EXHIBIT 10.24
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STOCK AND ASSET PURCHASE AGREEMENT
By and Among
Mac-Gray Services, Inc.,
("Buyer")
Amerivend Corporation,
("Amerivend")
Amerivend Southeast Corporation,
("Amerivend Southeast")
and
Xxxxxx X. Xxxxxx
and
Xxxxxx X. Xxxxxx Grantor Retained Annuity Trust
("Stockholders")
March 4, 1998
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STOCK AND ASSET PURCHASE AGREEMENT
INDEX
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Page
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SECTION 1. SALE OF SHARES AND ASSETS; PURCHASE PRICE.............. 1
1.01 Transfer of Amerivend Shares................................ 1
1.02 Sale of Southeast Assets.................................... 2
1.03 Purchase Price.............................................. 2
1.04 Closing..................................................... 3
1.05 Amerivend Purchase Price Adjustment......................... 3
1.06 Further Assurances.......................................... 5
1.07 Transfer Taxes.............................................. 5
1.08 No Assumption; Allocation of Southeast Purchase Price....... 5
1.09 Proration................................................... 5
1.10 Transfer of Southeast Assets................................ 5
1.11 Employees................................................... 6
1.12 Stockholders' Representative................................ 6
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND
XX. XXXXXX
2.01 Making of Representations and Warranties.................... 8
2.02 Organization and Qualifications of the Companies............ 8
2.03 Capital Stock of the Companies; Beneficial Ownership........ 8
2.04 Subsidiaries; Investments................................... 8
2.05 Authority................................................... 9
2.06 Real and Personal Property.................................. 10
2.07 Laundry Leases.............................................. 12
2.08 Equipment................................................... 13
2.09 Title....................................................... 13
2.10 Financial Statements........................................ 13
2.11 Taxes....................................................... 14
2.12 Collectibility of Accounts Receivable....................... 16
2.13 Inventories................................................. 16
2.14 Absence of Certain Changes.................................. 17
2.15 Ordinary Course............................................. 19
2.16 Banking Relations........................................... 19
2.17 Intellectual Property....................................... 19
2.18 Contracts................................................... 20
2.19 Litigation.................................................. 22
2.20 Compliance with Laws........................................ 22
2.21 Insurance................................................... 22
2.22 Warranty or Other Claims.................................... 23
2.23 Powers of Attorney.......................................... 23
(i)
2.24 Finder's Fee................................................ 23
2.25 Permits; Burdensome Agreements.............................. 23
2.26 Corporate Records; Copies of Documents...................... 23
2.27 Transactions with Interested Persons........................ 24
2.28 Employee Benefit Programs................................... 24
2.29 Environmental Matters....................................... 26
2.30 List of Directors and Officers.............................. 27
2.31 Employees; Labor Matters.................................... 27
2.32 Non-Foreign Status.......................................... 28
2.33 Backlog..................................................... 28
2.34 Customers, Distributors and Suppliers....................... 28
2.35 Transfer of Shares.......................................... 29
2.36 Stock Repurchase............................................ 29
2.37 Disclosure.................................................. 29
2.38 Commission Payments......................................... 29
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS 29
3.01 Amerivend Shares............................................ 29
3.02 Authority................................................... 30
3.03 Finder's Fee................................................ 30
3.04 Agreements.................................................. 30
SECTION 4. COVENANTS OF THE COMPANIES AND THE STOCKHOLDERS........ 31
4.01 Making of Covenants and Agreements.......................... 31
4.02 Conduct of Business......................................... 31
4.03 Consents.................................................... 33
4.04 Notice of Default........................................... 33
4.05 Consummation of Agreement................................... 33
4.06 Cooperation of the Companies and the Stockholders........... 33
4.07 No Solicitation of Other Offers............................. 33
4.08 Confidentiality............................................. 34
4.09 Tax Returns................................................. 34
4.10 Filing Cooperation.......................................... 34
4.11 No Transfer of Securities................................... 34
4.12 Use of Trade Name........................................... 35
4.13 Updating of Information..................................... 35
4.14 2451 Brickell Avenue........................................ 35
SECTION 4A. CERTAIN TAX MATTERS................................... 35
4A.01 Section 338(h)(10) Election................................. 35
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER................ 36
5.01 Making of Representations and Warranties.................... 36
5.02 Organization of Buyer....................................... 36
(ii)
5.03 Authority of Buyer.......................................... 36
5.04 Litigation.................................................. 37
5.05 Finder's Fee................................................ 37
SECTION 6. COVENANTS OF BUYER..................................... 37
6.01 Making of Covenants and Agreements.......................... 37
6.02 Confidentiality............................................. 37
6.03 Consents.................................................... 38
6.04 Consummation of Agreement................................... 38
SECTION 7. CONDITIONS............................................. 38
7.01 Conditions to the Obligations of Buyer...................... 38
7.02 Conditions to Obligations of the Companies and the
Stockholders................................................ 42
SECTION 8. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED............ 43
8.01 Termination................................................. 43
8.02 Effect of Termination....................................... 44
8.03 Right to Proceed............................................ 44
SECTION 9. SURVIVAL............................................... 44
9.01 Survival of Warranties...................................... 44
SECTION 10. INDEMNIFICATION....................................... 44
10.01 Indemnification by Southeast and the Stockholders........... 44
10.02 Limitations on Indemnification by Southeast and the
Stockholders................................................ 45
10.03 Indemnification by Buyer.................................... 46
10.04 Limitation on Indemnification by Buyer...................... 46
10.05 Notice; Defense of Claims................................... 46
10.06 Claims Against Indemnification Escrow....................... 47
SECTION 11. MISCELLANEOUS......................................... 47
11.01 Fees and Expenses........................................... 47
11.02 Governing Law............................................... 48
11.03 Notices..................................................... 48
11.04 Entire Agreement............................................ 49
11.05 Assignability; Binding Effect............................... 49
11.06 Captions and Gender......................................... 49
11.07 Execution in Counterparts................................... 49
11.08 Amendments.................................................. 49
11.09 Publicity and Disclosures................................... 49
11.10 Consent to Jurisdiction..................................... 50
11.11 Specific Performance........................................ 50
11.12 Bulk Sales Law.............................................. 50
(iii)
STOCK AND ASSET PURCHASE AGREEMENT
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AGREEMENT entered into as of March 4, 1998 by and among Mac-Gray Services,
Inc., a Delaware corporation ("Buyer"), Amerivend Corporation, a Florida
corporation ("Amerivend"), Amerivend Southeast Corporation, a Georgia
corporation ("Southeast"), Xxxxxx X. Xxxxxx ("Xx. Xxxxxx") and the Xxxxxx X.
Xxxxxx Grantor Retained Annuity Trust (the "Xxxxxx Trust"). Amerivend and
Amerivend Southeast are sometimes referred to herein individually as a "Company"
and together as the "Companies" and Xx. Xxxxxx and the Xxxxxx Trust are
sometimes referred to herein individually as a "Stockholder" and together as the
"Stockholders."
W I T N E S S E T H
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AS, the Stockholders are the record and beneficial owners of all of
the issued and outstanding capital stock of Amerivend which consists entirely of
an aggregate of Five Hundred (500) shares of common stock, $.10 par value per
share (the "Amerivend Shares");
WHEREAS, subject to the terms and conditions set forth herein, the
Stockholders desire to sell all of the Amerivend Shares to Buyer, and Buyer
desires to acquire all of the Amerivend Shares; and
WHEREAS, subject to the terms and conditions hereof, Southeast desires to
sell, transfer and assign to Buyer and Buyer desires to purchase from Southeast,
all of the properties and assets comprising the laundry distribution and coin
route management business of Southeast (the "Southeast Laundry Business").
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION SALE OF SHARES AND ASSETS; PURCHASE PRICE.
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1.01 Transfer of Amerivend Shares. At the Closing (as hereinafter
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defined), each Stockholder shall deliver or cause to be delivered to Buyer
certificates representing all of the Amerivend Shares owned by such Stockholder
as set forth on Exhibit A, which collectively shall represent all of the issued
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and outstanding capital stock of Amerivend. Such stock certificates shall be
duly endorsed in blank for transfer or shall be presented with stock powers duly
executed in blank, with such signature guarantees and such other documents as
may be reasonably required by Buyer to effect a valid transfer of such Amerivend
Shares by such Stockholder, free and clear of any and all liens, encumbrances,
charges or claims. Each Stockholder by execution of this Agreement hereby
appoints Buyer as his attorney-in-fact to effectuate transfer of the Amerivend
Shares at the Closing.
1.02 Sale of Southeast Assets. Upon the terms and subject to the
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conditions set forth in this Agreement, Southeast agrees to sell, assign,
transfer and deliver to Buyer, and Buyer agrees to purchase from Southeast, all
right, title and interest in and to the following assets of Southeast which
comprise the Southeast Laundry Business, other than the Southeast Receivable (as
defined below) (the "Southeast Assets"):
(a) Laundry Machines and other Tangible Assets. All of Southeast's
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(i) new and used inventory of washers and dryers, soap, bleach and softener
dispensers and change machines, parts and accessories, a true, correct and
complete list of which is attached hereto as Schedule 1.02(a)(i) and (ii)
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furniture and office equipment, a true, correct and complete list of which is
attached hereto as Schedule 1.02(a)(ii), in each case together with any
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additions thereto prior to the Closing Date;
(b) Vehicles. All of the vehicles listed on Schedule 1.02(b) attached
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hereto;
(c) Receivables. All notes and accounts receivable of Southeast
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outstanding on the Closing Date (other than the receivable due from Amerivend to
Southeast in the amount of $408,299, plus any interest through the Closing Date
(the "Southeast Receivable"));
(d) Name. The name "Amerivend Southeast" and all related and
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associated logos and trademarks, and all licenses to or from third parties with
respect to the foregoing and rights related thereto;
(e) Distributorship; Contracts. All of the rights of Southeast
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under and interest of Southeast in (i) all distributorship agreements with
Maytag Corporation, including all Parts Distributor Agreements and Commercial
Distributor Sales Agreements (collectively, the "Maytag Distributorship") and
(ii) all customer purchase orders;
(f) Goodwill. All of the goodwill of Southeast in, and the going
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concern value of the Southeast Laundry Business, and all of the intellectual
property and intangible assets of Southeast used or held for use in the
Southeast Laundry Business, including without limitation all business and
customer lists, proprietary information, and trade secrets; and
(g) Records. All of Southeast's customer logs and records and other
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business records relating to the Southeast Laundry Business.
