EXHIBIT 10.59
PURCHASE AGREEMENT
by and between
Xxxxx Laundry Service Midwest Limited Partnership,
JPS Laundry, Inc.,
Xxxxx Laundry Service, Inc.,
Coin Controlled Washers, Inc.,
Xxxxx Laundry Service-Central Limited Partnership,
Xxxxx Services-Texas, Inc.
Superior Coin, Inc.
Superior Coin II, Inc.,
Advance Xxxxx Domestic Machines, Inc.,
Xxxxxxx X. Xxxxxx and
Xxxxxx X. Xxxxxx
and
Coinmach Corporation
Dated: January 20, 1998
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1
DEFINITIONS.................................................................. 2
1.1 Defined Terms............................................ 2
1.2 Other Defined Terms...................................... 13
ARTICLE 2
PURCHASE AND SALE............................................................ 13
2.1 Transfer of Partnership Interests, Stock
and Assets............................................... 13
2.2 Purchase Price and Purchase Price Deposit................ 16
2.3 Purchase Price Allocations............................... 17
2.4 Purchase Price Adjustment................................ 17
2.5 Closing Costs; Transfer Taxes............................ 19
ARTICLE 3
CLOSING...................................................................... 20
3.1 Closing.................................................. 20
3.2 Conveyances at Closing................................... 20
3.3 Other Deliveries at Closing.............................. 23
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS.................................... 23
4.1 Organization of the Xxxxx Entities....................... 23
4.2 Capitalization of MLSLP and MAS.......................... 24
4.3 Authorization; Binding Effect............................ 25
4.4 Absence of Certain Changes or Events..................... 25
4.5 Title to Assets, Etc..................................... 28
4.6 Condition of Tangible Assets............................. 29
4.7 Location Contracts and Machine Rental Contracts.......... 29
4.8 Contracts and Commitments................................ 30
4.9 No Conflict or Violation................................. 31
4.10 Consents and Approvals................................... 31
4.11 Financial Statements..................................... 32
4.12 Litigation............................................... 32
4.13 Labor Matters............................................ 32
4.14 Liabilities.............................................. 33
4.15 Compliance with Law...................................... 33
4.16 No Brokers............................................... 33
4.17 No Other Agreements to Sell the MLSLP
-i-
Partnership Interests, the MAS Stock or the
Purchased Assets......................................... 33
4.18 Proprietary Rights....................................... 34
4.19 Employee Benefit Plans................................... 34
4.20 Transactions with Certain Persons........................ 37
4.21 Tax Matters.............................................. 37
4.22 Severance Arrangements................................... 39
4.23 Insurance................................................ 40
4.24 Payments................................................. 40
4.25 Customers and Suppliers.................................. 40
4.26 Compliance With Legislation Regulating
Environmental Quality.................................... 41
4.27 Real Estate.............................................. 42
4.28 Solvency................................................. 42
4.29 Material Misstatements Or Omissions...................... 43
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER...................................... 43
5.1 Organization of Buyer.................................... 43
5.2 Authorization............................................ 43
5.3 No Conflict or Violation................................. 43
5.4 Consents and Approvals................................... 44
5.5 No Brokers............................................... 44
5.6 Due Diligence............................................ 44
5.7 Parent Company........................................... 44
5.8 Financing................................................ 44
5.9 Solvency................................................. 44
ARTICLE 6
COVENANTS OF SELLERS AND BUYER............................................... 45
6.1 Maintenance of Business Prior to Closing................. 45
6.2 Investigation by Buyer................................... 45
6.3 Consents and Best Efforts................................ 46
6.4 Xxxxx Entities' Employees................................ 46
6.5 Certain Prohibited Transactions.......................... 48
6.6 Treatment of MLSLP's Plan................................ 49
6.7 Notification of Certain Matters.......................... 49
6.8 No Mergers, Consolidations, Sale of Stock, Etc........... 50
6.9 Corporate Name........................................... 50
ARTICLE 7
CONDITIONS TO SELLERS' AND XXXXXX'X OBLIGATIONS.............................. 51
7.1 Representations, Warranties and Covenants................ 51
7.2 No Governmental Proceedings or Litigation................ 51
7.3 HSR Act.................................................. 51
-ii-
7.4 Opinion of Counsel....................................... 51
7.5 Freedom Systems Exclusive Sales Agreement................ 51
7.6 Deliveries at Closing.................................... 51
7.7 Certificates and Corporate Documents..................... 51
7.8 Employment Agreements with Buyer......................... 52
7.9 Consulting Agreement with Buyer.......................... 52
ARTICLE 8
CONDITIONS TO BUYER'S OBLIGATIONS............................................ 52
8.1 Representations, Warranties and Covenants................ 52
8.2 Consents................................................. 53
8.3 No Governmental Proceedings or Litigation................ 53
8.4 Disclosure Schedule...................................... 53
8.5 Due Diligence............................................ 53
8.6 Opinion of Counsel....................................... 54
8.7 Material Changes......................................... 54
8.8 HSR Act.................................................. 54
8.9 Freedom Systems Exclusive Sales Agreement................ 54
8.10 Assignment of Certain Excluded Assets.................... 54
8.11 Employment Agreements with Buyer......................... 54
8.12 Consulting Agreement with Buyer.......................... 54
8.13 Termination of MLSLP Employment Agreements............... 54
8.14 Payout Letters and Releases.............................. 55
8.15 Motor Vehicle Titles..................................... 55
8.16 Miscellaneous Deliveries at Closing...................... 55
8.17 Certificates and Corporate Documents..................... 55
8.18 Form 5500................................................ 56
ARTICLE 9
COVENANT NOT TO COMPETE AND CONFIDENTIALITY
9.1 Covenant Not to Compete.................................. 56
9.2 Confidentiality and Non-Solicitation..................... 57
9.3 Validity................................................. 57
9.4 Remedies................................................. 57
ARTICLE 10
RISK OF LOSS................................................................. 58
ARTICLE 11
ACTIONS BY SELLERS AND BUYER AFTER THE CLOSING............................... 58
11.1 Books and Records........................................ 58
11.2 Survival of Representations, Etc......................... 58
11.3 Indemnifications......................................... 59
11.4 Exclusive Remedy......................................... 63
-iii-
11.5 Bulk Sales............................................... 64
11.6 Filing of MLSLP and MAS Tax Returns; Code
Section 338(h)(10........................................ 64
11.7 Further Assurances....................................... 65
ARTICLE 12
MISCELLANEOUS................................................................ 65
12.1 Termination.............................................. 65
12.2 Assignment............................................... 65
12.3 Notices; Transfer of Funds............................... 66
12.4 Choice of Law............................................ 67
12.5 Entire Agreement; Amendments and Waivers................. 67
12.6 Multiple Counterparts.................................... 67
12.7 Expenses................................................. 67
12.8 Invalidity............................................... 67
12.9 Titles................................................... 67
12.10 Publicity................................................ 67
12.11 Confidential Information................................. 68
12.12 Interpretation of "Knowledge", etc....................... 68
-iv-
EXHIBITS A1 - A7
FINANCIAL STATEMENTS AND BALANCE SHEETS.................................... A-1
EXHIBIT B
ESCROW AGREEMENT........................................................... B-1
EXHIBIT C
XXXX OF SALE............................................................... C-1
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT................................ D-1
EXHIBIT E
FORM OF BUYER'S LEGAL OPINION.............................................. E-1
EXHIBIT F
FORM OF SELLERS' LEGAL OPINION............................................. F-1
-v-
PURCHASE AGREEMENT
This Purchase Agreement, dated as of January 20, 1998, is by and among
Coinmach Corporation, a Delaware corporation ("Buyer"), Xxxxxxx X. Xxxxxx
-----
("Spagat"), Xxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxx Laundry Service Midwest Limited
-------- ------
Partnership, a Delaware limited partnership ("Xxxxx Midwest"), JPS Laundry,
-------------
Inc., a Delaware corporation ("JPS"), Xxxxx Laundry Service, Inc., a Delaware
---
corporation ("MLS"), Coin Controlled Washers, Inc., an Illinois corporation
---
("CCW"), Xxxxx Laundry Service-Central Limited Partnership, an Indiana limited
-----
partnership ("Central"), Xxxxx Services-Texas, Inc., a Illinois corporation
-------
("Texas"), Superior Coin, Inc., an Illinois corporation ("Coin"), Superior Coin
------- ----
II, Inc., an Illinois corporation ("Coin II") and Advance/Xxxxx Domestic
-------
Machines, Inc., an Illinois corporation ("Advance" and together with Xxxxx
-------
Midwest, JPS, MLS, Spagat, CCW, Central, Texas, Coin and Coin II, the "Sellers"
-------
and, individually, a "Seller").
------
RECITALS
--------
X. Xxxxx Midwest, MAS Laundry, Inc., a Delaware corporation ("MAS"),
---
JPS and MLS (collectively, the "MLSLP Partners") collectively own, all of the
--------------
issued and outstanding partnership interests (collectively, the "MLSLP
-----
Partnership Interests") in Xxxxx Laundry Service Limited Partnership, a Delaware
---------------------
partnership ("MLSLP").
-----
X. Xxxxxx owns all of the issued and outstanding common stock, par
value $.01 per share (the "MAS Stock"), of MAS.
---------
C. CCW, Central, Texas, Coin, Coin II, Advance and MLSLP own certain
assets which such parties use in the conduct of their respective businesses of
supplying coin-operated laundry equipment services to multi-family dwellings
located primarily in the States of Delaware, Arizona, Arkansas, California, the
District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Nebraska, North
Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South
Dakota, Texas, Virginia, West Virginia and Wisconsin (the foregoing businesses,
considered as a whole, shall hereinafter be collectively referred to as the
"Business").
---------
D. Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, the MLSLP Partnership Interests, the MAS Stock and substantially
all of the assets of CCW, Central, Texas, Coin, Coin II and Advance (other than
the Excluded Assets (as defined below)), in each case, subject to the terms and
conditions of this Agreement.
-1-
AGREEMENT
---------
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
-----------
1.1 Defined Terms. As used herein, the terms below shall have the
following meanings:
"Adverse Effect" shall mean a materially adverse effect on any of the
--------------
Business, the MLSLP Partnership Interests, the MAS Stock, the Purchased Assets
(in the aggregate), the financial condition of the Xxxxx Entities or results of
operations of the Xxxxx Entities, in each case, taken as a whole.
"Affiliate" of any particular Person shall mean any other Person
---------
controlling, controlled by or under common control with such particular Person,
including, without limitation, any other Person which would be treated as a
single employer under Section 414 of the Code.
"Agreement" shall mean this Purchase Agreement, among Buyer, Sellers
---------
and Xxxxxx, as it may be amended from time to time in accordance with its terms.
"Balance Sheets" shall mean, collectively, (i) the MLSLP Balance
--------------
Sheet, (ii) the unaudited balance sheet of Coin as of Xxxxx 00, 0000, (xxx) the
unaudited balance sheet of Central as of June 30, 1997 and (iv) the unaudited
balance sheets of each of Coin II, CCW, Texas and Advance as of December 31,
1996, in each case, previously delivered to Buyer and attached hereto as
Exhibits "A-1" through "A-7".
"Balance Sheet Date" shall mean June 30, 1997.
------------------
"Books and Records" shall mean all records pertaining to the Purchased
-----------------
Assets, the Business or customers or suppliers of the Xxxxx Entities, other than
those records which constitute Excluded Assets.
"Business" shall have the meaning set forth in Recital C hereof.
--------
"Closing Date" shall mean a date mutually acceptable to the parties
------------
hereto which shall in no event be later than the
-2-
earlier to occur of (i) the seventh business day after all of the conditions to
Closing specified in Articles 7 and 8 have been satisfied and (ii) April 30,
1998.
"Code" shall mean the Internal Revenue Code of 1986, as amended and as
----
it may be amended from time to time.
"Condominium Properties" shall mean, collectively, the condominium
----------------------
properties owned by MLSLP and Coin and listed on Schedule 4.27 of the Disclosure
Schedule.
"Consent" shall mean a consent or waiver by a Consenting Party to an
-------
assignment or similar transfer or conveyance to Buyer of a Contract (other than
a Location Contract), in either case, required by the terms of such Contract in
connection with the transactions contemplated by this Agreement.
"Consenting Party" shall mean any Person whose consent or waiver is
----------------
required in order to assign or otherwise transfer or convey any rights and
obligations of the Xxxxx Entities under a Contract to Buyer in accordance with
the terms hereof.
"Contract" shall mean any of the agreements, contracts (including,
--------
without limitation, the Location Contracts and Machine Rental Contracts), Leases
or commitments to which a Xxxxx Entity is a party and which relate to the
Business (other than those agreements, contracts or commitments which constitute
Excluded Assets) which, in each case, are described in the Disclosure Schedule
and any agreements, contracts, leases or commitments to which a Xxxxx Entity is
a party and which relate to the Business (other than those agreements, contracts
or commitments which constitute Excluded Assets) which, in each case, are not
required to be described in the Disclosure Schedule solely because of the
requirements set forth in this Agreement.
"Contract Rights" shall mean all of the rights and obligations of any
---------------
Xxxxx Entity under the Contracts.
"Disclosure Schedule" shall mean a schedule delivered by Sellers to
-------------------
Buyer on or prior to the date hereof, as amended, if necessary, in accordance
with the terms hereof, which sets forth, among other things, the exceptions to
the representations and warranties contained in Article 4 hereof and certain
other information called for by Article 4 hereof and certain other provisions of
this Agreement.
"Encumbrances" shall mean any claim, mortgage, deed of trust,
------------
restrictive covenant, lien, pledge, option, charge, easement, security interest,
right-of-way, encumbrance or other right of third parties, whether or not filed,
recorded or
-3-
otherwise perfected under applicable law, as well as the interest of any vendor,
vendee, lessor or lessee under any conditional sale agreement, capital lease or
other title retention agreement other than: (a) any mechanic's, materialmen's
or similar lien, (b) any lien arising under worker's compensation, unemployment
insurance, social security, retirement, or similar legislation, (c) any other
nonconsensual lien arising in the ordinary course of the Business and in
accordance with the past practices of the Xxxxx Entities and not incurred in
connection with the borrowing of money, (d) statutory liens of landlords,
carriers and other similar liens, in respect of liabilities which are not yet
due or which are being contested in good faith and are disclosed with
specificity on the Disclosure Schedule, (e) liens for Taxes not yet due and
payable and liens for Taxes due and payable, in each case, the validity or
amount of which is currently being contested in good faith by appropriate
proceedings and disclosed with specificity on the Disclosure Schedule, (f) any
irregularity in title, zoning or similar restriction or other Encumbrance which
does not materially interfere with the value, occupation, use or enjoyment of
the property or asset which is subject thereto; provided that the foregoing
items (a) - (f) do not, singly or in the aggregate, materially interfere with
the Business or the Purchased Assets.
"Environmental and Safety Requirements" shall mean all applicable
-------------------------------------
federal, state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, including, without limitation, the
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901, et seq.) ("RCRA"),
-- --- ----
the Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. (S) 9601, et seq.) ("CERCLA"), the Clean Air Act (42 U.S.C. Section 7401,
-- --- ------
et seq.), the Clear Water Act (42 U.S.C. (S) 1251, et seq.), the Toxic
-- --- -- ---
Substances Control Act (15 U.S.C. (S) 2601 et seq.), the Federal Water Pollution
-- ---
Control Act (33 U.S.C. (S) 1251 et seq.), the Safe Drinking Water Act (21 U.S.C.
-- ---
(S) 349, 42 U.S.C. (S)(S) 201, 300f), the Toxic Substances Control Act (15
U.S.C. (S) 2601 et seq.), all judicial and administrative orders and
-- ---
determinations, all contractual obligations and all common law concerning public
health and safety, worker or occupational health and safety, and pollution or
protection of the environment, including, without limitation, all those relating
to the presence, use, production, generation, handling, transport, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
Release, threatened Release, control, or cleanup of any Hazardous Substance.
"Environmental Liabilities" shall include any liabilities, damages,
-------------------------
costs, expenses, judicial or administrative actions or proceedings,
Encumbrances, claims, fines, penalties, impositions, losses or lost income
arising under, from, or in relation to (i) any Environmental and Safety
Requirements; (ii)
-4-
the presence of any Hazardous Substance at, on or under any Facility or former
Facility of a Xxxxx Entity or MAS; (iii) any Release or threatened Release; or
(iv) the exposure or alleged exposure of any Person, animal, aquatic life or
property to any Hazardous Substance.
"Equity Interests" shall mean, with respect to any Person, the capital
----------------
stock, partnership interests or other equity interests (including the MLSLP
Partnership Interests and the MAS Stock) of such Person or options, warrants,
rights to subscribe to, scrip calls, contracts, undertakings, arrangements,
commitments to issue or other rights of any kind to acquire (whether through an
exchange, conversion or otherwise) the capital stock, partnership interests or
other equity interests of such Person.
"Escrow Agent" shall mean LaSalle National Bank, Chicago, Illinois.
------------
"Excluded Assets" shall mean, collectively, the following items of the
---------------
Xxxxx Entities, none of which are to be acquired by Buyer hereunder:
(a) all cash held or maintained at the bank accounts of the Xxxxx
Entities and all cash equivalents;
(b) the accounts receivable or notes receivable of any Xxxxx Entity
owed by any other Xxxxx Entity or any Affiliate, director, officer, shareholder
or partner of any Xxxxx Entity;
(c) all assets relating to the credit card business or operations
conducted by Freedom Card Systems, Inc., an Illinois corporation and an
Affiliate of one or more of the Xxxxx Entities, except those assets purchased by
any Xxxxx Entity from Freedom Card Systems, Inc. and owned by a Xxxxx Entity as
of the Closing Date or to be acquired by Buyer pursuant to the Exclusive Sales
Agreement;
(d) all real property interests owned in fee by any Xxxxx Entity,
including, without limitation, the Condominium Properties;
(e) Permits, to the extent not lawfully transferable;
(f) refunds, or credits or claims therefor, in respect of any Tax paid
by any Xxxxx Entity or any predecessor of any Xxxxx Entity or any payment under
any Tax sharing, Tax allocation or similar agreements;
(g) employee welfare or pension benefit plans and arrangements whether
or not subject to ERISA, including, but not
-5-
limited to, all Plans and Employee Benefit Programs of the Xxxxx Entities and
all assets thereof and all contracts and policies entered into or issued
pursuant thereto, except the Stop Loss Policy;
(h) all rights of each Xxxxx Entity with respect to insurance policies
and any claims thereunder solely to the extent relating to the Excluded Assets
or the Retained Liabilities;
(i) rights in connection with prepaid expenses solely to the extent
related to the Excluded Assets;
(j) all other rights, claims and causes of action solely to the extent
related to the Excluded Assets or the Retained Liabilities;
(k) all Books and Records which relate solely to the Excluded Assets,
including the corporate seal, certificate of incorporation, minute books, stock
books, Tax Returns, books of account or other records having to do with the
corporate or partnership organization of any Xxxxx Entity other than MLSLP or
MAS;
(l) any rights of any Xxxxx Entity under this Agreement or under any
other agreement between any Xxxxx Entity and Buyer entered into on or after the
date of this Agreement;
(m) all rights to receive mail and other communications addressed to
any Xxxxx Entity solely relating to any of the Excluded Assets or any of the
Retained Liabilities;
(n) except as specifically set forth in this Agreement to the
contrary, all rights of any Xxxxx Entity (other than MLSLP and MAS) against any
third party (i) which commences a lawsuit or similar proceeding against any
Xxxxx Entity (other than MLSLP or MAS) or (ii) with respect to a claim other
than a Contract Right against such third party, in either case, solely to the
extent that such rights arise prior to the Closing Date;
(o) the attorney-client privilege of each Xxxxx Entity (other than
MLSLP or MAS) and its counsel;
(p) the bank accounts of each Xxxxx Entity (other than MLSLP or MAS);
(q) "key man" insurance policies with respect to Spagat and Xxxxxx,
Split Dollar Agreement, dated as of October 8, 1993, between CCW and Xxxxxx
Xxxxxx, as trustee of the Xxxxxxx X. Xxxxxx Family Trust u/a/d October 15, 1992,
and Split Dollar Agreement, dated as of October 8, 1993, between CCW and Xxxxxx
X.
-6-
Rich, as trustee of the Xxxxxx Survivorship Insurance Trust u/a/d July 30, 1993,
together with any assignments of the foregoing;
(r) two motor vehicles, one of which is a Mercedes S500 leased by
Spagat and the other which is a Cadillac Allante owned by Xxxxxx;
(s) limited partnership interest in EIP XIII Limited Partnership,
whose sole assets are interests in real property not being acquired by Buyer
hereunder;
(t) all rights of the Xxxxx Entities under the United Airlines "Pass
Plus" program;
(u) tickets to Chicago Bulls basketball games;
(v) three "laptop" computers located in the Chicago corporate office
and used by each of Spagat and Xxxxxx;
(w) office furniture of each of Spagat and Xxxxxx, including 2
television sets and 1 satellite dish; and
(x) the name "Xxxxx Water Systems, Inc."
"Facilities" shall mean the Locations, plants, offices, self storage
----------
facilities, re-manufacturing facilities, warehouses, administration buildings,
including, without limitation, the refurbishing facility of the Xxxxx Entities
located in San Francisco, California, and all real property and related
facilities, in each case, relating to the Business as presently conducted and
which, other than the Locations, are identified or listed on Schedule 4.8 to the
Disclosure Schedule.
"Financial Statements" shall mean the Balance Sheets and the
--------------------
statements of income for each Xxxxx Entity (other than MAS) for the twelve month
period ended as of the applicable balance sheet date set forth in the Balance
Sheet, together, in the case of MLSLP, with the notes thereon and the related
unqualified report of Deloitte & Touche, LLP, MLSLP's certified public
accountants, previously delivered to Buyer and attached hereto as Exhibits "A-1"
through "A-7".
"Fixtures and Equipment" shall mean all of the furniture, fixtures,
----------------------
furnishings, machinery (including the Machines and Parts) and equipment owned by
the Xxxxx Entities and located in, at or upon the Facilities as of the Balance
Sheet Date after giving effect to all additions, replacements or deletions since
the Balance Sheet Date in the ordinary course of the Business.
-7-
"Hazardous Substance" shall mean any pollutants, dangerous substances,
-------------------
contaminants (including without limitation, asbestos, oil, petroleum or
petroleum-containing substances, products or byproducts, lead-based paint, solid
waste, radiation, methane gas, Formaldehyde, radioactive waste, chemical
substances or mixtures, pesticides, pollutants, contaminants, radon, noise,
radiation, polychlorinated biphenyls ("PCBs")), toxic substances or chemicals,
----
hazardous or otherwise regulated materials, substances or wastes, or hazardous
substances, in each case, subject to the Environmental and Safety Requirements
in effect on the date hereof or prior to the Closing Date.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
-------
Act of 1976, as amended.
"Investment" shall mean, with respect to any Person, (a) any direct or
----------
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or other ownership or beneficial interest
(including without limitation partnership interests and joint venture interests
of any other Person), and (b) any capital contribution by such Person to any
other Person.
"Leasehold Estates" shall mean all of the rights and obligations of
-----------------
the Xxxxx Entities as lessee under the Leases.
"Leasehold Improvements" shall mean all leasehold improvements owned
----------------------
by the Xxxxx Entities and situated in or on the property leased under the
Leases.
"Leases" shall mean all of the leases to which a Xxxxx Entity is a
------
party and which relate to the Business (including Location Contracts) listed on
the Disclosure Schedule and all other leases relating to the Business which are
not required to be set forth thereon pursuant to this Agreement.
"Legal Requirements" shall mean any applicable action, law, statute,
------------------
treaty, rule, regulation, order, ordinance, judgment, injunction, decree, award,
legally binding determination or direction of an arbitrator or government
entity, including, without limitation, any zoning, Environmental and Safety
Requirement, motor vehicle safety requirements or standards.
"Location" shall mean a laundry room or similar location (excluding
--------
the Condominium Properties) at which one or more On-Location Machines are
installed pursuant to a Location Contract (and all such locations are,
collectively, the "Locations").
