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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of October 1, 1999, by
and between RailWorks Corporation, a Delaware corporation ("RW"), and X.X. Xxxxx
Co., Inc., a Texas corporation (the "Company") and Xxxxxxx Xxxx Xxxxx (the
"Stockholder").
R E C I T A L S
A. The Stockholder is the beneficial and record owner of all
of the issued and outstanding shares of Capital Stock of the Company (the
"Shares").
B. The Stockholder wishes to sell the Shares, and RW wishes to
purchase the Shares, upon the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual promises herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. As used in this Agreement
and in the related Schedules and Exhibits, the following terms have the meanings
assigned to them below in this Section 1.01. Capitalized terms used in this
Agreement and not defined below in this Section 1.01 have the meanings assigned
to them in the Recitals or elsewhere in this Agreement, as the case may be.
"Affiliate" means, as to any specified Person, any other
Person that, directly or indirectly controls, is controlled by or is under
common control with the specified Person. As used in this definition, "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person (whether through
ownership of Capital Stock of that Person, by contract or otherwise). A person
is not an Affiliate of another person solely because of familiar relationships.
"Audited Financial Statements" means the Balance Sheet of the
Company as at the Balance Sheet Date together with the Statement of Income and
Retained Earnings and Statement of Cash Flows for the year ended as of the
Balance Sheet Date as reported upon by Xxxxxxxx & Associates, P.C.
"Business Day" means a day, other than Saturday or Sunday, in
the city of New York, New York on which banks are open for business.
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"Capital Lease" means a lease of (or other agreement conveying
the right to use) real or personal property that is required to be classified
and accounted for as a capital lease under GAAP as in effect on the date of this
Agreement.
"Capital Stock" means, with respect to: (a) any corporation,
any share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in that corporation; and (b) any other
Entity, any share, membership or other percentage interest, unit of
participation or other equivalent (however designated) of an equity interest in
that Entity.
"Charter Documents" means, with respect to any Entity at any
time, in each case as amended, modified and supplemented at that time, (a) the
articles or certificate of formation, incorporation or organization (or the
equivalent organizational documents) of that Entity, (b) the bylaws or limited
liability company agreement or regulations (or the equivalent governing
documents) of that Entity and (c) each document setting forth the designation,
amount and relative rights, limitations and preferences of any class or series
of that Entity's Capital Stock or of any rights in respect of that Entity's
Capital Stock.
"Closing" means the consummation of the transactions
contemplated by this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Closing Balance Sheet" means the balance sheet of the Company
as of September 30, 1999 prepared in accordance with GAAP consistently applied
and certified by independent accountants, which shall be prepared at the cost of
Stockholder and which is attached hereto as Exhibit M.
"Closing Date" means October 1, 1999.
"Confidential Information" means, with respect to any Person,
all trade secrets and other confidential, nonpublic and/or proprietary
information of that Person, including information derived from reports,
investigations, research, work in progress, codes, marketing and sales programs,
capital expenditure projects, cost summaries, pricing formulae, contract
analyses, financial information, projections, confidential filings with any
Governmental Authority and all other confidential, nonpublic concepts, methods
of doing business, ideas, materials or information prepared or performed for, by
or on behalf of that Person.
"CPA" means the independent certified public accounting firm
then regularly retained to report upon RW's financial statements.
"Damage" to any specified Person means any cost, damage
(including any consequential, exemplary, punitive or treble damage) or expense
(including reasonable fees and actual disbursements by attorneys, consultants,
experts or other Representatives and Litigation costs) to, any fine of or
penalty on, or any liability (including loss of earnings or profits) of any
other nature of that Person.
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"Damage Claim" means, as asserted (a) against any specified
Person, any claim, demand or Litigation made or pending against that Person for
Damages to any other Person, or (b) by the specified Person, any claim or demand
of the specified Person against any other Person for Damages to the specified
Person.
"Derivative Securities" of a specified Entity means any
Capital Stock or debt security or other Indebtedness of the specified Entity or
any other Person which is convertible into or exchangeable for, or any option,
warrant or other right to acquire, (a) any unissued Capital Stock of the
specified Entity or (b) any Capital Stock of the specified Entity which has been
issued and is being held by the Entity directly or indirectly as treasury stock.
"Earn-Out Payment(s)" means the payment(s) to be made pursuant
to Exhibit D.
"Entity" means any sole proprietorship, corporation,
partnership of any kind having a separate legal status, limited liability
company, business trust, unincorporated organization or association, mutual
company, joint stock company or joint venture.
"Escrow Agreement" means the escrow agreement to be executed
and delivered on the Funding Date by RW, the Stockholder and the Escrow Agent in
the form of Exhibit E, with the blanks appropriately completed.
"Escrow Agent" means First Union National Bank.
"Exchange Act" means the Securities Exchange Act of 1934.
"Financial Statements" means the Audited Financial Statements,
the Interim Financial Statements, the Closing Balance Sheet and the other
financial statements of the Company, if any, delivered to RW prior to the
Closing Date.
"Funding Date" means the date on which the Initial Payment is
made.
"GAAP" means generally accepted accounting principles and
practices in the United States as in effect from time to time which have been or
are applied on a basis consistent with the Entity's most recent financial
statements.
"Governmental Approval" means at any time any authorization,
consent, approval, permit, franchise, certificate, license, implementing order
or exemption of, or registration or filing with, any Governmental Authority,
including any certification or licensing of a natural person to engage in a
profession or trade or a specific regulated activity, at that time.
"Governmental Authority" means (a) any national, state,
county, municipal or other government, domestic or foreign, or any agency,
board, bureau, commission, court, department or other instrumentality of any
such government, or (b) any Person having the authority under any applicable
Governmental Requirement to assess and collect Taxes for its own account.
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"Governmental Requirement" means at any time (a) any law,
statute, code, ordinance, order, rule, regulation, judgment, decree, injunction,
writ, edict, award, authorization or other requirement of any Governmental
Authority in effect at that time or (b) any obligation included in any
certificate, certification, franchise, permit or license issued by any
Governmental Authority or resulting from binding arbitration, including any
requirement under common law, at that time.
"Guaranty" means, for any specified Person, without
duplication, any liability, contingent or otherwise, of that Person guaranteeing
or otherwise becoming liable for any obligation of any other Person (the
"obligor") in any manner, whether directly or indirectly, and including any
liability of the specified Person, direct or indirect, (a) to purchase or pay
(or advance or supply funds for the purchase or payment of) that obligation or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment of that obligation, (b) to purchase property, securities or services
for the purpose of assuring the owner of that obligation of its payment or (c)
to maintain working capital, equity capital or other financial statement
condition or liquidity of the obligor so as to enable the obligor to pay that
obligation; provided, that the term "Guaranty" does not include endorsements for
collection or deposit in the ordinary course of the endorser's business.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976.
"Immediate Family Member" of the Stockholder means at any
time: (a) if the Stockholder is a natural person, any child or grandchild (by
blood or legal adoption) or spouse of the Stockholder at that time, or any child
of that spouse; and (b) if the Stockholder is an Entity whose ultimate
beneficial owner is a natural person, or a natural person and his spouse, any
child or grandchild (by blood or legal adoption) or spouse at that time (if not
then an ultimate beneficial owner of that Entity), or any child of that spouse,
of the ultimate beneficial owner or owners.
"Indebtedness" of any Person means, without duplication, (a)
any liability of that Person (i) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds, letters of
credit, banker's acceptances and similar instruments), for the deferred purchase
price of property or services or arising under conditional sale or other title
retention agreements, other than trade payables arising in the ordinary course
of business, (ii) evidenced by notes, bonds, debentures or similar instruments,
(iii) in respect of Capital Leases or (iv) in respect of an interest rate swap,
cap or collar agreement or similar arrangement, (b) any liability secured by any
Lien upon any property or assets of that Person (or upon any revenues, income or
profits of that Person therefrom), whether or not that Person has assumed that
liability or otherwise become liable for the payment thereof or (c) any
liability of others of the type described in the preceding clause (a) or (b) in
respect of which that Person has incurred, assumed or acquired a liability by
means of a Guaranty or (d) any interest or fees incurred in connection with any
liability of the types described in the preceding clause (a), (b) and (c).
"Information" means written information, including (a) data,
certificates, reports and statements (excluding Financial Statements) and (b)
summaries of unwritten agreements, arrangements, contracts, plans, policies,
programs or practices or of unwritten amendments or modifications of,
supplements to or waivers under any of the foregoing documents.
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"Interim Balance Sheet" means the Company's balance sheet, as
of the Interim Balance Sheet Date.
"Interim Balance Sheet Date" means June 30, 1999.
"Interim Financial Statements" means the Interim Balance Sheet
of the Company together with the statement of Income and Retained Earnings and
Statement of Flows from the start of the Company's current fiscal year through
the Interim Balance Sheet Date.
"Lien" means, with respect to any property or asset of any
Person (or any revenues, income or profits of that Person therefrom) (in each
case whether the same is consensual or nonconsensual or arises by contract,
operation of law, legal process or otherwise), (a) any mortgage, lien, security
interest, pledge, attachment, levy or other charge or encumbrance of any kind
thereupon or in respect thereof or (b) any other arrangement under which the
same is transferred, sequestered or otherwise identified with the intention of
subjecting the same to, or making the same available for, the payment or
performance of any liability in priority to the payment of the ordinary,
unsecured creditors of that Person, including any "adverse claim" (as defined in
Section 8-302(b) of each applicable Uniform Commercial Code) in the case of any
Capital Stock. For purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any asset that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease or other title retention agreement relating to that asset.
"Litigation" means any action, case, proceeding, claim,
grievance, suit or investigation or other proceeding conducted by or pending
before any Governmental Authority or any arbitration proceeding.
"Material" means, as applied to any Entity, material to the
business, operations, property or assets, liabilities, financial condition or
results of operations of that Entity and its Subsidiaries considered as a whole.
"Material Adverse Effect" means, with respect to the
consequences of any fact or circumstance (including the occurrence or
non-occurrence of any event) to the Company and the Company Subsidiaries
considered as a whole that such fact or circumstance has caused, is causing or
will cause, directly, indirectly or consequentially, singly or in the aggregate
with other facts and circumstances, any Damages in excess of $25,000.
"Note" means the promissory note to be given by RW in payment
of the Purchase Price substantially in the form annexed as Exhibit B.
"Organization State" means, as applied to (a) any corporation,
its state or other jurisdiction of incorporation, (b) any limited liability
company or limited partnership, the state or other jurisdiction under whose laws
it is organized and existing in that legal form, and (c) any other Entity, the
state or other jurisdiction whose laws govern that Entity's internal affairs.
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"Permitted Investments" means at the time of purchase or other
acquisition by the Company (a) obligations issued or guaranteed by the United
States of America with a remaining maturity not exceeding one year and (b)
commercial paper with maturities of not more than 270 days and a published
rating of not less than A-1 by Standard & Poor's Rating Group or P-1 by Xxxxx'x
Investor Services, Inc.
"Permitted Liens" means, as applied to the property or assets
of any Person (or any revenues, income or profits of that Person therefrom): (a)
Liens for Taxes if the same are not at the time due and delinquent; (b) Liens of
carriers, warehousemen, mechanics, laborers and materialmen for sums not yet
due; (c) Liens incurred in the ordinary course of that Person's business in
connection with workmen's compensation, unemployment insurance and other social
security legislation (other than pursuant to ERISA or Section 412(n) of the
Code); (d) Liens incurred in the ordinary course of that Person's business in
connection with deposit accounts or to secure the performance of bids, tenders,
trade contracts, statutory obligations, surety and appeal bonds, performance and
return-of-money bonds and other obligations of like nature; (e) easements,
rights-of-way, reservations, restrictions and other similar encumbrances
incurred in the ordinary course of that Person's business or existing on
property and not materially interfering with the ordinary conduct of that
Person's business or the use of that property; (f) defects or irregularities in
that Person's title to its real properties which do not materially (i) diminish
the value of the surface estate or (ii) interfere with the ordinary conduct of
that Person's business or the use of any of such properties; (g) any interest or
title of a lessor of assets being leased by any Person pursuant to any Capital
Lease disclosed in Schedule 4.19 or any lease that, pursuant to GAAP, would be
accounted for as an operating lease; and (h) Liens securing purchase money
Indebtedness disclosed in Schedule 4.18 or 4.19 so long as such Liens do not
attach to any property or assets other than the properties or assets purchased
with the proceeds of such Indebtedness.
"Person" means any natural person, Entity, estate, trust,
union or employee organization or Governmental Authority.
"Property, Plant and Equipment" means at any time any property
that then would be included and classified as property, plant and equipment (but
excluding any real property) on a consolidated balance sheet prepared in
accordance with GAAP of the Company and the Entity.
"Proprietary Rights" means (a) patents, applications for
patents and patent rights, (b) in each case, whether registered, unregistered or
under pending registration, trademark rights, tradenames, trade name rights,
corporate names, business names, trade styles or dress, service marks and logos
and other trade designations and copyrights and (c), in the case of the Company,
all agreements relating to the technology, know-how or processes used in any
business of the Company.
"Purchase Price" means the price payable by RW to the
Stockholder as consideration for the sale of the Shares and more fully described
in Section 2.02.
"Related Party Agreement" means any contract or other
agreement, written or oral, (a) to which the Company is a party or is bound or
by which any property of the Company is bound or may be subject and (b) (i) to
which the Stockholder or any of the Stockholder's Related Persons
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or Affiliates also is a party, (ii) of which the Stockholder or any of the
Stockholder's Related Persons or Affiliates is a beneficiary or (iii) as to
which any transaction contemplated thereby properly would be characterized
(without regard to the amount involved) as a related party transaction for
purposes of applying the disclosure requirements of GAAP or the SEC.
