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Exhibit 10.16
STOCK EXCHANGE AGREEMENT
AMONG
ORIUS CORP.,
NATG HOLDINGS, LLC
AND
THE SHAREHOLDERS OF
COPENHAGEN UTILITIES & CONSTRUCTION, INC.,
AN OREGON CORPORATION
FEBRUARY 20, 1999
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TABLE OF CONTENTS
1. DEFINITIONS.......................................................................... 1
2. EXCHANGE TRANSACTION................................................................. 6
(a) BASIC TRANSACTION........................................................... 6
(b) INITIAL CONSIDERATION....................................................... 6
(c) EARN-OUT CONSIDERATION...................................................... 6
(d) THE CLOSING................................................................. 9
(e) DELIVERIES AT CLOSING....................................................... 9
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS CONCERNING THE TRANSACTION........ 9
(a) AUTHORIZATION OF TRANSACTION................................................ 9
(b) NONCONTRAVENTION............................................................ 9
(c) BROKERS' FEES............................................................... 9
(d) INVESTMENT.................................................................. 9
(e) COMPANY SHARES.............................................................. 10
(f) DISCLOSURE.................................................................. 10
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND ORIUS CONCERNING THE TRANSACTION..... 10
(a) AUTHORIZATION OF TRANSACTION................................................ 10
(b) NONCONTRAVENTION............................................................ 10
(c) BROKERS' FEES............................................................... 10
(d) DISCLOSURE.................................................................. 11
5. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY................................ 11
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER............................ 11
(b) CAPITALIZATION.............................................................. 11
(c) TITLE TO ASSETS............................................................. 12
(d) NONCONTRAVENTION............................................................ 12
(e) SUBSIDIARIES................................................................ 12
(f) FINANCIAL STATEMENTS........................................................ 12
(g) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END............................ 12
(h) UNDISCLOSED LIABILITIES..................................................... 14
(i) LEGAL COMPLIANCE............................................................ 14
(j) TAX MATTERS................................................................. 15
(k) REAL PROPERTY............................................................... 16
(l) INTELLECTUAL PROPERTY....................................................... 17
(m) TANGIBLE ASSETS............................................................. 18
(n) EQUIPMENT FORMERLY OWNED BY EXCEL........................................... 18
(o) INVENTORY................................................................... 19
(p) CONTRACTS................................................................... 19
(q) NOTES AND ACCOUNTS RECEIVABLE............................................... 19
(r) POWERS OF ATTORNEY.......................................................... 19
(s) INSURANCE................................................................... 19
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(t) LITIGATION.................................................................. 20
(u) COMMITMENTS AND WARRANTIES.................................................. 20
(v) LIABILITY FOR SERVICES PERFORMED............................................ 20
(w) EMPLOYEES................................................................... 20
(x) EMPLOYEE BENEFITS........................................................... 21
(y) GUARANTIES.................................................................. 22
(z) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS................................... 22
(aa) CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY............................. 23
(ab) CUSTOMERS AND SUPPLIERS..................................................... 23
6. REPRESENTATIONS AND WARRANTIES CONCERNING THE BUYER AND ORIUS........................ 24
(a) ORGANIZATION OF THE BUYER................................................... 24
(b) ORGANIZATION OF ORIUS....................................................... 24
(c) CAPITALIZATION OF ORIUS..................................................... 24
(d) TITLE TO ASSETS............................................................. 24
(e) SUBSIDIARIES AND AFFILIATES................................................. 25
(f) FINANCIAL STATEMENTS........................................................ 25
(g) EVENTS SUBSEQUENT TO MOST RECENT NORTH AMERICAN PERIOD END.................. 25
(h) TAX MATTERS................................................................. 25
(i) INTELLECTUAL PROPERTY....................................................... 25
(j) INSURANCE................................................................... 26
(k) LEGAL COMPLIANCE............................................................ 26
(l) EMPLOYEE BENEFITS........................................................... 26
(m) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS................................... 27
(n) DISCLOSURE.................................................................. 28
7. PRE-CLOSING COVENANTS................................................................ 28
(a) GENERAL..................................................................... 28
(b) NOTICES AND CONSENTS........................................................ 29
(c) OPERATION OF BUSINESS....................................................... 29
(d) PRESERVATION OF BUSINESS.................................................... 29
(e) FULL ACCESS................................................................. 29
(f) NOTICE OF DEVELOPMENTS...................................................... 29
(g) EXCLUSIVITY................................................................. 29
(h) NO TERMINATION OF SHAREHOLDERS' OBLIGATION BY SUBSEQUENT INCAPACITY......... 29
8. POST-CLOSING COVENANTS............................................................... 30
(a) GENERAL..................................................................... 30
(b) LITIGATION SUPPORT.......................................................... 30
(c) TRANSITION.................................................................. 30
(d) INDEPENDENT ACCOUNTANTS..................................................... 30
(e) TAX MATTERS................................................................. 30
(f) STOCK OPTIONS............................................................... 30
(g) AUDITED FINANCIAL STATEMENTS................................................ 31
(h) NON-DISPARAGEMENT........................................................... 31
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9. CONDITIONS TO OBLIGATION TO CLOSE.................................................... 31
(a) CONDITIONS TO OBLIGATION OF THE BUYER....................................... 31
(b) CONDITIONS TO OBLIGATION OF THE SHAREHOLDERS................................ 33
10. REMEDIES FOR BREACHES OF THIS AGREEMENT.............................................. 34
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES.................................. 34
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER......................... 34
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SHAREHOLDERS.................. 35
(d) MATTERS INVOLVING THIRD PARTIES............................................. 35
(e) DETERMINATION OF ADVERSE CONSEQUENCES....................................... 36
(f) OTHER INDEMNIFICATION PROVISIONS............................................ 36
11. POST-CLOSING ADJUSTMENT OF CONSIDERATION............................................. 36
12. TAX MATTERS.......................................................................... 37
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE............................ 37
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE.............. 37
(c) COOPERATION ON TAX MATTERS.................................................. 38
(d) TAX SHARING AGREEMENTS...................................................... 38
(e) CERTAIN TAXES............................................................... 38
13. TERMINATION.......................................................................... 39
(a) TERMINATION OF AGREEMENT.................................................... 39
(b) EFFECT OF TERMINATION....................................................... 39
14. MISCELLANEOUS........................................................................ 39
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS..................................... 39
(b) NO THIRD-PARTY BENEFICIARIES................................................ 39
(c) ENTIRE AGREEMENT............................................................ 39
(d) SUCCESSION AND ASSIGNMENT................................................... 40
(e) COUNTERPARTS................................................................ 40
(f) HEADINGS.................................................................... 40
(g) NOTICES..................................................................... 40
(h) GOVERNING LAW............................................................... 40
(i) AMENDMENTS AND WAIVERS...................................................... 41
(j) SEVERABILITY................................................................ 41
(k) EXPENSES.................................................................... 41
(l) CONSTRUCTION................................................................ 41
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES........................... 41
(n) SPECIFIC PERFORMANCE........................................................ 41
(o) SUBMISSION TO JURISDICTION.................................................. 41
(p) WAIVER OF JURY TRIAL........................................................ 42
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Exhibit A: Form of Employment Agreements
Exhibit B: Form of Leases
Exhibit C: Form of Non-Competition Agreement
Exhibit D: Form of Subscription Agreement
Exhibit E: Form of Escrow Agreement
Exhibit F: Form of Subordination Agreement
Exhibit G: Form of Seller's opinion
Exhibit H: Form of Buyer's opinion
Exhibit I: Financial Statements
Exhibit J: North American Financial Statements
Annex 1: Accredited Investor Questionnaire
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STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT is entered into as of February 19, 1999
by and among NATG Holdings, LLC, a Delaware limited liability company (the
"Buyer"), Orius Corp., a Delaware corporation ("Orius") and the shareholders of
Copenhagen Utilities & Construction, Inc., an Oregon corporation (the
"Company") listed on the signature page to this Agreement (the "Shareholders").
The Buyer, Orius and the Shareholders are referred to collectively herein as
the "Parties."
This Agreement contemplates the exchange by the Shareholders of all of
the issued and outstanding capital stock of the Company to Buyer. The
Shareholders will receive cash and capital stock in Orius Corp., a Delaware
corporation and the parent company of the Buyer ("Orius"), in exchange for
their shares of capital stock of the Company.
Simultaneously herewith, NATG Merger Sub, Inc., a Florida corporation
and a wholly-owned subsidiary of Buyer ("Merger Sub"), and North American
Tel-Com Group, Inc., a Florida corporation ("North American"), are entering
into a merger agreement (the "Merger Agreement") pursuant to which Merger Sub
will be merged with and into North American. Buyer also is entering into stock
exchange agreements with the shareholders of Network Cabling Services, Inc.
("NCS"), Xxxxxx Underground Cable, Inc. ("Xxxxxx") and DAS-CO of Idaho, Inc.
("DAS-CO") to acquire all of the issued and outstanding capital stock of NCS,
Xxxxxx and DAS-CO (collectively with this Agreement and the Merger Agreement,
the "Exchange Agreements"). The parties to the Exchange Agreements, other than
the parties to the DAS-CO and Xxxxxx Exchange Agreements, intend for the
transfers contemplated thereunder to be treated as a single transaction
qualifying under Section 351 of the Code (as hereinafter defined).
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"Accredited Investor" has the meaning set forth in Regulation
D promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses, and any other cost of enforcing a party's rights under this
Agreement.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the
meaning of Code Section 1504(a) or any similar group defined under a similar
provision of state, local or foreign law.
"Stockholders Agreement" means that certain Stockholders
Agreement among Orius and the stockholders of Orius dated as of the Closing
Date.
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"Applicable Rate" means the corporate base rate of interest
publicly announced from time to time by PNC Bank, N.A.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could form the
basis for any specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d)
below.
"Closing Date Balance Sheet" has the meaning set forth in
Section 11(b) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Share" means any share of the voting common stock,
par value $.02 per share, or the non-voting common stock, par value $.02 per
share, of the Company.
"Consideration" has the meaning set forth in Section 2(b)
below.
"Controlled Group of Corporations" has the meaning set forth
in Code Section 1563.
"Disclosure Schedule" has the meaning set forth in Section 5
below.
"Draft Closing Date Balance Sheet" has the meaning set forth
in Section 11(a) below.
"EBITDA" means earnings before interest, taxes, depreciation
and amortization as reflected on an income statement prepared in accordance
with GAAP and consistent with the past practices of the Company applied on a
consistent basis.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), (d) Employee Welfare Benefit Plan or (e)
bonus, incentive, stock purchase, stock ownership, stock option, stock
appreciation right, severance, salary continuation, termination, change of
control or other material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Section 3(1).
"Employment Agreements" means the Employment Agreements
substantially in the form attached hereto as Exhibit A.
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"Environmental, Health, and Safety Requirements" shall mean
all federal, state, local and foreign statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
Hazardous Materials (which, for purposes of this Agreement, shall xxxxx any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation), each as
amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means (i) any corporation included with the
Company in a controlled group of corporations within the meaning of Section
414(b) of the Code; (ii) any trade or business (whether or not incorporated)
which is under common control with the Company within the meaning of Section
414(c) of the Code; (iii) any member of an affiliated service group of which
the Company is a member within the meaning of Section 414(m) of the Code; or
(iv) any other person or entity treated as an affiliate of the Company under
Section 414(o) of the Code.
"Estimated Closing Balance Sheet" has the meaning given that
term in Section 9(a)(xiii) hereof.
"Excess Shareholders Equity" has the meaning set forth in
Section 5(g)-Permitted Distributions of the Disclosure Schedule.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statement" has the meaning set forth in Section
5(f) below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Indemnified Party" has the meaning set forth in Section
10(d)(i) below.
"Indemnifying Party" has the meaning set forth in Section
10(d)(i) below.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
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"Knowledge" means that which is known by a person and that of
which a person has constructive knowledge based upon information readily
available to that person in the performance of such person's duties after
reasonable investigation and inquiry of such person. In the case of the Buyer,
"Knowledge" means the Knowledge of its President. In the case of the Company,
"Knowledge" means the Knowledge of the Shareholders.
