EXHIBIT NO. 2.14
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STOCK PURCHASE AGREEMENT
by and among
▇▇▇▇▇ EQUITIES, INC.,
▇▇▇▇▇ INDUSTRIES, INC.,
▇▇▇▇▇ EQUITIES OF FLA. INC.,
THE SELLERS NAMED HEREIN
and
▇▇▇▇.▇▇▇ ACQUISITION CORP. III
Dated as of August 3, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I
CERTAIN DEFINITIONS............................................. 2
1.1 Definitions............................................ 2
ARTICLE II
PURCHASE AND SALE OF THE SHARES................................. 7
2.1 Basic Transaction...................................... 7
2.2 Closing Transactions................................... 7
2.3 Purchase Price......................................... 8
ARTICLE III
CONDITIONS TO CLOSING........................................... 10
3.1 Conditions to Buyer's Obligations...................... 10
3.2 Conditions to Sellers' Obligations..................... 13
ARTICLE IV
[Intentionally Omitted]......................................... 14
ARTICLE V
REPRESENTATIONS AND WARRANTIES CONCERNING
THE COMPANIES AND SELLERS....................................... 14
5.1 Capacity, Organization, Corporate Power and Licenses... 14
5.2 Capital Stock and Related Matters; Title to Shares..... 15
5.3 Authorization; Noncontravention........................ 15
5.4 Subsidiaries........................................... 16
5.5 Financial Statements................................... 16
5.6 Accounts Receivable.................................... 17
5.7 Inventory.............................................. 17
5.8 Absence of Undisclosed Liabilities..................... 17
5.9 No Material Adverse Effect............................. 18
5.10 Absence of Certain Developments........................ 18
5.11 Assets................................................. 20
5.12 Contracts and Commitments.............................. 21
5.13 Intellectual Property Rights........................... 23
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5.14 Litigation............................................. 24
5.15 Compliance with Laws................................... 25
5.16 Environmental and Safety Matters....................... 25
5.17 Employees.............................................. 27
5.18 Employee Benefits Plans................................ 27
5.19 Insurance.............................................. 29
5.20 Tax Matters............................................ 29
5.21 Sellers Brokerage and Transaction Bonuses.............. 31
5.22 Bank Accounts.......................................... 32
5.23 Names and Locations.................................... 32
5.24 Affiliate Transactions................................. 32
5.25 Service Warranties..................................... 32
5.26 Customers and Suppliers................................ 32
5.27 Disclosure............................................. 33
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER......................... 33
6.1 Organization and Power................................. 33
6.2 Capitalization......................................... 33
6.3 Authorization.......................................... 33
6.4 No Violation........................................... 34
6.5 Governmental Authorities and Consents.................. 34
6.6 Litigation............................................. 34
6.7 Brokerage.............................................. 34
ARTICLE VII
[Intentionally Omitted]......................................... 34
ARTICLE VIII
ADDITIONAL AGREEMENTS; COVENANTS AFTER CLOSING.................. 34
8.1 Survival of Representations and Warranties............. 34
8.2 Indemnification........................................ 35
8.3 Mutual Assistance...................................... 39
8.4 Non-Competition; Non-Solicitation...................... 39
8.5 Press Release and Announcements........................ 41
8.6 Expenses............................................... 41
8.7 Specific Performance................................... 41
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8.8 Further Assurances..................................... 42
8.9 Confidentiality........................................ 42
8.10 Tax Matters............................................ 42
8.11 Use of ▇▇▇▇▇ Name...................................... 45
8.12 Surety Bonds........................................... 45
ARTICLE IX
MISCELLANEOUS................................................... 45
9.1 Amendment and Waiver................................... 45
9.2 Notices................................................ 46
9.3 Successors and Assigns................................. 47
9.4 Severability........................................... 47
9.5 Captions; Interpretation............................... 48
9.6 No Third-Party Beneficiaries........................... 48
9.7 Complete Agreement..................................... 48
9.8 Counterparts........................................... 48
9.9 Delivery by Facsimile.................................. 48
9.10 Governing Law.......................................... 49
9.11 Schedules.............................................. 49
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EXHIBITS AND SCHEDULES
Exhibits:
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Exhibit A-1 - Employment Agreement
Exhibit A-2 - Employment Agreement
Exhibit B-1 - Executive Purchase Agreement
Exhibit B-2 - Executive Purchase Agreement
Exhibit C - Stockholders Agreement
Exhibit D - Registration Agreement
Exhibit E - Real Estate Lease
Exhibit F - Form of Opinion of Counsel for Sellers and the Companies
Schedules:
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Permitted Liens Schedule
Schedule of Sellers
Bank Account Schedule
Restrictions Schedule
Capital Stock and Related Matters Schedule
Financial Statements Schedule
Contracts Schedule
Developments Schedule
Assets Schedule
Leased Real Property Schedule
Intellectual Property Schedule
Litigation Schedule
Permits Schedule
Environmental Schedule
Employees Schedule
Employee Benefits Schedule
Insurance Schedule
Taxes Schedule
Permitted Distributions Schedule
Names and Locations Schedule
Affiliated Transactions Schedule
Customers and Suppliers Schedule
Buyer Brokerage Schedule
Indemnification Schedule
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INDEX OF DEFINED TERMS
PAGE
Accounting Firm......................................................... 9
Affiliate............................................................... 2
Affiliated Group........................................................ 2
Agreement............................................................... 2
Applicable Rate......................................................... 2
Buyer................................................................... 2
Buyer Parties........................................................... 35
CERCLA.................................................................. 3
Closing................................................................. 7
Closing Date............................................................ 7
Closing Indebtedness.................................................... 8
Code.................................................................... 3
Companies............................................................... 2
Company................................................................. 2
Confidential Information................................................ 3
Employment Agreements................................................... 11
Encumbrance............................................................. 3
Encumbrances............................................................ 7
Environmental and Safety Requirements................................... 3
Equities................................................................ 2
ERISA................................................................... 4
Estimated Purchase Price................................................ 8
Excess Distributions.................................................... 4
Executive Purchase Agreement............................................ 11
Executive Securities.................................................... 4
▇▇▇▇▇ Purchase Agreements............................................... 11
Final Purchase Price................................................... 9
Final Purchase Price Statement.......................................... 8
Florida................................................................. 2
GAAP.................................................................... 4
Governmental Approvals.................................................. 10
Guaranty................................................................ 4
HSR Act................................................................. 4
Income Tax Payable...................................................... 4
Indebtedness............................................................ 4
Indemnitee.............................................................. 37
Indemnitor.............................................................. 37
Industries.............................................................. 2
Intellectual Property Rights............................................ 5
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Investment.............................................................. 5
Leased Real Property.................................................... 20
Leased Realty........................................................... 20
Lien.................................................................... 5
▇▇▇▇.▇▇▇................................................................ 5
Losses.................................................................. 35
March Balance Sheet..................................................... 16
Material Adverse Effect................................................. 5
MT&T Credit Line........................................................ 5
Multiemployer Plan...................................................... 28
Notice of Disagreement.................................................. 8
Permitted Liens......................................................... 5
Permitted Tax Distributions............................................. 6
Person.................................................................. 6
Plan.................................................................... 27
Purchase Price.......................................................... 8
Purchase Price Statement................................................ 8
Real Estate Leases...................................................... 12
Registration Agreement.................................................. 12
Restricted Covenants.................................................... 40
Restricted Territories.................................................. 39
S Corps................................................................. 31
Securities Act.......................................................... 6
Seller.................................................................. 2
Seller Period Taxes..................................................... 43
Seller Representative................................................... 6
Sellers................................................................. 2
September Balance Sheet................................................. 16
Stockholders Agreement.................................................. 11
Straddle Tax Returns.................................................... 43
Subsidiary.............................................................. 6
Tax..................................................................... 6
Tax Returns............................................................. 7
Third-Party Approvals................................................... 10
Treasury Regulations.................................................... 7
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of August 3, 2000, by and among ▇▇▇▇▇ Equities, Inc., a New York
corporation ("EQUITIES"), ▇▇▇▇▇ Industries, Inc., a New York corporation
("INDUSTRIES"), ▇▇▇▇▇ Equities of Fla. Inc., a Florida corporation ("FLORIDA"
and, together with Equities and Industries, the "COMPANIES" and each
individually, a "COMPANY"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an individual resident of the
State of New York, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual resident of the State of New
York, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an individual resident of the State of New York,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual resident of the State of New York, (each of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a
"SELLER" and, collectively, the "SELLERS"), and ▇▇▇▇.▇▇▇ Acquisition Corp. III,
a Delaware corporation ("BUYER").
WHEREAS, Sellers own all of the issued and outstanding shares of
capital stock (the "SHARES") of each of the Companies; and
WHEREAS, on the terms and subject to the conditions set forth in this
Agreement, Buyer desires to purchase from Sellers, and Sellers desire to sell to
Buyer, all of the Shares.
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and understandings contained herein and intending to be legally bound, the
parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, the following
terms have the meanings set forth below:
"AFFILIATE" of any particular Person means any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "CONTROL" (including the terms "CONTROLLING,"
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and such "control" will be presumed if any Person owns
10% or more of the voting capital stock or other ownership interests, directly
or indirectly, of any other Person.
"AFFILIATED GROUP" means an affiliated group as defined in Section 1504
of the Code (or any analogous combined, consolidated or unitary group defined
under state, local or foreign income Tax law) of which a Company is or has been
a member.
"APPLICABLE RATE" means the prime rate of interest reported by the WALL
STREET JOURNAL from time to time.
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"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular Code section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"COMPANY TRANSACTION" means any (a) reorganization, liquidation,
dissolution or recapitalization of any of the Companies, (b) merger or
consolidation involving any of the Companies, (c) purchase or sale of any assets
or capital stock (or any rights to acquire, or securities convertible into or
exchangeable for, any such capital stock) of any of the Companies (other than
the purchase and sale of inventory and capital equipment in the ordinary course
of business consistent with past custom and practice), or (d) similar
transaction or business combination involving any of the Companies or their
businesses or assets.
"CONFIDENTIAL INFORMATION" means all information of a confidential or
proprietary nature (whether or not specifically labeled or identified as
"confidential"), in any form or medium, that relates to the business, products,
financial information, services or research or development of the Companies or
their respective suppliers, distributors, customers, independent contractors or
other business relations. Confidential Information includes, but is not limited
to, the following: (i) internal business information (including information
relating to strategic and staffing plans and practices, business, training,
marketing, promotional and sales plans and practices, cost, rate and pricing
structures and accounting and business methods); (ii) identities of, individual
requirements of, specific contractual arrangements with, and information about,
the Companies' suppliers, distributors, customers, independent contractors or
other business relations and their confidential information; (iii) trade
secrets, know-how, compilations of data and analyses, techniques, systems,
formulae, recipes, research, records, reports, manuals, documentation, models,
data and data bases relating thereto; (iv) inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports and
all similar or related information (whether or not patentable); and (v) other
Intellectual Property Rights
"ENCUMBRANCE" means any Lien, charge, security interest, claim, pledge,
Tax, option, warrant, right, contract, call, commitment, equity, demand, proxy,
voting agreement, restriction on transfer (other than restrictions on transfer
under the Securities Act and applicable state securities laws) or other
encumbrance.
"ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all federal, state, local
and foreign statutes, regulations, ordinances and other provisions having the
force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law, in each case
concerning public health and safety, worker health and safety and pollution or
protection of the environment (including all those relating to the presence,
use, production, generation, handling, transport, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge,
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release, threatened release, control or cleanup of any hazardous or otherwise
regulated materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise, radiation or radon),
each as amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCESS DISTRIBUTIONS" means an amount equal to the excess (if any) by
which the aggregate distributions (other than distributions in the amount of
$4,913,320 set forth in the third and fourth columns of the Permitted
Distributions Schedule) made by the S Corps to the Sellers since September 30,
1999 exceed the Permitted Tax Distributions.
"EXECUTIVE SECURITIES" means the shares of ▇▇▇▇.▇▇▇'s Preferred Stock
and Common Stock issued to certain Sellers pursuant to the respective Executive
Purchase Agreements between each such Seller and ▇▇▇▇.▇▇▇.
"GAAP" means United States generally accepted accounting principles, as
in effect from time to time.
"GUARANTY" means any agreement, undertaking or arrangement by which any
Person guarantees, endorses or otherwise becomes or is contingently liable upon
the debt, obligation or other liability of any other Person (other than by
endorsements of instruments in the ordinary course of collection), or guaranties
of the payment of dividends or other distributions upon the shares of any other
Person.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"INCOME TAX PAYABLE" means an amount equal to the income or franchise
tax payable of Industries as of the Closing Date calculated in accordance with
GAAP consistently applied, plus any interest, penalties or additions to tax or
additional amounts in respect of the foregoing.
"INDEBTEDNESS" means, with respect to any Person at any date, without
duplication: (i) all obligations of such Person for borrowed money or in respect
of loans or advances, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments or debt securities, (iii) all
obligations in respect of letters of credit and bankers' acceptances issued for
the account of such Person, (iv) all obligations arising from cash/book
overdrafts, (v) all obligations arising from deferred compensation arrangements,
(vi) all obligations of such Person secured by a Lien, (vii) all Guaranties of
such Person in connection with any of the foregoing, (viii) all capital lease
obligations, (ix) all deferred rent, (x) all indebtedness for the deferred
purchase price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables
incurred in the ordinary course of business which are not past due), (xi) all
other liabilities classified as non-current liabilities in accordance with GAAP
as of the
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Closing Date, and (xii) all accrued interest, prepayment premiums or penalties
related to any of the foregoing.
"INTELLECTUAL PROPERTY RIGHTS" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) Internet domain names,
trademarks, service marks, trade dress, trade names, logos and corporate names
and registrations and applications for registration thereof together with all of
the goodwill associated therewith, (iii) copyrights (registered or unregistered)
and copyrightable works and registrations and applications for registration
thereof, (iv) mask works and registrations and applications for registration
thereof, (v) computer software, data, data bases and documentation thereof, (vi)
trade secrets and other confidential information (including ideas, formulas,
recipes, compositions, inventions (whether patentable or unpatentable and
whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vii) other intellectual property rights, and (viii) copies and tangible
embodiments thereof (in whatever form or medium).
"INVESTMENT" as applied to any Person means (i) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including limited
liability company interests, partnership interests and joint venture interests)
of any other Person, and (ii) any capital contribution by such Person to any
other Person.
"LIEN" means any mortgage, pledge, hypothecation, lien (statutory or
otherwise), preference, priority, security interest, security agreement,
easement, covenant, restriction or other encumbrance of any kind or nature
whatsoever (including any conditional sale or other title retention agreement
and any lease having substantially the same effect as any of the foregoing and
any assignment or deposit arrangement in the nature of a security device).
"▇▇▇▇.▇▇▇" means ▇▇▇▇.▇▇▇, Inc., a Delaware corporation and parent of
Buyer.
"MATERIAL ADVERSE EFFECT" means a material and adverse effect or
development upon the business, operations, assets, liabilities, financial
condition, value, business prospects, operating results, cash flow, net worth or
employee, customer or supplier relations of the Companies or their Subsidiaries.
"M&T CREDIT LINE" shall mean the Revolving Loan Agreement dated as of
February 11, 2000 among Equities, Manufacturers and Traders Trust Company, a New
York banking corporation, and the Guarantors named therein.
"PERMITTED LIENS" means (i) Liens that are set forth on the PERMITTED
LIENS SCHEDULE attached hereto, (ii) Liens for Taxes not delinquent or the
validity of which are being contested in good faith by appropriate proceedings
and as to which adequate reserves have been established on
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the Companies' financial statements in accordance with GAAP, (iii) statutory
landlord's, mechanic's, carrier's, workmen's, repairmen's or other similar Liens
arising or incurred in the ordinary course of business, and (iv) Liens arising
from zoning ordinances which are not violated by current use or occupancy of any
real property.