-8-
"Location Contracts" shall mean all Contracts pursuant to which a
------------------
Xxxxx Entity provides installation, maintenance or other services (other than
Machine leases or rentals to end-users) with respect to On-Location Machines.
"Machine Rental Contracts" shall mean all Contracts pursuant to which
------------------------
any Xxxxx Entity provides domestic installation, maintenance or other services
with respect to Machines that are rented or leased by individuals or other end-
users from any of the Xxxxx Entities.
"Machines" shall mean any and all of the coin-operated washing
--------
machines and dryers, soap machines, debit card equipment, change makers and
similar vending or service machines (including the On-Location Machines) owned
or leased by a Xxxxx Entity.
"Xxxxx Entities" shall mean, collectively, MLSLP, MAS, CCW, Central,
--------------
Texas, Coin, Coin II and Advance.
"Management Participation Agreements" shall mean each of the
-----------------------------------
Management Participation Agreements between Xxxxxxx Xxxx, Xxxxxxx Xxxxxxxx,
Xxxxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxxxxx X'Xxxxx, Xxxxxxxx Xxxxx, Xxxx Xxxxxxx,
Xxxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xx., on the one hand, and a Xxxxx Entity, on the
other hand.
"MAS Stock" shall have the meaning set forth in Recital B to this
---------
Agreement.
"MLSLP Assets" shall mean (i) all Machines, Parts, Facilities,
------------
Fixtures and Equipment and Motor Vehicles, in each case owned or leased by
MLSLP, (ii) all Contracts to which MLSLP is a party and (iii) all Permits of
MLSLP.
"MLSLP Balance Sheet" shall mean the audited balance sheet of MLSLP as
-------------------
of June 30, 1997 together with the notes thereon and the related unqualified
report of Deloitte & Touche, LLP, MLSLP's certified public independent
accountants.
"MLSLP Partners" shall have the meaning set forth in Recital A to this
--------------
Agreement.
"MLSLP Partnership Interests" shall have the meaning set forth in
---------------------------
Recital A to this Agreement.
"Motor Vehicles" shall mean any and all trucks, trailers, vans and
--------------
automobiles owned or leased by any Xxxxx Entity and used in the Business (other
than those automobiles constituting Excluded Assets), which vehicles shall be
listed on the Disclosure Schedule.
-9-
"Net Gross" shall mean, with respect to any Location for the twelve
---------
(12) month period ending on the Balance Sheet Date, an amount equal to the gross
revenues or coin collections for such Location minus the applicable commission
-----
or rental expenses, in each case reasonably allocable to such Location.
"On-Location Machines" shall mean approximately 202,000 coin-operated
--------------------
washing machines and dryers, as of December 31, 1997, installed at Locations,
and subject to written or oral Location Contracts.
"Parts" shall mean any and all spare parts or other Machine equipment
-----
owned by any Xxxxx Entity.
"Permits" shall mean all of the Xxxxx Entities' licenses, permits and
-------
other governmental authorizations which are required for the conduct of the
Business as conducted on the date hereof.
"Person" shall mean an individual, partnership, corporation,
------
association, joint stock company, limited liability company, trust, joint
venture, unincorporated organization, governmental authority or any other entity
or organization of any kind whatsoever.
"Post-Signing Diligence Materials" shall mean, collectively, (i) all
--------------------------------
purchasing agreements and extended purchasing agreements set forth on the
Disclosure Schedule between a Xxxxx Entity and Speed Queen Company or its
Affiliates; (ii) each of the employment agreements between Spagat and Xxxxxx and
a Xxxxx Entity; (iii) the Management Participation Agreements; and (iv) all
financing documents relating to outstanding long-term indebtedness of the Xxxxx
Entities described on the Disclosure Schedule.
"Proprietary Rights" shall mean all of the Xxxxx Entities'
------------------
registrations of trademarks and of other marks or trade names used in the
operation of the Business as conducted as of the date hereof, including without
limitation the trade names: "Xxxxx Laundry Services Limited Partnership", "Coin
Controlled Washers, Inc.", "Xxxxx Laundry Service-Central Limited Partnership,"
"Xxxxx Services-Texas, Inc.", "Superior Coin-Op, Inc.", "Superior Coin, Inc.",
"Advance Xxxxx Domestic Machines, Inc.", which are held by a Xxxxx Entity and
all pending applications for any such registrations and all patents and
copyrights which are held by a Xxxxx Entity and all pending applications
therefor relative to the Business; and all other trademarks and other marks,
trade names and other trade rights and all other trade secrets, designs, plans,
specifications and other proprietary rights, whether or not registered, but
which have been reduced to writing, owned by or licensed to a Xxxxx
-10-
Entity which are relative to the Business, as conducted as of the date hereof,
other than commercially available standard software.
"Purchased Assets" shall mean all of each Xxxxx Entity's right, title
----------------
and interest in and to properties, assets and rights of any kind, whether
tangible or intangible, real or personal, owned by each Xxxxx Entity (except the
Excluded Assets) and constituting, or used in connection with, the Business,
including without limitation, the following:
(i) Machines and Parts;
(ii) all Location Contracts;
(iii) all Motor Vehicles;
(iv) accounts receivable and refunds or deposits other than those which
relate to or constitute Excluded Assets;
(v) cash (including, without limitation, cash in Machines but
excluding cash which constitutes an Excluded Asset);
(vi) all Contract Rights, except Contract Rights that relate solely to
Excluded Assets or constitute Excluded Assets;
(vii) all Leasehold Estates;
(viii) all Leasehold Improvements;
(ix) all Fixtures and Equipment, except Fixtures and Equipment that
relate solely to Excluded Assets or constitute Excluded Assets;
(x) all Books and Records other than those which relate solely to the
Excluded Assets or constitute Excluded Assets (it being understood that Buyer
shall grant each Xxxxx Entity and its Representatives access to and the right to
copy all Books and Records for any legitimate purpose);
(xi) all Proprietary Rights other than those which relate solely to the
Excluded Assets or constitute Excluded Assets; and
(xii) to the extent transferable, all Permits.
"Release" shall mean the spilling, leaking, disposing, discharging,
-------
emitting, depositing, injecting, dumping, leaching, escaping or other release of
any Hazardous Substance, whether purposely, accidentally, intended, unintended,
knowingly, unknowingly, suddenly, over time, or otherwise.
-11-
"Representative" shall mean, with respect to any Person, any officer,
--------------
director, partner, Affiliate, stockholder,principal, attorney, accountant,
financial advisor, consultant, agent, employee or other representative of such
Person.
"Seller" and "Sellers" shall have the meanings set forth in the
------ -------
Preamble to this Agreement.
"Stop Loss Policy" shall mean that certain Excess Loss Indemnity
----------------
Policy between MLSLP and AIG Life Insurance Company (Policy No. 316-7359)
relating to the health care benefits provided to employees of the Xxxxx
Entities.
"Tax" shall mean any federal, state, local, or foreign income, gross
---
receipts, license, payroll, employment, excise, severance, stamp, occupational,
premium, windfall profits, environmental (including taxes under Section 59A of
the Code), customs duties, capital stock, franchise, profits, withholding,
social security or similar, unemployment, disability, real property, personal
property, sales, use, transfer Tax, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including
without limitation any interest, penalty or addition thereto, whether disputed
or not.
"Tax Return" shall mean any return, declaration, report, claim for
----------
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof, whether
arising out of the transactions contemplated by the Transaction Documents or
otherwise.
"Transaction Documents" shall mean this Agreement, the Disclosure
---------------------
Schedule, the Closing Disclosure Schedule, the Escrow Agreement, the Exclusive
Sales Agreement, the Xxxx of Sale, the Assignment and Assumption Agreement, the
stock powers pursuant to which the MAS stock certificates are transferred to
Buyer, Excluded Asset Conveyance Agreements, any documents evidencing
assumptions of the Xxxxx Plan and the Xxxxx Laundry Service Insurance Coverage
Compensation Reduction Plan required to be delivered pursuant to Section 6.6
hereof, the employment agreement to be entered into by Buyer with Spagat, the
Consulting Agreement to be entered into between Buyer and Xxxxxx, documents
evidencing termination of the MLSLP Employment Agreements and officers' or
partners' certificates of the parties hereto required to be delivered pursuant
to Sections 7.6 and 8.17 hereof (it being understood that references to
"Transaction Documents" in this Agreement shall mean such Transaction Documents
that have been executed as of the date hereof or the Closing Date, as
applicable).
-12-
1.2 Other Defined Terms. The following terms shall have the meanings
-------------------
given to such terms in the sections of this Agreement set forth below:
Term Section
---- ---------
AAA 2.4(d)
Action 4.12
Arbitrator 2.4(d)
Assumed Liabilities 2.1(d)
CLC 5.7
Closing 3.1
Closing Disclosure Schedule 8.4
Confidentiality Agreement 6.2
Consent Lease 3.2(c)
Damages 11.3(a)
Dispute 2.4(d)
ERISA 4.19(a)
Escrow Agreement 2.2(a)
Excluded Asset Conveyance
Agreements 8.10
Multiemployer plan 4.19(d)
Employee benefit plan 4.19(a)
Employee Benefit Program 4.19(a)
Exclusive Sales Agreement 7.5
GAAP 4.4(j)
Xxxxx Plan 6.6
MLSLP Employment Agreements 8.13
Personnel 4.4(b)
Plans 4.19(a)
Purchase Price Deposit 2.2(a)
Refurbished Locations 4.26
Retained Employees 6.4(b)
Retained Liabilities 2.1(e)
Service Agreement 3.2(c)
Sublease 3.2(c)
Purchase Price 2.2(a)
Unrefurbished Locations 4.26
WARN Act 4.19(f)
ARTICLE 2
PURCHASE AND SALE
-----------------
2.1 Transfer of Partnership Interests, Stock and Assets. On the
---------------------------------------------------
Closing Date and subject to the terms and conditions set forth in this
Agreement:
(a) Each of CCW, Central, Texas, Coin, Coin II and Advance hereby
agrees to sell, convey, transfer, assign and
-13-
deliver to Buyer, and Buyer hereby agrees to acquire from such parties, their
respective rights, title and interest in, to and under the Purchased Assets
(other than the MLSLP Assets) as the same exist on the Closing Date;
(b) Each of the MLSLP Partners (other than MAS) hereby agrees to sell,
convey, transfer, assign and deliver to Buyer, and Buyer hereby agrees to
acquire from the MLSLP Partners, all of the MLSLP Partners' respective rights,
title and interest in, to and under the MLSLP Partnership Interests;
(c) Spagat hereby agrees to sell, convey, transfer, assign and deliver
to Buyer, and Buyer hereby agrees to acquire from Spagat, all of Spagat's
rights, title and interest in, to and under the MAS Stock; and
(d) Buyer shall assume the following obligations and liabilities of
the Xxxxx Entities (collectively, the "Assumed Liabilities"), all of which shall
-------------------
be discharged by Buyer when and as they become due or otherwise mature:
(i) all obligations and liabilities accruing or arising out of events
or occurrences happening after the Closing Date under Contracts (including,
without limitation, the Stop Loss Policy) set forth on the Disclosure Schedule
(excluding any obligations or liabilities to the extent relating to an Excluded
Asset or a Retained Liability) and which have arisen or have been incurred in
the ordinary course of the Business (but, in either case, not including any
obligation or liability for any breach by any Xxxxx Entity or Spagat or Xxxxxx
of any term of any Contract or commitment occurring on or prior to the Closing
Date); and
(ii) all liabilities, obligations or debts of the Xxxxx Entities
(other than MAS) of any kind, character or description arising under any
Contract and relating to the Purchased Assets or the operation of the Business
(except any such liabilities, obligations or debts relating to an Excluded Asset
or a Retained Liability), whether arising prior to or following the Closing that
remain unpaid or unsatisfied by the Xxxxx Entities as of the Closing Date and,
in each case, only to the extent such liabilities, obligations or debts of such
Xxxxx Entities are reflected on the 1997 Balance Sheet, including, without
limitation (in each case, other than with respect to MAS), (i) any accounts
payable or notes payable of each such Xxxxx Entity not owed to any other Xxxxx
Entity, Xxxxxx, Spagat or any director, officer or partner of any Xxxxx Entity,
Spagat, (ii) accrued sales tax, (iii) accrued insurance, (iv) accrued
commissions payable in respect of Location Contracts, (v) payroll withholding
and accrued payroll taxes and expenses, (vi) accrued capital lease obligations
of the Xxxxx Entities, (vii) accrued expenses of the Xxxxx Entities, (viii)
accrued 401(k)
-14-
contributions under the Xxxxx Laundry Service Retirement and Savings Plan and
the Coin Controlled Washers, Inc. 401(k) Profit Sharing and Investment Plan,
(ix) accrued personal property taxes, and (x) accrued vacation time, personal
time, bereavement time, sick-leave time or other similar employment benefit with
respect to all employees of the Xxxxx Entities other than those individuals
listed on Schedule 6.4 of this Agreement; and
(iii) all unpaid minimum basic rent, personal property taxes,
water, gas, electricity and other utilities, common area maintenance
reimbursements to lessors, local business or other license fees or taxes,
merchants association dues and other similar periodic charges incurred in the
ordinary course of the Business consistent with past practice and, in each case,
only to the extent each of the foregoing items are reflected on the 1997 Balance
Sheet; provided, however, that it being understood that, within sixty (60) days
-------- -------
after the Closing Date, Sellers will furnish Buyer with records (in form and
substance reasonably satisfactory to Buyer) which evidence the gross collections
of the Xxxxx Entities at each Location to the extent necessary to enable Buyer
to comply with the percentage rent provision of each applicable Location
Contract.
(e) Except for the Assumed Liabilities, Buyer is not assuming any
other obligations, liabilities or commitments of any Xxxxx Entity, Spagat or
Xxxxxx of any nature whatsoever, whether absolute, accrued, contingent or
otherwise, disclosed or undisclosed and whether or not relating to the Business,
all of which shall be retained by Sellers and Xxxxxx (collectively, the
"Retained Liabilities"), including, without limitation, (i) any liabilities in
--------------------
respect of any Tax of any Xxxxx Entity or payable by any Xxxxx Entity (other
than MAS) in connection with the Business, except any sales tax, payroll tax and
personal property tax reflected on the 1997 Balance Sheet, (ii) any liability
for legal, accounting or broker's fees incurred in connection with the
negotiation of the Transaction Documents or the consummation of the transactions
contemplated thereby, (iii) any liabilities related to any Actions commenced
prior to or to the extent based solely on events occurring prior to the Closing
Date involving a Xxxxx Entity, Spagat or Xxxxxx, (iv) any indebtedness for
borrowed money of any Xxxxx Entity (other than MAS), (v) any liability in
respect of the employees of the Xxxxx Entities listed on Schedule 6.4 of this
Agreement, (vi) any liability in respect of any Plans or Employee Benefit
Programs (other than the Stop Loss Policy) maintained, administered or otherwise
contributed to by any Xxxxx Entity or an Affiliate of any Xxxxx Entity
(including, but not limited to, any liabilities or penalties attributable to any
failure by any Xxxxx Entity to timely file any annual returns or reports
required under the Code or ERISA with respect to any Plan or Employee Benefit
Program as such terms are defined in Section 4.19 hereof) and liability for
-15-
retiree medical, dental or life insurance benefits offered by any Xxxxx Entity,
even if such benefits have been provided by the Xxxxx Entities to their
respective employees hired by Buyer, (vii) any liabilities of any Xxxxx Entity
under any policies or binders of fire, liability, title, worker's compensation
and other forms of insurance maintained by any Xxxxx Entity or the Business or
the employees of the Business, (viii) any accounts payable or notes payable of
any Xxxxx Entity owed to any other Xxxxx Entity, or any director, officer or
partner of any Xxxxx Entity relating to the period prior to and including the
Closing Date, (ix) any accrued vacation time, personal time, bereavement time,
sick-leave time or bonuses and other benefits of all employees of the Xxxxx
Entities identified on Schedule 6.4 of this Agreement, (x) any obligations or
liability of Texas as disclosed on the Disclosure Schedule owed to Speed Queen
or its Affiliates relating to the equipment purchases, and (xi) any liabilities
or obligations of any kind or nature relating to or arising out of the Excluded
Assets, the MLSLP Employment Agreements or the Management Participation
Agreements, including, without limitation, any obligation or liability for any
breach by any Xxxxx Entity of any term of any Contract or commitment occurring
on or prior to the Closing Date. Sellers and Xxxxxx agree to discharge all
Retained Liabilities when and as they become due or otherwise mature.
2.2 Purchase Price and Purchase Price Deposit.
-----------------------------------------
(a) Upon the terms and subject to the conditions contained herein, on
the Closing Date, Buyer shall pay to Sellers for the sale, transfer, assignment,
conveyance and delivery of the MLSLP Partnership Interests, the MAS Stock and
the Purchased Assets an aggregate amount (the "Purchase Price") equal to Two
--------------
Hundred and Fourteen Million Dollars ($214,000,000), a portion of which (the
"Purchase Price Deposit") in an amount equal to Five Million Dollars
-----------------------
($5,000,000) shall be deposited by Buyer on the date hereof into an escrow
account maintained with the Escrow Agent on behalf of Sellers and Buyer in
accordance with the terms and conditions of an escrow agreement, dated the date
hereof, by and among the Escrow Agent, Sellers and Buyer substantially in the
form of Exhibit "B" attached hereto (the "Escrow Agreement").
----------------
(b) The Purchase Price (excluding the Purchase Price Deposit, which
shall be subject to and payable in accordance with the terms and conditions of
the Escrow Agreement) shall be paid on the Closing Date by wire transfer of
immediately available funds to Sellers as pursuant to written wire transfer
instructions delivered to Seller at least two business days prior to the Closing
Date. Schedule 2.2 sets forth the portion of the Purchase Price which Buyer
will pay to each Seller hereunder at the Closing.
-16-
(c) If Buyer fails to consummate the transactions contemplated by this
Agreement due to the unavailability of sufficient financing, then, if at any
time prior to the first anniversary of the date hereof Buyer or CLC consummates
an acquisition of the Xxxxx Entities, the parties hereto agree that the Purchase
Price Deposit shall be credited against the purchase price paid by Buyer or CLC
in such acquisition.
2.3 Purchase Price Allocations. The Purchase Price shall be
--------------------------
allocated among the MLSLP Partnership Interests, the MAS Stock and the Purchased
Assets in accordance with the values set forth on Schedule 2.3 attached hereto,
which Schedule 2.3 shall be agreed upon by the parties prior to the Closing.
Sellers and Buyer each hereby covenant and agree that none of them will take a
position on any income Tax Return (including, without limitation, Internal
Revenue Service Form 8594) or with any governmental authority that is in any way
inconsistent with the terms of this Section 2.3 or the allocation set forth on
Schedule 2.3. The parties hereto agree that such allocation shall be revised in
a manner consistent with Temporary Treasury Regulation (S)1.1060-1T(f) or any
successor regulation thereto to reflect any indemnification payments made under
Article 11 of this Agreement. Sellers and Buyer shall inform each other
promptly of any challenge by any governmental authority to the allocation set
forth on Schedule 2.3 and no party shall agree to any adjustment asserted by
such governmental authority without the prior written consent of the other
parties, which consent shall not be unreasonably withheld. Sellers and Buyer
agree reasonably to cooperate with each other in preparing Internal Revenue
Service Form 8594 for filing by each of them and to furnish the other party with
a copy of Internal Revenue Service Form 8594 within a reasonable period before
its filing due date.
2.4 Purchase Price Adjustment.
-------------------------
(a) For the purposes of this Section 2.4, the following terms shall
have the following meanings:
(A) "1997 Balance Sheet" shall mean the unaudited consolidated
balance sheet of the Xxxxx Entities (other than MAS) as of December 31,
1997, which shall be prepared in accordance with generally accepted
accounting principles consistently applied.
(B) "Final Balance Sheet" shall mean the unaudited consolidated
balance sheet of the Xxxxx Entities (other than MAS) as of the Closing
Date, which shall be prepared in accordance with generally accepted
accounting principles consistently applied.
-17-
(C) "1997 Assets" shall mean the aggregate amount of all current
assets (which constitute Purchased Assets) on the 1997 Balance Sheet.
(D) "Final Assets" shall mean the aggregate amount of all current
assets (which constitute Purchased Assets) on the Final Balance Sheet.
(E) "1997 Liabilities" shall mean the aggregate amount of all
current liabilities (other than those liabilities which constitute Retained
Liabilities) of the Xxxxx Entities (other than MAS) on the 1997 Balance
Sheet.
(F) "Final Liabilities" shall mean the aggregate amount of all
current liabilities (other than those liabilities which constitute Retained
Liabilities) of the Xxxxx Entities (other than MAS) on the Final Balance
Sheet.
(G) "1997 Net Current Asset Value" shall mean the 1997 Assets
less the 1997 Liabilities. The 1997 Net Current Asset Value can be a
positive or a negative number.
(H) "Final Net Current Asset Value" shall mean the Final Assets
less the Final Liabilities. The Final Net Current Asset Value can be a
positive or a negative number.
(I) "Deficiency Amount" shall mean the amount, if any, by which
the Final Net Current Asset Value is less than (more negative than) the
1997 Net Current Asset Value.
(J) "Surplus Amount" shall mean the amount, if any, by which the
Final Net Current Asset Value is greater than (less negative than) the 1997
Net Current Asset Value.
(b) Sellers shall, and shall cause MLSLP to, deliver to Buyer the 1997
Balance Sheet to Buyer on or prior to the Closing Date and the Final Balance
Sheet to Buyer no later than forty-five (45) days after the Closing Date.
(c) No later than ten (10) business days after delivery of the Final
Balance Sheet to Buyer (A) Sellers shall pay to Buyer by wire transfer of
immediately available funds an amount in cash equal to the Deficiency Amount, if
any, or (B) Buyer shall pay to Sellers by wire transfer of immediately available
funds an amount in cash equal to the Surplus Amount, if any, provided, however,
that no payments shall be made pursuant to this Section 2.4 unless the
Deficiency Amount or Surplus Amount, as applicable, exceeds, $250,000, in which
case the full Deficiency Amount or Surplus Amount shall be payable.
-18-
(d) If Buyer and Sellers shall be unable to agree on the calculation
of the amount of any adjustment to the Purchase Price required by this Section
2.4 or shall be unable to resolve any other dispute arising under this Section
2.4 (any such dispute, a "Dispute") within fifteen (15) days of the date on
-------
which any such adjustment should be made pursuant to this Section 2.4, then such
Dispute shall, at the demand of any party hereto, be determined by arbitration.
Sellers and Buyer shall appoint an arbitrator ("Arbitrator") who is licensed by
----------
the American Arbitration Association ("AAA") to arbitrate such Dispute. In the
---
event Sellers and Buyer cannot agree on the selection of the Arbitrator, each
such party shall select one arbitrator who shall together select the Arbitrator
who shall arbitrate the matter. Sellers and Buyer shall within twenty (20) days
thereafter present their positions with respect to the Dispute to the Arbitrator
together with such other materials as the Arbitrator deems appropriate. The
Arbitrator shall, within twenty (20) days after the submission of such
evidentiary materials, submit a written decision on such Dispute to the
applicable parties hereto. Any determination by the Arbitrator with respect to
any such Dispute shall be final and binding on the parties hereto. The
arbitration shall be conducted on consecutive business days in Chicago, Illinois
in accordance with the commercial arbitration rules of the AAA as in effect for
commercial arbitrations conducted in Chicago, Illinois by the AAA. The parties
hereto agree that the costs and expenses of the arbitration (including without
limitation the cost of the Arbitrator, but excluding costs and expenses incurred
by a party relating to its participation therein) shall be borne in equal
proportions by each of the Sellers and Buyer. Any party desiring to commence an
arbitration proceeding in accordance with this Section 2.4 shall so notify the
other parties hereto by written notice setting forth in reasonable detail the
nature of the dispute and the relief demanded.