"Leases" means the five-year triple net lease agreements
between the Buyer and the Shareholders (or their Affiliates) for the real
property utilized by the Company in Clackamas, Oregon and Sacramento,
California substantially in the forms attached hereto as Exhibit B.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Material Adverse Effect" means, individually or together
with other adverse effects, any material adverse effect on the assets,
liabilities, results of operations, business condition (financial or otherwise)
or prospects of the Company or on the Company's ability to consummate the
transactions contemplated hereby or the ability of the Buyer to operate the
business of the Company immediately after the Closing in substantially the same
manner as such business is conducted prior to Closing
"Minimum Equity" has the meaning set forth in Section
5(g)-Permitted Distributions of the Disclosure Schedule.
"Most Recent Balance Sheet" means the balance sheet contained
within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth
in Section 5(f) below.
"Most Recent Fiscal Period End" has the meaning set forth in
Section 5(f) below.
"Most Recent Fiscal Year End" has the meaning set forth in
Section 5(f) below.
"Most Recent North American Balance Sheet" means the balance
sheet contained within the Most Recent North American Statements.
"Most Recent North American Fiscal Period End" has the
meaning set forth in Section 6(f) below.
"Multiemployer Plan" has the meaning set forth in ERISA
Section 3(37).
"National Securities Exchange" shall have the meaning
ascribed to that term in the rules and regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
"Noncompetition Agreements" means the Noncompetition
Agreements substantially in the form attached hereto as Exhibit C.
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"North American" has the meaning set forth in the preface
hereof.
"North American Subsidiary" means any entity that is an
Affiliate of North American immediately prior to the consummation of the
Exchange Agreements.
"Orius" has the meaning set forth in the preface hereof.
"Orius Common Stock" means any share of the common stock, par
value $.0001 par share, of Orius.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA
Section 406 and Code Section 4975.
"Reportable Event" has the meaning set forth in ERISA Section
4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens that could not reasonably be expected to have
a Material Adverse Effect, (b) liens for Taxes not yet due and payable or for
Taxes that the taxpayer is contesting in good faith through appropriate
proceedings disclosed on Section 5(j) of the Disclosure Schedule, (c) purchase
money liens and liens securing rental payments under capital lease arrangements
disclosed in the Most Recent Financial Statements, and (d) other liens arising
in the Ordinary Course of Business and not incurred in connection with the
borrowing of money, so long as such liens could not reasonably be expected to
have a Material Adverse Effect.
"Shareholders" has the meaning set forth in the preface
above.
"Stockholders' Agreement" means that certain Stockholders'
Agreement among Orius and the shareholders of the Buyer dated as of the Closing
Date.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
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"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not,
and any obligations under any agreements or arrangements with respect to any of
the foregoing.
"Tax Return" means 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.
"Third Party Claim" has the meaning set forth in Section
10(d) below.
2. EXCHANGE TRANSACTION.
(a) BASIC TRANSACTION. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to exchange with the
Shareholders, and the shareholders agree to exchange with the Buyer, all of
their respective Company Shares for the consideration specified below in this
Section 2.
(b) INITIAL CONSIDERATION. The Buyer agrees to deliver
(collectively, the "Consideration") (i) at Closing to the Shareholders (A) cash
in the amount of twenty-three million dollars ($23,000,000) payable by wire
transfer or other immediately available funds and (B) one hundred ten thousand
seven hundred fourteen (110,714) shares of the Orius Common Stock and (ii) 90
days after the Closing Date, cash in the amount of two hundred fifty thousand
dollars ($250,000) (as adjusted pursuant to Section 11(f) hereof). The
Consideration shall be subject to adjustment pursuant to the provisions of
Section 11 hereof. The Consideration shall be allocated as set forth in Section
5(b) to the Disclosure Schedule.
(c) EARN-OUT CONSIDERATION.
(i) From and after the Closing, and until Buyer's
obligations under this Section 2(c) are satisfied in full, Buyer shall continue
the business operations of the Company as a separate corporate entity (the
Company's business and operations after the Closing are referred to herein as
the "DIVISION"). In connection therewith Buyer shall prepare, using accounting
procedures consistent with the past accounting practices of the Company to the
extent that such practices are consis with GAAP, unaudited internally generated
separate financial statements for the Division (the "DIVISION STATEMENTS"). The
Division Statements shall be based on a fiscal year ending on December 31
(being the same fiscal year end as Buyer; all references to "fiscal year" in
this Section 2(c) refer to the fiscal year of the Division ending on December
31).
(ii) In addition to the Initial Consideration, the
Buyer shall pay to Shareholders cash, and Orius shall issue to the Shareholders
shares of Orius Common Stock (such cash and shares of Orius Common Stock being
referred to herein as the "EARN-OUT CONSIDERATION"), in amounts based upon the
EBITDA of the Company in each of fiscal year 1999 and 2000.
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(A) The "FY 1999 EARN-OUT TABLE" table
below contains rows that set forth a lower EBITDA threshold (Column 1) and an
upper EBITDA threshold (Column 2). If Company's EBITDA with respect to fiscal
year 1999 falls between the lower and upper EBITDA thresholds for one of the
rows, then this row will be the "FY 0000 XXXX-XXX XXX" for purposes of this
Agreement. The Buyer shall pay to the Shareholders the aggregate amount of cash
indicated in Column 3, and Orius shall issue the Shareholders the aggregate
number of shares of Orius Common Stock indicated in Column 4, that appear on
the FY 0000 Xxxx-Xxx Xxx.
FY 1999 EARN-OUT TABLE
Row COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4
-------- -------- -------- --------
Lower EBITDA Threshold Upper EBITDA Threshold Cash Orius Shares
---------------------- ---------------------- -------- ------------
1 0 $6,325,000 $0 0
2 $6,325,000 $6,650,000 $609,375 2,902
3 $6,650,000 6,975,000 $1,218,750 5,804
4 $6,975,000 $7,300,000 $1,828,125 8,705
5 $7,300,000 4 $2,437,500 11,607
(B) The "FY 2000 EARN-OUT TABLE" below
contains rows that set forth a lower EBITDA threshold (Column 1) and an upper
EBITDA threshold (Column 2). If Company's EBITDA with respect to fiscal year
2000 falls between the lower and upper EBITDA thresholds for one of the rows,
then this row will be the "FY 0000 XXXX-XXX XXX" for purposes of this Agreement.
The Buyer shall pay to the Shareholders the aggregate amount of cash indicated
in Column 3, and Orius shall issue the Shareholders the aggregate number of
shares of Orius Common Stock indicated in Column 4, that appear on the FY 0000
Xxxx-Xxx Xxx.
FY 2000 EARN-OUT TABLE
Row COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4
-------- -------- -------- --------
Lower EBITDA Threshold Upper EBITDA Threshold Cash Orius Shares
---------------------- ---------------------- -------- ------------
1 0 $6,950,000 $0 0
2 $6,950,000 $7,300,000 $609,375 2,902
3 $7,300,000 $7,650,000 $1,218,750 5,804
4 $7,650,000 $8,000,000 $1,828,125 8,705
5 $8,000,000 4 $2,437,500 11,607
(iii) The Earn-Out Consideration for any fiscal year
shall be delivered no later than 90 calendar days after the end of such fiscal
year, except to the extent that the provisions of Subsection 2(c)(iv)(B) below
apply.
(iv) The calculation of the Earn-Out Consideration
shall be subject to the following provisions:
(A) The amount, if any, by which the EBITDA
with respect to fiscal year 1999 (not accounting for any application of
Paragraph 2(c)(iv)(B)) exceeds the lower EBITDA threshold in the FY 0000
Xxxx-Xxx Xxx is referred to herein as the "FY 1999 EXCESS." The FY 1999 Excess
may be added to the EBITDA for fiscal year 2000. The amount of the FY 1999
Excess applied pursuant to this Paragraph 2(c)(iv)(A) shall be subtracted from
the EBITDA for fiscal year 1999 for purposes of the application of Paragraph
2(c)(iv)(B) hereof.
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(B) The amount, if any, by which the EBITDA
with respect to fiscal year 2000 (not accounting for any application of
Paragraph 2(c)(iv)(A)) exceeds the lower EBITDA threshold in the FY 0000
Xxxx-Xxx Xxx is referred to herein as the "FY 2000 EXCESS." The FY 2000 Excess
shall be applied retroactively to fiscal year 1999. If the calculation of the
Earn-Out Consideration with respect to fiscal year 1999, after taking into
account the FY 2000 Excess, would be greater than the amount of Earn-Out
Consideration already paid with respect to fiscal year 1999, then the amount of
such increase in Earn-Out Consideration for fiscal year 1999 shall be payable
to the Shareholders at the time that the Earn-Out Consideration with respect to
fiscal year 2000 is paid. The amount of the FY 2000 Excess applied pursuant to
this Paragraph 2(c)(iv)(B) shall be subtracted from the EBITDA for fiscal year
2000 for purposes of the application of Paragraph 2(c)(iv)(A) hereof.
(C) An example of the application of this
Subsection 2(c)(iv) is as follows: If the EBITDA for fiscal year 1999 is
$7,100,000, then Row 4 of the FY 1999 Earn-Out Table is the FY 0000 Xxxx-Xxx
Xxx, and the Earn-Out Consideration with respect to fiscal year 1999 would be
$1,828,125 and 8,705 shares of Orius Common Stock. See Subsection 2(c)(ii)(A).
If the EBITDA for fiscal year 2000 is $7,900,000, then Row 4 of the FY 2000
Earn-Out Table is the FY 0000 Xxxx-Xxx Xxx, and the Earn-Out Consideration with
respect to fiscal year 2000 would be $1,828,125 and 8,705 shares of Orius
Common Stock. See Subsection 2(c)(ii)(B). The FY 1999 Excess is $125,000
($7,100,000 exceeds $6,975,000 by $125,000). The FY 2000 Excess is $250,000
($7,900,000 exceeds $7,650,000 by $250,000). The excess for either year may be
applied to the EBITDA of the other year to increase the Earn-Out Consideration
for the latter year. Thus, if the Earn-Out Consideration for fiscal year 1999
is increased by $200,001 of the FY 2000 Excess, i.e. from $7,100,000 to
$7,350,001, then the FY 0000 Xxxx-Xxx Xxx becomes Row 5 of the FY 1999 Earn-Out
Table. Buyer and Orius shall pay to Shareholders the Earn-Out Consideration in
Row 5 of the FY 1999 Earn-Out Table, above the amount already paid from Row 4
(i.e. an additional amount of $609,375 and 2,902 shares of Orius Common Stock).
The EBITDA for fiscal year 2000 will be decreased by $200,001, the amount of
the FY 2000 Excess applied to fiscal year 1999, with no change in the fiscal
year 2000 Earn-Out Consideration. Alternatively, $100,001 of the FY 1999 Excess
may be added to the EBITDA for fiscal year 2000, with the same effect on the FY
2000 Earn-Out Consideration of changing the FY 0000 Xxxx-Xxx Xxx from Row 4 to
Row 5. The EBITDA for fiscal year 1999 will be decreased by $100,001, the
amount of the FY 1999 Excess applied to fiscal year 2000, with no change in the
fiscal year 2000 Earn-Out Consideration.
(v) Any Earn-Out Consideration due and payable under
this Section 2(c) shall be allocated to the Shareholders in proportion to their
ownership of Company Common Stock at the Closing.
(vi) The issuance of Orius Common Stock comprising
the Earn-Out Consideration shall be contingent on Shareholders and Orius
entering into a subscription agreement relating to the Earn-Out Consideration
substantially in the form of Exhibit D to this Agreement.
(vii) Pursuant to the terms of the Escrow Agreement
attached hereto as Exhibit E, 23,214 shares of Orius Common Stock will be
deposited in escrow with SunTrust Bank, N.A. as Escrow Agent. Shares held in
escrow with respect the Earn-Out for fiscal year 1999 that are not earned in
fiscal year 1999 shall remain in escrow until the end of fiscal year 2000.