"Related Person" of the Stockholder means: (i) any Immediate
Family Member of the Stockholder, (ii) any Estate of that Stockholder or any
Immediate Family Member of the Stockholder, (iii) the trustee of any inter vivos
or testamentary trust of which all the beneficiaries are Related Persons of the
Stockholder and (iv) any Entity the entire equity interest in which is owned by
any one or more of the Stockholder and Related Persons of the Stockholder. As
used in this definition, "Estate" means, as to any natural person who has died
or been adjudicated mentally incompetent by a court of competent jurisdiction,
(i) that person's estate or (ii) the administrator, conservator, executor,
guardian or representative of that estate.
"Representatives" means, with respect to any Person, the
directors, officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents
of that Person, or any other representatives of that Person or of any of those
directors, officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents.
"Restricted Payment" means, with respect to any Entity at any
time, any of the following effected by that Entity: (a) any declaration or
payment of any dividend or other distribution, direct or indirect, on account of
any Capital Stock of that Entity or any Affiliate of that Entity or (b) any
direct or indirect redemption, retirement, purchase or other acquisition for
value of, or any direct or indirect purchase, payment or sinking fund or similar
deposit for the redemption, retirement, purchase or other acquisition for value
of, or to obtain the surrender of, any then outstanding Capital Stock of that
Entity or any Affiliate of that Entity or any then outstanding warrants, options
or other rights to acquire or subscribe for or purchase unissued or treasury
Capital Stock of that Entity or any Affiliate of that Entity.
"RW Common Stock" means the common stock, par value $0.01 per
share, of RW.
"RW Indemnified Party" means RW and its Affiliates and each of
their respective officers, directors, employees, agents and counsel.
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholder Indemnified Party" means (a) the Stockholder and
his Affiliates (other than the Company or, following the Closing, RW or any of
its Subsidiaries, if the Stockholder is an Affiliate of RW), and each of their
respective officers, directors, employees, agents and counsel and (b) prior to
the Closing, the Company and each of its officers, directors, employees, agents
and counsel who are not Stockholder Indemnified Parties within the meaning of
clause (a) of this definition.
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"Subsidiary" of any specified Person at any time, means any
Entity a majority of the Capital Stock of which is at that time owned or
controlled, directly or indirectly, by the specified Person.
"Tangible Net Worth" shall have the meaning set forth in
Exhibit C.
"Taxes" means all taxes, charges, fees, levies, or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, social security, unemployment, excise,
estimated, severance, stamp, occupation, property, or other taxes, customs
duties, fees, assessments, or charges of any kind whatsoever, including, without
limitation, all interest and penalties thereon, and additions to tax or
additional amounts imposed by any taxing authority, domestic or foreign, upon
the Company or any Tax Affiliate.
"Threshold Amount" means $700,000.
"Transaction Document" means this Agreement and the other
written agreements, documents, instruments and certificates executed pursuant to
or in connection with this Agreement, including those specified in Article VII
to be delivered at or before the Closing or on the Funding Date, all as amended,
modified or supplemented from time to time.
"Wholly Owned Subsidiary" means any corporation or other
Entity all of whose outstanding Capital Stock on a fully diluted basis is owned
and controlled, directly or indirectly through another Wholly Owned Subsidiary,
by the Company.
Section 1.02. Other Definitional Provisions.
(a) Except as otherwise specified herein, all references
herein to any Governmental Requirement defined or referred to herein, including
the Code, ERISA, the Exchange Act, Resource Conservation and Recovery Act
("RCRA"), Occupational Health and Safety Act ("OSHA") and the Securities Act,
shall be deemed references to that Governmental Requirement or any successor
Governmental Requirement, as the same may have been amended or supplemented from
time to time, and any rules or regulations promulgated thereunder.
(b) When used in this Agreement, the words "herein," "hereof"
and "hereunder" and words of similar import shall refer to this Agreement as a
whole and not to any provision of this Agreement, and the words "Article,"
"Section," "Schedule" and "Exhibit" refer to Articles and Sections of, and
Schedules and Exhibits to, this Agreement unless otherwise specified.
(c) Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes the
other gender and the neuter.
(d) The word "including" (and, with correlative meaning, the
word "include") means including, without limiting the generality of any
description preceding such word, and the words "shall" and "will" are used
interchangeably and have the same meaning.
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Section 1.03. Captions. Captions to Articles, Sections and
subsections of, and Schedules and Exhibits to, this Agreement or any other
Transaction Document are included for convenience of reference only, and such
captions shall not constitute a part of this Agreement or any other Transaction
Document for any other purpose or in any way affect the meaning or construction
of any provision of this Agreement or any other Transaction Document.
Section 1.04 Subsidiaries. Any representation, warranty,
covenant or agreement made on behalf of the Company shall be deemed to be made
by and with respect to the Company and Company Subsidiaries. The Company shall
cause each Company Subsidiary to comply with the representations, warranties,
covenants and agreements of this Agreement, as if, and to the same effect, each
Company Subsidiary were a party hereto.
ARTICLE II
SALE AND PURCHASE OF SHARES
Section 2.01 Sale of Shares. At the Closing, (i) Stockholder
shall sell the Shares to RW, and shall deliver to RW stock certificates
representing such Shares, duly endorsed in blank or with duly executed stock
powers attached, in proper form for transfer, with all signatures guaranteed and
with appropriate transfer stamps, if any, affixed at the expense of the
Stockholders, free and clear of any Lien or other encumbrance; and (ii) RW shall
purchase the Shares for the Purchase Price.
Section 2.02 Purchase Price, and Payment for the Shares.
(a) The Purchase Price shall be in the aggregate:
(i) $20,400,000, payable to the Stockholder by
federal funds wire transferred on the Funding Date (the "Initial Payment");
(ii) The issuance to the Stockholder at the Funding
of 300,000 shares of RW Common Stock.
(iii) $3,000,000 by the execution and delivery at the
Funding of the Note; and
(iv) The Earn-Out Payments.
(b) (i) All of the shares of RW Common Stock otherwise
issuable to the Stockholder, shall be issued, and delivered at the Closing, to
the Escrow Agent to be held in escrow and be distributed in accordance with the
Escrow Agreement.
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(ii) $100,000 of the Initial Payment shall be
delivered to the Escrow Agent to be held in escrow and be distributed in
accordance with the Escrow Agreement and the Remediation Agreement.
(iii) The amount of interest due on the Republic Note
(as defined on Exhibit C) shall be paid out of the Initial Payment directly to
Republic Bank.
(c) If, prior to the delivery of (i) any payment due in
accordance with the Note, or, (ii) any Earn-Out Payment, RW shall make one or
more claims against the Stockholder for a breach of any representation,
warranty, covenant or agreement under this Agreement, then RW shall make said
payments to the Escrow Agent to be held in an escrow account (the "Escrow
Account") pursuant to the Escrow Agreement up to a cumulative amount not to
exceed 125% of the total amount of any such claims. RW shall also notify
Stockholder that such payment has been made to the Escrow Agent and Stockholder
shall thereupon endorse such fact upon the Note if applicable. At such time or
times as RW shall make any such payments to the Escrow Agent, RW shall notify
the Escrow Agent in writing of the existence and nature of RW claim, and the
Escrow Agent shall not release the money so paid until instructed to do so in
writing by RW and Stockholder, or until directed to do so by a final,
unappealable order of a court of competent jurisdiction.
Section 2.03. Funding. The Funding shall take place at the
offices of Xxxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00
a.m. local time, on a date, not more than 10 Business Days nor less than 5
Business Days after the satisfaction of the conditions precedent set forth in
Article VII. The Funding Date shall be specified in a notice given by RW to
Stockholder within 3 Business Days of the satisfaction or waiver of such
conditions. The Funding may occur at such other time and place as RW and the
Stockholder shall mutually agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE STOCKHOLDER
AND THE SHARES
The Stockholder represents and warrants to, and agrees with,
RW that all the following representations and warranties in this Article III are
as of the date of this Agreement, and will be on the Funding Date, true and
correct:
Section 3.01. Investment Representations.
(a) the Stockholder will acquire the shares of RW Common Stock
to be issued pursuant to Article II to the Stockholder solely for the
Stockholder's account, for investment purposes only and with no current
intention or plan to distribute, sell or otherwise dispose of any of those
shares in connection with any distribution;
(b) the Stockholder is not a party to any agreement or other
arrangement for the disposition of any shares of RW Common Stock other than this
Agreement;
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(c) the Stockholder is an "accredited investor" as defined in
Rule 501(a) promulgated under the Securities Act; and
(d) the Stockholder (A) is able to bear the economic risk of
an investment in the RW Common Stock acquired pursuant to this Agreement, (B)
can afford to sustain a total loss of that investment, (C) has such knowledge
and experience in financial and business matters that he or she is capable of
evaluating the merits and risks of the proposed investment in the RW Common
Stock, (D) has had an adequate opportunity to ask questions and receive answers
from the officers of RW concerning any and all matters relating to the
transactions contemplated hereby, and (E) has asked all questions of the nature
described in preceding clause (D), and all those questions have been answered to
his or her satisfaction.
Section 3.02. Ownership and Status of Company Capital Stock.
The Stockholder is the record and beneficial owner of all of the shares of
Company Capital Stock, free and clear of all Liens.
Section 3.03. Power of the Stockholder. The Stockholder has
the full power, legal capacity and authority to execute and deliver this
Agreement and each other Transaction Document to which the Stockholder is a
party and to perform the Stockholder's obligations in this Agreement and in all
other Transaction Documents to which the Stockholder is a party. This Agreement
constitutes, and each such other Transaction Document, when executed in the
Stockholder's individual capacity and delivered by the Stockholder, will
constitute, the legal, valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law).
Section 3.04. No Conflicts or Litigation. The execution,
delivery and performance in accordance with their respective terms by the
Stockholder of this Agreement and the other Transaction Documents to which the
Stockholder is a party do not and will not (i) violate or conflict with any
Governmental Requirement, (ii) breach or constitute a default under any
agreement or instrument to which the Stockholder is a party or by which the
Stockholder or any of the shares of Company Capital Stock owned by the
Stockholder is bound, the result of which would be to prohibit or interfere with
the consummation of the transactions contemplated by this Agreement, (iii)
result in the creation or imposition of, or afford any Person the right to
obtain, any Lien upon any of the shares of Company Capital Stock owned by the
Stockholder (or upon any revenues, income or profits of the Stockholder
therefrom). No Litigation is pending or, to the knowledge of the Stockholder,
threatened to which the Stockholder is or may become a party which (i) questions
or involves the validity or enforceability of any of the Stockholder's
obligations under any Transaction Document or (ii) seeks (or reasonably may be
expected to seek) (A) to prevent or delay the consummation by the Stockholder of
the transactions contemplated by this Agreement to be consummated by the
Stockholder or (B) Damages in connection with any consummation by the
Stockholder of the transactions contemplated by this Agreement.
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Section 3.05. Preemptive and Other Rights; Waiver. Except for
the right of the Stockholder to receive shares of RW Common Stock pursuant to
this Agreement and the Transaction Documents, the Stockholder either (a) does
not own or otherwise have any statutory or contractual preemptive or other right
of any kind (including any right of first offer or refusal) to acquire any
shares of Company Capital Stock or RW Common Stock or (b) hereby irrevocably
waives each right of that type the Stockholder does own or otherwise has.
Section 3.06. Control of Related Businesses.
(a) The Stockholder is not, alone or with one or more other
Persons, the controlling Affiliate of any Entity, business or trade (other than
the Company), that (a) is engaged in any line of business which is the same as
or similar to the Business in which the Company is engaged or (b) is, or has
within the three-year period ending on the date of this Agreement, engaged in
any transaction with the Company, except for transactions in the ordinary course
of business of the Company.
(b) the terms and conditions of any agreements between the
Stockholder or an Affiliate of the Stockholder, on the one hand, and the Company
on the other hand, in any Related Party Agreement will have been amended
effective as of the Closing Date to be no less favorable to the Company than the
Company reasonably could have expected to obtain in an arms-length transaction
with a Person other than an Affiliate of the Company and (ii) the rentals or
other payments provided for in such agreements then will not exceed fair market
rentals of the property being leased or fair market value of the sum or product
being provided and such amounts shall have been previously approved in writing
by the Chief Financial Officer of RW.
Section 3.07. Representation by Counsel. The Stockholder
represents and agrees that the Stockholder has been represented by counsel of
the Stockholder's own choosing; the Stockholder has had the full right and
opportunity to consult with the Stockholder's respective attorneys and other
advisors and has availed itself of this right and opportunity; the Stockholder
has carefully read and fully understands this Agreement in its entirety and has
had it fully explained to it by such counsel; the Stockholder is fully aware of
the contents hereof and the meaning, intent and legal effect thereof; and the
Stockholder is competent to execute this Agreement and has executed this
Agreement free from coercion, duress or undue influence. The Stockholder and the
Stockholder's counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF
THE COMPANY AND THE STOCKHOLDER
The Company and the Stockholder represent and warrant to, and
agree with, RW that all the following representations and warranties in this
Article IV are as of the date of this Agreement, and will be, on the Funding
Date, true and correct:
Section 4.01. Organization, Power.
(a) the Organization State of the Company is the State of
Texas, and the Company (i) is a corporation duly organized, validly existing and
in good standing under the laws of that State and (ii) has all requisite
corporate power and authority under those laws and its Charter Documents to own
or lease and to operate its properties and to carry on its business as now
conducted.
(b) (i) the authorized Capital Stock of the Company is
comprised of 100,000 shares of Company Common Stock, of which 8,280 shares have
been issued and are now outstanding and no shares are held by the Company as
treasury shares, and (ii) there are no outstanding Derivative Securities of the
Company.
(c) The Company has elected to be treated as an S corporation
within the meaning of the Code effective in 1987 and such S-Corporation status
has not been terminated at any time prior to the Closing Date and the Company
has satisfied all criteria for S-Corporation status since the date of the
election.