2.5 Closing Costs; Transfer Taxes. Sellers shall be responsible for
-----------------------------
any documentary transfer Taxes and any sales, use or other Taxes imposed by
reason of the transactions contemplated hereby and any deficiency, interest or
penalty asserted with respect thereto, and Buyer shall be responsible for any
title searches or insurance premiums for title insurance to be obtained by
Buyer. Buyer shall also be responsible for the fees and costs of recording or
filing all applicable conveyancing instruments described in Section 3.2(a).
-19-
ARTICLE 3
CLOSING
-------
3.1 Closing. The Closing of the transactions contemplated herein
-------
(the "Closing") shall be held at 11:00 a.m. New York City time on the Closing
-------
Date at the offices of Xxxxxxxx Kill & Olick, P.C., 1251 Avenue of the Americas,
New York, New York, unless the parties hereto otherwise agree.
3.2 Conveyances at Closing.
----------------------
(a) Instruments and Possession. To effect the transfer referred to in
--------------------------
Section 2.1 hereof, Sellers (as applicable) will, and will cause MLSLP to, on
the Closing Date, execute and deliver to Buyer:
(i) one or more assignments of partnership interest with respect to
the MLSLP Partnership Interests other than that held by MAS and
certificate(s) evidencing the MAS Stock (duly endorsed in blank for
transfer or accompanied by stock powers duly executed in blank), in each
case free and clear of any Encumbrances;
(ii) one or more bills of sale substantially in the form attached
hereto as Exhibit "C", conveying in the aggregate all of the owned personal
property of the Xxxxx Entities (other than MLSLP and MAS) included in the
Purchased Assets;
(iii) an Assignment and Assumption Agreement in the form attached
hereto as Exhibit "D" with respect to the Leases and all other Assumed
Liabilities;
(iv) the Exclusive Sales Agreement;
(v) subject to Section 3.2(c), separate assignments of all Contract
Rights included in the Purchased Assets to the extent necessary;
(vi) assignments of all Proprietary Rights which constitute Purchased
Assets in recordable form to the extent necessary to assign such rights;
(vii) the subleases, if any, of the properties to be subleased to Buyer
as provided herein;
(viii) original certificates of title, signed by a Xxxxx Entity, as
necessary, and such other executed forms as may be required to transfer to
Buyer title in any Motor Vehicle
-20-
owned by any Xxxxx Entity constituting part of the Purchased Assets;
(ix) one or more assignment or assumption agreements in form and
substance reasonably acceptable to Buyer which gives effect to the transfer
of the Excluded Assets from MLSLP and MAS to the MLSLP Partners or any of
their Affiliates; and
(x) such other instruments or documents as shall be reasonably
requested by Buyer to vest in Buyer title in and to the Purchased Assets in
accordance with the provisions of this Agreement.
On the Closing Date, Buyer will execute, where applicable, and deliver
to Sellers:
(i) the Purchase Price in accordance with Section 2.2 hereof;
(ii) an Assignment and Assumption Agreement in the form attached hereto
as Exhibit "D" with respect to the Assumed Liabilities;
(iii) the Exclusive Sales Agreement;
(iv) amendments or restatements of the certificate of limited
partnership of MLSLP removing the MLSLP Partners (other than MAS) as
partners of MLSLP (which amendments or restatements, if necessary, shall be
executed by the MLSLP Partners); and
(v) such other instruments as shall be reasonably requested by Sellers
to effect the consummation of the transactions contemplated hereby.
(b) Form of Instruments. All of the instruments referred to in
-------------------
Section 3.2(a) above shall be in form and substance, and shall be executed and
delivered in a manner, reasonably satisfactory to the party receiving delivery
thereof.
(c) Consents to Assignment.
----------------------
(i) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any Contract, Contract
Right, license, purchase order or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof, without
the Consent of a Consenting Party thereto, would constitute a breach thereof or
in any way affect or materially impair the respective rights of the Xxxxx
Entities (other than MAS or MLSLP)
-21-
or Buyer thereunder. Buyer acknowledges and agrees that Sellers shall not be
required to seek any consents or waivers with respect to the assignment or other
transfer of the Location Contracts and that, notwithstanding anything in this
Agreement to the contrary, in no event shall the failure to seek or obtain such
consents or waivers: (x) be deemed a breach of any representation, warranty,
covenant or other agreement of the Sellers or Xxxxxx hereunder; (y) constitute a
failure of a condition precedent contained in Article 8 hereof; or (z) entitle
Buyer to indemnification hereunder.
(ii) If such Consent is not obtained, or if an attempted assignment
thereof would be ineffective or would affect or materially impair any rights of
the Xxxxx Entities thereunder so that Buyer would not receive all such rights,
the Sellers and Xxxxxx will use their reasonable best efforts, and will cause
the Xxxxx Entities to use their reasonable best efforts, to provide to Buyer the
net economic benefits under any such Contract, license, purchase order, claim,
right or benefit, including, without limitation, enforcement for the benefit of
Buyer (at Buyer's expense) of any and all rights of the Xxxxx Entities against a
Consenting Party, and cooperate in any reasonable and lawful arrangement
designed to provide such benefits to Buyer, without any Seller or Xxxxxx
incurring any significant financial or other obligation to Buyer independent of
such benefits, including, without limitation, (x) to the extent subletting is
permitted under the terms of any Location Contract for which a Consent is
required and shall not have been obtained by the Xxxxx Entities, Spagat or
Xxxxxx (any such Location Contract, a "Consent Lease") and applicable law, to
-------------
sublet the Location covered by such Consent Lease to Buyer on the same terms and
conditions (including rental and other payments) that are contained in the
existing Consent Lease, for the balance of the term thereof less one day (the
"Sublease") or (y) to the extent a service agreement is permitted under the
--------
terms of the Consent Lease and applicable law, enter into a service agreement
(the "Service Agreement"), in form and substance reasonably acceptable to Buyer,
-----------------
whereby Buyer is appointed exclusive agent of Sellers to service the Machines
and collect the revenues generated therefrom at the Location subject to the
Consent Lease for the term of the Consent Lease.
(iii) Any transfer or assignment to Buyer of any Purchased Asset
or any Contract (other than any Location Contract) which shall require the
Consent of any Consenting Party shall be made subject to such Consent being
obtained, provided that the failure to obtain a necessary consent, approval or
waiver with respect thereto shall not constitute a breach of this Agreement. To
the extent that Buyer is provided the benefits pursuant to this Agreement of any
Contract, Contract Right or other Purchased Asset, Buyer shall perform for the
benefit of the
-22-
other party or parties thereto the obligations of the relevant Xxxxx Entity
thereunder or in connection therewith, but only to the extent that (i) such
action by Buyer would not result in any default thereunder or in connection
therewith and (ii) such obligation would have been an Assumed Liability but for
the non-assignability or non-transferability of the related Contract, Contract
Right or other Purchased Asset.
3.3 Other Deliveries at Closing. In addition to the foregoing
---------------------------
matters, at the Closing Buyer and Sellers shall (and Sellers shall cause MLSLP
to) deliver the certificates, opinions of counsel and other materials described
in Articles 7 and 8, respectively.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Except as set forth on the Disclosure Schedule, each Seller and Xxxxxx
hereby represents and warrants to Buyer as follows:
4.1 Organization of the Xxxxx Entities.
----------------------------------
(a) Each Xxxxx Entity that is a limited partnership is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation, has full partnership power and authority to conduct its Business as
it is presently being conducted and to own and lease its properties and assets.
Each such Xxxxx Entity is duly qualified to do business as a foreign limited
partnership and is in good standing in each jurisdiction in which such
qualification is necessary under any applicable Legal Requirement as a result of
the conduct of the Business or the ownership of its properties or assets, except
for any such jurisdiction in which the failure to be so qualified would not
reasonably be expected to have an Adverse Effect. Each jurisdiction in which
each such Xxxxx Entity is qualified to do business as a foreign limited
partnership and each jurisdiction in which each such Xxxxx Entity conducts
business but is not qualified to do business is, in each case, listed on the
Disclosure Schedule.
(b) Each Xxxxx Entity that is a corporation is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, has full corporate power and authority to conduct its Business as it
is presently being conducted and to own and lease its properties and assets.
Each such Xxxxx Entity is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
necessary under the applicable law as a
-23-
result of the conduct of its Business or the ownership of its properties or
assets, except for any such jurisdiction in which the failure to be so qualified
would not reasonably be expected to have an Adverse Effect. Each jurisdiction
in which each such Xxxxx Entity is qualified to do business as a foreign
corporation is listed on the Disclosure Schedule.
(c) The partnership Books and Records of MLSLP are correct, current,
and complete in all respects, and the signatures appearing on all documents
contained therein are the true signatures of the persons purporting to have
signed the same. All actions reflected in such books and records were duly and
validly taken in compliance with all applicable Legal Requirements. Each of the
MLSLP Partners have properly filed a certificate of limited partnership and all
amendments thereto required to be filed with the Secretary of State of the State
of Delaware pursuant to the Revised Uniform Limited Partnership Act of the State
of Delaware.
4.2 Capitalization of MLSLP and MAS.
-------------------------------
(a) The MLSLP Partners are the sole general partners of MLSLP and own
of record and beneficially 100% (Xxxxx Midwest 75.98%, MAS .24%, JPS .24% and
MLS 23.54%) of the outstanding partnership interests of MLSLP. The MLSLP
Partnership Interests constitute all of the ownership interests in MLSLP, and,
taken together, the MLSLP Partners have good and marketable title to the MLSLP
Partnership Interests, free and clear of all Encum brances. Other than the
MLSLP Partnership Interests or rights granted under the Management Participation
Agreements, MLSLP has no outstanding Equity Interests or Equity Interests
containing any profit participation features. Sellers have delivered to Buyer a
true and complete copy of the partnership agreement of MLSLP and all amendments,
modifications or supplements thereto. Except as set forth in the partnership
agreement of MLSLP, there are no statutory or contractual rights of refusal or
other limitations with respect to the transfer of the MLSLP Partnership
Interests contemplated by this Agreement. MLSLP has not violated any applicable
federal or state securities laws in connection with the offer, sale or issuance
of any of its ownership interests. All of the outstanding MLSLP Partnership
Interests have been duly authorized and validly issued and are fully paid and
non-assessable and are not subject to any Encumbrances. MLSLP owns no Equity
Interests of, and is not in any manner affiliated (whether through an Investment
or participation of any kind) with the Equity Interests of, any Person. Except
for its initial limited partner who was redeemed prior to the date hereof and
except as set forth on the Disclosure Schedule, MLSLP has not had any partner
other than the MLSLP Partners.
-24-
(b) MAS has authorized 1,000 shares of MAS Stock, 100 shares of which
are issued and outstanding. The MAS Stock is owned of record and beneficially
by Spagat free and clear of all Encumbrances. Upon transfer of the shares of
MAS Stock to Buyer hereunder on the Closing Date in accordance with Section 2.1
of this Agreement, Buyer will receive good and marketable title to such shares
of MAS Stock, free and clear of all Encumbrances. The MAS Stock constitutes all
of the Equity Interests of MAS, and all of Spagat's shares of MAS Stock have
been duly authorized and validly issued and are fully paid and non-assessable.
Except for the MAS Stock, MAS has no outstanding Equity Interests or Equity
Interests containing any profit participation features. Sellers have delivered
to Buyer a true and complete copy of the certificate of incorporation and bylaws
of MAS and all amendments, modifications or supplements thereto. There are no
statutory or contractual rights of refusal or other limitations with respect to
the transfer of the MAS Stock contemplated by this Agreement. MAS has not
violated any applicable federal or state securities laws in connection with the
offer, sale or issuance of any of its ownership interests. Except for its
interest in the MLSLP Partnership Interests, MAS owns no Equity Interests of,
and is not in any manner affiliated (whether through an Investment or
participation of any kind) with the Equity Interests of, any Person.
4.3 Authorization; Binding Effect. Each Seller and Xxxxxx has all
-----------------------------
necessary corporate, partnership or other power, as applicable, and authority
and has taken all corporate or partnership action, as applicable, necessary to
enter into the Transaction Documents to which it is a party, to consummate the
transactions contemplated thereby and to perform its obligations thereunder.
This Agreement and each applicable Transaction Document has been duly executed
and delivered by each Seller and Xxxxxx and is a legal, valid and binding
obligation of each Seller and Xxxxxx enforceable against each Seller and Xxxxxx
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to or affecting the
rights or remedies of creditors, general principles of equity (whether
considered in an action at law or in equity) and the discretion of the court
before which any proceeding therefor may be brought.
4.4 Absence of Certain Changes or Events. Except as set forth in the
------------------------------------
Disclosure Schedule, since the Balance Sheet Date, there has not been any:
(a) change in the Xxxxx Entities' consolidated financial condition or
results of operations, except for changes contemplated hereby, changes,
individually or in the aggregate, which have not resulted in and could not
reasonably be expected
-25-
to result in an Adverse Effect and changes in the ordinary course of business
consistent with past practice or changes occurring as a result of general
economic or financial conditions or other developments which are not unique to
any of the Xxxxx Entities;
(b) (i) except for normal periodic increases in the ordinary course of
business consistent with past practice, increase in the compensation payable or
to become payable by the Xxxxx Entities to any of their respective officers,
directors, employees or agents (collectively, "Personnel"), (ii) bonus,
---------
incentive compensation, service award or other like benefit granted, made or
accrued, contingently or otherwise, in each case, in an amount in excess in
$10,000 (on an individual basis), for or to the credit of any of the Personnel,
(iii) employee welfare, pension, retirement, profit-sharing or similar payment
or arrangement made or agreed to by Sellers or Xxxxxx for any Personnel except
pursuant to the existing plans and arrangements described in the Disclosure
Schedule or (iv) new employment or consulting agreement to which any Xxxxx
Entity is a party;
(c) addition to or modification of or prepayment of any kind with
respect to the employee benefit plans, arrangements or practices described in
the Disclosure Schedule affecting Personnel other than (i) contributions made
for fiscal years 1996 or 1997 in accordance with the normal practices of the
Xxxxx Entities or (ii) the extension of coverage to other Personnel who became
eligible after the Balance Sheet Date as set forth in the Disclosure Schedule;
(d) sale, assignment or transfer of any of the assets of any Xxxxx
Entity, material singly or in the aggregate, other than in the ordinary course
of business consistent with past practices;
(e) cancellation of any indebtedness in an amount in excess of $50,000
or waiver of any rights of substantial value to any Xxxxx Entity, in each case,
other than in the ordinary course of business;
(f) amendment, cancellation or termination (except upon expiration) of
any Contract, other than in the ordinary course of business consistent with past
practice, or any material Permit;
(g) capital expenditure or the execution of any Lease or any incurring
of liability therefor, outside the ordinary course of business and involving
payments in excess of $50,000 in the aggregate (excluding acquisitions by
Sellers of route businesses);
-26-
(h) failure to operate the Business in the ordinary course and
consistent with past practices, to keep available to Buyer the services of the
Personnel, or, except in the ordinary course of business, to preserve for Buyer
the goodwill of suppliers, Customers and others having business relations with
any of the Xxxxx Entities;
(i) failure to repay any obligation, except in the ordinary course of
business or where such failure would not reasonably be expected to result in an
Adverse Effect;
(j) change in accounting methods or practices by any of the Xxxxx
Entities affecting their respective assets, liabilities or the Business, except
to the extent required by generally accepted accounting principles ("GAAP");
----
(k) material revaluation by any of the Xxxxx Entities of any class of
their respective assets as a whole, including, without limitation, writing off
notes or accounts receivable, except in the ordinary course of business
consistent with past practice or as required by GAAP;
(l) damage, destruction or loss (whether or not covered by insurance)
which has materially adversely affected the Facilities, considered as a whole,
or the Business;
(m) any Encumbrance on the Purchased Assets not in the ordinary course
of business consistent with past practices, other than such Encumbrances which
will be discharged or terminated in full prior to the Closing Date;
(n) liabilities involving $100,000 or more except in the ordinary
course of business and consistent with past practice, or any increase or change
in any assumptions underlying or methods of calculating any bad debt,
contingency or other reserves, except as required by GAAP;
(o) payment, discharge or satisfaction of any liabilities other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the Balance Sheets or incurred in the ordinary course of business and consistent
with past practice since the Balance Sheet Date;
(p) other event or condition of any character, other than in the
ordinary course of business, which in any one case or in the aggregate has, or
any event or condition known to Sellers or Xxxxxx (other than matters of general
public knowledge relating to general economic conditions or the industry of the
Xxxxx Entities as a whole) which it is reasonable to expect will, in any one
case or in the aggregate, result in an Adverse Effect;
-27-
(q) declaration, setting aside or payment by MAS or MLSLP of non-cash
dividends or distributions in respect of any MAS Stock, MLSLP Partnership
Interest or other Equity Interests or any non-cash redemption, purchase or other
acquisition of any such MAS Stock, MLSLP Partnership Interests or other Equity
Interests;
(r) issuance by MAS or MLSLP of, or commitment by any MLSLP Partner or
MLSLP to issue, any MAS Stock, MLSLP Partnership Interests or other Equity
Interests;
(s) Encumbrance on any of the MLSLP Partnership Interests or the MAS
Stock; or
(t) activity which has resulted or could reasonably be expected, with
the passage of time or the giving of notice or otherwise, to result in the
acceleration or any delay in the payment of their accounts payable, in each case
as compared with their custom and practice in the conduct of the Business
immediately prior to the Balance Sheet Date;
(u) agreement by any Seller, MLSLP, MAS or Xxxxxx to do any of the
foregoing.
4.5 Title to Assets, Etc.
--------------------
(a) The Xxxxx Entities have good and marketable fee simple title to
the Purchased Assets. Except as set forth in the Disclosure Schedule and for
Encumbrances which will be removed prior to the Closing Date, none of the
Purchased Assets are subject to any Encumbrances. Each Xxxxx Entity has
performed all material obligations required to be performed by it with respect
to all Purchased Assets owned or leased by it through the date hereof.
(b) Each Xxxxx Entity enjoys peaceful and undisturbed possession of
all Facilities owned or leased by it, and such Facilities are not subject to any
Encumbrance, encroachments, building or use restrictions, exceptions,
reservations or limitations which interfere in any material respect with or
impair in any material respect the present and continued use thereof in the
usual and normal conduct of the Business. All Facilities are supplied with
utilities and other services necessary for the Business with respect thereto
(including any necessary gas, electricity, water (including, without limitation,
the unrestricted use and right to a water supply sufficient for the Business),
irrigation, sanitary and storm sewer service).
(c) There are no pending condemnation proceedings pursuant to which a
Spagat, Xxxxxx or a Xxxxx Entity has been named a party and served with a
complaint or, to the knowledge of
-28-
Sellers, threatened condemnation proceedings relating to any of the Facilities
(other than the Locations). To the knowledge of Sellers and Xxxxxx, there are
no pending condemnation proceedings pursuant to which Spagat, Xxxxxx or a Xxxxx
Entity has been named as a party and served with a complaint or threatened
condemnation proceedings relating to any of the Locations. The real property
improvements (including leasehold improvements), equipment and other tangible
assets owned or used by the Xxxxx Entities at the Facilities are structurally
sound with, to the knowledge of Sellers and Xxxxxx, no known material defects.
Except as set forth in the Disclosure Schedule, none of said improvements,
Fixtures and Equipment or other assets is subject to any commitment or other
arrangement for their sale or use by any other Person.
(d) The Disclosure Schedule states the name of each bank or other
financial institution with which MLSLP or MAS has an account or safety deposit
box.
4.6 Condition of Tangible Assets. The Facilities and Fixtures and
----------------------------
Equipment, taken as a whole, are in all material respects in good operating
condition and repair consistent with age (except for ordinary wear and tear),
are sufficient in all material respects for the operation of the Business as
presently conducted and are in conformity with all Legal Requirements.
4.7 Location Contracts and Machine Rental Contracts. The Disclosure
-----------------------------------------------
Schedule provides or by Closing will provide a listing of the Location Contracts
and Machine Rental Contracts which, taken as a whole, is accurate in all
material respects as of the Closing Date. The Disclosure Schedule sets forth or
by Closing will set forth the following terms with respect to each Location
Contract: (i) type of account; (ii) account number; (iii) termination date;
(iv) whether there is an automatic renewal provision; (v) the number of On-
Location Machines at the applicable Location; and (vi) the commission
arrangement with respect to the account. The Disclosure Schedule sets forth or
by Closing will set forth the following terms with respect to each Machine
Rental Contract: (i) the name of the customer; (ii) the number of Machines
rented or leased pursuant to such Contract; and (iii) the material economic
terms. Buyer acknowledges and understands that the information concerning each
Location Contract in such listing contained in the Disclosure Schedule is only a
summary of the Location Contracts and is qualified by reference to the Location
Contracts. Except as set forth on the Disclosure Schedule and except as would
not materially adversely effect such Location Contract, each Location Contract
grants Sellers the exclusive right to install, service, maintain and operate all
On-Location Machines at the Location(s) set forth in the applicable Location
Contract. As of the date of this Agreement, the Xxxxx Entities are not, and to
the knowledge of
-29-
Sellers and Xxxxxx, no other party is in material breach or violation of or
default under any terms of any of the Location Contracts, and since the Balance
Sheet Date neither Sellers nor Xxxxxx has received any written notice,
requesting or threatening the removal of On-Location Machines from a Location,
or any other anticipatory breach of any Location Contract, or of any foreclosure
against any Location set forth in any of the Location Contracts, in each case,
except in the ordinary course of business. Except as set forth on the
Disclosure Schedule, since the Balance Sheet Date neither Sellers nor Xxxxxx has
received any written notice questioning the validity or enforceability of any
Location Contract. Sellers have delivered, and have caused MLSLP to deliver, to
Buyer a copy of their respective standard forms of Location Contracts.
4.8 Contracts and Commitments. Except as set forth in the Disclosure
-------------------------
Schedule, no Xxxxx Entity is a party to any written:
(a) commitment, contract, note, loan, evidence of indebtedness,
purchase order or letter of credit involving any obligation or liability on the
part of a Xxxxx Entity of more than $75,000 and not cancelable (without
liability) within 30 days;
(b) lease of real property (other than a Location Contract or lease of
a self-storage facility);
(c) lease of personal property involving any annual expense in excess
of $15,000 and not cancelable (without liability) within 30 days;
(d) contracts and commitments relating to the Business not otherwise
described above or listed in the Disclosure Schedule (including purchase orders
and undertakings or commitments to any governmental or regulatory authority) and
not entered into or arising in the ordinary course of business or consistent
with past practice;
(e) Permits required to conduct the Business as presently conducted
(it being understood that such listing shall be delivered not later than fifteen
(15) calendar days prior to the Closing Date).
(f) contracts or agreements containing covenants limiting the freedom
of any Xxxxx Entity to engage in any line of business or compete with any
Person; or
(g) employment contracts and consulting agreements, including without
limitation, contracts to employ executive officers and other contracts with
Representatives of Sellers or
-30-
the Xxxxx Entities other than oral contracts of a Seller for employment at will
and contracts with independent contractors engaged in connection with the
construction and maintenance of laundry rooms in accordance with the ordinary
course of business consistent with past practice.
No Xxxxx Entity is (and, to the knowledge of Sellers and Xxxxxx, no
other party is) in material breach or violation of, or material default under,
any of the Contracts or other instruments, obligations, evidences of
indebtedness or commitments described in (a)-(g) above. Each Contract described
on the Disclosure Schedule is a legal, valid and binding obligation of each
Xxxxx Entity which is a party thereto enforceable against each such Xxxxx Entity
in accordance with its terms. Neither, Seller, Xxxxxx nor any Xxxxx Entity is
aware of any facts or circumstances which would reasonably be expected to cause
any of them to fail to perform in any material respect any of their respective
obligations pursuant to any Contract to which each is a party, and neither
Spagat, Xxxxxx nor any Xxxxx Entity has knowledge or notice of any breach or
anticipated breach by any other Person to any Contract.
