or adjustment has been
asserted or, to the best knowledge of the Company, proposed with respect to any
Tax Return of or with respect to the Company or any of the Company Subsidiaries
and there are no liens for Taxes upon the assets or properties of the Company or
any of the Company Subsidiaries, except for liens for Taxes not yet due and
owing.
(e) Since January 1, 1996, no written claim has been made by an authority
in a jurisdiction where the Company or any of the Company Subsidiaries currently
do not file Tax Returns that any of the Company or the Company Subsidiaries are
or may be subject to taxation by that jurisdiction.
(f) The Company and each of the Company Subsidiaries have withheld and paid
over all Taxes required to have been withheld and paid over in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other Third Party.
(g) Neither the Company nor any Company Subsidiary is required to include
in income any adjustment pursuant to Section 481(a) of the Code (or similar
provisions of other law or regulations) by reason of a change in accounting
method nor does the Company or any such Subsidiary have any knowledge that the
United States Internal Revenue Service (or other Governmental Authority having
taxing authority) has proposed, or is considering, any such change in accounting
method.
(h) The Company and the Company Subsidiaries are in full compliance with
Section 263A of the Code and the Treasury Regulations thereunder for all taxable
years for which the statute of limitations is not yet closed.
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(i) Neither the Company nor any Company Subsidiary has been included in any
consolidated, combined or unitary Tax Return (other than for a group of which
Parent, Law International or the Company is the common parent) provided for
under the laws of the United States, any state or locality with respect to Taxes
for any taxable period for which the statute of limitations has not expired; and
neither the Company nor any Company Subsidiaries has any liability for the Taxes
of any Person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(j) None of Parent, Law International, the Company or any of the Company
Subsidiaries is a party to or bound by any affiliated group consolidated return
tax allocation agreement, tax sharing agreement or tax indemnification
agreement, other than among themselves.
(k) As of the Initial Closing Date and the Subsequent Closing Date, there
will be no excess loss accounts or deferred intercompany gains or losses
pertaining to the Company or any of the Company Subsidiaries.
SECTION 3.18. Compliance with Laws. Except as set forth in Section 3.18 of
the Disclosure Letter, since January 1, 1996, neither the Company, nor any of
the Company Subsidiaries violated or infringed (in either case, to the best
knowledge of the Company), and is not in violation or infringement of, any
Applicable Law or any order, writ, injunction or decree of any Governmental
Authority.
SECTION 3.19. Finders' Fees. Except for Deutsche Banc Alex. Xxxxx, there is
no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Selling Parties who would
be entitled to any fee or commission upon consummation of the transactions
contemplated by this Agreement.
SECTION 3.20. Environmental Compliance.
(a) The Company and the Company Subsidiaries have obtained all approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities, or from any other
Person, that are required under any Environmental Law applicable to the Company
or the Company Subsidiaries. There are no material permits, licenses and other
authorizations issued under any Environmental Law applicable to the Company and
the Company Subsidiaries.
(b) The Company is also in compliance with all material limitations,
restrictions, conditions, standards, requirements, schedules and timetables
required or imposed under all Environmental Laws applicable to the Company or
the Company Subsidiaries.
(c) Except as set forth in Section 3.20(c) of the Disclosure Letter, there
are no present, nor, to the best knowledge of the Company have there been any
past, events, conditions, circumstances, incidents, actions or omissions,
relating to or in any way affecting the Company, the Company Subsidiaries, the
Business or any facilities or real property currently or, to the best knowledge
of the Company formerly, owned, operated or leased by the Company or any Company
Subsidiary that violate or may violate any Environmental Law applicable to the
Company or the Company Subsidiaries or that may give rise to any environmental
liability, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation (i) under any Environmental Law,
(ii) based on or related to the manufacture, processing, distribution, use,
treatment, storage (including without limitation underground storage tanks),
disposal, transport or handling, or the emission, discharge, release or
threatened release of any Hazardous Substance or (iii) resulting from exposure
to workplace hazards.
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(d) The Company and the Company Subsidiaries have made available to the
Buyers all environmental documents, studies and reports that are in the
possession of the Company or any of the Company Subsidiaries relating to: (i)
any Facilities owned leased or operated by the Company or any of the Company
Subsidiaries or (ii) any liability under Environmental Law of the Business, the
Company or the Company Subsidiaries.
(e) Except as set forth in Section 3.20(e) of the Disclosure Letter, there
are no, nor, to the best knowledge of the Company have there ever been any,
underground storage tanks, asbestos-containing materials or polychlorinated
biphenyls located on property currently, or, to the best knowledge of the
Company, formerly, owned, operated or leased by the Company and the Company
Subsidiaries.
SECTION 3.21. Insurance; Bonds. Section 3.21 of the Disclosure Letter sets
forth a complete list accurately describing all current insurance policies,
other than insurance policies purchased by subcontractors or other Third Parties
under which the Company or any of the Company Subsidiaries are additional named
insureds, held by or for the benefit of the Company or any of the Company
Subsidiaries or concerning their respective businesses and properties, including
but not limited to all casualty, errors and omissions insurance and officers'
and directors' liability insurance policies that cover the Company or any of the
Company Subsidiaries or their officers and directors and all material
outstanding bonds, letters of credit and other surety arrangements issued or
entered into in connection with the businesses, assets and liabilities of the
Company or any of the Company Subsidiaries. All insurance coverage applicable to
the Company or the Company Subsidiaries is in full force and effect, is believed
by the Selling Parties to insure the Company and the Company Subsidiaries in
reasonably sufficient amounts against all risks usually insured against by
persons operating similar businesses or properties of similar size in the
localities where such businesses or properties are located, provides coverage as
may be required by any and all contracts to which the Company is a party and has
been issued by insurers of recognized responsibility. There are no pending
material claims against such insurance by the Company or any of the Company
Subsidiaries as to which the applicable insurers have denied coverage. In
addition, there exist no material claims (or facts and circumstances with
respect to potential claims) under such insurance that have not been properly
filed by the Company or any of the Company Subsidiaries. Since January 1, 1998,
neither the Company nor any Company Subsidiary has been refused any insurance
coverage by any insurer from which the Company or any Company Subsidiary has
sought coverage.
SECTION 3.22. Takeover Statutes. No "fair price," "moratorium" or "control
share acquisition" or other similar anti-takeover statute or regulation of any
Governmental Authority, whether foreign or domestic (each a "Takeover Statute")
or any applicable anti-takeover provision in the charter documents of the
Company or the Target Companies is applicable to the Company, the Company
Subsidiaries, this Agreement or any of the transactions contemplated by this
Agreement.
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SECTION 3.23. Material Contracts.
(a) Section 3.23(a) of the Disclosure Letter sets forth a complete list of
the following existing Contracts of the Company, the Company Subsidiaries or the
Business (collectively with the Employment Agreements and the Leases, the
"Scheduled Contracts"):
(i) each Contract of the Company that requires or permits the other party
thereto to require the payment or incurrence of liabilities by the Company
subsequent to the date of this Agreement of more than Two Hundred Fifty Thousand
Dollars ($250,000);
(ii) each Contract of the Company or the Company Subsidiaries involving the
obligation of any of the Company or the Company Subsidiaries to deliver products
or services involving payments to the Company or the Company Subsidiaries in
excess of Two Hundred Fifty Thousand Dollars ($250,000);
(iii) each Contract of the Company or the Company Subsidiaries with a
customer or client with respect to which there is a reasonable probability that
the direct costs (including fringe benefits) related to the Contract will exceed
the revenue for the Contract by at least Twenty-Five Thousand Dollars ($25,000);
(iv) performance bonds, completion bonds, bid bonds, suretyship agreements
and similar instruments and agreements and any letters of credit and the related
reimbursement agreements issued with respect to the foregoing;
(v) each partnership agreement, joint venture agreement, teaming
arrangement or other similar Contract entered into by the Company or a Company
Subsidiary which is currently in effect, or under which there are residual
obligations of the Company or a Company Subsidiary;
(vi) each Contract for the acquisition or disposition of a business or a
material amount of assets or property entered into by the Company or a Company
Subsidiary since January 1, 1998;
(vii) each Contract, commitment or obligation of the Company or a Company
Subsidiary restricting or otherwise affecting the ability of the Company or a
Company Subsidiary to compete in the Business or otherwise in any jurisdiction;
(viii) each Contract relating to the use of Intellectual Property Rights,
except any of the foregoing related to the use of generally available computer
software;
(ix) all material warranty agreements, product or service guarantees or
indemnity agreements currently in effect with respect to any of the services
heretofore rendered or products heretofore sold by the Company or a Company
Subsidiary;
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(x) each distribution, sales representative, commission, marketing, agent,
franchise, technical assistance Contract or other similar Contract relating to
or providing for the marketing and/or sale of products or services to which the
Company or any Company Subsidiary is a party or by which it is otherwise bound;
(xi) each Contract, other than the Employment Agreements, or other similar
agreements to which the Company is a party with any current or former officer,
director, employee, consultant, agent or other representative having a remaining
term of more than six (6) months from the date hereof or providing for an
obligation to pay and/or accrue compensation of Fifty Thousand Dollars ($50,000)
or more per annum, or providing for the payment of fees or other consideration
in excess of Fifty Thousand Dollars ($50,000);
(xii) each Contract relating to, or evidencing, or guaranteeing, or
providing security for, Debt or the deferred purchase price of material property
(whether incurred, assumed, guaranteed or secured by any asset);
(xiii) each material Contract for the purchase or sale of inventory,
equipment or Third Party services that contains an escalation, renegotiation or
redetermination clause or which cannot be canceled without liability, premium or
penalty if written notice is given thirty (30) days prior to the effective date
of the notice; and
(xiv) each other existing Contract, not otherwise covered by clauses (i)
through (xiii), the loss of which could reasonably be expected to result in a
Company Material Adverse Effect.