Section 4.02. Qualification. The Company is authorized or
qualified to own or lease and to operate its properties or to carry on its
business as now conducted in Texas, Louisiana, Oklahoma, New Mexico and
Arkansas, and the Company does not own, lease or operate properties or carry on
business which is Material to the Company in any jurisdiction not listed herein.
Section 4.03. Authorization; Enforceability; Absence of
Conflicts; Required Consents.
(a) The execution, delivery and performance by the Company of
this Agreement and each other Transaction Document to which it is a party, and
the other transactions contemplated hereby and thereby, are within its corporate
or other power under its Charter Documents and the applicable Governmental
Requirements of its Organization State and have been duly authorized by all
proceedings, including actions permitted to be taken in lieu of proceedings,
required under its Charter Documents and the applicable Governmental
Requirements.
(b) This Agreement has been, and each of the other Transaction
Documents to which the Company is a party, when executed and delivered to RW
will have been, duly executed and delivered by the Company and is, or when so
executed and delivered will be, the legal, valid and
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binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as that enforceability may be (i) limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and (ii) subject to
general principles of equity (regardless of whether that enforceability is
considered in a proceeding in equity or at law).
(c) The execution, delivery and performance in accordance with
their respective terms by the Company of the Transaction Documents to which it
is a party have not and will not (i) violate, breach or constitute a default
under (A) the Charter Documents of the Company (B) any Governmental Requirement
applicable to the Company, or (C) any agreement that is Material to the Company,
(ii) except for any Indebtedness due to Republic National Bank that is disclosed
in the Closing Balance Sheet, result in the acceleration or mandatory prepayment
of any Indebtedness, or any Guaranty not constituting Indebtedness, of the
Company or afford any holder of any of that Indebtedness, or any beneficiary of
any of those Guaranties, the right to require the Company to redeem, purchase or
otherwise acquire, reacquire or repay any of that Indebtedness, or to perform
any of those Guaranties, (iii) cause or result in the imposition of, or afford
any Person the right to obtain, any Lien upon any property or assets of the
Company (or upon revenues, income or profits of the Company therefrom) or (iv)
result in the revocation, cancellation, suspension or Material modification,
individually or in the aggregate, of any Governmental Approval possessed by the
Company at the date hereof and necessary for the ownership or lease or the
operation of its properties or the carrying on of its business as now conducted.
(d) Except as may be required by the HSR Act or the applicable
state securities or blue sky laws, no Governmental Approvals are required to be
obtained, and no reports or notices to or filings with any Governmental
Authority are required to be made for the execution, delivery or performance by
the Company of the Transaction Documents to which it is a party, the enforcement
against the Company of its obligations thereunder or the effectuation of the
transactions contemplated thereby.
Section 4.04. Charter Documents and Records; No Violation. The
Company has caused true, complete and correct copies of the Charter Documents,
each as in effect on the date hereof, and the minute books and similar corporate
or other Entity records of the Company to be delivered to RW. No breach or
violation of any Charter Document of the Company has occurred and is continuing.
Section 4.05. No Defaults. No condition or state of facts
exists, or, with the giving of notice or the lapse of time or both, would exist,
which (a) entitles any holder of any outstanding Indebtedness, or any Guaranty,
of the Company, or a representative of that holder, to accelerate the maturity,
or require a mandatory prepayment, of that Indebtedness or Guaranty, or affords
that holder or its representative, or any beneficiary of that Guaranty, the
right to require the Company to redeem, purchase or otherwise acquire, reacquire
or repay any of that Indebtedness, or to perform that Guaranty in whole or in
part, (b) entitles any Person to obtain any Lien (other than a Permitted Lien)
upon any properties or assets of the Company (or upon revenues, income or
profits of the Company therefrom) or (c) constitutes a violation or breach of,
or a default under, any agreement that is Material to the Company by the
Company.
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Section 4.06. Company Subsidiaries. The Company does not own,
of record or beneficially, directly or indirectly through any Person, and does
not control, directly or indirectly through any Person or otherwise, any Capital
Stock or Derivative Securities of any Entity.
Section 4.07. Capital Stock of the Company. All the issued and
outstanding shares of Capital Stock of the Company (a) have been duly authorized
and validly issued in accordance with the applicable Governmental Requirements
of their issuer's Organization State and Charter Documents and (b) are fully
paid and nonassessable. The Company has not issued or sold any shares of its
outstanding Capital Stock in breach or violation of (a) any applicable statutory
or contractual preemptive rights, or any other rights of any kind (including any
rights of first offer or refusal), of any Person or (b) the terms of any of its
Derivative Securities which then were outstanding. No Person has, otherwise than
solely by reason of that Person's right, if any, to vote shares of the Capital
Stock of the Company it holds (to the extent those shares afford the holder
thereof any voting rights) any right to vote on any matter with the holders of
Capital Stock of the Company.
Section 4.08. Transactions in Capital Stock. (a) the Company
has no obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire or reacquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof; and (b) no
transaction has been effected, and no action has been taken in contemplation of
the transactions described in this Agreement, respecting the equity ownership of
the Company.
Section 4.09. Predecessor Status; Etc. The Company has no
predecessor Entity and has not been a Subsidiary or division of another
corporation or a part of an acquisition that later was rescinded during the past
five years.
Section 4.10. Related Party Agreements. Schedule 4.10 lists
all Related Party Agreements executed or in effect during the three years prior
to the Closing Date which required or shall require the Company to make payments
or render services of a value in excess of $10,000.
Section 4.11. Litigation. Except as disclosed in Schedule
4.11, no Litigation is pending or, to the knowledge of the Company or the
Stockholder, threatened to which the Company is or may become a party.
Section 4.12. Product Quality, Warranty Claims, Product
Liability. All products and services sold, rented, leased, provided or delivered
by the Company to customers on or prior to the Closing Date conform or will
conform to applicable contractual commitments, express and implied warranties,
product and service specifications and quality standards, and, to the knowledge
of the Company and the Stockholder, the Company has no liability (and there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the Company giving
rise to any liability) for replacement or repair thereof or other damages in
connection therewith. No product or service sold, leased, rented, provided or
delivered by the Company to customers on or prior to the Closing Date is subject
to any guaranty, warranty or other indemnity beyond the applicable standard
terms and conditions of sale, rent or lease. Except as set forth on Schedule
4.12, the Company has no liability (and there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand against the
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Company which might give rise to any liability) arising out of any injury to a
person or property as a result of the ownership, possession, provision or use of
any equipment, product or service sold, rented, leased, provided or delivered by
the Company on or prior to the Closing Date. All product liability claims that
have been asserted against the Company since January 1, 1994, whether covered by
insurance or not and whether litigation has resulted or not, are listed and
summarized on Schedule 4.12.
Section 4.13. Financial Statements; Disclosure.
(a) The Financial Statements (including in each case the
related schedules and notes) delivered to RW present fairly, in all Material
respects, the consolidated financial position of the Company at the respective
dates of the balance sheets included therein and the consolidated results of
their operations and their consolidated cash flows and Stockholder's or other
owner's equity for the respective periods set forth therein and have been
prepared in accordance with GAAP (except the absence of footnotes and normal
year end adjustments on the Interim Financial Statements). As of the date of any
balance sheet included in the Financial Statements, the Company did not then
have any outstanding Indebtedness to any Person or any liabilities of any kind
(including contingent obligations, tax assessments or unusual forward or
long-term commitments), or any unrealized or anticipated loss, which in the
aggregate then were Material to the Company and required to be reflected in
those Financial Statements or in the notes related thereto in accordance with
GAAP which were not so reflected.
(b) Any amounts shown due to the Stockholder or any
Stockholder Related Persons on the Closing Balance Sheet represent only salary
for the current period earned in the ordinary course of business.
(c) (i) As of the date hereof, all Information that has been
made available to RW by or on behalf of the Company prior to the date of this
Agreement in connection with the transactions contemplated hereby is, taken
together, true and correct in all Material respects (other than financial
budgets and projections) and does not contain any untrue statement of a Material
fact or omit to state a Material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which those statements were made.
(ii) All Information that is made available after the date
hereof from time to time prior to the Funding Date to RW by or on behalf of the
Company in connection with or pursuant to this Agreement, any other Transaction
Document or the transactions contemplated hereby or thereby will be, when made
available and taken together, true and correct in all Material respects (other
than financial budgets and projections) and will not contain any untrue
statement of a Material fact or omit to state a Material fact necessary in order
to make the statements contained therein not materially misleading in light of
the circumstances under which those statements are made.
(iii) All financial budgets and projections that have been
or are hereafter from time to time prepared by the Company or any of its
Representatives and made available prior to the Funding Date to RW pursuant to
or in connection with this Agreement, any other Transaction
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Document or the transactions contemplated hereby or thereby have been and will
be prepared and furnished to RW in good faith and were and will be based on
facts and assumptions that are believed by the management of the Company to be
reasonable in light of the then current and foreseeable business conditions of
the Company and represented and will represent that management's good faith
estimate of the consolidated projected financial performance of the Company
based on the information available to the officers of the Company at the time so
furnished.
Section 4.14. Compliance with Laws. To the knowledge of the
Company and the Stockholder, except as disclosed in Schedule 4.14, the Company
has, or has the benefit of, all authorizations, approvals, licenses, permits and
orders of and from all Governmental Authorities necessary to carry on the
business of the Company as it is currently being conducted, to own or hold under
lease the properties and assets they own or hold under lease and to perform all
of their respective obligations under the agreements to which any of them is a
party (collectively, the "Licenses"). To the knowledge of the Company and the
Stockholder, the Company is (and has been during the past five years) in
compliance in all Material respects with all applicable laws, regulations and
administrative orders (including, without limitation, laws relating to
employment of labor or use or occupancy of properties or any part thereof and
the Foreign Corrupt Practices Act of 1977, or any Governmental Requirements to a
similar effect) of any country, state or municipality or any subdivision thereof
to which it is subject. Schedule 4.14 lists all Licenses of the Company and all
Licenses held by any employee of the Company that are used for the benefit of
the Company. The Company has previously delivered to RW all reports, if any, and
filings made or filed by the Company during the past five years pursuant to
OSHA.
Section 4.15. Certain Environmental Matters.
(a) As used in this Section 4.15, the following terms shall
have the following meanings:
(i) "Hazardous Materials" means any dangerous, toxic or
hazardous pollutant, contaminant, chemical, waste, material or substance as
defined in or governed by any federal, state or local law, statute, code,
ordinance, regulation, rule or other requirement relating to such substance or
otherwise relating to the environment or human health or safety, including
without limitation any waste, material, substance, pollutant or contaminant that
might cause any injury to human health or safety or to the environment or might
subject the Company to any imposition of costs or liability under any
Environmental Law.
(ii) "Environmental Laws" means all applicable federal,
state, local and foreign laws, rules, regulations, codes, ordinances, orders,
decrees, directives, permits, licenses and judgments relating to pollution,
contamination or protection of the environment (including, without limitation,
all applicable federal, state, local and foreign laws, rules, regulations,
codes, ordinances, orders, decrees, directives, permits, licenses and judgments
relating to Hazardous Materials in effect as of the date of this Agreement).
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(iii) "Release" shall mean the spilling, leaking,
disposing, discharging, emitting, depositing, ejecting, leaching, escaping or
any other release or threatened release, however defined, whether intentional or
unintentional, of any Hazardous Material.
(b) The Company and the real properties listed on Schedule
4.18 (the "Real Property") are in Material compliance with all applicable
Environmental Laws.
(c) The Company has obtained, and maintained in full force and
effect, all environmental permits, licenses, certificates of compliance,
approvals and other authorizations necessary to conduct its business and own or
operate the Real Property (collectively, the "Environmental Permits"). A copy of
each such Environmental Permit shall be provided by the Company to RW prior to
the Closing. The Company has conducted its business in compliance with all terms
and conditions of the Environmental Permits. The Company has filed all reports
and notifications required to be filed under and pursuant to all applicable
Environmental Laws.
(d) Except as set forth in Schedule 4.15: (i) no Hazardous
Materials have been generated, treated, contained, handled, located, used,
manufactured, processed, buried, incinerated, deposited, stored, or released on,
under or about any part of the Company or the Real Property, (ii) the Company
and the Real Property and any improvements thereon, contain no Hazardous
Materials, asbestos, urea, lead paint, LFCs, formaldehyde, radon at levels above
natural background, polychlorinated biphenyls (PCBs) or pesticides, and (iii) no
aboveground or underground storage tanks are located on, under or about the Real
Property, or have been located on, under or about the Real Property and then
subsequently been removed or filled. If any such storage tanks exist on, under
or about the Real Property, such storage tanks have been duly registered with
all appropriate governmental entities and are otherwise in compliance with all
applicable Environmental Laws.
(e) Except as set forth in Schedule 4.15, the Company has not
received notice alleging in any manner that the Company is, or might be
potentially responsible for any Release of Hazardous Materials, or any costs
arising under or violation of Environmental Laws.
(f) No expenditure will be required in order for RW to comply
with any Environmental Laws in effect at the time of the Closing in connection
with the operation or continued operation of the business of the Company or the
Real Property in a manner consistent with the current operation thereof by the
Company.
(g) The Company and the Real Property are not and have not
been listed on the United States Environmental Protection Agency National
Priorities List of Hazardous Waste Sites, or any other list, schedule, law,
inventory or record of hazardous or solid waste sites maintained by any federal,
state or local agency.
(h) The Company has disclosed and delivered to RW all
environmental reports, files, records, citations and investigations which the
Company or Stockholder have obtained or ordered with respect to the business of
the Company and the Real Property.
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(i) No part of the business of the Company or the Real
Property has been used as a landfill, dump or other disposal, storage, transfer,
handling or treatment area for Hazardous Materials, or as a gasoline service
station or a facility for selling, dispensing, storing, transferring, disposing
or handling petroleum and/or petroleum products.
(j) No lien has been attached or filed against the Company or
the Real Property in favor of any governmental or private entity for (i) any
liability or imposition of costs under or violation of any applicable
Environmental Law or (ii) any Release of Hazardous Materials.