4.9 No Conflict or Violation. Except as set forth in the Disclosure
------------------------
Schedule, neither the execution and delivery of the Transaction Documents by any
party hereto other than Buyer nor the consummation of the transactions
contemplated thereby will result in (a) a violation of or a conflict with any
provision of any of the organizational documents of any Xxxxx Entity, including,
without limitation, the agreement of limited partnership of MLSLP or the
certificate of incorporation of MAS, (b) a material breach or violation of, or a
material default under, any term or provision of any Contract, Permit,
authorization or concession to which any Xxxxx Entity is a party or by which any
of the Purchased Assets are bound, which breach or default is reasonably likely
to have an Adverse Effect (it being understood that with respect to this Section
4.9 only no representation is being made with respect of any of the Location
Contracts or automobile leases), (c) a violation by any Xxxxx Entity of any
Legal Requirement, or (d) an imposition of any Encumbrance on the Business or on
any of the Purchased Assets, other than any such Encumbrance which would not
reasonably be expected to have an Adverse Effect.
4.10 Consents and Approvals. Except as set forth on the Disclosure
----------------------
Schedule and except for the filings required under the HSR Act, Consents or
waivers which may be required under Location Contracts and automobile leases and
filings with a governmental authority in connection with the transfer of a
vehicle title, no consent, approval, waiver or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority, or any
other Person, is required to be made
-31-
or obtained by Sellers in connection with the execution, delivery and
performance of this Agreement by Sellers and Xxxxxx and the consummation of the
transactions contemplated hereby by Sellers and Xxxxxx, unless the failure to
obtain any such consent, approval, waiver or authorization would not be likely
to result in an Adverse Effect or a material adverse effect on the Business or
on any Seller's or Xxxxxx'x ability to consummate the transactions contemplated
hereby.
4.11 Financial Statements. Sellers and Xxxxxx have heretofore
--------------------
delivered, and have caused MLSLP to deliver, to Buyer true and complete copies
of the Financial Statements. Except as otherwise set forth therein, the
footnotes thereto or in the Disclosure Schedule, the Financial Statements are
complete, are in accordance with the books and records of the Xxxxx Entities and
present fairly in all material respects the financial condition and results of
operations indicated thereby. The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied,
and contain and reflect all necessary adjustments for a fair representation of
such Financial Statements as of the date and for the periods covered thereby.
4.12 Litigation. Except as set forth in the Disclosure Schedule and
----------
except for Actions which, if adversely decided, would not reasonably be expected
to have an Adverse Effect, there is no action, order, writ, injunction, judgment
or decree outstanding or claim, suit, litigation, proceeding, labor dispute,
arbitral action or investigation (collectively, "Actions") pending or, to each
-------
Seller's and Xxxxxx'x knowledge, threatened against, relating to or affecting
(i) any Xxxxx Entity, Spagat, Xxxxxx or the Business, (ii) any benefit plan for
Personnel or any fiduciary or administrator thereof or (iii) any of the
transactions contemplated by the Transaction Documents. Neither any Xxxxx
Entity, Spagat nor Xxxxxx is in default with respect to any judgment, order,
writ, injunction or decree of any court or governmental agency, and there are no
unsatisfied judgments against any Xxxxx Entity, Spagat, Xxxxxx or the Business.
4.13 Labor Matters. No Xxxxx Entity is a party to any labor
-------------
agreement with respect to its employees with any labor organization, group or
association. Except as set forth in the Disclosure Schedule, no Xxxxx Entity
has, within the past three years, experienced any attempt by organized labor or
its Representatives to make such Xxxxx Entity conform to demands of organized
labor relating to its employees or to enter into a binding agreement with
organized labor that would cover the employees of any Xxxxx Entity. Each Xxxxx
Entity is in compliance in all material respects with all applicable laws
respecting employment practices, terms and conditions of
-32-
employment and wages and hours and is not engaged in any unfair labor practice.
There is no unfair labor practice charge or complaint against any Xxxxx Entity
pending or, to the knowledge of each Seller and Xxxxxx, threatened before the
National Labor Relations Board or any other governmental agency arising out of
Xxxxx Entity's activities, and neither Sellers nor Xxxxxx has knowledge of any
facts or information which would give rise thereto; there is no labor strike or
labor disturbance pending or, to the knowledge of each Seller and Xxxxxx,
threatened against any Xxxxx Entity nor is any grievance currently being
asserted; and no Xxxxx Entity has experienced, within the past three years, a
work stoppage or other labor difficulty in either case which has had or is
reasonably likely to have an Adverse Effect.
4.14 Liabilities. Except as set forth in the Disclosure Schedule,
-----------
the Xxxxx Entities have no liabilities or obligations (absolute, accrued,
contingent or otherwise) except (i) liabilities which are reflected or reserved
against on the Balance Sheets (or in the notes thereto in the case of the MLSLP
Balance Sheet), (ii) liabilities incurred in the ordinary course of business and
consistent with past practice since the Balance Sheet Date, and (iii)
liabilities arising under Contracts described in the Disclosure Schedule or
which are of the type described in Section 4.8 but which because of the dollar
amount or other qualifications are not required to be listed in the Disclosure
Schedule and (iv) liabilities which would not individually or when combined with
all other liabilities be reasonably likely to have an Adverse Effect.
4.15 Compliance with Law. The Xxxxx Entities and the Business are in
-------------------
compliance in all material respects with all applicable Legal Requirements.
Spagat, Xxxxxx and the Xxxxx Entities have not received any written notice to
the effect that, or otherwise been advised that, any Xxxxx Entity is in
violation of any material Legal Requirements, and Spagat, Xxxxxx and the Xxxxx
Entities are unaware of any presently existing circumstances likely to result in
violations of any such Legal Requirements.
4.16 No Brokers. Neither the Xxxxx Entities, Spagat, Xxxxxx nor any
----------
Representative thereof has entered into or will enter into any contract,
agreement, arrangement or understanding with any Person which will result in the
obligation of Buyer to pay any finder's fee, brokerage commission or similar
payment in connection with the transactions contemplated by the Transaction
Documents.
4.17 No Other Agreements to Sell the MLSLP Partnership Interests, the
----------------------------------------------------------------
MAS Stock or the Purchased Assets. Except as set forth in the Disclosure
---------------------------------
Schedule, neither Spagat nor Xxxxxx nor
-33-
any Xxxxx Entity, nor any Affiliate or Representative of any Xxxxx Entity has
any legal obligation, absolute or contingent, to any other Person to sell all or
substantially all of the Purchased Assets of the Business, any of the MLSLP
Partnership Interests, the MAS Stock or all or substantially all of the
partnership interests or the capital stock of any Xxxxx Entity or to effect any
merger, consolidation or other reorganization of any Xxxxx Entity or MLSLP or to
enter into any agreement with respect thereto.
4.18 Proprietary Rights. All of the Proprietary Rights of the Xxxxx
------------------
Entities are listed in the Disclosure Schedule. The Proprietary Rights listed
in the Disclosure Schedule are all those required to conduct the Business as
presently conducted. Except as set forth in the Disclosure Schedule, no Person
has a right to receive a royalty or similar payment in respect of any
Proprietary Rights pursuant to any contractual arrangements entered into by any
Seller, Xxxxxx or Xxxxx Entity, and no Person otherwise has a right to receive a
royalty or similar payment in respect of any such Proprietary Rights. The Xxxxx
Entities, Spagat and Xxxxxx have no licenses granted by or to them or no other
agreements to which they are a party, relating in whole or in part to any of the
Proprietary Rights. To the knowledge of Sellers and Xxxxxx, use of the
Proprietary Rights by the Xxxxx Entities is not infringing upon or otherwise
violating the rights of any third party in or to such Proprietary Rights, except
any such infringement or violation that does not materially adversely effect
such right, and no proceedings have been instituted or, to the knowledge of
Sellers and Xxxxxx, threatened against or written notices received by any Seller
that are presently outstanding alleging that any Xxxxx Entity's use of its
Proprietary Rights infringes upon or otherwise violates any rights of a third
party in or to any such Proprietary Rights.
4.19 Employee Benefit Plans.
----------------------
(a) The Disclosure Schedule lists:
(i) the names, positions, titles, dates of commencement of
employment and current compensation of the employees of the Business,
including, without limitation, employees on approved or legally mandated
leaves of absence and whether there exist employment agreements or
contracts with the employees of the Business;
(ii) each "employee benefit plan" as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), that is covered by ERISA and that is maintained,
-----
administered or otherwise contributed to by Sellers for the benefit of
present or
-34-
former employees of the Xxxxx Entities (each a "Plan"; collectively, the
----
"Plans"); and
------
(iii) each plan or arrangement not subject to ERISA and
maintained, administered or otherwise contributed to by the Xxxxx Entities
for the benefit of present or former employees of the Business which
provides for retirement or welfare benefits, including, but not limited to
any plans or arrangements which are subject to Section 125 of the Code,
compensation arrangements, bonus or benefit plans, programs or other
arrangements, including without limitation, all arrangements, policies,
plans and programs relating to retirement, disability, insurance,
(including any self-insured arrangements), severance pay, supplemental
unemployment benefit, vacation, leave of absence, equity participation,
stock purchase, stock option, stock appreciation right or any other
incentive arrangement or any similar compensation or welfare benefit plan
(individually, an "Employee Benefit Program" and, collectively, the
------------------------
"Employee Benefit Programs").
--------------------------
(b) The Xxxxx Entities have made available to Buyer correct and
complete copies of the following items:
(i) the plan document for each Plan and related trust agreement
(and all amendments thereto);
(ii) the most recent annual report (Form 5500 including, if
applicable, Schedule B thereto) prepared in connection with each Plan;
(iii) the last actuarial valuation report prepared in connection
with any Plan which is subject to Title IV of ERISA;
(iv) the most recent determination letter from the Internal
Revenue Service relating to each Plan which is intended to be qualified
under Section 401(a) of the Code;
(v) the current summary plan description for each Plan.
(c) (i) Each Plan and Employee Benefit Program of the Xxxxx Entities
has been maintained and administered in material compliance in all material
respects with all applicable laws, rules and regulations, including but not
limited to ERISA and the Code.
(ii) Each Plan that is intended to be qualified under Section
401(a) of the Code has received a determination letter from the Internal
Revenue Service
-35-
stating that such Plan is a qualified plan and that each trust created
under any such Plan is exempt from taxation under Section 501(a) of the
Code, and no circumstances exist, including the events contemplated by this
Agreement, which might cause any such Plan to cease being so qualified.
(d) To the best of Sellers' and Xxxxxx'x knowledge, after due inquiry,
at no time have the Xxxxx Entities or any trade or business which together with
any Xxxxx Entity would at any time be treated as a single employer under Section
4001(b)(1) of ERISA or Section 414 of the Code, contributed to, maintained or
been obligated to contribute to any plan which is subject to Title IV of ERISA,
including any multiemployer plan as such term is defined under Section 3(37) of
ERISA.
(e) No post-retirement medical and life insurance benefit obligations
exist with respect to any present or former employees of the Xxxxx Entities.
(f) The Xxxxx Entities and any Affiliates thereof have not been
affected by any transaction or engaged in layoffs or employment terminations
with respect to the Business sufficient in number to trigger the application of
the Worker Adjustment and Retraining Notification Act (the "WARN Act") or any
--------
similar or local law.
(g) Except as set forth on the Disclosure Schedule, with respect to
each Plan and Employee Benefit Program, (i) no Tax or penalty under any
provision of the Code or ERISA has been imposed or can reasonably be expected to
be imposed as a result of actions or inactions which occurred prior to the
Closing Date; and (ii) all returns, reports and notices which are required under
the Code, ERISA or any other applicable law and the regulations thereunder have
been timely provided to governmental agencies, employees, participants or
beneficiaries.
(h) Neither the Sellers nor any Affiliates have failed to comply with
any of the health care continuation coverage requirements or related notice
requirements under Section 601, et. seq. of ERISA and Section 4980B of the Code.
(i) No "prohibited transaction" (as such term is used in Section 406
of ERISA or Section 4975 of the Code) has heretofore occurred with respect to
any Plan.
(j) No litigation or administrative or other proceedings involving a
Plan or Employee Benefit Program have occurred or are pending or threatened.
(k) There is no contract, Plan or Employee Benefit Program covering
any current or former employees of the Xxxxx
-36-
Entities that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to the terms of Section 280G of
the Code.
(l) Except as specifically set forth in the Disclosure Schedule or in
the Management Participation Agreements, no payment, award, bonus, severance
payment or other amount under any contract, Plan or Employee Benefit Program
will be triggered as a result of the events contemplated by this Agreement.
(m) No Plan or Employee Benefit Program has any restrictions against
termination or modification, either by its terms or due to any written or oral
communications by any representative of the Sellers.
4.20 Transactions with Certain Persons. Except as set forth in the
---------------------------------
Disclosure Schedule, neither any Representative of any Xxxxx Entity, Spagat or
Xxxxxx nor any member of any such Person's immediate family is presently a party
to any transaction with any Xxxxx Entity, Spagat or Xxxxxx relating to the
Business, including, without limitation, any contract, agreement or other
arrangement (i) providing for the furnishing of services by (other than for
services as officers or directors of the Xxxxx Entity), (ii) providing for the
rental of real or personal property from, or (iii) otherwise requiring payments
to (other than for services as officers, directors, Representatives or employees
of the Xxxxx Entity) any such Person in which any such Person has a substantial
or beneficial interest.
4.21 Tax Matters.
-----------
(a) Except as explicitly set forth in the attached Disclosure
Schedule:
(A) Each of MLSLP and MAS has (a) filed all Tax Returns which are
required to be filed prior to the Closing Date and each such Tax Return is
correct and complete, (b) paid all Taxes due and owing by it as of the
Closing Date (whether or not shown on any Tax Return) and (c) withheld and
paid over all Taxes which it is obligated to withhold from amounts paid or
owing to any Personnel, shareholder, partner, creditor or other Person;
(B) no Tax audits are pending or being conducted with respect to
MLSLP or MAS;
(C) no information related to Tax matters has been requested by
any Taxing authority, and neither MLSLP nor MAS nor any Seller has received
written notice indicating an intent to open an audit or other review from
any Taxing authority and neither MLSLP, MAS nor any Seller
-37-
nor any partner of MLSLP or officer or director of MAS is aware of any
facts or circumstances which might reasonably be expected to cause any
authority to assess any additional Taxes for any period for which Tax
Returns have been filed;
(D) neither MLSLP nor MAS nor any Seller nor Xxxxxx has knowledge
of any asserted claim (whether in writing or otherwise) by any Taxing
authority concerning its respective liability for Taxes;
(E) no claim has ever been made by any jurisdiction in which
MLSLP or MAS does not file Tax Returns to the effect that MLSLP or MAS is
or may be subject to any Tax imposed by that jurisdiction;
(F) since December 31, 1992, neither MLSLP nor MAS has waived any
statute of limitations in respect of Taxes or agreed to an extension of
time with respect to any Tax assessment or deficiency;
(G) neither MLSLP nor MAS is a party to any agreement that could
obligate it to make any payments that would not be deductible pursuant to
Section 280G of the Code, and has not filed a consent pursuant to Section
341(f) of the Code;
(H) each of MLSLP and MAS has heretofore delivered to Buyer and
its Representatives correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed
against or agreed to by any of them;
(I) neither MLSLP nor MAS is party to any Tax sharing or
allocation agreement, and has no liability for the Taxes of any Person
under (S) 1.1502-6 of the Treasury Regulations (or any similar provision of
state, local or foreign law), or as a transferee or successor, by contract,
or otherwise;
(J) MLSLP has at all times since formation qualified to be
treated and classified as a partnership for Tax (including, without
limitation, federal and state income and franchise tax) purposes and not as
an association (or other entity) taxable as a corporation or otherwise and
will remain so qualified until the Closing occurs.
(K) the unpaid Taxes of MLSLP and MAS do not exceed, as of the
Balance Sheet Date, the reserve for Tax liabilities set forth on the MLSLP
Balance Sheet or the MAS Balance Sheet, respectively, and such unpaid
taxes, as of the Closing Date, do not exceed that reserve adjusted to
-38-
take account of the passage of time through the Closing Date in accordance
with MLSLP's and MAS's past custom and practices in computing their Taxes
and filing Tax Returns (it being understood that nothing in this clause (K)
shall affect the agreement of the parties hereto with respect to the
assumption of liabilities set forth in Section 2.1 hereof).
(L) MAS has at all times since formation qualified as an "S
Corporation" pursuant to section 1361(a) of the Code and will remain so
qualified until the Closing occurs.
(b) Each Xxxxx Entity (other than MLSLP and MAS) and any predecessor
of any Xxxxx Entity (other than MLSLP and MAS) at or prior to the Closing Date,
has timely filed all Tax Returns which are required to be filed, and each such
Tax Return is correct and complete in all respects.
(c) Each of the Xxxxx Entities has paid all Taxes due and owing by it
(whether or not shown on any Tax Return) with respect to which successor,
transferee or any other liability for any Taxes could apply to or be payable by
Buyer as a result of the transactions contemplated by the Transaction Documents,
except for transfer Taxes (sale, use, real estate transfer or any other similar
Tax) arising out of the transactions contemplated hereunder and pursuant to the
terms and conditions of this Agreement and the other Transaction Documents.
(d) There are no tax liens or Encumbrances of any kind on any of the
Purchased Assets that arose in connection with any failure (or alleged failure)
by any Xxxxx Entity to pay any Tax, except for property tax liens relating to
property taxes not yet due or payable.
(e) No Tax audits are pending or being conducted, or to the knowledge
of Sellers and Xxxxxx, threatened, with respect to any Xxxxx Entity. No Xxxxx
Entity or their respective Representatives (including any Representative
responsible for Tax matters) is aware of any facts or circumstances which might
reasonably be expected to cause any authority to assess any additional Taxes for
any period for which Tax Returns have been filed.
(f) Each Xxxxx Entity has delivered to Buyer and its Representatives
correct and complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by Sellers
since December 31, 1993.
4.22 Severance Arrangements. No Xxxxx Entity has entered into any
----------------------
severance or similar arrangement in respect of
-39-
any present or former Personnel or Representative that will result in any
obligation (absolute or contingent) of Buyer to make any payment to any present
or former Personnel or Representative following termination of employment.
4.23 Insurance. The Disclosure Schedule contains a complete and
---------
accurate list in all material respects of all policies or binders of fire,
liability, title, worker's compensation and other forms of insurance (showing as
to each policy or binder the carrier, policy number, coverage limits, expiration
dates, annual premiums and a general description of the type of coverage
provided) maintained by the Xxxxx Entities on the Business, Purchased Assets or
Personnel. All of such policies are sufficient in all material respects for
compliance with all Legal Requirements and all Contracts to which any Xxxxx
Entity is a party, except where such failure to comply therewith would not
reasonably be expected to have a material adverse effect on the Xxxxx Entities'
rights and benefits under such policies. No Xxxxx Entity is in default in a
material respect under any of such policies or binders, and no Xxxxx Entity has
failed to give any notice or to present any claim under any such policy or
binder in a due and timely fashion, except for those failures to give notice or
present claims which would not reasonably be expected to have an Adverse Effect.
To the knowledge of each Seller and Xxxxxx, there are no facts upon which an
insurer might be justified in reducing coverage or increasing premiums on
existing policies or binders. To the knowledge of Sellers and Xxxxxx, there are
no outstanding unpaid claims under any such policies or binders. Such policies
and binders provide sufficient coverage consistent with the coverage customary
in the Xxxxx Entities' industry in full force and effect on the date hereof.
4.24 Payments. The Xxxxx Entities have not, directly or indirectly,
--------
paid or delivered any fee, commission or other sum of money or item or property,
however characterized, to any finder, agent, government official or other party
or Person, in the United States or any other country, which is in any manner
related to the Business, which the Xxxxx Entities know or have reason to believe
to have been illegal under any Legal Requirement.
4.25 Customers and Suppliers. The Disclosure Schedule contains a
-----------------------
complete and accurate list of (i) the forty (40) largest customers of the Xxxxx
Entities, taken as a whole, in terms of Net Gross during the last fiscal year of
the Xxxxx Entities, showing the approximate Net Gross and approximate total
revenues to the Xxxxx Entities by each such customer during such fiscal year;
(ii) the five (5) largest suppliers of the Xxxxx Entities in terms of Machine
and Parts purchases during the last fiscal year of the Xxxxx Entities, taken as
a whole, showing the
-40-
approximate total purchases by the Xxxxx Entities from each such supplier during
such fiscal year. Since the Balance Sheet Date, there has been no change in the
business relationship of any Xxxxx Entity with any customer or supplier which
would reasonably be expected to have a material adverse effect on the economic
terms of such relationship.
4.26 Compliance With Legislation Regulating Environmental Quality.
-------------------------------------- ---------------------
Notwithstanding anything to the contrary contained in this Agreement, the
representations and warranties set forth in this Section 4.26 are made (i) by
Sellers and Xxxxxx with respect to all of the Facilities (other than the
Locations) and all Locations which have been refurbished or renovated by a Xxxxx
Entity (but not a predecessor of a Xxxxx Entity) (collectively, the "Refurbished
-----------
Locations") and (ii) to Sellers' and Xxxxxx'x actual knowledge, with respect to
---------
all Locations other than the Refurbished Locations (the "Unrefurbished
-------------
Locations"). Except as set forth in the Disclosure Schedule:
---------
(a) None of the following exists at, on or under any of the Facilities
in violation of any Environmental and Safety Requirement:
(i) Hazardous Substances or materials or vessels, storage tanks
or other containers used for the storage, disposal or burial of Hazardous
Substances;
(ii) asbestos-containing materials in any form or condition;
(iii) materials or equipment containing polychlorinated biphenyls;
or
(iv) wetlands;
(b) Neither Seller, Xxxxxx nor any Xxxxx Entity has received any
written notice or report regarding any liabilities or potential liabilities it
may have (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, arising under
any Environmental and Safety Requirements;
(c) The Xxxxx Entities have at all times used, generated, treated,
stored, transported, disposed of or otherwise handled Hazardous Substances in
substantial compliance with all Environmental and Safety Requirements;
(d) No current or past use, generation, treatment, transportation,
storage, disposal or handling practice of the Xxxxx Entities with respect to
Hazardous Substances has resulted
-41-
in any Environmental Liability under any Environmental and Safety Requirement;
(e) The Xxxxx Entities have obtained and complied with, and are in
substantial compliance with, all material Permits and other authorizations that
may be required pursuant to any Environmental and Safety Requirements for the
occupation of the Facilities and the operation of the Business;
(f) No facts, events or conditions caused by or resulting from any act
or omission of any Xxxxx Entity (but not a predecessor of any Xxxxx Entity), or
to the actual knowledge of the Sellers and Xxxxxx, any other fact, event or
condition, relating to the operation of the Business or past or present
Facilities (other than the Unrefurbished Locations) or, to the actual knowledge
of the Sellers and Xxxxxx, past or present Unrefurbished Locations will prevent,
hinder or limit continued compliance with Environmental and Safety Requirements,
give rise to any investigatory, remedial or corrective obligations pursuant to
the 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 relating to on-site or off-site
Releases or threatened Releases of Hazardous Substances, personal injury,
property damage or natural resources damage;
(g) Neither this Agreement nor the transactions contemplated by the
Transaction Documents impose any obligations for off-site investigation or
cleanup, or notification to or consent of any governmental entity or Person
pursuant to any Environmental and Safety Requirements;
(h) The Xxxxx Entities (but not any predecessor in interest), Spagat
or Xxxxxx have not expressly or by operation of law assumed or undertaken any
liability or corrective or remedial obligations of any other Person relating to
Environmental and Safety Requirements; and
4.27 Real Estate. Schedule 4.27 of the Disclosure Schedule lists the
-----------
Condominium Properties owned by MLSLP and Coin, which Condominium Properties
constitute all of the real property owned by any Xxxxx Entity or with respect to
which any Xxxxx Entity has a fee interest.
4.28 Solvency. MLSLP (i) owns the MLSLP Assets, the fair saleable
--------
value of which, on a going concern basis, are greater than (A) the total amount
of liabilities (including contingent liabilities) of MLSLP, and (B) the amount
that will be required to pay the probable liabilities of MLSLP's then existing
debts as they become due; (ii) has capital that is not unreasonably small in
relation to the Business as presently
-42-
conducted and as proposed to be conducted; and (iii) does not intend to incur
and does not believe that it will incur debts beyond its ability to pay such
debts as they become due.