1.03 Purchase Price. In reliance upon the representations and warranties
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of the Companies and the Stockholders contained herein and made at the Closing
and subject to satisfaction of all of the conditions contained herein:
(a) Amerivend Shares. In consideration of the sale by the
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Stockholders to Buyer of the Amerivend Shares, Buyer agrees that at the Closing
it will deliver to the Stockholders an aggregate purchase price (the "Amerivend
Purchase Price") equal to (i) $33,140,000, less (ii) the aggregate amount of
principal of and accrued and unpaid interest,
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premiums and penalties (if any) and other amounts on all indebtedness of
Amerivend for borrowed funds outstanding as of the Closing Date (as hereinafter
defined) (assuming payment in full by Buyer of all such indebtedness on the
Closing Date), including without limitation the indebtedness listed on Schedule
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1.03 attached hereto (but excluding the Southeast Receivable), less (iii) the
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amount of the Southeast Receivable, and as adjusted pursuant to Section 1.05
hereof. The Amerivend Purchase Price shall be paid by Buyer at the Closing by
delivery to the Escrow Agent (as defined in Section 1.03(c) below) of $1,500,000
with the balance paid to the Stockholders, as allocated between the Stockholders
as specified on Exhibit A hereto, by wire transfer to an account specified by
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each Stockholder.
(b) Southeast Assets. In consideration of the sale by Southeast to
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Buyer of the Southeast Assets, Buyer agrees that at the Closing it will deliver
to Southeast an aggregate purchase price (the "Southeast Purchase Price") equal
to $360,000, which shall be paid at the Closing by wire transfer to an account
specified by Southeast.
(c) Escrow Amount. On the Closing Date, Buyer shall deliver to State
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Street Bank and Trust Company (the "Escrow Agent") cash in an amount equal to
$1,500,000 (the "Escrow Amount") to be held by the Escrow Agent pursuant to and
in accordance with the terms and provisions of the Indemnification Escrow
Agreement in the form attached hereto as Exhibit B (the "Escrow Agreement").
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1.04 Closing. Unless this Agreement shall have been terminated in
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accordance with Section 8 hereof, the closing of the purchase and sale of the
Amerivend Shares and the Southeast Assets provided for in this Agreement (the
"Closing") shall take place at the offices of Xxxxxxx, Procter & Xxxx LLP at
Exchange Place, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 commencing at 10:00
A.M. Eastern Standard Time on March 31, 1998 or, if the conditions contained in
Sections 7.01(i) and 7.02(d) have not been satisfied by such date, on the date
that is three (3) business days after such conditions are satisfied, in either
case provided that the conditions to closing set forth in Section 7 hereof are
satisfied or, if applicable, waived, or at such other time and date as may be
otherwise mutually agreed upon by the parties (the "Closing Date"). Except as
otherwise expressly provided in this Agreement or in any document contemplated
by this Agreement, all matters at the Closing shall be considered to take place
simultaneously and no delivery of any documents shall be deemed complete until
all transactions and deliveries of documents are completed.
1.05 Amerivend Purchase Price Adjustment.
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(a) Closing Adjustment. The Amerivend Purchase Price shall be
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adjusted as of the Closing Date to the extent that Estimated Net Working Capital
(as defined below) of Amerivend differs from the Net Working Capital of
Amerivend at December 31, 1996 (the "1996FYE Net Working Capital"), which the
parties estimate was $870,300, as follows:
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(i) The Amerivend Purchase Price shall be increased by the
amount (if any) by which Estimated Net Working Capital exceeds the 1996FYE Net
Working Capital; and
(ii) The Amerivend Purchase Price shall be decreased by the
amount (if any) by which the 1996FYE Net Working Capital exceeds Estimated Net
Working Capital.
For purposes of this Section 1.05, "Net Working Capital" means the aggregate
value of Amerivend's current assets minus the aggregate value of Amerivend's
current liabilities (excluding any current portion of any indebtedness which
reduces the Amerivend Purchase Price pursuant to Section 1.03 hereof), all as
determined in accordance with generally accepted accounting principles ("GAAP")
and consistent with the practices and policies used in preparing Amerivend's
December 31, 1996 balance sheet. For purposes of this Agreement, "Estimated Net
Working Capital" means the estimated Net Working Capital of Amerivend at the
Closing Date based on a statement jointly prepared by and agreed to by Buyer and
Amerivend at least two business days prior to the Closing Date.
(b) Post-Closing Adjustment. The Amerivend Purchase Price will be
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adjusted dollar for dollar following the Closing Date as provided in this
Section 1.05(b). Buyer shall pay the Stockholders (in proportion to their
respective allocations on Exhibit A hereto) the amount (if any) by which the
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Closing Net Working Capital (as defined in Section 1.05(c) below) exceeds the
Estimated Net Working Capital and the Stockholders shall pay Buyer the amount
(if any) by which the Estimated Net Working Capital exceeds the Closing Net
Working Capital. Payment shall be made in immediately available funds by the
party obligated to make such payment not more than five business days following
the determination of the Closing Net Working Capital pursuant to Section 1.05(c)
hereof.
(c) Closing Net Working Capital Statement. Buyer will furnish to the
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Stockholders' Representative (as defined in Section 1.12 hereof) not later than
45 days after the Closing Date a statement (the "Closing Net Working Capital
Statement") showing the Net Working Capital of Amerivend at the Closing Date
(the "Closing Net Working Capital"). Buyer will give Stockholders'
Representative and his accountants reasonable access to books, records and work
papers of Amerivend for purposes of confirming the Closing Net Working Capital
Statement. Unless Stockholders' Representative notifies Buyer in writing that
it disagrees with the Closing Net Working Capital Statement within 30 days after
Stockholders' Representative's receipt thereof, the Closing Net Working Capital
Statement shall be conclusive and binding on all parties hereto and not subject
to dispute or review. If Stockholders' Representative notifies Buyer in writing
of its disagreement with the Closing Net Working Capital Statement within such
30-day period, then Stockholders' Representative and Buyer shall attempt to
resolve their differences with respect thereto within 30 days after Buyer's
receipt of Stockholders' Representative's written notice of disagreement. Any
dispute regarding the Closing Net Working Capital Statement not resolved by
Stockholders' Representative and Buyer within such 30-day period will be
resolved by an accounting firm mutually acceptable to both parties or, in the
absence of agreement, by an accounting firm of national reputation selected by
lot after eliminating Buyer's principal outside accountants and
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Stockholders' Representative' principal outside accountants and one additional
firm designated as objectionable by each of Buyer and Stockholders'
Representative. The parties will engage the accounting firm within seven days
after such 30-day period. The determination by the accounting firm so selected
of the Closing Net Working Capital Statement and the Closing Net Working Capital
(with such modifications therein, if any, as reflect such determination) shall
be conclusive and binding upon all parties hereto and not subject to dispute or
review. The fees and expenses of such accounting firm in acting (in the event of
a dispute) under this Section 1.05(c) shall be shared equally by Stockholders'
Representative and Buyer.
1.06 Further Assurances. The Stockholders and Southeast from time to time
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after the Closing at the request of Buyer and without further consideration
shall execute and deliver further instruments of transfer and assignment and
take such other action as Buyer may reasonably require to more effectively
transfer and assign to, and vest in, Buyer the Amerivend Shares, the Southeast
Assets and all rights thereto, and to fully implement the provisions of this
Agreement.
1.07 Transfer Taxes. All sales and transfer taxes, fees and duties, if
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any, under applicable law incurred in connection with the sale and transfer of
the Amerivend Shares and Southeast Assets pursuant to this Agreement will be
borne and paid by the Stockholders and Southeast, respectively, and the
Stockholders and Southeast shall promptly reimburse Amerivend and Buyer for any
such tax, fee or duty which any of them is required to pay under applicable law.
1.08 No Assumption; Allocation of Southeast Purchase Price. Buyer is not
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assuming and shall not pay or be liable for any liability or obligation of
Southeast of any kind or nature, known, unknown, contingent or otherwise. At or
prior to the Closing, Buyer and Southeast shall agree on the allocation of the
Southeast Purchase Price, which allocation shall be set forth on Schedule 1.08
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attached hereto. Such allocation shall be made in accordance with (i) the
respective fair market values of the Southeast Assets being purchased and sold
and (ii) the provisions of Section 1060 of the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder, and shall be binding upon
Buyer and Southeast for all purposes (including financial accounting purposes,
financial and regulatory reporting purposes and tax purposes). Buyer and
Southeast each further agrees to file its Federal income tax returns and its
other tax returns reflecting such allocation, Form 8594 and any other reports
required by Section 1060 of the Code, in accordance with said allocation.
1.09 Proration. Buyer and Southeast shall prorate personal property taxes
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and any other items as agreed by Buyer and Southeast in connection with the sale
of the Southeast Assets. Such proration shall be made as of 12:00 a.m. on the
Closing Date and the Southeast Purchase Price shall be adjusted as necessary to
reflect such proration.
1.10 Transfer of Southeast Assets. At the Closing, Southeast shall
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deliver or cause to be delivered to Buyer good and sufficient instruments of
transfer transferring to Buyer title to all of the Southeast Assets including
without limitation, a Xxxx of Sale and assignments of the
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Maytag Distributorship, together with any required consents to assignment. Such
instruments of transfer (a) shall be in the form which is usual and customary
for transferring the type of property involved under the laws of the
jurisdictions applicable to such transfers, (b) shall be in form and substance
reasonably satisfactory to Buyer and its counsel, (c) shall effectively vest in
Buyer good and marketable title to all of the Southeast Assets free and clear of
all Encumbrances (as defined in Section 2.06 hereof), and (d) where applicable,
shall be accompanied by evidence of the discharge of all Encumbrances against
the Southeast Assets.
1.11 Employees.
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(a) Southeast shall terminate all of its employees effective as of
the Closing and Buyer shall not assume or have any obligations or liabilities
with respect to such terminations.
(b) Buyer shall offer employment to each of Southeast's employees as
of the Closing Date. Southeast acknowledges and agrees that Buyer may interview
and discuss employment terms and issues with its employees. Nothing in this
Agreement shall be construed as a commitment or obligation of Buyer to continue
the employment of, any of Southeast's employees.
(c) Southeast shall pay all wages, salaries, commissions, and the
cost of all fringe benefits provided to all of its employees which shall have
become due for work performed as of and through the day preceding the Closing
Date, and Southeast shall collect and pay all taxes in respect of such wages,
salaries, commissions and benefits.
(d) Southeast acknowledges and agrees that Buyer shall not acquire
any rights or interests of Southeast in, or assume or have any obligations or
liabilities of Southeast under, any benefit plans maintained by, or for the
benefit of employees of Southeast prior to the Closing Date including without
limitation obligations for severance or vacation accrued but not taken as of the
Closing Date.