(k) The Company has not transported or arranged for the
transportation for storage, treatment or disposal of any Hazardous Materials to
any location which is: (i) listed on the EPA's National Priorities List of
Hazardous Waste sites; (ii) listed on the Comprehensive Environmental Response,
Compensation, Liability Information System or on any similar state list; or
(iii) the subject of any regulatory or legal action which may lead to claims
against the Company for damages to natural resources, personal injury,
remediation, clean-up costs or corrective action under any Environmental Law.
(l) The Stockholder, on behalf of itself and its successors
and assigns, hereby waives, releases and agrees not to bring against RW or the
Company any claim, demand, cause of action or proceeding, including without
limitation any cost recovery action, under any Environmental Law which results
from (a) any act or omission of the Company occurring on or prior to the Funding
Date or (b) the ownership, use, control or operation on or prior to the Funding
Date of any facility, site, area or property used in the business of the
Company.
Section 4.16. Liabilities and Obligations. Except as reflected
in the Closing Balance Sheet or as set forth on Schedules 4.12 and 4.22(b), the
Company has no liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise, whether due or to become due, whether known or unknown, and
regardless of when asserted) arising out of transactions or events heretofore
entered into, or any action or inaction, or any state of facts existing, with
respect to or based upon transactions or events heretofore occurring, except (i)
liabilities which have arisen after the Closing Sheet Date but prior to the
Funding Date in the ordinary course of business consistent with past practice
(none of which is a material uninsured liability for breach of contract, breach
of warranty, tort, infringement, claim or lawsuit), or (ii) as otherwise set
forth in Schedule 4.16.
Section 4.17. Receivables. Except as set forth in Schedule
4.17, all the accounts and notes or other advances receivable of the Company
reflected on the Closing Balance Sheet were collected, or are, in the reasonable
and good faith belief of the Company's management, collectible, in the
respective amounts so reflected, net of the reserves, if any, reflected in the
Closing Balance Sheet.
Section 4.18. Owned and Leased Real Properties.
(a) Schedule 4.18 lists and describes in all Material
respects: (i) all real properties owned by the Company and, for each of those
properties, the address thereof, the type and square footage of each structure
located thereon and the use thereof in the business of the Company; and
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(ii) all real properties of which the Company is the lessee and, for each of
those properties, the address thereof, the type and square footage of each
structure located thereon the Company is leasing and the expiration date of its
lease and the use thereof in the business of the Company.
(b) The Company has provided RW with true, complete and
correct copies of all title reports and title insurance policies owned or in the
possession of the Company and relating to any of the real properties listed as
being owned in Schedule 4.18. Except as set forth in Schedule 4.18 or those
reports and policies, and except for Permitted Liens, the Company owns in fee,
and has good, valid and marketable title to, free and clear of all Liens, each
property listed in that Section as being owned.
(c) The Company has provided RW with true, correct and
complete copies of all leases under which the Company is leasing each of the
properties listed as being leased in Schedule 4.18. Except as set forth in
Schedule 4.18, (i) each of those leases is, to the knowledge of the Company,
valid and binding on the lessor party thereto, and (ii) the lessee party thereto
has not sublet any of the leased space to any Person other than the Company.
(d) The fixtures of the Company are affixed only to one or
more of the real properties listed in Schedule 4.18 and, except as set forth in
Schedule 4.18, are maintained in working order and adequate for the purposes for
which they presently are being used or held for use, ordinary wear and tear
excepted.
Section 4.19. Owned and Leased Property, Plant and Equipment.
(a) The Company has provided RW with a list, accurate and
complete in all Material respects, of the Property, Plant and Equipment owned
and leased by the Company.
(b) Except as set forth in Schedule 4.19 and except for
Permitted Liens, the Company has good, valid and marketable title to, free and
clear of all Liens, each property listed as being owned on the list provided to
RW in accordance with Section 4.19(a).
(c) The Company has provided RW with complete copies of all
leases under which the Company is leasing each of the properties listed as being
leased on the list provided to RW in accordance with Section 4.19(a) and all
leases referred to in Section 4.21 and, except set forth in Schedule 4.19, (i)
each of those leases is, to the knowledge of the Company, valid and binding on
the lessor party thereto, and (ii) the lessee party thereto has not sublet any
of the leased property to any Person other than the Company.
(d) Except as set forth in Schedule 4.19, all the Property,
Plant and Equipment listed therein are in good working order and condition,
ordinary wear and tear excepted, and adequate for the purposes for which they
presently are being used or held for use. The Property, Plant and Equipment
owned by the Company is adequate for the operation of the Company's business at
its current scope and volume.
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Section 4.20. Proprietary Rights. The Company does not own or
have the legal right to use any Proprietary Rights. No Proprietary Rights are
necessary for the operation of the Company's business.
Section 4.21. Title to Other Properties. In each case, free
and clear of all Liens except for Permitted Liens and as set forth in Schedule
4.21, the Company has good and valid title to, or holds under a lease valid and
binding on the lessor party thereto, all its tangible personal properties and
assets (other than Property, Plant and Equipment) that individually is or in the
aggregate are Material to the Company.
Section 4.22. Commitments.
(a) Schedule 4.22(a) sets forth a complete list of each of the
following (each a "Company Commitment") to which the Company is a party or by
which any of its properties is bound and which on the Closing Date remains
executory in whole or in any part:
(i) each partnership, joint venture or cost-sharing
agreement;
(ii) each guaranty or suretyship, indemnification or
contribution agreement or performance bond;
(iii) each instrument, agreement or other obligation
evidencing or relating to Indebtedness of the Company or to money lent or to
be lent to another Person;
(iv) each contract to purchase or sell real property;
(v) each agreement with dealers or sales or
commission agents, public relations or advertising agencies, accountants or
attorneys (other than in connection with this Agreement and the transactions
contemplated hereby) involving total payments under any one such agreement
within any 12-month period in excess of $10,000 and which is not terminable
without penalty and on no more than 30 days' prior notice;
(vi) each agreement for the acquisition or provision of
services, supplies, equipment, inventory, fixtures or other property involving
more than $10,000 in the aggregate;
(vii) each contract containing any noncompetition
agreement, covenant or undertaking;
(viii) each agreement providing for the purchase from
a supplier of all or substantially all the requirements of the Company of a
particular product or service; or
(ix) to the knowledge of the Company or Stockholder, each
other agreement or commitment not made in the ordinary course of business or
that is Material to the Company.
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(b) Complete copies of all written Company Commitments, and
complete written descriptions of all oral Company Commitments, have heretofore
been delivered or made available to RW. Except as set forth in Schedule 4.22(b):
(i) there are no existing or asserted defaults, events of default or events,
occurrences, acts or omissions that, with the giving of notice or lapse of time
or both, would constitute defaults or events of default under any Company
Commitment that are Material to the Company by the Company or, to the knowledge
of the Company, any other party thereto; and (ii) no penalties have been
incurred, nor are amendments pending, with respect to the Company Commitments
Material to the Company. The Company Commitments are in full force and effect
and are valid and enforceable obligations of the Company parties thereto and, to
the knowledge of the Company, the other parties thereto in accordance with their
respective terms, and no defenses, off-sets or counterclaims have been asserted
or, to the knowledge of the Company, may be made by any party thereto (other
than by the Company), and the Company has not, as the case may be, waived any
rights thereunder, except as described in Schedule 4.22(b).
(c) Except as disclosed in Schedule 4.22(c) or contemplated
hereby or by any other Transaction Document to which the Company or the
Stockholder is a party: (i) neither the Company nor the Stockholder has received
notice of any plan or intention of any other party to any Company Commitment to
exercise any right to cancel or terminate any Company Commitment, and neither
the Company nor the Stockholder knows of any condition or state of facts which
would justify the exercise of such a right; and (ii) neither the Company nor the
Stockholder currently contemplates, or has reason to believe any other Person
currently contemplates, any amendment or change to any Company Commitment.
Section 4.23. Capital Expenditures. Without taking into
consideration the Panama Canal Project, capital expenditures currently
anticipated by the Company's management to be incurred by the Company during the
remainder of the current fiscal year is $1,000,000. Without taking into
consideration the Panama Canal Project, neither the Company nor the Stockholder
is aware of any presently existing condition or fact which would cause capital
expenditures in the two years after Closing to be greater by a Material amount
than capital expenditures in the two years prior to Closing.
Section 4.24. Inventories, Parts and Supplies. The Company has
no inventory and the Company does not (i) depend on any single vendor for its
parts and supplies the loss of which could have a Material Adverse Effect on the
Company and (ii) never has sustained a difficulty Material to the Company in
obtaining its parts and supplies.
Section 4.25. Insurance. (a) Schedule 4.25 lists, as of the
Closing Balance Sheet Date, all insurance policies then carried by the Company
and a list of all insurance loss runs and worker's compensation claims received
for the most recently ended three policy years has been provided to RW; (b) the
Company has provided RW complete copies of all insurance policies carried by the
Company which are in effect, all of which (A) have been issued by insurers
licensed to do business in the state in which the insured properties are
located, (B) currently are, and will remain without interruption through the
Closing Date, in full force and effect; (c) no insurance carried by the Company
has been canceled by the insurer during the past five years, and the Company has
never been unable to obtain coverage; and (d) except as set forth on Schedule
4.25(d), neither the Company
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nor the Stockholder has received any notice or other communication from any
issuer of any such insurance policy of any material increase in any deductibles,
retained amounts or the premiums payable thereunder, and, to the knowledge of
the Company and the Stockholder, no such increase in deductibles, retainages or
premiums is threatened.
Section 4.26. Employee Matters.
(a) (i) To the knowledge of the Company and Stockholder, no
group of the Company's employees has any plans to terminate his or its
employment; (ii) the Company has complied with all laws and Governmental
Requirements relating to the employment of labor, including provisions thereof
relating to wages, hours, benefits equal opportunity, collective bargaining and
the payment of social security and other taxes; (iii) the Company has no
Material labor relations problem pending and its labor relations are
satisfactory; (iv) except as set forth in the Schedules to this Agreement, there
are no workers' compensation claims pending against the Company nor is the
Company aware of any incidents that would give rise to such a claim; (v) to the
best knowledge of the Company, no employee of the Company is subject to any
secrecy or noncompetition agreement or any other agreement or restriction of any
kind that would impede in any way the ability of such employee to carry out
fully all activities of such employee in furtherance of the business of the
Company; (vi) no employee or former employee of the Company has any claim with
respect to any Proprietary Rights of the Company; (vii) no citation has been
issued by the Occupational Health and Safety Administration against the Company
and no notice of contest or OSHA administrative enforcement proceeding involving
the Company has been filed or is pending; (viii) no citation of the Company has
occurred and no enforcement proceeding has been initiated or is pending under
Federal or foreign immigration law; and/or (ix) the Company has not taken any
action which would constitute a "Mass Layoff" or "Plant Closing" within the
meaning of the Worker Adjustment and Retraining Notification Act or otherwise
trigger notice requirements or liability under any local or state plant closing
notice law; and, to the extent any liability should arise between the date of
this Agreement and the Funding as a result of employment actions by the Company,
the Company will be solely responsible financially therefor.
(b) Schedule 4.26 lists, as of the date set forth in the
Schedule, each employee of the Company earning in excess of $50,000 and the
position, title, remuneration (including any scheduled salary or remuneration
increases), date of employment and accrued vacation pay of each such employee.
Schedule 4.26 lists all employees who are parties to employment agreements with
the Company.
(c) Except as set forth in Schedule 4.26 (c), (1) employees of
the Company have not been and are not represented by a union, labor organization
or collective bargaining unit which was either National Labor Relations Board
("NLRB") or National Mediation Board ("NMB") certified or voluntarily recognized
or recognized under foreign law; (2) the Company has not been and is not a
signatory to a collective bargaining agreement with any union, labor
organization or collective bargaining unit; (3) no representation election
petition has been filed by employees of the Company or is pending with the NLRB
or NMB and no union organizing campaign involving employees of the Company has
occurred, is threatened, or is in progress; (4) no NLRB unfair labor practice
charges or Litigation alleging such claims have been filed or, to the knowledge
of the
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Company and the Stockholder, threatened and/or are presently pending against the
Company or any labor organization representing its employees; (5) no grievance
or arbitration demand (or "minor dispute"), whether or not filed pursuant to a
collective bargaining agreement, has been filed or, to the knowledge of the
Company and the Stockholder, threatened or is pending against the Company; (6)
no hand billing, picketing, work stoppage (sympathetic or otherwise), or other
"concerted action" involving the employees of the Company has occurred, is, to
the knowledge of the Company and the Stockholder, threatened or is in progress;
and/or (7) no breach of contract and/or denial of fair representation claim has
been filed or is pending against the Company and/or any labor organization
representing its employees.
(d) All employees of the Company are citizens of, or are
authorized in accordance with federal immigration laws to be employed in, the
United States.
(e) Except as set forth in Schedule 4.26 (e), the Company is
not a party to any agreement, or has established any policy, practice or
program, requiring any of them to make a payment or provide any other form of
compensation or benefit or vesting rights to any person performing services for
the Company that would not be payable or provided in the absence of this
Agreement or the consummation of the transactions contemplated by this
Agreement, including any parachute payment under Section 280G of the Code.
(f) The Company has no obligation or commitment to provide
medical, dental or life insurance benefits to or on behalf of any of its
employees following termination of employment or to any of its former employees
who have terminated employment except as may be required pursuant to the
continuation of coverage provisions of Section 4980B of the Code and the
applicable parallel provisions of ERISA.
Section 4.27. Compliance with ERISA, Etc.