4.29 Material Misstatements Or Omissions. No representations or
-----------------------------------
warranties by Sellers, Xxxxxx or the Xxxxx Entities in this Agreement, the
Transaction Documents, nor any document, exhibit, statement, certificate or
schedule furnished to Buyer pursuant thereto or in connection with the
transactions contemplated thereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material fact necessary
to make the statements or facts contained therein not misleading. Sellers and
Xxxxxx have disclosed, and have caused MLSLP to disclose, all events, conditions
and facts materially affecting the Business, prospects and financial condition
of the Xxxxx Entities, Spagat and Xxxxxx.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Sellers and Xxxxxx as follows:
5.1 Organization of Buyer. Buyer is duly organized, validly existing
---------------------
and in good standing under the laws of the State of Delaware.
5.2 Authorization. Buyer has all necessary corporate power and
-------------
authority and has taken all corporate action necessary to enter into the
Transaction Documents to which Buyer is a party, to consummate the transactions
contemplated thereby and to perform its obligations thereunder. The Transaction
Documents to which Buyer is a party have been duly executed and delivered by
Buyer and are legal, valid and binding obligations of Buyer, enforceable against
Buyer in accordance with their terms.
5.3 No Conflict or Violation. Neither the execution and delivery of
------------------------
the Transaction Documents by any party thereto other than Sellers and Xxxxxx nor
the consummation of the transactions contemplated thereby will result in (a) a
violation of or a conflict with any provision of the certificate of
incorporation or bylaws of Buyer, (b) a breach of, or a violation of, or default
under, any term or provision of any contract, agreement, indebtedness, lease,
Encumbrance, commitment, license, franchise, Permit, authorization or concession
to which Buyer is a party or by which any of its assets are bound, which breach
or default would be likely to result in a material adverse effect on Buyer's
ability to consummate the transactions contemplated thereby or (c) a violation
by Buyer of any Legal Requirement
-43-
which violation would be likely to result in a material adverse effect on
Buyer's ability to consummate the transactions contemplated thereby.
5.4 Consents and Approvals. Except as set forth on the Disclosure
----------------------
Schedule and the filings required under the HSR Act, no consent, approval,
waiver or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority, or any other Person, is required to be
made or obtained by Buyer in connection with the execution, delivery and
performance of the Transaction Documents to which Buyer is a party and the
consummation of the transactions contemplated thereby, unless the failure to
obtain any such consent, approval, waiver or authorization would not be likely
to result in a material adverse effect on Buyer's ability to consummate the
transactions contemplated thereby.
5.5 No Brokers. Neither Buyer nor any Representative of Buyer has
----------
entered into or will enter into any contract, agreement, arrangement or
understanding with any Person which will result in the obligation of any Seller,
Xxxxx Entity or Xxxxxx to pay any finder's fee, brokerage commission or similar
payment in connection with the transactions contemplated by the Transaction
Documents.
5.6 Due Diligence. Subject to the obligation of Sellers and Xxxxxx
-------------
to deliver to Buyer a Closing Disclosure Schedule at the Closing and the Post-
Signing Diligence Materials, Buyer has conducted such due diligence
investigation of the Business and Purchased Assets as it has deemed necessary
and is satisfied with the results thereof.
5.7 Parent Company. All of the issued and outstanding shares of
--------------
common stock of Buyer are owned beneficially and of record by Coinmach Laundry
Corporation, a Delaware corporation ("CLC"). CLC's principal assets are the
---
issued and outstanding shares of common stock of Buyer, and CLC has no
independent business operations.
5.8 Financing. Buyer will have as of the Closing Date sufficient
---------
cash and/or available credit facilities to pay the Purchase Price and to make
all other necessary payments of fees and expenses in order to consummate the
transactions contemplated by the Transaction Documents to which Buyer is a party
in accordance with the terms thereof.
5.9 Solvency. After giving effect to the transactions contemplated
--------
hereby, (a) the assets of Buyer and its subsidiaries (at a fair valuation
thereof) exceed the total liabilities of Buyer and such subsidiaries, on a
consolidated basis; (b) Buyer has capital that is not unreasonably small in
relation to the
-44-
Business as presently conducted and as proposed to be conducted and (c) Buyer
does not intend to incur and does not believe that it will incur debts beyond
its ability to pay such debts as they become due.
ARTICLE 6
COVENANTS OF SELLERS AND BUYER
------------------------------
Each Seller, Xxxxxx and Buyer covenants as follows:
6.1 Maintenance of Business Prior to Closing. Until the earlier of
----------------------------------------
the Closing or the termination of this Agreement in accordance with its terms,
each Seller and Xxxxxx shall, and shall cause each Xxxxx Entity to, use its
reasonable efforts to continue to carry on the Business in the ordinary course
and substantially in accordance with past practice, except as otherwise provided
in this Agreement. Without limiting the generality of the foregoing, through
the earlier of the Closing Date or the termination of this Agreement in
accordance with its terms, each Seller and Xxxxxx shall, and shall cause each
Xxxxx Entity to, use its reasonable efforts to (a) maintain the Purchased Assets
in substantially their current state of repair, consistent with age, excepting
normal wear and tear; and (b) maintain insurance covering Purchased Assets
similar to that in effect on the date hereof.
6.2 Investigation by Buyer. Until the earlier of the Closing or the
----------------------
termination of this Agreement in accordance with its terms, each Seller and
Xxxxxx shall, and shall cause each Xxxxx Entity to, allow Buyer at its own
expense during regular business hours, upon prior notice to and agreement of
Sellers and without materially interfering with the Business, to make such
inspection of the Purchased Assets and to inspect and make copies of other
Contracts, Books and Records or information requested by Buyer, including
historical financial information, concerning the business and operations of the
Facilities; provided, however, that any information obtained from Sellers,
-------- -------
Xxxxxx or the Xxxxx Entities is subject to the confidentiality agreement, dated
November 4, 1996 (the "Confidentiality Agreement") between MLSLP and Buyer (the
-------------------------
continued validity of which is hereby acknowledged by Buyer). All such
information shall be provided to Buyer in such form as such information may
presently exist or be readily available. Notwithstanding the foregoing, Buyer
shall wait at least two (2) business days after the agreed public announcement
described in Section 12.10 to make direct physical on-site inspection and
photographing of the Facilities and the Fixtures and Equipment. All
communications to Sellers pursuant to this Section 6.3 shall be made to Xxxxxx
X. Xxxxxxx, a Representative
-45-
of Sellers, c/x Xxxxx Laundry Services Limited Partnership, 000 Xxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx 00000.
6.3 Consents and Best Efforts. Within five (5) days after the
-------------------------
execution and delivery of this Agreement, Buyer, Sellers and Xxxxxx shall, and
Sellers and Xxxxxx shall cause each Xxxxx Entity to, make all filings required
under the HSR Act. On or prior to the Closing Date, Sellers and Xxxxxx shall,
and Sellers and Xxxxxx shall cause each Xxxxx Entity to, obtain all Consents or
waivers and make all filings with governmental authorities which may be required
to transfer to Buyer all Motor Vehicles leased by any Xxxxx Entity other than
MLSLP. In addition, as soon as practicable, and subject to Section 3.2(c),
Buyer and each Seller and Xxxxxx, as applicable, will, and Sellers and Xxxxxx
shall cause each Xxxxx Entity to, commence all other reasonable action required
hereunder to obtain all applicable Permits, Consents, approvals and agreements
of (other than Consents under Location Contracts), and to give all notices and
make all filings with, any third parties as may be reasonably necessary to
authorize, approve or permit the full and complete sale, conveyance, assignment
or transfer of the other Purchased Assets in accordance with the terms of this
Agreement. Buyer shall have the sole responsibility to apply for or obtain at
its expense (i) any and all consents to transfer Permits or (ii) any and all new
Permits for continued operation of the Facilities, and to make at Buyer's
expense any improvements or alterations of any type to the Purchased Assets
required in order to transfer or obtain any such Permits. Sellers and Xxxxxx
shall, and shall cause the Xxxxx Entities to, cooperate in good faith with
Buyer's efforts as provided in Section 11.7.
6.4 Xxxxx Entities' Employees.
-------------------------
(a) Buyer agrees to offer employment to all of the Xxxxx Entities'
employees except those corporate office employees of the Xxxxx Entities listed
on Schedule 6.4 of this Agreement.
(b) All employees of the Xxxxx Entities employed by Buyer on or after
the Closing Date (collectively, the "Retained Employees") shall be entitled to
------------------
such benefits as Buyer makes available to similarly situated employees of Buyer.
Buyer shall give credit to each of the Retained Employees for service with the
Xxxxx Entities under each of Buyer's plans and employee benefit programs for
purposes of eligibility, vesting, waiting periods, pre-existing conditions and
any benefits that take seniority into account.
(c) As soon as practicable after the Closing Date, Sellers and Xxxxxx
shall, and shall take all actions necessary to permit the Retained Employees to
receive distributions of their vested account balances under each tax-qualified
Plan.
-46-
(d) Sellers shall be solely responsible for paying or causing to be
paid directly to the Retained Employees on their behalf all benefits to which
they are entitled under the Plans and Employee Benefit Programs of the Xxxxx
Entities. In furtherance of the foregoing, Sellers will submit all claims for
health care benefits covered by any of its health care plans which relate to
claims incurred by Retained Employees or their dependents on or before the
Closing Date, regardless of when such claims may be filed, but only to the
extent covered under the terms and conditions of the Plans of the Xxxxx Entities
which cover such Retained Employees. Notwithstanding anything contained in this
Agreement to the contrary, Buyer shall not be responsible for any claims
incurred by Retained Employees or their dependents on or before the Closing
Date, regardless of when such claims may be filed.
(e) Sellers shall be responsible and liable for salary, bonus, fringe
benefits, welfare benefits, pension benefits, vacation, holiday or bereavement
sick pay and other benefits or claims, including severance payments and COBRA
benefits required under Part 6 of Title I of ERISA, with respect to employees of
the Xxxxx Entities listed on Schedule 6.5 of this Agreement. All salaries,
wages, bonuses and all other cash compensation of the Retained Employees which
are accrued as of the Closing Date and reflected on the 1997 Balance Sheet shall
be the responsibility and liability of Buyer. All accrued vacation time,
accrued sick-leave time, accrued bereavement time, accrued personal time and
other similar employee benefits relating to the Retained Employees which are
accrued as of the Closing Date and reflected on the 1997 Balance Sheet shall be
the responsibility and liability of Buyer. Buyer shall be responsible and
liable for claims arising under any state worker's compensation or similar law
in respect of Retained Employees which are based upon any occurrence solely
after the Closing Date. Sellers shall be responsible and liable for any such
claims which are based upon any occurrence solely on or before the Closing Date.
Buyer and Sellers shall have responsibility and liability for any such claims
which are based upon any occurrence both before and after the Closing Date based
upon relative fault of Buyer, on the one hand, and Sellers, on the other.
(f) All contributions due to the Xxxxx Laundry Service Retirement and
Savings Plan, the Coin Controlled Washers, Inc. 401(k) Profit Sharing and
Investment Plan or any other Plan, with respect to the periods ending on or
before the Closing Date have been or will be timely made and a pro rata portion
of all contributions, including matching contributions, for the current plan
year have been or will be timely made (without regard to any applicable service
or employment requirements under the terms of any such Plan).
-47-
(g) Seller shall be responsible for complying with the requirements
under Part 6 of Title I of ERISA ("COBRA") with respect to Retained Employees,
and their qualified beneficiaries to the extent that such compliance relates to
qualifying events which occur on or before the Closing Date; Buyer shall be
responsible for complying with the requirements of COBRA with respect to
Retained Employees to the extent that such compliance relates to qualifying
events which occur after the Closing Date.
(h) On or prior to the Closing Date, Sellers shall cause Buyer to
become a successor to MLSLP and to assume all of its rights and entitlements
under the Stop Loss Policy.
6.5 Certain Prohibited Transactions. Until the earlier of the
-------------------------------
Closing or the termination of this Agreement in accordance with its terms, none
of the Sellers or Xxxxxx shall, nor shall they permit the Xxxxx Entities to,
except as permitted or contemplated by this Agreement or as otherwise consented
to by Buyer, such consent not to be unreasonably withheld or delayed:
(a) incur any indebtedness for borrowed money (except indebtedness
under existing credit facilities in the ordinary course of the Business),
assume, guarantee, endorse or otherwise become responsible for obligations of
any other individual, partnership, firm or corporation, or make any loans or
advances to any individual, partnership, firm or corporation, in each case, in
an amount in excess of $100,000, except in the ordinary course of business and
consistent with past practice;
(b) issue any newly issued partnership interests or shares of capital
stock, as applicable, or any other Equity Interests;
(c) pay or incur any obligation to pay any non-cash dividend on its
capital stock or partnership interests, as applicable, or make or incur any
obligation to make any non-cash distribution or redemption with respect to
partnership interests or capital stock;
(d) make any change to its certificate of incorporation, bylaws,
partnership agreement or other charter document or instrument, as applicable;
(e) mortgage, pledge or otherwise encumber any of its properties or
assets or sell, transfer or otherwise dispose of any of its properties or assets
or cancel, release or assign any indebtedness owed to it or any claims held by
it, except in the ordinary course of business and consistent with past practice;
(f) make any investment of a capital nature either by purchase of
stock or securities, contributions to capital,
-48-
property transfer or otherwise, or by the purchase of any property or assets of
any other individual, partnership, firm or corporation, except in the ordinary
course of business and consistent with past practice;
(g) enter into or terminate any material Contract or make any material
change in any of its material Leases and Contracts, other than in the ordinary
course of business and consistent with past practice;
(h) do any other act which would cause any representation or warranty
of any Seller, Xxxxxx or Xxxxx Entity in this Agreement to be or become untrue
in any material respect;
(i) enter into any transaction with any Person on terms other than
those which are on an arm's-length basis;
(j) make any payments to or engage in transactions with Affiliates of
Xxxxx Entities or related parties, in each case, other than in the ordinary
course of business and consistent with past practices;
(k) other than in the ordinary course of business, discharge or
satisfy any Encumbrance;
(l) other than in the ordinary course of business, institute, settle
or agree to settle any litigation, Action or proceeding (other than solely with
respect to a Retained Liability) before any court or governmental body; or
(m) other than in the ordinary course of business, cancel or terminate
any policies of insurance with respect to the Business or the insurable
Purchased Assets.
6.6 Treatment of MLSLP's Plan. Sellers and Xxxxxx shall cause the
-------------------------
MLSLP Partners and MLSLP to cause any Person or Persons other than Buyer, MLSLP
or MAS to assume the sponsorship of the Xxxxx Laundry Service Retirement and
Savings Plan (the "Xxxxx Plan") and the Xxxxx Laundry Service Insurance Coverage
----------
Compensation Reduction Plan prior to the Closing Date.
6.7 Notification of Certain Matters. Each Seller and Xxxxxx shall,
-------------------------------
and shall cause each Xxxxx Entity to give prompt written notice to Buyer, and
Buyer shall give prompt notice to Sellers and Xxxxxx, of (i) the occurrence, or
failure to occur, of any event which occurrence or failure would be reasonably
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect any time from the date hereof to
the Closing Date and (ii) any material failure of Sellers, Xxxxxx or Buyer, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to
-49-
be complied with or satisfied by it hereunder. Each party shall use all
reasonable efforts to remedy any material failure on its part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder.
6.8 No Mergers, Consolidations, Sale of Stock, Etc. Until the
----------------------------------------------
earlier of the Closing or the termination of this Agreement in accordance with
its terms, each Seller and Xxxxxx will not, nor shall they permit the Xxxxx
Entities to, directly or indirectly, solicit any inquiries or proposals or enter
into or continue any discussions, negotiations or agreements relating to the
sale or exchange of its capital stock or the merger of Sellers with, or any
direct or indirect disposition of all or substantially all of any Xxxxx
Entities' assets or business to, any person other than Buyer or its Affiliates
or provide any assistance or any information to or otherwise cooperate with any
person in connection with any such inquiry, proposal or transaction. In the
event that any Seller, Xxxxxx or Xxxxx Entity receives an unsolicited offer for
such a transaction or obtains information that such an offer is reasonably
likely to be made, such Seller or Xxxxx Entity will provide Buyer with notice
thereof as soon as practical after receipt, including the identity of the
prospective purchaser or soliciting party.
6.9 Corporate Name. Neither Sellers nor Xxxxxx shall use the trade
--------------
names: "Xxxxx Laundry Service Limited Partnership," "Coin Controlled Washers,
Inc.," "Xxxxx Laundry Service-Central Limited Partnership," "Xxxxx Services-
Texas, Inc.," "Xxxxx Laundry Services, Inc.," "Xxxxx Laundry Service -Cleveland,
Inc.," "Chicago Coin Division," "Superior Coin-Op, Inc.," "Superior Coin II,
Inc.," "Advance/Xxxxx Domestic Machines, Inc.," or any derivation thereof except
as directed by Buyer, at any time after the Closing Date, it being the intent of
the parties hereto that from and after the Closing Date, Buyer will have the
sole right as against Seller, Xxxxxx and their respective Representatives to
conduct any business under such name and that Buyer will commence doing so
immediately on and after the Closing Date; provided, however, that,
-------- -------
notwithstanding the foregoing, (a) Xxxxxx Xxxxxx, a shareholder of a Seller,
shall be permitted to use the trade name "Advance" in connection with the
operation of his business as presently conducted solely to the extent such
business does not compete with the Business, and (b) Spagat and/or Xxxxxx shall
be permitted to use the trade name "Xxxxx Water Systems, Inc." in connection
with the operation of the business of Xxxxx Water Systems, Inc., solely to the
extent such business does not compete with the Business. Each Seller shall take
all actions necessary to withdraw or terminate its authority to conduct business
under such names in each jurisdiction where it is qualified or authorized to use
such names.
-50-
ARTICLE 7
CONDITIONS TO SELLERS' AND XXXXXX'X OBLIGATIONS
-----------------------------------------------
The obligations of Sellers and Xxxxxx to consummate the transactions
provided for hereby are subject, in the reasonable discretion of Sellers and
Xxxxxx, to the satisfaction, on or prior to the Closing Date, of each of the
following conditions:
7.1 Representations, Warranties and Covenants. All representations
-----------------------------------------
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date, except as and to the extent
that the facts and conditions upon which such representations and warranties are
based are expressly required or permitted to be changed by the terms hereof, and
Buyer shall have performed in all material respects all agreements and covenants
required hereby to be performed by it prior to or at the Closing Date.
7.2 No Governmental Proceedings or Litigation. No Action by any
-----------------------------------------
governmental authority shall have been instituted or threatened which questions
the validity or legality of the transactions contemplated hereby and which could
reasonably be expected to damage Sellers and Xxxxxx materially if the
transactions contemplated hereunder are consummated.
7.3 HSR Act. The applicable waiting period, including any extension
-------
thereof, under the HSR Act shall have expired.
7.4 Opinion of Counsel. Buyer shall have delivered to Sellers and
------------------
Xxxxxx an opinion of Xxxxxxxx Kill & Olick, P.C., counsel to Buyer, dated as of
the Closing Date, substantially in the form attached hereto as Exhibit "E".
7.5 Freedom Systems Exclusive Sales Agreement. Sellers and Xxxxxx
-----------------------------------------
shall have caused Freedom Card Systems, Inc., an Affiliate of Sellers and
Xxxxxx, to have executed and delivered to Buyer an Exclusive Sales Agreement on
mutually satisfactory terms.
7.6 Deliveries at Closing. Sellers and Xxxxxx shall have received
---------------------
each of the items required to be delivered by Buyers pursuant to Section 3.2(a)
of this Agreement.
7.7 Certificates and Corporate Documents. Buyer will furnish Sellers
------------------------------------
with such certificates of its officers to evidence compliance with the
conditions set forth in this Article 7 as may be reasonably requested by
Sellers, including without limitation:
-51-
(i) an officer's certificate of Buyer, dated the Closing Date,
certifying that the conditions specified in Sections 7.1 and 7.2 have been
fully satisfied;
(ii) copies of resolutions, certified by the appropriate
officers where applicable, duly adopted by Buyer authorizing the execution,
delivery and performance of the Transaction Documents to which Buyer is a
party and the consummation of the transactions contemplated by the
Transaction Documents;
(iii) certificates as to the good standing of Buyer in the State
of Delaware; and
(iv) such other documents relating to the transactions
contemplated by the Transaction Documents as the Buyer reasonably requests.
7.8 Employment Agreements with Buyer. Each of Spagat and Xxxxxx X.
--------------------------------
Bransen shall have entered into an employment agreement with Buyer on mutually
satisfactory terms.
7.9 Consulting Agreement with Buyer. Xxxxxx shall have entered into
-------------------------------
a consulting agreement with Buyer on mutually satisfactory terms.
ARTICLE 8
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer to consummate the transactions provided for
hereby are subject, in the reasonable discretion of Buyer, to the satisfaction,
on or prior to the Closing Date, of each of the following conditions:
8.1 Representations, Warranties and Covenants. All representations
-----------------------------------------
and warranties of Sellers, Xxxxxx and the Xxxxx Entities contained in this
Agreement (except with respect to the representations made by Sellers in
Sections 4.4(b)(iii), 4.4(c), 4.4(i), 4.4(j), 4.4(n), 4.4(r) or 4.19 hereof to
the extent a breach or inaccuracy thereof does not result in Damages in an
amount in excess of $250,000 in the case of an one of such representations or
warranties or $1,000,000 in the aggregate) shall be true and correct in all
material respects at and as of the Closing Date, except as and to the extent
that the facts and conditions upon which such representations and warranties are
based are expressly required or permitted to be changed by the terms hereof, and
each Seller and Xxxxxx shall, and shall have caused each Xxxxx Entity to have
performed in all material
-52-
respects all agreements and covenants required hereby to be performed by it
prior to or at the Closing Date.
8.2 Consents. Except as provided in Sections 3.2(c), all Consents
--------
from Consenting Parties necessary to permit Sellers to transfer the Purchased
Assets to Buyer as contemplated hereby shall have been obtained (and evidence
thereof reasonably acceptable to Buyer delivered to Buyer), except where the
failure to obtain any such Consent would not have an Adverse Effect upon Buyer
and would not restrict the transferability, use or operation of any of the
Purchased Assets, provided, however, that the failure to obtain Consents with
-------- -------
respect to any of the Facilities or the Motor Vehicles shall in no event
constitute a failure by Sellers to satisfy the obligations of Sellers under this
Section 8.2.
8.3 No Governmental Proceedings or Litigation. No Action by any
-----------------------------------------
governmental authority shall have been instituted or threatened in writing which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to materially affect the right or ability of
Buyer to own, operate or possess the Purchased Assets, the MAS Stock or the
MLSLP Partnership Interests after the Closing or to damage Buyer if the
transactions contemplated hereunder are consummated.
8.4 Disclosure Schedule. Sellers and Xxxxxx shall have delivered to
-------------------
Buyer at least five (5) business days prior to the Closing Date a Disclosure
Schedule (the "Closing Disclosure Schedule") revised to reflect any changes in
---------------------------
the information on the Disclosure Schedule from the date hereof up to and
including the Closing Date, which Closing Disclosure Schedule shall be made a
part of this Agreement and incorporated herein by reference and which Closing
Disclosure Schedule shall be in form and substance reasonably acceptable to
Buyer in all material respects.
8.5 Due Diligence. Sellers, Xxxxxx and the Xxxxx Entities shall have
-------------
delivered to Buyer all Post-Signing Diligence Materials, and Buyer shall be
reasonably satisfied that, after giving effect to the transactions contemplated
hereby and Sellers' concurrent use of a portion of the proceeds of the Purchase
Price to completely discharge all indebtedness for borrowed money of the Xxxxx
Entities, none of the Post-Signing Diligence Materials will give rise to an
Assumed Liability in an aggregate amount in excess of $10,000 (except for
purchases of Machines and Parts under Contracts between Speed Queen Company and
any of the Xxxxx Entities, which Contracts Buyer shall have the option in its
sole discretion to designate an Excluded Asset and a Retained Liability, as
applicable). This condition shall be deemed satisfied unless Buyer gives
written notice of any
-53-
matter with which Buyer is dissatisfied by 5:00 p.m. (E.S.T.) on the tenth
business day following the date of receipt thereof.