(b) The Selling Parties have made available to the Buyers true and correct
copies of all Scheduled Contracts. Each Scheduled Contract is a legal, valid and
binding obligation of the Company or the Company Subsidiary, as the case may be,
and, to the best knowledge of the Company, each other party thereto, enforceable
against each such party thereto in accordance with its terms, except (i) as
rights to indemnity hereunder may be limited by federal or state securities laws
or the public policies embodied therein, (ii) as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the enforcement of creditors' rights generally, and (iii) as the
remedy of specific performance and other forms of injunctive relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. Neither the Company, the Company
Subsidiaries nor, to the best knowledge of the Company, any other party thereto,
is in material default under such Scheduled Contracts.
(c) Except as set forth in Section 3.23(c) of the Disclosure Letter, none
of the Selling Parties are aware of any intent by any party to any Scheduled
Contract (i) to terminate or amend the terms thereof or (ii) with respect to any
Scheduled Contract that contains an option to extend its term or that renews
automatically if no notice of termination is given, to refuse to exercise such
option or to renew such Scheduled Contract upon expiration of its term. Neither
the Company nor any Company Subsidiary is currently paying liquidated damages in
lieu of performance under any Scheduled Contract.
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SECTION 3.24. Related Party Transactions. Except as set forth in Section
3.24 of the Disclosure Letter, neither the Company, nor the Company
Subsidiaries, nor Parent, nor any of their related persons, nor, to the best
knowledge of the Company, any of the officers or directors of the Company or the
Company Subsidiaries (or any family member of any such officer or director), now
has or at any time subsequent to January 1, 1998, either directly or indirectly,
had a material interest in:
(a) any Person which furnishes or sells or during such period furnished or
sold services or products to the Company or the Company Subsidiaries or
purchases or during such period purchased from the Company or the Company
Subsidiaries any goods or services, or otherwise does or during such period did
business with the Company or the Company Subsidiaries; or
(b) any contract, commitment or agreement to which the Company or any
Company Subsidiary is or during such period was a party or under which it is or
was obligated or bound or to which any of its properties may be or may have been
subject.
SECTION 3.25. Real Estate.
(a) Section 3.25(a) of the Disclosure Letter sets forth a complete list of
the following:
(i) all real property and interests in real property and the buildings,
structures and improvements thereon (the "Owned Property") which the Company or
any of the Company Subsidiaries owns;
(ii) all leases (the "Leases") of real property and interests in real
property and the buildings, structures and improvements thereon (the "Leased
Property" and together with the Owned Property, the "Facilities") pursuant to
which the Company or any of the Company Subsidiaries is the lessee except Leases
into which the Company or the Company Subsidiary has entered in connection with
a project or to provide employee housing, and with respect to which (A) the
annual rental obligation does not exceed Twenty Five Thousand Dollars ($25,000)
or (B) the Lease is terminable without penalty on sixty (60) days or less notice
to the landlord;
(iii) all Contracts (and all amendments, extensions and modifications
thereto) held by the Company or any of the Company Subsidiaries, or contractual
obligations (and all amendments, extensions and modifications thereto) on the
part of either the Company or any of the Company Subsidiaries, to purchase or
acquire any interest in real property;
(iv) all Contracts (and all amendments, extensions and modifications
thereto) granted by either the Company or any of the Company Subsidiaries, or
contractual obligations (and all amendments, extensions and modifications
thereto) on the part of either the Company or any of the Company Subsidiaries,
to sell or dispose of any interest in real property; and
25
(v) all policies of title insurance issued to the Company or any of the
Company Subsidiaries with respect to the Facilities.
The Selling parties have made available to the Buyers true and correct
copies of the Leases and other Contracts and polices of title insurance set
forth in the Disclosure Letter.
(b) The Facilities are sufficient for the conduct of the Business as it is
now being conducted. All Owned Properties have received all required approvals
of Governmental Authorities (including, without limitation, permits and a
certificate of occupancy or other similar certificate permitting lawful
occupancy of the Facilities) required in connection with the operation thereof
and are being operated and maintained in all material respects in accordance
with Applicable Law. The improvements constructed on the Facilities, including,
without limitation, all leasehold improvements situated in or on the Leased
Property and owned by the Company, and all material fixtures and equipment and
other material tangible assets owned, leased or used by the Company or any of
the Company Subsidiaries at the Facilities are, to the best knowledge of the
Company: (i) subject to no material defects, (ii) in good operating condition
and repair, subject to ordinary wear and tear, and (iii) in conformity in all
material respects with all Applicable Law and other requirements relating
thereto currently in effect.
(c) Except as set forth in Section 3.25(c) of the Disclosure Letter, (i)
each Lease is in full force and effect, (ii) neither the Company nor any of the
Company Subsidiaries is in default in any material respect of their respective
obligations under any Lease, and (iii) to the best knowledge of the Company,
there are no restrictions or any asserted restrictions that do or could
reasonably be expected to impair in any material respect the use of the
applicable Facility as now used in the Business as now being conducted.
(d) Except for Permitted Liens and matters disclosed on any policies of
title insurance issued to the Company or any of the Company Subsidiaries with
respect to the Owned Properties which have been made available to Xxxxxx, none
of the Owned Properties are subject to any liens, mortgages, deeds of trust,
claims against title, security interests, rights of way, written agreements,
reservations of an interest in title or other encumbrances on title.
SECTION 3.26. Government Contracting, Investigations and Actions.
(a) Except as set forth in Section 3.26(a) of the Disclosure Letter, (i)
neither the Company, any of the Company Subsidiaries nor any of the Company's
and the Company Subsidiaries' directors, officers or employees, or to the best
knowledge of the Company, any of the Company's and the Company Subsidiaries'
agents or consultants, is (or for the last five years has been) under
administrative, civil or criminal investigation (including as a result of a qui
tam or similar action brought under the Civil False Claims Act or any similar
foreign Applicable Law), indictment or information, audit or internal
investigation with respect to any alleged irregularity, misstatement or omission
arising under or relating to any contract, bid or proposal with any Governmental
Authorities or is (or for the last five years has been) in violation of any
Applicable Law relative to prohibited practices; (ii) neither the Company nor
any of the Company Subsidiaries have made a voluntary disclosure to any
Governmental Authority with respect to any alleged irregularity, misstatement or
omission arising under or relating to any contract, bid or proposal with any
Governmental Authorities that has led or would reasonably be expected to lead,
either before or after the Initial Closing Date or Subsequent Closing Date, to
any of the consequences set forth in (i) and (ii) above or any other material
damage, penalty assessment, recoupment of payment or disallowance of cost.
26
(b) Neither the Company, any of the Company Subsidiaries nor any of the
Company's and the Company Subsidiaries' directors, officers or employees is (or
for the last five years has been) suspended or debarred from doing business with
any Governmental Authority. To the best knowledge of the Company, there are no
circumstances that would warrant the institution of suspension or debarment
proceedings with regard to any Governmental Authority on the part of the Company
or any of the Company Subsidiaries in the future.
(c) The cost accounting and procurement systems used in the Business with
respect to any Contracts with a Governmental Authority are in compliance in all
material respects with all Applicable Law.
SECTION 3.27. Foreign Corrupt Practices. Neither the Company, the Company
Subsidiaries nor any director, officer or employee of the Company or any Company
Subsidiary, nor, to the best knowledge of the Company, any other Person acting
on behalf of the Company or any of the Company Subsidiaries, has, directly or
indirectly, since January 1, 1996 (a) given or agreed to give any gift or
similar benefit to any customer, supplier, governmental official or employee,
representative of a political party, or other person who is or may be in a
position to help or hinder the Company or any Company Subsidiary (or assist the
Company or any Company Subsidiary in connection with any actual or proposed
transaction) which is (i) in violation of any Applicable Law, (ii) for any of
the purposes described in Section 162(c) of the Foreign Corrupt Practices Act,
or (iii) for establishment or maintenance of any concealed fund or concealed
bank account, or (b) acted in a manner which would be unlawful under any
Applicable Law pertaining to the export or import of technical data, restrictive
trade practices or boycotts.
SECTION 3.28. Relations with Suppliers and Customers. Except as set forth
in Section 3.28 of the Disclosure Letter, no significant supplier or significant
customer of the Company or any of the Company Subsidiaries has canceled any
Contract since January 1, 1998 or has indicated to the Company or any Company
Subsidiary an intention to cancel or not renew any Contract that is renewable by
its terms or to not exercise any option to extend any Contract that contains an
option to extend, and to the best knowledge of the Company, there has been no
threat by any supplier not to provide, products, supplies, or services
(including utilities) to the Company or any of the Company Subsidiaries. The
Company and the Company Subsidiaries' relationships with their respective
significant customers and suppliers, and the relationships of each such supplier
to its suppliers, are good, and none of the Selling Parties are aware of
anything that would lead any of them to conclude that any such relationship may
be in jeopardy.
SECTION 3.29. Intellectual Property. The Company and the Company
Subsidiaries own, or are validly licensed or otherwise have the right to use all
(i) foreign and United States federal and state patents, trademarks, trade
names, service marks and copyright registrations, (ii) foreign and United States
federal and state patent, trademark, trade name, service xxxx and copyright
applications for registration, (iii) common law claims to trademarks, service
marks and trade names, (iv) claims of copyright which exist although no
registrations have been issued with respect thereto, (v) fictitious business
name filings with any state or local Governmental Authority and (vi) inventions,
concepts, designs, improvements, original works of authorship, computer
programs, know-how, research and development, techniques, modifications to
existing copyrightable works of authorship, data and other proprietary and
intellectual property rights (whether or not patentable or subject to copyright
or trade secret protection), in each case which are material to the conduct of
the business of the Company and the Company Subsidiaries, taken as a whole
(collectively, the "Intellectual Property Rights"). There are no Liens on the
Intellectual Property Rights. There are no outstanding and, to the best
knowledge of the Company, no threatened material disputes or disagreements with
the Company or any of the Company Subsidiaries with respect to any Intellectual
Property Rights.