"PERMITTED TAX DISTRIBUTIONS" means, with respect to each Seller, an
amount equal to (A) 32.5% of such Seller's pro rata share of each S Corp's items
of gross income net of all items of loss and deduction, computed pursuant to the
provisions of Section 1366 or 702, as applicable, of the Code for the period
from October 1, 1999 through the day immediately preceding the Closing Date,
less (B) any tax credits for such period.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated association, corporation, limited liability
company, entity or governmental entity (whether federal, state, county, city or
otherwise and including any instrumentality, division, agency or department
thereof).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"SELLER REPRESENTATIVE" means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (irrespective of whether, at the time, stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company, association or other business entity, either (A) a majority of the
partnership or other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more Subsidiaries
of that Person or a combination thereof, or (B) such Person is a general
partner, managing member or managing director of such partnership, limited
liability company, association or other entity.
"TAX" means any (i) federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or other tax, of
any kind whatsoever, including any interest, penalties or additions to tax or
additional amounts in respect of the foregoing; (ii) liability of the Companies
for the payment of any amounts of the type described in clause (i) above arising
as a result of being (or ceasing to be) a member of any Affiliated Group (or
being included (or required to be included) in any Tax Return relating thereto);
and (iii) liability of the
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Companies for the payment of any amounts of the type described in clause (i)
above as a result of any express or implied obligation to indemnify or otherwise
assume or succeed to the liability of any other Person.
"TAX RETURNS" means returns, declarations, reports, claims for refund,
information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of any Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"TREASURY REGULATIONS" means the United States Treasury Regulations
promulgated under the Code, and any reference to any particular Treasury
Regulation section shall be interpreted to include any final or temporary
revision of or successor to that section regardless of how numbered or
classified.
ARTICLE II
PURCHASE AND SALE OF THE SHARES
2.1 BASIC TRANSACTION. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Buyer shall purchase from Sellers, and
Sellers shall sell, convey, assign, transfer and deliver to Buyer, all of the
Shares, free and clear of all Encumbrances.
2.2 CLOSING TRANSACTIONS.
(a) CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, at 9:00 a.m. local time on
August 3, 2000, or at such other time and/or place as is mutually agreeable to
the parties, or, if any of the conditions to Closing set forth in Article III
have not been satisfied at or waived by the party entitled to the benefit
thereof on or prior to such date, on the second business day following
satisfaction or waiver of such conditions (the "CLOSING DATE").
(b) DELIVERIES. At the Closing:
(i) Buyer shall pay to each Seller an amount equal to (A) the
percentage set forth opposite such Seller's name on the SCHEDULE OF SELLERS
attached hereto, MULTIPLIED BY (B) an amount equal to the Estimated Purchase
Price, by wire transfer of immediately available funds to the accounts set forth
on the BANK ACCOUNT SCHEDULE;
(ii) Sellers shall deliver to Buyer (A) certificates
representing the Shares (to the extent certificated) duly endorsed in blank or
accompanied by duly executed stock powers, with appropriate transfer stamps (if
any) affixed thereto, and (B) to the extent not certificated, duly executed
forms of assignment for such Shares;
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(iii) the Companies, Sellers and Buyer, as applicable, shall
deliver the opinions, certificates and other documents and instruments required
to be delivered by or on behalf of such party under Article III below; and
(iv) Sellers shall deliver to Buyer all corporate books and
records, including stock ledgers and minute books and other similar property of
the Companies in their possession.
2.3 PURCHASE PRICE.
(a) The aggregate purchase price to be paid for the Shares (the
"PURCHASE PRICE") shall be an amount equal to $91,700,000, MINUS (i) an amount
equal to the amount (if any) by which all Indebtedness (other than the amount of
Indebtedness incurred immediately prior to Closing to fund Permitted Tax
Distributions) of the Companies existing as of the end of the business day
immediately preceding the Closing Date as shown on the Final Purchase Price
Statement (as defined in Section 2.3(c) below and as prepared in accordance with
the provisions thereof) (the "CLOSING INDEBTEDNESS") is more than $6,300,000,
PROVIDED THAT any purchase price adjustment relating to the Closing Indebtedness
shall not exceed $1,000,000, MINUS (ii) $794,159.86, MINUS (iii) the Income Tax
Payable, and MINUS (iv) any Excess Distributions.
(b) Not less than two days prior to the Closing, the Seller
Representative will present to Buyer a good faith estimate of the Purchase Price
(the "PURCHASE PRICE STATEMENT"), including an estimate of the components of,
and the resulting calculation of, the Purchase Price (the "ESTIMATED PURCHASE
PRICE").
(c) Within 120 days following the Closing Date, Buyer shall deliver to
the Seller Representative a Purchase Price calculation (in its final and binding
form, the "FINAL PURCHASE PRICE STATEMENT"), setting forth the Closing
Indebtedness, the Income Tax Payable, the Excess Distributions and the resulting
Purchase Price calculated with reference to such amounts. The Final Purchase
Price Statement shall include all known adjustments required in a year-end
closing of the books and shall be prepared in accordance with GAAP and shall set
forth the Closing Indebtedness, the Income Tax Payable, the Excess Distributions
and the resulting Purchase Price calculated with reference thereto on a combined
and consolidated basis. Sellers shall cooperate as reasonably requested in
connection with the preparation of the Final Purchase Price Statement. During
the 20-day period immediately following the Seller Representative's receipt of
the Final Purchase Price Statement, Sellers shall be permitted to review the
Companies' books and records and the Companies' working papers related to the
preparation of the Final Purchase Price Statement and determination of the
Purchase Price. The Final Purchase Price Statement shall become final and
binding upon the parties 20 days following the Seller Representative's receipt
thereof, unless Sellers shall give written notice of their disagreement (a
"NOTICE OF DISAGREEMENT") to Buyer prior to such date. Any Notice of
Disagreement shall specify in reasonable detail the nature and dollar amount of
any disagreement so asserted and shall be delivered only if (and to the extent
that) Sellers reasonably and in good faith determine that the Final Purchase
Price Statement and the resulting Purchase Price calculated with reference
thereto delivered
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by Buyer has not been determined in accordance with the guidelines and
procedures set forth in this Agreement. If a timely Notice of Disagreement is
received by Buyer, then the Final Purchase Price Statement (as revised in
accordance with clause (x) or (y) below) shall become final and binding upon the
parties on the earliest of (x) the date the parties resolve in writing any
differences they have with respect to the matters specified in the Notice of
Disagreement, or (y) the date all matters in dispute are finally resolved in
writing by the New York office of PricewaterhouseCoopers LLP or, to the extent
that they are unable or unwilling to act as the accounting firm, another "big
five" accounting firm (other than Ernst & Young) selected by the parties (the
"ACCOUNTING FIRM"). During the 20 days following delivery of a Notice of
Disagreement, the parties shall seek in good faith to resolve in writing any
differences they have with respect to the matters specified in the Notice of
Disagreement. Following delivery of a Notice of Disagreement, Buyer and its
agents and representatives shall be permitted to review Sellers' and their
representatives' working papers relating to the Notice of Disagreement. At the
end of the 20-day period referred to above, the parties shall submit to the
Accounting Firm for review and resolution of all matters (but only such matters)
that remain in dispute and that were properly included in the Notice of
Disagreement. The parties shall instruct the Accounting Firm to make a final
determination of the Closing Indebtedness, the Income Tax Payable, the Excess
Distributions and the resulting Purchase Price calculated with reference to such
amounts to the extent such amounts are in dispute, in accordance with the
guidelines and procedures set forth in this Agreement. The parties will
cooperate with the Accounting Firm during the term of its engagement. The
parties shall instruct the Accounting Firm not to assign a value to any item in
dispute greater than the greatest value for such item assigned by Buyer, on the
one hand, or Sellers, on the other hand, or less than the smallest value for
such item assigned by Buyer, on the one hand, or Sellers, on the other hand. The
parties shall also instruct the Accounting Firm to make its determination based
solely on presentations by Buyer and Sellers which are in accordance with the
guidelines and procedures set forth in this Agreement (i.e., not on the basis of
an independent review). The Final Purchase Price Statement and the determination
of the Closing Indebtedness, the Income Tax Payable, the Excess Distributions
and the resulting Purchase Price calculated with reference thereto shall become
final and binding on the parties on the date the Accounting Firm delivers its
final resolution in writing to the parties (which final resolution shall be
requested by the parties to be delivered not more than 45 days following
submission of such disputed matters). The fees and expenses of the Accounting
Firm shall be shared equally by Buyer, on the one hand, and Sellers, on the
other hand; PROVIDED THAT if the Purchase Price as finally determined by the
Accounting Firm is not at least 10% greater than Buyer's calculation of the
Purchase Price then the Sellers shall pay all of the fees and expenses of the
Accounting Firm.
(d) Promptly after the Final Purchase Price Statement and the
determination of the Closing Indebtedness, the Income Tax Payable, the Excess
Distributions and the resulting Purchase Price calculated with reference to such
amounts become final and binding on the parties under Section 2.3(c) above, the
Estimated Purchase Price shall be recalculated by giving effect to the final and
binding Closing Indebtedness, Income Tax Payable and Excess Distributions (as
recalculated, the "FINAL PURCHASE PRICE"). If the Estimated Purchase Price is
greater than the Final Purchase Price, Sellers shall, and if the Final Purchase
Price is greater than the Estimated Purchase Price, Buyer shall, within three
business days after the Final Purchase Price Statement becomes final and binding
on the
- 9 -
parties, make payment by wire transfer to Buyer or Sellers, as the case may be,
in immediately available funds of the amount of such difference, together with
interest thereon at a rate per annum equal to the Applicable Rate, calculated on
the basis of the actual number of days elapsed over 360, from the Closing Date
to the date of payment.
ARTICLE III
CONDITIONS TO CLOSING
3.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or prior to the Closing Date:
(a) The representations and warranties in Article V hereof that are
subject to materiality qualifications shall be true and correct in all respects
at and as of the Closing and the representations and warranties contained in
Article V hereof that are not subject to materiality qualifications shall be
true and correct in all material respects at and as of the Closing, and each of
Sellers and the Companies shall have performed in all material respects all of
the covenants and agree ments required to be performed by Sellers and the
Companies hereunder prior to the Closing;
(b) Sellers and the Companies shall have received or obtained all
third-party consents, authorizations, waivers and approvals that are necessary
(i) for the consummation of the transactions contemplated hereby, or (ii) to
prevent a breach of or default under, or a termination, modification or
acceleration of, any instrument, contract, lease, license or other agreement
identified on the attached RESTRICTIONS SCHEDULE (collectively, the "THIRD-PARTY
APPROVALS"), in each case on terms reasonably satisfactory to Buyer;
(c) Buyer and the Companies shall have received or obtained all
governmental and regulatory consents, novations, approvals, licenses and
authorizations that are necessary (i) for the consummation of the transactions
contemplated hereby, or (ii) for Buyer to own the Shares and to operate the
businesses of and control the Companies following the Closing (including any
required approvals from the State of New York), in each case on terms and
conditions reasonably satisfactory to Buyer, and all applicable waiting periods
under the HSR Act shall have expired or been terminated (collectively, the
"GOVERNMENTAL APPROVALS");
(d) No suit, action or other proceeding shall be pending or threatened
before any court or governmental or regulatory official, body or authority or
any arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling or charge would (i) prevent the performance of this Agreement or the
consummation of any of the transactions contemplated hereby, or declare unlawful
any of the transactions contemplated hereby, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (iii)
affect adversely the right of Buyer to own the Shares or operate the businesses
of or control the Companies, or (iv) affect adversely the right of
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the Companies to own their respective assets or control their respective
businesses, and no such injunction, judgment, order, decree or ruling shall have
been entered or be in effect;
(e) Since September 30, 1999, there shall have been no material
adverse change or development or the discovery of an event or occurrence which
could be expected to have a material adverse change or development in the
business, financial condition, value, operating results, assets, liabilities,
operations, business prospects, cash flow, net worth or customer, supplier or
employee relations of the Companies taken as a whole (as determined by Buyer in
its sole discretion);
(f) Sellers shall have delivered to the Companies all property owned
by the Companies that is currently used by any persons who are not full-time
employees of the Companies;
(g) The Companies shall have obtained and delivered to Buyer a letter
of consent and estoppel and/or a landlord lien waiver agreement from each lessor
of Leased Realty and the Real Estate Leases in form and substance reasonably
satisfactory to Buyer and Buyer's lender and their special counsel;
(h) The respective employment arrangements between any Company and
each of the Sellers shall have been terminated. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall have
entered into an agreement for employment with the Companies in form
substantially the same as that attached hereto as EXHIBIT A-1 and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ shall have entered into an agreement for employment with the Companies
in form substantially the same as that attached hereto as EXHIBIT A-2 (the
"EMPLOYMENT AGREEMENTS"), and all of such agreements shall be in full force and
effect at the Closing;
(i) Each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall have entered
into an executive stock purchase agreement with ▇▇▇▇.▇▇▇ providing for the
purchase, in the aggregate, of $7,000,000 of capital stock of ▇▇▇▇.▇▇▇, each in
form substantially the same as that attached hereto as EXHIBIT B-1 (the "▇▇▇▇▇
PURCHASE AGREEMENTS"), and each of such agreements shall be in full force and
effect at the Closing;
(j) Each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have
entered into an executive stock purchase agreement with ▇▇▇▇.▇▇▇ providing for
the purchase, in the aggregate, of $2,000,000 of capital stock of ▇▇▇▇.▇▇▇, each
in form substantially the same as that attached hereto as EXHIBIT B-2 (together
with the ▇▇▇▇▇ Purchase Agreements, the "EXECUTIVE PURCHASE AGREEMENTS"), and
each of such agreements shall be in full force and effect at the Closing;
(k) Each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have entered into the Amended and Restated
Stockholders Agreement, dated as of June 12, 2000, among ▇▇▇▇.▇▇▇ and the
stockholders of ▇▇▇▇.▇▇▇ attached hereto as EXHIBIT C (the "STOCKHOLDERS
AGREEMENT"), and such agreement shall be in full force and effect at the
Closing;
(l) Each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have entered into the Amended and Restated
Registration Agreement, dated as of June
- 11 -
12, 2000, among ▇▇▇▇.▇▇▇ and the stockholders of ▇▇▇▇.▇▇▇ attached hereto as
EXHIBIT D (the "REGISTRATION AGREEMENT"), and such agreement shall be in full
force and effect at the Closing;
(m) One of the Companies shall have entered into agreements for the
lease of (i) ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ with F&M Properties LLC,
(ii) ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ with F&M Properties LLC and (iii) ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ with F.M.P. Holding Corp., each in form
substantially the same as that attached hereto as EXHIBIT E (the "REAL ESTATE
LEASES"), and the Real Estate Leases shall be in full force and effect at the
Closing;
(n) Buyer shall have received from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel
for Sellers and the Companies, an opinion with respect to the matters set forth
in EXHIBIT F attached hereto, which shall be addressed to Buyer and Buyer's
lenders, dated as of the Closing Date, and in form and substance reasonably
satisfactory to Buyer and Buyer's lenders;
(o) Buyer shall have received evidence (in form and substance
satisfactory to Buyer) that the Companies' and Sellers' legal counsel,
investment bankers and other agents and representatives have been paid in full
and that the Companies have no liability to any of their or Sellers' legal
counsel, investment bankers, agents or representatives;
(p) The Companies shall have obtained releases of all Liens (other
than any Permitted Liens) relating to the assets and properties of the Companies
and the Companies shall have obtained and delivered to Buyer and Buyer's lenders
payoff letters with respect to all Indebtedness for borrowed money outstanding
as of the Closing (in each case on terms and conditions satisfactory to Buyer);
(q) Sellers and the Companies shall have delivered to Buyer copies of
the Companies' interim monthly and year-to-date financial statements;
(r) The Companies' and their Subsidiaries' aggregate Indebtedness
shall not exceed $13,000,000;
(s) The Companies' auditors, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall have
consented to the use of their audited financial statements of the Companies and
their Subsidiaries as of and for the periods ending September 30, 1999,
September 30, 1998 and September 30, 1997 by ▇▇▇▇.▇▇▇ in any filing made by
▇▇▇▇.▇▇▇ with the Securities and Exchange Commission; and
(t) Sellers shall have delivered to Buyer (i) a certificate signed by
each of the Companies, dated the Closing Date, stating that the conditions
specified in subsections (a) through (s) above (other than subsection (n) above)
have been satisfied as of the Closing; (ii) a certificate from Sellers and the
Companies indicating their good faith and best estimates of (A) the Closing
Indebtedness (B) the Income Tax Payable and (C) the Excess Distributions; (iii)
copies of all Third-Party Approvals and Governmental Approvals; (iv) certified
copies of the resolutions of the Companies' board of directors authorizing the
execution, delivery and performance of this Agreement
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and the other agreements contemplated hereby and the consummation of the
transactions contemplated hereby and thereby; (v) the resignations, effective as
of the Closing, of each director of each Company; (vi) good standing
certificates for each of the Companies from their respective jurisdictions of
incorporation and each jurisdiction in which such Company is qualified to do
business as a foreign corporation, in each case dated as of a recent date prior
to the Closing Date; (vii) elections under Code Section 338(h)(10) for each of
the S Corps on Form 8023 (and any corresponding state or local income tax
elections), in accordance with its instructions and the Temporary Regulations
under Code Section 338(h)(10) (such elections shall be left blank so as to allow
for the allocation of the Purchase Price in accordance with Section 8.10(d)(iv)
hereof), and executed by each Seller; and (viii) such other documents or
instruments as are required to be delivered by Sellers or the Companies at the
Closing pursuant to the terms hereof or that Buyer reasonably requests prior to
the Closing Date to effect the transactions contemplated hereby.