(a) Except as set forth in Schedule 4.27, with respect to all
employees and former employees of the Company and all dependents and
beneficiaries of such employees and former employees, (i) the Company does not
maintain or contribute to any nonqualified deferred compensation or retirement
plans, contracts or arrangements; (ii) the Company does not maintain or
contribute to any qualified defined contribution plans (as defined in Section
3(34) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 414(i) of the Code; (iii) the Company does not maintain or
contribute to any qualified defined benefit plans (as defined in Section 3(35)
of ERISA or Section 414(j) of the Code); and (iv) the Company does not maintain
or contribute to any employee welfare benefit plans (as defined in Section 3(1)
of ERISA).
(b) To the extent required (either as a matter of law or to
obtain the intended tax treatment and tax benefits), all employee benefit plans
(as defined in Section 3(3) of ERISA) which the Company does maintain or to
which it does contribute (collectively, the "Plans") comply in all Material
respects with the requirements of ERISA and the Code. With respect to the Plans,
(i) all required contributions which are due have been made and a proper accrual
has been made for all contributions due in the current fiscal year; (ii) there
are no actions, suits or claims pending, other
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than routine uncontested claims for benefits; and (iii) there have been no
prohibited transactions (as defined in Section 406 of ERISA or Section 4975 of
the Code).
(c) RW has received true and complete copies of (i) the most
recent determination letter, if any, received by the Company from the Internal
Revenue Service regarding the Plans which the Company maintains or to which it
contributes and any amendment to any Plan made subsequent to any Plan amendments
covered by any such determination letter; (ii) the most recent financial
statements and annual report or return for the Plans; and (iii) the most
recently prepared actuarial valuation reports.
(d) The Company does not contribute (and has never
contributed) to any multi-employer plan, as defined in Section 3(37) of ERISA.
The Company has no actual or potential liabilities under Section 4201 of ERISA
for any complete or partial withdrawal from a multi-employer plan. The Company
has no actual or potential liability for death or medical benefits after
separation from employment, other than (i) death benefits under the employee
benefit plans or programs (whether or not subject to ERISA) set forth Schedule
4.27 and (ii) health care continuation benefits described in Section 4980B of
the Code.
(e) Neither the Company nor any of its directors, officers,
employees or other "fiduciaries", as such term is defined in Section 3(21) of
ERISA, has committed any breach of fiduciary responsibility imposed by ERISA or
any other applicable law with respect to the Plans which would subject the
Company, RW, RW's subsidiaries or any of their respective directors, officers or
employees to any liability under ERISA or any applicable law.
(f) The Company has not incurred any liability for any tax or
civil penalty or any disqualification of any employee benefit plan (as defined
in Section 3(3) of ERISA) imposed by Sections 4980B and 4975 of the Code and
Part 6 of Title I and Section 502(i) of ERISA.
Section 4.28. Taxes.
(a) Each of the Company, and any Plans, as the case may be
(each, a "Tax Affiliate" and, collectively, the "Tax Affiliates"), has: (i)
timely filed (or has had timely filed on its behalf) all returns, declarations,
reports, estimates, information returns, and statements ("Returns") required to
be filed or sent by it in respect of any Taxes or required to be filed or sent
by it by any taxing authority having jurisdiction; (ii) timely and properly paid
(or has had paid on its behalf) all Taxes shown to be due and payable on such
Returns; (iii) established on the Closing Balance Sheet, in accordance with
GAAP, reserves that are adequate for the payment of any Taxes not yet due and
payable; (iv) complied with all applicable laws, rules, and regulations relating
to the withholding of Taxes and the payment thereof (including, without
limitation, withholding of Taxes under Sections 1441 and 1442 of the Internal
Revenue Code of 1986, as amended (the "Code"), or similar provisions under any
foreign laws), and timely and properly withheld from individual employee wages
and paid over to the proper governmental authorities all amounts required to be
so withheld and paid over under all applicable laws.
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(b) There are no liens for Taxes upon any assets of the
Company or of any Tax Affiliate, except liens for Taxes not yet due.
(c) No deficiency for any Taxes has been proposed, asserted or
assessed against the Company or the Tax Affiliates that has not been resolved
and paid in full. No waiver, extension or comparable consent given by the
Company or the Tax Affiliates regarding the application of the statute of
limitations with respect to any Taxes or Returns is outstanding, nor is any
request for any such waiver or consent pending. There has been no Tax audit or
other administrative proceeding or court proceeding with regard to any Taxes or
Returns, nor is any such Tax audit or other proceeding pending, nor has there
been any notice to the Company by any taxing authority regarding any such Tax
audit or other proceeding, or, to the best knowledge of the Company, is any such
Tax audit or other proceeding threatened with regard to any Taxes or Returns.
The Company does not expect the assessment of any additional Taxes of the
Company or the Tax Affiliates and is not aware of any unresolved questions,
claims or disputes concerning the liability for Taxes of the Company or the Tax
Affiliates which would exceed the estimated reserves established on its books
and records.
(d) Neither the Company nor any Tax Affiliate is a party to
any agreement, contract or arrangement that would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code and the consummation of the transactions
contemplated by this Agreement will not be a factor causing payments to be made
by the Company or any Tax Affiliate that are not deductible (in whole or in
part) under Section 280G of the Code.
(e) Neither the Company nor any Tax Affiliate has requested
any extension of time within which to file any Return, which Return has not
since been filed.
(f) No property of the Company or any Tax Affiliate is
property that the Company or any Tax Affiliates is or will be required to treat
as being owned by another person under the provisions of Section 168(f)(8) of
the Code (as in effect prior to amendment by the Tax Reform Act of 1986) or is
"tax-exempt use property" within the meaning of Section 168 of the Code.
(g) Neither the Company nor any Tax Affiliate is required to
include in income any adjustment under Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by the Company or any Tax
Affiliate as a result of the Tax Reform Act of 1986 and neither the Company nor
any Tax Affiliate has knowledge that the Internal Revenue Service has proposed
any such adjustment or change in accounting method.
(h) All transactions that could give rise to an understatement
of federal income tax (within the meaning of Section 6661 of the Code as it
applied prior to repeal) or an underpayment of tax (within the meaning of
Section 6662 of the Code) were reported in a manner for which there is
substantial authority or were adequately disclosed (or, with respect to Returns
filed before the Funding Date, will be reported in such a manner or adequately
disclosed) on the Returns required in accordance with Sections 6661(b)(2)(B) and
6662(d)(2)(B) of the Code.
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(i) Neither the Company nor any Tax Affiliate has engaged in
any transaction that would result in a deemed election under Section 338(e) of
the Code, and neither the Company nor any Tax Affiliate will engage in any such
transaction within any applicable "consistency period" (as such term is defined
in Section 338 of the Code).
(j) The Company is not a part of any affiliated, combined or
unitary group, except those affiliations of groupings resulting directly from
the ownership of the Company by the Stockholder.
Section 4.29. Customer Contracts. Except as set forth in
Schedule 4.29, the Company is not (a) a party to any governmental contract
subject to price redetermination or renegotiation or (b) a party to a contract
designated by the appropriate Governmental Authority as a "small business
set-aside" contract, minority set-aside contract, women-owned business set-aside
contract, or other similar designation which could adversely affect RW's ability
to continue to service such accounts or adversely affect the amount of
consideration to be earned from servicing such accounts.
Section 4.30. Absence of Changes. Since the Interim Balance
Sheet Date, except as set forth in Schedule 4.30, none of the following has
occurred with respect to the Company.
(a) any circumstance, condition, event or state of facts
(either singly or in the aggregate) which has caused, is causing or is
reasonably likely to cause a Material Adverse Effect on the Company;
(b) any change in its authorized Capital Stock or in any of
its outstanding Capital Stock or Derivative Securities;
(c) any repayment of Indebtedness to the Stockholder or any
Restricted Payment.
(d) any increase in, or any commitment or promise to increase,
the rates of compensation as of the date hereof, or the amounts or other
benefits paid or payable under any Plan or other compensation or benefit
arrangement plan or policy, except for ordinary and customary bonuses and salary
increases for employees (other than the Stockholder or his Immediate Family
Members) at the times and in the amounts consistent with its past practice;
(e) any work interruptions, labor grievances or claims filed,
or any similar event or condition of any character, that will have a Material
Adverse Effect on the Company or RW following the Closing;
(f) any distribution, sale or transfer of, or any Company
Commitment to distribute, sell or transfer, any of its assets or properties of
any kind which singly is or in the aggregate are Material to the Company, other
than distributions, sales or transfers in the ordinary course of its business
and consistent with its past practices to Persons other than the Stockholder and
his Immediate Family Members and Affiliates;
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(g) any cancellation, or agreement to cancel, any
Indebtedness, obligation or other liability owing to it, including any
Indebtedness, obligation or other liability of the Stockholder or any Related
Person or Affiliate thereof, provided that it may negotiate and adjust bills in
the course of good faith disputes with customers in a manner consistent with
past practice, if all those adjustments are reflected in the Closing Balance
Sheet.
(h) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of its assets,
property or rights or requiring consent of any Person to the transfer and
assignment of any such assets, property or rights;
(i) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside of
the ordinary course of its business consistent with its past practices;
(j) any waiver of any of its rights or claims that singly is
or in the aggregate are Material to the Company;
(k) any transaction by it outside the ordinary course of its
business or not consistent with its past practices;
(l) any incurrence by it of any Indebtedness or any Guaranty
not constituting its Indebtedness, or any Company Commitment to incur any
Indebtedness or any such Guaranty;
(m) any investment in the Capital Stock, Derivative Securities
or Indebtedness of any Person other than a Permitted Investment;
(n) any capital expenditure or series of related capital
expenditures by the Company collectively in excess of $500,000, or commitments
by the Company to make capital expenditures totaling in excess of $500,000; or
(o) any cancellation or termination of an agreement that is
Material to the Company.
Section 4.31. Bank Relations; Powers of Attorney. The Company
has provided RW with a complete written statement setting forth:
(a) the name of each financial institution in which the
Company has borrowing or investment arrangements, deposit or checking accounts
or safe deposit boxes;
(b) the types of those arrangements and accounts, including,
as applicable, names in which accounts or boxes are held, the account or box
numbers and the name of each Person authorized to draw thereon or have access
thereto; and
(c) the name of each Person holding a general or special power
of attorney from the Company and a description of the terms of each such power.
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Section 4.32. Year 2000 Complaint. To the best of the
Company's knowledge, the Company is Year 2000 compliant and will be at all times
hereafter. "Year 2000 Compliant" means, with respect to the Company's
information technology, software and other processing capabilities (the
"Technology"), it (i) is designed to be used prior to, during, and after the
calendar Year 2000 A.D., (ii) will at all such times accurately receive, provide
and process date/time data (including, but not limited to, calculating,
comparing and sequencing) from, into and between the twentieth and twenty-first
centuries, including the years 1999 and 2000, and leap year calculations, (iii)
will correctly interpret and manipulate all data, in whatever form including
printed form, screen displays, financial records, calculations and business
related data so as to avoid errors in processing that may otherwise occur
because of the inability of the software or other processing capabilities to
recognize accurately the year 2000 or subsequent dates, (iv) will not
malfunction, cease to function or provide invalid or incorrect results, and, (v)
when used in combination with the information technology of third parties
customary within the Company's industry, properly exchanges date/time data with
it.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF RW
RW represents and warrants to the Company and Stockholder that
all the following representations and warranties in this Article V are as of the
date of this Agreement, and will be, on the Funding Date, true and correct:
Section 5.01. Organization, Power. RW is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and RW has all requisite corporate power and authority under the laws
of its Organization State and its Charter Documents to enter into this agreement
and perform its obligations hereunder.
Section 5.02. Authorization; Enforceability; Absence of
Conflicts; Required Consents.
(a) The execution, delivery and performance by RW of this
Agreement and each other Transaction Document to which it is a party, and the
effectuation of the transactions contemplated hereby and thereby, are within its
corporate power under its Charter Documents and the applicable Governmental
Requirements of its Organization State and have been duly authorized as required
under its Charter Documents and the applicable Governmental Requirements of its
Organization State.
(b) This Agreement has been, and each of the other Transaction
Documents to which RW is a party, when executed and delivered to the other
parties thereto, will have been, duly executed and delivered by it and is, or
when so executed and delivered will be, its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law).
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(c) The execution, delivery and performance of this Agreement
and the other Transaction Documents to which RW is a party by RW and the
consummation by RW of the transactions contemplated hereby do not conflict with
or result in any breach of any of the provisions of, constitute a default under,
result in a violation of, result in the creation of a right of termination or
acceleration or any Lien, security interest, charge or encumbrance upon any
assets of RW, or require any authorization, consent, approval, exemption or
other action by or notice to any court or other governmental body, under the
provisions of the Charter Documents of RW or any Indebtedness or other agreement
or instrument by which RW is bound or affected, or Governmental Requirement to
which RW is subject.
(d) Except as may be required by the HSR Act or the applicable
state securities or blue sky laws, no Governmental Approvals are required to be
obtained, and no reports or notices to or filings with any Governmental
Authority are required to be made for the execution, delivery or performance by
RW of the Transaction Documents to which it is a party, the enforcement against
RW, of its obligations thereunder or the effectuation of the transactions
contemplated hereby and thereby.
Section 5.03. No Defaults. No condition or state of facts
exists, or, with the giving of notice or the lapse of time or both, would exist,
which (a) entitles any holder of any outstanding Indebtedness, or any Guaranty
not constituting Indebtedness, of RW, or a representative of that holder, to
accelerate the maturity, or require a mandatory prepayment, of that Indebtedness
or Guaranty, or affords that holder or its representative, or any beneficiary of
that Guaranty, the right to require RW to redeem, purchase or otherwise acquire,
reacquire or repay any of that Indebtedness, or to perform that Guaranty in
whole or in part, (b) entitles any Person to obtain any Lien (other than a
Permitted Lien) upon any properties or assets of RW (or upon revenues, income or
profits of RW or (c) constitutes a violation or breach of, or a default under,
any agreement that is Material to RW.