8.6 Opinion of Counsel. Sellers and Xxxxxx shall have delivered to
------------------
Buyer an opinion of Xxxx, Xxxxxx & Xxxxxxxxx, counsel to Sellers and Xxxxxx,
dated as of the Closing Date, substantially in the form attached hereto as
Exhibit "F".
8.7 Material Changes. Except as contemplated by this Agreement or
----------------
except as directly caused by the acts or omissions of Buyer, since the Balance
Sheet Date, there shall not have been any change or any development or discovery
of any material contingent or other liability not in the Disclosure Schedule,
which could reasonably result in an Adverse Effect.
8.8 HSR Act. The applicable waiting period, including any extension
-------
thereof, under the HSR Act shall have expired.
8.9 Freedom Systems Exclusive Sales Agreement. Sellers and Xxxxxx
-----------------------------------------
shall cause Freedom Card Systems, Inc., an Affiliate of Sellers and Xxxxxx, to
have executed and delivered to Buyer an Exclusive Sales Agreement on mutually
satisfactory terms.
8.10 Assignment of Certain Excluded Assets. Sellers and Xxxxxx shall
-------------------------------------
have caused MLSLP and MAS, as applicable, to have entered into one or more
agreements in form and substance reasonable acceptable to Buyer (collectively,
the "Excluded Asset Conveyance Agreements") pursuant to which each of the
------------------------------------
Excluded Assets owned or leased by MLSLP or MAS or with respect to which MLSLP
or MAS has an interest (including, without limitation, the Condominium
Properties) are assigned, conveyed and transferred, in whole or in part, to any
Person or Persons other than MLSLP, MAS, Buyer or any Affiliates or
Representative of Buyer.
8.11 Employment Agreements with Buyer. Each of Spagat and Xxxxxx X.
--------------------------------
Bransen shall have entered into an employment agreement with Buyer on mutually
satisfactory terms.
8.12 Consulting Agreement with Buyer. Xxxxxx shall have entered into
-------------------------------
a consulting agreement with Buyer on mutually satisfactory terms.
8.13 Termination of MLSLP Employment Agreements. Sellers and Xxxxxx
------------------------------------------
shall have caused MLSLP to have terminated each of the employment agreements,
dated December 5, 1994, between MLSLP and each of Spagat and Xxxxxx
(collectively, the "MLSLP Employment Agreements") and provided evidence
---------------------------
reasonably satisfactory to Buyer of such terminations.
-54-
8.14 Payout Letters and Releases. Sellers and Xxxxxx shall have
---------------------------
delivered to Buyer one or more payout letters and releases from existing
creditors of the Xxxxx Entities releasing the Xxxxx Entities from any and all
obligations relating to or arising out of all indebtedness for borrowed money of
the Xxxxx Entities.
8.15 Motor Vehicle Titles. Sellers and Xxxxxx shall have delivered
--------------------
to Buyer, and shall have caused MLSLP to deliver to Buyer, original certificates
of title (or such other written evidence reasonably acceptable to Buyer)
evidencing the transfer to Buyer or to a designee of Buyer of legal title to the
Motor Vehicles owned by Sellers or the Xxxxx Entities.
8.16 Miscellaneous Deliveries at Closing. Buyer shall have received
-----------------------------------
each of the items required to be delivered by Sellers and Xxxxxx pursuant to
Section 3.2(a) of this Agreement.
8.17 Certificates and Corporate Documents. Each Seller, as applicable
------------------------------------
will furnish Buyer with such certificates of its officers and others or general
partner, as applicable, to evidence compliance with the conditions set forth in
this Article 8 as may be reasonably requested by Buyer, including without
limitation:
(i) a certificate or officer's certificate of each Seller, as
applicable, dated the Closing Date, each certifying that the conditions
specified in Sections 8.1, 8.2, 8.3 and 8.7 have been fully satisfied;
(ii) copies of resolutions, certified by the appropriate
officers where applicable, duly adopted by each of the Sellers, MLSLP and
MAS, as necessary, and, if applicable, by the boards of directors, partners
and stockholders of each of them, authorizing their respective execution,
delivery and performance of the Transaction Documents to which they are a
party and the consummation of the transactions contemplated by the
Transaction Documents;
(iii) certificates as to the good standing (or other
certificates relating to the right to do business) of the Xxxxx Entities
from the states in which such parties are required to be qualified to do
business;
(iv) such xxxx(s) of sale, warranty deeds, warranty assignments
of leases, Excluded Asset Conveyance Agreements and all other instruments
of conveyance which the Buyer reasonably requests in order to effect the
Sale;
(v) certificate of limited partnership and partnership agreement
of MLSLP and certificates of
-55-
incorporation and bylaws of MAS, including ledger or stock and partnership
interest transfer books, if any, of MLSLP and MAS; and
(vi) such other documents relating to the transactions
contemplated by the Transaction Documents as the Buyer reasonably requests.
8.18 Form 5500. Prior to the Closing Date, Sellers and Xxxxxx shall
---------
(a) file or cause to be filed under the Department of Labor Delinquent Filer
Voluntary Compliance Program, as described at 60 Fed. Reg. 20874 (April 27,
1995), complete annual reports and information returns (Form 5500 Series Annual
Return/Report) for all Plans and Employee Benefit Programs for which such annual
reports are required to be filed and have not been timely filed, and (b) furnish
Buyer with copies of any and all such filings.
ARTICLE 9
COVENANT NOT TO COMPETE AND CONFIDENTIALITY
-------------------------------------------
9.1 Covenant Not to Compete. For the purposes of this Section 9.1,
-----------------------
the term "Territory" shall mean the States of Delaware, Arizona, Arkansas,
---------
California, the District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Nebraska,
North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina,
South Dakota, Texas, Virginia, West Virginia and Wisconsin. Sellers and Xxxxxx
acknowledge and agree that the Xxxxx Entities' reputation and goodwill are an
integral part of its business success throughout the Territory. If Buyer is
deprived of any of the Xxxxx Entities' goodwill or if Sellers or Xxxxxx in any
manner utilizes such reputation and goodwill in competition with Buyer in the
Territory, Buyer will be deprived of the benefits it has bargained for pursuant
to this Agreement. This covenant is necessary to transfer the Business and
goodwill of the Business to Buyer effectively. Accordingly, as an inducement
for Buyer to enter into this Agreement, Sellers and Xxxxxx agree that for a
period of eight (8) years after the Closing, Sellers and Xxxxxx shall not,
without Buyer's prior written consent, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of, or be connected as a director, officer, employee, partner,
consultant or otherwise with, any Person in the Territory (other than Freedom
Card Systems, Inc. solely with respect to its business as conducted as of the
date hereof), which, directly or indirectly, competes with the Business, as
operated as of the date hereof, provided that the foregoing shall not preclude
any Seller or Xxxxxx from owning up to 2% of the
-56-
outstanding debt or equity securities of a publicly-traded entity which might be
deemed to so compete.
9.2 Confidentiality and Non-Solicitation. Sellers and Xxxxxx agree
------------------------------------
to maintain in confidence, and not to disclose to any third party, except as
required by applicable law or legal process, any ideas, methods, developments,
inventions, improvements and business plans and information which are the
confidential information of Buyer and which are not publicly known or in the
public domain, provided that the foregoing restriction shall not apply to
Freedom Card Systems, Inc. Sellers and Xxxxxx agrees that for a period of eight
(8) years from and after the Closing Date, it or they shall not and shall not
permit any of its or their Representatives, to, directly or indirectly, (i) in
any manner induce or attempt to induce any Personnel, customer, supplier,
licensee, landlord or other business relation of Buyer to leave or cease doing
business with Buyer or in any way interfere with the relationship between Buyer
and any Personnel, customer, supplier, licensee, landlord or other business
relation thereof or (ii) except for employees of any Xxxxx Entity not hired by
Buyer, hire or solicit for employment any employee who is an executive officer,
key employee or sales representative of the Business on the Closing Date.
Sellers and Xxxxxx agree that such solicitation includes, without limitation,
offering any employment to any such employee commencing after the non-
solicitation period.
9.3 Validity. In the event the agreement in Sections 9.1 or 9.2
--------
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect,
it shall be interpreted to extend only over the maximum period of time for which
it may be enforceable and/or over the maximum geographical area as to which it
may be enforceable and/or to the maximum extent in all other respects as to
which it may be enforceable, all as determined by such court in such action.
9.4 Remedies. Sellers and Xxxxxx acknowledge that a breach of the
--------
covenants contained in Sections 9.1 and 9.2 will cause irreparable damage to
Buyer, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such breach will be inadequate. Accordingly, Sellers
and Xxxxxx agree that if Sellers or Xxxxxx breach the covenant contained in
Sections 9.1 and 9.2 in addition to any other remedy which may be available at
law or in equity, Buyer shall be entitled to specific performance and injunctive
relief, without posting bond or other security.
-57-
ARTICLE 10
RISK OF LOSS
------------
Legal title, equitable title and risk of loss with respect to the
Purchased Assets, the MAS Stock and the MLSLP Partnership Interests shall not
pass to the Buyer until the Purchased Assets, the MAS Stock and the MLSLP
Partnership Interests are transferred to Buyer on the Closing Date in accordance
with the terms of this Agreement.
ARTICLE 11
ACTIONS BY SELLERS AND BUYER AFTER THE CLOSING
----------------------------------------------
11.1 Books and Records. Each party agrees that it will cooperate
-----------------
with and make available to the other party, during normal business hours, all
Books and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing Date which are
necessary or useful in connection with any tax inquiry, audit, investigation or
dispute, any litigation or investigation or any other matter requiring any such
Books and Records, information or employees for any reasonable business purpose.
The party requesting any such Books and Records, information or employees shall
bear all out-of-pocket costs and expenses (including without limitation,
reasonable attorneys' fees and disbursements, but excluding reimbursement for
salaries and employee benefits) reasonably incurred in connection with providing
such Books and Records, information or employees. In furtherance of the
foregoing Buyer shall also provide reasonable assistance in the collection of
information and documents. Buyer shall not dispose of any Books and Records
during the seven-year period beginning with the Closing Date without Sellers'
consent, which shall not be unreasonably withheld. Following the expiration of
such seven-year period, Buyer may dispose of Books and Records at any time upon
giving 60 days' prior written notice to Sellers, unless one or more Sellers
agree to take possession of such Books and Records within 60 days at no expense
to Buyer.
11.2 Survival of Representations, Etc. All statements contained in
--------------------------------
the Disclosure Schedule, the Xxxx of Sale, the Assignment and Assumption
Agreement and any certificate or instrument of conveyance required to be
delivered by or on behalf of the parties pursuant to this Agreement and relied
upon by Sellers' counsel in rendering its opinion required to be delivered
pursuant to Section 8.6 hereof shall be deemed to be representations and
warranties by the parties hereunder. The representations and warranties of
Sellers, Seiden, the Xxxxx Entities and Buyer contained herein shall survive the
Closing
-58-
Date, without regard to any investigation made by any of the parties hereto, for
a period of eighteen (18) months, but shall thereafter be of no further force or
effect; provided, however, that: (a) the representations and warranties set
-------- -------
forth in Section 4.6 hereof shall survive the Closing Date for a period of four
months; (b) the representations and warranties set forth in Sections 4.5(a),
4.9, 4.10, 4.16, 4.17, 4.19, 4.20, 4.21, 4.24 and 4.26 hereof shall survive the
Closing Date until the expiration of the applicable statutes of limitations (and
any extensions thereof), and (c) the representations and warranties contained in
Sections 4.1, 4.2 and 4.3 hereof shall survive the Closing Date and continue in
full force and effect forever. The termination or expiration of any
representations or warranties or indemnification obligations under this Article
11 shall not affect any written claims made in good faith by any Indemnified
Person hereunder prior to such expiration or termination. All covenants and
agreements of the parties contained in this Agreement shall survive the Closing
Date. Each party will have liability to the other arising out of a breach of a
representation or warranty for which indemnification is provided hereunder only
if the party claiming that such breach of representation or warranty occurred
delivers to the other party written notice and an explanation of the facts and
circumstances giving rise to the claim of breach of representation or warranty
as and to the extent then known to such party, including the Section hereof
involved and the basis for such claimed breach of representation or warranty,
within the applicable survival period set forth herein.
11.3 Indemnifications.
----------------
(a) By Sellers and Xxxxxx. Subject to Section 11.3(j), each Seller
---------------------
and Xxxxxx shall indemnify, save and hold harmless Buyer, its Affiliates, and
its and their respective Representatives, stockholders and successors and
permitted assigns, from and against any and all costs, losses, liabilities,
damages, lawsuits, deficiencies, claims and expenses (whether or not arising out
of third-party claims), including without limitation, interest, penalties, and
subject to other terms of this Section 11.3, reasonable attorneys' fees and
disbursements and all reasonable fees and expenses incurred in investigation,
defense or settlement of any of the foregoing (herein, the "Damages"), incurred
-------
in connection with or arising out of or resulting from (i) any breach of any
covenant or warranty, or the inaccuracy of any representation, made by any
Seller, Xxxxxx or any Xxxxx Entity in Article 4 of this Agreement, the
Disclosure Schedule or in any certificate or instrument of conveyance delivered
by or on behalf of any Seller pursuant to this Agreement and relied upon by
Seller's counsel in rendering its opinion required to be delivered pursuant to
Section 8.6 hereof; (ii) any Retained Liability; (iii) the Purchased Assets or
the
-59-
operation of the Facilities, in each case, to the extent arising out of
transactions entered into or events occurring prior to the Closing Date and not
constituting Assumed Liabilities; and (iv) the failure of any Xxxxx Entity to
perform any of their respective obligations under any of the arrangements
contemplated by or entered into pursuant to Section 3.2(c) hereof; provided,
--------
however, that except with respect to Retained Liabilities and as set forth in
-------
Section 11.4 hereof, the aggregate obligation of Sellers and Xxxxxx under this
Section 11.3 with respect to breaches of the Sellers', Xxxxxx'x or the Xxxxx
Entities' representations and warranties contained in Article 4 hereof, shall
not exceed in the aggregate $107,000,000. The term "Damages" as used in this
Section 11.3 is not limited to matters asserted by third parties against
Sellers, Seiden, the Xxxxx Entities or Buyer, but includes Damages incurred or
sustained by Sellers, Seiden, the Xxxxx Entities or Buyer in the absence of
third party claims.
(b) By Buyer. Buyer shall indemnify, save and hold harmless Xxxxxx
--------
and each Seller, its Affiliates and its and their respective Representatives,
partners, stockholders, successors and permitted assigns, from and against any
and all Damages incurred in connection with or arising out of or resulting from
(i) any breach of any covenant or warranty, or the inaccuracy of any
representation, made by Buyer in this Agreement, the Disclosure Schedule or in
any certificate or instrument or conveyance delivered by or on behalf of Buyer
pursuant to this Agreement; (ii) from and after the Closing Date, any Assumed
Liability or any liability, obligation or commitment of any nature (absolute,
accrued, or otherwise) directly relating to the Purchased Assets to the extent
arising out of transactions entered into or events occurring after the Closing
Date and not constituting Retained Liabilities; (iii) the failure of Sellers or
Buyer to obtain any Consent required under any Location Contract or other Lease;
or (iv) any arrangement contemplated by or entered into pursuant to Section
3.2(c) hereof or failure by Buyer to perform its obligations under any
arrangement contemplated by or entered into pursuant to Section 3.2(c) hereof.
(c) Defense of Claims. If a claim for Damages is to be made by a
-----------------
party entitled to indemnification hereunder against the indemnifying party, the
party entitled to such indemnification shall give written notice to the
indemnifying party as soon as practical after the party entitled to
indemnification becomes aware of any fact, condition or event which may give
rise to Damages for which indemnification may be sought under this Section 11.3.
If any lawsuit or enforcement action is filed against any party entitled to the
benefit of indemnity hereunder, written notice thereof shall be given to the
indemnifying party as promptly as practicable (and in any event
-60-
within fifteen (15) days after the service of the citation or summons);
provided, that the failure of any indemnified party to give timely notice shall
not affect rights to indemnification hereunder except to the extent that the
indemnifying party is prejudiced by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to the indemnified party that
(i) the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action and (ii) the indemnifying
party has sufficient financial capacity to defend such proceeding, then the
indemnifying party shall be entitled, if it so elects, to take control of the
defense and investigation of such lawsuit or action and to employ and engage
attorneys of its own choice to handle and defend the same, at the indemnifying
party's cost, risk and expense; provided that the indemnifying party and its
counsel shall proceed with diligence and in good faith with respect thereto.
(d) Control of Defense: Exceptions, etc. Notwithstanding the
-------------------------------------
provisions of paragraph 11.3(c): (i) the indemnified party will be entitled to
participate in the defense of such claim and to employ counsel of its choice for
such purpose at its own expense (provided that the indemnifying party will bear
--------
the reasonable fees and expenses of such separate counsel incurred prior to the
date upon which the indemnifying party effectively assumes control of such
defense), and (ii) the indemnifying party will not be entitled to assume control
of the defense of such claim, and, in the case of clause (w) below, will pay
two-thirds of the reasonable fees and expenses of legal counsel retained by the
indemnified party or, in the case of either clause (x) or (z), pay all of the
reasonable fees and expenses of legal counsel retained by the indemnified party,
if:
(w) the indemnified party reasonably believes that an adverse
determination of such proceeding could be materially detrimental to or
materially injure the indemnified party's reputation or future business
prospects,
(x) the indemnified party has been advised in writing by its
outside legal counsel that there exists or is reasonably likely to arise a
conflict of interest which, under applicable principles of legal ethics,
could prohibit legal counsel from representing both the indemnified party
and the indemnifying party in such proceeding, or
(y) a court of competent jurisdiction rules that the indemnifying
party has failed or is failing to prosecute or defend vigorously such
claim.
In the event the indemnifying party is not permitted to assume control
of the defense of such claim (as provided in this
-61-
Section 11.3) the legal expenses for which the indemnifying party shall be
obligated pursuant to clause (ii) of this Section 11.3 shall be limited to
hourly charges and expenses calculated at the same rate as if the defense of
such claim were handled by a law firm selected by the indemnifying party in its
reasonable discretion. For purposes of this Section 11.3(d), counsel for the
indemnified party shall be counsel selected by the indemnified party and
reasonably acceptable to the indemnifying party.
(e) Prior Consent for Settlement. The indemnifying party must obtain
----------------------------
the prior written consent of the indemnified party (which the indemnified party
will not unreasonably withhold or delay) prior to entering into any settlement
of such claim or proceeding or ceasing to defend such claim or proceeding unless
such settlement: (i) includes as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability with respect to such claim or litigation; and (ii) does not impose an
injunction or other equitable relief upon the indemnified party; provided,
--------
however that if the indemnified party withholds its consent to settlement of a
-------
claim in bad faith or without a reasonable basis for doing so, and the claim is
later adjudicated or settled to the further detriment of the indemnifying party,
the indemnifying party shall only be liable for the Damages up to the initially
proposed settlement amount.
(f) Characterization; Taxes. The parties intend that any amount paid
-----------------------
pursuant to the provisions of this Section 11.3 be treated as an adjustment to
the Purchase Price. If, notwithstanding such intention, any sales or transfer
tax is imposed on any indemnified party in respect of any payment pursuant to
this Section 11.3 (including this paragraph 11.3(f)), then the indemnifying
party or indemnifying parties will reimburse the indemnified party for the
amount of such tax (and any tax in respect of any payment pursuant to this
paragraph 11.3(f)).
(g) Brokers and Finders. Pursuant to the provisions of this Section
-------------------
11.3, Buyer and each Seller and Xxxxxx shall indemnify, hold harmless and defend
the other party from the payment of any and all broker's and finder's expenses,
commissions, fees or other forms of compensation which may be due or payable
from or by the indemnifying party, or may have been earned by any third party
acting on behalf of the indemnifying party in connection with the negotiation
and execution hereof and the consummation of the transactions contemplated
hereby.
No Representative of any party shall be personally liable for any
Damages under the provisions contained in this Section 11.3. Nothing herein
shall relieve either party of any
-62-
liability to make any payment expressly required to be made by such party
pursuant to this Agreement.
(h) Cooperation. The indemnified party shall use its commercially
-----------
reasonable efforts to cooperate with the indemnifying party in defending any
claim and provide any books, records, information or testimony requested which
is in the hands of or under the control of the indemnified party.
(i) Insurance Proceeds. In determining the amount of any Damages for
------------------
which an indemnified party is entitled to indemnification under this Agreement,
the gross amount thereof shall be reduced by any insurance proceeds actually
received by such indemnified party or its Affiliates in respect of such Damages,
net of any insurance premium or increase of such premium that becomes due solely
as a result of the indemnified party filing the claim in respect of which such
insurance proceeds were paid.
(j) Indemnification Deductible. Notwithstanding anything contained in
--------------------------
Section 11.3 of this Agreement to the contrary, no Seller or Xxxxxx shall be
required to indemnify Buyer in respect of any Damages (other than Damages
arising out of or constituting Retained Liabilities) covered by clause (i) of
Section 11.3(a), (without consideration of breaches of or inaccuracies of any
representation made by Sellers or Xxxxxx contained in Section 4.26) except to
the extent the aggregate amount of all Damages exceeds $500,000, in which event
Sellers and Xxxxxx will be required to indemnify Buyer for all Damages in excess
of $500,000; provided, however, that (A) any Damages directly or indirectly
-------- -------
arising out of or relating to gross negligence, willful misconduct or bad faith
of any of the Sellers or Xxxxxx in so far as such Damages relate to
representations that are qualified by knowledge and any Damages directly or
indirectly arising out of or relating to fraud of any of the Sellers or Xxxxxx
shall not be subject to the limitations of this Section 11.3(j) and (B) no
Seller or Xxxxxx shall be required to indemnify Buyer in respect of any Damages
directly or indirectly arising out of any breach of or inaccuracy contained in
any representation made by Sellers or Xxxxxx in Section 4.26 hereof, except to
the extent the aggregate amount of all Damages resulting therefrom exceeds
$1,000,000, in which event Sellers and Xxxxxx will be required to indemnify
Buyer for all such Damages in excess of $1,000,000.
11.4 Exclusive Remedy. Except for Damages directly or indirectly
----------------
arising out of or relating to (i) the Retained Liabilities, (ii) gross
negligence, willful misconduct or bad faith of any of the parties hereto in so
far as such Damages relate to representations that are qualified by knowledge or
(iii) fraud of any of the parties hereto, and except for remedies
-63-
that cannot be waived as a matter of law, if the Closing occurs, this Article
11, and any limitations contained herein, shall be the exclusive remedy for
breach of the representations and warranties contained in Articles 4 and 5
hereof or in the corresponding certificates delivered pursuant to Section 3.2
hereof. In furtherance of the foregoing, each Seller, Xxxxxx and Buyer hereby
waives, to the fullest extent permitted under applicable law, any and all other
rights, claims and causes of action it may have, from and after the Closing,
against another party hereto or its respective officers, directors, employees,
agents, other Representatives or Affiliates relating to the subject matter of
this Agreement.
11.5 Bulk Sales. It may not be practicable to comply or attempt to
----------
comply with the procedures of the "Bulk Sales Act" or similar law of any or all
of the states in which the Purchased Assets are situated or of any other state
which may be asserted to be applicable to the transactions contemplated by the
Transaction Documents. Accordingly, to induce Buyer to waive any requirements
for compliance with any or all of such laws, Sellers and Xxxxxx hereby agree
that the indemnity provisions of Section 11.3 hereof shall apply to any Damages
of Buyer or any institution providing financing to Buyer arising out of or
resulting from the failure of Buyer, Sellers or Xxxxxx to comply with any such
laws or any similar law or which may be asserted to be applicable, subject to
the limitations on indemnification set forth in Section 11.3(g).