1.12 Stockholders' Representative.
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(a) By executing and delivering this Agreement, each Stockholder
hereby irrevocably constitutes and appoints Xxxxxx X. Xxxxxx as his true and
lawful agent and attorney-in-fact (the "Stockholders' Representative") with full
power of substitution to act in his name, place and xxxxx with respect to all
transactions contemplated by, and all terms and provisions of, this Agreement,
and to act on his behalf in any dispute or arbitration involving this Agreement,
and to do or refrain from doing all such further acts and things, and execute
all such documents as the Stockholders' Representative shall deem necessary or
appropriate in connection with the transactions contemplated by this Agreement,
in all events in the Stockholders' Representative's sole and absolute
discretion, including, without limitation, the power:
6
(i) to waive any condition to the obligations of the Company and the
Stockholders to consummate the transactions contemplated by this Agreement;
(ii) to act for each Stockholder with regard to matters pertaining to
indemnification referred to in this Agreement, including the power to compromise
any claim on behalf of any Stockholder and to transact matters of litigation;
(iii) to execute and deliver all ancillary agreements, certificates
and documents, and to make representations and warranties therein, on behalf of
each Stockholder in connection with the consummation of the transactions
contemplated by this Agreement;
(iv) to do or refrain from doing any further act or deed on behalf of
each Stockholder relating to the subject matter of this Agreement, as fully and
completely as each such Stockholder could do if personally present; and
(v) to receive all notices on behalf of each Stockholder in
connection with any claims or matters under this Agreement.
(b) The appointment of the Stockholders' Representative in this
Section 1.04 shall be deemed coupled with an interest and shall be irrevocable,
and Buyer and any other person may conclusively and absolutely rely, without
inquiry, upon any action of the Stockholders' Representative on behalf of the
Stockholders in all matters referred to herein. All notices delivered by Buyer
to the Stockholders' Representative (whether pursuant hereto or otherwise) for
the benefit of the Stockholders shall constitute notice to the Stockholders.
(c) All actions, decisions and instructions of the Stockholders'
Representative taken, made or given pursuant to the authority granted to the
Stockholders' Representative pursuant to paragraph (a) above shall be conclusive
and binding upon the Stockholders, and the Stockholders shall not have the right
to object, dissent, protest or otherwise contest the same.
(d) The provisions of this Section 1.12 are independent and
severable, shall constitute an irrevocable power of attorney, coupled with an
interest surviving death or disability of any Stockholder, granted by each of
the Stockholders to the Stockholders' Representative and shall be binding upon
the executors, heirs, legal representatives, successors and assigns of each of
the Stockholders.
(a) Buyer shall be entitled to rely conclusively on the instructions
and decisions of the Stockholders' Representative as to any actions required or
permitted to be taken by the Stockholders or the Stockholders' Representative
hereunder, and no party hereunder shall have any cause of action against Buyer
for any action taken in good faith by Buyer in reliance upon the instructions or
decisions of the Stockholders' Representative.
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND XX. XXXXXX.
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2.01 Making of Representations and Warranties. As a material inducement
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to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, each Company and Xx. Xxxxxx jointly and severally hereby
make to Buyer the representations and warranties contained in this Section 2. No
Stockholder shall have any right of indemnity or contribution from Amerivend or
any Subsidiary with respect to the breach of any representation or warranty
hereunder.
2.02 Organization and Qualifications of the Companies. Each Company is a
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corporation duly organized, validly existing and in good standing under the laws
of Florida (in the case of Amerivend) or Georgia (in the case of Southeast),
with full corporate power and authority to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is currently conducted or proposed to be
conducted. The copies of each Company's Articles of Incorporation, as amended
to date, and of each Company's by-laws, as amended to date, and heretofore
delivered to Buyer's counsel, are complete and correct, and no amendments
thereto are pending. Each Company is duly qualified to do business as a foreign
corporation in each jurisdiction where the nature of its properties or the
conduct of its business makes its qualification so necessary, except where the
failure to be so qualified would not have a material adverse effect on the
business, assets, properties, results of operations, condition (financial or
otherwise) or prospects (a "Material Adverse Effect") of the Companies and their
Subsidiaries (as hereinafter defined) taken as a whole.
2.03 Capital Stock of the Companies; Beneficial Ownership.
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(a) The authorized capital stock of Amerivend consists of 3,000,000
shares of common stock, $.10 par value per share, of which 500 shares are duly
and validly issued, outstanding, fully paid and nonassessable and of which
2,999,500 shares are authorized but unissued. There are no outstanding options,
warrants, rights, commitments, preemptive rights or agreements of any kind for
the issuance or sale of, or outstanding securities convertible into, any
additional shares of capital stock of any class of Amerivend. No capital stock
of either Company has been issued in violation of any federal or state law.
Except as set forth in Schedule 2.03 attached hereto, there are no voting
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trusts, voting agreements, proxies or other agreements, instruments or
undertakings with respect to the voting of the Amerivend Shares to which either
Amerivend or any of the Stockholders is a party.
(b) Each of the Stockholders owns beneficially and of record that
number of Amerivend Shares set forth opposite such Stockholder's name in Exhibit
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A attached hereto free and clear of any and all Encumbrances.
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2.04 Subsidiaries; Investments. Each Company's subsidiaries and
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investments in any other corporation or business entity are listed in Schedule
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2.04 attached hereto (collectively,
----
8
the "Subsidiaries" and, individually, each a "Subsidiary"). Except as set forth
in Schedule 2.04 attached hereto, each Subsidiary is a duly organized, validly
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existing corporation or other business entity in good standing under the laws of
the jurisdiction of its incorporation or formation with full power and authority
to own or lease its properties and to conduct its business in the manner and in
the places where such properties are owned or leased or such business is
currently conducted or proposed to be conducted. Except as disclosed in
Schedule 2.04 attached hereto, all of the outstanding shares of capital stock
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of each Subsidiary are owned beneficially and of record by the relevant Company,
free of any lien, restriction or encumbrance and said shares have been duly and
validly issued and are outstanding, fully paid and nonassessable. The copies of
each of the Subsidiaries' Articles of Incorporation and by-laws, or other
organizational documents, each as amended to date, and heretofore delivered to
Buyer's counsel, are complete and correct, and no amendments thereto are
pending. None of the Subsidiaries is in violation of any term of its Articles of
Incorporation or by-laws (or comparable organizational documents). Each
Subsidiary is duly qualified to do business as a foreign corporation in each
jurisdiction where (i) such Subsidiary conducts business and (ii) the laws of
such jurisdiction require such qualification, and it is not required to be
licensed or qualified to conduct its business or own its property in any other
jurisdiction. Except as disclosed in Schedule 2.04 attached hereto, (A) there
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are no outstanding warrants, options or other rights to purchase or acquire any
of the shares of capital stock or other ownership interests of any Subsidiary,
or any outstanding securities convertible into such shares or outstanding
warrants, options or other rights to acquire any such convertible securities,
(B) there are no restrictions on the transfer of any Subsidiaries' capital stock
or other ownership interests, and (C) no capital stock or other ownership
interest of any Subsidiary has been issued in violation of any foreign, federal,
state or local law.
2.05 Authority. Each Company has full right, authority and power to enter
---------
into this Agreement and each agreement, document and instrument to be executed
and delivered by such Company pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by each Company of this Agreement and each such other agreement,
document and instrument have been duly authorized by all necessary action of
such Company and no other action on the part of such Company is required in
connection therewith.
This Agreement and each agreement, document and instrument contemplated
hereby to which either Company is a party constitute, or when executed and
delivered by such Company will constitute, valid and binding obligations of such
Company enforceable against such Company in accordance with their terms, except
as limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors' rights
and (ii) general principles of equity that restrict the availability of
equitable remedies. The execution, delivery and performance by each Company of
this Agreement and each such agreement, document and instrument:
(A) does not and will not violate any provision of the Articles of
Incorporation or by-laws or any similar organizational documents of either
Company;
9
(B) does not and will not violate any federal, state or local laws
applicable to either Company or require either Company to obtain any approval,
consent or waiver of, or make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made; and
(C) does not and will not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of any indenture or loan or credit agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment,
injunction, decree, determination or arbitration award to which either Company
(or any of its Subsidiaries) is a party or by which the property of either
Company (or any of its Subsidiaries) is bound or affected, except as set forth
on Schedule 2.05, or result in the creation or imposition of any mortgage,
-------------
pledge, lien, security interest or other charge or encumbrance on either
Company's (or any of its Subsidiary's) assets or on the capital stock of either
Company, except as specifically identified in Schedule 2.05 attached hereto.
-------------
2.06 Real and Personal Property.
--------------------------
(a) Real Property. All of the real property owned or leased by
-------------
either Company or any of its Subsidiaries is identified in Schedule 2.06(a)
----------------
attached hereto (herein referred to as the "Owned Real Property" or the "Leased
Real Property," as the case may be, or collectively as the "Real Property.")
(i) Title. Except as set forth in Schedule 2.06(a) attached
----- ----------------
hereto, each Company and each Subsidiary (as the case may be) has good, clear,
record and marketable title to (A) all Owned Real Property of such Company and
(B) enforceable leasehold interests in the Leased Real Property of such Company,
in each case free and clear of all easements, covenants, restrictions, leases,
mortgages, liens, assessments, claims, rights, judgments, encroachments,
pledges, conditional sale agreements, security interests, encumbrances, or other
matters affecting title (collectively, "Encumbrances"), other than:
(x) easements, covenants, restrictions and similar
encumbrances that do not and could not materially interfere with the use of the
Owned Real Property as currently used and improved; and
(y) minor encroachments that do not and could not
materially adversely affect the value or use of the Owned Real Property as
currently used and improved and that could be removed without material cost.
((x) and (y) are collectively referred to as "Permitted Encumbrances"), except
as set forth in Schedule 2.06(a) attached hereto. To the knowledge of the
----------------
Companies and the Sto`ckholders, the lessors of the Leased Real Property have
good, clear, record and marketable title to the Leased Real Property, and the
Companies and their Subsidiaries have good, clear, record and marketable title
to enforceable leasehold interests in the Leased Real Property, in each case
10
free and clear of all Encumbrances other than Permitted Encumbrances, subject
only to the right of reversion of the lessor, except as set forth in Schedule
--------
2.06(a).