All proceedings to be taken by Sellers and the Companies in connection
with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to effect the
transactions contemplated hereby reasonably requested by Buyer shall be
reasonably satisfactory in form and substance to Buyer and its special counsel.
Any condition specified in this Section 3.1 may be waived by Buyer if such
waiver is set forth in a writing duly executed by Buyer.
3.2 CONDITIONS TO SELLERS' OBLIGATIONS. The obligation of Sellers to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following condi tions at or prior to the Closing:
(a) The representations and warranties made by Buyer in Article VI
hereof shall be true and correct in all material respects at and as of the
Closing Date, and Buyer shall have performed in all material respects all the
covenants and agreements required to be performed by it hereunder prior to the
Closing;
(b) All applicable waiting periods under the HSR Act shall have
expired or been otherwise terminated;
(c) No suit, action or other proceeding shall be pending before any
court or governmental or regulatory official, body or authority wherein an
unfavorable injunction, judgment, order, decree or ruling would (i) prevent
consummation of the transactions contemplated by this Agreement or (ii) cause
the transactions contemplated by this Agreement to be rescinded following
consummation, and no such injunction, judgment, order, decree or ruling shall be
in effect;
(d) ▇▇▇▇.▇▇▇ shall have executed and delivered the Stockholders
Agreement, and the Stockholders Agreement shall be in full force and effect as
of the Closing;
(e) ▇▇▇▇.▇▇▇ shall have executed and delivered the Registration
Agreement, and the Registration Agreement shall be in full force and effect as
of the Closing;
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(f) ▇▇▇▇.▇▇▇ shall have executed and delivered each of the Executive
Purchase Agreements, and each of the Executive Purchase Agreements shall be in
full force and effect as of the Closing; and
(g) At the Closing, Buyer shall have delivered to the Seller
Representative (i) a certificate signed by Buyer, dated the date of the Closing,
stating that the conditions specified in subsection (a) above have been
satisfied and that the waiting period under the HSR Act has expired or been
terminated, (ii) certified copies of the resolutions of Buyer's board of
directors authorizing the execution, delivery and performance of this Agreement
and the other agreements contemplated hereby and the consummation of the
transactions contemplated hereby and thereby, and (iii) such other documents or
instruments as are required to be delivered by Buyer at the Closing pursuant to
the terms hereof or that Sellers reasonably request prior to the Closing Date to
effect the transactions contemplated hereby.
All proceedings to be taken by Buyer in connection with the
consummation of the trans actions contemplated hereby and all documents required
to be delivered by Buyer to effect the trans actions contemplated hereby
reasonably requested by Sellers or the Seller Representative shall be reasonably
satisfactory in form and substance to Sellers. Any condition specified in this
Section 3.2 may be waived if such waiver is set forth in a writing duly executed
by Sellers.
ARTICLE IV
[Intentionally Omitted]
ARTICLE V
REPRESENTATIONS AND WARRANTIES CONCERNING
THE COMPANIES AND SELLERS
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, each Seller and the Companies
hereby jointly and severally represent and warrant to Buyer that:
5.1 CAPACITY, ORGANIZATION, CORPORATE POWER AND LICENSES. Each Seller
has full power, authority and legal capacity to enter into this Agreement and
the other documents contemplated hereby to which such Seller is a party and to
perform his or her obligations hereunder and thereunder. Each of Equities and
Industries is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York and is qualified to do business
in every jurisdiction in which its ownership of property or conduct of business
requires it to qualify. Florida is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and is
qualified to do business in every jurisdiction in which its ownership of
property or conduct of business requires
- 14 -
it to qualify. Each of the Companies possesses all requisite corporate power and
authority and all licenses, permits and authorizations necessary to own and
operate its properties, to carry on its business as now conducted and presently
proposed to be conducted and to carry out the transactions contemplated by this
Agreement. The copies of the certificate or articles of incorporation and
by-laws for each Company, which have been furnished to Buyer's special counsel,
reflect all amendments made thereto at any time prior to the date of this
Agreement and are correct and complete. The minute books (containing the records
of meetings of the stockholders and board of directors), the stock certificate
books and the stock record books of the Companies are correct and complete in
all material respects. None of the Companies is in default under or in violation
of any provision of its certificate or articles of incorporation or by-laws. The
attached CAPITAL STOCK AND RELATED MATTERS SCHEDULE sets forth a list of the
officers and directors of each of the Companies.
5.2 CAPITAL STOCK AND RELATED MATTERS; TITLE TO SHARES. The entire
authorized, issued and outstanding capital stock of each of the Companies and
the par value per share of such capital stock is set forth on the CAPITAL STOCK
AND RELATED MATTERS SCHEDULE attached hereto. Each Seller is the record owner
of, and has good and marketable title to, all of the outstanding shares of
common stock of the Companies set forth opposite such Seller's name on the
SCHEDULE OF SELLERS, free and clear of all Encumbrances. At the Closing, Sellers
shall sell to Buyer good and marketable title to the Shares, free and clear of
all Encumbrances. None of the Companies has outstanding any stock, equity or
other securities convertible or exchangeable for any capital stock, or
containing any profit participation features, nor any rights or options to
subscribe for or to purchase its capital stock, or any stock or securities
convertible into or exchangeable for its capital stock, or any stock
appreciation rights or phantom stock plan. None of the Companies is subject to
any option or obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock or any warrants, options or
other rights to acquire its capital stock. None of the Companies has violated
any federal or state securities laws in connection with the offer, sale or
issuance of its capital stock. All of the outstanding shares of the Companies'
capital stock have been duly authorized, validly issued and are fully paid and
nonassessable. Except as set forth on the CAPITAL STOCK AND RELATED MATTERS
SCHEDULE attached hereto, there are no agreements between the Companies'
stockholders with respect to the voting or transfer of the Companies' capital
stock, or with respect to any other aspect of the Companies' affairs.
5.3 AUTHORIZATION; NONCONTRAVENTION. The execution, delivery and
performance of this Agreement and all of the other agreements and instruments
contemplated hereby to which the Companies are a party have been duly authorized
by each of the Companies, and no other corporate act or other proceeding on the
part of the Companies or the boards of directors of the Companies is necessary
to authorize the execution, delivery or performance of this Agreement or the
other agreements contemplated hereby and the consummation of the transactions
contemplated hereby or thereby. This Agreement has been duly executed and
delivered by each of the Companies and Sellers and constitutes a valid and
binding obligation of each of the Companies and Sellers, enforceable against
each in accordance with its terms, and each of the other agreements and
instruments contemplated hereby to which the Companies or any Seller is a party,
when executed and delivered by the Companies or such Seller(s), as applicable,
in accordance with the terms hereof and thereof, shall each constitute a valid
- 15 -
and binding obligation of such Person, enforceable in accordance with its
respective terms. Except as set forth on the attached RESTRICTIONS SCHEDULE and
except for any filing, notice or authorization required pursuant to the HSR Act,
the execution and delivery by the Companies and Sellers of this Agreement and
all of the other agreements and instruments contemplated hereby to which the
Companies or any Seller(s) is a party and the fulfillment of and compliance with
the respective terms hereof and thereof by the Companies and Sellers do not and
will not (a) conflict with or result in a breach of the terms, conditions or
provisions of, (b) constitute a default under (whether with or without the
passage of time, the giving of notice or both), (c) result in the creation of
any Lien upon any of the Companies' capital stock or assets pursuant to, (d)
give any third party the right to modify, terminate or accelerate any obligation
under, (e) result in a violation of, or (f) require any authorization, consent,
approval, exemption or other action of or by or notice or declaration to, or
filing with, any third party or any court or administrative or governmental body
or agency pursuant to, the Companies' charter documents, bylaws or other
constituent documents, or any law, statute, rule or regulation to which any of
the Companies or any Seller is subject, or any agreement, instrument, license,
permit, order, judgment or decree to which the Companies or any Seller is
subject. None of the Companies or any Seller is a party to or bound by any
written or oral agreement or understanding with respect to a Company Transaction
other than this Agreement, and each such Person has terminated all discussions
with third parties (other than with Buyer and its Affiliates) regarding Company
Transactions.
5.4 SUBSIDIARIES. None of the Companies has or has ever had any
Subsidiaries other than (i) F.M.P. Holding Corp., a New York corporation and
wholly-owned subsidiary of Industries, which was distributed to the stockholders
of Industries prior to the Closing and (ii) C and F Equipment Corp., a New York
corporation and wholly-owned subsidiary of Industries, which was merged with and
into Industries on July 2, 1996. None of the Companies owns or holds the right
to acquire any shares of stock or any other security or interest in any other
Person or has any obligation to make any Investment in any Person.
5.5 FINANCIAL STATEMENTS. Attached hereto as the FINANCIAL STATEMENTS
SCHEDULE are the following financial statements and open contracts schedule:
(a) the audited combined and consolidated balance sheet of the
Companies as of September 30, 1999 (after giving effect to the "Entries to be
Posted" chart attached thereto, the "SEPTEMBER BALANCE SHEET"), September 30,
1998 and September 30, 1997, and the related statements of income and cash flows
for the fiscal years then ended as audited by ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and the
footnotes thereto;
(b) the combined and consolidated balance sheet of the Companies as
of March 31, 2000 (after giving effect to the "Entries to be Posted" chart
attached thereto, the "MARCH BALANCE SHEET") and the related statements of
income and cash flows for the six-month period then ended;
(c) the reviewed combined and consolidated balance sheet of the
Companies as of March 31, 1999, March 31, 1998 and March 31, 1997, and the
related statements of income and cash flows for the six-month periods then ended
as reviewed by ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇; and
- 16 -
(d) the schedule of open contracts as of June 15, 2000 and July 15,
2000;
Each of the foregoing financial statements (after giving effect to the "Entries
to be Posted" chart attached thereto) and schedule of open contracts (including
in all cases the notes thereto, if any) is accurate and complete, is consistent
with the books and records of the Companies (which, in turn, are accurate and
complete), fairly presents the financial condition and operating results of the
Companies and has been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, subject in the case of unaudited
financial statements to the absence of footnote disclosures (none of which
footnote disclosures would, alone or in the aggregate be materially adverse to
the business, operations, assets, liabilities, financial condition, operating
results, value, cash flow or net worth of the Companies taken as a whole).
Except as set forth on the FINANCIAL STATEMENTS SCHEDULE, since the date of the
September Balance Sheet, there have been no changes in the Companies' reserve or
accrual amounts or policies.
5.6 ACCOUNTS RECEIVABLE. All accounts and notes receivable reflected
on the September Balance Sheet, the March Balance Sheet and all accounts and
notes receivable reflected on the books and records of the Companies generated
after the date of the March Balance Sheet (net of allowances for doubtful
accounts as reflected thereon and as determined in accordance with GAAP) are
valid receivables arising in the ordinary course of business and are current and
collectible at the aggregate recorded amount therefor as shown on the September
Balance Sheet, the March Balance Sheet and on the books and records of the
Companies, as the case may be (net of allowances for doubtful accounts as
reflected thereon and as determined in accordance with GAAP). No Person has any
Lien on such receivables or any part thereof, and no agreement for deduction,
free goods, discount or other deferred price or quantity adjustment has been
made with respect to any such receivables.
5.7 INVENTORY. The Companies' inventory consists of a quantity and
quality usable and salable in the ordinary course of business consistent with
past practice, is not obsolete, defective, damaged or slow-moving, is
merchantable and fit for its intended use, subject only to the reserves for
inventory write-down set forth on the face of the September Balance Sheet and
the March Balance Sheet (rather than the notes thereto) and as determined in
accordance with GAAP. The amount and mix of the Companies' inventory are
consistent with past practice. Inventory valuations are recorded on the books
and records of the Companies, and are reflected on the face of the September
Balance Sheet and the March Balance Sheet, in accordance with GAAP consistently
applied.
5.8 ABSENCE OF UNDISCLOSED LIABILITIES. None of the Companies has or
will have any obligation or liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Companies, whether due or
to become due and regardless of when or by whom asserted) arising out of any
transaction entered at or prior to the date hereof, or any action or inaction at
or prior to the date hereof, or any state of facts existing at or prior to the
date hereof, other than (a) liabilities reflected on the September Balance
Sheet, (b) liabilities and obligations which have arisen after the date of the
September Balance Sheet in the ordinary course of business and accurately
reflected on the Companies' books and records (none of which is a liability for
breach of contract, breach of warranty,
- 17 -
tort, infringement, violation of law, claim or lawsuit), (c) obligations under
contracts and commitments described on the attached CONTRACTS SCHEDULE and (d)
obligations under contracts and commitments entered into in the ordinary course
of business consistent with past practice which are not required to be disclosed
on the CONTRACTS SCHEDULE pursuant to Section 5.12 below (but not liabilities
for any breach of any such contract or commitment occurring on or prior to the
Closing Date).
5.9 NO MATERIAL ADVERSE EFFECT. Since September 30, 1999 there has
occurred no fact, event or circumstance which has had or would reasonably be
expected to have a Material Adverse Effect. Since September 30, 1999, each of
the Companies has conducted its business only in the ordinary course of business
consistent with past practice.