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(viii) The cash portion of the Earn-Out
Consideration is subject to the Subordination Agreement attached hereto as
Exhibit F.
(ix) Disputes regarding the calculation of the
Earn-Out Consideration shall be resolved in the same manner as disputes
regarding the Closing Balance Sheet as described in Section 11(b) and 11(c)
hereof.
(d) THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Holland &
Knight LLP in Ft. Lauderdale, Florida, commencing at 9:00 a.m. local time on
February 26, 1999 or such other date, time and place as the Parties may
mutually determine (the "Closing Date").
(e) DELIVERIES AT CLOSING. At the Closing, (i) the
Shareholders will deliver to the Buyer the various certificates, instruments,
and documents referred to in Section 9(a) below, (ii) the Buyer will deliver to
the Shareholders the various certificates, instruments, and documents referred
to in Section 9(b) below, (iii) the Shareholders will deliver to the Buyer
stock certificates representing all of their Company Shares, endorsed in blank
or accompanied by duly executed assignment documents, and (iv) the Buyer will
deliver to the Shareholders the Consideration specified in Section 2(b) above.
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS CONCERNING THE
TRANSACTION. Each Shareholder represents and warrants to the Buyer that the
statements contained in this Section 3 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date
of this Agreement throughout this ' 3), except as set forth on ' 3 of the
Disclosure Schedule (as hereinafter defin
(a) AUTHORIZATION OF TRANSACTION. Such Shareholder has full
power and authority to execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of such Shareholder, enforceable in accordance with its terms and
conditions except to the extent enforcement thereof may be limited by
applicable bankruptcy, reorganization, insolvency or moratorium laws, or other
laws affecting the enforcement of creditors' rights or by the principles
governing the availability of equitable remedies. Such Shareholder need not
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency or any other Person in
order to consummate the transactions contemplated by this Agreement.
(b) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which such Shareholder is
subject or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
material agreement, contract, lease, license, instrument, or other arrangement
to which such Shareholder is a party or by which he is bound or to which any of
his assets is subject.
(c) BROKERS' FEES. Such Shareholder has, or prior to Closing
will have, paid any fees or commissions due from Shareholders to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement. Such Shareholder agrees that he will pay any additional amounts that
may become due from him or the Company to any such broker, finder or agent in
the future, including as a result of any indemnification obligations.
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(d) INVESTMENT. Such Shareholder (A) understands that, the
Orius Common Stock that he will receive as part of the Consideration has not
been, and will not be, registered under the Securities Act, or under any state
securities laws, and are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering, (B) is
acquiring the Orius Common Stock solely for his own account for investment
purposes, and not with a view to the distribution thereof, (C) is a
sophisticated investor with knowledge and experience in business and financial
matters, (D) has received certain information concerning Orius and has had the
opportunity to obtain additional information as desired in order to evaluate
the merits and the risks inherent in holding the Orius Common Stock, (E) is
able to bear the economic risk and lack of liquidity inherent in holding the
Orius Common Stock, and (F) is an Accredited Investor for the reasons set forth
on Annex I.
(e) COMPANY SHARES. Such Shareholder holds of record and owns
beneficially the number of Company Shares set forth opposite such Shareholder's
name, in Section 5(b) of the Disclosure Schedule, free and clear of any
restrictions on transfer (other than any restrictions under the Securities Act
and state securities laws), Taxes, Security Interests liens or other
encumbrances, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Such Shareholder is not a party to any option,
warrant, purchase right, or other contract or commitment that could require
such Shareholder to sell, transfer, or otherwise dispose of any capital stock
of the Company (other than this Agreement). Such Shareholder is not a party to
any voting trust, proxy, shareholders agreement, or other agreement or
understanding with respect to the voting of any capital stock of the Company.
(f) DISCLOSURE. Neither this Agreement nor any of the
exhibits, attachments, written statements, documents, certificates or other
items prepared for or supplied to the Buyer by such Shareholder with respect to
the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make
each statement contained herein or therein not misleading. There is no fact
which such Shareholder has not disclosed to the Buyer herein and of which the
Shareholders is aware which could be anticipated to have a Material Adverse
Effect.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND ORIUS CONCERNING
THE TRANSACTION. The Buyer and Orius, jointly and severally, represent and
warrant to the Shareholders that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 4),
except as set forth in the disclosure schedule delivered by the Buyer to the
Shareholders on the date hereof (the "Buyer Disclosure Schedule").
(a) AUTHORIZATION OF TRANSACTION. Each of the Buyer and Orius
has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Buyer and Orius, enforceable in accordance
with its terms and conditions except to the extent enforcement thereof may be
limited by applicable bankruptcy, reorganization, insolvency or moratorium
laws, or other laws affecting the enforcement of creditors' rights or by the
principles governing the availability of equitable remedies. Neither Buyer nor
Orius need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency or
any other Person in order to consummate the transactions contemplated by this
Agreement.
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(b) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which the Buyer or Orius is
subject or any provision of their respective charter or bylaws or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Buyer or Orius is a
party or by which either of them is bound or to which any of the assets of
either of them is subject.
(c) BROKERS' FEES. The Buyer has, or prior to the Closing
will have, paid any fees or commissions due from the Buyer to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement. The Buyer agrees that it will pay any additional amounts that may
become due from the Buyer to any such broker, finder or agent in the future,
including as a result of any indemnification obligations.
(d) DISCLOSURE. Neither this Agreement nor any of the
exhibits, attachments, written statements, documents, certificates or other
items prepared for or supplied to the Shareholders by the Buyer or Orius with
respect to the transactions contemplated hereby contains any untrue statement
of a material fact or omits to state any material fact necessary in order to
make each statement contained herein or therein not misleading. There is no
fact which the Buyer or Orius has not disclosed to the Shareholders herein and
of which the Buyer or Orius or any of the their respective officers or
directors is aware and which could be anticipated to have a Material Adverse
Effect on the operations of the Buyer or Orius after the Closing.
5. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The
Shareholders jointly and severally represent and warrant to the Buyer that the
statements contained in this Section 5 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date
of this Agreement throughout this Section 5), except as set forth in the
Disclosure Schedule delivered by the Shareholders to the Buyer on the date
hereof and initialed by the Parties (the "Disclosure Schedule"). The Disclosure
Schedule shall be effective to modify only those representations and warranties
to which the Disclosure Schedule makes explicit reference. The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 5.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation. The Company is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. The Company has full
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and used
by it, except where failure to do so is authorized or will not result in any
Material Adverse Effect. Section 5(a) of the Disclosure Schedule lists the
directors and officers of the Company. Correct and complete copies of the
charter and bylaws of the Company (as amended to date) are included as part of
Section 5(a) of the Disclosure Schedule. The minute books (containing the
records of meetings of the stockholders, the board of directors, and any
committees of the board of directors), the stock certificate books, and the
stock record books of the Company are correct and complete and an true and
correct copy thereof has been provided to the Buyer. The Company is not in
default under or in violation of any provision of its charter or bylaws.
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(b) CAPITALIZATION. The entire authorized capital stock of
the Company consists of 100,000 Company Shares, of which 2,496 voting Company
Shares and 59,904 non-voting Company shares are issued and outstanding and no
Company Shares are held in treasury. All of the issued and outstanding Company
Shares have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record and owned beneficially by the
Shareholders in the amounts set forth in Section 5(b) of the Disclosure
Schedule. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, preemptive
rights or other contracts or commitments that could require the Company to
issue, sell, or otherwise cause to become outstanding any of its capital stock
or securities convertible or exchangeable for, or any options, warranties, or
rights to purchase, any of such capital stock. There are no outstanding
obligations of the Company to repurchase, redeem or otherwise acquire any
capital stock or any securities convertible into or exchangeable for such
capital stock or any options, warrants or rights to purchase such capital stock
or securities. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting, transfer, dividend or other rights
(such as registration rights under the Securities Act) of the capital stock of
the Company.
(c) TITLE TO ASSETS. The Company has good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
it, located on its premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security Interests
(other than the Security Interests disclosed on the face of the Most Recent
Balance Sheet), except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet, none of
which disposals are expected to have a Material Adverse Effect. The
consummation of the transactions contemplated by this Agreement will not affect
the Company's good and marketable title to, or valid leasehold interest in, the
properties and assets described in the preceding sentence.
(d) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will: (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which the Company is subject
or any provision of the charter or bylaws or similar governance documents of
the Company or; (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Company is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets) which individually or in the aggregate would constitute the Basis of a
Material Adverse Effect on the Company. The Company need not give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any Person, government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(e) SUBSIDIARIES. Except as set forth in Section 5(e) of the
Disclosure Schedule, the Company does not currently have, and has never had,
any Subsidiaries and does not own any securities of any other Person.
(f) FINANCIAL STATEMENTS. Attached hereto as Exhibit I are
the following financial statements (collectively the "Financial Statements"):
(i) reviewed consolidated balance sheets and statements of income, including
the independent accountant's report thereon as of and for the fiscal year ended
December 31, 1997 (the "Most Recent Fiscal Year End") for the Company; (ii)
reviewed consolidated balance sheets and statements of income, including the
independent accountant's report thereon as of and for the fiscal years ended
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December 31, 1994, December 31, 1995 and December 31, 1996 and (iii) unaudited
consolidated balance sheets and statements of income, (the "Most Recent
Financial Statements") as of and for the period from January 1, 1998, through
December 31, 1998 for the Company (the "Most Recent Fiscal Period End"). The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Company as of
such dates and the results of operations of the Company for such periods, are
correct and complete in all material respects, and are consistent with the
books and records of the Company (which books and records are correct and
complete in all material respects).
(g) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except
as set forth on Section 5(g) of the Disclosure Schedule (and, as appropriate,
after giving effect to the transactions described on Schedule 7(c)), since the
Most Recent Fiscal Year End, there has not been any occurrence, event, incident,
action, failure to act or transaction that constitutes the Basis of a Material
Adverse Effect on the Company or any that is outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, since that date:
(i) The Company has not sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) The Company has not entered into any
agreements, contracts, leases, or licenses either involving more than $100,000
or having a term greater than 12 months or outside the Ordinary Course of
Business;
(iii) No party (including the Company) has
accelerated, terminated, modified, or cancelled any agreements, contracts,
leases, or licenses involving more than $100,000 to which the Company is a
party or by which it is bound;
(iv) The Company has not imposed or allowed to be
imposed any Security Interest upon any of its assets, tangible or intangible;
(v) The Company has not made any capital
expenditures involving more than $100,000 in the aggregate or outside the
Ordinary Course of Business;
(vi) The Company has not made any capital investment
in, any loan to, or any acquisition of the securities or assets of, any other
Person;
(vii) The Company has not issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation involving more
than $100,000;
(viii) The Company has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary Course
of Business;
(ix) The Company has not cancelled, compromised,
waived, or released any right or claim either involving more than $100,000 in
the aggregate or outside the Ordinary Course of Business;
(x) The Company has not granted any license or
sublicense of any rights under or with respect to any Intellectual Property;
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(xi) There has been no change made or authorized in
the charter or bylaws of any of the Company;
(xii) The Company has not issued, sold, or otherwise
disposed of any of its capital stock or securities convertible into or
exchangeable for such stock, or granted any options, warrants, or other rights
to purchase or obtain any of such capital stock or securities;
(xiii) The Company has not declared, set aside, or
paid any dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise acquired any
of its capital stock or other securities;
(xiv) The Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property
involving more than $100,000 in the aggregate;
(xv) The Company has not made any loan to, or
entered into any other transaction with, any of its directors, officers, and
employees or their "Associates" (as defined in Rule 12b-2 under the Exchange
Act);
(xvi) The Company has not entered into any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement outside the
Ordinary Course of Business;
(xvii) The Company has not granted any increase in
any compensation of any of its directors, officers, or other employees outside
the Ordinary Course of Business;
(xviii) The Company has not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);
(xix) The Company has not made any other change in
employment terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xx) The Company has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xxi) There has not been any other material
occurrence, event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving the Company; and
(xxii) The Company has not increased, or experienced
any change in assumptions underlying or method of calculating, any bad debt,
contingency, tax or other reserves or changed its accounting practices, methods
or assumptions (including changes in estimates or valuation methods); or
written down the value of any assets;
(xxiii) The Company has not granted any bonuses or
made any other payments of any kind (other than base compensation in the
Ordinary Course of Business) to any officer, director or employee of the
Company, or to any Person related to any of the foregoing; and
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(xxiv) The Company has not committed to do any of
the foregoing.