-------
(ii) Status of Leases. All leases of Leased Real Property or of
----------------
Owned Real Property are identified in Schedule 2.06(a) attached hereto, and true
----------------
and complete copies thereof have been delivered to Buyer. Each of said leases
has been duly authorized and executed by the parties thereto and is in full
force and effect. Neither Company nor any of their Subsidiaries is in default
under any of said leases or has received any notice thereof, nor has any event
occurred which, with notice or the passage of time, or both, would give rise to
such a default. To the knowledge of the Companies and the Stockholders, none of
the other parties to said leases is in default thereunder and there is no event
which, with notice or the passage of time, or both, would give rise to such a
default. After giving effect to the transactions contemplated by this
Agreement, each of said leases will be fully enforceable by the Company or
Subsidiary which is a party thereto against the other party thereto.
(iii) Consents. Except as set forth in Schedule 2.06(a) attached
-------- ----------------
hereto, no approval is required with respect to the transactions contemplated by
this Agreement from the other parties to any lease of the Leased Real Property,
from the holder of any Encumbrance on any Owned Real Property, or from any
regulatory authority, no filing with any regulatory authority is required in
connection therewith, and to the extent that any such consents, approvals or
filings are required, the Companies or the Stockholders will obtain or complete
them before the Closing.
(iv) Condition of Real Property. There are no material defects
--------------------------
in the physical condition of any land, buildings or improvements constituting
part of the Real Property, including, without limitation, structural elements,
mechanical systems, parking and loading areas, and all such buildings and
improvements are in good operating condition and repair and have been well
maintained.
(v) Compliance with the Law. Neither Company nor any
-----------------------
Subsidiary has received any notice from any governmental authority of any
violation of any law, ordinance, regulation, license, permit or authorization
issued with respect to any Real Property that has not been heretofore corrected,
and no such violation exists which should have a material adverse effect on the
operation or value of any Real Property. All improvements located on or
constituting part of the Real Property and their use and operation by the
Companies and their Subsidiaries were and are now in compliance in all material
respects with all applicable laws, ordinances, regulations, licenses, permits
and authorizations, except as set forth in Schedule 2.06(a) attached hereto. No
----------------
approval or consent to the transactions contemplated by this Agreement is
required of any governmental authority with jurisdiction over any aspect of the
Real Property or its use or operations, except where the failure to obtain such
approval or consent would not have a material adverse effect on the operation or
value of the Real Property. Neither Company nor any Subsidiary has received any
notice of any real estate tax deficiency or assessment which has not been
satisfied or is aware of any proposed
11
material deficiency, claim or assessment with respect to any of the Real
Property, or any pending or threatened condemnation thereof.
(b) Personal Property. A complete description of the machinery and
-----------------
equipment of each Company and each of its Subsidiaries is contained in Schedule
--------
2.06(b) attached hereto. Except as specifically disclosed in said Schedule or
-------
the Base Balance Sheet (as hereinafter defined), each Company and each of its
Subsidiaries has good and marketable title to all of its personal property.
None of such personal property or assets is subject to any Encumbrance except as
specifically disclosed in said Schedule or in the Base Balance Sheet. The Base
Balance Sheet reflects all personal property of Amerivend and each of its
Subsidiaries. Except as otherwise specified in Schedule 2.06(b) attached
----------------
hereto, all leasehold improvements, furnishings, machinery and equipment of each
Company and each of its Subsidiaries are in good repair, have been well
maintained and substantially comply with all applicable laws, ordinances and
regulations, and such machinery and equipment is in good working order; and
neither Company nor any of the Stockholders knows of any pending or threatened
change of any such law, ordinance or regulation which could adversely affect
either Company, any of its Subsidiaries or any of their businesses.
2.07 Laundry Leases. Schedule 2.07 attached hereto lists all of the
-------------- -------------
contracts, understandings and arrangements, whether written or oral, including
any tenancy at will, under which either Company or any of their Subsidiaries are
bound, or to which either Company or any of their Subsidiaries is a party, which
relate to the placement of laundry machines (the "Laundry Leases"). Schedule
--------
2.07 attached hereto contains a true, correct and complete list of all Laundry
----
Lease locations, Laundry Lease expirations, the number of laundry machines at
each Laundry Lease location, vend prices, net revenues after commission for each
Laundry Lease location and whether the terms of such Laundry Lease require the
consent or approval of or prior notice to any third party as a result of the
consummation of the transactions contemplated by this Agreement. True and
correct copies of all the Laundry Leases have been delivered or made available
to Buyer prior to the date hereof. Each of the Laundry Leases is valid, in full
force and effect and binding upon the relevant Company or its Subsidiaries, as
the case may be, and the other parties thereto in accordance with its respective
terms. Neither Company, its Subsidiaries nor, to the knowledge of the Companies
and the Stockholders, any other party is in default under or in arrears in the
performance, payment or satisfaction of any agreement or condition on its part
to be performed or satisfied under any Laundry Lease, nor, to the knowledge of
the Companies and the Stockholders, does any condition exist that with notice or
lapse of time or both would constitute such a default, and no waiver or
indulgence has been granted by any lessee under any Laundry Lease. Neither
Company nor any of its Subsidiaries has received notice or has knowledge of any
fact which would result in the termination, repudiation or breach of any Laundry
Lease. After giving effect to the transactions contemplated by this Agreement,
each of the Laundry Leases will be valid and effective in accordance with its
terms, and fully enforceable by the relevant Company or a Subsidiary against the
other party thereto.
12
2.08 Equipment. The laundry machines that are the subject of the Laundry
---------
Leases listed in Schedule 2.07 constitute all of the laundry machines which are
-------------
owned and/or operated by the Companies and their Subsidiaries, except for
laundry machines held in inventory as set forth in Schedule 2.08 attached
-------------
hereto. Schedule 2.08 attached hereto includes a true, correct and complete
-------------
list of: (i) all of the laundry machines and change machines installed at the
Laundry Lease locations listed in Schedule 2.07 and (ii) all of the inventory of
-------------
new laundry machines of the Companies and their Subsidiaries (collectively, the
"Equipment"). All of the Equipment is in good operating condition, ordinary
wear and tear excepted.
2.09 Title. Except as set forth in Schedule 2.09 attached hereto, each
----- -------------
Company and its Subsidiaries have good and valid title to, or a valid leasehold
interest in, all of their Equipment, Laundry Leases and the other properties and
assets which are used in their business or otherwise material to their financial
condition, free and clear of any Encumbrance. The Southeast Assets being
purchased by Buyer hereunder constitute all of the assets necessary for Buyer to
operate the Southeast Laundry Business as currently conducted.
2.10 Financial Statements.
--------------------
(a) The Companies have delivered to Buyer the following financial
statements, copies of which are attached hereto as Schedule 2.10:
-------------
(b) Consolidated balance sheets of Amerivend and its Subsidiaries as
of December 31, 1995, 1996 and 1997 and statements of income and retained
earnings and statements of cash flows for the three (3) years then ended, which
statements are audited by Amerivend's independent public accountants (KPMG Peat
Marwick in the case of the 1995 and 1996 statements and Morrison, Brown, Argiz &
Company in the case of the 1997 statements). The audited balance sheet of
Amerivend as of December 31, 1997 is referred to herein as the "Amerivend Base
Balance Sheet."
(c) Consolidated balance sheets of Southeast and its Subsidiaries as
of March 31, 1995, 1996 and 1997 and statements of income and retained earnings
and statements of cash flows for the three (3) years then ended, which
statements are audited by Conn & Company, P.C., independent public accountants.
The audited balance sheet of Southeast as of March 31, 1997 is referred to
herein as the "Amerivend Southeast Base Balance Sheet" and, together with the
Amerivend Base Balance Sheet, the "Base Balance Sheet."
(d) A consolidated balance sheet of Amerivend and its Subsidiaries
as of January 31, 1998 and statements of income and retained earnings and
statements of cash flows for the one-month period then ended, certified by
Amerivend's Treasurer or Chief Financial Officer.
(e) Consolidated balance sheets of Southeast and its Subsidiaries
as of December 31, 1997 and January 31, 1998 and statements of income and
retained earnings and statements of cash flows for the nine-month and one-month
periods then ended, respectivley, certified by Southeast's Treasurer or Chief
Financial Officer.
13
The financial statements described in (b), (c), (d) and (e) above have been
prepared in accordance with GAAP applied consistently during the periods covered
thereby, are complete and correct in all material respects and present fairly in
all material respects the financial condition of each Company and its
Subsidiaries, as the case may be, at the dates of said statements and the
results of operations for the periods covered thereby.
(f) As of the date of the Base Balance Sheet, neither Company nor
any of its Subsidiaries has or will have any liabilities of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, known or
unknown (including, without limitation, liabilities as guarantor or otherwise
with respect to obligations of others, liabilities for taxes due or then accrued
or to become due, or contingent or potential liabilities relating to activities
of either Company or any of its Subsidiaries or the conduct of their business
prior to the date of the Base Balance Sheet, regardless of whether claims in
respect thereof had been asserted as of such date), except (i) liabilities
stated or adequately reserved against on the Base Balance Sheet or the notes
thereto, (ii) liabilities reflected in Schedules furnished to Buyer hereunder as
of the date hereof, or (iii) immaterial liabilities incurred in the ordinary
course of business of the Companies and their Subsidiaries, as applicable, in
existence as of the date of the Base Balance Sheet which are not required to be
reflected in the Base Balance Sheet or the notes thereto under GAAP.
(g) As of the date hereof and as of the Closing, neither Company nor
any of its Subsidiaries has had or will have any liabilities of any nature,
whether accrued, absolute, contingent or otherwise, asserted or unasserted,
known or unknown (including, without limitation, liabilities as guarantor or
otherwise with respect to obligations of others, liabilities for taxes due or
then accrued or to become due, or contingent or potential liabilities relating
to activities of either Company or any of its Subsidiaries or the conduct of
their business prior to the date hereof or the Closing, as the case may be,
regardless of whether claims in respect thereof had been asserted as of such
date), except liabilities (i) stated or adequately reserved against on the Base
Balance Sheet or the notes thereto, (ii) reflected in Schedules furnished to
Buyer hereunder on the date hereof, or (iii) incurred after the date of the Base
Balance Sheet in the ordinary course of business of the Companies or any
Subsidiary consistent with the terms of this Agreement.