5.10 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth on the
attached DEVELOPMENTS SCHEDULE, since September 30, 1999, none of the Companies
has:
(a) issued any notes, bonds or other debt securities or any capital
stock, or other equity securities or any securities or rights convertible,
exchangeable or exercisable into any capital stock or other equity securities;
(b) borrowed any amount or incurred or become subject to any material
liabilities, except (i) current liabilities incurred in the ordinary course of
business consistent with past practice, or (ii) liabilities for borrowings
pursuant to the M&T Credit Line incurred in the ordinary course of business
consistent with past practice;
(c) discharged or satisfied any material Lien or paid any material
obligation or liability, other than current liabilities paid in the ordinary
course of business;
(d) declared, set aside or made any payment or distribution of cash
(other than Permitted Tax Distributions) or other property to any of its
stockholders with respect to such stockholder's capital stock or otherwise, or
purchased, redeemed or otherwise acquired any shares of its capital stock or
other equity securities (including any warrants, options or other rights to
acquire its capital stock or other equity);
(e) mortgaged or pledged any of its properties or assets or subjected
them to any Lien, except for Permitted Liens;
(f) sold, assigned, transferred, leased, licensed or otherwise
encumbered any of its tangible assets, except in the ordinary course of business
consistent with past practice, or canceled or forgiven any debts or claims;
(g) sold, assigned, transferred, leased, licensed or otherwise
encumbered any Intellectual Property Rights, disclosed any proprietary
confidential information to any Person (other than to Buyer and its Affiliates
and other than in the ordinary course of business consistent with past
- 18 -
practice in circumstances in which it has imposed reasonable confidentiality
restrictions), or abandoned or permitted to lapse any Intellectual Property
Rights;
(h) made or granted any bonus or any wage or salary increase to any
employee (including officers) or group of employees who receive more than
$40,000 in annual compensation from the Companies or made or started any bonus
or any wage or salary increase with respect to any employee (including officers)
or group of employees who receive less than $40,000 in annual compensation
outside the ordinary course of business (except as required by pre-existing
contracts described on the attached CONTRACTS SCHEDULE), or made or granted any
increase in any employee benefit plan or arrangement, or amended or terminated
any existing employee benefit plan or arrangement or adopted any new employee
benefit plan or arrangement or entered into, amended or terminated any
collective bargaining agreement or other agreement;
(i) implemented any plant closing or other layoff of employees that
could implicate the Worker Adjustment and Retraining Notification Act, as
amended, or any similar foreign, state or local law, regulation or ordinance;
(j) suffered any extraordinary losses or waived any rights of value
(whether or not in the ordinary course of business or consistent with past
practice) in excess of $25,000 in the aggregate;
(k) made capital expenditures or commitments therefor that amount in
the aggregate to more than $25,000;
(l) delayed or postponed the payment of any accounts payable or
commissions or any other liability or obligation or agreed or negotiated with
any party to extend the payment date of any accounts payable or commissions or
any other liability or obligation or accelerated the collection of (or
discounted) any accounts or notes receivable;
(m) made any loans or advances to, guaranties for the benefit of, or
any Investments in, any Person (other than advances to the Companies' employees
in the ordinary course of business consistent with past practice);
(n) made any charitable contributions or pledges exceeding in the
aggregate $10,000 or made any political contributions;
(o) suffered any damage, destruction or casualty loss exceeding in
the aggregate $25,000 whether or not covered by insurance;
(p) made any change in any method of accounting or accounting
policies or made any write-down in the value of its inventory that is material
or that is other than in the usual, regular and ordinary course of business
consistent with past practice, including changes in reserve or accrual amounts
or policies (whether or not in the ordinary course of business or consistent
with past practice);
- 19 -
(q) made any Investment in or taken any steps to incorporate any
Subsidiary;
(r) amended its certificate or articles of incorporation, by-laws or
other organizational documents;
(s) entered into any agreement or arrangement prohibiting or
restricting it from freely engaging in any business or otherwise restricting the
conduct of its business anywhere in the world;
(t) taken any action or failed to take any action that has, had or
would reasonably be expected to have the effect of accelerating to pre-Closing
periods sales to the trade or other customers that would otherwise be expected
to occur after the Closing;
(u) entered into any contract other than in the ordinary course of
business consistent with past practice, entered into any other material
transaction, whether or not in the ordinary course of business or consistent
with past practice, or materially changed any business practice; or
(v) agreed, whether orally or in writing, to do any of the foregoing.
5.11 ASSETS.
(a) The Companies have good and marketable title to, or a valid
leasehold interest in, all properties and assets used by the Companies, located
on their premises or shown on the September Balance Sheet, the March Balance
Sheet or acquired after the date thereof, free and clear of all Liens (other
than properties and assets disposed of for fair consideration in the ordinary
course of business since the date of the September Balance Sheet and the March
Balance Sheet and except for Liens disclosed on the September Balance Sheet and
the March Balance Sheet (including any notes thereto) and Permitted Liens). The
Companies own, have a valid leasehold interest in or have the valid and
enforceable right to use all assets, tangible or intangible, necessary for the
conduct of their business as presently conducted and as presently proposed to be
conducted. All of the Companies' buildings (including all components of such
buildings, structures and other improvements), equipment, machinery, fixtures,
improvements and other tangible assets (whether owned or leased) are in good
condition and repair (ordinary wear and tear excepted) and are fit for use in
the ordinary course of the Companies' business as presently conducted and as
presently proposed to be conducted. All such assets have been installed and
maintained in all material respects in accordance with all applicable laws,
regulations and ordinances. The attached ASSETS SCHEDULE sets forth and
describes in reasonable detail the actual out-of-pocket capital expenditures (as
determined in accordance with GAAP) made by the Companies during the
twelve-months ended September 30, 1999 and the twelve-months ended March 31,
2000.
(b) None of the Companies owns any real property or possesses any
right to acquire any real property. The LEASED REAL PROPERTY SCHEDULE attached
hereto contains a complete list of all real property leased or subleased by the
Companies (individually "LEASED REAL PROPERTY" and collectively, the "LEASED
REALTY"). The Companies have previously delivered to Buyer's special
- 20 -
counsel complete and accurate copies of each of the leases for the Leased Realty
(the "REALTY LEASES"). With respect to each Realty Lease: (i) the Realty Lease
is legal, valid, binding, enforceable and in full force and effect and will
continue to be legal, valid, binding, enforceable and in full force and effect
after the Closing; (ii) neither the Companies nor any other party to the Realty
Lease is in breach or default, and no event has occurred which, with notice or
lapse of time or both, could constitute such a breach or default or permit
termination, modification or acceleration under the Realty Lease; (iii) no party
to the Realty Lease has repudiated any provision thereof; (iv) there are no
disputes, oral agreements or forbearance programs in effect as to the Realty
Lease; (v) the Realty Lease has not been modified in any respect, except to the
extent that such modifications are disclosed by the documents delivered to
Buyer; and (vi) the Companies have not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the Realty Lease.
(c) F&M Properties LLC has fee simple title to the real property
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇ ▇▇▇▇ which is leased to the Companies pursuant to the Real Estate
Leases, free and clear of all Liens, except Permitted Liens and does not lease
or sublease the properties to any Person other than the Companies and does not
allow any Person other than the Companies to use such properties.
(d) F.M.P. Holding Corp. has fee simple title to the real property
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ which is leased to the Companies
pursuant to a Real Estate Lease, free and clear of all Liens, except Permitted
Liens and does not lease or sublease the property to any Person other than the
Companies and does not allow any Person other than the Companies to use such
property.
5.12 CONTRACTS AND COMMITMENTS.
(a) Except as set forth on the attached CONTRACTS SCHEDULE, none of
the Companies is a party to or bound by any written or oral:
(i) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to employees, former employees or consultants, or any other
employee benefit plan or arrangement, or any collective bargaining agreement or
any other contract with any labor union, or severance agreements, programs,
policies or arrange ments, contracts with any multi-employer organization or
association for the purpose of collective bargaining or collective bargaining
agreement administration, or subcontractor for whose non-compliance with
collective bargaining agreements any of the Companies are liable;
(ii) contract for the employment of any officer, individual
employee or other Person on a full-time, part-time, consulting or other basis or
relating to loans to officers, directors or Affiliates;
- 21 -
(iii) contract under which the Companies have advanced or loaned
any other Person amounts in the aggregate exceeding $25,000;
(iv) agreement or indenture relating to borrowed money or other
Indebtedness or the mortgaging, pledging or otherwise placing a Lien on any
material asset or material group of assets of the Companies;
(v) Guaranty, performance bond or similar agreement;
(vi) lease or agreement under which the Companies is lessee of
or holds or operates any property, real or personal, owned by any other party,
except for any lease of real or personal property under which the aggregate
annual rental payments do not exceed $25,000;
(vii) lease or agreement under which the Companies is lessor of
or permits any third party to hold or operate any property, real or personal,
owned or controlled by the Companies;
(viii) contract or group of related contracts with the same party
or group of affiliated parties the performance of which involves consideration
in the aggregate in excess of $25,000, other than purchase and sales orders
incurred in the ordinary course of business;
(ix) assignment, license, indemnification or agreement with
respect to any intangible property (including any Intellectual Property Rights);
(x) warranty agreement with respect to its services rendered or
its products sold or leased;
(xi) agreement under which it has granted any Person any
registration rights (including demand or piggyback registration rights);
(xii) sales, distribution, supply or franchise agreement;
(xiii) agreement with a term of more than six months which is not
terminable by the Companies upon less than 30 days' notice without penalty and
involves a consideration in excess of $25,000 annually;
(xiv) contract regarding voting, transfer or other arrangements
related to the Companies' capital stock or warrants, options or other rights to
acquire any of the Companies' capital stock;
(xv) contract or agreement prohibiting it from freely engaging
in any business or competing anywhere in the world; or
- 22 -
(xvi) any other agreement which is material to its operations and
business prospects or involves a consideration in excess of $25,000 annually.
(b) All of the contracts, leases, agreements and instruments set
forth or required to be set forth on the CONTRACTS SCHEDULE are valid, binding
and enforceable in accordance with their respective terms and will be in full
force and effect without penalty in accordance with their terms upon
consummation of the transactions contemplated hereby. Except as set forth on the
CONTRACTS SCHEDULE, (i) each of the Companies and their respective
subcontractors has performed all obligations required to be performed by it and
is not in default under or in breach of nor in receipt of any claim of default
or breach under any contract, lease, agreement or instrument to which the
Companies are subject; (ii) no event has occurred which with the passage of time
or the giving of notice or both would result in a default, breach or event of
noncompliance by the Companies under any contract, lease, agreement or
instrument to which the Companies are subject; (iii) none of the Companies has
any present expectation or intention of not fully performing all such
obligations; (iv) no partially-filled or unfilled customer purchase order or
sales order is subject to cancellation or any other material modification by the
other party thereto or is subject to any penalty, right of set-off or other
charge by the other party thereto for late performance or delivery; and (v)
neither the Companies nor any Seller has knowledge of any breach or anticipated
breach by the other parties to any contract, lease, agreement, instrument or
commitment to which they are parties. None of the Companies is a party to any
contract, agreement or commitment the performance of which could reasonably be
expected to have a Material Adverse Effect.
(c) Buyer's counsel has been supplied with a true and correct copy of
each of the written instruments, plans, contracts and agreements and an accurate
description of each of the oral arrangements, contracts and agreements which are
referred to on the attached CONTRACTS SCHEDULE, together with all amendments,
waivers or other changes thereto.
5.13 INTELLECTUAL PROPERTY RIGHTS.
(a) The attached INTELLECTUAL PROPERTY SCHEDULE contains a complete
and accurate list of all (i) patented or registered Intellectual Property Rights
owned or, to the Companies' or any Seller's knowledge, used by the Companies,
(ii) pending patent applications and applications for other registrations of
Intellectual Property Rights filed by or on behalf of the Companies, and (iii)
material unregistered Intellectual Property Rights owned or used by the
Companies. The attached INTELLECTUAL PROPERTY SCHEDULE also contains a complete
and accurate list of all licenses and other rights granted by the Companies to
any third party with respect to any Intellectual Property Rights and all
licenses and other rights granted by any third party to the Companies with
respect to any Intellectual Property Rights, in each case identifying the
subject Intellectual Property Rights. The Companies own and possess all right,
title and interest to, or have the right to use pursuant to a valid and
enforceable license, all Intellectual Property Rights necessary for the
operation of the businesses of the Companies as presently conducted and as
presently proposed to be conducted, free and clear of all Liens. Without
limiting the generality of the foregoing, the Companies own and possess all
right, title and interest in and to all Intellectual Property Rights created or
developed by the Companies' employees and independent contractors or under the
direction or supervision of the' employees or independent contractors relating
- 23 -
to the businesses of the Companies or to the actual or demonstratively
anticipated research or development conducted by the Companies. Except as set
forth on the attached INTELLECTUAL PROPERTY SCHEDULE, the loss or expiration of
any Intellectual Property Right or related group of Intellectual Property Rights
owned or used by the Companies has not had and would not reasonably be expected
to have a Material Adverse Effect, and no loss or expiration of any Intellectual
Property Right is threatened, pending or, to the Companies' or any Seller's
knowledge, reasonably foreseeable. The Companies have taken all necessary steps
to maintain and protect the Intellectual Property Rights which they own and use.
To the Companies' and Sellers' knowledge, the owners of any Intellectual
Property Rights licensed to the Companies have taken commercially reasonable
action to maintain and protect the Intellectual Property Rights which are
subject to such licenses.
(b) Except as set forth on the attached INTELLECTUAL PROPERTY
SCHEDULE, (i) there have been no claims made against the Companies asserting the
invalidity, misuse or unenforceability of any of the Intellectual Property
Rights owned or used by the Companies and, to the Companies' and each Seller's
knowledge, there is no basis for any such claim, (ii) neither the Companies nor
any Seller has received any notices of, and has no knowledge of any facts that
indicate a likelihood of, any infringement or misappropriation by, or conflict
with, any third party with respect to any Intellectual Property Rights
(including any demand or request that the Companies license any rights from a
third party), (iii) the conduct of the Companies' businesses has not infringed,
misappropriated or conflicted with and does not infringe, misappropriate or
conflict with any Intellectual Property Rights of other Persons, and (iv) to the
Companies' and each Seller's knowledge, the Intellectual Property Rights owned
by or licensed to the Companies have not been infringed, misappropriated or
conflicted by other Persons. The transactions contemplated by this Agreement
will not have a Material Adverse Effect on the Companies' right, title or
interest in and to the Intellectual Property Rights listed (or required to be
listed) on the INTELLECTUAL PROPERTY SCHEDULE and all of such Intellectual
Property Rights shall be owned or available for use by the Companies on
identical terms and conditions immediately after the Closing.
(c) Except as disclosed on the INTELLECTUAL PROPERTY SCHEDULE, none
of the computer software, computer firmware, computer hardware (whether general
or special purpose) or other similar or related computer systems or software
that are used or relied on by Companies in the conduct of its business will
malfunction, will cease to function, will generate incorrect data or will
produce incorrect results when processing, providing or receiving (i)
date-related data from, into and between the twentieth and twenty-first
centuries or (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
5.14 LITIGATION. Except as set forth on the attached LITIGATION
SCHEDULE and matters for which the Companies are fully insured, there are no
actions, suits, proceedings (including any arbitration proceedings), orders,
investigations or claims pending or, to the Companies' or any Seller's
knowledge, threatened against or affecting the Companies or their assets (or to
the Companies' or any Seller's knowledge, pending or threatened against or
affecting any of the officers, directors or employees of the Companies with
respect to their business or proposed business activities), or pending or
threatened by the Companies against any Person, at law or in equity, or before
or by any governmental department, commission, board, bureau, agency or
instrumentality (including any actions,
- 24 -
suits, proceedings or investigations with respect to the transactions
contemplated by this Agreement); none of the Companies is subject to any
arbitration proceedings under collective bargaining agreements or otherwise or
any governmental investigations or inquiries; and, to the Companies' or any
Seller's knowledge, there is no basis for any of the foregoing. The foregoing
includes, without limitation, actions pending or threatened involving the prior
employment of any of the Companies' employees, their use in connection with the
Companies' businesses of any information or techniques allegedly proprietary to
any of their former employers or their obligations under any agreements with
prior employers. None of the Companies is subject to any judgment, order or
decree of any court or other governmental agency, and none of the Companies has
received any opinion or memorandum or advice from legal counsel to the effect
that it is exposed, from a legal standpoint, to any material liabilities. There
are no actions, suits, proceedings (including any arbitration proceedings),
orders, investigations or claims pending or, to the Companies' or any Seller's
knowledge, threatened against or affecting any Seller in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with the
transactions contemplated hereby.