(h) UNDISCLOSED LIABILITIES. Except as disclosed in Section
5(h) of the Disclosure Schedule, the Company does not have any Liability,
except for (i) Liabilities set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) and (ii) Liabilities which have arisen
after the Most Recent Fiscal Period End in the Ordinary Course of Business
(none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort, infringement,
or violation of law and none of which could reasonably be expected to have a
Material Adverse Effect).
(i) LEGAL COMPLIANCE. The Company and its predecessors and
Affiliates have complied, in all material respects, with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
(j) TAX MATTERS.
(i) The Company has filed all Tax Returns that were
required to be filed prior to the date hereof and will have filed all Tax
Returns that it will have been required to file prior to the Closing Date. All
such Tax Returns were correct and complete in all material respects. All Taxes
owed by the Company (whether or not shown on any Tax Return) have been paid or
are fully and adequately accrued and adequately disclosed on the Most Recent
Balance Sheet. The Company is not currently the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Company does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of the Company that arose in connection with any
failure (or alleged failure) to pay any Tax.
(ii) The Company has withheld and paid when due all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder, or
other third party.
(iii) Neither Shareholders nor the Company has
Knowledge that any authority expects to assess any additional Taxes for any
period for which Tax Returns have been filed. There is no action, suit or
proceeding, investigation, dispute or claim now pending or threatened
concerning any Tax Liability of the Company or proposed adjustment to the
taxable income of the Company either (A) claimed or raised by any authority in
writing or (B) as to which any of the Shareholders and the Company has
Knowledge based upon personal contact with any agent of such authority. Section
5(j) of the Disclosure Schedule contains a summary of all Tax Returns filed
with respect to the Company for the last three completed tax years, indicates
those Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Shareholders have made available to the
Buyer correct and complete copies of all Tax Returns of the Company,
examination reports, and statements of deficiencies assessed against or agreed
to by the Company since January 1, 1994.
(iv) The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
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(v) The Company has not filed a consent under Code
Section 341(f) concerning collapsible corporations. The Company has not made
any payments, is not obligated to make any payments, or is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code ' 280G or that would give rise
to any obligation to indemnify any Person for any excise tax payable pursuant
to Code Section 4999. The Company has not been United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). The Company has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Code Section 6662. Neither the Company nor any predecessor or
affiliate thereof is a party to any Tax allocation, sharing, indemnification or
similar agreement. The Company (A) has not been a member of an Affiliated Group
filing a consolidated federal income Tax Return (other than a group the common
parent of which was the Company) and (B) does not have any Liability for the
Taxes of any Person (other than any of the Company and its Subsidiaries) under
Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise. No indebtedness
of the Company consists of "corporate acquisition indebtedness" within the
meaning of Code Section 279.
(vi) Section 5(j) of the Disclosure Schedule sets
forth as of the most recent practicable date the basis for Federal income tax
purposes of the Company in its assets.
(vii) The unpaid Taxes of the Company (A) did not,
as of the Most Recent Fiscal Period End, exceed the reserve for Tax Liability
set forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto) and (B) do not, and will not as of the Closing Date, exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in filing its Tax
Returns.
(k) REAL PROPERTY. The Company does not own any real
property. Section 5(k) of the Disclosure Schedule lists and describes briefly
all real property leased or subleased to the Company. The Shareholders have
delivered to the Buyer correct and complete copies of the leases and subleases
listed in Section 5(k) of the Disclosure Schedule (as amended to date). With
respect to each lease and sublease listed in Section 5(k) of the Disclosure
Schedule:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby;
(iii) no party to the lease or sublease is in breach
or default, and no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iv) no party to the lease or sublease has
repudiated any provision thereof;
(v) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(vi) the Company has not received a notice from the
lessor indicating that the lease will not be renewed at the end of its current
term for any additional terms provided for in the lease;
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(vii) the term of the lease will continue for a
minimum of six months past the Closing Date;
(viii) with respect to each sublease, the
representations and warranties set forth in subsections (i) through (vii) above
are true and correct with respect to the underlying lease;
(ix) the Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(x) all facilities leased or subleased thereunder
have received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations;
(xi) all facilities leased or subleased thereunder
are supplied with utilities and other services necessary for the operation of
said facilities; and
(xii) the Shareholders are not aware of any pending
or threatened foreclosure or other enforcement proceedings relating to the real
property underlying the leases or subleases set forth in Section 5(k) of the
Disclosure Schedule that could result in the Company's loss of possession of
such real property.
(l) INTELLECTUAL PROPERTY.
(i) Section 5(l)(i) of the Disclosure Schedule list
the Intellectual Property owned by the Company. To the Shareholders' Knowledge,
the Company owns or has the right to use pursuant to license, sublicense,
agreement, or permission in writing all Intellectual Property necessary for the
operation of the businesses of the Company as presently conducted and as
presently proposed to be conducted. To the Shareholders' Knowledge, each item
of Intellectual Property owned or used by the Company immediately prior to the
Closing hereunder will be owned or available for use by the Company on
identical terms and conditions immediately subsequent to the Closing hereunder.
To the Shareholders' Knowledge, the Company has taken all necessary action to
maintain and protect each item of Intellectual Property that it owns or uses.
(ii) To the Shareholders' Knowledge, the Company has
not interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and none of
the Shareholders and the directors and officers (and employees with
responsibility for Intellectual Property matters) of the Company has ever
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that the Company must license or refrain from using any Intellectual Property
rights of any third party). To the Knowledge of Shareholders and the Company,
no third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of the
Company.
(iii) Section 5(l)(iii) of the Disclosure Schedule
identifies each patent or registration which has been issued to the Company
with respect to any of its Intellectual Property, identifies each pending
patent application or application for registration which the Company has made
with respect to any of its Intellectual Property, and identifies each license,
agreement, or other permission which the Company has granted to any third party
with respect to any of its Intellectual
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Property (together with any exceptions). The Shareholders have delivered to the
Buyer correct and complete copies of all such patents, registrations,
applications, licenses, agreements, and permissions (as amended to date) and
have made available to the Buyer correct and complete copies of all other
written documentation evidencing ownership and prosecution (if applicable) of
each such item. Section 5(l)(iii) of the Disclosure Schedule also identifies
each trade name or unregistered trademark used by the Company in connection with
any of its businesses. With respect to each item of Intellectual Property
required to be identified in Section 5(l)(iii) of the Disclosure Schedule:
(A) To the Shareholders' Knowledge, the
Company possesses all right, title, and interest in and to the item, free and
clear of any Security Interest, license, or other restriction;
(B) The item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
(C) No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
which challenges the legality, validity, enforceability, use, or ownership of
the item; and
(D) The Company has never agreed to
indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Section 5(l)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that any third party owns and
that the Company uses pursuant to license, sublicense, agreement, or
permission. The Shareholders have delivered to the Buyer correct and complete
copies of all such licenses, sublicenses, agreements, and permissions (as
amended to date). With respect to each item of Intellectual Property required
to be identified in Section 5(l)(iv) of the Disclosure Schedule:
(A) The license, sublicense, agreement, or
permission covering the item is legal, valid, binding, enforceable, and in full
force and effect;
(B) The license, sublicense, agreement, or
permission will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby;
(C) No party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(D) No party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
(E) With respect to each sublicense, the
representations and warranties set forth in subsections (A) through (D) above
are true and correct with respect to the underlying license;
(F) The underlying item of Intellectual
Property is not subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(G) No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
which challenges the legality, validity, or enforceability of the underlying
item of Intellectual Property; and
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(H) The Company has never granted any
sublicense or similar right with respect to the license, sublicense, agreement,
or permission.
(v) To the Knowledge of Shareholders and the
Company, the Company will not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of its businesses as presently
conducted and as presently proposed to be conducted.
(vi) None of the Shareholders and the Company has
any Knowledge of any new products, inventions, procedures, or methods of
manufacturing or processing that any competitors or other third parties have
developed which reasonably could be expected to supersede or make obsolete any
product or process of any of the Company.
(m) TANGIBLE ASSETS. The Company owns or leases all
buildings, machinery, equipment, and other tangible assets necessary for the
conduct of its business as presently conducted and as presently proposed to be
conducted. Each such tangible asset has been maintained in accordance with
normal industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it presently
is used and presently is proposed to be used. Section 5(m) of the Disclosure
Schedule lists all material tangible assets owned by the Company.
(n) EQUIPMENT FORMERLY OWNED BY EXCEL. Section 5(n) of the
Disclosure Schedule identifies all of the assets (the "Excel Equipment.")
formerly owned by Excel Equipment L.L.C. ("Excel"). Ownership of and title to
the Excel Equipment were duly transferred to the Company on or about December
31, 1998. The Excel Equipment is free and clear of any Security Interest. The
Excel Equipment consists of all of the equipment that the Company leased from
Excel or otherwise enjoyed the use of immediately prior to the transfer of the
Excel Equipment to the Company.
(o) INVENTORY. The inventory of the Company shown on the Most
Recent Balance Sheet consists of raw materials and supplies, manufactured and
purchased parts, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or manufactured,
and none of which is slow-moving, obsolete, damaged, or defective, subject only
to the reserve for inventory writedown set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice
of the Company.
(p) CONTRACTS. Section 5(p) of the Disclosure Schedule lists
all the material contracts and other agreements to which the Company is a
party. The Shareholders have delivered to the Buyer a correct and complete copy
of each written agreement listed in Section 5(p) of the Disclosure Schedule (as
amended to date). With respect to each such agreement: (A) the agreement is
legal, valid, binding, enforceable, and in full force and effect; (B) the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) to the Shareholders' Knowledge, no party
is in breach or default, and no event has occurred which with notice or lapse
of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) to the
Shareholders' Knowledge, no party has repudiated any provision of the
agreement. Section 5(p) of the Disclosure Schedule lists each currently
outstanding bid or proposal for business submitted by the Company in excess of
$1,000,000.
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(q) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of the Company are reflected properly on the Most Recent Balance
Sheet in accordance with GAAP, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and, will be collected in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the
Company.
(r) POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the Company.
(s) INSURANCE. Section 5(s) of the Disclosure Schedule
includes a true, correct and complete list of all policies of insurance
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the Company is
a party. Genuine and complete copies of each of the insurance policies listed
in Section 5(s) of the Disclosure Schedule have been provided to the Buyer.
With respect to each such insurance policy, to the Shareholders' Knowledge: (A)
the policy is legal, valid, binding, enforceable, and in full force and effect;
(B) the policy will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither the Company nor any other party
to the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; (D)
neither the Company, any ERISA Affiliate nor the Buyer shall be subject to a
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability and (E) to Shareholders' or the Company's Knowledge, no
party to the policy has repudiated any provision thereof. To the Shareholders'
Knowledge, the Company has been fully covered at all times during the past 5
years by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period. Section
5(s) of the Disclosure Schedule describes any self-insurance arrangements
affecting the Company.
(t) LITIGATION. Section 5(t) of the Disclosure Schedule sets
forth each instance in which the Company (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party, or
to the Knowledge of Shareholders or the Company, is threatened to be made a
party to any claim, action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. Except as set
forth in Section 5(t) of the Disclosure Schedule, there is no other pending, or
to the knowledge of Shareholders or the Company, threatened claim, arbitration
proceeding, action, suit, investigation or other proceeding against or
involving the Company or any property or rights of the Company or any officer
or director or the Company. To the Shareholders' Knowledge, none of the
actions, suits, proceedings, hearings, and investigations set forth in Section
5(t) of the Disclosure Schedule could have a Material Adverse Effect on the
business, financial condition, operations, results of operations, or future
prospects of the Company. Neither the Shareholders nor the directors and
officers (and employees with responsibility for litigation matters) of the
Company has any reason to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against the Company.