2.11 Taxes.
-----
(a) Each Company and each of its Subsidiaries has paid or caused to
be paid all federal, state, local, foreign and other taxes, including, without
limitation, income taxes, estimated taxes, capital gains taxes, alternative
minimum taxes, excise taxes, sales taxes, goods and services taxes, use taxes,
value-added taxes, gross receipts taxes, franchise taxes, capital stock taxes,
employment and payroll-related taxes, withholding taxes, stamp taxes, transfer
taxes, windfall profit taxes, environmental taxes and property taxes, whether or
not measured in whole or in part by net income, and all deficiencies, or other
additions to tax, interest, fines and penalties owed by it (collectively,
"Taxes"), required to be paid by it through the date hereof whether disputed or
not. All Taxes and other assessments and levies which either
14
Company or any of their Subsidiaries is required to withhold or collect have
been withheld and collected and have been paid over to the proper governmental
authorities within the time required by applicable law.
(b) Each Company and each of its Subsidiaries has in accordance with
applicable law filed all federal, state, local and foreign tax returns and all
other materials required to be filed by it through the date hereof and will
continue to do so in respect of any fiscal period ending on or prior to the
Closing Date, and all such returns correctly and accurately set forth the amount
of any Taxes relating to the applicable period. A list of federal, state, local
and foreign income tax returns filed with respect to each Company and its
Subsidiaries for taxable periods ending on or after March 9, 1989 is set forth
in Schedule 2.11 attached hereto, and said Schedule indicates those returns that
-------------
have been audited or currently are subject of an audit. For each taxable period
of each Company and its Subsidiaries ended on or after March 9, 1989, such
Company has delivered to Buyer correct and complete copies of all federal,
state, local and foreign tax returns, examination reports and statements of
deficiencies assessed against or agreed to by such Company or any of its
Subsidiaries.
(c) Except as set forth in Schedule 2.11 attached hereto, neither
-------------
the Internal Revenue Service ("IRS") nor any other governmental authority is now
asserting or, to the knowledge of the Companies and the Stockholders,
threatening to assert against either Company or any of its Subsidiaries, any
deficiency or claim for additional Taxes. No claim has ever been made by an
authority in a jurisdiction where a Company or any Subsidiary does not file
reports and returns that such Company or such Subsidiary is or may be subject to
taxation by that jurisdiction. There are no Encumbrances on any of the assets of
the Companies or any of their Subsidiaries that arose in connection with any
failure (or alleged failure) to pay any Taxes. Neither Company nor any
Subsidiary has ever entered into a closing agreement pursuant to Section 7121 of
the Internal Revenue Code of 1986, as amended (the "Code").
(d) Except as set forth in Schedule 2.11 attached hereto, there has
-------------
not been any audit of any tax return filed by either Company or any Subsidiary,
no such audit is in progress, and neither Company nor any Subsidiary has been
notified by any tax authority that any such audit is contemplated or pending.
Except as set forth in Schedule 2.11, no extension of time with respect to any
-------------
date on which a tax return was or is to be filed by either Company or any
Subsidiary is in force, and no waiver or agreement by either Company or any
Subsidiary is in force for the extension of time for the assessment or payment
of any Taxes.
(e) Neither Company nor any Subsidiary has ever been (or has ever
had any liability for unpaid Taxes because it once was) a member of an
"affiliated group" (as defined in Section 1504(a) of the Code). Except as set
forth in Schedule 2.11 attached hereto, neither Company nor any Subsidiary has
-------------
ever filed, and has ever been required to file, a consolidated, combined or
unitary tax return with any other entity. Except as set forth in Schedule 2.11,
--------------
neither Company nor any Subsidiary owns or has ever owned a direct or indirect
interest in any trust, partnership, corporation or other entity. Except as set
forth in Schedule 2.11
-------------
15
attached hereto, neither Company nor any Subsidiary is a party to any tax
sharing agreement. Neither Company nor any Subsidiary is or could be liable for
any Taxes of any other person or entity.
(f) For purposes of this Agreement, all references to sections of
the Code shall include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign law.
(g) For federal income tax purposes, Amerivend el
ected to be an S
corporation under (S)1362 of the Code effective as of March 9, 1989 and has been
an S corporation at all times since March 9, 1989. For state income tax
purposes, including but not limited to the States of Florida and Georgia,
Amerivend elected to be an S corporation effective as of March 9, 1989 and has
been an S corporation at all times since March 9, 1989. Amerivend is an entity
described in Section 280(G)(b)(5)(A)(i) of the Code.
(h) Amerivend filed with each of its Georgia S corporation corporate
tax returns filed since March 9, 1989 a consent agreement signed by all of its
nonresident stockholders, in which all of such stockholders agreed to pay
Georgia income tax on their portion of Amerivend's corporate income.
2.12 Collectibility of Accounts Receivable. All of the accounts and notes
-------------------------------------
receivable of the Companies or any Subsidiary shown or reflected on the Base
Balance Sheet or existing at the date hereof (less the reserve for bad debts set
forth on the Base Balance Sheet) are or will be at the Closing valid and
enforceable claims, fully collectible and subject to no setoff or counterclaim.
Neither Company nor any Subsidiary has any accounts or loans receivable of
Amerivend from any person, firm or corporation which is affiliated with either
Company or any Subsidiary or from any director, officer or employee of either
Company or any Subsidiary, except as disclosed in Schedule 2.12 attached hereto,
-------------
and all accounts and loans receivable from any such person, firm or corporation
shall be paid in cash prior to the Closing, or shall be included in indebtedness
of Amerivend in accordance with Section 1.03 hereof.
2.13 Inventories. Except as disclosed in Schedule 2.13, all items in the
----------- -------------
inventories of the Companies or any Subsidiary shown on the Base Balance Sheet
or existing at the date hereof are of a quality and quantity saleable or
leasable in the ordinary course of business of the Companies and their
Subsidiaries at profit margins consistent with their experience during the year
ended December 31, 1997. Except as disclosed in Schedule 2.13, said inventories
-------------
reflect write-downs to realizable values in the case of items which are below
standard quality or have become obsolete or unsaleable or unleasable (except at
prices less than cost) in the ordinary course of the business of the Companies
and their Subsidiaries. No such write-downs since January 1, 1997 have had a
Material Adverse Effect on the Companies and their Subsidiaries taken as a
whole. The values of the inventories stated in the Base Balance Sheet and any
subsequent financial statements of either Company or any Subsidiary reflect the
normal inventory valuation policies of the Companies and their Subsidiaries and
were determined at the lower of cost or market in accordance with generally
accepted accounting principles, practices and methods consistently applied.
Purchase commitments for parts are
16
not in excess of normal requirements and none are at prices materially in
excess of current market prices. Except as disclosed in Schedule 2.13, all
-------------
inventory items are located on the Owned Real Property or the Leased Real
Property. Since the date of the Base Balance Sheet, no inventory items have been
sold, leased or disposed of except through sales and leases in the ordinary
course of business at profit margins consistent with the experience of the
Companies and their Subsidiaries during the year ended December 31, 1997.
2.14 Absence of Certain Changes. Except as disclosed in Schedule 2.14
-------------------------- -------------
attached hereto, since the date of the Amerivend Base Balance Sheet (in the case
of Amerivend) and since the date of the Southeast Base Balance Sheet (in the
case of Southeast) there has not been:
(a) Any change in the financial condition, properties, assets,
liabilities, business or operations of either Company or any of its
Subsidiaries, which change by itself or in conjunction with all other such
changes, whether or not arising in the ordinary course of business, has had a
Material Adverse Effect on the Companies and their Subsidiaries taken as a
whole;
(b) Any contingent liability incurred by either Company or any of
its Subsidiaries as guarantor or otherwise with respect to the obligations of
others or any cancellation of any material debt or claim owing to, or waiver of
any material right of, the Company or any of its Subsidiaries;
(c) Any Encumbrance placed on any of the properties of either
Company or any of its Subsidiaries which remains in existence on the date hereof
or will remain on the Closing Date;
(d) Any obligation or liability of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown
(including, without limitation, liabilities for Taxes due or to become due or
contingent or potential liabilities relating to products or services provided by
the Companies or any of their Subsidiaries or the conduct of the business of the
Companies or any of their Subsidiaries since the date of the Base Balance Sheet
regardless of whether claims in respect thereof have been asserted), incurred by
either Company or any of its Subsidiaries other than obligations and liabilities
incurred in the ordinary course of business consistent with the terms of this
Agreement (it being understood that product or service liability claims shall
not be deemed to be incurred in the ordinary course of business);
(e) Any purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of either Company or any of its Subsidiaries other than in
the ordinary course of business;
(f) Any damage, destruction or loss, whether or not covered by
insurance, which has had a Material Adverse Effect on the Companies and their
Subsidiaries taken as a whole;
17
(g) Any declaration, setting aside or payment of any dividend by
either Company or any of its Subsidiaries, or the making of any other
distribution in respect of the capital stock, or other ownership interests, of
either Company or any of its Subsidiaries, or any direct or indirect redemption,
purchase or other acquisition by either Company or any of its Subsidiaries of
its own capital stock, or other ownership interests;
(h) Any labor trouble or claim of unfair labor practices involving
either Company or any of its Subsidiaries, any change in the compensation
payable or to become payable by either Company or any of its Subsidiaries to any
of its officers, employees, agents or independent contractors other than normal
merit increases in accordance with its usual practices, or any bonus payment or
arrangement made to or with any of such officers, employees, agents or
independent contractors;
(i) Any change with respect to the officers or management of either
Company or any of its Subsidiaries;
(j) Any payment or discharge of a material lien or liability of
either Company or any of its Subsidiaries which was not shown on the Base
Balance Sheet or incurred in the ordinary course of business thereafter;
(k) Any obligation or liability incurred by either Company or any of
its Subsidiaries to any of its officers, directors, stockholders or employees,
or any loans or advances made by either Company or any of its Subsidiaries to
any of its officers, directors, stockholders or employees, except normal
compensation and expense allowances payable to officers or employees;
(l) Any change in accounting methods or practices, credit practices
or collection policies used by either Company or any of its Subsidiaries;
(m) Any other transaction entered into by either Company or any of
its Subsidiaries other than transactions in the ordinary course of business;
(n) Any change in the financial condition of any Subsidiary of
either Company that would make it more likely than not that any guarantee made
by such Company with respect to such Subsidiary's obligations will be triggered
within six (6) months after the date of this Agreement, or any change in the
financial condition of any such Subsidiary that has triggered a guarantee of
either Company with respect to the obligations of such Subsidiary;
(o) Any waiver of any valuable right of, or cancellation of any debt
or claim held by, either Company or any of its Subsidiaries; or
(p) Any agreement or understanding whether in writing or otherwise,
for either Company or any its Subsidiaries to take any of the actions specified
in paragraphs (a) through (o) above.