27
SECTION 3.30. Title to Assets. Except where the failure to have a good,
valid and indefeasible title would not reasonably be expected to have a Company
Material Adverse Effect, each of the Company and the Company Subsidiaries has
good, valid and indefeasible title to all of the tangible assets purported to be
owned by it, whether real, personal or mixed. All tangible property owned by the
Company or any of the Company Subsidiaries is free and clear of restrictions on
or conditions to transfer or assignment, and free and clear of any Liens, except
for those disclosed in the Company Financial Statements, except for matters
disclosed on any policies of title insurance issued to the Company or any of the
Company Subsidiaries with respect to any Facilities and made available to
Xxxxxx, except for Permitted Liens and except for those not reasonably expected
to have a Company Material Adverse Effect.
SECTION 3.31. Accuracy of Representations. No representation, warranty or
schedule furnished by the Selling Parties to the Buyers in connection with the
transactions contemplated hereby contains any untrue statement of material fact
or omits to state any material fact necessary to make the statements contained
herein or therein not misleading. None of the Selling Parties nor any of their
Affiliates shall be deemed to have made to the Buyers or any other Person any
representation or warranty other than as expressly made by the Selling Parties
in this Article 3 or in any agreement or schedule delivered by the Selling
Parties pursuant to this Agreement. None of the Selling Parties nor any of their
Affiliates makes any representation or warranty regarding any projections,
estimates or budgets for the Business contained in any projected financial
information or statements heretofore delivered to or made available to the
Buyers or any other Person.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE BUYERS
As an inducement to the Selling Parties to enter into this Agreement and to
consummate the transactions contemplated herein, each of the Buyers hereby
represents and warrants, as of the date of this Agreement and as of the Initial
Closing Date, to each of the Selling Parties as follows:
SECTION 4.1. Organization, Existence and Power. Each of the Buyers is a
corporation (or equivalent) duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of formation and has all
power and authority to own and operate its respective business as now owned and
operated. Each of the Buyers is duly qualified to do business as a foreign
corporation in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary
to carry on its business as now conducted, except for those jurisdictions where
in the aggregate the failure to be so qualified is not, and is not reasonably
expected to become, material.
28
SECTION 4.2. Authorization. The execution, delivery and performance by each
of the Buyers of this Agreement and the Escrow Agreement and the consummation by
each of the Buyers of the transactions contemplated under this Agreement and the
Escrow Agreement are within the Buyers' respective corporate (or equivalent)
powers and have been duly authorized by all necessary action on the part of each
of the Buyers. This Agreement and the Escrow Agreement have been duly and
validly executed and delivered by each of the Buyers and constitutes a legal,
valid and binding agreement of the Buyers, enforceable against each of them in
accordance with its terms, except (a) as rights to indemnity hereunder may be
limited by federal or state securities laws or the public policies embodied
therein, (b) as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the enforcement of
creditors' rights generally, and (c) as the remedy of specific performance and
other forms of injunctive relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
SECTION 4.3. Governmental Authorization. The execution, delivery and
performance of this Agreement and the Escrow Agreement by the Buyers require no
action by, consent or approval of, or filing by the Buyers with, any
Governmental Authority.
SECTION 4.4. Non-Contravention. The execution, delivery and performance by
the Buyers of this Agreement and the Escrow Agreement does not and will not (a)
contravene or conflict with the respective charter documents of the Buyers, a
true, correct and complete copy of each of which has been delivered to the
Selling Parties by the Buyers, (b) contravene, conflict with or constitute a
default under any material agreement to which any Buyer is a party, or (c)
assuming compliance with the matters referred to in Section 4.3, contravene or
conflict with or constitute a violation of any provision of any Applicable Law
binding upon or applicable to any of the Buyers.
SECTION 4.5. Litigation. There is no Legal Proceeding pending against, or
to the best knowledge of any of the Buyers, threatened against or affecting, any
Buyer before any Governmental Authority that challenges or seeks to prevent,
enjoin, rescind, alter or delay the transactions contemplated by this Agreement
or the Escrow Agreement.
SECTION 4.6. Investment Representations. The Buyers are acquiring the
Shares for investment solely for their own account and not with a view to, or
for resale in connection with, any distribution thereof and is aware that each
of Parent and the Company is relying upon the bona fide nature of the Buyers'
investment intent as expressed herein. The Buyers further understand that the
Shares to be acquired have not been registered under the Securities Act and have
not been qualified under applicable state securities laws and that any
subsequent disposition thereof must be registered under the Securities Act and
qualified under applicable state securities laws or be exempt from such
registration and qualification. The Buyers are aware that no market may exist
for the resale of the Shares. The Buyers have the ability to bear the economic
risks of investment in the Shares including a complete loss of the investment.
The Buyers confirm that in making the decision to acquire the Shares that the
Buyers and their advisors have been given the opportunity to examine all
documents and to ask questions of, and to receive answers from, the management
of and advisors to the Company and the Company Subsidiaries concerning the terms
and conditions of the transactions contemplated by this Agreement and other
matters set forth in any schedule or attachment hereto.
29
SECTION 4.7. Financing. The Buyers have sufficient funds or will obtain
under existing credit arrangements prior to the Initial Closing Date all funds
necessary to consummate the transactions contemplated hereby.
SECTION 4.8. Accuracy of Representations. No representation, warranty,
statement or schedule furnished by the Buyers to the Selling Parties in
connection with the transactions contemplated hereby contains any untrue
statement of material fact or omits to state any material fact necessary to make
the statements contained herein or therein not misleading. None of the Buyers
nor any of their Affiliates shall be deemed to have made to Selling Parties or
any other Person any representation or warranty other than as expressly made by
the Buyers in this Article 4 or in any agreement or schedule delivered by the
Buyers pursuant to this Agreement.
ARTICLE 5
COVENANTS OF THE SELLING PARTIES
SECTION 5.1. Conduct of the Business. From the date hereof until the
Subsequent Closing Date, the Selling Parties shall conduct the Business in the
ordinary course and use all commercially reasonable efforts to preserve intact
the Business, the business organizations and relationships of the Business and
goodwill with Third Parties and keep available the services of the present
officers, employees, agents and other personnel of the Business. Without
limiting the generality of the foregoing, from the date hereof until the
Subsequent Closing Date:
(a) without Jacob's prior consent, neither the Company nor any of the
Company Subsidiaries will, nor will either of them agree to, and Parent will not
permit the Company or the Company Subsidiaries to, or to agree to:
(i) purchase or otherwise acquire assets or securities from any other
Person, or sell or transfer any assets of the Company or the Company
Subsidiaries, other than in the ordinary course of business;
(ii) incur any liability, except liabilities (A) incurred in the ordinary
course of business in which the aggregate dollar amount of all such liabilities
incurred by the Company does not exceed Five Hundred Thousand Dollars
($500,000), (B) incurred pursuant to existing obligations of the Company that
are disclosed in the Disclosure Letter or (C) expressly contemplated by the
terms of this Agreement;
(iii) amend or modify in any material respect or terminate any Scheduled
Contract or any other Contract entered into by the Company or the Company
Subsidiaries after the date hereof which, if in existence on the date hereof,
would be required to be set forth in Section 3.23(a) of the Disclosure Letter as
a Scheduled Contract (each, a "Subsequent Material Contract");
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(iv) make or commit to make any capital expenditure, or group of related
capital expenditures, in excess of One Hundred Fifty Thousand Dollars ($150,000)
for the Company or any Company Subsidiary, other than capital expenditures
expressly required under any Scheduled Contract or any Subsequent Material
Contract;
(v) other than in the ordinary course of business, (A) increase the rate or
terms of compensation payable or to become payable to its directors, officers or
employees, (B) pay or agree to pay any bonus, stock option, severance, pension,
retirement allowance or other employee benefit not provided for by any Employee
Plan, Benefit Arrangement or Employment Agreement set forth in the Disclosure
Letter, or (C) enter into any material employment agreement with or for the
benefit of any Person;
(vi) make any change in its accounting methods or in the manner of keeping
its books and records or any change in its current practices with respect to
accounting for or recording sales, receivables, payables or accrued expenses;
(vii) other than the repayment of intercompany debt and intercompany
dividends between or among the Company Subsidiaries, declare or pay any dividend
or make any distribution in respect of any of its Equity Securities, except for
the Dividend or, directly or indirectly, redeem, purchase or otherwise acquire
any of its Equity Securities or the Equity Securities of any of its Affiliates,
make any other payments of any kind to the holders of any of its Equity
Securities in respect thereof or to the holders of any Equity Securities of any
of its Affiliates in respect thereof or issue any shares of Equity Securities
except in connection with any vested options of the Company;
(viii) amend its charter documents;
(ix) sell, transfer or otherwise dispose of any of the Shares or any
interest therein or create (or permit the creation of) any Share Encumbrance on
any of the Shares, whether voluntarily or involuntarily;
(x) take or fail to take any action if such action or inaction would
materially adversely affect the applicability of any insurance in effect on the
date hereof that covers all or any of the assets of the Company, the Company
Subsidiaries or the Business; or
(xi) take any action or inaction or group or combination of actions or
inactions that results in, or could reasonably be expected to result in, a
breach of any representation, warranty, covenant or agreement contained in this
Agreement or a Company Material Adverse Effect.