Section 5.04. Compliance with Laws; No Litigation. To the
knowledge of RW, it is in compliance with all Governmental Requirements
applicable to it. No Litigation is pending or, to the knowledge of RW,
threatened to which RW is or may become a party which (a) questions or involves
the validity or enforceability of any obligation of RW under any Transaction
Document, (b) seeks (or reasonably may be expected to seek) to prevent or delay
consummation by RW of the transactions contemplated by this Agreement to be
consummated by RW.
Section 5.05. SEC Filings. RW has heretofore delivered to the
Stockholder and RW's Form 10-K for the year ended December 31, 1998 ("10-K") and
its quarterly reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999. As of their respective dates, except for any information
corrected or superseded by subsequent filings with the Securities and Exchange
Commission ("SEC"), such report did not contain any untrue statement of Material
fact or omit to state a Material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements of RW
and its Subsidiaries, and the notes thereto certified by the CPA's included in
the 10-K have been prepared in accordance with GAAP and present fairly the
consolidated financial position of RW and its Subsidiaries as of the date
thereof and the results of their consolidated operations and changes in
consolidated financial position for the periods then
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ended. The unaudited consolidated financial statements included in RW's 1999
quarterly reports filed on Form 10-Q comply as to form in all Material respects
with the published rules and regulations of the SEC with respect thereto; and
such unaudited financial statements are fairly presented in conformity with
generally accepted accounting principles (except as permitted by Form 10-Q)
applied on a basis substantially consistent with that of the audited financial
statements included in the 10-K, subject to normal year-end adjustments. Except
as and to the extent reflected or reserved against in the balance sheet included
in the 10-K or 10-Qs, in the notes thereto or as covered by valid and
collectible insurance or other collectible claim for reimbursement, except as
set forth in a Schedule referred to in this Agreement or in a press release
issued by RW since the filing of the most recent 10-Q, there has been no
material adverse change in the business, prospects, properties or condition
(financial or otherwise) of RW or its Subsidiaries which is Materially adverse
to RW or its Subsidiaries taken as a whole.
ARTICLE VI
INTENTIONALLY LEFT BLANK
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.01. Conditions to the Obligations of Each Party.
The obligation of each party hereto to take the actions
contemplated to be taken by that hereby are subject to the satisfaction, (or
waiver) of each of the following conditions on or before the date of the Closing
Date:
(a) No Litigation shall be pending on the date of the Closing
to restrain, prohibit or otherwise interfere with, or to obtain Material Damages
or other relief from RW in connection with, the consummation of the transaction
herein contemplated; and
(b) All Governmental Approvals required to be obtained by any
of the Company or RW in connection with the consummation of the transactions
contemplated herein or in the other Transaction Documents shall have been
obtained.
Section 7.02. Conditions to the Obligations of the Company and
the Stockholder. The obligations of the Company and the Stockholder with respect
to actions to be taken by them hereby are subject to the satisfaction, or the
written waiver by the Company on behalf of itself and each Stockholder pursuant
to Section 11.05, in addition to the conditions specified in Section 7.01, as
applicable, all the following conditions:
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(a) All the representations and warranties of RW in Article V
(as supplemented as provided herein) shall be true and correct as of the Funding
Date as though made at that time;
(b) Employment and Non-Competition Agreements with Xxxxxxx
Xxxx Xxxxx and Xxxxxxx Xxxx Xxxxx, Xx. in the form of Exhibits A-1 and A-2 shall
have been duly executed and delivered by the Company.
(c) RW shall have delivered to the Company and Xxxxxxx Xxxx
Xxxxx:
(i) an RW officer's certificate respecting the
representations and warranties of RW in Article V and compliance with the
covenants of RW in Article VI and in the form of Exhibit F;
(ii) a certificate of the secretary or any assistant
secretary of RW in the form of Exhibit G, and to which is attached, (a) the
Charter Documents of RW (b) the resolutions of the boards of directors of RW
respecting the Transaction Documents and the transactions contemplated thereby;
and (c) a certificate respecting the incumbency and true signatures of the RW
officers who execute the Transaction Documents on behalf of RW;
(iii) the Escrow Agreement duly executed and delivered
by RW; and
(iv) opinions dated the Funding Date and addressed to the
Company and the Stockholder from counsel for RW substantially in the form
attached hereto as Exhibit H;
Section 7.03. Conditions to the Obligations of RW. The
obligations of RW with respect to actions to be taken by it hereby are subject
to the satisfaction or the written waiver by RW, in addition to the conditions
specified in Section 7.01, all the following conditions:
(a) All the representations and warranties of the Stockholder
and the Company in Articles III and IV (as supplemented as provided herein)
shall be true and correct as of the Funding Date as though made at that time;
(b) Employment and Non-Competition Agreements with Xxxxxxx
Xxxx Xxxxx, Xxxxxxx Xxxx Xxxxx, Xx., Xxxx Click and Xxxxx Xxxxx in the form of
Exhibits X-0, X-0, X-0 and A-4 hereto shall have been duly executed and
delivered by the Stockholder named in such agreement.
(c) The Stockholder and the Company shall have delivered to
RW:
(i) a Company officer's certificate, signed by a
Responsible Officer, respecting the representations and warranties of the
Stockholder and the Company in Articles III and IV and compliance with the
covenants of the Stockholder and the Company in Article VI and in the form
attached hereto as Exhibit I;
(ii) a certificate of the secretary or any assistant
secretary of the Company in the form reasonably acceptable to RW respecting, and
to which is attached, (a) the Charter
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Documents of the Company; (b) the resolutions of the board of directors of the
Company respecting the Transaction Documents and the transactions contemplated
thereby; and (c) a certificate respecting the incumbency and true signatures of
the responsible officers who execute the Transaction Documents on behalf of the
Company;
(iii) the Escrow Agreement duly executed and delivered by
the Stockholder;
(iv) from the Stockholder and Xxxx Xxxxx, a General
Release in the forms of Exhibit J-1 and Exhibit J-2 duly executed and delivered.
(v) an opinion dated the Funding Date and addressed to RW
from counsel for the Company and the Stockholder substantially in the form of
Exhibit K;
(vi) from the Stockholder, an executed certificate to the
effect that no withholding is required under Section 1445 of the Code, in the
form of Exhibit L, with the blanks appropriately completed; and
(vii) for the Company, a certificate, dated as of a
current date, duly issued by the appropriate Governmental Authorities in its
Organization State and, unless waived by RW, in each other jurisdiction listed
in Schedule 4.02, showing it to be in good standing and authorized to do
business in its Organization State and those other jurisdictions and that all
state franchise and/or income tax returns and taxes due by it in its
Organization State and those other jurisdictions for all periods prior to the
Closing have been filed and paid.
(d) The Stockholder shall have executed and delivered the
Remediation Agreement attached hereto as Exhibit N.
ARTICLE VIII
COVENANTS FOLLOWING THE CLOSING
Section 8.01. Preparation and Filing of Tax Returns. (a) After
the Closing, the Stockholder shall prepare at his sole cost and expense, all
short-year federal, state, county, local and foreign tax returns required by law
for the period beginning with the first day of the Company's fiscal year in
which the Closing Date occurs and ending with the Closing Date. Each such return
shall be prepared in a financially responsible and conservative manner and shall
be delivered to RW together with all necessary supporting schedules within 90
days following the Closing Date for its approval (but such approval shall not
relieve the Stockholder of his responsibility for the taxes assessed under these
returns). The Stockholder shall be responsible for the filing when due and the
payment of all income taxes shown to be due or that may come to be due on such
returns. The Stockholder shall be entitled to receive all refunds shown on said
returns and any such refunds received by the Company or RW shall be remitted to
the Stockholder.
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(b) Each party hereto will, and will cause its Affiliates to,
provide to each of the other parties hereto such cooperation and information as
any of them reasonably may request in filing any Return, amended Return or claim
for refund, determining a liability for Taxes or a right to refund of Taxes or
in conducting any audit or other proceeding in respect of Taxes. This
cooperation and information shall include providing copies of all relevant
portions of the relevant Returns, together with such accompanying schedules and
work papers, documents relating to rulings or other determinations by taxing
authorities and records concerning the ownership and Tax bases of property as
are relevant which a party possesses. Each party will make its employees, if
any, reasonably available on a mutually convenient basis at its cost to provide
an explanation of any documents or information so provided. Subject to the
preceding sentence, each party required to prepare Returns pursuant to this
Agreement shall bear all costs attributable to the preparation and filing of
those Returns.
(c) RW will join with the Stockholder and the Company in
making an election under Section 338(h)(10) of the Code (and any corresponding
elections under state, local, or foreign tax law) (collectively, a "Section
338(h)(10) Election") with respect to the purchase and sale of the Shares
hereunder. The Stockholder will pay the income taxes attributable to the making
of the Section 338(h)(10) Election. The Stockholder will prepare the appropriate
forms to effect the Section 338(h)(10) Election and will furnish them to RW at
least 30 days prior to the required filing date therefor, for filing by RW
pursuant to Section 8.01(a) hereof. Stockholder agrees to execute such forms as
required and to file such forms on a timely basis as and where required to
effect a valid Section 338(h)(10) Election. The Stockholder, Company and RW
agree that the Purchase Price shall be allocated among the Company's assets in
accordance with Schedule 8.01(c) and that such allocation shall be used in
connection with the tax filings contemplated by this Section.
Section 8.02. Removal of Guaranties. At or within 60 days
following the Funding Date, RW will cause the Stockholder Guaranties of debts to
Republic National Bank listed on Schedule 8.02 to be terminated. RW shall
indemnify and reimburse the Stockholder for any payments made by him in
connection with said Stockholder's Guaranties of any other Indebtedness.
Section 8.03. Reports Under the Exchange Act. RW shall use
commercially reasonable efforts to make all required filings under the Exchange
Act on a timely basis as may be necessary to permit the Stockholder to avail
himself of the provisions of Rule 144 promulgated under the Securities Act at
such time as Rule 144 shall become available to the Stockholder.
Section 8.04. Further Documents and Assurances. Each party
hereto shall, at the request of any other party hereto, execute and deliver such
other and further documents ans assurances as may reasonably necessary or
desirable to effectuate the transactions described herein.
Section 8.05. Promissory Note. RW shall account for the
promissory note in its books and records in accordance with GAAP.
Section 8.06. Payment Bond. Within thirty (30) days of the
Funding Date, RW will obtain a Payment Bond with respect to the payment of the
amounts due on the note in a form substantially similar to Exhibit O.
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Section 8.07. Use of Name. Not later than one year after both
Stockholder and Xxxxxxx Xxxx Xxxxx, Xx., cease to be employees of the Company,
Company will cease the use of the name "X.X. Xxxxx" or any variants thereof.
ARTICLE IX
INDEMNIFICATION
Section 9.01. Survival of Representations and Warranties. All
the provisions of this Agreement will survive the Closing indefinitely
notwithstanding any investigation at any time made by or on behalf of any party
hereto or the provision of any Supplemental Information pursuant to Section
6.08, provided that the representations and warranties set forth in Articles
III, IV and V and in any certificate delivered in connection herewith with
respect to any of those representations and warranties will terminate and expire
on the second anniversary of the date of this Agreement, except as follows: (a)
the representations and warranties of the Stockholder which relate expressly or
by necessary implication to Taxes, ERISA or other employment or labor matters or
the Governmental Requirements referred to in clause (iii) of Section 9.02(a)
will survive until the expiration of the applicable statutes of limitations
(including all periods of extension and tolling); and (b) the representations
and warranties of the Stockholder which relate expressly or by necessary
implication to the environment or Environmental Laws will survive for a period
of five years from the Closing Date. After a representation and warranty has
terminated and expired, no indemnification will or may be sought pursuant to
this Article IX on the basis of that representation and warranty by any Person
who would have been entitled pursuant to this Article IX to indemnification on
the basis of that representation and warranty prior to its termination and
expiration, provided that, in the case of each representation and warranty that
will terminate and expire as provided in this Section 9.01, no claim presented
in writing for indemnification pursuant to this Article IX on the basis of that
representation and warranty prior to its termination and expiration will be
affected in any way by that termination and expiration.
Section 9.02. Indemnification of RW Indemnified Parties.
(a) Subject to the applicable provisions of Sections 9.01 and
9.07, the Stockholder covenants and agrees that he will indemnify each RW
Indemnified Party against, and hold each RW Indemnified Party harmless from and
in respect of, all Damage Claims that arise from, are based on, arise out of or
are attributable to (i) any breach of the representations and warranties of the
Stockholder or the Company set forth herein or in certificates delivered in
connection herewith; (ii) the nonfulfillment of any covenant or agreement on the
part of the Stockholder or the Company under this Agreement; (iii) any provision
of any Environmental Law which results from (A) any act or omission of the
Company occurring on or prior to the Funding Date or its respective employees,
agents or representatives or (B) the ownership, use, control or operation on or
prior to the Funding Date of any facility, site, area or property used in the
business of the Company (whether currently or previously owned or leased by the
Company), including, without limitation, Damage Claims arising from any release
of Hazardous Materials or off-site shipment of any Hazardous Materials at or
from any such facility, site, area or property; or (iv) any liability under the
Securities Act, the
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Exchange Act or other applicable Governmental Requirement which arises out of or
is based on (A) any untrue statement or alleged untrue statement of a material
fact relating to the Company, which is provided to RW or its counsel in writing
by the Company or the Stockholder or (B) any omission or alleged omission to
state therein a material fact relating to the Company, required to be stated
therein or necessary to make the statements therein not misleading, and not
provided to RW or its counsel by the Company or the Stockholder after a written
request therefor (each such Damage Claim and each Damage Claim described in
Section 9.02(b) being an "RW Indemnified Loss");
(b) Once the occurrence of a breach of any representations or
warranties has been established, Damages shall be calculated without regard to
whether such breach caused a Material Adverse Effect.
