Exhibit 4.3
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated December 22, 2000 by and among TRC Companies,
Inc., a Delaware corporation ("Parent"), TRC Environmental Corporation, a
Connecticut corporation (the "Buyer" and collectively with Parent and its
affiliates, a "TRC Entity" or the "TRC Entities"), and Xxxxxxx X. Xxxxxxx
("Xxxxxxx") and the R&J Xxxxxxx Family Limited Partnership, a New Jersey limited
partnership (the "LP", and collectively with Xxxxxxx, the "Seller").
R E C I T A L S
The Seller owns all of the outstanding voting capital stock of Omni
Environmental Corporation, a New Jersey corporation (the "Company").
The Buyer will purchase from the Seller and the Seller will sell or cause to be
sold to the Buyer all of the issued and outstanding shares of voting capital
stock of the Company (the "Company Shares") in exchange for the consideration
set forth in Section 2 below.
NOW, THEREFORE, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties and covenants
herein contained, the Parties agree as follows:
1. THE PURCHASE AND SALE
On and subject to the terms and conditions of this Agreement, the Buyer
agrees to purchase from the Seller and the Seller agrees to sell to the Buyer
all of the Company Shares for the consideration specified in Section 2 below.
2. THE CLOSING; PAYMENT
2.1 THE CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of Seller in Princeton, New Jersey commencing at 10:00
A.M. local time on December 22, 2000 (the "Closing Date") to be deemed effective
as of November 1, 2000 (the "Effective Date"). Closing may occur remotely by
facsimile transmission.
2.2 ACTIONS AT THE CLOSING. At the Closing, (i) the Seller will deliver to
the Buyer the various certificates, instruments and documents required
hereunder, (ii) the Buyer will deliver to the Seller the various certificates,
instruments and documents required hereunder, (iii) the Seller will deliver to
Buyer certificates evidencing all of the Company Shares owned endorsed in blank
or accompanied by duly executed assignment documents, and (iv) the Buyer will
deliver to the Seller the consideration set forth below.
2.3 PURCHASE PRICE. (a) INITIAL PAYMENT. In exchange for the Company
Shares, Buyer shall deliver to Seller (i) $200,000 by check; (ii) a three-year
Promissory Note in the principal amount of $400,000 in the form attached hereto
as Exhibit 2.3(a); as well as (iii) certificates for shares of the Parent common
stock (the "TRC Shares") worth $600,000, $575,000 of which to be payable to
Seller and $25,000 of which to be allocated to Xxxxx Xxxxxxxx. The number of TRC
Shares to be delivered shall be calculated using a per share value equal to the
average closing price of TRC common stock on the New York Stock Exchange over
the 30-day period ending December 20, 2000. The cash, Note and TRC Shares shall
be delivered within five (5) days of the Closing.
(b) PURCHASE PRICE ADJUSTMENT. The cash portion of the first Earnout
Payment as defined below shall be adjusted upwards or downwards by $1.00 for
each $1.00 by which the assets of the Company, less its liabilities (the "Net
Worth"), determined by generally accepted accounting principles, consistently
applied, as of October 31, 2000 is more than or less than $344,248,
respectively.
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(c) EARNOUT PAYMENT. (i) As an addition to the Purchase Price,
within 90 days after the end of each of the three fiscal years following the
Effective Date, with the first fiscal year commencing November 1, 2000, Buyer
shall pay Seller, which payment shall be unconditionally guaranteed by Parent,
amounts in cash equal to the sum of the following:
(A) 30% of the Net Service Revenue for the Company (NSR) greater
than $1,500,000 up to $2,100,000;
(B) 60% of NSR (excluding the portion of NSR included in
subparagraph (C) below) above $2,100,000
(C) 42.5% of NSR over $2,100,000 for work subcontracted to
Company from a TRC Entity (excluding Company); and
(D) 17.5% of NSR for work brought to a TRC Entity (excluding
Company) through the direct, material and substantial effort of Company, and
(ii) As an addition to the Purchase Price, Buyer shall pay Seller,
which payment shall be unconditionally guaranteed by Parent, within 90 days
after the close of the three fiscal years ending October 31, 2003, October 31,
2004 and October 31, 2005, the sum of $10,000 for each two percent (2%)
(adjusted proportionately if less than 2%) of the percentage cumulative growth
in NSR for the three fiscal years commencing November 1, 2000 and ending October
31, 2003 over Base NSR, up to a maximum annual payment of $100,000 and aggregate
payment of $300,000. (e.g. Base NSR equals $2M and FYE 10/31/03 NSR equals $3M.
50% growth over Base NSR results in a $250,000 aggregate payment.
(iii) "NSR" shall be, for each fiscal year in question, gross revenue
of Company less fees paid to subcontractors and other directs costs directly
allocable to the production of revenue . For purposes of determining NSR, Parent
shall deliver to Seller within 45 days of the end of each fiscal year, and for
each fiscal year, (i) consolidated (and nonconsolidated for Company) statements
of income prepared in accordance with GAAP, consistently applied, (ii) itemized
breakdown of revenue by Company customer, (iii) itemized breakdown of revenue of
all TRC Entities (other than Company) from any Company customer (determined from
the Company's database), (iv) itemized breakdown by customer of work
subcontracted to Company by a TRC Entity, (v) itemized breakdown of professional
fees paid to subcontractors referenced to particular revenue, and (vi) itemized
breakdown by customer of revenue of all TRC Entities from work obtained by the
direct, material and substantial effort of Company. The statements and
information provided herein shall be certified to Seller as true and complete by
the Chief Financial Officer of Parent. Seller shall have 45 days following
receipt of the statements required above to notify Buyer of any dispute of any
item contained therein, which notice shall set forth the basis for such dispute.
During such time period, Seller and its authorized representatives shall have
full access at all reasonable times to the books and records of the TRC Entities
for purposes of reviewing and resolving any disputes concerning the calculation
of the Earnout Payment. In the event that Seller notifies Buyer of a dispute ,
the undisputed portion of the Earnout Payment shall be paid to Seller on the due
date thereof. If Buyer and Seller are unable to resolve their dispute within 15
days after Seller's notice to Buyer, the dispute shall be submitted to binding
arbitration to a mutually agreeable independent accountant. The cost of the
arbitration shall be shared equally by the parties, provided, however, that the
prevailing party in the arbitration shall be reimbursed for all costs and
expanses incurred in resolving the dispute. The determination by the arbitrator
shall be final and binding and shall be deemed a final arbitration award that is
enforceable under the Federal Arbitration Act. "Base NSR" for purposes of
subparagraph (ii) shall be $1,900,000.
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(d) REGISTRATION. The TRC Shares deliverable hereunder will not be
registered and will bear a restrictive legend in substantially the following
form:
"The Stock represented by this Certificate has not been
registered under the Federal Securities Act of 1933, as amended,
and may not be assigned, transferred or otherwise disposed of
without an opinion of counsel satisfactory to the Company that an
exemption under such Act is available therefor or that an
applicable registration statement under such Act is effective
with respect thereto. In addition, the stock has not been
registered or qualified in accordance with the securities laws of
any state and transfer may be made only in compliance with such
laws."