18
2.15 Ordinary Course. Since the dates of their respective Base Balance
---------------
Sheets, each Company and each of its Subsidiaries has conducted its business
only in the ordinary course and consistently with its prior practices.
2.16 Banking Relations. All of the arrangements which either Company or
-----------------
any of its Subsidiaries has with any banking institution are completely and
accurately described in Schedule 2.16 attached hereto, indicating with respect
-------------
to each of such arrangements the type of arrangements maintained (such as
checking account, borrowing arrangements, safe deposit box, etc.) and the person
or persons authorized in respect thereof.
2.17 Intellectual Property.
---------------------
(a) except as described in Schedule 2.17 attached hereto, each
-------------
Company and each of its Subsidiaries has exclusive ownership of, or exclusive
license to use, all patent, copyright, trade secret, trademark, or other
proprietary rights (collectively, "Intellectual Property") used or to be used in
the business of such Company or such Subsidiary as presently conducted or
contemplated. All of the rights of each Company and each of its Subsidiaries in
such Intellectual Property are freely transferable. There are no claims or
demands of any other person pertaining to any of such Intellectual Property and
no proceedings have been instituted, or are pending or threatened, which
challenge the rights of either Company or any of its Subsidiaries in respect
thereof. Except as described in Schedule 2.17, each Company and each of its
-------------
Subsidiaries has the right to use, free and clear of claims or rights of other
persons, all customer lists, designs, manufacturing or other processes, computer
software, systems, data compilations, research results and other information
required for or incident to its products or its business as presently conducted
or contemplated.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to either Company or any of its Subsidiaries are listed in Schedule
--------
2.17 attached hereto. All of such patents, patent applications, trademark
----
registrations, trademark applications and registered copyrights have been duly
registered in, filed in or issued by the United States Patent and Trademark
Office or such other applicable governmental office or authority under the
jurisdiction of which the relevant Company and its Subsidiaries conduct
business, as the case may be, and have been properly maintained and renewed in
accordance with all applicable provisions of applicable law and administrative
regulations.
(c) All licenses or other agreements under which either Company or
any of its Subsidiaries is granted rights in Intellectual Property are listed in
Schedule 2.17 attached hereto. All said licenses or other agreements are in
-------------
full force and effect, there is no material default by any party thereto, and,
except as set forth in Schedule 2.17 attached hereto, all of the rights of each
-------------
Company or any Subsidiary thereunder will continue in full force and effect upon
consummation of the transactions contemplated hereby. To the knowledge of the
Companies and the Stockholders, the licensors under said licenses and other
agreements have and had all requisite power and authority to grant the rights
purported to be conferred thereby.
19
True and complete copies of all such licenses or other agreements, and any
amendments thereto, have been provided to Buyer.
(d) All licenses or other agreements under which either Company or
any of its Subsidiaries has granted rights to others in Intellectual Property
owned or licensed by either Company or such Subsidiary are listed in
Schedule 2.17 attached hereto. All of said licenses or other agreements
-------------
are in full force and effect and, to the knowledge of the Companies and the
Stockholders, there is no material default by any party thereto, and, except as
set forth in Schedule 2.17 attached hereto, all of the rights of each Company
-------------
or any Subsidiary thereunder will continue in full force and effect upon
consummation of the transactions contemplated hereby. True and complete copies
of all such licenses or other agreements, and any amendments thereto, have been
provided to Buyer.
(e) Each Company and each of its Subsidiaries has taken all steps
required in accordance with sound business practice to establish and preserve
its ownership of all material Intellectual Property rights with respect to its
products, services and technology. Except as set forth on Schedule 2.17,
-------------
neither Company nor any of its Subsidiaries has made any valuable non-public
information of either Company available to any person other than employees of
the Companies and their Subsidiaries, except pursuant to written agreements
requiring the recipients to maintain the confidentiality of such information and
appropriately restricting the use thereof. Neither Company nor any Stockholder
has any knowledge of any infringement by others of any material Intellectual
Property rights of either Company or any Subsidiary.
(f) The present and contemplated business, activities, products and
services of the Companies and their Subsidiaries do not infringe any
Intellectual Property of any other person. No proceeding charging either
Company or any of its Subsidiaries with infringement of any adversely held
Intellectual Property has been filed or is threatened to be filed. To the
knowledge of the Companies and the Stockholders, there exists no unexpired
patent or patent application which includes claims that would be infringed by or
otherwise adversely affect the products, activities or business of either
Company or any Subsidiary. Neither Company nor any of its Subsidiaries is
making unauthorized use of any confidential information or trade secrets of any
person, including, without limitation, to the knowledge of the Companies, any
former employer of any past or present employee of either Company or any of its
Subsidiaries. Except as set forth in Schedule 2.17, neither Company or any
-------------
Subsidiary nor, to the knowledge of the Companies and the Stockholders, any of
their employees have any agreements or arrangements with any persons other than
a Company or its Subsidiaries related to confidential information or trade
secrets of such persons or restricting any such employee's ability to engage in
business activities of any nature. The activities of their employees on behalf
of the Companies or any Subsidiary do not violate any such agreements or
arrangements known to the Companies.
2.18 Contracts. Except for contracts, commitments, plans, agreements and
---------
licenses described in Schedule 2.18 attached hereto (true and complete copies of
-------------
which have been
20
delivered to Buyer) and excluding Laundry Leases, neither Company nor any of its
Subsidiaries is a party to or subject to:
(a) Any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining or the like, or any contract or agreement with any labor
union;
(b) Any employment contract, consulting contract or contract for
services which is not terminable within thirty (30) days by the relevant Company
or a Subsidiary without liability for any penalty or severance payment;
(c) Any contract or agreement for the purchase of any commodity,
material or equipment except purchase orders in the ordinary course for less
than $10,000 each, such orders not exceeding $50,000 in the aggregate;
(d) Any other contracts or agreements creating any obligations of
either Company or any of its Subsidiaries of $10,000 or more with respect to any
such contract or agreement not specifically disclosed elsewhere under this
Agreement;
(e) Any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular product from a supplier;
(f) Any contract or agreement which by its terms does not terminate
or is not terminable without penalty by the relevant Company or a Subsidiary or
their successors within one (1) year after the date hereof;
(g) Any contract or agreement for the sale or lease of its products
not made in the ordinary course of business;
(h) Any contract with any sales agent or distributor of products of
either Company or any of its Subsidiaries;
(i) Any contract containing covenants limiting the freedom of either
Company or any of its Subsidiaries to compete in any line of business or with
any person or entity;
(j) Any contract or agreement for the purchase of any fixed asset
for a price in excess of $10,000, whether or not such purchase is in the
ordinary course of business;
(k) Any license agreement (as licensor or licensee);
(l) Any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money;
21
(m) Any contract or agreement with any officer, employee, director
or stockholder of either Company or any of its Subsidiaries or with any persons
or organizations controlled by or affiliated with any of them; or
(n) Any contract, agreement or understanding whether in writing or
otherwise for either Company or any of its Subsidiaries to take any of the
actions specified in paragraphs (a) through (m) above.
Neither Company nor any of its Subsidiaries individually or in the
aggregate is in default under any such contracts, commitments, plans, agreements
or licenses described in said Schedule or has any knowledge of conditions or
facts which, with notice or the passage of time, or both, would constitute a
default.
2.19 Litigation. Schedule 2.19 attached hereto lists all currently
---------- -------------
pending litigation and governmental or administrative proceedings or
investigations to which either Company or any of its Subsidiaries is a party.
Except for matters described in Schedule 2.19 attached hereto, there is no
-------------
litigation or governmental or administrative proceeding or investigation pending
or, to the knowledge of the Companies and the Stockholders, threatened against
either Company or any of its Subsidiaries or their affiliates (including,
without limitation, directors and officers) which may have, either individually
or in the aggregate, a Material Adverse Effect on the Companies and their
Subsidiaries taken as a whole, or which would prevent or hinder the consummation
of the transactions contemplated by this Agreement. With respect to each matter
set forth therein, Schedule 2.19 attached hereto sets forth a description of the
-------------
matter, the forum (if any) in which it is being conducted, the parties thereto
and the type and amount of relief sought.
2.20 Compliance with Laws. Except as set forth in Schedule 2.20 attached
-------------------- -------------
hereto, each Company and each of its Subsidiaries is in compliance in all
material respects with all applicable statutes, ordinances, orders, judgments,
decrees, rules and regulations promulgated by any federal, state, municipal or
foreign entity, agency, court or other governmental authority applicable to it
or to the conduct of its business, and neither Company nor any of its
Subsidiaries has received notice of a violation or alleged violation of any such
statute, ordinance, order, rule or regulation, except where the failure to be in
such compliance would not have, either individually or in the aggregate, a
Material Adverse Effect on the Companies and their Subsidiaries taken as a
whole, and neither Company nor any of its Subsidiaries has received notice of a
material violation or alleged material violation of any such statute, ordinance,
order, rule or regulation.
2.21 Insurance. The physical properties, assets, business, operations,
---------
employees, officers and directors of each Company and each of its Subsidiaries
are insured to the extent disclosed in Schedule 2.21 attached hereto, and all
-------------
such insurance policies and arrangements are disclosed in said Schedule. There
is no claim by either Company or any of its Subsidiaries pending under any such
policies as to which coverage has been questioned, denied or disputed by the
insurer. Said insurance policies and arrangements are in full force and effect,
all
22
premiums due with respect thereto are currently paid, and each Company and
each of its Subsidiaries is in compliance in all material respects with the
terms thereof. Said insurance is adequate and customary for the business
engaged in by the Companies and their Subsidiaries and is sufficient for
compliance by each Company and each of its Subsidiaries with all requirements of
law and all agreements and leases to which such Company or any of its
Subsidiaries is a party.
2.22 Warranty or Other Claims. There are no existing or threatened
------------------------
product liability, warranty or other similar claims, or any facts upon which a
material claim of such nature could be based, against either Company or any of
its Subsidiaries for products or services which are defective or fail to meet
any product or service warranties except as disclosed in Schedule 2.22 hereto.
-------------
No claim has been asserted against either Company or any of its Subsidiaries for
renegotiation or price redetermination of any business transaction, and there
are no facts upon which any such claim could be based.
2.23 Powers of Attorney. Neither Company, any Subsidiary nor any
------------------
Stockholder has any outstanding power of attorney.
2.24 Finder's Fee. Neither Company nor any of its Subsidiaries has
------------
incurred or become liable for any broker's commission or finder's fee relating
to or in connection with the transactions contemplated by this Agreement.