(b) the Company and the Company Subsidiaries will, and Parent will cause
the Company and the Company Subsidiaries to:
(i) (A) maintain the Company and the Company Subsidiaries' respective
assets in the ordinary course of business in reasonably serviceable operating
order and condition, reasonable wear and tear, damage by fire and other casualty
excepted, (B) promptly repair, restore or replace any material assets to the
extent such repair, restructure or replacement would be done in the ordinary
course of business and (C) upon any damage, destruction or loss to any of such
assets, apply any and all insurance proceeds received with respect thereto to
the prompt repair, replacement and restoration thereof to the condition of such
assets before such event to the extent reasonably practicable;
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(ii) file all Tax Returns required to be filed and make timely payment of
all applicable Taxes when due, in each case including any normal periods of
extension;
(iii) comply with, and maintain the effectiveness of, all material Permits;
and
(iv) pay accounts payable and pursue collection of its accounts receivable
in the ordinary course of business.
SECTION 5.2. Noncompetition.
(a) From and after the Subsequent Closing Date and as further provided in
Section 5.2(b), neither Parent, nor any of its Affiliates, shall, directly or
indirectly, whether as a partner, stockholder, Affiliate or any other capacity:
(i) for a period of two years after the Subsequent Closing Date, own,
lease, manage, operate, control, participate in the management or control of or
maintain or continue any interest whatsoever in any Person that engages,
directly or indirectly in any business that competes with the Prohibited Xxxx
Business in any material way in any country where the Prohibited Xxxx Business
was conducted by the Company or any of the Company Subsidiaries at any time
within the five-year period immediately preceding the Subsequent Closing Date;
or
(ii) for a period of three years after the Subsequent Closing Date, solicit
the employment of any Company Employee unless such employee is terminated by
Buyer after the Subsequent Closing Date, provided, however, that Parent or its
Affiliates may engage in general employment advertising or solicitation not
specifically targeting any Company Employee and may employ persons who seek
employment with Parent or any of its Affiliates without solicitation; or
(iii) for a period of three years after the Subsequent Closing Date,
induce, cause or attempt to induce or cause any Person to replace or terminate
any Contract relating to the Prohibited Xxxx Business with products or services
of any other Person.
provided, however, that in the event of a sale of Parent (whether by
merger, sale of stock, sale of assets or otherwise) after the Subsequent Closing
to a Third Party (an "Acquiring Third Party"), such Acquiring Third Party shall
not be bound (but Parent and all of its assets, whether the business of Parent
is held by the Acquiring Third Party as a separate legal entity or as a division
of the Acquiring Third Party shall continue to be bound) by the provisions of
Sections (i) and (iii) of this Section 5.2(a).
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(b) The prohibition in Section 5.2(a) shall apply in each country and in
all political subdivisions or regions of such country in which the Selling
Parties are currently engaged in the Business other than the Americas. Parent
agrees that, in connection with the purchase by the Buyers of the Shares
(including the goodwill) of the Business, the time and geographic restrictions
set forth above are reasonable. Parent agrees that the remedy at law for any
breach by Parent or its Affiliates of this Section 5.2 will be inadequate and
that the Buyers shall be entitled to injunctive relief, or other equitable
relief, without the necessity of actual monetary loss being proved, in order
that a breach or threatened breach of this Section 5.2 may be effectively
enjoined. The parties intend that the unenforceability or invalidity of any term
or provision of this Section 5.2 shall not render any other term or provision
contained herein unenforceable or invalid. If the activities described in
Section 5.2(a) or the period of time or the geographical area covered by this
Section 5.2(b) should be deemed too extensive, then the parties intend that this
Section 5.2 be construed to cover the maximum scope of business activities,
period of time and geographical area (not exceeding those specifically set forth
herein) as may be permissible under applicable law.
SECTION 5.3. Use of Names. For a period of up to one year following the
Subsequent Closing Date, Parent may continue to use the trade names "Xxxx,"
"LawGibb" or any variation thereof currently used by Parent or its subsidiaries
(the "Xxxx Names"): (i) in displays, signage and postings, to the extent such
displays, signage or postings exist on the Subsequent Closing Date and (ii) to
the extent any Xxxx Names appear on stationery, packaging materials, supplies or
inventory on hand as of the Subsequent Closing Date or on order at the time of
the Subsequent Closing, until such materials have been exhausted. Parent shall
use reasonable commercial efforts to discontinue the use of any Xxxx Names as
promptly as practicable following the Subsequent Closing Date, and following the
one-year anniversary of the Subsequent Closing, Parent shall not use, nor shall
it permit any of its Affiliates, any successor to all or part of its business
(other than the Buyers) or any other Third Party to use any Xxxx Names.
Notwithstanding anything to the contrary in this Agreement, Parent agrees that
promptly following the Subsequent Closing, it will take all necessary steps to
amend its corporate name to eliminate "Xxxx" and variations thereof from its
name and the name of any of its Affiliates that it controls.
SECTION 5.4. Access to Information. From the date hereof until the
Subsequent Closing Date, the Selling Parties will provide the Buyers, their
counsel, financial advisors, auditors and other authorized representatives
reasonable access during normal business hours to the offices, properties, books
and records of the Company and each of the Company Subsidiaries and will furnish
to the Buyers, their counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's and each of the
Company Subsidiaries' employees, counsel and financial advisors to cooperate
with the Buyers in its investigation of the business of the Company and each of
the Company Subsidiaries. From the date hereof until the Subsequent Closing
Date, the Company will allow the Buyers, their counsel, financial advisors,
auditors and other authorized representatives to make extracts and copies of the
books and records of the Company and each of the Company Subsidiaries during
normal business hours.
SECTION 5.5. Notices of Certain Events. The Selling Parties shall promptly
notify the Buyers in writing of the occurrence of any breach by any of the
Selling Parties of any representation or warranty, or any covenant or agreement
contained in this Agreement, promptly after any of the Selling Parties becomes
aware of any such breach.
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SECTION 5.6. Return of Information. In the event that this Agreement is
terminated for any reason, the Selling Parties shall, and shall cause their
respective officers, directors, employees, counsel, financial advisors, auditors
and other representatives to, return all confidential information heretofore
furnished to any such Persons by or on behalf of Xxxxxx.
SECTION 5.7. Resignation of Directors and Officers. On or prior to the
Initial Closing, Parent shall cause each of the directors and officers of the
Company Subsidiaries set forth in Exhibit C, and on or prior to the Subsequent
Closing, Parent shall cause each of the directors and officers of the Company
set forth in Exhibit C, to resign as director and/or officer of the Company or
the Company Subsidiaries, as applicable.
SECTION 5.8. Directors and Officers Insurance. Parent will take such steps
as are necessary to provide officers' and directors' liability insurance for
three years after the Subsequent Closing in respect of acts or omissions
occurring prior to the Subsequent Closing covering each of the present and
former officers and directors of the Company and Company Subsidiaries on terms
with respect to coverage and amounts at least as favorable as the coverage and
amounts currently provided by Parent's policy.
SECTION 5.9. Supplements to Disclosure Letter. From time to time up to the
Initial Closing, the Selling Parties shall promptly supplement or amend the
Disclosure Letter with respect to any matter first existing or occurring after
the date hereof which, if existing or occurring at or prior to such date, would
have been required to be set forth in the Disclosure Letter, or that is
necessary to correct any information in Disclosure Letter that has been rendered
inaccurate thereby. The Selling Parties shall provide explanations of any
supplements or amendments to the Disclosure Letter as requested by the Buyers.
If, in the Buyers' reasonable determination, any such supplements or amendments
to the Disclosure Letter reveal an occurrence or event that would result in a
Company Material Adverse Effect, the Buyers may terminate this Agreement
pursuant to Section 10.1(b).
ARTICLE 6
COVENANTS OF THE BUYERS
SECTION 6.1. Return of Information. In the event that this Agreement is
terminated for any reason, the Buyers shall, and shall cause its officers,
directors, employees, counsel, financial advisors, auditors and other
representatives to, return all confidential information heretofore furnished to
any such Persons by or on behalf of the Company and any of the Company
Subsidiaries.
SECTION 6.2. Notices of Certain Events. The Buyers shall promptly notify
the Selling Parties in writing if the Buyers become aware of the occurrence of
any breach by any of the Buyers of any representation or warranty, or any
covenant or agreement contained in this Agreement, promptly after any of the
Buyers becomes aware of any such breach.
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SECTION 6.3. Consents and Approvals. Prior to the Initial Closing, the
Buyers shall use all commercially reasonable efforts to procure all consents
that the Buyers are required to obtain to consummate the transactions
contemplated by this Agreement at the earliest practicable date prior to the
Initial Closing.
SECTION 6.4. Use of Names. Notwithstanding anything to the contrary in this
Agreement, for a period of up to one year following the Subsequent Closing Date,
the Buyers may continue to use the name "Law" or "LawGibb" and related
trademarks, corporate names, and trade names incorporating "Law" or "LawGibb"
and the stylized "Law" or "LawGibb" logos: (i) in displays, signage and
postings, to the extent such displays, signage or postings exist on the
Subsequent Closing Date; (ii) to state the Buyers' former affiliation with
LawGibb (e.g., formerly a division of "LawGibb") and (iii) to the extent any
such trade names, trademarks, service marks or logos appear on stationery,
packaging materials, supplies or inventory on hand as of the Subsequent Closing
Date or on order at the time of the Subsequent Closing, until such materials
have been exhausted. The Buyers shall use reasonable commercial efforts to
discontinue the use of such trademarks and trade names as promptly as
practicable following the Subsequent Closing Date, and following the one-year
anniversary of the Subsequent Closing, the Buyers will not use, nor shall they
permit any of their Affiliates, any successor to all or part of their respective
businesses or any other Third Party to use any of such trademarks and trade
names.