(u) COMMITMENTS AND WARRANTIES. All services provided by the
Company have been performed in conformity with all applicable contractual
commitments (written or oral) and all express and implied warranties (written
or oral), and the Company has no Liability and, to the Knowledge of the
Shareholders and the Company, there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability) in connection with any
such services. Section 5(u) of the Disclosure Schedule includes copies of the
standard forms of agreement entered into between the Company and its customers.
The Company has not entered into any written or oral agreements with any of its
customers that include guaranties, warranties, or indemnity provisions other
than those included in the agreements included as part of Section 5(u) of the
Disclosure Schedule.
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Neither the Company nor the Shareholders has received notice (written
or oral) from any of its customers stating that the customer intends to reduce
the volume of business that it currently conducts with the Company or to cease
doing business with the Company.
(v) LIABILITY FOR SERVICES PERFORMED. The Company has no
Liability (and, to Shareholders' Knowledge, there is no Basis for any present
or future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability) arising out
of any injury to individuals or property as a result of or in connection with
any services provided by the Company.
(w) EMPLOYEES. To the Knowledge of the Shareholders or the
Company, no executive, key employee, or group of employees has any plans to
terminate employment with the Company. The Company is not currently, nor at any
prior time has been, a party to or bound by any collective bargaining
agreement, nor has the Company experienced any strikes, contractual grievances,
claims of unfair labor practices, or other collective bargaining disputes. The
Company has not committed any unfair labor practice. Neither the Shareholders
nor the Company have any Knowledge of any organizational effort presently being
made or threatened by or on behalf of any labor union with respect to employees
of the Company. To the Knowledge of the Shareholders and the Company, the
Company has not experienced any material employment dispute with any employee.
(x) EMPLOYEE BENEFITS.
(i) Section 5(x) of the Disclosure Schedule lists
each Employee Benefit Plan that the Company or any ERISA Affiliate maintains,
contributes to, or is required to contribute to or under which the Company or
any ERISA Affiliate has any Liability.
(A) Each such Employee Benefit Plan (and
each related trust, insurance contract, or fund) complies in form and in
operation in all respects with the applicable requirements of ERISA, the Code,
and other applicable laws.
(B) All required reports and disclosures
(including Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's, and
Summary Plan Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Section 4980B have been met with
respect to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(C) All contributions (including all
employer contributions and employee salary reduction contributions) which are
due have been paid to each such Employee Benefit Plan which is an Employee
Pension Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such Employee
Pension Benefit Plan or accrued in accordance with the past custom and practice
of the Company and in accordance with GAAP. All premiums or other payments for
all periods ending on or before the Closing Date have been paid with respect to
each such Employee Benefit Plan which is an Employee Welfare Benefit Plan.
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(D) Each such Employee Benefit Plan which
is an Employee Pension Benefit Plan now meets and at all times since inception
have met the requirements of a "qualified plan" under Code Section 401(a) and
has received, within the last two years, a favorable determination letter from
the Internal Revenue Service.
(E) As of the Closing Date, the market
value of assets under each such Employee Benefit Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer Plan) will equal or exceed
the present value of all vested and nonvested Liabilities thereunder determined
in accordance with PBGC methods, factors, and assumptions applicable to an
Employee Pension Benefit Plan terminating on such date.
(F) The Shareholders have delivered to the
Buyer correct and complete copies of the plan documents and summary plan
descriptions including all amendments thereto, the most recent determination
letter received from the Internal Revenue Service, the three most recent Form
5500 Annual Reports (including all schedules thereto), the three most recent
annual premium payment forms filed with the PBGC, and all related trust
agreements, insurance contracts, and other funding agreements which implement
each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that
the Company or any ERISA Affiliate maintains, contributes to, or is required to
contribute to or under which the Company or any ERISA Affiliate has any
liability:
(A) No such Employee Benefit Plan which is
an Employee Pension Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a Reportable Event as
to which notices would be required to be filed with the PBGC. No proceeding by
the PBGC to terminate any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or threatened.
(B) There have been no Prohibited
Transactions with respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of any
such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to any such Employee Benefit Plan (other than
routine claims for benefits) is pending or threatened. Neither the Shareholders
nor the Company has any Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(C) Neither the Company nor any ERISA
Affiliate has incurred, and none of the Shareholders and the directors and
officers (and employees with responsibility for employee benefits matters) of
the Company has any reason to expect that the Company or any ERISA Affiliate
will incur, any Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal Liability) or under
the Code with respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(iii) Neither the Company nor any ERISA Affiliate
contributes to, ever has contributed to, or ever has been required to
contribute to any Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(iv) Neither the Company nor any ERISA Affiliate
maintains or contributes to, or has ever been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life insurance or
other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
Code Section 4980B).
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(y) GUARANTIES. The Company is not a guarantor or otherwise
is liable for any Liability or obligation (including indebtedness) of any other
Person.
(z) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) The Company and its Affiliates have complied and
are in compliance with all Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the
foregoing, the Company and its Affiliates have obtained and complied with, and
are in compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental, Health, and Safety Requirements for the
occupation of its facilities and the operation of its business; a list of all
such permits, licenses and other authorizations is set forth on the attached
Disclosure Schedule.
(iii) Neither the Company nor its Affiliates has
received any written or oral notice, report or other information regarding any
actual or alleged violation of Environmental, Health, and Safety Requirements,
or any liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory, remedial
or corrective obligations, relating to any of them or its facilities arising
under Environmental, Health, and Safety Requirements.
(iv) None of the following exists at any property or
facility owned or operated by the Company: (1) underground storage tanks, (2)
asbestos-containing material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(v) None of the Company or its Affiliates has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without limitation
any hazardous substance, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a manner
that has given or would give rise to liabilities, including any liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental, Health, and Safety Requirements.
(vi) Neither this Agreement nor the consummation of
the transaction that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification to or consent of
government agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(vii) Neither the Company nor its Affiliates has,
either expressly or by operation of law, assumed or undertaken any liability,
including without limitation any obligation for corrective or remedial action,
of any other Person relating to Environmental, Health, and Safety Requirements.
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(viii) No facts, events or conditions relating to
the past or present facilities, properties or operations of the Company or any
of its Affiliates will prevent, hinder or limit continued compliance with
Environmental, Health, and Safety Requirements, give rise to any investigatory,
remedial or corrective obligations pursuant to Environmental, Health, and
Safety Requirements (whether on-site or off-site), or give rise to any other
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise)
pursuant to Environmental, Health, and Safety Requirements, including without
limitation any relating to onsite or offsite releases or threatened releases of
hazardous materials, substances or wastes, personal injury, property damage or
natural resources damage.
(aa) CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY. Except
as set forth in Section 5(aa) of the Disclosure Schedule, neither the
Shareholders, their respective Affiliates, any director or employee of the
Company, or any relatives of the Shareholders, or any person living in the same
residence as such persons, has been involved in any business arrangement or
relationship with the Company within the past 12 months, and neither the
Shareholders nor their respective Affiliates nor any of such other persons own
leases, licenses, or otherwise has any interest in any asset, tangible or
intangible, which is used in the business of the Company or any contract, lease
or commitment to which the Company is a party. The Company is not indebted to
any officer, director or employee of the Company for any liability or
obligation. No officer, director or employee of the Company is indebted to the
Company for any liability or obligation.
(bb) CUSTOMERS AND SUPPLIERS. To the Shareholders' Knowledge,
no purchase order or commitment of the Company is in excess of normal
requirements, nor are prices provided therein in excess of current market
prices for the products or services to be provided thereunder. No material
supplier of the Company has advised the Company in writing within the past year
that it will stop, or decrease the rate of, supplying materials, products or
services to the Company and no material customer of the Company has advised the
Company in writing within the past year that it will stop, or decrease the rate
of buying materials, products or services from the Company. Section 5(ab) of
the Disclosure Schedule sets forth a list of (a) each customer that accounted
for more than 5% of the consolidated revenues of the Company during the last
full fiscal year or the interim period through the date of the Most Recent
Financial Statements and the amount of revenues accounted for by such customer
during each such period and (b) each supplier that is the sole supplier of any
significant product or component to the Company. To the Shareholders'
Knowledge, the consummation of the transactions contemplated hereby will not
have a Material Adverse Effect on the Company's relationship with any customer
or supplier listed in Section 5(ab) of the Disclosure Schedule.
6. REPRESENTATIONS AND WARRANTIES CONCERNING THE BUYER AND ORIUS. The
Buyer and Orius, jointly and severally, represent and warrant to the
Shareholders that the statements contained in this Section 6 are correct and
complete as of the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 6), except
as set forth in the Buyer Disclosure Schedule. The Buyer Disclosure Schedule
shall be effective to modify only those representations and warranties to which
the Disclosure Schedule makes explicit reference. The Buyer Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 6.
(a) ORGANIZATION OF THE BUYER. The Buyer is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Correct and complete copies of the governing
documents of the Buyer (as amended to date) are included as part of the Buyer
Disclosure Schedule. The manager and executive officers of the Buyer and the
names and titles of the executive officers and directors of Orius are set forth
on the Buyer Disclosure Schedule.
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(b) ORGANIZATION OF ORIUS. Orius is a corporation validly
existing and in good standing under laws of the State of Delaware. Each
Affiliate and Subsidiary of Orius is validly existing and in good standing
under the laws of the state in which it was incorporated or organized. Orius,
and each of its Affiliates and Subsidiaries, is duly authorized to conduct
business under the laws of each jurisdiction where such qualification is
required, except where failure to do so is authorized or will not result in any
Material Adverse Effect. Orius and each of its Affiliates and Subsidiaries has
full corporate power and authority and all licenses, permits and authorizations
necessary to carry on the business in which it is engaged and in which it
presently proposes to engage, and to own and use the properties owned and used
by it, except where a failure to obtain any such licenses, permits and
authorizations will not have a Material Adverse Effect on Orius. Correct and
complete copies of the charter and bylaws (or similar governance documents) of
Orius are included as part of Section 6(b) of the Buyer Disclosure Schedule.
Neither Orius, nor any of its Affiliates and Subsidiaries, are in default under
or in violation of any provisions of their respective charters or bylaws (or
similar governance documents).
(c) CAPITALIZATION OF ORIUS. The entire authorized capital
stock of Orius consists of 4,700,000 shares of Common Stock and 300,000 shares
of preferred stock. The issued and outstanding capital stock of Orius is set
forth and held of record as set forth on Buyer Disclosure Schedule. All of the
issued and outstanding shares of Common Stock have been duly authorized,
validly issued, fully paid, and are nonassessable. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
Orius to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to Orius.
There are no voting trusts, proxies or other agreements or understandings with
respect to the voting of the capital stock of Orius.
(d) TITLE TO ASSETS. Orius, its Affiliates and Subsidiaries
have good and marketable title to, or a valid leasehold interest in, the
properties and assets used by them, located on their premises, or shown on the
Most Recent Orius Balance Sheet or acquired after the date thereof, free and
clear of all Security Interests (other than the Security Interests disclosed on
the face of the Most Recent Orius Balance Sheet and other Permitted Liens),
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Orius Balance Sheet, none of which disposals
are expected to have a Material Adverse Effect on Orius or any of its
Affiliates or Subsidiaries. The consummation of the transactions contemplated
by this Agreement will not affect the Company's good and marketable title to,
or valid leasehold interest in, the properties and assets described in the
preceding sentence.