2.25 Permits; Burdensome Agreements. Schedule 2.25 lists all material
------------------------------ -------------
permits, registrations, licenses, franchises, certifications and other approvals
(collectively, the "Approvals") required from federal, state or local
authorities in order for each Company and each of its Subsidiaries to conduct
its business. Each Company and each of its Subsidiaries has obtained all such
Approvals, which are valid and in full force and effect, and is operating in
material compliance therewith. Except as disclosed in Schedule 2.25 or in any
-------------
other Schedule hereto, neither Company nor any of its Subsidiaries is subject to
or bound by any agreement, judgment, decree or order which may have, either
individually or in the aggregate, a Material Adverse Effect on the Companies
and their Subsidiaries taken as a whole. Schedule 2.25 lists all registrations,
-------------
certifications and similar approvals necessary or customary in the Companies'
business for use in the manufacture, marketing, maintenance, leasing, sales and
distribution of the Companies' and their Subsidiaries' products and services.
2.26 Corporate Records; Copies of Documents. The corporate record and
--------------------------------------
minute books of each Company and each of its Subsidiaries accurately record all
corporate action taken by their respective stockholders and board of directors
and committees. The copies of the corporate records of each Company and each of
its Subsidiaries, as made available to Buyer for review, are true and complete
copies of the originals of such documents. Each Company has made available for
inspection and copying by Buyer and its counsel true and correct copies of all
documents referred to in this Section or in the Schedules delivered to Buyer
pursuant to this Agreement.
23
2.27 Transactions with Interested Persons. Except as set forth in
------------------------------------
Schedule 2.27 attached hereto, neither Company, any of its Subsidiaries, any
-------------
Subsidiary nor, Stockholder, officer, supervisory employee or director of either
Company or to the knowledge of the Companies and the Stockholders, any of their
respective spouses or family members, owns directly or indirectly on an
individual or joint basis any material interest in, or serves as an officer or
director or in another similar capacity of, any competitor or supplier of either
Company or any Subsidiary, or any organization which has a material contract or
arrangement with either Company or any of its Subsidiaries. Except as set forth
in Schedule 2.27 attached hereto, there are no loans, leases or other continuing
-------------
transactions between either Company or any Subsidiary and any present, or
former, stockholder, director, officer or employee or, to the knowledge of the
Companies and the Stockholders, any member of such stockholder's, director's,
officer's or employee's immediate family, or any business organization
controlled by any such stockholder, director, officer, employee or his or her
immediate family.
2.28 Employee Benefit Programs. Schedule 2.28 lists every Employee
------------------------- -------------
Program (as defined below) that has been maintained (as defined below) by either
Company or any of their Subsidiaries at any time during the three-year period
ending on the Closing Date.
(a) Each Employee Program which has ever been maintained by either
Company or any of its Subsidiaries and which has at any time been intended to
qualify under Section 401(a) or 501(c)(9) of the Code has received a favorable
determination or approval letter from the IRS regarding its qualification under
such Section and has, in fact, been qualified under the applicable section of
the Code from the effective date of such Employee Program through and including
the Closing (or, if earlier, the date that all of such Employee Program's assets
were distributed). No event or omission has occurred which would cause any such
Employee Program to lose its qualification under the applicable Code section.
(b) Neither Company nor any Stockholder knows or has reason to know,
of any failure of any party to comply with any laws applicable to the Employee
Programs that have been maintained by either Company or any of its Subsidiaries.
With respect to any Employee Program ever maintained by either Company or any of
its Subsidiaries, there has occurred no "prohibited transaction," as defined in
Section 406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code, or breach of any duty under ERISA or
other applicable law (including, without limitation, any health care
continuation requirements or any other tax law requirements, or conditions to
favorable tax treatment, applicable to such plan), which could result, directly
or indirectly, in any taxes, penalties or other liability to either Company, any
Subsidiary or Buyer. No litigation, arbitration, governmental administrative
proceeding (or investigation) or other proceeding (other than those relating to
routine claims for benefits) is pending or threatened with respect to any such
Employee Program. No Employee Program has any material unfunded or underfunded
obligation to provide benefits to any past, current or future participant
therein.
(c) Neither Company, any Subsidiary nor any Affiliate (as defined
below) (i) has ever maintained any Employee Program which has been subject to
Title IV of ERISA
24
(including, but not limited to, any Multiemployer Plan (as defined below)) or
(ii) has ever provided health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by Part 6
of Subtitle B of Title I of ERISA) or has ever promised to provide such post-
termination benefits.
(d) With respect to each Employee Program maintained by either
Company or any Subsidiary within the three (3) years preceding the Closing,
complete and correct copies of the following documents (if applicable to such
Employee Program) have previously been delivered to Buyer: (i) all documents
embodying or governing such Employee Program, and any funding medium for the
Employee Program (including, without limitation, trust agreements), as they may
have been amended; (ii) the most recent IRS determination or approval letter
with respect to such Employee Program under Code Section 401 or 501(c)(9), and
any applications for determination or approval subsequently filed with the IRS;
(iii) the three (3) most recently filed IRS Forms 5500, with all applicable
schedules and accountants' opinions attached thereto; (iv) the summary plan
description for such Employee Program (or other descriptions of such Employee
Program provided to employees) and all modifications thereto; (v) any insurance
policy (including any fiduciary liability insurance policy) related to such
Employee Program; (vi) any documents evidencing any loan to an Employee Program
that is a leveraged employee stock ownership plan; and (vii) all other materials
reasonably necessary for Buyer to perform any of its responsibilities with
respect to any Employee Program subsequent to the Closing (including, without
limitation, health care continuation requirements).
(e) For purposes of this Section:
(i) "Employee Program" means (A) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(4)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are not
subject to ERISA; and (B) all stock option plans, bonus or incentive award
plans, severance pay policies or agreements, deferred compensation agreements,
supplemental income arrangements, vacation plans, and all other employee benefit
plans, agreements and arrangements not described in (A) above. In the case of an
Employee Program funded through an organization described in Code Section
501(c)(9), each reference to such Employee Program shall include a reference to
such organization.
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides (or has promised to provide) benefits
under such Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise covers
employees of such entity, or their spouses, dependents or beneficiaries.
25
(iii) An entity is an "Affiliate" of a Company or a Subsidiary
if it would have ever been considered a single employer with such Company or any
of its Subsidiaries under ERISA Section 4001(b) or part of the same "controlled
group" as such Company or any of its Subsidiaries for purposes of ERISA Section
302(d)(8)(C).
(iv) "Multiemployer Plan" means a (pension or non-pension)
employee benefit plan to which more than one employer contributes and which is
maintained pursuant to one or more collective bargaining agreements.
2.29 Environmental Matters.
---------------------
(a) Except as set forth in Schedule 2.29 attached hereto, (i)
-------------
neither Company nor any of its Subsidiaries has ever generated, transported,
used, stored, treated, disposed of or managed any Hazardous Waste (as defined
below); (ii) no Hazardous Material (as defined below) has ever been or is
threatened to be spilled, released or disposed of at any site presently or
formerly owned, operated, leased or used by either Company or any of its
Subsidiaries, or has ever been located in the soil or groundwater at any such
site; (iii) no Hazardous Material has ever been transported from any site
presently or formerly owned, operated, leased or used by either Company or any
of its Subsidiaries for treatment, storage or disposal at any other place; (iv)
neither Company nor any of its Subsidiaries presently owns, operates, leases or
uses, nor has it previously owned, operated, leased or used any site on which
underground storage tanks are or were located; and (v) no lien has ever been
imposed by any governmental agency on any property, facility, machinery or
equipment owned, operated, leased or used by either Company or any of its
Subsidiaries in connection with the presence of any Hazardous Material.
(b) Except as set forth in Schedule 2.29 attached hereto, (i)
-------------
neither Company nor any of its Subsidiaries has any material liability under,
nor has it ever violated, any Environmental Law (as defined below); (ii) each
Company and each of its Subsidiaries, any property owned, operated, leased or
used by any of them, and any facilities and operations thereon, are presently in
compliance with all applicable Environmental Laws; (iii) neither Company nor any
of its Subsidiaries has ever entered into or been subject to any judgment,
consent decree, compliance order or administrative order with respect to any
environmental or health and safety matter or received any request for
information, notice, demand letter, administrative inquiry or formal or informal
complaint or claim with respect to any environmental or health and safety matter
or the enforcement of any Environmental Law; and (iv) neither Company nor any of
its Subsidiaries has any reason to believe that any of the items enumerated in
clause (iii) of this Subsection will be forthcoming.
(c) Except as set forth in Schedule 2.29 attached hereto, no site
-------------
owned, operated, leased or used by either Company or any of its Subsidiaries
contains any asbestos or asbestos-containing material, any polychlorinated
biphenyls (PCBs) or equipment containing PCBs, or any urea formaldehyde foam
insulation.
26
(d) The Companies have provided to Buyer copies of all documents,
records, and information available to the Companies or any of their Subsidiaries
concerning any environmental or health and safety matter relevant to either
Company or any of its Subsidiaries, whether generated by either Company, its
Subsidiaries or others, including, without limitation, environmental audits,
environmental risk assessments, site assessments, documentation regarding off-
site disposal of Hazardous Materials, spill control plans and reports,
correspondence, permits, licenses, approvals, consents and other authorizations
related to environmental or health and safety matters issued by any governmental
agency.
(e) For purposes of this Section 2.29, (i) "Hazardous Material"
shall mean and include any hazardous waste, hazardous material, hazardous
substance, petroleum product, oil, toxic substance, pollutant, contaminant or
other substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) "Hazardous
Waste" shall mean and include any hazardous waste as defined or regulated under
any Environmental Law; (iii) "Environmental Law" shall mean any environmental or
health and safety-related law, regulation, rule, ordinance or by-law at the
foreign, federal, state or local level, whether existing as of the date hereof,
previously enforced or subsequently enacted; and (iv) "Company" shall mean and
include both Companies, each of their respective Subsidiaries and all other
entities for whose conduct either Company or any of its Subsidiaries is or may
be held responsible under any Environmental Law.
2.30 List of Directors and Officers. Schedule 2.30 attached hereto
------------------------------ -------------
contains a true and complete list of all current directors and officers of each
Company and each of its Subsidiaries. In addition, Schedule 2.30 attached
-------------
hereto contains a list of all managers, employees and consultants of each
Company and any Subsidiary who, individually, have received or are scheduled to
receive compensation from either Company or any of its Subsidiaries for the year
ending December 31, 1997, in excess of $50,000. In each case, such Schedule
includes the current job title and aggregate annual compensation of each such
individual.