(e) Registration Rights. If, within one (1) year after the Closing
Date, Parent files a registration statement under the Securities Act of 1933, as
amended, or any successor statute then in effect, covering a public offering in
excess of $7,500,000 by Parent or any stockholder of Parent of shares of the
common stock of Parent other than a registration statement solely in connection
with an employee benefit plan, Buyer shall first so notify Seller of Parent's
intent to file a registration statement. Within sixty (60) days after giving
such notice to Seller, Seller may, by written notice to Parent, request that
Seller's shares be included in such registration statement. In such case and
with the giving of Seller's notice, Buyer shall use its best efforts to include
such shares in the registration statement and related underwriting arrangements.
No such effort need be made, however, if, in the reasonable opinion of counsel
for Parent, the disposition of such shares is exempt from applicable
registration requirements at that time. If the offering by Parent is
underwritten, any shares disposed of pursuant to this provision will be
underwritten by the same underwriter or underwriters on the same basis as other
shares included in the offering. In the event the managing underwriter or
underwriters refuse to include all of the shares offered for disposition
hereunder, Parent may reasonably limit the number of shares which may be offered
by Seller hereunder. Seller shall cooperate with Parent in the preparation and
filing of any registration statement, and shall make the customary agreements,
representations, warranties and indemnifications to the underwriter(s) with
respect to any shares included in an underwriting hereunder.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Each Seller represents and warrants to Buyer as of the date hereof and of
the Closing as follows:
3.1 ORGANIZATION AND STANDING. Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power to carry on its business as
currently being conducted and to own, lease and operate its assets, and is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of any of its assets or the
nature of its business makes such qualification necessary. Company has
previously delivered to Buyer a true and complete list of the states in which it
conducts business or has offices. Company has delivered to Buyer correct and
complete copies of the Articles of Incorporation and By-laws of the Company as
amended to date. The minute books (containing the records of meetings of the
stockholders, the board of directors and any committees of the board of
directors), the stock certificate books, and the stock record books of the
Company are correct and complete. The Company is not in default under or in
violation of any provision of its Articles of Incorporation or By-laws.
3.2 DUE AUTHORIZATION. The execution, delivery and performance by Seller of
this Agreement and all of the other agreements, certificates and documents
delivered on or prior to the Closing Date in connection with the transactions
contemplated hereby (the "Ancillary Documents") to which he or it is or will be
a party, and the consummation by him or it of the transactions contemplated
hereby and thereby have been or will be duly authorized by all requisite
actions. Xxxxxxx is an adult individual and is competent to execute and deliver
this Agreement and the Ancillary Documents to which HE is or will be a party.
This Agreement and the Ancillary Documents to which Seller is or will be a party
have been or will be duly and validly executed and delivered by Seller and
constitute or will constitute valid and binding obligations of Seller,
enforceable in accordance with their respective terms.
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3.3 CONSENTS, APPROVALS, ETC. Except as set forth on Schedule 3.3, no
material consent, approval or authorization of, or waiver or exemption by, or
filing with, or permit from any governmental, public or self-regulatory body or
authority (collectively "Governmental Approvals") is required in connection with
the execution, delivery or performance by Seller of this Agreement or any of the
Ancillary Documents to which Seller is or will be a party or the consummation by
Seller of the transactions contemplated hereby or thereby. All Governmental
Approvals set forth on Schedule 3.3 will have been obtained or made prior to the
Closing.
3.4 NO VIOLATION. Except as set forth on Schedule 3.4, the execution,
delivery and performance by Seller of this Agreement and the Ancillary Documents
to which Seller is or will be a party and the consummation by Seller of the
transactions contemplated hereby and thereby will not, with or without the
giving of notice or the lapse of time, or both, (a) violate any judgment, order,
writ or decree of any court applicable to Seller or Company, (b) have any
material adverse effect on any of the permits referred to in Section 3.16, or
(c) result in the breach of or conflict with any material term, covenant,
condition or provision of, result in the modification or termination of,
constitute a default under, or result in the creation or imposition of any lien,
charge, or encumbrance ("Lien") upon any of the Company's assets pursuant to,
(i) the Articles of Incorporation or By-laws of Company or (ii) any material
contract, agreement, note, mortgage, indenture or other instrument to which
Seller or Company is a party or by which any of their respective assets or
properties is bound.
3.5 FINANCIAL STATEMENTS. Seller has delivered to Buyer true and complete
copies of the financial statements of Company as of and for the ten-month period
ended October 31, 2000 and for the years ended December 31, 1999, and December
31, 1998 (the "Financial Statements"). Except as set forth on Schedule 3.5, the
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and fairly present the
financial position of Company as of the dates of such statements and the results
of its operations and changes in financial position for the periods then ended.
Company has no material obligations, liabilities or commitments of any kind
whatsoever, accrued or unaccrued, contingent or absolute, other than
obligations, liabilities or commitments (i) which are fully reflected or fully
reserved against in Company's balance sheet as of October 31, 2000 or the
footnotes thereto, (ii) which are not required to be so reflected under
generally accepted accounting principles, or (iii) which were incurred in the
ordinary course of business since October 31, 2000.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since October 31, 2000, Company
has operated its business only in the ordinary course and there has not occurred
(i) any event which had or is reasonably likely to have a material adverse
effect on the business, financial condition, results of operations, assets,
liabilities or prospects of the business conducted by Company (a "Material
Adverse Effect"); (ii) any commitment or promise to enter into, amend or
terminate, or entry into, amendment or termination of, an employment,
consulting, severance, termination or indemnification agreement, policy, plan,
arrangement or practice, or (other than normal increases in the ordinary course
of business that are consistent with past practices and that, when taken in the
aggregate, have not resulted in a material increase in benefits or compensation
expense and other than as required under the terms of any agreement or plan in
effect on the date of this Agreement) any increase in the compensation payable
or to become payable to any employee of Company or any entry into or increase in
any bonus, insurance, pension or other employee benefit plan, payment, policy,
agreement, practice or arrangement made to, for or with any such employees;
(iii) except as set forth on Schedule 3.6 hereto, any entry into any commitment
or transaction material to Company (including, without limitation, any
borrowing, capital expenditure or sale of assets); (iv) any change in accounting
principles or methods; (v) any commencement or to Seller's knowledge threat of
any litigation or governmental investigation; (vi) any amendments or changes in
the Articles of Incorporation or By-laws of Company which could reasonably be
expected to have a Material Adverse Effect; or (vii) any taking of any action
referred to in Section 5.2, except as permitted or required thereby which could
reasonably be expected to have a Material Adverse Effect; (viii) any damage to
or destruction of any of the assets of the Company, whether or not covered by
insurance which could reasonably be expected to have a Material Adverse Effect;
or (ix) any dividend or distribution in respect of shares of capital stock of
Company or any redemption or repurchase of any shares.
3.7 LITIGATION. Except as set forth on Schedule 3.7, (i) there is no claim,
action, suit, proceeding, arbitration, investigation, hearing or notice of
hearing (collectively, "Litigation"), pending or to Seller's knowledge
threatened, by or before any court or governmental or administrative authority
or private arbitration tribunal, against Seller or Company which relates to or
affects the business of Company, any of Company's assets or the transactions
contemplated hereby; (ii) neither Company nor any officer, director or employee
of Company has been permanently
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or temporarily enjoined or barred by order, judgment or decree of any court or
other tribunal or any agency or self-regulatory body from engaging in or
continuing any conduct or practice in connection with the business of Company;
and (iii) there is not in existence any order, judgment or decree of or
agreement with any court or other tribunal or any agency or self-regulatory body
requiring Company or any officer, director or employee of Company to take any
action of any kind with respect to the business of Company or Company's assets
or to which Company or any officer, director or employee of Company is a party
or by which any of them is bound affecting the business of Company or Company's
assets.