11.6 Filing of MLSLP and MAS Tax Returns; Code Section 338(h)(10. As
-----------------------------------------------------------
soon as practicable after the Closing, Sellers and Buyer shall cooperate with
each other and take consistent actions with respect to the filing of Tax Returns
for MLSLP and MAS, and Sellers and Xxxxxx shall cause MLSLP and MAS to file all
Tax Returns and pay all Taxes (other than sales tax, payroll tax and personal
property tax reflected on the 1997 Balance Sheet to be assumed by Buyer pursuant
to Section 2.1 hereof) with respect to MLSLP and MAS, respectively, for all
taxable periods ending on or before the Closing Date and shall cause MLSLP and
MAS to pay all Taxes (other than sales tax reflected on the 1997 Balance Sheet
to be assumed by Buyer pursuant to Section 2.1 hereof) for all taxable periods
ending after the Closing Date to the extent such Taxes are properly attributable
to the portion of such taxable period ending on the Closing Date.
If requested by Buyer in writing, Spagat agrees to elect and consent
and take any other steps necessary to cause the sale of MAS Stock to qualify as
a deemed sale of assets pursuant to section 338(h)(10) of the Code and the
Treasury regulations thereunder and as a result of such sale will incur no
liability pursuant to section 1374 of the Code.
-64-
11.7 Further Assurances. After the Closing Date, each party will
------------------
cooperate in good faith with the other and will take all appropriate action and
execute any documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder or under the Transaction Documents.
ARTICLE 12
MISCELLANEOUS
-------------
12.1 Termination. If any condition precedent to Sellers' or Xxxxxx'x
-----------
obligations hereunder is not satisfied and such condition is not waived by
Sellers or Xxxxxx at or prior to the Closing Date, or if any condition precedent
to Buyer's obligations hereunder is not satisfied and such condition is not
waived by Buyer at or prior to the Closing Date, Sellers, Xxxxxx or Buyer, as
the case may be, may, provided that the non-occurrence of the Closing is not
attributable to a breach of the terms hereof by the party seeking termination,
terminate this Agreement at its option by notice to the other party. In the
event of the termination of this Agreement by either party as above provided,
neither party shall have any liability hereunder of any nature whatsoever (other
than pursuant to the Escrow Agreement and Section 12.11 below) to the other
party, including any liability for damages, unless either party is in breach or
default under any of its obligations hereunder, in which event the party in
default shall be liable to the other party for such default. In the event that
a condition precedent to its obligations is not satisfied, nothing contained
herein shall be deemed to require any party to terminate this Agreement, rather
than to waive such condition precedent and proceed with the Closing. This
Agreement shall terminate automatically if the Closing Date has not occurred on
or prior to April 30, 1998. The Confidentiality Agreement shall survive any
termination of this Agreement.
12.2 Assignment. This Agreement may not be assigned by any party
----------
hereto including by operation of law without the prior written consent of the
other parties, provided that Sellers and Xxxxxx shall not unreasonably withhold
their consent with respect to an assignment required by Buyer's financing
sources in order to consummate the transactions contemplated hereby.
Notwithstanding anything to the contrary herein, no assignment by Buyer shall
relieve Buyer of its obligations hereunder. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, and no other Person shall
have any right, benefit or obligation hereunder.
-65-
12.3 Notices; Transfer of Funds. Unless otherwise provided herein,
--------------------------
any notice, request, instruction or other document to be given hereunder by
either party to the other shall be in writing and (a) delivered personally, (b)
mailed by certified mail, postage prepaid, return receipt requested (such mailed
notice to be effective on the date such receipt is acknowledged or refused) or
(c) sent by reputable overnight courier service prepaid (such notice to be
effective on the date of receipt), as follows:
If to a Seller or Xxxxxx, addressed to such Seller or Xxxxxx at the
following address:
c/x Xxxxx Laundry Services Limited Partnership
000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
With a copy to:
Xxxx, Gerber & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
If to Buyer, addressed to:
Coinmach Corporation
000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
With a copy to:
Xxxxxxxx Kill & Olick, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
Payments to be made to Sellers hereunder shall be made by wire
transfer of immediately available funds to be delivered to Sellers in accordance
with the instructions set forth in Schedule 2.1 or to such other account or
place as Sellers may designate by written notice as provided herein. Payments
to be made to Buyer hereunder shall be made by wire transfer of immediately
available funds to be delivered to Buyer in accordance with the instructions set
forth in Schedule 2.1 or to
-66-
such other account or place as Buyer may designate by written notice as provided
herein.
12.4 Choice of Law. This Agreement shall be construed, interpreted
-------------
and the rights of the parties determined in accordance with the laws of the
State of New York (without reference to the choice of law provisions thereof.)
12.5 Entire Agreement; Amendments and Waivers. This Agreement,
----------------------------------------
together with all the Transaction Documents and exhibits and schedules hereto
and the Confidentiality Agreement, constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party or parties to
be bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
12.6 Multiple Counterparts. This Agreement may be executed in one or
---------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.7 Expenses. Except as set forth below or as otherwise specified
--------
herein, each party hereto shall pay its own legal, accounting, out-of-pocket and
other expenses incident to this Agreement and to any action taken by such party
in preparation for carrying this Agreement into effect, whether or not the
transactions contemplated hereby are consummated.
12.8 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other Transaction Document shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, then to
the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or any
other such instrument.
12.9 Titles. The titles, captions or headings of the Articles and
------
Sections contained herein are inserted for convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of this
Agreement.
12.10 Publicity. Unless required to do so by applicable law or legal
---------
process, neither party shall issue any press release or similar publicity or
make any public statement regarding the Transaction Documents or the
transactions
-67-
contemplated thereby without the prior written approval of the other party.
Subject to applicable law and legal process, the parties hereto shall issue a
mutually acceptable press release within one business day after the execution
and delivery of this Agreement. If either party is required by law or legal
process to make any public statement regarding the Transaction Documents or the
transactions contemplated by the Transaction Documents, such party must first
provide to the other party the content of the proposed public statement, the
reasons that such disclosure is required by law or legal process, and the time
and place that the public statement will be made, in each case to the extent
permitted by law or legal process or to the extent reasonably practicable.
Notwithstanding the foregoing, it is acknowledged and agreed among the parties
that Buyer is a reporting company under the Securities Exchange Act of 1934 and,
as such, is subject to the reporting requirements thereunder. Accordingly,
subject to the third sentence of this Section 12.10, no agreement contained
herein shall prevent Buyer from complying with any such requirements in any
manner Buyer deems appropriate.
12.11 Confidential Information. The parties acknowledge that the
------------------------
transactions contemplated by this Agreement are of a confidential nature and,
subject to the agreements contained in Section 12.10 hereof, each party agrees
to keep this Agreement strictly confidential and each party agrees that it will
not, without the prior written consent of the other party, make any public
comment, statement, or communication or otherwise disclose or permit any
disclosure with respect to, or regarding the transactions contemplated hereby,
including but not limited to the existence of this Agreement, except to their
respective Representatives, or as required by applicable law or legal process,
until such time as the parties make a public announcement regarding the
transaction as provided in Section 12.10. Neither Sellers, Xxxxxx nor Buyer at
any time shall make any public disclosure of the specific terms, conditions or
other aspects of this Agreement, except as required by applicable law or legal
process.
12.12 Interpretation of "Knowledge", etc. The terms "knowledge" or
-----------------------------------
"aware" or derivations thereof when used in this Agreement with respect to any
of the Sellers, Xxxxxx or the Xxxxx Entities shall mean the actual knowledge of
Xxxxxx or Spagat after reasonable due inquiry (consistent with the senior
management positions of Xxxxxx and Spagat) with members of senior management of
each of the Xxxxx Entities.
[SIGNATURE PAGES TO FOLLOW]
-68-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their respective behalf, by their respective officers
thereunto duly authorized, all as of the day and year first above written.
COINMACH CORPORATION
By: __________________________
Name:
Title:
COIN CONTROLLED WASHERS, INC.,
By: __________________________
Name:
Title:
XXXXX LAUNDRY SERVICE-CENTRAL
LIMITED PARTNERSHIP,
By: XXXXX LAUNDRY SERVICE -
CLEVELAND, INC.
a general partner
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
XXXXX SERVICES-TEXAS, INC.
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
SUPERIOR COIN, INC.
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
-69-
SUPERIOR COIN II, INC.
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
ADVANCE XXXXX DOMESTIC MACHINES, INC.
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
XXXXX LAUNDRY SERVICE MIDWEST
LIMITED PARTNERSHIP
By: __________________________
Name:
Title:
JPS LAUNDRY INC.
By: __________________________
Name:
Title:
XXXXX LAUNDRY SERVICE, INC.
By: __________________________
Name:
Title:
______________________________
Xxxxxxx X. Xxxxxx
______________________________
Xxxxxx X. Xxxxxx
-70-
XXXXX LAUNDRY SERVICES LIMITED
PARTNERSHIP/1/
By: MAS LAUNDRY, INC.,
a general partner
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
MAS LAUNDRY, INC./2/
--------------
/1/ MLSLP confirms each of the representations and warranties made by Sellers
and Xxxxxx in this Agreement insofar as such representations and warranties
relate to MLSLP.
/2/ MAS confirms each of the representations and warranties made by Sellers and
Xxxxxx in this Agreement insofar as such representations and warranties relate
to MAS.
By: __________________________
Name:
Title:
-71-
EXHIBITS A1 - A7
FINANCIAL STATEMENTS AND BALANCE SHEETS
---------------------------------------
EXHIBIT B
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is made and entered into as
---------
of January 20, 1998, by and among Coinmach Corporation, a Delaware corporation
(the "Buyer"), Xxxxxxx X. Xxxxxx ("Spagat"), Xxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxx
----- ------ ------
Laundry Service Midwest Limited Partnership, a Delaware limited partnership
("Xxxxx Midwest"), JPS Laundry, Inc., a Delaware corporation ("JPS"), Xxxxx
--------------- ---
Laundry Service, Inc., a Delaware corporation ("MLS"), Coin Controlled Washers,
---
Inc., an Illinois corporation ("CCW"), Xxxxx Laundry Service-Central Limited
---
Partnership, an Indiana limited partnership ("Central"), Xxxxx Services-Texas,
-------
Inc., a Illinois corporation ("Texas"), Superior Coin, Inc., an Illinois
-----
corporation ("Coin"), Superior Coin II, Inc., an Illinois corporation ("Coin
---- ----
II") and Advance/Xxxxx Domestic Machines, Inc., an Illinois corporation
("Advance" and together with Xxxxx Midwest, JPS, MLS, Spagat, CCW, Central,
---------
Texas, Coin and Coin II, the "Sellers" and, individually, a "Seller") and La
------- ------
Salle National Bank, as escrow agent (the "Escrow Agent").
------------
RECITALS
--------
WHEREAS, Xxxxx Midwest, MAS Laundry, Inc., a Delaware corporation
("MAS"), JPS and MLS (collectively, the "MLSLP Partners") collectively own, all
----- --------------
of the issued and outstanding partnership interests (collectively, the "MLSLP
-----
Partnership Interests") in Xxxxx Laundry Service Limited Partnership, a Delaware
---------------------
partnership ("MLSLP");
-----
WHEREAS, Spagat owns all of the issued and outstanding common stock,
par value $.01 per share (the "MAS Stock"), of MAS;
---------
WHEREAS, CCW, Central, Texas, Coin, Coin II, Advance and MLSLP own
certain assets which such parties use in the conduct of their respective
businesses of supplying coin-operated laundry equipment services to multi-family
dwellings located primarily in the States of Delaware, Arizona, Arkansas,
Florida, Georgia, Kentucky, California, Indiana, Iowa, Kansas, Illinois,
Louisiana, Maryland, Michigan, Minnesota, Missouri, Nebraska, North Carolina,
Pennsylvania, Ohio, Oklahoma, South Carolina, Texas, Virginia, Wisconsin, Xxxxx
Xxxxxx, Xxxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxxx and the District of Columbia (the
foregoing businesses, considered as a whole, shall hereinafter be collectively
referred to as the "Business");
--------
WHEREAS, contemporaneously herewith Sellers are selling to Buyer the
MLSLP Partnership Interests, the MAS Stock and substantially all of the assets
of CCW, Central, Texas, Coin, Coin II and Advance, in each case, subject to the
terms and conditions of that certain Purchase Agreement, of even date herewith,
between Sellers and Buyer (the "Purchase Agreement");
------------------
B-1
WHEREAS, Sellers and Buyer desire to establish an escrow account
pursuant to the terms and conditions of the Purchase Agreement; and
WHEREAS, a copy of this Agreement has been delivered to the Escrow
Agent, and the Escrow Agent is willing to act as Escrow Agent hereunder;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants and agreements hereinafter set forth, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto covenant and agree as follows:
AGREEMENT
---------
1. Definitions. All capitalized terms used in this Agreement,
-----------
unless otherwise defined herein, shall have the respective meanings given to
such terms in the Purchase Agreement.
2. Appointment of Escrow Agent. The Escrow Agent is hereby
---------------------------
appointed to act as escrow agent hereunder, and the Escrow Agent accepts such
appointment and agrees to act as such.
3. Establishment of Escrowed Funds.
-------------------------------
(a) On the date hereof, Buyer shall deliver to the Escrow Agent
an amount in cash equal to five million dollars ($5,000,000) to be deposited by
the Escrow Agent in a segregated income-generating account with the Escrow Agent
established solely for the purposes set forth herein (the "Escrowed Funds").
--------------
Any interest or other income earned or received on the Escrowed Funds shall
become part of the Escrowed Funds (the "Accrued Funds").
-------------
(b) The Escrow Agent hereby acknowledges receipt of the Escrowed
Funds.
4. Disbursement of the Escrowed Funds.
----------------------------------
(a) Upon satisfaction (or waiver by Buyer) of each of the Buyer
Closing Conditions set forth in Article 8 of the Purchase Agreement, Sellers and
Buyer shall deliver a joint written notice to the Escrow Agent terminating this
Agreement and instructing the Escrow Agent to pay on the Closing Date the
Escrowed Funds (excluding any Accrued Funds) to Sellers and the Accrued Funds to
Buyer.
(b) If on or prior to the Closing Date the Buyer Closing
Conditions have not been satisfied for any reason other than the failure of
Buyer to perform in all material respects any of its obligations under the
Purchase Agreement, Buyer and Sellers shall deliver a joint written notice to
the Escrow Agent
B-2
terminating this Agreement and instructing the Escrow Agent to pay the Escrowed
Funds (including the Accrued Funds) to Buyer as soon as practicable after
receipt of such written notice.
(c) If Buyer fails to issue a press release announcing the
execution of the Purchase Agreement within one business day after execution and
delivery of the Purchase Agreement by each of the parties thereto, Buyer and
Sellers shall deliver a joint written notice to the Escrow Agent terminating
this Agreement and instructing the Escrow Agent to pay the Escrowed Funds
(excluding any Accrued Funds) to Sellers and the Accrued Funds to Buyer as soon
as practicable after receipt of such written notice.
(d) If on or prior to the Closing Date, the Escrow Agent shall
not have received any joint written notice from Buyer and Sellers with respect
to the disbursement of the Escrowed Funds, the Escrow Agent shall continue to
hold the Escrowed Funds subject to the terms and conditions of this Agreement
until such time that it receives joint written instructions from Buyer and
Sellers with respect to the disposition thereof.
(e) All payments to be made by the Escrow Agent pursuant to the
terms and conditions of this Agreement shall be made by wire transfer of
immediately available funds to the account of the Buyer or the Sellers, as
applicable, in accordance with the wire transfer instructions designated in
writing by the Buyer or Sellers on or after the date hereof.
5. Arbitration. Any and all disputes or controversies arising out
-----------
of or in connection with (i) the interpretation, application, performance,
nonperformance or breach by any of the parties hereto of this Agreement, or (ii)
any instruments executed and delivered hereunder, shall be resolved by good
faith negotiations between the parties hereto; provided, however, that if such
-------- -------
parties are unable to resolve any such disputes or controversies, at the demand
of any party hereto, each such dispute or controversy shall be determined by
arbitration. Sellers, Buyer and, to the extent such dispute or controversy
involves an act or omission of the Escrow Agent under this Agreement, the Escrow
Agent, shall appoint an arbitrator ("Arbitrator") who is licensed by the
----------
American Arbitration Association ("AAA") to arbitrate such dispute or
---
controversy. In the event Sellers, Buyer and, if applicable, the Escrow Agent,
cannot agree on the selection of the Arbitrator, each such party shall select
one arbitrator who shall together select the Arbitrator who shall arbitrate the
matter. Sellers, Buyer and, if applicable, the Escrow Agent, shall, within
twenty (20) days thereafter, present their positions with respect to the dispute
or controversy to the Arbitrator together with such other materials as the
Arbitrator deems appropriate. The Arbitrator shall, within twenty days after
the submission of such evidentiary materials, submit a written decision on such
dispute
B-3
or controversy to the applicable parties hereto. Any determination by the
Arbitrator with respect to any such dispute or controversy shall be final and
binding on the parties hereto. The arbitration shall be conducted on
consecutive business days in Chicago, Illinois in accordance with the commercial
arbitration rules of the AAA as in effect for commercial arbitrations conducted
in New York, New York by the AAA. The parties hereto agree that the costs and
expenses of the arbitration (including without limitation the cost of the
Arbitrator) shall be borne in equal proportions by each of the Escrow Agent,
Sellers and Buyer; provided, however, that to the extent such dispute or
-------- -------
controversy does not involve any act or omission of the Escrow Agent under this
Agreement, such costs and expenses shall be borne 50% by Sellers and 50% by
Buyer. Any party desiring to commence an arbitration proceeding in accordance
with this Section 5 shall so notify the other parties hereto by written notice
setting forth in reasonable detail the nature of the dispute and the relief
demanded.
6. Cooperation by Parties. With respect to all matters covered by
----------------------
this Agreement, the parties agree to use their good faith efforts to cooperate
with each other and to provide to the other party such information as may be
reasonably requested regarding these matters, including providing access to and
the right to copy, at the requesting party's expense and during normal business
hours, all relevant data, records, studies, reports or other documents. Buyer
and Sellers further agree to provide each other reasonable access to their
respective properties and employees, on a mutually convenient basis. Such
access to employees may include interviews or attendance at depositions or legal
or administrative proceedings or meetings and conferences with governmental
agencies.
7. Investment of Escrowed Funds; Distribution of Interests;
--------------------------------------------------------
Quarterly Reports.
-----------------
(a) The Escrow Agent shall act as custodian of the Escrowed Funds
and, unless otherwise directed from time to time by Buyer and Sellers with
respect to the investment or reinvestment of the Escrowed Funds, shall invest
the Escrowed Funds in shares of a registered money-market fund. At the joint
direction of Buyer and Sellers, the Escrowed Funds shall also be invested from
time to time in (i) direct obligations of, or repurchase agreements
collateralized by direct obligations of, the United States Government (or
agencies or instrumentalities thereof) or any state of the United States (or
agencies or instrumentalities of any thereof) which (x) shall have maturities
not in excess of one (1) year from the date of acquisition or (y) bear interest
that is exempt from federal income taxation under the Internal Revenue Code of
1986, as amended (the "IRC"), and which obligations are rated in one of the two
---
highest categories by Standard & Poor's Ratings Service ("S&P"), a division of
---
The XxXxxx-Xxxx Companies, Inc. or Xxxxx'x Investors Service, Inc. ("Moody's"),
-------
(ii) certificates of deposit, time deposits or other
B-4
interest-bearing deposits of commercial banks having total capital and surplus
of at least $250,000,000 (the "Bank") as Buyer and Sellers may from time to time
----
direct and which shall have maturities not in excess of ninety (90) days, (iii)
a deposit reserve or such other money market account available from time to time
from the Bank, (iv) commercial paper maturing no more than one (1) year from the
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's, (v) municipal bonds having a
rating of at least A-1 from S&P or at least P-1 from Moody's, or (vi) any other
investments approved in writing by Buyer and Sellers. The Escrow Agent shall
have no liability whatsoever for any investment losses resulting from the
investment or reinvestment of the Escrowed Funds.
(b) Federal, state or local taxes, if any, hereafter imposed
upon, asserted or assessed against any income generated from the Escrowed Funds
shall be paid by the party receiving such Escrowed Funds. On an annual basis or
at such other times as may be required under applicable provisions of the IRC
and treasury regulations, the Escrow Agent shall deliver to Sellers an
information return on the appropriate Form 1099 with respect to income generated
from the Escrowed Funds. Buyer (and not the Escrow Agent) shall be responsible
for issuing such additional information returns to the Sellers as may be
required pursuant to the IRC and regulations.
(c) The Escrow Agent shall provide Buyer and Sellers with
quarterly statements regarding the balance, account activity and income activity
for the Escrowed Funds.
8. Fees and Expenses. In consideration for its services hereunder,
-----------------
the Escrow Agent shall be entitled to (i) a one-time set-up fee of $500 and an
annual fee of $2,500 (pro-rated for any fraction thereof) commencing on the date
hereof through the earlier to occur of the date of (x) removal of the Escrow
Agent, (y) resignation of the Escrow Agent and (z) termination of this
Agreement, in each case in accordance with the terms and provisions of this
Agreement, and (ii) reimbursement for all reasonable out-of-pocket expenses
incurred in connection with the performance of its duties hereunder
(collectively, the "Escrow Agent Fees"). Upon Buyer's and Sellers' receipt of
-----------------
written notice from the Escrow Agent requesting payment of any such Escrow Agent
Fees (which notice shall be delivered by the Escrow Agent to each of Buyer and
Sellers on an annual basis as specified above), Buyer and Sellers shall promptly
thereafter each pay one-half (50%) of such Escrow Agent Fees to the Escrow
Agent.
9. Termination of Escrow. The Escrow Agent shall hold the Escrowed
---------------------
Funds until the date on which Buyer and Sellers deliver a joint written notice
to the Escrow Agent terminating this Agreement (the "Termination Date") and
----------------
directing the Escrow
B-5
Agent with respect to the disbursement of all of the Escrowed Funds.
10. Escrow Agent.
------------
(a) The duties and obligations of the Escrow Agent shall be
determined solely by the express provisions of this Agreement, and the Escrow
Agent shall not be liable except in respect of the performance of such duties
and obligations as are specifically set forth in this Agreement. Unless
specifically agreed to by the Escrow Agent in this Agreement, the Escrow Agent
shall not be bound in any way by any agreement or contract among any of the
parties to this Agreement, including the Purchase Agreement.
(b) The Escrow Agent shall not be responsible in any manner
whatsoever for any failure or inability of Buyer or Sellers to honor any of the
provisions of this Agreement.
(c) The Escrow Agent shall be fully protected in acting on and
relying upon any written advice, certificate, notice, direction, instruction,
request, or other paper or document which the Escrow Agent in good faith
believes to be genuine (without being required to determine the authenticity or
the correctness of any fact stated therein or the propriety or validity or
service thereof) and to have been signed or presented by the proper party or
parties, and may assume that any Person purporting to give such advice,
certificate, notice, direction instruction or request or other paper or document
has been duly authorized to do so.
(d) The Escrow Agent shall not be liable for any act reasonably
done or step reasonably taken or reasonably omitted by it in good faith or for
any mistake in fact or law, or for anything which it may reasonably do or
refrain from reasonably doing in connection herewith, except its own gross
negligence, bad faith or willful misconduct.
(e) The Escrow Agent may seek the advice of legal counsel in the
event of any dispute or question as to the construction of any of the provisions
of this Agreement or its duties hereunder, and it shall incur no liability and
shall be fully protected in respect of any action taken, omitted or suffered by
it in good faith in accordance with the written opinion of such counsel. If a
controversy arises between one or more of the parties hereto, or between any of
the parties hereto and any Person not a party hereto, as to whether or not or to
whom the Escrow Agent shall deliver the Escrowed Funds or any portion thereof or
as to any other matter arising out of or relating to this Agreement or the
Escrowed Funds deposited hereunder, the Escrow Agent shall not be required to
determine the same and need not make any delivery of the Escrowed Funds or any
portion thereof but may retain it without liability to anyone until the rights
of the parties to the dispute shall have finally
B-6
been determined in accordance with the terms and conditions contained herein,
but the Escrow Agent shall be under no duty whatsoever to institute or defend
any such proceedings. The Escrow Agent shall be entitled to assume that no such
controversy has arisen unless it has received conflicting written notices from
the parties to this Agreement.