5.15 COMPLIANCE WITH LAWS.
(a) Each of the Companies has complied and is in compliance with all
applicable laws, ordinances, codes, rules, requirements and regulations of
foreign, federal, state and local governments and all agencies thereof relating
to the operation of its business and the maintenance and operation of its
properties and assets. No notices have been received by and no claims have been
filed against the Companies alleging a violation by any of the Companies or
their respective subcontractors of any such laws, ordinances, codes, rules,
requirements or regulations. None of the Companies has made any bribes, kickback
payments or other similar payments of cash or other consideration, including
payments to customers or clients or employees of customers or clients for
purposes of doing business with such Persons.
(b) Each of the Companies holds and is in compliance with all
permits, licenses, bonds, approvals, certificates, registrations, accreditations
and other authorizations of all foreign, federal, state and local governmental
agencies required for the conduct of its business and the ownership of its
properties (including as the same relate to Environmental and Safety
Requirements), and the attached PERMITS SCHEDULE sets forth a list of all of
such material permits, licenses, bonds, approvals, certificates, registrations,
accreditations and other authorizations. No notices have been received by the
Companies alleging the failure to hold any of the foregoing. All of such
permits, licenses, bonds, approvals, accreditations, certificates, registrations
and authorizations will be available for use by the Companies immediately after
the Closing.
5.16 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth on the
attached ENVIRONMENTAL SCHEDULE:
(a) Each of the Companies and their respective Affiliates has
complied with and is in compliance with all Environmental and Safety
Requirements.
- 25 -
(b) Without limiting the generality of the foregoing, each of the
Companies and their respective Affiliates has obtained and complied with, and is
in compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental and Safety Requirements for the occupation of
their facilities and the operation of their businesses.
(c) None of the Companies has received any oral or written notice,
report or other information regarding any actual or alleged violation of
Environmental and Safety Requirements or any liabilities or potential
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to it
or its facilities arising under Environmental and Safety Requirements.
(d) Neither this Agreement nor the consummation of the transactions
contemplated hereby will result in any obligations for site investigation or
cleanup, or notification to or consent of any government agencies or third
parties under any Environmental and Safety Requirements (including any so called
"transaction-triggered" or "responsible property transfer" laws and
regulations).
(e) None of the following exists at any property or facility owned,
occupied or operated by the Companies: (i) underground storage tanks; (ii)
asbestos-containing material in any form or condition; (iii) materials or
equipment containing polychlorinated biphenyls; or (iv) landfills, surface
impoundments or other disposal areas.
(f) None of the Companies or their respective Affiliates has treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled or released any substance (including any hazardous substance) or owned,
occupied or operated any facility or property (and no such property or facility
is contaminated by any such substance) in a manner that has given or could give
rise to any liabilities (including any liability for response costs, corrective
action costs, personal injury, natural resource damages, property damage or
attorneys fees or any investigative, corrective or remedial obligations)
pursuant to CERCLA or any other Environmental and Safety Requirements.
(g) No facts, events or conditions relating to the past or present
facilities, properties or operations of the Companies, or any of their
respective predecessors or Affiliates will prevent, hinder or limit continued
compliance with Environmental and Safety Requirements, give rise to any
investigatory, remedial or corrective obligations pursuant to Environmental and
Safety Requirements, or give rise to any other liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to Environmental and
Safety Requirements, including without limitation any relating to on-site or
off-site releases or threatened releases of hazardous materials, substances or
wastes, personal injury, property damage or natural resources damage.
(h) None of the past or present properties or facilities of the
Companies is listed on any local, state or federal lists or registries of
contaminated, potentially-contaminated or waste disposal sites.
- 26 -
(i) To the knowledge of the Companies, no spills, releases, disposal
or any other environmental condition exists or has occurred on any real property
adjoining or in the vicinity of any property or facility of the Companies.
(j) None of the Companies has, either expressly or by operation of
law, assumed, undertaken or otherwise become subject to, any liability including
any obligation for corrective, investigatory or remedial action of any other
Person relating to any Environmental and Safety Requirements.
(k) The Sellers and each of the Companies have furnished to Buyer all
environmental audits, reports and other material environmental documents
(whether completed or commenced) relating to the current and former operations
and facilities of the Companies and their respective Affiliates, which are in
their possession, custody or control.
5.17 EMPLOYEES. The attached EMPLOYEES SCHEDULE correctly sets forth
the name, job title and current annual salary of each of the Companies'
employees receiving more than $40,000 in annual compensation and whether any
employees are absent from active employment, including, but not limited to,
leave of absence or disability. Except as set forth on the attached EMPLOYEES
SCHEDULE, (a) none of the Companies is aware that any executive or key employee
of the Companies or any group of employees of the Companies has any plans to
terminate employment with the Companies; (b) the Companies have complied with
all laws relating to the employment of labor (including provisions thereof
relating to wages, hours, safety and health, equal opportunity, collective
bargaining and the payment of social security and other Taxes), and none of the
Companies is aware that it has any labor relations problems (including any union
organization activities, work jurisdictional disputes, claims by labor
organizations for indemnification against contractual defaults by the Companies'
subcontractors, threatened or actual strikes or work stoppages or material
grievances); and (c) neither the Companies nor any of their respective employees
are subject to any noncompete, nondisclosure, confidentiality, employment,
consulting or similar agreements relating to, affecting or in conflict with the
present or proposed business activities of the Companies, except for agreements
between the Companies and their present and former employees. The EMPLOYEES
SCHEDULE sets forth the bonuses paid and reasonably expected to be paid to the
Companies' officers and employees during calendar years 1999 and 2000 (through
the Closing Date) and for the fiscal year ended September 30, 1999.
5.18 EMPLOYEE BENEFITS PLANS.
(a) The attached EMPLOYEE BENEFITS SCHEDULE sets forth an accurate
and complete list of each "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) and each other employee benefit plan, program or
arrangement providing benefits to current or former employees (including any
bonus plan, plan for deferred compensation, retirement, severance, sick leave,
employee health or other welfare benefit plan or other arrangement), at any time
maintained, sponsored, or contributed to by the Companies, or with respect to
which the Companies have any liability or potential liability. Each such item
listed on the attached EMPLOYEE BENEFITS SCHEDULE is referred to herein as a
"PLAN."
- 27 -
(b) Except as set forth on the attached EMPLOYEE BENEFITS SCHEDULE,
the Companies do not have any obligation to contribute to (or any other
liability, including current or potential withdrawal liability, with respect to)
any "multiemployer plan" (as defined in Section 3(37) of ERISA) ("MULTIEMPLOYER
PLAN") or any employee benefit plan that is a "defined benefit plan" (as defined
in Section 3(35) of ERISA), whether or not terminated. With respect to each
Multiemployer Plan, (i) none of the Companies has incurred, or reasonably
expects to incur, a complete or partial withdrawal under Section 4201 of ERISA,
(ii) each of the Companies has made or accrued for all required contributions to
such plan on a timely basis and will have made all such contributions as of the
Closing Date, and (iii) such plan is not insolvent or in reorganization, nor
does it have an accumulated funding deficiency, and none of the Companies knows
of any reason why such plan would become insolvent or be in reorganization or
have an accumulated funding deficiency in the foreseeable future.
(c) The Companies do not have any obligation under any Plan or
otherwise to provide medical, health, life insurance or other welfare-type
benefits to current or future retired or terminated employees (except for
limited continued medical benefit coverage required to be provided under Section
4980B of the Code or as required under applicable state law).
(d) Except as set forth on the EMPLOYEE BENEFITS SCHEDULE under the
heading "Profit Sharing Plans," the Companies does not maintain, contribute to
or have any liability or potential liability under (or with respect to) any
employee benefit plan that is a "defined contribution plan" (as defined in
Section 3(34) of ERISA), whether or not terminated.
(e) For purposes of this Section 5.18, the term "Companies" includes
all entities treated as a single employer with the Companies pursuant to Section
414 of the Code.
(f) With respect to the Plans, all required or recommended (in
accordance with historical practices) payments, premiums, contributions,
reimbursements or accruals for all periods ending prior to or as of the Closing
will have been made or properly accrued or reserved for on the September Balance
Sheet or the March Balance Sheet, as applicable. None of the Plans has any
unfunded liabilities which are not reflected on the September Balance Sheet or
the March Balance Sheet, as applicable.
(g) The Plans and all related trusts, insurance contracts and funds
have been maintained, funded and administered in compliance in all material
respects with their terms and with the applicable provisions of ERISA, the Code
and other applicable laws. Neither the Companies nor any trustee or
administrator of any Plan has engaged in any transaction with respect to the
Plans which would subject the Companies or any trustee or administrator of the
Plans, or any party dealing with any such Plan, nor do the transactions
contemplated by this Agreement constitute transactions which would subject any
such party, to either a civil penalty assessed pursuant to Section 502(i) of
ERISA or the tax or penalty on prohibited transactions imposed by Section 4975
of the Code. No actions, suits or claims with respect to the assets of the Plans
(other than routine claims for benefits) are pending or, to the Companies' or
any Seller's knowledge, threatened which could result in or subject the
Companies to any liability, and there are no circumstances which would give rise
to or be expected to give rise to any
- 28 -
such actions, suits or claims. No liability to the Pension Benefit Guaranty
Corporation or otherwise under Title IV of ERISA has been or could be incurred
by the Companies.
(h) Each of the Plans which is intended to be qualified under Section
401(a) of the Code has received a favorable determination from the Internal
Revenue Service that such plan is qualified under Section 401(a) of the Code,
and there are no circumstances which would adversely affect the qualified status
of any such Plan.
(i) The Companies have provided Buyer with true and complete copies
of all documents pursuant to which the Plans are maintained, funded and
administered, and the most recent annual reports (Form 5500 and attachments) for
the Plans.
5.19 INSURANCE. The attached INSURANCE SCHEDULE contains a description
of each insurance policy maintained by the Companies with respect to its
properties, assets and businesses, setting forth the type of coverage, the
annual premiums and deductibles, the coverage amounts therefor and an indication
whether such policy is on a "claims made" or "incurrence" basis, and each such
policy is in full force and effect. None of the Companies is in default with
respect to its obligations under any insurance policy maintained by it, and none
of the Companies has been denied insurance coverage. The insurance coverage of
the Companies is of a kind and type routinely carried by corporations of similar
size engaged in similar lines of business. No insurer has advised any of the
Companies that it intends to reduce coverage, increase premiums or fail to renew
any existing policy or binder. There are no facts upon which an insurer might be
justified in reducing coverage or increasing premiums on existing policies or
binders. Except as set forth on the INSURANCE SCHEDULE, no insurer has denied or
threatened to deny any claim that any of the Companies has made against such
insurer. Except as set forth on the INSURANCE SCHEDULE, none of the Companies
has any self-insurance or co-insurance programs, and the reserves set forth on
the September Balance Sheet and the March Balance Sheet are adequate to cover
all anticipated liabilities with respect to any such self-insurance or
co-insurance programs.
5.20 TAX MATTERS.
(a) Each of the Companies has timely filed all Tax Returns required
to be filed by it, each such Tax Return has been prepared in compliance with all
applicable laws and regulations, and all such Tax Returns are true and accurate.
The attached TAXES SCHEDULE lists all federal, state, local and foreign Tax
Returns filed with respect to any of the Companies for taxable periods that
ended on or after September 30, 1997. All Taxes due and payable by the Companies
(whether or not shown or required to be shown on any Tax Return) have been paid
and the Companies have withheld and paid over to the appropriate taxing
authority all Taxes which they are required to withhold from amounts paid or
owing to any employee, stockholder, creditor or other third party. All Taxes
accrued but not yet due are accrued on the September Balance Sheet, accrued on
the March Balance Sheet and included in the Income Tax Payable amount.
(b) Except as set forth on the attached TAXES SCHEDULE:
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(i) none of the Companies has requested or been granted an
extension of the time for filing any Tax Return which has not yet been filed;
(ii) none of the Companies has consented to extend to a date
later than the date hereof the time in which any Tax may be assessed or
collected by any taxing authority;
(iii) no deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Tax has been proposed, asserted
or assessed by any taxing authority against the Companies;
(iv) there is no action, suit, taxing authority proceeding or
audit now in progress, pending or, to the Companies' or any Seller's knowledge,
threatened against or with respect to the Companies;
(v) the Companies do not reasonably expect any taxing authority
to claim or assess any amount of additional Taxes against the Companies;
(vi) no claim has ever been made by a taxing authority in a
jurisdiction where any of the Companies, respectively, does not file Tax Returns
claiming that any of the Companies, respectively, is or may be subject to Taxes
assessed by such jurisdiction;
(vii) none of the Companies has made any election under Section
341(f) of the Code (or any corresponding provision of state, local or foreign
income Tax law);
(viii) none of the Companies has made any payments, is obligated
to make any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under Code Section 280G;
(ix) none of the Companies has been a United States real
property holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section 897(c)(1)(A)(ii);
(x) none of the Companies will be required (A) as a result of a
change in method of accounting for a taxable period ending on or prior to the
Closing Date, to include any adjustment in taxable income for any taxable period
(or portion thereof) ending after the Closing Date, (B) as a result of any
"closing agreement," as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign income Tax law), to include
any item of income in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date, (C) as a
result of any sale reported on the installment method, to include in taxable
income any amount from a sale in a taxable period ending on or prior to the
Closing Date, or (D) as a result of any prepaid amount received in a taxable
period ending on or prior to the Closing Date, to include in taxable income such
amount (or portion thereof) for any taxable period (or portion thereof) ending
after the Closing Date;
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(xi) none of the Companies (A) is or has been a member of an
Affiliated Group, (B) is a party to or bound by any Tax allocation or Tax
sharing agreement or (C) has any current or potential contractual obligation to
indemnify any Person (other than any of the Companies) 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;
(xii) Buyer will not be required to deduct and withhold any
amount pursuant to Section 1445(a) of the Code upon the transfer of any cash or
property pursuant to this Agreement;
(xiii) each of Equities and Florida (collectively, the "S CORPS")
has made a valid election under Code Section 1362, effective March 19, 1987 and
January 16, 1998, respectively, to be an S corporation for all taxable years
since its inception through and including the current year and has made all
corresponding valid elections, where required, in the states in which it does
business and such elections have not been terminated;
(xiv) none of the S Corps has or has ever had any Subsidiary;
(xv) none of the Companies will be liable for any Tax under Code
Section 1374 in connection with the deemed sale of their assets caused by the
Section 338(h)(10) Election. None of the Companies has, in the past 10 years,
(A) acquired assets from another corporation in a transaction in which any
company's Tax basis for the acquired assets was determined, in whole or in part,
by reference to the Tax basis of the acquired assets (or any other property) in
the hands of the transferor, or (B) acquired any stock of any corporation which
is a qualified Subchapter S subsidiary;
(xvi) Since September 30, 1999, the Companies, in the aggregate,
have not made distributions to any Sellers (other than distributions agreed to
by Buyer relating to Tax periods ending on or prior to September 30, 1999) in
order to pay such Seller's federal and state income tax liabilities in excess of
Permitted Tax Distributions and the aggregate amount of any distributions made
since such date is disclosed on the PERMITTED DISTRIBUTIONS SCHEDULE; and
(xvii) $1,000,000 of distributions made by the S Corps to the
Sellers on March 31, 2000 were used by the Sellers to pay Taxes attributable to
S Corp income relating to Tax periods ending on or prior to September 30, 1999.