3.8 PROPERTIES. Except as set forth on Schedule 3.8, Company has good and
marketable title to all owned property, and valid and enforceable leasehold
interests in all leased property. All assets of Company are reflected on the
balance sheet of Company as of October 31, 2000, except for assets acquired or
sold after October 31, 2000 in the ordinary course of business consistent with
past practices. None of the Company's assets is subject to any Liens, except for
(i) Liens disclosed on the balance sheet of Company as of October 31, 2000, (ii)
Liens for taxes not yet due and payable or being contested in good faith by
appropriate proceedings which have been fully reserved against on such balance
sheet, (iii) inchoate materialmen's, mechanics and other similar Liens arising
or incurred in the ordinary course of business, and (iv) other Liens that do not
detract from or interfere with the present use or value of, title to,
marketability or insurability of, the assets.
3.9 CONDITION OF EQUIPMENT, ETC. The tangible assets of Company are in good
condition and repair (ordinary wear and tear which is not such as to affect
adversely the operation of the business excepted) and suitable for the uses for
which intended. All such equipment conforms in all material respects with all
applicable laws, ordinances, regulations, orders and other requirements relating
thereto currently in effect.
3.10 AGREEMENTS, PLANS, ARRANGEMENTS, ETC. Set forth on Schedule 3.10 is a
list of all agreements, plans and arrangements to which Company is a party or by
which Company or any of its assets is bound or affected as follows:
(a) lease agreement (whether as lessor or lessee) relating to real or
personal property involving payments of more than $25,000 annually;
(b) license agreement, assignment or contract (whether as licensor or
licensee, assignor or assignee) relating to any intellectual property, except
for off-the-shelf and imbedded software licenses;
(c) employee agreement not terminable without liability to Company
upon notice to the employee of not more than 30 days, or employee agreement
which provides for compensation at the rate of more than $40,000 per year
(including all salary, bonuses and commissions) to any employee;
(d) contract or subcontract for the purchase or sale of goods,
materials, supplies, capital assets or services involving future payments in
excess of $25,000 in any one case or in the aggregate with all other such
agreements with the same party;
(e) agreement with any sales agent or representative;
(f) agreement to which Company or any predecessor is or was a party
containing contractual indemnity, allocation or other cost-sharing provisions
relating to environmental liability;
(g) joint venture or partnership agreement with any other person;
(h) agreement for the borrowing or lending of money or guaranteeing,
indemnifying or otherwise becoming liable for the obligations or liabilities of
another, or granting any person a Lien on any of Company's assets;
(i) agreement which restricts it or any of its affiliates, officers,
directors, employees or agents from doing business anywhere in the world or from
engaging in or competing in any line of business or with any person or using or
disclosing any information in its possession, except for agreements between
Seller and its officers, directors, employees or agents;
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(j) agreement giving any party the right to renegotiate prices or
require a reduction in price or refund of payment previously made; or
(k) other agreement involving future payments in excess of $25,000.
Correct and complete copies of all such contracts and agreements (or,
if oral, true and complete written summaries thereof) (collectively referred to
herein as "Contracts") have been made available to Buyer prior to the date
hereof. Each Contract under which any obligation of Company or any other party
remains unperformed is now valid, in full force and effect and enforceable in
accordance with its terms and Company has fulfilled, or taken all action
reasonably necessary to enable it to fulfill when due, all of its obligations
under the Contracts. Except as otherwise set forth on Schedule 3.10, there has
not occurred any default by Company, or any event which, with or without the
lapse of time or the election of any person other than Company, or any
combination thereof, will become a default, nor has there occurred any default
by others or any event which, with or without the lapse of time or the election
of Company, will become a default by any other party under any of the Contracts.
3.11 ACCOUNTS RECEIVABLE. All Accounts Receivable of the Company arose in
the ordinary course of business from bona fide transactions and are valid and to
seller's knowledge fully collectible, subject to any reserve reflected on the
balance sheet of Company as of October 31, 2000 or established since such date
and disclosed to Buyer in writing.
3.12 CUSTOMERS. Except as set forth on Schedule 3.12, to Sellers' knowledge
there has been no termination, cancellation, or limitation of or modification or
change in the business relationship of Company with any customer which
individually provided more than 5% of gross revenues of Company for the period
ended October 31, 2000. To Seller's knowledge, no such customer nor any group of
customers has expressed any material dissatisfaction with the services provided
by Company or the transactions contemplated by this Agreement or any
unwillingness to continue any such relationship.
3.13 BOOKS AND RECORDS. All the books, records and accounts of Company are
in all material respects true and complete, are maintained in accordance with
good business practice and all laws applicable to its business, and accurately
present and reflect in all material respects all of the transactions therein
described.
3.14 POWERS OF ATTORNEY. Except as set forth on Schedule 3.14, Company has
no power of attorney or comparable delegation of authority outstanding in
connection with its business.
3.15 COMPLIANCE WITH APPLICABLE LAWS. The Company's business as currently
conducted does not violate or infringe any material applicable law, statute,
ordinance, rule, regulation, decree or order (each and all of the foregoing
being herein referred to as "Laws") currently in effect, or to Seller's
knowledge proposed to be adopted. To Seller's knowledge, Company has not
received any notice of any violation of any Laws applicable to its business and
the Seller knows of no basis for the allegation of any such violation.
3.16 PERMITS. Company possesses all permits and has made all registrations
that are required to own, maintain and operate its business.
3.17 INSURANCE AND INSURANCE REQUIREMENTS
(a) (i) Company's business and its assets are covered by insurance
with responsible companies against casualty and other losses customarily
obtained to cover comparable properties and assets by businesses in the
industry, in scope, coverage and amounts which are reasonable in light of
existing circumstances; (ii) Company carries liability, property and casualty
and automobile insurance, workers' compensation and professional liability
insurance in reasonable amounts; and (iii) all of the foregoing insurance is in
full force and effect. Company (and any predecessor companies) have been
continuously covered by adequate insurance, without gaps in coverage, and will
continue to be covered by such insurance until and after the Closing Date, with
respect to acts and omissions occurring prior to the Closing Date.
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(b) Schedule 3.17 hereto sets forth a list of all insurance policies
and fidelity and surety bonds covering Company's business, employees and assets.
All premiums due and payable have been paid, and to Sellers' knowledge there are
no pending or threatened terminations for the current policy period with respect
to any of such policies or bonds, and Company is in compliance with all
conditions contained in such policies or bonds.
(c) Company has given all notices and presented all claims under any
of its insurance policies in due and timely fashion. There are no pending or to
Sellers' knowledge threatened disputes relating to coverage or other disputed
claims under any of Company's insurance policies.
3.18 BANK AND SAFE DEPOSIT ARRANGEMENTS. Schedule 3.18 sets forth a correct
and complete list of each bank account and safe deposit box maintained by
Company and the names of all persons authorized to deal with such accounts and
safe deposit boxes.