(f) Buyer and Sellers shall reimburse and indemnify the Escrow
Agent and its members, employees, and agents for, and hold it harmless against
any loss, liability or expense including, but not limited to, reasonable counsel
fees and disbursements incurred without gross negligence, bad faith or willful
misconduct on the part of the Escrow Agent arising out of or in connection with
its acceptance of, or the performance of its duties and obligations under, this
Agreement as well as the costs and expenses of defending against any claim or
liability arising out of or relating to this Agreement. Buyer and Sellers agree
that any amount due under this Section 11(f) shall be borne equally by Buyer, on
the one hand, and the Sellers, on the other hand.
(g) The Escrow Agent hereby accepts its appointment and agrees to
act as Escrow Agent under the terms and conditions of this Agreement. By such
acceptance and agreement, however, the Escrow Agent shall not be deemed to have
waived any right with respect to any transaction (other than its service as
Escrow Agent hereunder) between or among it and any other party or parties
hereto.
11. Resignation or Removal of Escrow Agent. The Escrow Agent may
--------------------------------------
resign as such following the giving of sixty (60) days' prior written notice
(the "Resignation Notice") to the other parties hereto. Similarly, the Escrow
------------------
Agent may be removed and replaced following the giving of ten (10) days' prior
written notice (the "Replacement Notice") given jointly by Buyer and Sellers to
------------------
the Escrow Agent. In either event, the duties of the Escrow Agent hereunder
shall terminate thirty (30) days after the date of (x) receipt by the Sellers
and by Buyer of the Resignation Notice or (y) receipt by the Escrow Agent of the
Replacement Notice, as applicable. Prior to the termination of such 60-day or
10-day notice period, as applicable, the Escrow Agent shall then deliver the
balance of the Escrowed Funds then in its possession to a successor Escrow Agent
as shall be appointed by the other parties hereto as evidenced by a written
notice filed with the Escrow Agent. If the Buyer and the Sellers are unable to
agree upon a successor Escrow Agent or shall have failed to appoint a successor
Escrow Agent prior to the expiration of thirty (30) days following the date of
receipt by the Sellers and the Buyer of the Resignation Notice or the date of
receipt by the Escrow Agent of the Removal Notice, as applicable, the then-
acting Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor Escrow Agent or other appropriate relief (the costs
and expenses of which shall be jointly borne by Buyer and Sellers), and any
B-7
such resulting appointment shall be binding upon all of the parties hereto.
Upon acknowledgement by any successor Escrow Agent of the receipt of the then
remaining balance of the Escrowed Funds, the then acting Escrow Agent shall be
fully released and relieved of all duties, responsibilities and obligations
under this Agreement, other than those resulting from the Escrow Agent's gross
negligence, bad faith or willful misconduct, and the successor Escrow Agent
shall, without further act or deed, succeed to all the rights, duties,
responsibilities and obligations of the predecessor Escrow Agent under this
Agreement.
12. Inspection. All money or any other property held as part of the
----------
Escrowed Funds or interest, income or proceeds thereon shall at all times be
clearly identified as being held by the Escrow Agent hereunder. Any party
hereto may inspect the Escrowed Funds at any time during the Escrow Agent's
business hours.
13. Notices. Unless otherwise provided herein, any notice,
-------
objection, request, instruction or other document to be given hereunder by any
party to the others shall be in writing and delivered in person or by courier,
overnight mail, by facsimile transmission or mailed by certified mail, postage
prepaid, return receipt requested (such mailed notice to be effective on the
date such receipt is acknowledged or refused), as follows:
If to Sellers: Superior Coin, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
Telephone: (312)
Facsimile: (312)
With a copy to: Xxxx, Xxxxxx & Xxxxxxxxx
0 Xxxxx Xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Buyer: Coinmach Corporation
00 Xxxxxx Xxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxx Kill & Olick, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
B-8
Facsimile: (000) 000-0000
If to the Escrow
Agent: La Salle National Bank
000 Xxxxx Xx Xxxxx Xxxxxx - Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as any party hereto may designate by prior written
notice.
All such notices, objections, requests, instructions, documents and
other communications will (i) if delivered personally to the address as provided
in this Section 14, be deemed given upon delivery, (ii) if delivered by
facsimile transmission to the facsimile number as provided in this Section 14,
be deemed given upon receipt, (iii) if delivered by overnight mail to the
address as provided in this Section 14, be deemed given the next business day
after sent, and (iv) if delivered by mail in the manner described above to the
address as provided in this Section 14, be deemed given upon receipt (in each
case regardless of whether such notice is received by any other Person to whom a
copy of such communication is to be delivered pursuant to this Section 14).
14. Entire Agreement; Binding Effect; No Rights of Third Parties;
-------------------------------------------------------------
Assignment. The terms and provisions of this Agreement constitute the entire
----------
agreement between the parties hereto with respect to the subject matter hereof.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective Representatives, heirs, executors, administrators,
successors and assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies under or by
reason of this Agreement. This Agreement may not be assigned by Sellers without
the prior written consent of Buyer.
15. Modification. This Agreement shall not be amended or modified
------------
except pursuant to an instrument in writing executed by each of the parties
hereto.
16. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of New York without regard to principles
of conflict of laws.
17. Miscellaneous. The section headings contained in this Agreement
-------------
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. If any term,
condition or provision of this
B-9
Agreement shall be declared, to any extent, invalid or unenforceable, the
remainder of the Agreement, other than the term, condition or provision held
invalid or unenforceable, shall not be affected thereby and shall be considered
in full force and effect and shall be valid and be enforced to the fullest
extent permitted by applicable law.
18. No Modification of Purchase Agreement. Except as expressly
-------------------------------------
provided in this Agreement, the rights and obligations of Buyer and Sellers
under this Agreement shall in no way affect their respective rights and
obligations under the Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
B-10
IN WITNESS WHEREOF, the parties have hereunto executed this Agreement on the
day and year first above written.
ESCROW AGENT: LA SALLE NATIONAL BANK
/s/ XXXXXXXX X. XXXX
By: _________________________
Name: Xxxxxxxx X. Xxxx
Title:Asst. Vice President
BUYER: COINMACH CORPORATION
/s/ XXXXXX X. XXXXX
By: ________________________
Xxxxxx X. Xxxxx
Chief Financial Officer
SELLERS: COIN CONTROLLED WASHERS, INC.,
/s/ XXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxx X. Xxxxxx
Title:
XXXXX LAUNDRY SERVICE-CENTRAL
LIMITED PARTNERSHIP,
By: XXXXX LAUNDRY SERVICE-
CLEVELAND, INC., a general
partner
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
XXXXX SERVICES-TEXAS, INC.
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
SUPERIOR COIN, INC.
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
B-11
SUPERIOR COIN II, INC.
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
ADVANCE XXXXX DOMESTIC MACHINES,
INC.
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
XXXXX LAUNDRY SERVICE MIDWEST
LIMITED PARTNERSHIP
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name:
Title:
JPS LAUNDRY, INC.
/s/ XXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxx X. Xxxxxx
Title:
XXXXX LAUNDRY SERVICE, INC.
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title:
/s/ XXXXXXX X. XXXXXX
______________________________
Xxxxxxx X. Xxxxxx
/s/ XXXXXX X. XXXXXX
______________________________
Xxxxxx X. Xxxxxx
B-12
EXHIBIT C
XXXX OF SALE
------------
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, each of Coin Controlled Washers, Inc., an Illinois
corporation ("CCW"), Xxxxx Laundry Service-Central Limited Partnership, an
---
Illinois limited partnership ("Central"), Xxxxx Services-Texas, Inc., a Illinois
-------
corporation ("Texas"), Superior Coin, Inc., an Illinois corporation ("Coin"),
----- ----
Superior Coin II, Inc., an Illinois corporation ("Coin II") and Advance/Xxxxx
-------
Domestic Machines, Inc., an Illinois corporation ("Advance" and together with
-------
Xxxxx Midwest, JPS, MLS, Spagat, CCW, Central, Texas, Coin and Coin II, the
"Sellers" and, individually, a "Seller"), does hereby grant, bargain, transfer,
-------- ------
sell, assign, convey and deliver to Coinmach Corporation, a Delaware corporation
("Buyer"), all of such Seller's right, title and interest in and to all of the
Purchased Assets as defined in that certain Purchase Agreement, dated as of even
date herewith, by and among Sellers, Xxxxxx X. Xxxxxx and Buyer (the "Purchase
Agreement"), except to the extent any Purchased Assets are being transferred,
sold, assigned, conveyed or delivered to Buyer pursuant to separate instruments
of conveyance.
This Xxxx of Sale is being executed and delivered by Sellers as of the
date set forth below pursuant to the terms of the Purchase Agreement and shall
be construed consistently therewith.
[SIGNATURE PAGES FOLLOW]
C-1
IN WITNESS WHEREOF, Each Seller has caused this Xxxx of Sale to be
executed in its name by a duly authorized officer or general partner, as
applicable as of this ____ day of January, 1998.
COIN CONTROLLED WASHERS, INC.,
By: __________________________
Name:
Title:
XXXXX LAUNDRY SERVICE-CENTRAL
LIMITED PARTNERSHIP,
By: XXXXX LAUNDRY SERVICE -
CLEVELAND, INC.
a general partner
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
XXXXX SERVICES-TEXAS, INC.
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
SUPERIOR COIN, INC.
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
C-2
SUPERIOR COIN II, INC.
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
ADVANCE/XXXXX DOMESTIC MACHINES, INC.
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
X-0
XXXXX XX XXXXXXXX )
) ss.
COUNTY OF XXXX )
On _________ __, 1998, before me, the undersigned, a Notary Public in
and for said County and State, personally appeared Xxxxxxx X. Xxxxxx, known to
me to be the President of the corporation that executed the within instrument,
and known to me to be the person who executed the within instrument on behalf of
the corporation therein named, and acknowledged to me that, acting on behalf of
such corporation, he executed the same.
WITNESS my hand and official seal.
______________________________
Notary Public in and for said
County and State
C-4
STATE OF ILLINOIS )
) ss.:
COUNTY OF XXXX )
On _________ __, 1998, before me, the undersigned, a Notary Public in
and for said County and State, personally appeared Xxxxxxx X. Xxxxxx, known to
me to be the President of a general partner of Xxxxx Laundry Service-Central
Limited Partnership that executed the within instrument, and known to me to be
the person who executed the within instrument on behalf of the partnership
therein named, and acknowledged to me that, acting on behalf of such
partnership, he executed the same.
WITNESS my hand and official seal.
______________________________
Notary Public in and for said
County and State
C-5
STATE OF _____________ )
) ss.
COUNTY OF ____________ )
On _________ __, 1998, before me, the undersigned, a Notary Public in
and for said County and State, personally appeared Xxxxxxx X. Xxxxxx, known to
me to be the President of the corporation that executed the within instrument,
and known to me to be the person who executed the within instrument on behalf of
the corporation therein named, and acknowledged to me that, acting on behalf of
such corporation, he executed the same.
WITNESS my hand and official seal.
______________________________
Notary Public in and for said
County and State
C-6
STATE OF _____________ )
) ss.
COUNTY OF ____________ )
On _________ __, 1998, before me, the undersigned, a Notary Public in
and for said County and State, personally appeared Xxxxxxx X. Xxxxxx, known to
me to be the President of the corporation that executed the within instrument,
and known to me to be the person who executed the within instrument on behalf of
the corporation therein named, and acknowledged to me that, acting on behalf of
such corporation, he executed the same.
WITNESS my hand and official seal.
______________________________
Notary Public in and for said
County and State
C-7
STATE OF _____________ )
) ss.
COUNTY OF ____________ )
On _________ __, 1998, before me, the undersigned, a Notary Public in
and for said County and State, personally appeared Xxxxxxx X. Xxxxxx, known to
me to be the President of the corporation that executed the within instrument,
and known to me to be the person who executed the within instrument on behalf of
the corporation therein named, and acknowledged to me that, acting on behalf of
such corporation, he executed the same.
WITNESS my hand and official seal.
______________________________
Notary Public in and for said
County and State
C-8
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
-------------------------------------------
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement"), dated as of
___________ __, 1998, between Coinmach Corporation, a Delaware corporation
("Assignee"), Coin Controlled Washers, Inc., an Illinois corporation ("CCW"),
---
Xxxxx Laundry Service-Central Limited Partnership, an Illinois limited
partnership ("Central"), Xxxxx Services-Texas, Inc., a Illinois corporation
-------
("Texas"), Superior Coin, Inc., an Illinois corporation ("Coin"), Superior Coin
------- ----
II, Inc., an Illinois corporation ("Coin II") and Advance/Xxxxx Domestic
-------
Machines, Inc., an Illinois corporation ("Advance" and together with Xxxxxx,
-------
Xxxxx Midwest, JPS, MLS, Spagat, CCW, Central, Texas, Coin and Coin II, the
"Assignors" and, individually, an "Assignor").
---------- --------
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Purchase Agreement, dated the date
hereof, between Assignors and Assignee (the "Purchase Agreement").
RECITALS
Assignors and Assignee are parties to the Purchase Agreement pursuant
to which Assignors have executed and delivered to Assignee a Xxxx of Sale under
which Assignors have transferred and conveyed and assigned their interests in
certain assets identified therein to Assignee (the "Purchased Assets").
In partial consideration for the transfer of the Purchased Assets,
Assignee agreed to assume the Assumed Liabilities.
To induce Assignee to enter into the Purchase Agreement, Assignors
agreed to assume and retain sole liability for the Retained Liabilities;
__________________________
AGREEMENT
In consideration of the mutual representations, warranties and
covenants set forth in this Agreement and for other good and valuable
consideration, the receipt and adequacy
D-1
of which is hereby acknowledged, the parties hereto agree as follows:
1. Assignment and Assumption. Assignors hereby sell, convey,
-------------------------
transfer and assign to Assignee all of Assignors' right, title and interest in,
to and under the Purchased Assets subject to the terms and conditions of the
Purchase Agreement, in general, and Section 3.2(c) thereof in particular.
Assignee hereby assumes and agrees to timely discharge the Assumed Liabilities,
and Assignors hereby assume and agree to timely discharge the Retained
Liabilities. Assignors hereby also assign unto Assignee all transferable
manufacturer, supplier or contractor warranties or guaranties respecting any
Purchased Assets. Except as expressly assumed in the Purchase Agreement,
Assignee does not assume and shall not in any manner be responsible or liable
for any Retained Liability. This Assignment and Assumption Agreement shall be
interpreted consistently with the Purchase Agreement and is executed pursuant to
the Purchase Agreement, the terms of which are expressly incorporated herein by
this reference and does not expand, diminish or revise the terms of the Purchase
Agreement.
2. Binding upon Successors. This Agreement shall be binding upon
-----------------------
the heirs, executors, administrators, successors and assigns of the parties
hereto.
3. Governing Law. This Agreement shall be construed according to
-------------
the laws of the State of New York (without regard to any conflicts of laws
provisions thereof) applicable to contracts made and performed in New York.
4. Counterpart Execution. This Agreement may be executed in any
---------------------
number of counterparts, each of which, when so executed and delivered, shall be
an original, but all of which together shall constitute one agreement binding
all of the parties hereto.
[SIGNATURE PAGES TO FOLLOW]
D-2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
COINMACH CORPORATION
/s/ XXXXXXX X. XXXXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxxxx
Title:Chief Executive Officer
COIN CONTROLLED WASHERS, INC.,
/s/ XXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxx X. Xxxxxx
Title:
XXXXX LAUNDRY SERVICE-CENTRAL
LIMITED PARTNERSHIP,
By: XXXXX LAUNDRY SERVICE -
CLEVELAND, INC.
a general partner
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
XXXXX SERVICES-TEXAS, INC.
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
D-3
SUPERIOR COIN, INC.
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
SUPERIOR COIN II, INC.
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
ADVANCE XXXXX DOMESTIC MACHINES, INC.
/s/ XXXXXXX X. XXXXXX
By: __________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
D-4
EXHIBIT E
FORM OF BUYER'S LEGAL OPINION
-----------------------------
All capitalized terms used herein, unless otherwise defined herein,
shall have the meanings given to such terms in the agreement.
1. Buyer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to enter into and perform its obligations under
each of the Transaction Documents to which Buyer is a party.
2. The execution, delivery and performance by Coinmach of each of
the Transaction Documents to which Coinmach is a party, have been duly
authorized by all necessary corporate action. Such Transaction Documents have
been duly executed and, assuming the due authorization, execution and delivery
of each of the Transaction Documents by each of the other parties thereto,
constitute the valid and legally binding agreements of Coinmach, enforceable
against Coinmach in accordance with their respective terms, except to the extent
that such enforceability may be limited by: (a) bankruptcy, insolvency,
fraudulent conveyance, preferential transfer, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights and remedies generally; (b) general principles of equity
(whether such enforceability is considered in a proceeding in equity or at law),
and by the discretion of the court before which any proceeding therefor may be
brought; or (c) public policy considerations or court administrative, regulatory
or other governmental decisions that may limit the rights to indemnification or
contribution or limit or affect any covenants or agreements relating to
competition or future employment.
3. Except for filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, or such other consents, approvals or other
actions taken by Sellers, no authorization, consent, approval or other action
by, and no notice to or filing with any federal, state or local governmental
authority or regulatory body or other person is required for the due execution,
delivery and performance by Coinmach of the Transaction Documents to which it is
a party.
4. The execution, delivery and performance by Coinmach of the
Transaction Documents to which it is a party will
E-1
not (a) conflict with or violate, result in a breach of the terms, conditions or
provisions of, constitute (with or without notice or lapse of time or both) a
default under the provisions of Coinmach's Restated Certificate of Incorporation
or Bylaws; (b) to our knowledge, conflict with or violate any law, regulation,
order, writ, injunction, or decree of any court or governmental authority
against Coinmach, which conflict or violation could reasonably be expected to
result in a material adverse affect on the business or financial condition of
Coinmach; and (c) breach or violate or cause a default under (with or without
notice or lapse of time or both), any material financing document to which
Coinmach is a party.
E-2
EXHIBIT F
FORM OF SELLERS' LEGAL OPINION
------------------------------
All capitalized terms used herein, unless otherwise defined herein,
shall have the meanings given to such terms in the Agreement.
1. Each Xxxxx Entity is duly organized, validly existing and in good
standing under the laws of the State of its incorporation or organization and
has all requisite corporate or partnership power and authority to own, lease and
operate its properties and assets and to carry on the Business as presently
conducted and as proposed to be conducted. Each Xxxxx Entity is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary to carry on its business as
presently conducted, except where the failure to so qualify would not have an
Adverse Effect.
2. Each Seller that is not a person has all necessary corporate or
partnership power and authority to own, lease and/or operate the Purchased
Assets, to enter into the Transaction Documents, to consummate the transactions
contemplated thereby and to perform its obligations thereunder. All corporate,
partnership or other action, as applicable, by each Seller and Xxxxxx required
in order to authorize the execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated thereby has been
duly and validly taken, and no approval of the stockholders or partners of any
Seller or any Xxxxx Entity is required in connection therewith or, if required,
such approval has been duly obtained. The Agreement and each Transaction
Document has been duly executed and delivered by each Seller and Xxxxxx, as
applicable, and is a legal, valid and binding obligation of each Seller and
Xxxxxx enforceable against each Seller and Xxxxxx in accordance with its terms.
3. The authorized capitalization of MAS consists solely of 1,000
shares of common stock, par value $.01 per share, of which 100 shares are issued
and outstanding. All such outstanding shares have been duly authorized and
validly issued, are fully paid and non-assessable and were issued in compliance
with all applicable federal and state securities laws. There are no outstanding
subscriptions, warrants, options, calls or commitments of any nature related to
or entitling any person or entity to purchase or otherwise acquire any shares of
MAS Stock.
F-1
There are no obligations or securities convertible into or exchangeable for
shares of any capital stock of MAS. There are no pre-emptive rights with
respect to the shares of the capital stock of MAS. The shares of MAS Stock are
free and clear of any adverse claims, or voting or other rights, of third
parties.
4. Spagat has all legal capacity and authority to own the MAS Stock.
The outstanding shares of capital stock of MAS are owned of record and
beneficially by Spagat in the amounts set forth on Schedule "A" hereto. Spagat
has good and marketable title to all such shares of MAS Stock, free and clear of
any and all Encumbrances with full right, power and authority to transfer and
sell such shares of MAS Stock to Buyer.
5. The certificates representing the shares of MAS Stock (and the
stock powers attached thereto) are in due and proper form, and such certificates
have been duly and validly authorized, executed and delivered by Spagat. Upon
delivery thereof in accordance with the terms of the Agreement, Buyer will
receive good and marketable title to the MAS Stock, free and clear of any and
all Encumbrances.
6. The MLSLP Partners have all the legal capacity and authority to
own the MLSLP Partnership Interests. The MLSLP Partnership Interests are owned
of record and beneficially by the parties set forth on Schedule "B" hereto in
the amounts set forth therein. The MLSLP Partners have good and marketable
title to all such interests, free and clear of any and all Encumbrances with
full right, power and authority to transfer and sell such interests to Buyer.
There are no outstanding subscriptions, warrants, calls, options or commitments
of any nature related to or entitling any person or entity to purchase or
otherwise acquire any equity interests in MLSLP. There are no obligations or
securities convertible into or exchangeable for any equity interest in MLSLP.
The equity interests of MLSLP are free and clear of adverse claims, or voting or
other rights, of third parties and have been issued in compliance with all
applicable federal and state securities laws.
7. Upon the consummation of the transactions contemplated by the
Agreement, Buyer will receive good and marketable title to the MLSLP Partnership
Interests, free and clear of any and all Encumbrances.
8. Neither the execution and delivery of the Transaction Documents
nor the consummation of the transactions
F-2
contemplated thereby will result in (a) a violation of or a conflict with any
provision of the certificate of incorporation, bylaws or partnership agreement
of any Xxxxx Entity, (b) a breach or violation of, or a default under (with or
without notice or lapse of time or both), any term or provision of any Contract
to which any Xxxxx Entity, Spagat or Xxxxxx is a party or by which any of the
Purchased Assets are bound, (c) a violation by any Xxxxx Entity, Spagat or
Xxxxxx of any statute, rule, regulation, ordinance, code, order, judgment, writ,
injunction, decree or award applicable to any Xxxxx Entity, Spagat or Xxxxxx or
the Business, (d) an imposition of any Encumbrance, restriction or charge on the
Business or on any of the Purchased Assets, or (e) any suspension, impairment,
revocation, forfeiture or nonrenewal of any Permit.
9. Except as identified in the Agreement or the Disclosure Schedule,
no consent, approval or authorization of, action by, or declaration, filing or
registration with, any federal, state or local governmental or regulatory
authority, or any other Person, is required to be made or obtained by any Xxxxx
Entity, Spagat or Xxxxxx in connection with the execution, delivery and
performance by any Seller or Xxxxxx of the Transaction Documents and the
consummation of the transactions contemplated thereby.
10. Except as identified in the Agreement or the Disclosure Schedule,
there is no Action pending or, to our best knowledge, threatened against,
relating to or affecting (i) any Xxxxx Entity, Spagat or Xxxxxx or the Business,
(ii) any benefit plan for Personnel or any fiduciary or administrator thereof or
(iii) any of the transactions contemplated by the Transaction Documents. No
Xxxxx Entity, Spagat or Xxxxxx is in default with respect to any judgment,
order, writ, injunction or decree of any court or governmental agency, and there
are no unsatisfied judgments against any Xxxxx Entity, Spagat or Xxxxxx the
Business.
F-3