5.21 SELLERS BROKERAGE AND TRANSACTION BONUSES. There are no claims
for brokerage commissions, finders' fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement or
agreement binding upon any Seller or any of the Companies. There are no special
bonuses or other similar compensation payable to any employee of the Companies
in connection with the transactions contemplated hereby. Sellers shall pay, and
hold the Companies, Buyer and its Affiliates harmless against, any liability,
loss or expense (including reasonable attorneys' fees and out-of-pocket
expenses) arising in connection with any such claim or special bonus or other
similar compensation.
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5.22 BANK ACCOUNTS. The BANK ACCOUNT SCHEDULE attached hereto lists
all of the Companies' bank accounts (designating each authorized signatory and
the level of each signatory's authorization).
5.23 NAMES AND LOCATIONS. Except as set forth on the attached NAMES
AND LOCATIONS SCHEDULE, during the five-year period prior to the execution and
delivery of this Agreement, none of the Companies or their respective
predecessors has used any name or names under which it has invoiced account
debtors, maintained records concerning its assets or otherwise conducted
business. All of the tangible assets and properties of the Companies are located
at the locations set forth on the NAMES AND LOCATIONS SCHEDULE.
5.24 AFFILIATE TRANSACTIONS. Except as set forth on the attached
AFFILIATED TRANSACTIONS SCHEDULE, no officer, director, stockholder, employee or
Affiliate of any of the Companies or, to the Companies' or any Seller's
knowledge, any individual related by blood, marriage or adoption to any such
individual or any entity in which any such Person or individual owns any
beneficial interest, is a party to any agreement, contract, commitment or
transaction with the Companies or has any interest in any property used by the
Companies (including any Intellectual Property Rights). None of the Companies
has paid any fees, expenses or costs of the type described in Section 8.6 below
that are to be paid by Sellers pursuant to Section 8.6 below.
5.25 SERVICE WARRANTIES. All services rendered by the Companies have
been in conformity in all material respects with all applicable contractual
commitments and all express and implied warranties, and none of the Companies
has any liability (and, to the Companies' or any Seller's knowledge, there is no
reasonable basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against it giving rise to any
such liability) for curing or providing additional services or other damages in
connection therewith in excess of any warranty reserve specifically established
with respect thereto and included on the face of the September Balance Sheet and
the March Balance Sheet (rather than the notes thereto). No services rendered by
the Companies are subject to any guaranty, warranty or other indemnity beyond
the applicable standard terms and conditions of such sale (including as a result
of any course of conduct between the Companies and any Person or as a result of
any statements in any of the Companies' service or promotional literature). None
of the Companies has been notified of any claims for (and neither the Companies
nor any Seller has any knowledge of any threatened claims for) any extraordinary
warranty obligations or additional services relating to any of its services.
5.26 CUSTOMERS AND SUPPLIERS. The CUSTOMERS AND SUPPLIERS SCHEDULE
attached hereto sets forth (a) a list of the top twenty customers of the
Companies (on a consolidated basis) (by volume of revenues from such customers),
and (b) a list of the top ten suppliers of the Companies (on a consolidated
basis) (by volume of purchases from such suppliers), for the fiscal year ended
September 30, 1999 and the six-month period ended March 31, 2000 and, with
respect to such customers, the committed volume of purchases by such customers
for the fiscal year ended September 30, 1999 and the six-month period ended
March 31, 2000, and prices related thereto. None of the Companies has received
any indication from any material customer of the Companies to the effect that,
and none of the
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Companies has any reason to believe that, such customer will stop, materially
decrease the rate of, or materially change the terms (whether related to
payment, price or otherwise) with respect to, buying products and services from
the Companies (whether as a result of the consummation of the transactions
contemplated hereby or otherwise). None of the Companies has received any
indication from any material supplier to the Companies to the effect that, and
neither the Companies has any reason to believe that, such supplier will stop,
materially decrease the rate of, or materially change the terms (whether related
to payment, price or otherwise) with respect to, supplying materials, products
or services to the Companies (whether as a result of the consummation of the
transactions contemplated hereby or otherwise).
5.27 DISCLOSURE. Neither this Article V or any of the Exhibits or
Schedules attached hereto nor any of the written statements, documents,
certificates or other items prepared and supplied to Buyer or its Affiliates (or
their representatives or agents) by or on behalf of the Companies or Sellers in
connection with the transactions contemplated hereby, when taken together as a
whole, contain any untrue statement of a material fact or omit a material fact
necessary to make each statement contained herein or therein, in light of the
circumstances in which they were made, not misleading. There is no fact which
the Companies have not disclosed to Buyer in writing and of which any of their
stockholders, officers, directors or executive employees is aware which has had
or would reasonably be expected to have a Material Adverse Effect.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Sellers and the Companies to enter into this
Agreement and to consummate the transactions contemplated hereby, Buyer hereby
represents and warrants to Sellers and the Companies as follows:
6.1 ORGANIZATION AND POWER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer has all requisite corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder.
6.2 CAPITALIZATION. The authorized capital stock of Buyer consists of
1,000 shares of common stock, of which 1,000 shares of common stock are issued
and outstanding. All of such capital stock has been validly issued, is fully
paid and nonassessable, and has not been issued in violation of any preemptive
rights or rights of refusal. There are no voting trusts, proxies or any other
agreements or understandings with respect to the voting of the capital stock of
Buyer. Buyer is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock.
6.3 AUTHORIZATION. The execution, delivery and performance by Buyer
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly
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authorized by Buyer and no other corporate act or proceeding on the part of
Buyer, its board of directors or stockholders is necessary to authorize the
execution, delivery or performance of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Buyer, and this Agreement constitutes a valid and binding
obligation of Buyer, enforceable against it in accordance with its terms.
6.4 NO VIOLATION. Buyer is not subject to nor obligated under its
certificate of incorporation or by-laws, or any applicable law, rule or
regulation of any governmental authority, or any agreement, instrument, license
or permit, or subject to any order, writ, injunction or decree, which would be
breached or violated by its execution, delivery or performance of this Agreement
or the consummation of the transactions contemplated hereby.
6.5 GOVERNMENTAL AUTHORITIES AND CONSENTS. Except as required
pursuant to the HSR Act, no permit, consent, approval or authorization of, or
declaration to or filing with, any governmental or regulatory authority or any
other Person is required in connection with the execution, delivery or
performance of this Agreement by Buyer or the consummation by Buyer of the
transactions contemplated hereby.
6.6 LITIGATION. There are no actions, suits, proceedings, orders or
investigations pending or, to Buyer's knowledge, threatened against or affecting
Buyer, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would adversely affect Buyer's
performance of its obligations under this Agreement or the consummation of the
transactions contemplated hereby.
6.7 BROKERAGE. Except as set forth on the attached BUYER BROKERAGE
SCHEDULE, there are no claims for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Buyer.
ARTICLE VII
[Intentionally Omitted]
ARTICLE VIII
ADDITIONAL AGREEMENTS; COVENANTS AFTER CLOSING
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties in this Agreement and the Schedules and Exhibits attached hereto
or in any writing delivered by any party to another party in connection with
this Agreement shall survive the Closing as follows:
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(a) the representations and warranties in Section 5.15 (Compliance
with Laws), Section 5.16 (Environmental and Safety Matters), Section 5.18
(Employee Benefits Plans) and Section 5.20 (Tax Matters) shall terminate when
the applicable statutes of limitations with respect to the liabilities in
question expire (after giving effect to any extensions or waivers thereof), PLUS
thirty (30) days;
(b) the representations and warranties in Section 5.1 (Capacity,
Organization, Corporate Powers and Licenses), Section 5.2 (Capital Stock and
Related Matters; Title to Shares), Section 5.3 (Authorization;
Noncontravention), Section 5.4 (Subsidiaries), Section 5.21 (Sellers Brokerage
and Transaction Bonuses), Section 6.7 (Buyer Brokerage) and the last sentence of
Section 6.3 (Authorization) shall not terminate; and
(c) all other representations and warranties in this Agreement and
the Schedules and Exhibits attached hereto or in any writing delivered by any
party to another party in connection with this Agreement shall terminate on the
second anniversary of the Closing;
PROVIDED THAT any representation or warranty in respect of which indemnity may
be sought under Section 8.2 below, and the indemnity with respect thereto, shall
survive the time at which it would otherwise terminate pursuant to this Section
8.1 if notice of the inaccuracy or breach or potential inaccuracy or breach
thereof giving rise to such right or potential right of indemnity shall have
been given to the party against whom such indemnity may be sought prior to such
time (regardless of when the Losses in respect thereof may actually be
incurred). The representations and warranties in this Agreement and the
Schedules and Exhibits attached hereto or in any writing delivered by any party
to another party in connection with this Agreement shall survive for the periods
set forth in this Section 8.1 and shall in no event be affected by any
investigation, inquiry or examination made for or on behalf of any party, or the
knowledge of any party's officers, directors, stockholders, employees or agents
or the acceptance by any party of any certificate or opinion hereunder.
8.2 INDEMNIFICATION.
(a) INDEMNIFICATION BY SELLERS. Each Seller shall jointly and
severally indemnify Buyer and its Affiliates, stockholders, officers, directors,
employees, agents, partners, representatives, successors and assigns
(collectively, the "BUYER PARTIES") and save and hold each of them harmless
against and pay on behalf of or reimburse such Buyer Parties as and when
incurred for any loss, liability, diminution in value, lost profit, demand,
claim, action, cause of action, cost, damage, consequential damage, deficiency,
Tax, penalty, fine or expense, whether or not arising out of third-party claims
(including interest, penalties, reasonable attorneys' fees and expenses and all
amounts paid in investigation, defense or settlement of any of the foregoing)
(collectively, "LOSSES"), which any such Buyer Party may suffer, sustain or
become subject to, as a result of, in connection with, relating or incidental to
or by virtue of: (i) any breach by the Companies or any Seller of any
representation or warranty made by the Companies or any Seller in this Agreement
or any of the Schedules or Exhibits attached hereto, or in any of the
agreements, certificates or other instruments or documents furnished by the
Companies or the Sellers pursuant to this Agreement; (ii) any nonfulfillment or
breach of any
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covenant, agreement or other provision by the Companies or any Seller under this
Agreement or any of the Schedules and Exhibits attached hereto; (iii) any
action, demand, proceeding, investigation or claim by any Person against or
affecting the Companies or any Buyer Party which, if successful, would give rise
to or evidence the existence of or relate to a breach of any of the
representations, warranties, covenants or agreements of the Companies or any
Seller under this Agreement; (iv) any Taxes of the Companies with respect to any
Tax year or portion thereof ending on or before the Closing Date as determined
pursuant to Section 8.10 hereof; or (v) any of the matters set forth on the
INDEMNIFICATION SCHEDULE attached hereto; PROVIDED THAT Sellers shall not have
any liability under clause (i) above (other than with respect to the
representations and warranties contained in Section 5.1 (Capacity, Organization,
Corporate Power and Licenses), Section 5.2 (Capital Stock and Related Matters;
Title to Shares), Section 5.3 (Authorization/ Noncontravention), Section 5.4
(Subsidiaries), Section 5.20 (Tax Matters), Section 5.21(Sellers Brokerage and
Transaction Bonuses) and Section 5.24 (Affiliate Transactions)) unless the
aggregate of all Losses relating thereto for which Sellers would, but for this
proviso, be liable exceeds on a cumulative basis an amount equal to $200,000
(and then Sellers shall be liable for only such Losses in excess of the $200,000
deductible amount); and PROVIDED FURTHER that Sellers' aggregate liability under
clause (i) above (other than with respect to the representations and warranties
contained in Section 5.1 (Capacity, Organization, Corporate Power and Licenses),
Section 5.2 (Capital Stock and Related Matters; Title to Shares), Section 5.3
(Authorization/Noncontravention), Section 5.4 (Subsidiaries), Section 5.20 (Tax
Matters), Section 5.21 (Sellers Brokerage and Transaction Bonuses) and Section
5.24 (Affiliate Transactions)), shall in no event exceed $25,000,000 (with it
being understood, however, that nothing in this Agreement (including this
Section 8.2(a)) shall limit or restrict any of the Buyer Parties' rights to
maintain or recover any amounts in connection with any action or claim based
upon fraudulent misrepresentation or deceit).
(b) INDEMNIFICATION BY BUYER. Buyer agrees to and shall indemnify
Sellers and hold them harmless against any Losses which Sellers may suffer,
sustain or become subject to, as the result of, in connection with, relating or
incidental to or by virtue of the breach by Buyer of any representation,
warranty, covenant or agreement made by Buyer in this Agreement; PROVIDED THAT
Buyer shall not have any liability unless the aggregate of all Losses relating
thereto for which Buyer would, but for this proviso, be liable exceeds on a
cumulative basis an amount equal to $200,000 (and then Buyer shall be liable for
only such Losses in excess of the $200,000 deductible amount); and PROVIDED
FURTHER that Buyer's aggregate liability shall in no event exceed $25,000,000.
(c) MANNER OF PAYMENT. Except as otherwise provided herein, any
indemnification of the Buyer Parties or Sellers pursuant to this Section 8.2
shall be effected by wire transfer of immediately available funds from Sellers
or Buyer, as the case may be, to an account(s) designated by the applicable
Buyer Party or Sellers, as the case may be, within ten days after the
determination thereof. Any such indemnification payments shall include interest
at the Applicable Rate calculated on the basis of the actual number of days
elapsed over 360, from the date any such Loss is suffered or sustained to the
date of payment. Any amounts owing from Sellers pursuant to this Section 8.2
shall be made directly by Sellers (i) in accordance with the terms of this
Section 8.2(c), and/or (ii) at the option of Buyer, by delivery by Sellers to
Buyer of a certificate or certificates representing Executive Securities having
an aggregate value (based on the cost of such shares to Sellers as of the
Closing),
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equal to the amounts owing, duly endorsed in blank or accompanied by duly
executed stock powers. The Buyer Parties shall be entitled to (but shall not be
required to) set-off any amounts due or payable to any of the Buyer Parties by
Sellers pursuant to this Section 8.2 against any amounts otherwise due and
payable by any of the Buyer Parties or any of their Affiliates to Sellers
(including any amounts payable by Buyer in respect of its capital stock). All
indemnification payments under this Section 8.2 shall be deemed adjustments to
the Purchase Price set forth in Section 2.3(a) above.