3.19 TRANSACTIONS WITH AFFILIATES. Schedule 3.19 sets forth a true and
complete list of the amounts and other essential terms of any contract,
arrangement or transaction currently in effect between Company and any officer,
director, stockholder or other person related to, controlled by, or under common
control with, any of the foregoing persons, other than arrangements for the
payment of salary, including bonuses, for services rendered to Company, which
arrangements have previously been disclosed to Buyer.
3.20 INTELLECTUAL PROPERTY. Company owns or validly licenses all
intellectual property now or heretofore used or presently proposed to be used in
the conduct of Company's business (including computer software). Except as
disclosed on Schedule 3.20, to Seller's knowledge (a) Company owns or possesses
adequate licenses or other valid rights to use (without the making of any
payment to others or the obligation to grant rights to others in exchange) all
intellectual property necessary to the conduct of its business as presently
conducted or proposed to be conducted; (b) the validity of such items and the
title thereto of Company has not been questioned in any litigation to which
Company is a party, nor is any such Litigation threatened; (c) title to such
items (for which Company possesses licenses or other rights of use) is not
necessary to the conduct of its business as presently conducted or proposed to
be conducted; (d) Seller has no reason to believe that the conduct of the
business of Company as now conducted or proposed to be conducted does or will
conflict with any intellectual property rights of others; and (e) Company has
purchased the requisite number of copies of software programs to comply with all
licensing requirements for its computers. To Seller's knowledge to the extent
permissible under applicable law, all intellectual property heretofore owned or
held by any employee or officer of Company and relating directly to the business
of Company has been duly and effectively transferred to Company with no
restrictions on its subsequent transfer by Company.
3.21 EMPLOYEE MATTERS. (a) Set forth on Schedule 3.21(a) is a true and
complete list of each plan, contract, program, policy or arrangement maintained,
contributed to, or required to be contributed to, by Company for the benefit of,
or pursuant to which Company has or may have any liability to, any current or
former employee, consultant, partner, director or agent of Company or their
beneficiaries or dependents (collectively, the "Employees"), whether or not
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (collectively the "Plans"). Except as set forth on Schedule 3.21 (a),
Company does not have any commitment to create any additional Plan or modify or
change any existing Plan that would affect any Employee, except as required by
applicable law.
(b) Neither Company nor any ERISA Affiliate maintains, contributes to
or is required to contribute to, or has in the past maintained, contributed to
or been required to contribute to or otherwise has any actual or potential
liability with respect to any Plan which is or may be subject to Part III of
Subtitle B of Title I of ERISA or Section 412 of the Internal Revenue Code of
1986, as amended (the "Code"). Neither the Company nor any ERISA Affiliate
contributes to or is required to contribute to, or has in the past contributed
to or been required to contribute to or otherwise has any actual or potential
liability with respect to any "multi-employer plan" as defined in Section 3(37)
and 4001(a)(3) of ERISA. For purposes of this Section 3.21(b), the term "ERISA
Affiliate" means any business or entity which is a member of a "controlled group
of corporations" or an "affiliated service group" with Company or under "common
control" with Company within the meaning of Sections 414(b), (c) or (m) of the
Code or is required to be aggregated with the Company under Section 414(o) of
the Code or is under "common control" with the Company within the meaning of
Section 4001(a)(14) of ERISA or any regulations promulgated or proposed under
any of the foregoing Sections.
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(c) (i) Each of the Plans that is intended to meet the
requirements of Section 401(a) of the Code, is and has always been qualified
under Section 401(a) of the Code and its related trust is now, and since its
inception has been, exempt from taxation under Section 501(a) of the Code and
nothing has occurred that would materially adversely affect the qualified status
of any such Plan, (ii) Company and Seller have performed in all material
respects all obligations required to be performed by them under, and are not in
default under or in violation of, any Plan, and are in compliance with, and each
Plan has been operated in all respects in accordance with its provisions and the
rules and regulations governing each such Plan and with all applicable federal,
state and local laws, rules and regulations, (iii) no event has occurred and
there has been no failure to act on the part of Company, any fiduciary of any
Plan or any "plan official" (as defined in Section 412 of ERISA) that could
subject Company, Buyer, any Plan, fiduciary or plan official to the imposition
of any tax, penalty, liability or other disability, whether by way of indemnity
or otherwise, with respect to any Plan, and (iv) there are no actions, suits or
claims pending, threatened or anticipated (other than routine claims for
benefits) with respect to any Plan or the assets of any Plan.
(d) (i) The delivery and execution of, and performance of the
transactions contemplated by, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event that will
or may result in any payment (whether of severance pay or otherwise) to, or
acceleration, vesting, funding of, or increase in, benefits, or obligation to
fund benefits with respect to, any Employee or the forgiveness of any obligation
under any Plan, agreement, trust or loan. (ii) No payment that will or may be
made to any Employee shall constitute an "excess parachute payment" within the
meaning of Section 280G(b)(1) of the Code.
(e) Neither Company nor Seller maintains, provides or contributes to,
or has any material liability with respect to any "employee welfare benefit
plan" (as described in Section 3(1) of ERISA) for the benefit of retired or
former employees, directors or consultants.
(f) Company (i) is in compliance with all applicable federal, state
and local laws, rules and regulations respecting employment, employment
practices, labor relations, terms and conditions of employment and wages and
hours, in each case, with respect to Employees, and (ii) except as set forth on
Schedule 3.21(f) is not a party to any pending or threatened employment-related
claims, charges, litigation or grievances of any kind.
(g) Schedule 3.21(g) hereto sets forth the names and position titles
of all employees of the Company as of the date hereof together with the current
annual compensation including any bonuses paid.
(h) The Company is not a party to any collective bargaining agreement,
and to Seller's knowledge no action has been taken by any person to organize any
employees of Company.
3.22 TAXES. (a) Except as set forth on Schedule 3.22, Company has timely
filed with the appropriate governmental authorities all Tax Returns (as
hereinafter defined) required to be filed before the Closing Date, in respect of
periods ending on or prior to the Closing Date and has maintained, or caused to
be maintained, all required records with respect to Taxes (as hereinafter
defined), and has timely paid, or caused to be paid in full all material Taxes,
if any, shown to be due on such Tax Returns, or otherwise due from Company
before Closing for all periods up to and including the Closing Date. Company is
not a party to any pending audit or any pending action or proceeding by any
governmental authority for assessment or collection of Taxes, and no claim for
assessment or collection of Taxes has been asserted against Company.
(b) As used in this agreement, "Taxes" or "Tax" means all income,
capital gains, gross receipts, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, workers' compensation, excise,
severance, stamp, occupation, premium, property, or windfall profit taxes,
customs duties, estimated payments, estimated taxes, or other taxes, fees,
levies, assessments, or charges of any kind whatsoever relating to Company, its
business or assets, together with any interest and any penalties, additions to
tax, or additional amounts imposed by the United States or any other
jurisdiction, and any state, province, county, local or other government, taxing
authority, or subdivision thereof. "Tax Return" shall mean any return, report,
information return or other document (including any related or supporting
information) filed or required to be filed by Company with any governmental
entity or other authority in connection with the determination, assessment or
collection of any Tax (whether or not such Tax is imposed on the Company) or the
administration of any laws, regulations or administrative requirements relating
to any Tax.