(e) SUBSIDIARIES AND AFFILIATES. Section 6(e) of the Buyer
Disclosure Schedule sets forth a complete and correct list of all Subsidiaries
of North American. Except as set forth in Section 6(e) of the Buyer Disclosure
Schedule, Orius does not currently have, and has not had within the past five
years, any Affiliates or Subsidiaries, and does not own any securities of any
other Person. The issued and outstanding capital stock of each Subsidiary has
been duly authorized, validly issued and fully paid, and is nonassessable.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, preemptive rights, exchange rights, or
other contracts or commitments that could require any such Subsidiary to issue,
sell or otherwise cause to become outstanding any of its capital stock. There
are no outstanding obligations of any such Subsidiary to purchase, redeem or
otherwise acquire any capital stock or any securities convertible into or
exchangeable for such capital stock, or any options, warrants or rights to
purchase such capital stock or securities. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation or similar
rights with respect to any Subsidiary. There are no voting trusts, proxies or
other agreements or understandings with respect to the voting of the capital
stock of any such Subsidiary.
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(f) FINANCIAL STATEMENTS. Attached hereto as Exhibit J are
the following financial statements of North American (collectively the "North
American Financial Statements"): consolidated balance sheets and statements of
income, including the independent accountant's report thereon as of and for the
fiscal period ended November 28, 1998 (the "Most Recent North American Fiscal
Period End"). The North American Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of North American, its Affiliates and Subsidiaries as of such dates
and the results of operations of North American, its Affiliates and
Subsidiaries for such periods, are correct and complete in all material
respects, and are consistent with the books and records of North American, its
Affiliates and Subsidiaries (which books and records are correct and complete
in all material respects).
(g) EVENTS SUBSEQUENT TO MOST RECENT NORTH AMERICAN PERIOD
END. Since the Most Recent North American Fiscal Period End there has not
occurred any Material Adverse Effect on North American or any of its Affiliates
or Subsidiaries, and North American, its Affiliates and Subsidiaries have not
engaged in any transactions outside of the Ordinary Course of Business.
(h) TAX MATTERS. All federal, state, local and other tax
returns required to have been filed with respect to North American and any
North American Subsidiary have been filed, and payment or adequate provision
has been made for the payment of all taxes, fees, assessments and other
governmental charges which have or may become due pursuant to said returns or
to assessments received, except to the extent that such taxes, fees,
assessments and other charges are being contested in good faith by appropriate
proceedings diligently conducted and for which such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made and except where failure to file would not result in assessment of taxes,
penalties and interest in excess of $100,000 in the aggregate. There are no
agreements or waivers extending the statutory period of limitations applicable
to any federal income tax return of North American or any North American
Subsidiary for any period.
(i) INTELLECTUAL PROPERTY.
North American and each North American Subsidiary
owns or possesses all the material patents, trademarks, service marks, trade
names, copyrights, licenses, registrations, franchises, permits and rights
necessary to own and operate its properties and to carry on its business as
presently conducted and planned to be conducted by North American or a North
American Subsidiary, without known possible, alleged or actual conflict with
the rights of others.
(j) INSURANCE. All insurance policies and other bonds to
which North American or any North American Subsidiary is a party are valid and
in full force and effect. No notice has been given or claim made and no grounds
exist to cancel or avoid any of such policies or bonds or to reduce the
coverage provided thereby. Such policies and bonds provide adequate coverage
from reputable and financially sound insurers in amounts sufficient to insure
the assets and risks of North American and North American Subsidiary in
accordance with prudent business practice in the industry of the such entity.
(k) LEGAL COMPLIANCE. North American and each North American
Subsidiary are in compliance in all material respects with all applicable Laws
(other than Environmental Laws which are specifically addressed in Section
6(m)) in all jurisdictions in which any North American or any North American
Subsidiary is presently doing business except where the failure to do so would
not have a Material Adverse Effect.
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(l) EMPLOYEE BENEFITS.
(i) Each Employee Benefit Plan (and each related
trust, insurance contract, or fund) to which North American or any North
American Subsidiary is party complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code, and other applicable laws.
(ii) All required reports and disclosures (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with respect to each
such Employee Benefit Plan. The requirements of Part 6 of Subtitle B of Title I
of ERISA and of Code Section 4980B have been met with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(iii) All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before the
Closing Date which are not yet due have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and practice of the
applicable North American Subsidiary and in accordance with GAAP. All premiums
or other payments for all periods ending on or before the Closing Date have
been paid with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(iv) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan now meets and at all times since inception have
met the requirements of a "qualified plan" under Code Section 401(a) and has
received, within the last two years, a favorable determination letter from the
Internal Revenue Service.
(v) As of the Closing Date, the market value of
assets under each such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) will equal or exceed the
present value of all vested and nonvested Liabilities thereunder determined in
accordance with PBGC methods, factors, and assumptions applicable to an
Employee Pension Benefit Plan terminating on such date.
(vi) With respect to each Employee Benefit Plan that
North American or any ERISA Affiliate maintains, contributes to, or is required
to contribute to or under which North American or any ERISA Affiliate has any
liability:
(A) No such Employee Benefit Plan which is
an Employee Pension Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a Reportable Event as
to which notices would be required to be filed with the PBGC. No proceeding by
the PBGC to terminate any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or threatened.
(B) There have been no Prohibited
Transactions with respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of any
such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to any such Employee Benefit Plan (other than
routine claims for benefits) is pending or threatened. Neither the Shareholders
nor North American has any Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
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(C) Neither North American nor any ERISA
Affiliate has incurred, and none of the Shareholders and the directors and
officers (and employees with responsibility for employee benefits matters) of
North American has any reason to expect that North American or any ERISA
Affiliate will incur, any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any such Employee Benefit Plan
which is an Employee Pension Benefit Plan.
(vii) Neither North American nor any ERISA Affiliate
contributes to, ever has contributed to, or ever has been required to
contribute to any Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(viii) Neither North American nor any North American
Subsidiary maintains or contributes to, or has ever been required to contribute
to any Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Code Section 4980B).
(m) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) North American and its predecessors and each
North American Subsidiary have complied and are in compliance with all
Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the
foregoing, North American and each North American Subsidiary have obtained and
complied with, and are in compliance with, all permits, licenses and other
authorizations that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation of its facilities and the operation of its
business; a list of all such permits, licenses and other authorizations is set
forth on the attached Buyer Disclosure Schedule.
(iii) Neither North American nor its predecessors
nor any North American Subsidiary has received any written or oral notice,
report or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any liabilities or potential
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to
any of them or its facilities arising under Environmental, Health, and Safety
Requirements.
(iv) None of the following exists at any property or
facility owned or operated by North American: (1) underground storage tanks,
(2) asbestos-containing material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(v) None of North American or its predecessors nor
any North American Subsidiary has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or operated any
property or facility (and no such property or facility is contaminated by any
such substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as amended ("SWDA")
or any other Environmental, Health, and Safety Requirements.
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(vi) Neither this Agreement nor the consummation of
the transaction that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification to or consent of
government agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(vii) Neither North American nor its predecessors
nor any North American Subsidiary has, either expressly or by operation of law,
assumed or undertaken any liability, including without limitation any
obligation for corrective or remedial action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(viii) No facts, events or conditions relating to
the past or present facilities, properties or operations of North American or
any of its predecessors or North American Subsidiary will prevent, hinder or
limit continued compliance with Environmental, Health, and Safety Requirements,
give rise to any investigatory, remedial or corrective obligations pursuant to
Environmental, Health, and Safety Requirements (whether on-site or off-site),
or give rise to any other liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or offsite
releases or threatened releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources damage.
(n) DISCLOSURE. Neither this Agreement nor any of the
exhibits, attachments, written statements, documents, certificates or other
items prepared for or supplied to the Shareholders by Orius with respect to the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make each
statement contained herein or therein not misleading. There is no fact which
Orius has not disclosed to the Shareholders herein and of which Orius or any of
the its officers or directors is aware and which could be anticipated to have a
Material Adverse Effect on Orius after the Closing.
7. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his or its best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions
set forth in Section 9 below).
(b) NOTICES AND CONSENTS. The Shareholders will cause the
Company to give any notices to third parties, and will cause the Company to use
its best efforts to obtain any third party consent required in connection with
the matters referred to in Section 5(d) above. Each of the Parties will (and the
Shareholders will cause the Company to) give any notices to, make any filings
with, and use its best efforts to obtain any authorizations, consents, and
approvals of governments and governmental agencies in connection with the
matters referred to in Section 3(b) and Section 5(d) above.
(c) OPERATION OF BUSINESS. Except as set forth on Schedule
7(c) hereto and Section 5(g) of the Disclosure Schedule, the Shareholders will
not cause or permit the Company to engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, the Shareholders will not cause or
permit the Company to (i) declare, set aside, or pay any dividend or make any
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distribution with respect to its capital stock or redeem, purchase, or
otherwise acquire any of its capital stock or (ii) otherwise engage in any
practice, take any action, or enter into any transaction of the sort described
in Section 5(g) above. The Shareholders will immediately notify the Buyer in
writing with respect to any proposed capital expenditures in excess of $50,000.
(d) PRESERVATION OF BUSINESS. Except as provided on Schedule
7(c), the Shareholders will cause the Company to keep its business and
properties substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers, and employees.
(e) FULL ACCESS. The Shareholders will permit, and will cause
the Company to permit, representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the Company. At the request of the Buyer, Shareholders will
permit, and will cause the Company to permit, the Buyer's lenders, and their
respective counsel, to have the same access as permitted to the Buyer in
accordance with the immediately preceding sentence.
(f) NOTICE OF DEVELOPMENTS. The Shareholders will give prompt
written notice to the Buyer of any breach of any of the representations and
warranties in Section 5 above. Each Party will give prompt written notice to
the others of any breach of any of his or its own representations and
warranties in Section 3 above. No disclosure by any Party pursuant to this
Section 7(f), however, shall be deemed to amend or supplement the Buyer
Disclosure Schedule or the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. The Shareholders will not (and the
Shareholders will not cause or permit the Company to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of the Company (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate
in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing. The
Shareholders will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
(h) NO TERMINATION OF SHAREHOLDERS' OBLIGATION BY SUBSEQUENT
INCAPACITY. Shareholders specifically agrees that his obligations hereunder,
including, without limitation, the obligations pursuant to Section 10 hereof,
shall not be eliminated by his or her death or incapacity.
8. POST-CLOSING COVENANTS. The Parties agree as follows with respect
to the period following the Closing.
(a) GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Section 10 below). The Shareholders acknowledge and agree that
from and after the Closing the Buyer will be entitled to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort relating to the Company.
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(b) LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending Party (unless
the contesting or defending Party is entitled to indemnification therefor under
Section 10 below).
(c) TRANSITION. The Shareholders will not take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of the Company from
maintaining the same business relationships with the Company after the Closing
as it maintained with the Company prior to the Closing. The Shareholders will
refer all customer inquiries relating to the businesses of the Company to the
Buyer from and after the Closing.
(d) INDEPENDENT ACCOUNTANTS. After the Closing, Shareholders
shall (i) use reasonable efforts to cause the Company's past and present
independent auditors and accounting personnel to make available to the Buyer
and its representatives, at Buyer's sole cost and expense, all financial
information, including the right to examine all working papers pertaining to
audits or reviews previously or hereafter made by such auditors, and (ii)
provide such cooperation as the Buyer and its representatives may request in
connection with any audit or review of the Company that the Buyer may direct
its representatives to make. Without limiting the generality of the foregoing,
the Shareholders agree that they will cooperate with, and cause the Company's
past and present independent auditors, accounting personnel and other necessary
persons to cooperate with the Buyer, at Buyer's sole cost and expense, in the
preparation of any documents filed by the Buyer with the U.S. Securities and
Exchange Commission in connection with an offering of securities, to the extent
information about the Company is required therein.
(e) TAX MATTERS. The Shareholders covenant and agree not to
take any action, or fail to take any action, with respect to Taxes, that would
have an adverse effect on the Buyer on or after the Closing Date, including,
without limitation, amending or otherwise supplementing any Tax Return or
report of the Company with respect to any period prior to the Closing Date
without the consent of the Buyer. If any taxing authority conducts any audit or
investigation relating to the Company prior to the Closing Date, the Buyer may,
in its sole election, have the right to supervise such audit or investigation
and provide any response required in connection therewith.