(d) DEFENSE OF THIRD-PARTY CLAIMS. Any Person making a claim for
indemnification under this Section 8.2 (an "INDEMNITEE") shall notify the
indemnifying party (an "INDEMNITOR") of the claim in writing promptly after
receiving written notice of any action, lawsuit, proceeding, investigation or
other claim against it (if by a third party), describing the claim, the amount
thereof (if known and quantifiable) and the basis thereof; PROVIDED THAT the
failure to so notify an Indemnitor shall not relieve the Indemnitor of its
obligations hereunder except to the extent that (and only to the extent that)
such failure shall have caused the damages for which the Indemnitor is obligated
to be greater than such damages would have been had the Indemnitee given the
Indemnitor prompt notice hereunder. Any Indemnitor shall be entitled to
participate in the defense of such action, lawsuit, proceeding, investigation or
other claim giving rise to an Indemnitee's claim for indemnification at such
Indemnitor's expense, and at its option (subject to the limitations set forth
below) shall be entitled to assume the defense thereof by appointing a
recognized and reputable counsel acceptable to the Indemnitee to be the lead
counsel in connection with such defense; PROVIDED THAT prior to the Indemnitor
assuming control of such defense it shall first (i) verify to the Indemnitee in
writing that such Indemnitor shall be fully responsible (with no reservation of
any rights) for all liabilities and obligations relating to such claim for
indemnification (without regard to any dollar limitations otherwise set forth
herein) and that it shall provide full indemnification (whether or not otherwise
required hereunder) to the Indemnitee with respect to such action, lawsuit,
proceeding, investigation or other claim giving rise to such claim for
indemnification hereunder, and (ii) enter into an agreement with the Indemnitee
in form and substance satisfactory to the Indemnitee, which agreement
unconditionally guarantees the payment and performance of any liability or
obligation which may arise with respect to such action, lawsuit, proceeding,
investigation or facts giving rise to such claim for indemnification hereunder;
and PROVIDED FURTHER, that:
(i) the Indemnitee shall be entitled to participate in the
defense of such claim and to employ counsel of its choice for such purpose;
PROVIDED THAT the fees and expenses of such separate counsel shall be borne by
the Indemnitee (other than any fees and expenses of such separate counsel that
are incurred prior to the date the Indemnitor effectively assumes control of
such defense which, notwithstanding the foregoing, shall be borne by the
Indemnitor, and except that the Indemnitor shall pay all of the fees and
expenses of such separate counsel if the Indemnitee has been advised by counsel
that a reasonable likelihood exists of a conflict of interest between the
Indemnitor and the Indemnitee);
(ii) the Indemnitor shall not be entitled to assume control of
such defense (unless otherwise agreed to in writing by the Indemnitee) and shall
pay the fees and expenses of counsel retained by the Indemnitee if (1) the claim
for indemnification relates to or arises in connection with
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any criminal or quasi-criminal proceeding, action, indictment, allegation or
investigation; (2) the Indemnitee reasonably believes an adverse determination
with respect to the action, lawsuit, investigation, proceeding or other claim
giving rise to such claim for indemnification would be detrimental to or injure
the Indemnitee's reputation or future business prospects; (3) the claim seeks an
injunction or equitable relief against the Indemnitee; (4) the Indemnitee has
been advised by counsel that a reasonable likelihood exists of a conflict of
interest between the Indemnitor and the Indemnitee; (5) the claim involves
environmental matters in which case the Indemnitee shall have sole control and
management authority over the resolution of such claim (including hiring legal
counsel and environmental consultants, conducting environmental investigations
and cleanups, negotiating with governmental agencies and third parties and
defending or settling claims and actions); PROVIDED THAT the Indemnitee shall
keep the Indemnitor apprised of any major developments relating to any
environmental claim; or (6) upon petition by the Indemnitee, the appropriate
court rules that the Indemnitor failed or is failing to vigorously prosecute or
defend such claim; and
(iii) if the Indemnitor shall control the defense of any such
claim, the Indemnitor shall obtain the prior written consent of the Indemnitee
before entering into any settlement of a claim or ceasing to defend such claim
if, pursuant to or as a result of such settlement or cessation, injunctive or
other equitable relief will be imposed against the Indemnitee or if such
settlement does not expressly and unconditionally release the Indemnitee from
all liabilities and obligations with respect to such claim, without prejudice.
(e) CERTAIN WAIVERS; ETC. Each Seller hereby agrees that he or she
shall not make any claim for indemnification against Buyer, the Companies or any
of their respective Affiliates by reason of the fact that such Seller is or was
a stockholder, director, officer, manager, member, employee or agent of the
Companies or any of their Affiliates or is or was serving at the request of the
Companies or any of their Affiliates as a partner, trustee, director, officer,
employee or agent of another entity (whether such claim is for judgments,
damages, penalties, fines, costs, amounts paid in settlement, losses, expenses
or otherwise and whether such claim is pursuant to any statute, charter
document, bylaw, agreement or otherwise) with respect to any action, suit,
proceeding, complaint, claim or demand brought by any of the Buyer Parties
against such Seller pursuant to this Agreement or applicable law or otherwise,
and each Seller hereby acknowledges and agrees that he or she shall not have any
claim or right to contribution or indemnity from the Companies or any of their
Affiliates with respect to any amounts paid by him or her pursuant to this
Agreement or otherwise. Effective upon the Closing, each Seller hereby
irrevocably waives, releases and discharges the Companies and their Affiliates
from any and all liabilities and obligations to it, him or her of any kind or
nature whatsoever, whether in his or her capacity as a stockholder, officer,
director, manager or member of the Companies or any of their Affiliates or
otherwise (including in respect of any rights of contribution or indemnification
but excluding compensation otherwise payable as an employee of the Companies),
in each case whether absolute or contingent, liquidated or unliquidated, known
or unknown, and whether arising under any agreement or understanding (other than
this Agreement and any of the other agreements executed and delivered in
connection herewith) or otherwise at law or equity, and each Seller agrees that
he or she shall not seek to recover any amounts in connection therewith or
thereunder from the Companies or any of their Affiliates. In no event shall the
Companies or any of their Affiliates have any liability
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whatsoever to any Seller for any breaches of the representations, warranties,
agreements or covenants of the Companies hereunder, and in any event no Seller
may seek contribution from the Companies or any of their Affiliates in respect
of any payments required to be made by a Seller pursuant to this Agreement.
Notwithstanding the foregoing, a Seller shall maintain any existing
indemnification claim against any Company if (i) the subject matter of such
claim is not a breach of any of the provisions of this Agreement, (ii) such
Seller is otherwise entitled to be indemnified by such Company pursuant to its
charter or bylaws by reason of the fact that such Seller was an officer or
director of such Company, and (iii) such Seller is fully exonerated from any
wrongdoing with respect to the subject matter of the Seller's indemnification
claim.
8.3 MUTUAL ASSISTANCE. Buyer, the Companies and each Seller agrees
that they will mutually cooperate in the expeditious filing of all notices,
reports and other filings with any governmental authority required to be
submitted jointly by the Sellers, the Companies and Buyer (or any combination
thereof) in connection with the execution and delivery of this Agreement and/or
the other agreements contemplated hereby and the consummation of the
transactions contemplated hereby or thereby.
8.4 NON-COMPETITION; NON-SOLICITATION.
(a) Each Seller hereby acknowledges that he or she is familiar with
the Companies' trade secrets and with other Confidential Information. Each
Seller acknowledges and agrees that the Companies would be irreparably damaged
if he or she were to provide services to or otherwise participate in the
business of any Person competing with the Companies in a similar business and
that any such competition by such Seller would result in a significant loss of
goodwill by the Companies. Each Seller further acknowledges and agrees that the
covenants and agreements set forth in this Section 8.4 were a material
inducement to Buyer to enter into this Agreement and to perform its obligations
hereunder, and that Buyer and its stockholders would not obtain the benefit of
the transaction set forth in this Agreement as specifically negotiated by the
parties hereto if such Seller breached the provisions of this Section 8.4.
Therefore, each Seller agrees, in further consideration of the amounts to be
paid hereunder for the Shares and the goodwill of the Companies sold by Sellers,
that until the fifth anniversary of the Closing, such Seller shall not (and
shall cause his or her Affiliates not to), directly or indirectly, own any
interest in, manage, control, participate in (whether as an officer, director,
employee, partner, agent, representative or otherwise), consult with, render
services for, or in any other manner engage anywhere in the Restricted
Territories in any business engaged directly or indirectly in excavation work,
heavy highway or road construction, paving, utility excavation, pipeline
construction, or fiber optic cable or conduit excavation and/or installation;
PROVIDED THAT nothing herein shall prohibit a Seller or a Seller's Affiliate
from being a passive owner of not more than 2% of the outstanding stock of any
class of securities of a corporation which is publicly traded so long as none of
such Persons has any active participation in the business of such corporation.
For purposes of this Agreement, "RESTRICTED TERRITORIES" shall mean the United
States of America. Each Seller acknowledges that the Companies' businesses have
been conducted, or are presently proposed to be conducted, throughout the
Restricted Territories and that the geographic restrictions set forth above are
reasonable and necessary to protect the goodwill of the Companies' businesses
being sold by Sellers pursuant to this
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Agreement. Notwithstanding the foregoing, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall not be
prohibited by this Section 8.4(a) from engaging in the business of residential
real estate development, PROVIDED THAT any aspect of such real estate
development relating to utility excavation or installation shall be provided to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ by a subcontractor, and Buyer and its Affiliates shall have a
right of first refusal to perform such work at the lowest cost bid for such
work.
(b) No Seller may (and each Seller shall cause his or her Affiliates
not to) directly, or indirectly through another Person, (i) induce or attempt to
induce any employee of the Companies or any of their Affiliates to leave the
employ of the Companies or any of their Affiliates, or in any way interfere with
the relationship between the Companies or any of their Affiliates and any
employee thereof, (ii) hire any person who was an employee of the Companies or
any of the Company's Affiliates at any time during the six-month period
immediately prior to the date on which such hiring would take place (it being
conclusively presumed by the parties so as to avoid any disputes under this
Section 8.4(b) that any such hiring within such six-month period is in violation
of clause (i) above), or (iii) for so long as any Seller has continuing
obligations under Section 8.4(a) above, call on, solicit or service any
customer, supplier, licensee, licensor or other business relation of the
Companies or any of their Affiliates (including any Person that was a customer,
supplier or other material business relation of the Company or any of its
Subsidiaries or Affiliates at any time during the 12-month period immediately
prior to such call, solicit or service) in order to induce or attempt to induce
such Person to cease doing business with the Companies or any of their
Affiliates, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Companies or any of
its Affiliates (including making any negative statements or communications about
the Companies or any of its Affiliates).
(c) If, at the time of enforcement of the covenants contained in this
Section 8.4 (the "RESTRICTIVE COVENANTS"), a court shall hold that the duration,
scope or area restrictions stated herein are unreasonable under circumstances
then existing, the parties agree that the maximum duration, scope or area
reasonable under such circumstances shall be substituted for the stated
duration, scope or area and that the court shall be allowed and directed to
revise the restrictions contained herein to cover the maximum period, scope and
area permitted by law. Each Seller has consulted with legal counsel regarding
the Restrictive Covenants and based on such consultation has determined and
hereby acknowledges that the Restrictive Covenants are reasonable in terms of
duration, scope and area restrictions and are necessary to protect the goodwill
of the Companies' business and the substantial investment in the Companies made
by Buyer hereunder. Each Seller further acknowledges and agrees that the
Restrictive Covenants are being entered into by him or her in connection with
the sale by such Seller of the Shares and the goodwill of the Companies'
business pursuant to this Agreement and not directly or indirectly in connection
with such Seller's employment or other relationship with the Company.
(d) If any Seller or any Affiliate of any Seller breaches, or
threatens to commit a breach of, any of the Restrictive Covenants, the Companies
shall have the following rights and remedies, each of which rights and remedies
shall be independent of the others and severally
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enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to the Companies or their Affiliates at law or in
equity:
(i) the right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being agreed
that any breach or threatened breach of the Restrictive Covenants would cause
irreparable injury to the Companies and that money damages would not provide an
adequate remedy to the Company; and
(ii) the right and remedy to require Sellers to account for and
pay over to the Companies any profits, monies, accruals, increments or other
benefits derived or received by such Person as the result of any transactions
constituting a breach of the Restrictive Covenants.
In the event of any breach or violation by any Seller of any of the
Restrictive Covenants, the time period of such covenant shall be tolled until
such breach or violation is resolved.
8.5 PRESS RELEASE AND ANNOUNCEMENTS. After the Closing, Buyer and the
Companies may issue any such releases of information without the consent of any
other party hereto.
8.6 EXPENSES. Except as otherwise provided herein, Sellers and Buyer
shall pay all of their own respective fees, costs and expenses (including fees,
costs and expenses of legal counsel, investment bankers, brokers or other
representatives and consultants and appraisal fees, costs and expenses) incurred
in connection with the negotiation of this Agreement, the performance of its
obligations hereunder and the consummation of the transactions contemplated
hereby. In addition, Sellers shall pay all fees, costs and expenses of the
Companies incurred in connection with the negotiation of this Agreement, the
performance of their obligations hereunder and the consummation of the
transactions contemplated hereby, and the Companies shall not pay any fees,
costs or expenses (including legal and accounting fees, costs and expenses)
arising in connection with the transactions contemplated hereby if the
transactions are consummated. Notwithstanding the foregoing, Buyer shall
reimburse Sellers for up to $50,000 of fees, costs and expenses incurred by the
Sellers or the Companies in connection with the negotiation of this Agreement,
the performance of their obligations hereunder and the consummation of the
transactions contemplated hereby. Damages suffered by Buyer for a breach of this
Agreement shall in no way be limited by the amounts described in this Section
8.6.
8.7 SPECIFIC PERFORMANCE. The Companies, the Sellers and Buyer
acknowledge and agree that the other parties would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in accordance
with its specific terms or is otherwise breached. Accordingly, the Companies,
the Sellers and Buyer agree that the other parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court in
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the United States or in any state having jurisdiction over the parties and the
matter in addition to any other remedy to which they may be entitled pursuant
hereto.
8.8 FURTHER ASSURANCES. In the event that at any time after the
Closing any further action is necessary or desirable to carry out the purposes
of this Agreement, each of the parties hereto will take such further action
(including the execution and delivery of such further instruments and documents)
as any other party hereto reasonably may request. Sellers acknowledge and agree
that, from and after the Closing, Buyer will be entitled to possession of all
documents, books, records (including Tax records), agreements and financial data
of any sort relating to the Companies. Sellers shall not in any manner take any
action which is designed, intended or might be reasonably anticipated to have
the effect of discouraging customers, suppliers, lessors, licensors and other
business associates from maintaining the same business relationships with the
Companies and their Affiliates at any time after the date of this Agreement as
were maintained with the Companies and their Affiliates prior to the date of
this Agreement.
8.9 CONFIDENTIALITY. Each Seller agrees not to disclose or use at any
time (and each Seller shall cause each of his or her Affiliates not to use or
disclose at any time) any Confidential Information, except to the extent that
such disclosure or use is directly related to and required by the performance of
such Seller's duties to the Companies as an officer or employee. Each Seller
further agrees to take all appropriate steps (and to cause each of his or her
Affiliates to take all appropriate steps) to safeguard such Confidential
Information and to protect it against disclosure, misuse, espionage, loss and
theft. In the event any Seller or any Affiliate of a Seller is required by law
to disclose any Confidential Information, Sellers shall promptly notify Buyer in
writing, which notification shall include the nature of the legal requirement
and the extent of the required disclosure, and Sellers shall cooperate with
Buyer and the Companies to preserve the confidentiality of such information
consistent with applicable law.
8.10 TAX MATTERS.
(a) TAX PERIODS ENDING ON OR BEFORE SEPTEMBER 30, 1999. Sellers shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the Companies for all periods ending on or prior to September 30, 1999 or
for which the date of measurement for such Tax occurs prior to September 30,
1999 which are filed after September 30, 1999. All such Tax Returns shall be
prepared in accordance with past practice insofar as they relate to the
Companies. Sellers shall permit Buyer to review and comment on each such Tax
Return prior to filing. Sellers shall reimburse Buyer for Taxes of the Companies
with respect to such periods within fifteen (15) days prior to any payment by
Buyer or the Companies of such Taxes to the extent such Taxes were not accrued
as a liability on the Final Purchase Price Statement and did not reduce the
Purchase Price pursuant to Section 2.3 of this Agreement. Notwithstanding any
other provision of this Agreement, Sellers shall be liable for, and shall
indemnify and hold the Buyer Parties harmless against, all Taxes attributable to
or arising out of the failure of each of the S Corps to be qualified as an "S
corporation" at any time.