8
(c) From its inception through June 30, 1990, Company was a
Subchapter-S corporation for federal income tax purposes. From July 1, 1990
through the Closing Date, Company has been a C corporation for federal income
tax purposes (within the meaning of Section 1361 of the Internal Revenue Code of
1986, as amended).
3.23 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.23, to the
knowledge of Seller, there are no claims, notices, civil, criminal or
administrative actions, suits, hearings, investigations, inquiries or
proceedings pending or threatened against the Company that are based on or
related to any environmental matters, including any disposal of hazardous
substances at any place, or the failure to have any required environmental
permits, and there are no past or present conditions that Seller has reason to
believe are likely to give rise to any liability or other obligation of Company
under any environmental laws.
3.24 PROFESSIONAL LIABILITY. Except as set forth on Schedule 3.24 hereto,
neither Company nor its predecessors has incurred, nor is Seller aware of any
basis for any unresolved claim of liability of any kind relating to any activity
or service rendered or performed by Company or its predecessors.
3.25 BROKERS' FEES. Seller and the Company have not engaged any financial
adviser, finder or broker in connection with the transactions contemplated
hereby.
3.26 ACCURACY OF INFORMATION. None of the representations and warranties of
Seller contained herein contains any material misstatement of fact, or omits any
material fact required to be stated herein or necessary to make the statements
herein not misleading.
3.27 CAPITALIZATION. Schedule 3.27 contains the true and accurate
capitalization table of the Company. The Shares have been duly authorized, are
validly issued, fully paid and nonassessable, and Seller holds of record all of
the outstanding shares of the Company. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require the
Company to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. There are no voting trusts, promises or other agreements or
understandings with respect to the voting of the Company's capital stock.
3.28 CAPITAL STOCK. Each Seller holds of record and owns beneficially the
shares of capital stock of the Company shown opposite such Seller's name on
Schedule 3.27, free and clear of any restrictions on transfer, taxes, liens,
options, warrants, purchase rights, contracts, commitments, equities, claims and
demands (other than any restrictions under the Securities Act of 1933 or state
securities laws). Seller is not a party to any option, warrant, purchase right,
or other contract or commitment that could require the Seller to sell, transfer
or otherwise dispose of any capital stock (other than this Agreement). Seller is
not a party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock.
3.29 INVESTMENT. Seller (a) understands that the TRC Shares to be paid
in connection with this transaction have not been and will not be registered
under The Securities Act of 1933 or under any state securities laws, and are
being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering; (b) is acquiring the TRC Shares
solely for his own account for investment purposes and not with a view to the
distribution thereof; (c) is a sophisticated investor with knowledge and
experience in business and financial matters; (d) has received certain
information concerning the Buyer and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and risks
inherent in holding the TRC Shares; and (e) is able to bear the economic risk of
holding the TRC Shares.
9
4. REPRESENTATIONS AND WARRANTIES BY PARENT AND BUYER
Each TRC Entity jointly and severally represents and warrants as of the
date hereof and as of the Closing as follows:
4.1 ORGANIZATION, STANDING AND AUTHORITY OF BUYER. Each TRC Entity is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and has all requisite corporate power
to enter into this Agreement and all of the Ancillary Documents to which it is
or will be a party, to perform its obligations hereunder and thereunder, to
carry out the transactions contemplated hereby and thereby and to carry on its
business as currently being conducted.
4.2 DUE AUTHORIZATION. The execution, delivery and performance by each TRC
Entity of this Agreement and the Ancillary Documents to which it is or will be a
party, and the consummation by Buyer of the transactions contemplated hereby and
thereby, have been or will be duly authorized by all requisite corporate action.
This Agreement and the Ancillary Documents to which each TRC Entity is or will
be a party have been or will be duly and validly executed and delivered by it
and constitute or will constitute valid and binding obligations of it
enforceable against it in accordance with their respective terms.
4.3 CONSENTS, APPROVALS, ETC. Except as set forth on Schedule 4.3, no
Governmental Approval is required in connection with the execution, delivery or
performance by each TRC entity of this Agreement or any of the Ancillary
Documents to which it is or will be a party or the consummation by Buyer of the
transactions contemplated hereby or thereby. All Governmental Approvals set
forth on Schedule 4.3 will have been obtained or made prior to the Closing.
4.4 NO VIOLATION. Except as set forth on Schedule 4.4, the execution,
delivery and performance by each TRC entity of this Agreement and the Ancillary
Documents to which it is or will be a party and the consummation by it of the
transactions contemplated hereby and thereby will not, with or without the
giving of notice and the lapse of time, or both, (a) violate any judgment,
order, writ or decree of any court applicable to such TRC Entity or (b) result
in the breach of or conflict with any term, covenant, condition or provision of,
result in the modification or termination of, constitute a default under, or
result in the creation or imposition of any Lien, upon any of the assets or
properties of such TRC Entity pursuant to, the Articles of Incorporation or
By-laws of such TRC Entity or any contract, agreement, note, mortgage, indenture
or other instrument to which such TRC Entity is a party or by which any of its
assets or properties is or may be bound.
4.5 SEC REPORTS. Sellers have been furnished true copies of all reports,
statements and schedules required to be filed by each TRC Entity with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), since December 31, 1998 (collectively,
the "SEC Reports"). The SEC Reports complied in all material respects with all
applicable requirements of the Exchange Act and, as of their respective filing
dates, did not contain any untrue statement of material fact or omit to state a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The audited and
unaudited consolidated financial statements of Buyer included in the SEC Reports
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as stated in the financial statements) and
fairly present the financial position of Buyer and its consolidated subsidiaries
as of the dates thereof and the results of their operations and changes in
financial position for the periods then ended, subject, in the case of the
unaudited financial statements, to normal year-end audit adjustments.
4.6 CAPITAL STOCK. The TRC Shares will be duly authorized, validly issued,
fully paid and nonassessable, and free and clear of all Liens.
4.7 ACCURACY OF INFORMATION. None of the representations and warranties of
a TRC Entity contained herein contains any material misstatement of fact, or
omits any material fact required to be stated herein or necessary to make the
statements herein not misleading.
4.8 BROKERS' FEES. Buyer has not engaged any financial advisor, finder or
broker in connection with the transactions contemplated hereby.
10
4.9 INVESTMENT. Buyer understands that the Company Shares to be acquired in
this Transaction have not and will not be registered under the Securities Act of
1933 or under any state securities laws, that no public offering is involved in
the offering and sale of the Company Shares, and Buyer is acquiring the Company
Shares solely for its own account for investment purposes and not with a view to
a distribution thereof.
4.10 Tax Effect. The acquisition of the TRC Shares by Seller will be
treated as a nontaxable exchange of stock by Seller for federal income tax
purposes. Parent shall report the transaction for tax purposes in a manner
consistent with this tax position.