SECTION 6.5. Agreement Regarding Lex. After the Subsequent Closing, the
Buyers will not assert or pursue any new or pending insurance claims or other
indemnification obligations that any of the Company or the Company Subsidiaries
may have against Lex International Insurance Co. Ltd., a Bermuda company
("Lex"); provided, however, that nothing hereunder shall (i) prevent any of the
Buyers, the Company or any Company Subsidiary from collecting any amounts owing
to the Company or any Company Subsidiary from Lex in connection with any claim
that has been finally adjudicated on or prior to the Initial Closing Date, or
(ii) adversely affect Buyer's ability to submit claims under (A) Parent's errors
and omissions insurance coverage for the Business or (B) the ERP Coverage.
SECTION 6.6. Lease and Other Indemnities. Xxxxxx agrees that from and after
the Initial Closing Date: (i) it will assume the guarantee obligations of Parent
with respect to certain real estate lease obligations of the Company
Subsidiaries and (ii) will make arrangements to substitute itself for Parent
under any guarantees, bonds, indemnities and letters of credit supporting the
ongoing projects of the Business from and after the Initial Closing Date.
ARTICLE 7
MUTUTAL COVENANTS
The parties hereto agree that:
SECTION 7.1. Further Assurances. The Buyers and the Selling Parties shall
execute and deliver, whether prior to or after the Closings, such other
documents, certificates, agreements and other writings and shall use all
commercially reasonable efforts to take, or cause to be taken, such other
actions as may be reasonably necessary or desirable (including, without
limitation, making necessary filings with all Governmental Authorities), in
order to consummate or implement expeditiously the transactions contemplated by
this Agreement.
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SECTION 7.2. Publicity. On or prior to the Initial Closing Date, the Buyers
and the Selling Parties will consult with each other and will mutually agree
upon any press release or public announcement pertaining to this Agreement and
the transactions contemplated thereby and shall not issue any such press release
or make any such public announcement prior to such consultation and agreement,
except that either party and its affiliates may issue any such release or make
any such public announcement as it determines, in its reasonable discretion, is
required by Applicable Law or by obligations pursuant to any listing agreement
with any national securities exchange, in which case such party shall, and shall
cause its affiliates to, use reasonable efforts to consult in good faith with
the other party before issuing any such press release or making any such public
announcement.
SECTION 7.3. Antitrust Filings. In connection with the transactions
contemplated by this Agreement, promptly after the execution and delivery of
this Agreement, the Buyers and the Selling Parties shall comply and, to the
extent necessary, shall cause their Affiliates to comply, with any applicable
notification and reporting requirements of any applicable Foreign Antitrust Laws
and shall file any supplemental information which may be requested in connection
therewith pursuant to such Foreign Antitrust Laws. The Buyers and the Selling
Parties shall cooperate with each other to prepare and file any applications
necessary to obtain any required approvals of any Governmental Authority in
connection with, or to otherwise perform their obligations under, any applicable
Foreign Antitrust Laws.
SECTION 7.4. Section 338(h)(10) Election.
(a) The Buyers may elect to cause Parent and US Acquisition Subsidiary to
jointly make the election provided by Section 338(h)(l0) of the Code (the
"Election") for the acquisition of the stock of the Company by notifying Parent
in writing (the "Section 338 Election Notice") at any time on or before the date
that is 60 days prior to the deadline for filing the Election (the "Election
Deadline"). Parent and the Buyers shall provide to the other all necessary
information to permit the Election to be made. Parent and the Buyers shall, as
promptly as practicable following the receipt of a 338 Election Notice, take all
actions necessary and appropriate (including filing IRS From 8023 and other such
forms, returns, elections, schedules, attachments and other documents as may be
required (the "Forms")) to effect and preserve a timely Election.
(b) In the event the Buyers deliver a Section 338 Election Notice to
Parent, the Buyers shall, no later than thirty (30) days prior to the latest
date for the filing of the appropriate Form, deliver such Form to Parent for
Parent's approval, which approval shall not be unreasonably withheld.
SECTION 7.5. Post-Closing Insurance. Parent agrees to purchase, from AISLIC
(AIG) or such other carrier as is acceptable to Xxxxxx, extended reporting
period coverage for a period of not less than five years after the Subsequent
Closing Date covering only the Business (and naming Xxxxxx and its Affiliates as
additional insureds) for claims made after the Subsequent Closing Date for acts,
errors or omissions prior to the Subsequent Closing Date, with such coverage,
amounts and limits as set forth on Exhibit D (the "ERP Coverage"), provided,
however, that the Buyers shall pay or shall reimburse Parent for the first One
Million Dollars ($1,000,000) of premium costs.
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SECTION 7.6. Confidentiality. Each of the Buyers and the Selling Parties
hereby acknowledge that all non-public documents and information concerning
either the Buyers or the Selling Parties furnished to the other party or its
representatives in connection with the transactions contemplated by this
Agreement are subject to the terms and conditions of a confidentiality letter
dated November 7, 2000 by and between Parent and Xxxxxx, as amended from time to
time (the "Confidentiality Agreement"). The Confidentiality Agreement is
incorporated herein by this reference.
Effective upon, and only upon, the Subsequent Closing, the portion of
Confidentiality Agreement pertaining to the obligations of the Buyers to keep
confidential any non-public documents and information concerning the Company,
the Company Subsidiaries or the Business will terminate; provided, however, that
any and all other provisions shall remain in effect in accordance with the terms
of the Confidentiality Agreement. Notwithstanding the foregoing, after the
Subsequent Closing, Parent and Law International shall keep confidential, and
shall take reasonable steps to cause their representatives to keep confidential,
(a) any and all non-public information concerning the Buyers provided to the
Selling Parties or their representatives by the Buyers and (b) any and all
non-public information concerning the Company or the Company Subsidiaries. After
the Subsequent Closing, the Buyers shall keep confidential, and shall take
reasonable steps to cause their representatives to keep confidential, any and
all non-public information concerning Parent or Law International provided to
the Buyers by the Selling Parties or their representatives.
The parties hereto recognize and agree that in the event of a breach by a
party of this Section 7.6, money damages would not be an adequate remedy to the
injured party for such breach and, even if money damages were adequate, it would
be impossible to ascertain or measure with any degree of accuracy the damages
sustained by such injured party therefrom. Accordingly, if there should be a
breach or threatened breach by a party of the provisions of this section, the
injured party shall be entitled to an injunction restraining the breaching party
from any breach without showing or proving actual damage sustained by the
injured party.
SECTION 7.7. Post Closing Cooperation. After the Subsequent Closing Date,
Parent and Xxxxxx shall provide (or shall cause their respective subsidiaries to
provide, as applicable) each other and their respective designees (officers,
counsel, accountants, actuaries and other authorized representatives) with such
information with respect to the Company and the Company Subsidiaries as Parent
or Xxxxxx may reasonably request, and shall otherwise mutually cooperate so that
Parent, Xxxxxx and their respective subsidiaries can properly file their tax
returns and prepare their financial statements.
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ARTICLE 8
CONDITIONS TO CLOSING
SECTION 8.1. Conditions to Obligations of the Buyers. The obligation of the
Buyers to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver at or prior to the Initial Closing of the
following conditions:
(a) Each of the representations and warranties of the Selling Parties set
forth in Article 3 shall be true and correct in all material respects, provided,
however, that representations and warranties qualified by concepts of
materiality shall be true and correct in all respects, as of the Initial Closing
(except to the extent that any change therein is as a result of the transactions
contemplated hereby) with the same effect as though made on the date of the
Initial Closing.
(b) The Selling Parties shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Initial Closing.
(c) All necessary approvals of the holders of the outstanding preferred
stock of Parent shall have been obtained without condition, and shall be in full
force and effect.
(d) There shall be no Legal Proceedings under way or threatened by any
Governmental Authority (or determinations by any Governmental Authority) or by
any other Person challenging or in any manner seeking to restrict or prohibit
the sale of the Shares contemplated hereby or the consummation of the Initial
Closing or the transactions contemplated hereby, or to impose conditions that
would be reasonably likely to have a Company Material Adverse Effect.
(e) The Consolidated Net Equity shall be no less than the sum of (i) Twenty
Million Dollars ($20,000,000) and (ii) any Debt Prepayment Amount.
(f) Since the date hereof, there shall not have been any event, occurrence,
development or state of circumstances or facts or change in the Company, the
Company Subsidiaries or the Business that has had or that may be reasonably
expected to have, either alone or together with all such events, occurrences,
developments, states of circumstances or facts or changes, a Company Material
Adverse Effect.
(g) The Buyers shall have received the opinion of Long Xxxxxxxx & Xxxxxx
LLP, the Parent's United States counsel, dated as of the Initial Closing Date,
substantially in the form of Exhibit E hereto.
(h) The Buyers shall have received a certificate dated as of the date of
the Initial Closing and signed on behalf of Company by the chief executive
officer and chief financial officer of Parent, to the effect that the conditions
to the Buyers' obligations set forth in Sections 8.1(a), (b), (c), (d), (e), (f)
and (r) have been satisfied.
38
(i) Parent and Law International shall have executed and delivered the
Escrow Agreement to the Buyers.
(j) The Buyers shall have received certified copies of the charter
documents of each of the Selling Parties, Xxxx UK, Xxxx Petermuller & Partners
(Middle East) Ltd., Xxxx Petermuller & Partners (Europe) Ltd., Xxxx Overseas
(Jersey) Ltd. and Xxxx Africa.
(l) The Buyers shall have received certified copies of each of the Selling
Parties' resolutions of their respective board of directors, in form reasonably
satisfactory to the Buyers, approving the execution and delivery of the
Agreement and the transactions contemplated hereby (including the transfer of
the Shares).
(m) The Buyers shall have received the resignations required to be
delivered pursuant to Section 5.8.