Section 9.03. Indemnification of Stockholder Indemnified
Parties. (a) RW covenants and agrees that it will indemnify each Stockholder
Indemnified Party against, and hold each Stockholder Indemnified Party harmless
from and in respect of, all Damage Claims that arise from, are based on or are
attributable to (i) any breach by RW of its representations and warranties set
forth herein or in their certificates delivered to the Company or the
Stockholder in connection herewith; or (ii) the nonfulfillment of any covenant
or agreement on the part of RW under this Agreement (each such Damage Claim
being a "Stockholder Indemnified Loss").
(b) Once the occurrence of a breach of any representations or
warranties has been established, Damages shall be calculated without regard to
whether such breach caused a Material Adverse Effect.
Section 9.04. Conditions of Indemnification. (a) All claims
for indemnification under this Agreement shall be asserted and resolved as
follows in this Section 9.04.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-party claim or
claims asserted against the Indemnified Party ("Third Party Claim") that could
give rise to a right of indemnification under this Agreement and (ii) transmit
to the Indemnifying Party a written notice ("Claim Notice") describing in
reasonable detail the nature of the Third Party Claim, a copy of all papers
served with respect to that claim (if any), an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible (which estimate
shall not be conclusive of the final amount of such claim) and the basis for the
Indemnified Party's request for indemnification under this Agreement. Except as
set forth in Section 9.01, the failure to promptly deliver a Claim Notice shall
not relieve the Indemnifying Party of its obligations to the Indemnified Party
with respect to the related Third Party Claim except to the extent that the
resulting delay is materially prejudicial to the defense of that claim. Within
15 days after receipt of any Claim Notice (the "Election Period"), the
Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article IX with respect to that Third Party Claim and (ii) if the
Indemnifying Party does not dispute its potential liability to the Indemnified
Party with respect to that Third Party Claim, whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against that Third Party Claim.
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(c) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, that Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 9.04(c) and the Indemnified
Party will furnish the Indemnifying Party with all information in its possession
with respect to that Third Party Claim and otherwise cooperate with the
Indemnifying Party in the defense of that Third Party Claim; provided, however,
that the Indemnifying Party shall not enter into any settlement with respect to
any Third Party Claim that (i) purports to limit the activities of, or otherwise
restrict in any way, any Indemnified Party or any Affiliate of any Indemnified
Party, (ii) involves a guilty plea to any crime or (iii) involves a fine or
penalty, whether or not paid by the Indemnifying Party, without the prior
consent of that Indemnified Party (which consent may be withheld in the sole
discretion of that Indemnified Party). The Indemnified Party is hereby
authorized, at the sole cost and expense of the Indemnifying Party, to file,
during the Election Period, any motion, answer or other pleadings that the
Indemnified Party shall deem necessary or appropriate to protect its interests
or those of the Indemnifying Party. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 9.04(c) and will bear its own
costs and expenses with respect to that participation; provided, however, that
if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party (provided that such
expenses are reasonable), and, on its written notification of that employment,
the Indemnifying Party shall not have the right to assume or continue the
defense of such action on behalf of the Indemnified Party.
(d) If the Indemnifying Party (i) within the Election Period
(A) disputes its potential liability to the Indemnified Party under this Article
IX, (B) elects not to defend the Indemnified Party pursuant to Section 9.04(c)
or (C) fails to notify the Indemnified Party that the Indemnifying Party elects
to defend the Indemnified Party pursuant to Section 9.04(c) or (ii) elects to
defend the Indemnified Party pursuant to Section 9.04(c) but fails diligently
and promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (provided that such expenses are reasonable) (if the
Indemnified Party is entitled to indemnification hereunder), the Third Party
Claim by all appropriate proceedings, which proceedings shall be promptly and
vigorously prosecuted by the Indemnified Party to a final conclusion or settled.
The Indemnified Party shall have full control of such defense and proceedings.
Notwithstanding the foregoing, if the Indemnifying Party has delivered a written
notice to the Indemnified Party to the effect that the Indemnifying Party
disputes its potential liability to the Indemnified Party under this Article IX
and if such dispute is resolved in favor of the Indemnifying Party, the
Indemnifying Party shall not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this Section 9.04 or of the Indemnifying
Party's participation therein at the Indemnified Party's request, and the
Indemnified Party shall reimburse the Indemnifying Party in full for all
reasonable costs and expenses of such litigation. The
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Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 9.04(d),
and the Indemnifying Party shall bear its own costs and expenses with respect to
such participation.
(e) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of Damages attributable to that claim to
the extent feasible (which estimate shall not be conclusive of the final amount
of such claim) and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does not notify
the Indemnified Party within 15 days from its receipt of the Indemnity Notice
that the Indemnifying Party disputes such claim, the claim specified by the
Indemnified Party in the Indemnity Notice shall be deemed a liability of the
Indemnifying Party hereunder. If the Indemnifying Party has timely disputed such
claim, as provided above, such dispute shall be resolved by proceedings in an
appropriate court of competent jurisdiction if the parties do not reach a
settlement of such dispute within 30 days after notice of a dispute is given.
(f) Payments of all amounts owing by an Indemnifying Party
pursuant to this Article IX relating to a Third Party Claim shall be made within
30 days after the latest of (i) the settlement of that Third Party Claim, (ii)
the expiration of the period for appeal of a final adjudication of that Third
Party Claim or (iii) the expiration of the period for appeal of a final
adjudication of the Indemnifying Party's liability to the Indemnified Party
under this Agreement. Payments of all amounts owing by an Indemnifying Party
pursuant to Section 9.04(e) shall be made within 30 days after the later of (i)
the expiration of the 30-day Indemnity Notice period or (ii) the expiration of
the period for appeal of a final adjudication of the Indemnifying Party's
liability to the Indemnified Party under this Agreement. In the event that any
payments are not made in a timely manner pursuant to this Article IX RW shall
have the right to withhold any amounts otherwise due to the Stockholder in order
to satisfy such payment obligation.
Section 9.05. Security for Indemnity. As security for the
indemnification by the Company and the Stockholder, the parties have established
an escrow fund pursuant to the Escrow Agreement and RW has been granted the
right of payment into the escrow fund as provided in Section 2.02(c).
Section 9.06. Remedies Not Exclusive. The remedies provided in
this Agreement shall not be exclusive of any other rights or remedies available
to one party against the other, either at law or in equity.
Section 9.07. Limitations on Indemnification.
(a) Notwithstanding the provisions of Section 9.02(a), neither
the Company nor the Stockholder shall be required to indemnify or hold harmless
any of the RW Indemnified Parties on account of any RW Indemnified Loss under
Section 9.02(a) unless the liability of the Company and the Stockholder in
respect of that RW Indemnified Loss, when aggregated with the liability of the
Company and the Stockholder in respect of all RW Indemnified Losses under
Section 9.02(a),
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exceeds the Threshold Amount. Once the Threshold Amount has been exceeded,
Damages shall be calculated without regard to the Threshold Amount. In no event
shall (i) the aggregate liability of the Company and the Stockholder under this
Agreement, including Section 9.02(a), exceed the Purchase Price. For purposes of
determining the amount of RW Indemnified Losses, no effect will be given to any
resulting Tax benefit to any RW Indemnified Party.
(b) Notwithstanding the provisions of Section 9.03, RW shall
not be required to indemnify or hold harmless any of the Stockholder Indemnified
Parties on account of any Stockholder Indemnified Loss unless the liability of
RW in respect of that Stockholder Indemnified Loss, when aggregated with the
liability of RW in respect of all Stockholder Indemnified Losses, exceeds the
Threshold Amount. Once the Threshold Amount has been exceeded, Damages shall be
calculated without regard to the Threshold Amount. In no event shall RW be
liable under this Agreement, including Section 9.03, for any amount in excess of
the Purchase Price. For purposes of determining the amount of Stockholder
Indemnified Losses, no effect will be given to any resulting Tax benefit to any
Stockholder Indemnified Party.
(c) Notwithstanding the provisions of Section 9.07(a), the
Stockholder shall be required to indemnify and hold harmless all of the RW
Indemnified Parties on account of any RW Indemnified Loss, without regard to the
Threshold Amount or any upper limit on indemnification set forth in Section
9.07(a), that arise out of or relate to (i) Taxes of the Company through the
Closing Date, (ii) any breach of the representations or warranties contained in
Section 4.15, 4.30(c) or 4.30(d) or the covenants contained in Section 6.04(c)
or 6.04(f); or (iii) any withdrawal liability as defined in Section 4201 of
ERISA imposed on RW following the Closing Date resulting from the withdrawal or
partial withdrawal by any Company from any multiemployer plan prior to the
Funding Date.
ARTICLE X
LIMITATIONS ON COMPETITION
Section 10.01. Definitions. For the purposes of this
Article X, the following definitions shall apply:
(a) "Competitive Activities" means (i) the business of
construction and maintenance of railway beds and tracks; construction and
maintenance of elevated rail systems and structures; construction and
maintenance of railway switching and signaling equipment, distributorships and
supply in the field of rail and railway construction materials; distributorships
and supply in the field of electromechanical controls for use in the railroad
industry, namely, railway switching equipment and railway signaling equipment;
and design for others in the field of railroad industry, namely, engineering
design of rail and railway related structures and equipment and (ii) any
business currently conducted by the Company.
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(b) "Competitor" means any business, individual, partnership,
joint venture, association, firm, corporation or other Entity, other than RW or
its affiliates or subsidiaries, engaged, wholly or partly, in Competitive
Activities.
(c) "Competitive Position" means, except as otherwise set
forth in Schedule 10.01 (i) having any financial interest in a Competitor,
including but not limited to, the direct or indirect ownership or control of all
or any portion of a Competitor, or acting as a partner, officer, director,
principal, agent or trustee of any Competitor or (ii) engaging in any employment
or independent contractor arrangement, business or other activity with any
Competitor whereby Stockholder will serve such Competitor in any senior
managerial capacity.
(d) "Customer" means actual customers of the Company or RW as
of the Closing Date.
(e) "Non-compete Period" means the period beginning on the
date hereof and ending on the third anniversary of the Closing Date.
(f) "Non-Public Information" means any confidential,
proprietary business information or data belonging to or pertaining to the
Company or RW that does not constitute a Trade Secret (as hereinafter defined)
and that is not generally known by or available through legal means to the
public, including, but not limited to, information regarding the Company's or RW
customers or actively sought prospective customers, acquisition targets,
suppliers, manufacturers and distributors gained by Stockholder as a result of
his employment with the Company or his direct or indirect ownership of Company
Capital Stock.
(g) "Territory" means the area within a one hundred mile
radius of any corporate office or job site of the Company or RW or any of their
subsidiaries, affiliates or divisions, as now existing or hereafter acquired or
commenced.
(h) "Trade Secrets" means information or data of or about the
Company, including but not limited to technical or non-technical data, formulas,
patterns, compilations, programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, products plans, or lists of actual
or potential customers, clients, distributees or licensees, information
concerning the Company's finances, services, staff, contemplated acquisitions,
marketing investigations and surveys, that are not generally known to, and/or
are not readily ascertainable by proper means by, other persons.
Section 10.02. Trade Name and Non-Public Information. The
Stockholder hereby agrees that with regard to each item constituting all or any
portion of the Trade Secrets and Non-Public Information, at all times during
which such item continues to constitute a Trade Secret or Non-Public
Information, respectively:
(i) Stockholder shall not, directly or by assisting
others, own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected in any manner with, any
business conducted under any corporate or trade name of the
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Company or name similar thereto, without the prior written consent of RW except
stockholder may operate as presently conducted those business listed on Schedule
10.02; this Subsection 10.02(i) shall terminate at such time, if any, as Buyer
is obligated to cease use of "X.X. Xxxxx" pursuant to Section 8.07.
(ii) Stockholder shall hold in confidence all Trade
Secrets and all Non-Public Information and will not, either directly or
indirectly, use, sell, lend, lease, distribute, license, give, transfer, assign,
show, disclose, disseminate, reproduce, copy, appropriate or otherwise
communicate any Trade Secrets or Non-Public Information, without the prior
written consent of RW; and
(iii) Stockholder shall immediately notify the
Company of any unauthorized disclosure or use of any Trade Secrets or Non-Public
Information of which Stockholder becomes aware. Stockholder shall assist the
Company, to the extent necessary, in the procurement or any protection of the
Company's rights to or in any of the Trade Secrets or Non-Public Information.
Section 10.03. Non-competition.
(a) The parties hereto acknowledge that the Company is
conducting Competitive Activities throughout the Territory. Stockholder
acknowledges that to protect adequately the interest of Company in the business
of the Company it is essential that any non-compete covenant with respect
thereto cover all competitive Activities and the entire Territory.
(b) Stockholder hereby agrees that, during the Non-compete
Period, Stockholder will not, in the Territory, either directly or indirectly,
alone or in conjunction with any other party, accept, enter into or take any
action in conjunction with or in furtherance of a Competitive Position.
Stockholder shall notify the Company promptly in writing if Stockholder receives
an offer of a Competitive Position during the Non-compete Period, and such
notice shall describe all material terms of such offer.
Nothing contained in this Section 10.03 shall prohibit
Stockholder from (a) acquiring not more than five percent (5%) of any
Competitor, or from acquiring any percentage of any company which is
non-competitive with Company, whose common stock is publicly traded on a
national securities exchange or in the over-the-counter market and (b) each
Stockholder may continue to own equity interests in, and participate in the
business of, consistent with the past practice of such Stockholder, the Entities
listed on Schedule 10.01.
Section 10.04. Non-Solicitation. Stockholder hereby agrees
that the Stockholder will not, during the Non-compete Period, either directly or
indirectly, alone or in conjunction with any other party:
(a) solicit, divert or appropriate or attempt to solicit,
divert or appropriate, any Customer for the purpose of providing the Customer
with services or products competitive with
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those offered by RailWorks or any of it affiliates or subsidiaries (including
the Company) during the Non-compete Period, or
(b) solicit or attempt to solicit any officer, director,
employee, consultant, contractor, agent, lessor, lessee, licensor, licensee,
supplier of RailWorks or any of its affiliates or subsidiaries (including the
Company) to terminate, alter or lessen that party's affiliation with RailWorks
or any of its affiliates or subsidiaries (including the Company), or to violate
the terms of any agreement or understanding between such employee, consultant,
contractor or other person and RailWorks or any of its affiliates or
subsidiaries (including the Company).