5. COVENANTS OF COMPANY AND SELLERS
5.1 AFFIRMATIVE COVENANTS. Except as described herein or as Buyer may
otherwise consent in writing, between October 31, 2000 and the Closing Date,
Seller shall have caused Company to:
(a) operate its business only in the usual, regular and ordinary
course and in accordance with past practice and use its best efforts to (i)
preserve its business organization intact; (ii) keep available the services of
its employees; (iii) continue normal marketing, advertising and promotional
expenditures and (iv) preserve all beneficial business relationships with
customers, suppliers, subcontractors and others having business dealings with
it;
(b) (i) maintain all the tangible assets in good condition and repair,
normal wear and tear and damage due to fire or other unavoidable casualty
excepted and (ii) maintain insurance in full force and effect with responsible
companies, comparable in amount, scope and coverage to that in effect on the
date of this Agreement;
(c) (i) duly comply with all laws applicable to the Company's
business; (ii) perform all of its obligations without default; and (iii)
maintain its books, records and accounts in the usual, regular and ordinary
manner on a basis consistent with past practice;
(d) satisfy in full in accordance with past practice all of its
liabilities, including accounts payable, or contest in good faith such
liabilities;
(e) perform and comply with all of its obligations under all contracts
and instruments;
(f) give to Buyer and to its counsel, accountants, and other
representatives full access during normal business hours to all of the
properties, personnel, books, tax returns, contracts, commitments and records of
Company and furnish to Buyer and such representatives all such additional
documents, financial information and information with respect to the business
affairs of Company as Buyer may from time to time reasonably request;
(g) authorize Company's independent accountants to permit Buyer's
independent accountants and Buyer's accounting personnel to examine and copy,
when and as reasonably requested by Buyer, the records and working papers of
Company's independent accountants pertaining to its audits of the Financial
Statements;
(h) furnish Buyer, as soon as possible, with true and correct copies
of all monthly and quarterly financial statements which are prepared by or for
Company at any time from the date hereof until the Closing Date; and
(i) inform Buyer promptly of any development which may materially
interfere with the consummation of the transactions contemplated hereby.
5.2 NEGATIVE COVENANTS. Except as described herein or as Buyer may
otherwise consent in writing, between October 31, 2000 and the Closing Date, the
Seller shall have caused Company not to:
(a) incur or permit to be incurred any Lien on any of the assets of
the Company except for materialman's liens incurred in the ordinary course of
business consistent with past practice;
11
(b) transfer, sell, assign or otherwise convey any part of the
Company's assets, except in each case in the ordinary course of business
consistent with past practice;
(c) grant or sell any option or right to purchase any of the Company's
assets;
(d) change the character of Company's business;
(e) acquire all or substantially all of the assets of or any interest
in any other corporation, partnership, limited partnership, joint venture,
association, or other entity;
(f) declare, pay, or make any dividend or distribution or other
payment in respect of, or redeem any of, the outstanding shares of its capital
stock or pay any management fees;
(g) adopt, enter into, amend or terminate any employee agreement or
employee plan, or increase in any manner the compensation or benefits of, or
forgive any indebtedness of, any employee or pay or provide any benefit other
than benefits required pursuant to any employee agreement or employee plan
disclosed to Buyer prior to the date hereof, or adopt, enter into or amend any
employee agreement or employee plan, including any severance or termination
plan, policy, arrangement, practice or agreement, or grant any awards under any
bonus, incentive, performance or other compensation plan or arrangement or
(except as may be further required under the terms of any employee agreement or
employee plan as in effect on the date of this Agreement disclosed to Buyer
prior to the date hereof), contribute to or otherwise fund or secure the
benefits or compensation provided under, any of the employee agreements or
employee plans, or enter into any contract to do any of the foregoing;
(h) incur any obligation (fixed or contingent) or enter into any
lease, commitment, agreement or other transaction, except in the ordinary course
of business; -
(i) take or agree to take any action which would make any
representation or warranty of the Seller contained in this Agreement untrue or
incorrect in any material respect as of the date when made or as of any future
date on or prior to the Closing Date.
5.3 EXCLUSIVITY. Between the date hereof until either the Closing Date or
the termination date of this Agreement as provided under Section 11 hereof, (i)
Seller shall not and Seller shall cause Company not to solicit, initiate, or
encourage the submission of any proposal or offer from any person or enter into
any understanding, whether binding or not, with respect to the acquisition of
any capital stock or other voting securities or any portion of the assets or
business of the Company, or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any person to do or seek
any of the foregoing. Seller will immediately notify the Buyer if any person
makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
6. COVENANTS OF BUYER
6.1 AFFECTED EMPLOYEES. It is the intention of the parties hereto that the
employees of the Company (including employees on vacation, leave of absence,
short or long-term disability or layoff) (the "Affected Employees") at the
Closing Date will remain employees of the Company immediately following the
Closing Date at the salary levels that were in effect immediately prior to the
Closing Date. Nothing herein, however, shall be construed as an offer of
employment to any individual on other than an employee-at-will basis; except,
that Buyer agrees that it shall not terminate any such employees, other than for
cause, within 6 months of the Closing Date unless otherwise agreed between Buyer
and Xxx Xxxxxxx.
6.2 EMPLOYEE BENEFITS. After the Closing Date, the Affected Employees will
be provided such employee benefits, which are provided to Buyer's employees
generally and which are materially no less favorable in the aggregate than such
benefits provided by the Company immediately prior to the Closing Date. Buyer
will, and will cause the Company to, give to each Affected Employee the same
service credit with Buyer and the Company as each such Affected Employee
previously earned up to the Closing Date or as agreed by Xxx Xxxxxxx for
purposes of
12
determining the Affected Employee's eligibility to participate in, vesting
under, benefit accrual under, eligibility for early distribution of benefits
from and eligibility for early retirement or any subsidized benefit provided for
in any employee benefit plan, practice or policy established, maintained or
contributed to by Buyer (a "Buyer's Plan") and shall, where appropriate, cause
each Buyer's Plan to reflect the foregoing requirement.
6.3 EMPLOYMENT AGREEMENT/STOCK OPTION Simultaneously with the Closing,
Company will enter into the employment agreement (the "Employment Agreement")
with the Seller in the form appearing as Exhibit 6.3 to this Agreement. Parent
shall offer 3,000 stock options each to Xxxxx Xxxxxxxx and Xxxxxxxxxxx Xxxxxxx
pursuant to Parent's Stock Option Plan.
7. COVENANTS OF BUYER AND SELLERS
7.1 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. Seller and Buyer shall use
their best efforts (a) as promptly as reasonably practicable after the date
hereof, to file for all consents and approvals necessary for the consummation of
the transactions contemplated hereby and (b) to cooperate with one another (i)
in promptly determining whether any other filings are reasonably required to be
or should be made or consents, approvals, permits or authorizations are required
to be or should be obtained under any federal, state or local law or regulation
or whether any consents, approvals or waivers are required to be or should be
obtained from other parties to loan agreements, other contracts or permits in
connection with the consummation of the transactions contemplated hereby and
(ii) in promptly making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such consents, permits,
authorizations, approvals or waivers.
7.2 BEST EFFORTS; FURTHER ASSURANCES. (a) Subject to the terms and
conditions provided in this Agreement, each of the parties hereto shall use its
best efforts in good faith to take promptly, or cause to be taken, all actions
and to do promptly, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated hereby, to obtain all necessary waivers, consents
and approvals and to effect all necessary registrations and filings, and to
remove any injunctions or other impediments or delays, legal or otherwise, in
order to consummate and make effective the transactions contemplated by this
Agreement for the purpose of securing to the parties hereto the benefits
contemplated by this Agreement.