(n) The Buyers shall have received evidence that any and all Share
Encumbrances on any of the Shares and any Liens on any of the assets of the
Company or any of the Company Subsidiaries (other than Permitted Liens) have
been released as of the Initial Closing Date.
(o) The Buyers shall have received documentation from the holders of the
Selling Parties' Debt evidencing the Debt Prepayment Amount, no later than two
(2) Business Days prior to the Initial Closing.
(p) The Buyers shall have received certified copies of the joint consent of
the Preferred Directors of Parent in a form reasonably satisfactory to the
Buyers, approving execution and delivery of the Agreement and the transactions
contemplated hereby (including the transfer of the Shares).
(q) The Buyers shall have received, in a form reasonably satisfactory to
the Buyers, confirmation from the applicable insurance carrier that (1) the ERP
Coverage has been bound, (2) the premium has been paid in full and (3) the
provisions of clause (ii) of Section 6.5 are accurate.
(r) Parent shall have caused (i) the preference shares of Law Companies
Group, Ltd. (Jersey) to be transferred to Xxxx Holdings, Ltd., (ii) ARCUS XXXX
(Proprietary) Limited to acquire all outstanding "A" ordinary shares of HKS-Law
Xxxx Share Trust (PTY) Ltd. (South Africa) from the holders thereof and (iii)
the Company Subsidiaries to make payments aggregating approximately $340,000 to
certain employees participating in Parent's stock option plan who are entitled
to such payments as a result of the consummation of the transactions
contemplated hereby.
(s) The form and substance of all certificates, instruments, opinions and
other documents delivered to the Buyers under this Agreement shall be
satisfactory in all reasonable respects to the Buyers and their counsel.
39
SECTION 8.2. Conditions to Obligation of the Selling Parties. The
obligations of the Selling Parties to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction or waiver at or prior to
the Initial Closing of the following conditions:
(a) Each of the representations and warranties of the Buyers set forth in
Article 4 shall be true and correct in all material respects, provided, however
that representations and warranties qualified by concepts of materiality shall
be true and correct in all respects, as of the Initial Closing (except to the
extent that any change therein is as a result of the transactions contemplated
hereby) with the same effect as though made on the date of the Initial Closing.
(b) The Buyers shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Initial Closing.
(c) [Reserved]
(d) There shall be no Legal Proceedings under way or threatened by any
Governmental Authority (or determinations by any Governmental Authority) or by
any other Person challenging or in any manner seeking to restrict or prohibit
the sale of the Shares contemplated hereby or the consummation of the Closing or
the transactions contemplated hereby, or to impose conditions that would be
reasonably likely to have a Company Material Adverse Effect.
(e) The Selling Parties shall have received the opinion of Xxxxxx, Xxxx &
Xxxxxxxx LLP, Xxxxxx' U.S. counsel, dated as of the Initial Closing Date,
substantially in the form of Exhibit F hereto.
(f) The Selling Parties shall have received a certificate dated as of the
date of the Initial Closing and signed on behalf of Xxxxxx by its chief
executive officer and chief financial officer, to the effect that the conditions
to the Selling Parties' obligations set forth in Sections 8.2(a) and (b) have
been satisfied.
(g) The Buyers shall have executed and delivered the Escrow Agreement to
the Selling Parties.
(h) The arrangements for the substitution of Xxxxxx for Parent with respect
to the guarantees and indemnities referred to in Section 6.6(ii) shall be
reasonably satisfactory to the Selling Parties.
(i) The Selling Parties shall have received certified copies of each of the
Buyers' charter documents and resolutions of their respective board of
directors, in form reasonably satisfactory to the Selling Parties, approving the
execution and delivery of the Agreement and the transactions contemplated
hereby.
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ARTICLE 9
INDEMNIFICATION
SECTION 9.1 Agreement to Indemnify.
(a) The Buyers and their respective Affiliates (collectively, the "Buyer
Indemnitees") shall each be indemnified and held harmless to the extent set
forth in this Article 9 by Parent in respect of any and all Losses incurred by
any Buyer Indemnitee as a result of, relating to or arising from any of the
following:
(1) any inaccuracy or misrepresentation in or breach of any representation
or warranty made in this Agreement or in any agreements which are exhibits to
this Agreement by the Selling Parties at any time, whether or not Buyer's
Indemnitees relied thereon or had knowledge thereof; provided, however, that for
the purposes of determining whether there has been a Loss or the amount of any
such Loss suffered by a Buyer Indemnitee under this Section 9.1(a)(1), those
representations and warranties of the Selling Parties qualified by a materiality
standard shall be deemed not to include such materiality qualifiers;
(2) any liabilities owed by the Company or any Company Subsidiary to any of
their respective shareholders, or any Affiliate of any such shareholder;
(3) the business, operations or assets of the Company and the Company
Subsidiaries or any state of facts, activity, incident, circumstance or
condition relating, existing or occurring at or prior to the Subsequent Closing
Date, including, but not limited to, all Taxes for which the Company or any
Company Subsidiary is or could be held liable with respect to (i) any taxable
period ending on or prior to the Subsequent Closing Date, and (ii) any taxable
period that includes and ends after the Subsequent Closing Date (an "Overlap
Period") in an amount equal to the liability for Taxes that would have resulted
had the Overlap Period ended at the close of business on the Subsequent Closing
Date (utilizing, if applicable, the actual tax rate imposed on a particular
category of income by the applicable taxing jurisdiction); provided, however,
that notwithstanding the foregoing, there shall be no right of indemnification
under this Section 9.1(a)(3) with respect to Losses relating to items or matters
that are (i) disclosed in the Disclosure Letter or (ii) disclosed and adequately
reserved against in the Financial Statements, but in each case only to the
extent of the dollar amount so disclosed or reserved, as the case may be; and
(4) any liability owed as a result of the transactions contemplated by
Sections 8.1(r)(ii) and (iii).
It is the mutual understanding of the Buyers and the Selling Parties that
the indemnification obligations of the Selling Parties under each of the
subsections (1), (2), (3) and (4) of this Section 9.1(a) are separate sources of
obligation under this Agreement, and the failure of a Loss to be indemnifiable,
in whole or in part, under one of such subsections does not exclude such Loss
from qualifying as indemnifiable under another subsection.
41
(b) To the extent that the Losses giving rise to an indemnification
obligation of Parent are of the type covered by: (i) applicable insurance
policies of Parent or its Affiliates covering the Business; (ii) the ERP
Coverage; or (iii) any excess ERP coverage purchased by the Buyers or their
Affiliates (hereinafter collectively the "Applicable Insurance"), then the Buyer
Indemnitees shall, except as provided in the second sentence of this Section
9.1(b), first submit a claim for such Losses to the Applicable Insurance carrier
before seeking indemnification from Parent, and Parent shall cooperate with the
Buyer Indemnitees in the submission and resolution of such claim.
Notwithstanding the foregoing or any other provision of this Agreement: (i) the
Buyer Indemnitees have agreed in Section 6.5 to not to submit any claim to Lex,
and therefore the Buyer Indemnitees agree not to seek indemnification from
Parent to the extent any Loss would otherwise have been covered by Lex; and (ii)
the Buyer Indemnitees also agree that their exclusive remedy for professional
liability errors and omissions Losses shall be to submit a claim for such Losses
under the Applicable Insurance rather than seeking indemnification from Parent
therefor.
(c) Notwithstanding the foregoing, Parent shall not be obligated to
indemnify a Buyer Indemnitee under this Section 9.1 with respect to any
individual Loss unless and until (i) any such individual Loss exceeds Fifteen
Thousand Dollars ($15,000) (the entire amount of such Loss, a "Qualified Loss")
and (ii) the aggregate of all Qualified Losses suffered by all Buyer Indemnitees
hereunder exceeds Five Hundred Thousand Dollars ($500,000) (the "Deductible
Amount"), whereupon any Qualified Losses in excess of the Deductible Amount
shall become due and payable pursuant to the terms of this Article 9, provided,
however, that the foregoing limitations shall not apply with respect to any
Losses under Section 9.1(a)(4).
(d) Notwithstanding any other provision of this Agreement, in all events,
the maximum obligation of Parent for indemnification pursuant to Section
9.1(a)(1) or otherwise under this Agreement (the "Maximum R&W Indemnification")
shall be the Escrow Amount.
(e) The Selling Parties and their respective Affiliates (collectively, the
"Seller Indemnitees") shall each be indemnified and held harmless to the extent
set forth in this Article 9 by Xxxxxx in respect of any and all Losses incurred
by any Seller Indemnitee as a result of (i) any inaccuracy or misrepresentation
in or breach of any representation or warranty made by the Buyers in this
Agreement or in agreements which are exhibits to this Agreement, or (ii) the
business, operations or assets of the Company and the Company Subsidiaries or
any state of facts, activity, incident, circumstances or condition relating,
existing or occurring after the Subsequent Closing Date.
(f) The indemnification procedures of Article 9 shall be the exclusive
remedy of the parties hereto for Losses resulting from any inaccuracies or
misrepresentations in or breach of any representation or warranty made in this
Agreement or in any agreements which are exhibits to this Agreement.
(g) Notwithstanding the foregoing, none of the provisions pertaining to the
Deductible Amount, the Maximum R&W Indemnification or the exclusivity of
remedies set forth in Sections 9.1(b), (c), (d), (e) and (f), respectively,
shall apply to the indemnification obligations of Parent to the extent that any
inaccuracy or misrepresentation in or breach of any representation or warranty
or any other indemnifiable condition under this Agreement results from fraud,
gross negligence or willful misconduct in the making of any such representation
or warranty.
42
SECTION 9.2 Survival of Representations, Warranties and Covenants.