(f) STOCK OPTIONS. Orius has adopted a stock incentive plan
(the "Stock Incentive Plan") pursuant to which stock options and other forms of
stock-based compensation may be awarded to the officers, directors and
employees of the Buyer and its subsidiaries. The key employees of the Company
shall be eligible to receive awards under the Stock Incentive Plan of options
to acquire shares of the Orius Common Stock. Within 60 days of the Closing, the
officers of the Company shall recommend to the Stock Option Committee under the
Stock Incentive Plan the terms, conditions and amounts of awards to be granted
and the identity of the key employees of the Company to receive such awards,
however, all such awards, and the terms and conditions thereof, shall be
finally determined by the Stock Option Committee.
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(g) AUDITED FINANCIAL STATEMENTS. Shareholders shall cause
the Company's auditors to cooperate with Buyer's auditors in the preparation of
audited consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow including the audit report thereon as of
and for the three-year period ending December 31, 1998 for the Company. All
costs associated with the preparation and audit of the Company's December 31,
1998 financial statements shall be paid by Buyer.
(h) NON-DISPARAGEMENT. Shareholders agree that they shall not
knowingly make or cause to be made, directly or indirectly, orally or in
writing, any disparaging statements or remarks about the Company, Buyer, Orius
or their respective officers, employees, Affiliates and services. Buyer and
Orius agree that they shall not knowingly make or cause to be made, directly or
indirectly, orally or in writing, any disparaging statements or remarks about
the Shareholders. The restrictions of this section do not apply to any
statements or remarks made or caused to be made, directly or indirectly, prior
to the effective date of this Agreement. The restrictions herein shall not
apply to any statements or remarks made in connection with any judicial
proceeding or pursuant to any court order or subpoena.
9. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of
the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) The representations and warranties set forth in
Section 3 and Section 5 above shall be true and correct in all material
respects at and as of the Closing Date and there shall not have occurred any
Material Adverse Effect;
(ii) The Shareholders and the Company shall have
performed and complied with all of his covenants hereunder in all material
respects through the Closing;
(iii) The Company shall have procured all of the
third party consents specified in Section 7(b) above;
(iv) No action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction, or before any arbitrator,
wherein an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, (C) affect adversely the right of the
Company to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(v) The Shareholders shall have delivered to the
Buyer a certificate, to the effect that each of the conditions specified above
in Section 9(a)(i) through 9(a)(iv) is satisfied in all respects;
(vi) The Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3(b) and Section 5(d) above;
(vii) The Buyer shall have received from counsel to
the Shareholders an opinion substantially in form and substance as set forth in
Exhibit G attached hereto, addressed to the Buyer and dated as of the Closing
Date;
(viii) P. Xxxxxxxx Xxxxxxx shall have entered into
the Employment Agreement;
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(ix) The Shareholders shall have entered into the
Noncompetition Agreements;
(x) The Shareholders shall have entered into the
Leases;
(xi) Xxxxx Xxxxxxx and P. Xxxxxxxx Xxxxxxx, as
trustee of the Xxxx X. Xxxxxxx Family Trust, shall have released the Company
from its obligations under promissory notes issued to them in connection with
the redemption of preferred stock.
(xii) All actions to be taken by the Shareholders in
connection with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyer.
(xiii) At least five business days prior to the
Closing, the Buyer shall have received a balance sheet prepared by the Company,
estimating the assets, liabilities and shareholders' equity of the Company as
of the Closing Date (the "Estimated Closing Balance Sheet"). The Estimated
Closing Balance Sheet shall be prepared in accordance with the method set forth
in Section 11(a) for the preparation of the Draft Closing Balance Sheet and
will reflect: (A) Shareholders' Equity at least five million three hundred
thousand dollars ($5,300,000); and (B) cash of at least eight hundred thousand
dollars ($800,000). The Buyer shall not have objected to, challenged or
otherwise repudiated any of the amounts included in the Estimated Closing
Balance Sheet.
(xiv) The Buyer shall have received an appraisal,
from an appraiser selected by the Buyer, that states that the fair market value
of the Company's tangible assets listed in Section 5(m) of the Disclosure
Schedule is at least equal to the book value of such assets reflected in the
Estimated Closing Balance Sheet.
(xv) The Company shall have delivered evidence of
its qualification to do business in each jurisdiction where it is so qualified
and a certificate of good standing issued by the Secretary of State of each
such jurisdiction demonstrating that the Company is in good standing in that
jurisdiction;
(xvi) Each of the Shareholders shall have been made
parties to the Stockholders' Agreement;
(xvii) The board of directors of the Buyer shall
have approved the consummation of the transaction contemplated by this
Agreement;
(xviii) All actions to be taken by the Shareholders
in connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer; and
(xix) All of the transactions contemplated by the
Exchange Agreements shall have been consummated.
Buyer may waive any condition specified in this Section 9(a) if it executes a
writing so stating at or prior to the Closing.
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(b) CONDITIONS TO OBLIGATION OF THE SHAREHOLDERS. The
obligation of the Shareholders to consummate the transactions to be performed
by them in connection with the Closing is subject to satisfaction of the
following conditions:
(i) The representations and warranties set forth in
Section 4 and Section 6 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) The Buyer shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing;
(iii) No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction, or before any
arbitrator, wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) The Buyer shall have delivered to the
Shareholders a certificate to the effect that each of the conditions specified
above in Section 9(b)(i)-9(b)(iii) is satisfied in all respects;
(v) The Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3(b) and Section 5(d) above;
(vi) The Shareholders shall have received from
counsel to the Buyer an opinion substantially, in form and substance, as set
forth in Exhibit H attached hereto, addressed to the Shareholders, and dated as
of the Closing Date;
(vii) The Buyer shall have entered into the
Employment Agreements;
(viii) The Buyer shall have entered into the Leases;
(ix) The Shareholders shall have been released from
their personal obligations relative to any outstanding performance or payment
bonds of the Company or the Buyer shall have made such other arrangements as
may be mutually acceptable to the Shareholders and the Buyer to fully indemnify
the Shareholders with respect to any such obligations.
(x) On or before 5:00 p.m. MST on February 22, 1999,
the Shareholders shall have completed their due diligence investigation of the
Buyer and Orius;
(xi) All actions to be taken by the Buyer in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Shareholders; and
(xvii) All of the transactions contemplated by the
Exchange Agreements shall have been consummated.
The Shareholders may waive any condition specified in this Section 9(b) if they
execute a writing so stating at or prior to the Closing.
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10. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties, covenants and agreements of the Parties contained
in this Agreement or in any certificate, document, instrument or agreement
delivered pursuant to this Agreement shall survive the Closing hereunder
(notwithstanding any due diligence investigations that may have been undertaken
by the damaged Party) and continue in full force and effect for three years
from the Closing Date.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(i) In the event the Shareholders breach (or in the
event that any third party alleges facts that, if true, would mean that the
Shareholders have breached) any of their representations, warranties (or any of
such representations or warranties is untrue or inaccurate), covenants and
agreements contained herein or in any certificate, document, instrument or
agreement delivered pursuant to this Agreement, and, provided that the
Indemnified Buyers (as hereafter defined) make a written claim for
indemnification against the Shareholders pursuant to Section 14(g) below within
the applicable claim period provided in Section 10(a) above, then the
Shareholders agree to indemnify the Buyer and each of its officers, directors,
employees, representatives and shareholders (the "Indemnified Buyers") from and
against the entirety of any Adverse Consequences the Indemnified Buyers may
suffer through and after the date of the claim for indemnification (including
any Adverse Consequences the Indemnified Buyers may suffer after the end of any
applicable claim period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach) during any
applicable claim period; provided, however, that the Shareholders shall not
have any obligation to indemnify the Indemnified Buyer from and against any
Adverse Consequences resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or alleged breach) of any representation or
warranty of the Shareholders contained in Section 5 above (other than those in
Section 5(a)-5(c), Section 5(j), Section 5(x) and Section 5(z)): (A) until the
Indemnified Buyer has suffered Adverse Consequences by reason of all such
breaches (or alleged breaches) in excess of a $250,000 aggregate deductible
(after which point the Shareholders will be obligated only to indemnify the
Indemnified Buyer from and against Adverse Consequences in excess of that
amount) or thereafter (B) to the extent that the Adverse Consequences the
Indemnified Buyer has suffered by reason of all such breaches exceeds a
$23,250,000 aggregate ceiling (after which point the Shareholders will have no
obligation to indemnify the Buyer from and against further such Adverse
Consequences).
(ii) The Shareholders agree to indemnify the
Indemnified Buyers from and against the entirety of any Adverse Consequences
they may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the activities of any entity which at any time has been owned, in
whole or in part, by the Company or under common control with the Company.
(iii) Without limiting any other indemnification
provided in this Section 10, the Shareholders agree to indemnify the
Indemnified Buyers from and against the entirety of any Adverse Consequences
they may suffer as a result of a taxing authority taking the position that any
former or current subcontractor of the Company should have been, at any time
prior to the Closing Date, treated as an employee of the Company.
(iv) All of the indemnification obligations of
Shareholders under this Section 10 shall be joint and several.
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(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE
SHAREHOLDERS.
(i) In the event the Buyer or Orius breaches (or in
the event any third party alleges facts that, if true, would mean the Buyer or
Orius had breached) any of their representations, warranties (or any of such
representations or warranties is untrue or inaccurate), covenants and
agreements contained herein (including, without limitation, the payment
obligations of the Company set forth on Section 5(g)-Permitted Distributions of
the Disclosure Schedule) or in any certificate, document, instrument or
agreement delivered pursuant to this Agreement, and, provided that the
Shareholders makes a written claim for indemnification against the Buyer or
Orius pursuant to Section 14(g) below within the applicable claim period
provided in 8(a) above, then the Buyer and Orius, jointly and severally, agree
to indemnify the Shareholders and each of their representatives (the
"Indemnified Shareholders") from and against the entirety of any Adverse
Consequences the Indemnified Shareholders may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences the
Indemnified Shareholders may suffer after the end of any applicable claim
period) resulting from, arising out of, relating to, in the nature of, or
caused by the breach (or the alleged breach).
(ii) The Buyer and Orius, jointly and severally,
agree to indemnify the Indemnified Shareholders from and against the entirety
of any income tax liabilities the Indemnified Shareholders may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the failure
of the delivery of the Orius Common Stock to the Shareholders as part of the
Initial Consideration to be treated as a transaction qualifying under Section
351 of the Code.
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any party
entitled to indemnification hereunder (the "Indemnified Party") with respect to
any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against any other Party (the "Indemnifying Party") under this
Section 10(d) then the Indemnified Party shall notify each Indemnifying Party
thereof in writing within 120 days of the receipt of the third party
notification.
(ii) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 30 days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse judgment with respect to,
the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice materially adverse
to the continuing business interests of the Indemnified Party, (E) the named
parties to the Third Party Claim do not include both the Indemnified Party and
the Indemnifying Party, and (F) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with Section
10(d)(ii) above, (A) the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the Third Party
Claim, (B) the Indemnified Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party
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(not to be withheld unreasonably), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section
10(d)(ii) above is or becomes unsatisfied, however, (A) the Indemnified Party
may defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any commercially
reasonable manner (and the Indemnified Party need not consult with, or obtain
any consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (C) the Indemnifying
Parties will remain responsible for any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent provided in this
Section 10.
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
make appropriate adjustments for insurance coverage and take into account the
time cost of money (using the Applicable Rate as the discount rate) in
determining Adverse Consequences for purposes of this Section 10. All
indemnification payments under this Section 10 shall be deemed adjustments to
the Consideration.
(f) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy (including without limitation any
such remedy arising under Environmental, Health, and Safety Requirements) any
Party may have with respect to the Company, or the transactions contemplated by
this Agreement, subject, in each case, to any applicable insurance coverage.