(b) At any time or from time to time after the Closing, the
Parties agree to cooperate with each other to execute and deliver such other
documents, instruments of transfer or assignment, files, books and records and
do all such further acts and things as may reasonably be required to carry out
the intent of the parties hereunder and to effectuate the transactions
contemplated hereby.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions to be performed at
the Closing are subject to the satisfaction or, where permissible, waiver, on or
before the Closing Date, of each of the following conditions:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement or in any Ancillary Document
shall be true and correct in all material respects as of the date hereof and
(unless made as of a specified date) as of the Closing Date with the same effect
as if made on the Closing Date, and Seller shall have performed all obligations
and agreements and complied with all covenants contained in this Agreement or in
any Ancillary Document to be performed and complied with by him on or before the
Closing Date.
8.2 NO PROHIBITION. No statute, rule or regulation or order or injunction
of any court or administrative agency shall be in effect which prohibits Buyer
from consummating the transactions contemplated hereby.
8.3 CONSENTS AND APPROVALS. All Governmental Approvals and third party
consents required in connection with the transactions contemplated hereby shall
have been obtained on terms which are not reasonably likely to adversely affect
the business, financial condition, results of operations, assets, liabilities or
prospects of the Company's business.
13
8.4 NO LITIGATION. There shall not be any action, suit or proceeding
pending or threatened that seeks to (i) make the consummation of the
transactions contemplated hereby illegal or otherwise restrict or prohibit
consummation thereof or (ii) require the divestiture by Buyer or any of its
subsidiaries or affiliates of shares of stock or of any business, assets or
property of any of its subsidiaries or affiliates, or impose any material
limitation on the ability of any of them to conduct their business or to own or
exercise control of such assets, properties or stock.
8.5 ACTIONS, PROCEEDINGS, ETC. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated by this Agreement
or any Ancillary Documents to which Company and Seller is a party shall be
reasonably satisfactory to Buyer.
8.6 EMPLOYMENT AGREEMENT. Seller shall have entered into the Employment
Agreement.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions to be performed at
the Closing are subject to the satisfaction or, where permissible, waiver, on or
before the Closing Date, of each of the following conditions:
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement or in any Ancillary Document
shall be true and correct in all material respects as of the date hereof and
(unless made as of a specified date) as of the Closing Date with the same effect
as if they were made on the Closing Date, and Buyer shall have performed all its
obligations and agreements and complied with all its covenants contained in this
Agreement or in any Ancillary Document to be performed and complied with by it
on or before the Closing Date.
9.2 NO PROHIBITION. No statute, rule or regulation or order or injunction
of any court or administrative agency shall be in effect which prohibits Company
or Seller from consummating the transactions contemplated hereby.
9.3 CONSENTS AND APPROVALS. All Governmental Approvals and third party
consents required in connection with the transactions contemplated hereby shall
have been obtained.
9.4 ACTIONS, PROCEEDINGS, ETC. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated by this Agreement
or any Ancillary Documents to which Buyer is a party shall be reasonably
satisfactory to Seller.
9.5 NO LITIGATION. There shall not be any action, suit or proceeding
pending or threatened that seeks to make the consummation of the transactions
contemplated hereby illegal or otherwise restrict or prohibit consummation
thereof.
9.6 BUYOUT OF CLASS B. Company shall have caused the nonvoting Class B
shares owned by Xxxxx Xxxxxxxx and Xxxxxxxxxxx Xxxxxxx, representing .9% and .1%
interests, respectively, in the outstanding shares of Company, to be purchased
at no more than book value thereof.
9.7 MANAGEMENT EMPLOYMENT AGREEMENTS. Buyer shall have caused to have been
offered by Parent to Xxxxx Xxxxxxxx and Xxxxxxxxxxx Xxxxxxx 3,000 stock options
each pursuant to Parent's Stock Option Plan.
10. SURVIVAL AND INDEMNIFICATION
10.1 SURVIVAL. The representations and warranties made in this
Agreement shall survive the Closing for a period of two (2) years and shall
thereupon expire together with any right to indemnification in respect thereof
(except to the extent a Notice as hereinafter defined asserting a claim for
breach of any such representation or warranty shall have been given in good
faith prior to such date to the party which made such representation or
14
warranty). The covenants and agreements contained herein to be performed or
complied with after the Closing shall survive the Closing and expire in
accordance with their terms.
10.2 INDEMNIFICATION BY SELLER. From and after the Closing, Seller shall
indemnify and hold harmless Buyer from and against any and all demands, claims,
losses, liabilities, actions or causes of action, assessments, damages, fines,
taxes, penalties, costs and expenses (including, without limitation, interest,
expenses of investigation, reasonable fees and disbursements of counsel,
accountants and other experts (whether such fees and disbursements of counsel,
accountants and other experts related to claims, actions or causes of action
asserted by Buyer against Seller or asserted by third parties) (collectively
"Losses") incurred or suffered by Buyer, and their affiliates, and their
respective officers, directors, employees, agents and representatives arising
out of, resulting from, or relating to (a) any breach by Seller of any of his
representations and warranties contained in this Agreement; or (b) any failure
by Seller to perform any of his respective covenants or agreements contained in
this Agreement. Notwithstanding any other provision of this Agreement, and
except as provided in the following sentence, the total aggregate liability of
Seller for indemnification under this Section shall not exceed $1,000,000 or if
greater, the amount recoverable under Seller's applicable insurance, and
Seller's obligation to indemnify hereunder shall not apply until the cumulative
amount of all Losses subject to indemnification exceeds a deductible of $50,000.
10.3 INDEMNIFICATION BY BUYER. From and after the Closing, Buyer shall
indemnify and hold harmless Seller from and against any and all Losses (as
defined in Section 10.2) incurred or suffered by Seller arising out of,
resulting from, or relating to (a) any breach of any of the representations or
warranties made by Buyer in this Agreement; (b) any failure by Buyer to perform
any of its covenants or agreements contained in this Agreement; or (c) the
business or operations of Company after the Closing, except to the extent
arising out of, resulting from or relating to any breach of any of the
representations and warranties and covenants of Seller under this Agreement or
the business or operations of Company prior to the Closing.
10.4 PROCEDURE. (a) In the event that any party hereto shall sustain or
incur any Losses in respect of which indemnification may be sought by such party
pursuant to this Article 10, the party seeking such indemnification (the
"Indemnitee") shall assert a claim for indemnification by giving written notice
thereof (the "Notice") to the party (or parties) providing indemnification (the
"Indemnitor") within thirty (30) days after (i) receipt of written notice of
commencement of any third party litigation against such Indemnitee, (ii) receipt
by such Indemnitee of written notice of any third party claim pursuant to an
invoice, notice of claim or assessment against such Indemnitee, or (iii) such
Indemnitee becomes aware of the existence of any other event in respect of which
indemnification may be sought from the Indemnitor (including, without
limitation, any inaccuracy of any representation or warranty or breach of any
covenant). The Notice shall describe the claim and the specific facts and
circumstances in reasonable detail, and shall indicate the amount, if known, or
an estimate, if possible, of the Losses that have been or may be incurred or
suffered by such Indemnitee. The failure to timely deliver a Notice shall not
relieve the Indemnitor from the obligation to indemnify hereunder except to the
extent that the Indemnitor is prejudiced thereby. In case any third party claim,
action or proceeding (a "Claim") is brought against any Indemnitee, the
Indemnitor shall be entitled to assume the defense thereof, by written notice to
the Indemnitee of its intention to do so within 30 days after receipt of the
Notice. If the Indemnitor shall assume the defense of such Claim, without the
consent of the Indemnitee, which shall not be unreasonably withheld, the
Indemnitor shall not settle such Claim unless such settlement includes as an
unconditional term thereof the giving by the claimant or the plaintiff of a
release of the Indemnitee, satisfactory to the Indemnitee, from all liability
with respect to such Claim. Notwithstanding the assumption by the Indemnitor of
the defense of any Claim as provided in this subsection, the Indemnitee shall be
permitted to join in the defense of such Claim and to employ counsel at its own
expense; PROVIDED, HOWEVER, that if the defendants in any action shall include
both an Indemnitor and any Indemnitee, and such Indemnitee shall have reasonably
concluded that counsel selected by the Indemnitor has a conflict of interest
because of the availability of different or additional defenses to such
Indemnitee, such Indemnitee shall have the right to select separate counsel to
participate in the defense of such action on its behalf, at the expense of the
Indemnitor.