(a) All representations and warranties of each Indemnifying Party contained
herein and all claims of any Buyer Indemnitee or Seller Indemnitee in respect of
any breach of any representation or warranty of any Indemnifying Party contained
in this Agreement shall survive the Closing and shall expire on the third
anniversary of the Subsequent Closing Date, except that each of the following
representations, warranties, covenants, agreements and obligations shall survive
the Subsequent Closing Date and shall expire thirty (30) days after the
expiration of all applicable statutes of limitations, including extensions
thereof:
(1) the representations and warranties set forth in Sections 3.1, 3.2, 3.3
and 3.17 of this Agreement, and all claims of any Buyer Indemnitee in respect of
any breach of or inaccuracy or misrepresentation in any such representation or
warranty against Parent as Indemnifying Party;
(2) all claims of any Buyer Indemnitee in respect of any inaccuracy or
misrepresentation in or the breach of any representation or warranty of any of
the Selling Parties in this Agreement arising out of fraud, gross negligence or
willful misconduct in the making of any such representation or warranty;
(3) the representations and warranties set forth in Sections 4.1 and 4.2 of
this Agreement and all claims of any Seller Indemnitee in respect of any breach
of or inaccuracy or misrepresentation in any such representation or warranty
against any of the Buyers as the Indemnifying Parties; and
(4) all claims of any Seller Indemnitee in respect of any inaccuracy or
misrepresentation in or breach of any representation, warranty, covenant,
agreement or obligation made by Buyer in this Agreement arising out of fraud,
gross negligence or willful misconduct in the making of any such representation
or warranty.
(b) The covenants, agreements and obligations contained in this Agreement
or in agreements which are exhibits to this Agreement attached hereto which by
their terms shall be performed after the Closings shall survive the Closings and
not expire unless otherwise provided in this Agreement or the applicable
ancillary agreement, including, without limitation, in this Section 9.2;
provided, however, that obligations of the Indemnifying Parties set forth in
this Article 9 shall be limited to the obligations to provide indemnity only in
respect of claims for indemnification for which written notice as provided in
Section 9.3 has been given by a Buyer Indemnitee or Seller Indemnitee prior to
expiration, as provided in Section 9.2(a) of the representations and warranties
or any other provision of this Agreement upon which such claims for
indemnification are based.
43
(c) Notwithstanding anything herein to the contrary, indemnification for
claims for which written notice as provided in Section 9.3 has been timely
given, in good faith and on a reasonable basis prior to the expiration of the
representation or warranty or any other indemnifiable condition upon which such
claim is based as provided herein shall not expire, and claims for
indemnification may be pursued, until the final resolution of such claim in
accordance with Sections 9.3 and 11.5.
(d) The right to indemnification or other remedy based on the
representations and warranties herein 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 Closings, with respect to the accuracy or inaccuracy of or
compliance with, any such representation or warranty. All representations and
warranties of each party set forth in this Agreement shall be deemed to have
been made again by such party at and as of the Closing Date.
SECTION 9.3 Notice and Procedure. All claims for indemnification by any
Indemnified Party against an Indemnifying Party under this Article 9 shall be
asserted and resolved as follows:
(a)(i) If any claim or demand for which an Indemnifying Party would be
liable for Losses to an Indemnified Party is alleged or asserted by a Person
other than any Buyer Indemnitee or any Seller Indemnitee (a "Third Party
Claim"), the Indemnified Party shall deliver a Claim Notice with reasonable
promptness to the Indemnifying Party, together with a copy of all papers served,
if any, and specifying the nature of and alleged basis for the Third Party Claim
and, to the extent then feasible, the alleged amount or the estimated amount of
the Third Party Claim. In the event of a claim which may result in payment under
the Applicable Insurance, if any, the Indemnified Party shall deliver the
aforementioned information and a proof of loss statement to the Applicable
Insurance carrier(s). If the Indemnified Party fails to deliver the Claim Notice
to the Indemnifying Party within thirty (30) days after the Indemnified Party
receives notice of such Third Party Claim, the Indemnifying Party will not be
obligated to indemnify the Indemnified Party with respect to such Third Party
Claim, if and only to the extent that the Indemnifying Party's ability to defend
the Third Party Claim has been irreparably prejudiced by such failure. The
Indemnifying Party will notify the Indemnified Party within fifteen (15) days
after receipt of the Claim Notice (the "Notice Period") whether the Indemnifying
Party intends, at the sole cost and expense of the Indemnifying Party, to defend
the Indemnified Party against the Third Party Claim.
(ii) If the Indemnifying Party notifies the Indemnified Party within the
Notice Period that the Indemnifying Party intends to defend the Indemnified
Party against the Third Party Claim, then the Indemnifying Party will have the
right to defend, at its sole cost and expense, the Third Party Claim by all
appropriate proceedings, which proceedings will be diligently prosecuted by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party (with the consent of the Indemnified Party). The Indemnifying
Party will have full control of such defense and proceedings; provided, however,
that the Indemnified Party may file until the expiration of the Notice Period,
at the sole cost and expense of the Indemnified Party, any motion, answer or
other pleading that the Indemnified Party may deem necessary or appropriate to
protect its interests and that is not irrevocably prejudicial to the
Indemnifying Party (it being understood and agreed that, except as provided in
Section 9.3(a)(iii), if an Indemnified Party takes any such action that is
irrevocably prejudicial and conclusively causes a final adjudication that is
materially adverse to the Indemnifying Party, the Indemnifying Party will be
relieved of its obligations hereunder with respect to that portion of the Third
Party Claim prejudiced by the Indemnified Party's action); provided, further,
however, that, if requested by the Indemnifying Party, the Indemnified Party
shall cooperate, at the sole cost and expense of the Indemnifying Party, with
the Indemnifying Party and its counsel in contesting any Third Party Claim that
the Indemnifying Party elects to contest or, if appropriate in the judgment of
the Indemnified Party and related to the Third Party Claim, in making any
counterclaim or cross-claim against any Person (other than the Indemnified
Party).
44
The Indemnified Party may participate in, but not control, any defense or
settlement of any Third Party Claim assumed by the Indemnifying Party pursuant
to this Section 9.3(a)(ii) and, except as provided in the preceding sentence,
the Indemnified Party will bear its own costs and expenses with respect to such
participation. Notwithstanding the foregoing, the Indemnifying Party may not
assume the defense of the Third Party Claim if (1) the Persons against whom the
claim is made, or any impleaded Persons, include both the Indemnifying Party and
any Indemnified Party, and (2) representation of both such Persons by the same
counsel would be inappropriate due to actual or potential differing interests
between them, in which case any Indemnified Party shall have the right to defend
the Third Party Claim and to employ counsel at the expense of the Indemnifying
Party.
(iii) If the Indemnifying Party fails to notify the Indemnified Party
within the Notice Period that the Indemnifying Party intends to defend the
Indemnified Party against the Third Party Claim, or if the Indemnifying Party
gives such notice but fails to diligently prosecute or settle the Third Party
Claim, then the Indemnified Party will have the right (but not the obligation)
to defend, at the sole cost and expense of the Indemnifying Party, the Third
Party Claim by all appropriate proceedings, which proceedings will be diligently
prosecuted by the Indemnified Party to a final conclusion or settled at the
discretion of the Indemnified Party. The Indemnified Party will have full
control of such defense and proceedings, including any compromise or settlement
thereof; provided, however, that, if requested by the Indemnified Party, the
Indemnifying Party shall cooperate, at the sole cost and expense of the
Indemnifying Party, with the Indemnified Party and its counsel in contesting the
Third Party Claim which the Indemnified Party is contesting, or, if appropriate
and related to the Third Party Claim in question, in making any counterclaim or
cross claim against any Person (other then the Indemnifying Party).
45
(iv) Notwithstanding Section 9.3(a)(iii), if the Indemnifying Party
notifies the Indemnified Party within the Notice Period that the Indemnifying
Party disputes its obligation to indemnify the Indemnified Party against the
Third Party Claim, and if such dispute is resolved pursuant to Section 9.3(c) in
favor of the Indemnifying Party, the Indemnifying Party will not be required to
bear the costs and expenses of the Indemnified Party's defense pursuant to
Section 9.3(a)(iii) or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party will reimburse the
Indemnifying Party in full for all such costs and expenses. The Indemnifying
Party may participate in, but not control, any defense or settlement controlled
by the Indemnified Party pursuant to Section 9.3(a)(iii), but the Indemnifying
Party will bear its own costs and expenses with respect thereto if such
participation is not at the request of the Indemnified Party.
(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party that is not a Third Party Claim, the Indemnified Party shall
deliver an Indemnity Notice with reasonable promptness to the Indemnifying Party
specifying the nature of and specific basis for the claim and, to the extent
then feasible, the amount or the estimated amount of the claim. The failure by
any Indemnified Party to give timely notice referred to in the preceding
sentence shall not impair such Person's rights hereunder except to the extent
that an Indemnifying Party demonstrates that it has been irreparably prejudiced
thereby. If the Indemnifying Party does not notify the Indemnified Party within
30 days following its receipt of the Indemnity Notice that the Indemnifying
Party disputes its obligation to indemnify the Indemnified Party hereunder, the
claim will be conclusively deemed a liability of the Indemnifying Party
hereunder.
(c) If the Indemnifying Party timely disputes its liability with respect to
a claim described in a Claim Notice or an Indemnity Notice, the Indemnifying
Party and the Indemnified Party shall proceed promptly and in good faith to
negotiate a resolution of such dispute within 60 days following receipt of the
Claim Notice or Indemnity Notice and, if such dispute is not resolved through
negotiations during such 60-day period, it shall be resolved pursuant to the
provisions of Section 11.5 of this Agreement.
SECTION 9.4 Treatment of Indemnity Payments. All indemnity payments made
under this Agreement shall be treated by the parties for all Tax purposes as
adjustments to the Purchase Price.