Each Shareholder hereby agrees that he will not make any claim for
indemnification against the Company by reason of the fact that he was a
director, officer, employee, or agent of the Company or was serving at the
request of the Company as a partner, trustee, director, officer, employee, or
agent of another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyer against such Shareholder
(whether such action, suit, proceeding, complaint, claim, or demand is pursuant
to this Agreement, applicable law, or otherwise).
11. POST-CLOSING ADJUSTMENT OF CONSIDERATION.
(a) Within 90 days after the Closing Date, the Buyer will
prepare and deliver to Shareholders a draft balance sheet (the "Draft Closing
Date Balance Sheet") for the Company as of the close of business on the Closing
Date (determined as though the Parties had not consummated the transactions
contemplated by this Agreement), prepared in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements; except that
the Draft Closing Date Balance Sheet shall include all of the same types of
adjustments as were made in connection with the preparation of the Most Recent
Fiscal Year End Financial Statements.
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(b) If the Shareholders have any objections to the Draft
Closing Date Balance Sheet, they will deliver a detailed statement describing
their objections to the Buyer within 30 days after receiving the Draft Closing
Date Balance Sheet. The Buyer and the Shareholders will use reasonable efforts
to resolve any such objections themselves. If the Parties do not obtain a final
resolution within 30 days after the Buyer has received the statement of
objections, however, the Buyer and Shareholders will select an accounting firm
mutually acceptable to them to resolve any remaining objections. If the Buyer
and the Shareholders are unable to agree on the choice of an accounting firm,
they will select a nationally-recognized accounting firm by lot (after
excluding their respective regular outside accounting firms). The determination
of any accounting firm so selected will be set forth in writing and will be
conclusive and binding upon the Parties. The Buyer will revise the Draft
Closing Date Balance Sheet as appropriate to reflect the resolution of any
objections thereto pursuant to this Section 11(b). The "Closing Date Balance
Sheet" shall mean the Draft Closing Date Balance Sheet together with any
revisions thereto pursuant to this Section 11(b).
(c) In the event the Parties submit any unresolved objections
to an accounting firm for resolution as provided in Section 11(b) above, any
expenses relating to the engagement of the accounting firm shall be allocated
between the Shareholders and the Buyer by the accounting firm in proportion to
the amount in dispute which is decided in favor of the challenging party.
(d) The Buyer will make the work papers and back-up materials
used in preparing the Draft Closing Date Balance Sheet available to the
Shareholders and their accountants and other representatives at reasonable
times and upon reasonable notice during (A) the preparation by the Buyer of the
Draft Closing Date Balance Sheet, (B) review by the Shareholders of the Draft
Closing Date Balance Sheet, and (C) the resolution by the Parties of any
objections thereto.
(e) If the shareholder's equity set forth in the Closing Date
Balance Sheet is less than $5,300,000, the Shareholders will pay to the Buyer
an amount equal to such deficiency (plus interest thereon at the Applicable
Rate from the Closing Date) within three business days after the date on which
the Closing Date Balance Sheet finally is determined pursuant to Section 11(b).
If the shareholder's equity set forth in the Closing Date Balance Sheet is more
than $5,300,000, then the Buyer pay to the Shareholders an amount equal to such
excess (plus interest thereon at the Applicable Rate from the Closing Date) by
the later of three business days after the date on which the Closing Date
Balance Sheet finally is determined pursuant to Section 11(b) or 90 days from
the Closing Date.
(f) If the cash set forth in the Closing Date Balance Sheet
is less than $800,000, the Shareholders will pay to the Buyer an amount equal
to such deficiency (plus interest thereon at the Applicable Rate from the
Closing Date) within three business days after the date on which the Closing
Date Balance Sheet finally is determined pursuant to Section 11(b) or, at their
election by giving notice to the Company, the Shareholders may offset any
amount payable by them pursuant to this Section 11(f) the amount payable after
the Closing by Buyer to the Shareholders pursuant to Section 2(b).
12. TAX MATTERS. The following provisions shall govern the allocation
of responsibility as between the Buyer and Shareholders for certain tax matters
following the Closing Date:
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE.
Shareholders shall prepare or cause to be prepared and timely file or cause to
be timely filed all Tax Returns for the Company for all periods ending on or
prior to the Closing Date (the "Pre-Closing Period"). Such Tax Returns shall be
prepared by treating items on such Tax Return in a manner consistent with the
past practices with respect to such items, unless otherwise required by law.
Shareholders shall permit the Buyer to review and comment on each such Tax
Return described in the preceding sentence prior to filing. The Buyer shall pay
the amounts due for Taxes of the Company with respect to the Pre-Closing
Periods, up to the amount reflected in the reserve for Tax Liability shown on
the face of the Closing Date Balance Sheet. Shareholders jointly and severally
agree that they will pay, when due, all amounts due for Taxes of the Company
with respect to Pre-Closing Periods, that exceed the reserve for Tax Liability.
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(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. The Buyer shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of the Company for Tax periods which begin before the
Closing Date and end after the Closing Date. The Buyer shall permit
Shareholders to review and comment on each such Tax Return described in the
preceding sentence prior to filing. Shareholders shall pay to the Buyer within
fifteen (15) days after the date on which Taxes are paid with respect to such
periods an amount equal to the portion of such Taxes which relates to the
portion of such Taxable period ending on the Closing Date to the extent such
Taxes are not reflected in the reserve for Tax Liability shown on the face of
the Closing Date Balance Sheet. For purposes of this Section, in the case of
any Taxes that are imposed on a periodic basis and are payable for a Taxable
period that includes (but does not end on) the Closing Date, the portion of
such Tax which relates to the portion of such Taxable period ending on the
Closing Date shall (x) in the case of any real and personal property Taxes, be
deemed to be the amount of such Tax for the entire Taxable period multiplied by
a fraction the numerator of which is the number of days in the Taxable period
ending on the Closing Date and the denominator of which is the number of days
in the entire Taxable period, and (y) in the case of any other Tax be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date. Any credits or refunds relating to a Taxable period that
begins before and ends after the Closing Date shall be taken into account as
though the relevant Taxable period ended on the Closing Date. All
determinations necessary to give effect to the foregoing allocations shall be
made in a manner consistent with prior practice of the Company.
(c) COOPERATION ON TAX MATTERS.
(i) The Buyer, the Company and Shareholders shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Company and Shareholders agree (A) to retain
all books and records with respect to Tax matters pertinent to the Company
relating to any Taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by the
Buyer or Shareholders, any extensions thereof) of the respective Taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other party so requests, the Company or Shareholders, as the case may
be, shall allow the other party to take possession of such books and records.
(ii) The Buyer and Shareholders further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
(iii) The Buyer and Shareholders further agree, upon
request, to provide the other party with all information that either party may
be required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
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(d) TAX SHARING AGREEMENTS. All tax sharing agreements or
similar agreements with respect to or involving the Company shall be terminated
as of the Closing Date and, after the Closing Date, the Company shall not be
bound thereby or have any liability thereunder.
(e) CERTAIN TAXES. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by
Shareholders when due, and Shareholders will, at their own expense, file all
necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees, and, if required by applicable law, the Buyer will, and will cause its
affiliates to, join in the execution of any such Tax Returns and other
documentation.
13. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement as provided below:
(i) The Buyer and the Shareholders may terminate
this Agreement by mutual written consent at any time prior to the Closing;
(ii) The Buyer may terminate this Agreement by
giving written notice to the Shareholders at any time prior to the Closing (A)
in the event the Shareholders have breached any representation, warranty, or
covenant contained in this Agreement in any material respect, the Buyer has
notified the Shareholders of the breach, and the breach has continued without
cure for a period of 30 days after the notice of breach or (B) if the Closing
shall not have occurred on or before February 26, 1999 by reason of the failure
of any condition precedent under Section 9(a) hereof (unless the failure results
primarily from the Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement) or (C) in any event, if the Closing shall
not have occurred on or before March 28, 1999; and
(iii) The Shareholders may terminate this Agreement
by giving written notice to the Buyer at any time prior to the Closing (A) in
the event the Buyer has breached any representation, warranty, or covenant
contained in this Agreement in any material respect, the Shareholders have
notified the Buyer of the breach, and the breach has continued without cure for
a period of 30 days after the notice of breach or (B) if the Closing shall not
have occurred on or before February 26, 1999 by reason of the failure of any
condition precedent under Section 9(b) hereof (unless the failure results
primarily from the Shareholders himself breaching any representation, warranty,
or covenant contained in this Agreement) or (C) in any event, if the Closing
shall not have occurred on or before March 28, 1999.
(b) EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 13(a) above, all rights and obligations of the
Parties hereunder shall terminate without any Liability of any Party to any
other Party.
14. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of the Buyer and the Shareholders; provided, however, that any Party
may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
best efforts to advise the other Parties prior to making the disclosure).
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(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns and the Indemnified Parties
referred to in Section 10 hereof.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the Parties
named herein and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of his or its rights, interests, or
obligations hereunder without the prior written approval of the Buyer and the
Shareholders; provided, however, that the Buyer may (i) assign any or all of
its rights and interests hereunder to one or more of its Affiliates, (ii)
designate one or more of its Affiliates to perform its obligations hereunder
(in any or all of which cases the Buyer nonetheless shall remain responsible
for the performance of all of its obligations hereunder) and (iii) without the
approval of the Shareholders, assign its rights and interests hereunder to its
lenders (and any agent for the lenders), and the Parties consent to any
exercise by such lenders (and such agents) of their rights and remedies with
respect to such collateral.
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
IF TO THE SHAREHOLDERS: COPY TO:
----------------------- --------
P. Xxxxxxxx Xxxxxxx D. Xxxx Xxxxxxxx
00000 XX Xxxxxxx Xxxx The Golden Xxxxx xx Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000 0000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx Xxxxxxx Xxxxx, XX 00000
000 XX Xxxxxxxx Xxxx 000-000-0000
Xxxx Xxxxxx, XX 00000
IF TO THE BUYER: COPY TO:
---------------- ---------
NATG Holdings, LLC. Holland & Knight LLP
0000 Xxxxx Xxx, Xxxxx 000 One Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxx Xxxxx, XX 00000 Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx Attn: Xxxx Xxxxxx, Esq.
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Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Florida without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Florida.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Shareholders. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(k) EXPENSES. Each of the Parties will bear his or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby. The Shareholders
agree that, after December 31, 1998, the Company has not borne nor will bear
any of the Shareholders' costs and expenses (including, without limitation, any
of their legal, accounting or investment banking fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in
the negotiation of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The
Exhibits, Annexes, Schedules and Certificates identified in this Agreement are
incorporated herein by reference and made a part hereof.
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(n) SPECIFIC PERFORMANCE. Each of the Parties acknowledges
and agrees that the other Parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 14(o) below), in addition to any other remedy to which they
may be entitled, at law or in equity.
(o) SUBMISSION TO JURISDICTION. Each of the Parties submits
to the jurisdiction of any state or federal court sitting in Palm Beach County,
Florida or Multnomah County, Oregon, in any action or proceeding arising out of
or relating to this Agreement and agrees that all claims in respect of the
action or proceeding shall be heard and determined in any such court. Each of
the Parties waives any objection to the maintenance of any action or proceeding
so brought and waives any bond, surety, or other security that might be
required of any other Party with respect thereto. Any Party may make service on
any other Party by sending or delivering a copy of the process to the Party to
be served at the address and in the manner provided for the giving of notices
in Section 14(g) above. Each Party agrees that a final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law or at equity. In any action or
proceeding arising out of or relating to this Agreement, the prevailing party
shall be entitled to recover reasonable attorney's fees and costs from the
other party to the action or proceeding.
(p) WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND TO
THE FULLEST EXTENT PERMITTED BY LAW WAIVE ANY RIGHTS THAT THEY MAY HAVE TO
CLAIM OR RECEIVE SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
*****
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
NATG HOLDINGS, LLC.
By:
-------------------------------------
Xxxxxxx X. Xxxxxxxx
President
ORIUS CORP.
By:
-------------------------------------
Xxxxxxx X. Xxxxxxxx
President
SHAREHOLDERS:
-----------------------------------------
P. Xxxxxxxx Xxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxx
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