(b) If the Indemnitor shall fail to notify the Indemnitee of its
desire to assume the defense of any such Claim within the prescribed period of
time, or shall notify the Indemnitee that it will not assume the defense of any
such Claim, then the Indemnitee may assume the defense of any such Claim, in
which event it may do so in such manner as it may deem appropriate, and the
Indemnitor shall be bound by any determinations made in
15
any litigation with respect to any Claim or any settlement thereof, provided
that any such determinations or settlement shall not affect the right of the
Indemnitor to dispute any claim for indemnification by the Indemnitee.
(c) Amounts payable by the Indemnitor to the Indemnitee in respect of
any Losses for which such party is entitled to indemnification hereunder shall
be payable by the Indemnitor as incurred by the Indemnitee. In the event Seller
is obligated to pay Buyer pursuant to this Article 10, Seller may make such
payment by reducing the face amount of the Note by a corresponding amount.
10.5 INVESTIGATIONS; WAIVERS. The survival periods and rights to
indemnification provided for in this Article shall remain in effect for the
period set forth in Section 10.1 above notwithstanding any investigation at any
time by or on behalf of any party hereto or any waiver by any party hereto of
any condition to such party's obligations to consummate the transactions
contemplated hereby.
11. TERMINATION
11.1 TERMINATION AND ABANDONMENT. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing;
(a) by mutual written consent of Buyer and Seller; or
(b) by Buyer if the Buyer is not reasonably satisfied with the results
of its continuing due diligence regarding the Company; or
(c) by Buyer, on the one hand, or Seller on the other hand, if the
Closing shall not have occurred on or before December 29, 2000; PROVIDED,
HOWEVER, that the right to terminate this Agreement under this Section 11.1(c)
shall not be available to any party whose failure to fulfill any obligations
under this Agreement had been the cause of, or resulted in, the failure of the
Closing to occur on or before such date; or
(d) by Buyer, on the one hand, or Seller on the other hand, if any
court of competent jurisdiction shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated under this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable.
11.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 11.1, this Agreement shall forthwith become void,
and (except as provided in Section 11.3) there shall be no liability or
obligation on the part of any party hereto.
11.3 FEES AND EXPENSES. Whether or not the transactions contemplated by
this Agreement are consummated, each of the parties hereto shall pay its own
expenses incurred in connection with the transactions contemplated hereby,
including taxes and legal, accounting and other fees. Notwithstanding the
provisions of Section 11.2, if this Agreement is terminated by Seller, on the
one hand, or Buyer, on the other hand, by reason of a breach by the other of
this Agreement, in addition to any other remedy available at law or in equity,
the terminating party shall be reimbursed by the breaching party for all
reasonable out-of-pocket costs and expenses incurred by the terminating party in
connection with the transactions contemplated by this Agreement.
12. MISCELLANEOUS
12.1 SPECIFIC PERFORMANCE. Seller, on the one hand, and Buyer, on the other
hand, acknowledge that the other will be irreparably harmed and will have no
adequate remedy at law if such party fails to perform any of its obligations
under this Agreement. It is accordingly agreed that, in addition to any other
remedies which may be available, the Parties shall have the right to obtain
injunctive relief to restrain a breach or threatened breach of, or otherwise
obtain specific performance of, covenants and other agreements of the other
party contained in this Agreement.
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12.2 WAIVERS. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto, shall be deemed to constitute
a waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any party hereto
of any condition or of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any other condition or other breach. The
waiver by any party of any of the conditions precedent to its obligations under
this Agreement shall not preclude it from seeking redress for breach of this
Agreement other than with respect to the condition so waived.
12.3 NOTICES. All notices, requests, demands, applications, and other
communications which are required to be or may be given under this Agreement
shall be deemed to have been duly given if sent by recognized courier, telecopy
or facsimile transmission or delivered or mailed, certified first class mail,
postage prepaid, return receipt requested, to the parties hereto at the
following addresses:
TO SELLER:
Xxxxxxx X. Xxxxxxx
00 Xxxxx Xxxxx
Xxxxxxx, XX 00000
TO BUYER:
TRC Companies, Inc.
c/o Vice President and General Counsel
0 Xxxxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Fax No: (000) 000-0000
or to such other address as any party shall furnish to the other by notice given
in accordance with this Section.
12.4 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including the Schedules
hereto and the Ancillary Documents embody the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect thereto. This
Agreement may not be changed orally, but only by an agreement in writing signed
by the party or parties against whom any waiver, change, amendment, modification
or discharge may be sought.
12.5 BINDING EFFECT; BENEFITS. This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective legal
representatives, successors and assigns; provided that neither this Agreement
nor any of the rights hereunder may be assigned by any of the parties hereto
without the consent of the other parties.
12.6 HEADINGS. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. As used in this Agreement, "to the knowledge
of" any person or phrases of similar import mean or refer to information of
which such person has actual knowledge or which such person should reasonably be
expected to know of after reasonable inquiry.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.
12.8 GOVERNING LAW. The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the Laws of the State of
Connecticut, without giving effect to the principles of conflicts of law
thereof.
12.9 SEPARABILITY. Any term or provision of this Agreement which is invalid
or unenforceable shall be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement.
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12.10 PUBLIC ANNOUNCEMENTS. Neither Company and Seller, on the one hand,
nor Buyer, on the other hand, nor any of their respective affiliates, shall make
any public statements, including, without limitation, any press releases, with
respect to this Agreement and the transactions contemplated hereby without the
prior consent of the other party hereto (which consent may not be unreasonably
withheld) except as may be required by law.
12.11 NO THIRD-PARTY BENEFICIARIES. The Parties hereto agree that there are
no third-party beneficiaries of the provisions of this Agreement, and none of
the provisions hereof shall be deemed to inure to the benefit of any person not
a party hereto or an affiliate of a party hereto.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first above written.
TRC COMPANIES, INC.
By:
-------------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
TRC ENVIRONMENTAL CORPORATION
By: _________________________________
Name: Xxxx X. Xxxxxxxx
Title: President
SELLER:
_____________________________________
Xxxxxxx X. Xxxxxxx
_____________________________________
R& J Xxxxxxx Family Limited Partnership
By: Xxxxxxx X. Xxxxxxx
General Partner
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