ARTICLE 10
TERMINATION
SECTION 10.1. Grounds for Termination. This Agreement may be terminated at
any time prior to the Initial Closing:
(a) by mutual written agreement of all of the parties hereto;
(b) by either the Buyers or the Selling Parties at any time by written
notice if there shall have been (1) any inaccuracies or misrepresentations in or
breaches of the representations or warranties made in this Agreement by the
other party hereto that are material, taken as a whole, or (2) a failure by the
other party hereto to perform and satisfy in any material respect and in a
timely fashion any of its obligations under this Agreement required to be
performed and satisfied on or prior to the Initial Closing Date, or a failure by
such party to perform and satisfy any other obligations under this Agreement;
provided, however, that a termination pursuant to this Section 10.1(b) shall
become effective (i) fifteen (15) days after notice is given with respect to a
misrepresentation or breach that is not capable of being cured on or prior to
the Initial Closing Date, or (ii) immediately prior to the Initial Closing with
respect to a misrepresentation or breach that is capable of being cured, but is
not cured, on or immediately prior to the Initial Closing Date;
46
(c) by either the Buyers or the Selling Parties if any Applicable Law shall
hereafter be enacted or become applicable that makes the transactions
contemplated hereby or the consummation of the Initial Closing or the Subsequent
Closing illegal or otherwise prohibited, or if any judgment, injunction, order
or decree enjoining any party hereto from consummating the transactions
contemplated hereby is entered, and such judgment, injunction, order or decree
shall become final and nonappealable; and
(d) by either the Buyers or the Selling Parties, if the Initial Closing
shall not have been consummated by May 11, 2001 (the "Outside Date"); provided,
however, that neither the Buyers or the Selling Parties may terminate this
Agreement pursuant to this Section 10.1(d) if the Initial Closing shall not have
been consummated within such time period by reason of the failure of such party,
or any of its Affiliates, to perform in all material respects any of its or
their respective covenants or agreements contained in this Agreement.
SECTION 10.2. Effect of Termination. If this Agreement is terminated as
permitted by Section 10.1, all liability or obligations of the parties under
this Agreement shall terminate and no party shall have any liability or
obligation to any other party under this Agreement other than (a) pursuant to
the provisions of Sections 7.6, 11.3, 11.5 and this Section 10.2, or (b) by
reason of a breach of any of the provisions hereof.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
47
if to the Buyers, to: Xxxxxx Engineering Group Inc.
0000 X. Xxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
(for personal delivery and overnight courier)
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000-0000
(for United States mail)
Attn: President
Facsimile: (000) 000-0000
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
if to the Selling Parties, to: LawGibb Group, Inc.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to: Long Xxxxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: F.T. Xxxxx, Xx., Esq.
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter
specify by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section and
the appropriate facsimile confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 11.1.
SECTION 11.2. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent occurrence. No failure or delay by a party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
48
SECTION 11.3. Expenses. Except as otherwise provided for herein, all costs
and expenses incurred in connection with this Agreement and in closing and
carrying out the transactions contemplated hereby shall be paid by the party
incurring such cost or expense. Without limiting the generality of the
immediately preceding sentence, (A) the fees, costs and expenses of the
accountants, attorneys and other financial advisors to the Selling Parties in
connection with the preparation or negotiation of, or the consummation of the
transactions contemplated by, this Agreement shall be borne by Parent and none
of such fees, costs or expenses shall be paid by the Company or any of the
Company Subsidiaries and (B) the Buyers shall pay all stamp, transfer and other
similar taxes or fees arising from the transfer of the Shares. This Section 11.3
shall survive the termination of this Agreement.
SECTION 11.4. Entire Agreement/No Third Party Beneficiaries. This Agreement
(including the Disclosure Letter, schedules and exhibits and referred to herein
which are hereby incorporated by reference and the other agreements executed
simultaneously herewith) constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, expressed or implied,
between the parties with respect to the subject matter of this Agreement. Except
as specifically provided in Article 9 with respect to indemnification provided
to the Indemnitees identified therein, no provision of this Agreement shall
create any third party beneficiary rights in any Person, including any employee
or former employee of the Selling Parties, the Buyers or any Affiliate thereof
(including any beneficiary or dependent thereof).
SECTION 11.5. Arbitration.
(a) Any dispute, controversy or difference between or among the parties
(such parties being referred to individually as a "Disputing Party," and,
together, as the "Disputing Parties") arising out of this Agreement or the
transactions contemplated hereby, including without limitation any dispute
between an Indemnitee and any Indemnifying Party under Article 9, which the
parties are unable to resolve themselves shall be submitted to and resolved by
arbitration in accordance with the rules of the American Arbitration Association
(the "AAA") as herein provided. Any such arbitration shall be conducted by a
single arbitrator who (i) shall be qualified as an arbitrator under the
standards of the AAA and who shall have been engaged in the private practice of
law for not less than fifteen (15) years immediately prior to appointment as
arbitrator pursuant to this Agreement, (ii) is, in any such case, not affiliated
with any party in interest to such arbitration, and (iii) who has substantial
professional experience with regard to corporate legal matters. If the Disputing
Parties cannot agree on an appropriate arbitrator within thirty (30) days of a
request for arbitration by a Disputing Party, the AAA shall designate an
appropriate arbitrator.
49
(b) The arbitrator shall consider the dispute at issue in Washington, D.C.
or another location in the United States acceptable to the parties, at a
mutually agreed upon time within one hundred twenty (120) days (or such other
period as may be acceptable to the Disputing Parties or as directed by the
arbitrator) of the designation of the arbitrator. The arbitration proceeding
shall be held in accordance with the rules for commercial arbitration of the AAA
in effect on the date of the initial request by the Disputing Party that gave
rise to the dispute to be arbitrated (as such rules are modified by the terms of
this Agreement or may be further modified by mutual agreement of the Disputing
Parties) and shall include an opportunity for the parties to conduct discovery
in advance of the proceeding using all of the authorized methods of discovery
allowed by the Federal Rules of Civil Procedure in effect on the date of the
initial request by the Disputing Party. Notwithstanding the foregoing, the
Disputing Parties shall agree that they will attempt, and they intend that they
and the arbitrator should use commercially reasonable efforts in that attempt,
to conclude the arbitration proceeding and have a final decision from the
arbitrator within one hundred twenty (120) days from the date of selection of
the arbitrator; provided, however, that the arbitrator shall be entitled to
extend such one hundred twenty (120) day period for up to one additional one
hundred twenty (120) day period. The arbitrator shall be bound to follow the
laws of the State of Delaware, decisional and statutory, in reaching any
decision and making any award and shall deliver a written award, including
written findings of fact and conclusions of law, with respect to the dispute to
each of the parties, who shall promptly act in accordance therewith. Each
Disputing Party to such arbitration agrees that any award of the arbitrator
shall be final, conclusive and binding and that they will not contest any action
by any other party thereto in accordance with an award of the arbitrator;
provided, however that any party may appeal based on statutory grounds. It is
specifically understood and agreed that any party may enforce any award rendered
pursuant to the arbitration provisions of this Section 11.5 by bringing suit in
any court of competent jurisdiction.
(c) All costs and expenses attributable to the arbitrator shall be
allocated among the parties to the arbitration in such manner as the arbitrator
shall determine to be appropriate under the circumstances.
SECTION 11.6. Belgium Assets. It is the mutual understanding of the Buyers
and the Selling Parties that the Selling Parties are not selling, transferring
or assigning any of those assets or properties used in connection with the
unincorporated division of Parent's subsidiary Law Engineering & Environmental
Services, Inc. referred to as the "Environmental Policy Centre" to the Buyers or
any of their Affiliates pursuant to this Agreement or any of the transactions
contemplated hereunder.
SECTION 11.7. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the prior written consent of the other parties hereto.
SECTION 11.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws and not the conflicts of laws
provisions of the State of Delaware.
SECTION 11.9. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
50
SECTION 11.10. Severability. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated by this Agreement are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
SECTION 11.11. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 11.12. Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against either
party. Whenever required by the context, any gender shall include any other
gender, the singular shall include the plural and the plural shall include the
singular. Whenever the word "including" is used in this Agreement, it shall be
deemed to mean "including, without limitation," "including, but not limited to"
or other words of similar import such that the items following the word
"including" shall be deemed to be a list by way of illustration only and shall
not be deemed to be an exhaustive list of applicable items in the context
thereof. All references to dollars refer to U.S. Dollars.
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
LAWGIBB GROUP, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------
Name: Xxxxx X. Xxxxx
Title: Chairman, President and CEO
LAW INTERNATIONAL, INC
By: /s/ Xxxxx X. Xxxxx
----------------------
Name: Xxxxx X. Xxxxx
Title: President
XXXX INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------
Name: Xxxxx X. Xxxxx
Title: President
[Signature Page for Stock Purchase Agreement]
XXXXXX ENGINEERING GROUP INC.
By: /s/ Xxxx X. Xxxxxxx, Xx.
----------------------------
Xxxx X. Xxxxxxx, Xx.
Senior Vice President, Finance and
Administration
XXXXXX ENGINEERING, INC.
By: /s/ Xxxx X. Xxxxxxx, Xx.
----------------------------
Xxxx X. Xxxxxxx, Xx.
Director and Treasurer
XXXXXX ENGINEERING UK LIMITED
By: /s/ Xxxx X. Xxxxxxx, Xx.
----------------------------
Xxxx X. Xxxxxxx, Xx.
Director and Treasurer
XXXXXX ENGINEERING FRANCE SAS
By: /s/ Xxxx X. Xxxxxxx, Xx.
----------------------------
Xxxx X. Xxxxxxx, Xx.
Attorney in Fact pursuant to a Power
of Attorney dated March 27, 2001