Section 10.05. Damages. Because of the difficulty of measuring
economic losses to RW as a result of any breach by the Stockholder of his
covenants in Sections 10.01 through 10.04, and because of the immediate and
irreparable Damage that could be caused to RW for which it would have no other
adequate remedy, Stockholder agrees that RW may enforce the provisions of
Sections 10.01 through 10.04 by injunctions and restraining orders against that
Stockholder if Stockholder breaches any of those provisions.
Section 10.06. Reasonable Restraint. The parties hereto each
agree that Sections 10.01 through 10.05 impose a reasonable restraint on the
Stockholder in light of the activities and business of RW on the date hereof,
the current business plans of RW and the investment by Stockholder in RW as a
result of the Agreement.
Section 10.07. Severability; Reformation. The covenants in
this Article X are severable and separate, and the unenforceability of any
specific covenant in this Article X is not intended by any party hereto to, and
shall not, affect the provisions of any other covenant in this Article X. If any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth in Sections 10.01 through 10.04 are
unreasonable as applied to the Stockholder, the parties hereto, acknowledge
their mutual intention and agreement that those restrictions be enforced to the
fullest extent the court deems reasonable, and thereby shall be reformed to that
extent as applied to the Stockholder.
Section 10.08. Independent Covenant. All the covenants in this
Article X are intended by each party hereto to, and shall, be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Stockholder against RW, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by RW of any covenant in this Article X. It is specifically agreed
that the period specified in Section 10.01 shall be computed in the case of
Stockholder by excluding from that computation any time during which the
Stockholder is in violation of any provisions of Sections 10.01 through 10.04.
The covenants contained in this Article X shall not be affected by any breach of
any other provision hereof by any party hereto.
Section 10.09. Materiality. The Company and Stockholder,
severally and not jointly with any other Person, hereby agree that this Article
X is a material and substantial part of the transactions contemplated hereby.
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ARTICLE XI
GENERAL PROVISIONS
Section 11.01. Treatment of Confidential Information.
(a) Each of RW, the Company and the Stockholder, severally and
not jointly with any other Person, acknowledges that it has or may have had in
the past, currently has and in the future may have access to Confidential
Information of the Company and the Company Subsidiaries and RW and its
Subsidiaries. Each of RW, the Company and the Stockholder, severally and not
jointly with any other Person, agrees that it will keep confidential all such
Confidential Information furnished to it and, except with the specific prior
written consent of RW and the Company, will not disclose such Confidential
Information to any Person except (a) Representatives of the other parties to
this Agreement, (b) its own Representatives, provided that these Representatives
(other than counsel) agree to the confidentiality provisions of this Section
11.01; and provided, further, that Confidential Information shall not include
(i) such information which becomes known to the public generally through no
fault of Stockholder, (ii) information required to be disclosed by law or the
order of any governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), the disclosing party
shall, if possible, give prior written notice thereof to the party who owns the
Confidential Information and provide such party with the opportunity to contest
such disclosure, (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party or (iv) information RW determines it needs to disclose pursuant
to the Securities Act or the Exchange Act. Nothing herein shall be construed as
prohibiting any party from pursuing any other available remedy for such breach
or threatened breach, including the recovery of damages.
(b) Because of the difficulty of measuring economic losses as
a result of the breach of the foregoing covenants in Section 11.01(a), and
because of the immediate and irreparable Damage that would be caused to and for
which there is no other adequate remedy, each of the parties to Agreement the
provisions of Section 11.01(a) may be enforced by injunctions and restraining
orders against each of them who breaches any of those provisions.
(c) The obligations of RW set forth in Section 6.02(d) are
incorporated in this Section 11.01 by this reference.
(d) The obligations of the parties under this Section 11.01
shall survive the termination of this Agreement.
Section 11.02. Restrictions on Transfer of RW Common Stock.
(a) Except for transfers to employees of the Company that are
approved in writing by the Chief Executive Officer of RW prior to such transfer,
during the one year period ending on the first anniversary of the Closing Date
(the "Restricted Period"), the Stockholder will not: (i) sell, assign, exchange,
transfer, encumber, pledge, distribute, appoint or otherwise dispose of (A) any
shares of RW Common Stock received by the Stockholder in the transactions
contemplated herein
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or (B) any interest in (including any option to buy or sell) any of those shares
of RW Common Stock, in whole or in part, and RW will have no obligation to, and
shall not, treat any such attempted transfer as effective for any purpose; or
(ii) engage in any transaction, whether or not with respect to any shares of RW
Common Stock or any interest therein, the intent or effect of which is to reduce
the risk of owning the shares of RW Common Stock acquired pursuant hereto
(including, for example engaging in put, call, short-sale, straddle or similar
market transactions); provided, however, that this Section 11.02 shall not
restrict any transfer of RW Common Stock acquired by Stockholder pursuant hereto
to any of the Stockholder's Related Persons who agree in writing to be bound by
the provisions of this Section 11.02. The certificates evidencing the RW Common
Stock delivered to Stockholder pursuant hereto will bear a legend substantially
in the form set forth below and containing such other information as RW may deem
necessary or appropriate:
"EXCEPT PURSUANT TO THE TERMS OF THE AGREEMENT AMONG THE
ISSUER, THE HOLDER OF THIS CERTIFICATE AND THE OTHER PARTIES THERETO, THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE VOLUNTARILY SOLD, ASSIGNED,
EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE
DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED VOLUNTARY SALE, ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION OF ANY OF THOSE SHARES, DURING
THE ONE-YEAR PERIOD ENDING ON SEPTEMBER 30, 2000. ON THE WRITTEN REQUEST OF THE
HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND
(AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE DATE SPECIFIED
ABOVE."
(b) From the first anniversary of the Closing Date to the
fourth anniversary of the Closing Date, the Stockholder agrees to sell shares of
RW Common Stock acquired pursuant to this Agreement only in accordance with the
procedures set forth in this Section 11.02(b). Every fiscal quarter during such
period, the Stockholder will be permitted to sell, in the aggregate, up to 8% of
the aggregate number of shares of Common Stock received by the Stockholder
pursuant to this Agreement (the "Quarterly Block Trade Shares") in either a
block trade or a registered public offering, at the option of RW. If Stockholder
does not sell all of his or her Quarterly Block Trade Shares in any given
quarter, such Stockholder may sell such Quarterly Block Trade Shares pursuant to
this Section 11.02(b) in any later quarter, provided, however, that in no event
may the Stockholder sell more than 20% of the shares of Common Stock received by
the Stockholder pursuant to this Agreement in any one quarter. The Stockholder
that wishes to sell shares of RW Common Stock pursuant to such selling
opportunity must give notice to RW and the Executive Council no later than
fourteen days prior to the commencement of the fiscal quarter of RW during which
Stockholder wants to sell such shares. Notwithstanding anything set forth in
this Section 11.02(b), RW may elect to make available to the Stockholder (i)
additional opportunities to sell shares of RW Common Stock and/or (ii) the
opportunity to sell an amount in excess of such amount during any particular
quarter. The Company may modify or waive this Section 11.02(b) at its sole
discretion at any time following written notice to the Stockholder, provided
that no such modification or waiver may reduce the number of selling
opportunities or the maximum number of shares of RW Common Stock that may be
sold by the Stockholder during any selling opportunity.
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(c) The Stockholder (i) acknowledges that the shares of RW
Common Stock to be delivered to that Stockholder pursuant hereto have not been
and will not be registered under the Securities Act and therefore may not be
resold by Stockholder without compliance with the Securities Act and (ii)
covenants that none of the shares of RW Common Stock issued to Stockholder
pursuant hereto will be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except after full compliance with all the
applicable provisions of the Securities Act and the rules and regulations of the
SEC and applicable state securities laws and regulations. All certificates
evidencing shares of RW Common Stock issued pursuant hereto will bear the
following legend in addition to the legend prescribed by Section 11.02(a):
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS,
HAVE BEEN ISSUED PURSUANT TO ONE OR MORE EXEMPTIONS THERETO, AND MAY NOT BE SOLD
OR OTHERWISE TRANSFERRED, ASSIGNED OR DISPOSED OF UNLESS AND UNTIL REGISTERED
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED."
In addition, certificates evidencing shares of RW Common Stock
issued pursuant hereto to each Stockholder will bear any legend required by the
securities or blue sky laws of the state in which that Stockholder resides.
Section 11.03. Brokers and Agents. The Stockholder, on the one
hand, and RW, on the other, represents and warrants that such Person has not
directly or indirectly employed or become obligated to pay any broker, finder or
similar agent in connection with the transactions contemplated hereby and agree,
without regard to the Threshold Amount limitations set forth in Article IX, to
indemnify the other against all Damage Claims arising out of claims for any and
all fees and commissions of brokers or similar agents employed or promised
payment by such Person.
Section 11.04. Assignment; No Third Party Beneficiaries. This
Agreement and the rights of the parties hereunder may not be assigned (except by
operation of law) and shall be binding on and inure to the benefit of the
parties hereto, the successors of RW, and the heirs and legal representatives of
the Stockholder (and, in the case of any trust, the successor trustees of that
trust). Neither this Agreement nor any other Transaction Document is intended,
or shall be construed, deemed or interpreted, to confer on any Person not a
party hereto or thereto any rights or remedies hereunder or thereunder, except
as provided in Section 6.05(b) or as otherwise provided expressly herein or
therein.
Section 11.05. Entire Agreement; Amendment; Waivers. This
Agreement and the documents delivered pursuant hereto constitute the entire
agreement and understanding among the Stockholder, the Company, and RW and
supersede all prior agreements and understandings, both written and oral,
relating to the subject matter of this Agreement. This Agreement may be amended,
modified or supplemented, and any right hereunder may be waived, if, but only
if, that amendment, modification, supplement or waiver is in writing and signed
by each of the Stockholder, the
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Company and RW. The waiver of any of the terms and conditions hereof shall not
be construed or interpreted as, or deemed to be, a waiver of any other term or
condition hereof.
Section 11.06. Counterparts. This Agreement may be executed in
multiple counterparts, each of which will be an original, but all of which
together will constitute one and the same instrument.
Section 11.07. Expenses. Stockholder agrees that he will pay
all fees, costs and expenses incurred by him or the Company in connection with
the transactions contemplated herein and in the other Transaction Documents,
including, without limitation, the fees and expenses of attorneys, accountants
and other persons, and no portion thereof shall be assumed or paid by RW or the
Company except as otherwise specifically provided herein. RW agrees that it will
pay all fees, costs and expenses incurred by it in connection with the
transactions contemplated herein and in the other Transaction Document,
including, without limitation, the fees and expenses of its attorneys,
accountants, and other persons, and no portion thereof shall be paid by the
Stockholder or the Company.
Section 11.08. Notices. All notices required or permitted
hereunder shall be in writing, and shall be deemed to be delivered and received
(a) if personally delivered or if delivered by telex,
telegram, facsimile or courier service, when actually received by the party to
whom notice is sent or
(b) if delivered by mail (whether actually received or not),
at the close of business on the third Business Day next following the day when
placed in the mail, postage prepaid, certified or registered, addressed to the
appropriate party or parties, at the address of such party set forth below (or
at such other address as such party may designate by written notice to all other
parties in accordance herewith):
(i) if to RW, addressed to it at:
RailWorks Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn.: Xxxx X. Xxxxxx
Chief Executive Officer
with copies (which shall not constitute notice for purposes
of this Agreement) to:
Xxxxxx & Whitney, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxxxxxx, Xx.
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(ii) if to the Stockholder, addressed to him at:
Xxxxxxx Xxxx Xxxxx
Xxxxx 0
Xxx 000
Xxxxxxxx Xxxx, Xxxxx 00000-0000
(iii) if to the Company, addressed to it at:
c/o X. X. Xxxxx Co., Inc.
00000 Xxxxxx Xxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxx Xxxxx
` with copies (which shall not constitute notice for purposes
of this Agreement) to:
Xxxx Xxxxx, Esq.
X.X. Xxx 00000
Xxxxxxx, XX 00000-0000
Section 11.09. Governing Law. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF; PROVIDED, HOWEVER,
THAT ARTICLE X AND THE RIGHTS AND OBLIGATIONS THEREUNDER OF THE PARTIES THERETO
WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS THEREOF.
Section 11.10. Exercise of Rights and Remedies. Except as
otherwise provided herein, no delay or omission in the exercise of any right,
power or remedy accruing to any party hereto as a result of any breach or
default hereunder by any other party hereto shall impair any such right, power
or remedy, nor shall it be construed, deemed or interpreted as a waiver of or
acquiescence in any such breach or default, or of any similar breach or default
occurring later; nor shall any waiver of any single breach or default be
construed, deemed or interpreted as a waiver of any other breach or default
hereunder occurring before or after that waiver.
Section 11.11. Time. Time is of the essence in the performance
of this Agreement in all respects.
Section 11.12. Reformation and Severability. If any provision
of this Agreement is invalid, illegal or unenforceable, that provision shall, to
the extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties hereto as
expressed herein, and if such a modification is not possible, that provision
shall be severed
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from this Agreement, and in either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
Section 11.13. Remedies Cumulative. No right, remedy or
election given by any term of this Agreement shall be deemed exclusive, but each
shall be cumulative with all other rights, remedies and elections available at
law or in equity.
[Signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
RAILWORKS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx
Executive Vice-President
X.X. XXXXX CO., INC.
By: /s/ Xxxxxxx Xxxx Xxxxx
------------------------------
Xxxxxxx Xxxx Xxxxx
President
STOCKHOLDER
/s/ Xxxxxxx Xxxx Xxxxx
--------------------------
Xxxxxxx Xxxx Xxxxx