- 42 -
(b) TAX PERIODS BEGINNING BEFORE SEPTEMBER 30, 1999 AND ENDING AFTER
SEPTEMBER 30, 1999. Buyer shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns of the Companies for Tax periods which begin
before September 30, 1999 and end after September 30, 1999 ("STRADDLE TAX
RETURNS"). Buyer shall permit Sellers to review and comment on each such Tax
Return prior to filing. Any portion of any Tax which must be paid in connection
with the filing of a Straddle Tax Return, to the extent attributable to any
period or portion of a period ending on or before September 30, 1999, shall be
referred to herein as "SELLER PERIOD TAXES." Sellers shall pay to Buyer an
amount equal to the Seller Period Taxes due with any Straddle Tax Returns (to
the extent such Taxes are not accrued as a liability on the Final Purchase Price
Statement and did not reduce the Purchase Price pursuant to Section 2.3 of this
Agreement) at least ten (10) days before Buyer is required to cause to be paid
the related Tax liability. Where the Seller Period Taxes involve a period which
begins before September 30, 1999 and ends after September 30, 1999, such Seller
Period Taxes shall be calculated as though the taxable year of the Companies
terminated as of the close of business on September 30, 1999; PROVIDED, HOWEVER,
that in the case of a tax not based on income, receipts, proceeds, profits or
similar items, Seller Period Taxes shall be equal to the amount of tax for the
taxable period multiplied by a fraction, the numerator of which shall be the
number of days from the beginning of the taxable period through the Closing Date
and the denominator of which shall be the number of days in the taxable period.
All determinations necessary to give effect to the foregoing allocations shall
be made in a manner consistent with prior practice of the Company.
Notwithstanding the foregoing, Sellers shall be liable for, and shall indemnify
and hold Buyer and its Affiliates harmless against, any Taxes or adverse
consequences arising out of the distribution of stock of F.M.P. Holding Corp. to
the stockholders of Industries, all Taxes attributable to the making of the
Section 338(h)(10) Election and any Taxes arising out of the failure of each of
the S Corps to be qualified as an "S corporation" at any time. In addition,
Sellers shall be liable for and shall indemnify and hold Buyer and its
Affiliates harmless against (i) all Taxes imposed on the Companies on or prior
to the Closing Date if such Taxes are determined on a basis other than the
income of the Companies (including, but not limited to sales, use, transfer,
registration, value added, excise, natural resources, severance stamp, etc.);
and (ii) interest, penalties or additions to Seller Period Taxes or Taxes in
respect of the Tax periods ending on or before the Closing Date.
(c) COOPERATION ON TAX MATTERS.
(i) Sellers, the Companies and Buyer shall cooperate fully, as
and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Section 8.10 and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include signing any Tax Return, amended Tax Returns, claims or other documents
necessary to settle any Tax controversy, the retention and (upon the other
party's request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Sellers agree to retain all
books and records with respect to Tax matters pertinent to the Companies
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by Buyer,
any extensions thereof) of the respective taxable periods, and to abide by all
record retention
- 43 -
agreements entered into with any taxing authority and to give Buyer reasonable
written notice prior to transferring, destroying or discarding any such books
and records and, if the other party so requests, Buyer shall allow Sellers to
take possession of such books and records.
(ii) Buyer shall have the right to participate in any Tax
proceeding related to a pre-Closing Tax year of the Companies which may have the
effect of increasing Buyer's or the Companies' Tax liability for any Tax period
ending after the Closing, and Sellers shall not settle or compromise any such
proceeding without Buyer's prior written consent; PROVIDED HOWEVER, Buyer hereby
agrees to consent if Sellers fully indemnify Buyer for any increase in Buyer's
or the Companies' Tax liability.
(iii) Buyer and Sellers further agree, upon request by the other,
to use their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
(iv) Without the prior written consent (which shall not be
unreasonably withheld) of Buyer, neither any of Sellers nor the Companies shall
make or change any election, change an annual accounting period, file any
amended Tax Return, enter into any closing agreement, settle any Tax claim or
assessment relating to the Companies, surrender any right to claim a refund of
Taxes, or take any other similar action, or omit to take any action relating to
the filing of any Tax Return or the payment of any Tax, if such action or
omission would have the effect of increasing the present or future Tax liability
or decreasing any present or future Tax asset of the Companies, Buyer or any
Affiliate of Buyer. Sellers shall notify Buyer of any consent to any extension
or waiver of the limitation period applicable to any Tax claim or assessment
relating to the Companies within fifteen (15) days of making such consent or
waiver.
(d) SECTION 338(h)(10) ELECTIONS.
(i) Each Seller and Buyer will make an election under Code
Section 338(h)(10) for the S Corps with respect to the purchase and sale of the
Shares (and any corresponding provisions of state, local, or foreign law) (the
"SECTION 338(h)(10) ELECTIONS") . Each Seller shall sign on a timely basis all
federal and state forms used to make a Section 338(h)(10) Election requiring his
or her signature, which forms shall be provided to Sellers at or prior to the
Closing.
(ii) Sellers shall pay any Tax attributable to the making of the
Section 338(h)(10) Election with respect to the S Corps and shall indemnify
Buyer and the Companies against any such federal income tax.
(iii) Promptly after the Closing Date, Sellers shall provide to
Buyer any information (including Tax elections made by or on behalf of Sellers)
reasonably requested by Buyer in connection with its filing of any Section
338(h)(10) Election.
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(iv) The Purchase Price and other relevant items shall be
allocated among the assets of the Companies in accordance with their fair market
values as determined by the Seller Representative with the consent of Buyer
(which consent shall not be unreasonably withheld). The Seller Representative
shall deliver a schedule setting forth the fair market value of the assets and
such allocation within ninety (90) days after the Closing Date. Buyer and
Sellers shall file any Tax Returns and any other governmental filings on a basis
consistent with such allocation of fair market value.
(e) CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any corporate
level gains tax triggered by the sale of the Companies' stock), shall be paid by
Sellers when due, and Sellers will, at their own expense, file all necessary Tax
Returns and other documentation with respect to such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if requested by
applicable law, Buyer will, and will cause the Companies to, join in the
execution of any such Tax Returns and documentation.
8.11 USE OF ▇▇▇▇▇ NAME. At the Closing, the Sellers shall cause each
of their Affiliates to change its name to a name which does not use the word or
a word similar to "▇▇▇▇▇." After the Closing, the Sellers covenant and agree not
to and to cause each of their Affiliates not to use the word or a word similar
to "▇▇▇▇▇" as a trade, corporate or business name.
8.12 SURETY BONDS. Buyer agrees to use reasonable efforts to remove
▇▇▇▇▇ Communications Corp., F.M.P. Holding Corp., and ▇▇▇▇▇ General Contracting,
Inc. (collectively, the "ADDITIONAL SURETY BOND PARTIES") as parties to The St.
▇▇▇▇ Surety General Agreement of Indemnity (the "SURETY BOND AGREEMENT") dated
as of November 17, 1998 executed by each of Industries, Equities, and the
Additional Surety Bond Parties. Sellers represent and warrant that there are no
surety bonds, undertakings, Guaranties, stipulations or other obligatory
agreements (collectively, "BONDS") executed or procured by any of the Additional
Surety Bond Parties pursuant to the Surety Bond Agreement. Sellers covenant and
agree to cause the Additional Surety Bond Parties not to have any surety,
guarantor or similar Person issue any Bonds pursuant to the Surety Bond
Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 AMENDMENT AND WAIVER. This Agreement may be amended, and any
provision of this Agreement may be waived; PROVIDED THAT any such amendment or
waiver will be binding upon Sellers only if such amendment or waiver is set
forth in a writing executed by Sellers, and any such amendment or waiver will be
binding upon the Companies, after the Closing, and Buyer only if such amendment
or waiver is set forth in a writing executed by Buyer or the Companies, as the
case may be. No course of dealing between or among any Persons having any
interest in this Agreement shall be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any Person
under or by reason of this Agreement. No waiver of any of the provisions of this
- 45 -
Agreement shall be deemed or shall constitute a waiver of any other provisions,
whether or not similar, nor shall any waiver constitute a continuing waiver.
9.2 NOTICES. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given (i) when personally
delivered, sent by telecopy (with hard copy to follow) or sent by reputable
overnight express courier (charges prepaid), or (ii) five days following mailing
by certified or registered mail, postage prepaid and return receipt requested.
Unless another address is specified in writing, notices, demands and
communications to Sellers, the Companies and Buyer shall be sent to the
addresses indicated below:
NOTICES TO SELLERS:
▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO (WHICH SHALL NOT CONSTITUTE
NOTICE TO SELLERS):
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
NOTICES TO THE COMPANIES AND BUYER:
▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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WITH COPIES TO (WHICH SHALL NOT CONSTITUTE NOTICE TO THE COMPANIES OR BUYER):
Banc One Equity Capital
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇
E. ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
9.3 SUCCESSORS AND ASSIGNS. This Agreement and all of the covenants
and agreements contained herein and rights, interests or obligations hereunder,
by or on behalf of any of the parties hereto, shall bind and inure to the
benefit of the respective heirs, successors and assigns of the parties hereto
whether so expressed or not, except that neither this Agreement nor any of the
covenants and agreements herein or rights, interests or obligations hereunder
may be assigned or delegated by Sellers prior to or after the Closing, or
assigned or delegated by the Companies prior to the Closing, without the prior
written consent of Buyer. Buyer may assign its rights and obligations hereunder
(including its right to purchase the Shares), in whole or in part, to any of its
Affiliates without the consent of any of the other parties hereto. In addition,
Buyer may assign its rights and obligations pursuant to this Agreement, in whole
or in part, in connection with any disposition or transfer of all or any portion
of the Companies or its businesses in any form of transaction without the
consent of any of the other parties hereto. Buyer and, following the Closing,
the Companies may assign any or all of its rights pursuant to this Agreement,
including its rights to indemnification, to any of its lenders as collateral
security.
9.4 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
- 47 -
9.5 CAPTIONS; INTERPRETATION. The headings and captions used in this
Agreement, in any Schedule or Exhibit hereto, in the table of contents or in any
index hereto are for convenience of reference only and do not constitute a part
of this Agreement and shall not be deemed to limit, characterize or in any way
affect any provision of this Agreement or any Schedule or Exhibit hereto, and
all provisions of this Agreement and the Schedules and Exhibits hereto shall be
enforced and construed as if no caption or heading had been used herein or
therein. Any capitalized terms used in any Schedule or Exhibit attached hereto
and not otherwise defined therein shall have the meanings set forth in this
Agreement. Each defined term used in this Agreement shall have a comparable
meaning when used in its plural or singular form. The use of the word
"including" herein shall mean "including without limitation" and, unless the
context otherwise required, "neither," "nor," "any," "either" and "or" shall not
be exclusive. The use of the word "Company" or "Companies" herein shall be
deemed to include and be a reference to a "Company" and any Subsidiary of the
"Company" and the "Companies" and any Subsidiaries of the "Companies," including
when such words are used in Article V hereof (Representations and Warranties
Concerning the Companies and Sellers). The parties hereto intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which such party has not
breached shall not detract from or mitigate the fact that such party is in
breach of the first representation, warranty or covenant. The parties have
participated jointly in the negotiation and drafting of this Agreement. If an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
9.6 NO THIRD-PARTY BENEFICIARIES. Nothing herein expressed or implied
is intended or shall be construed to confer upon or give to any Person, other
than the parties hereto and their respective permitted successors and assigns,
any rights or remedies under or by reason of this Agreement, such third parties
specifically including employees and creditors of the Companies and creditors of
the Sellers.
9.7 COMPLETE AGREEMENT. This Agreement and the agreements and
documents referred to herein contain the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings (including that certain letter of intent
dated March 31, 2000, among ▇▇▇▇.▇▇▇, the Sellers and the Companies), whether
written or oral, relating to such subject matter in any way.
9.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts (including by means of telecopied signature pages), all of which
taken together shall constitute one and the same instrument.
9.9 DELIVERY BY FACSIMILE. This Agreement and any signed agreement or
instrument entered into in connection with this Agreement, and any amendments
hereto or thereto, to the extent signed and delivered by means of a facsimile
machine, shall be treated in all manner and respects as an
- 48 -
original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered
in person. At the request of any party hereto or to any such agreement or
instrument, each other party hereto or thereto shall re-execute original forms
thereof and deliver them to all other parties. No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine to deliver a
signature or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of a facsimile machine as a defense
to the formation of a contract and each such party forever waives any such
defense.
9.10 GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal law of the State of New York without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.
9.11 SCHEDULES. Nothing in any schedule attached hereto shall be
adequate to disclose an exception to a representation or warranty made in this
Agreement unless such schedule identifies the exception with particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be adequate to disclose an exception to a
representation or warranty made in this Agreement, unless the representation or
warranty has to do with the existence of the document or other item itself. No
exceptions to any representations or warranties disclosed on one schedule shall
constitute an exception to any other representations or warranties made in this
Agreement unless the exception is disclosed as provided herein on each such
other applicable schedule.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement on the date first written above.
▇▇▇▇.▇▇▇ ACQUISITION CORP. III
By:_________________________________
Name:
Title:
▇▇▇▇▇ EQUITIES, INC.
By:_________________________________
Name:
Title:
▇▇▇▇▇ INDUSTRIES, INC.
By:_________________________________
Name:
Title:
▇▇▇▇▇ EQUITIES OF FLA. INC.
By:_________________________________
Name:
Title:
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-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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INDEMNIFICATION SCHEDULE
Notwithstanding anything contained in this Agreement or the Disclosure
Schedules to the contrary, each of the Sellers shall jointly and severally
indemnify the Buyer Parties and save and hold each of them harmless against and
pay on behalf of or reimburse such Buyer Parties as and when occurred for:
1. All Losses related to claims of any sort or nature made by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
related to facts, events or circumstances arising on or before the Closing Date
other than the aggregate amount of the remaining payments due under Section 3 of
the Redemption Agreement dated September 30, 1998 between the Companies and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ which amount is included in the Closing Indebtedness.
2. All Losses (including insurance deductibles, but net of insurance recovery
by Buyer) related to actions, suits, proceedings, orders, investigations or
claims reflected on the LITIGATION SCHEDULE, PROVIDED THAT Sellers shall not be
responsible for (i) with respect to item 2 on the LITIGATION SCHEDULE, the first
$66,691 of Losses relating to work on the I-287 overpass project and the first
$93,022 of Losses relating to work on the Mahopac Project, (ii) with respect to
item 3 on the LITIGATION SCHEDULE, the first $106,447 of Losses, or (iii) with
respect to item 4 on the LITIGATION SCHEDULE, the first $14,457 of Losses.
3. All Losses (including insurance deductibles, but net of insurance recovery
by Buyer) arising from or related to violations of, or any liabilities or
investigatory, corrective or remedial obligations arising under, Environmental
and Safety Requirements with respect to the past or current properties,
facilities or operations of the Asphalt Plant in Vero Beach, Florida, whether or
not constituting a breach of any representation or warranty hereunder and
whether or not disclosed to Buyer prior to the Closing Date (whether on the
Environmental Schedule or otherwise) or identified by Buyer or its agents or
representatives through their due diligence investigations prior to the Closing
Date.
4. All Losses arising from or related to any obligations or liabilities
arising under Environmental and Safety Requirements or any other law with
respect to environmental conditions at, under or emanating from the real
property located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (whether
triggered by the cessation or termination of operations by any of the Companies
or their Affiliates at such location or otherwise), including without limitation
any investigatory, remedial or corrective obligations or any requirements for
site closure or post-closure monitoring or care, regardless of when such
obligations arise or occur.
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BUYER BROKERAGE SCHEDULE
Buyer or one of its Affiliates will pay a fee to ▇▇▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇, Banc One Equity Capital and Carlisle Enterprises in connection with the
transactions contemplated by this Agreement.
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