2.31 Employees; Labor Matters. The Companies and their Subsidiaries
------------------------
employ a total of approximately 96 full-time employees and 2 part-time employees
and generally enjoy good employer-employee relationships. The Companies and
their Subsidiaries do not employ a total of 100 or more employees (excluding
employees who work less than 20 hours per week or who have worked for a Company
or any of its Subsidiaries less than six (6) of the last twelve (12) months) and
will not have employed 100 or more employees at any point during the 90 days
prior to and including the Closing Date. Neither Company nor any of its
Subsidiaries is delinquent in payments to any of its employees for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed for it to the date hereof or amounts required to be reimbursed to such
employees. Upon termination of the employment of any of said employees, neither
Company, any Subsidiary nor Buyer will by reason of the transactions
contemplated under this Agreement or anything done prior to the Closing be
liable to any of said employees for so-called "severance pay" or any other
payments, except as set forth in Schedule 2.31. Neither Company nor any
-------------
Subsidiary has any
27
policy, practice, plan or program of paying severance pay or any form of
severance compensation in connection with the termination of employment, except
as set forth in said Schedule. Each Company and each of its Subsidiaries is in
compliance with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment and wages and hours. There are no charges of employment
discrimination or unfair labor practices, nor are there any strikes, slowdowns,
stoppages of work or any other concerted interference with normal operations
which are existing, pending or threatened against or involving either Company or
any of its Subsidiaries. No question concerning representation exists respecting
any employees of either Company or any of its Subsidiaries. There are no
grievances, complaints or charges that have been filed against either Company or
any of its Subsidiaries under any dispute resolution procedure (including, but
not limited to, any proceedings under any dispute resolution procedure under any
collective bargaining agreement) that might have a Material Adverse Effect on
the Companies and their Subsidiaries taken as a whole, and there is no
arbitration or similar proceeding pending and no claim therefor has been
asserted. No collective bargaining agreement is in effect or is currently being
or is about to be negotiated by either Company or any of its Subsidiaries.
Neither Company nor any of its Subsidiaries has received any information
indicating that any of its employment policies or practices is currently being
audited or investigated by any federal, state or local government agency. Each
Company and each of its Subsidiaries is, and at all times since its organization
has been, in compliance with the requirements of the Immigration Reform Control
Act of 1986.
2.32 Non-Foreign Status. Neither Company nor any of its Subsidiaries is a
------------------
"foreign person" within the meaning of Section 1445 of the Code and Treasury
Regulations Section 1.1445-2.
2.33 Backlog. As of the date hereof, each Company and each of its
-------
Subsidiaries has a backlog of firm orders for the sale or lease of products or
services, for which revenues have not been recognized by such Company or any
Subsidiary, as set forth in Schedule 2.33.
-------------
2.34 Customers, Distributors and Suppliers. Schedule 2.34 sets forth any
------------------------------------- -------------
customer, sales representative or distributor (whether pursuant to a commission,
royalty or other arrangement) which accounts for more than 1% of the sales of
the Companies and their Subsidiaries on a consolidated basis for the twelve (12)
months ended December 31, 1997 (collectively, the "Customers and Distributors").
Schedule 2.34 lists all of the suppliers of each Company and each of its
-------------
Subsidiaries to whom during the year ended December 31, 1997, the Companies or
any of their Subsidiaries made payments aggregating $50,000 or more, showing,
with respect to each, the name, address and dollar volume involved (the
"Suppliers"). The relationships of each Company and each of its Subsidiaries
with its Customers, Distributors and Suppliers are good commercial working
relationships. No Customer, Distributor or Supplier has canceled, materially
modified, or otherwise terminated its relationship with either Company or any
Subsidiary, or has during the last twelve (12) months decreased materially its
services, supplies or materials to either Company or any such Subsidiary or its
usage or purchase of the services or products of either Company or any
28
Subsidiary, nor to the knowledge of the Companies, does any Customer,
Distributor or Supplier have any plan or intention to do any of the foregoing.
2.35 Transfer of Shares. No holder of stock of either Company or any
------------------
Subsidiary has at any time transferred any of such stock to any employee of
either Company or any Subsidiary, which transfer constituted or could be viewed
as compensation for services rendered to either Company or any Subsidiary by
said employee.
2.36 Stock Repurchase. Except as set forth in Schedule 2.36, neither
---------------- -------------
Company nor any Subsidiary has redeemed or repurchased any of its capital stock.
2.37 Disclosure. The representations, warranties and statements contained
----------
in this Agreement and in the Certificates, Exhibits and Schedules delivered by
the Companies and its Subsidiaries pursuant to this Agreement to Buyer do not
contain any untrue statement of a material fact, and, when taken together, do
not omit to state a material fact required to be stated therein or necessary in
order to make such representations, warranties or statements not misleading in
light of the circumstances under which they were made. There are no facts which
presently or may in the future have a Material Adverse Effect on the Companies
and their Subsidiaries taken as a whole which have not been specifically
disclosed herein or in a Schedule furnished herewith, other than general
economic conditions affecting the industries in which the Companies and their
Subsidiaries operate.
2.38 Commission Payments. Schedule 2.38 attached hereto lists each
------------------- -------------
obligation or commitment, whether current or future, of Amerivend to make
guaranteed commission, prepaid rent, laundry room renovations or similar
payments under any Laundry Lease or other contract, including the Laundry Lease
or contract which requires each such payment, the due date of each such payment
and the amount of each such payment.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
--------------------------------------------------------------
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, each Stockholder hereby
severally makes to Buyer each of the representations and warranties set forth in
this Section 3 with respect to such Stockholder. No Stockholder shall have any
right of indemnity or contribution from Amerivend or any Subsidiary with respect
to the breach of any representation or warranty hereunder.
3.01 Amerivend Shares. Such Stockholder owns of record and beneficially
----------------
the number of Amerivend Shares set forth opposite such Stockholder's name in
Exhibit A attached hereto. Such Amerivend Shares are, and when delivered by
---------
such Stockholder to Buyer pursuant to this Agreement will be, duly authorized,
validly issued, fully paid, nonassessable and free and clear of any and
Encumbrances and restrictions on transfer, under Article 8 of any applicable
state version of the Uniform Commercial Code, including but not limited to
Massachusetts, Florida and Georgia, or otherwise, except restrictions on
transferability under applicable securities laws.
29
3.02 Authority. Such Stockholder has full right, authority, power and
---------
capacity to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by or on behalf of such Stockholder
pursuant to this Agreement and to carry out the transactions contemplated hereby
and thereby. This Agreement and each agreement, document and instrument
constitute, or when executed and delivered will constitute, a valid and binding
obligation of such Stockholder, enforceable in accordance with their respective
terms, and such Stockholder has full power and authority to transfer, sell and
deliver the Amerivend Shares to Buyer pursuant to this Agreement. The
execution, delivery and performance of this Agreement and each such agreement,
document and instrument:
(i) does not and will not violate any federal, state or local laws
applicable to such Stockholder or require such Stockholder to obtain any
approval, consent or waiver from, or make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made; and
(ii) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of, any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit, authorization,
order, writ, judgment, injunction, decree, determination or arbitration award to
which such Stockholder is a party or by which the property of such Stockholder
is bound or affected, or result in the creation or imposition of any Encumbrance
on any assets of either Company or any Subsidiary or on the Amerivend Shares
owned by such Stockholder.
3.03 Finder's Fee. Such Stockholder has not incurred or become liable for
------------
any broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
3.04 Agreements. Each such Stockholder who is employed by either Company
----------
or any Subsidiary is not a party to any non-competition, trade secret or
confidentiality agreement with any party other than a Company or a Subsidiary.
There are no agreements or arrangements not contained herein or disclosed in a
Schedule hereto, to which such Stockholder is a party relating to the business
of either Company or any Subsidiary or to such Stockholder's rights and
obligations as a stockholder, director or officer of either Company or any
Subsidiary. Such Stockholder does not own, directly or indirectly, on an
individual or joint basis, any material interest in, or serve as an officer or
director of, any customer, competitor or supplier of either Company or any
Subsidiary, or any organization which has a contract or arrangement with either
Company or any Subsidiary. Such Stockholder has not at any time transferred any
of the stock of either Company or any Subsidiary held by or for such holder to
any employee of either Company or any Subsidiary, which transfer constituted or
could be viewed as compensation for services rendered to either Company or any
Subsidiary by said employee. The execution, delivery and performance of this
Agreement will not violate or result in a default or acceleration of any
obligation under any contract, agreement, indenture
30
or other instrument involving either Company or any Subsidiary to which such
Stockholder is a party.
SECTION 4. COVENANTS OF THE COMPANIES AND THE STOCKHOLDERS.
------------------------------------------------------------
4.01 Making of Covenants and Agreements. Each Company and the
----------------------------------
jointly and severally hereby make the covenants and agreements set forth in this
Section 4 and the Stockholders agree to cause each Company and its Subsidiaries
to comply with such agreements and covenants.
4.02 Conduct of Business. Between the date of this Agreement and the
-------------------
Closing Date, each Company and each of its Subsidiaries will:
(a) Conduct its business only in the ordinary course and refrain
from changing or introducing any method of management or operations except in
the ordinary course of business and consistent with prior practices;
(b) Refrain from making any purchase, sale or disposition of any
asset or property other than in the ordinary course of business, from purchasing
any capital asset costing more than $50,000 and from mortgaging, pledging,
subjecting to a lien or otherwise encumbering any of its properties or assets
other than in the ordinary course of business, except that Amerivend may
distribute to its stockholders its interest in the partnership which owns
property in Crested Butte, Colorado (the "Partnership Distribution");
(c) Refrain from incurring any contingent liability as a guarantor
or otherwise with respect to the obligations of others, and from incurring any
other contingent or fixed obligations or liabilities except in the ordinary
course of business;
(d) Refrain from making any change or incurring any obligation to
make a change in its Articles of Incorporation, by-laws or similar
organizational documents or authorized or issued capital stock or ownership
interests;
(e) Except for the Partnership Distribution, refrain from (i)
declaring, setting aside or paying any dividend, making any other distribution
in respect of its capital stock or ownership interests, (ii) making any direct
or indirect redemption, purchase or other acquisition of its stock or ownership
interests or (iii) issuing, granting, awarding, selling, pledging, disposing of
or encumbering or authorizing the issuance, grant, award, sale, pledge,
disposition or encumbrance of any shares of, or securities convertible or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of its capital stock of any class thereof;
(f) Refrain from making any change in the compensation payable or to
become payable to any of its officers, employees, agents or independent
contractors, or
31
granting any severance or termination pay to, or entering into or amending any
employment, severance or other agreement or arrangement with, any of its
directors, officers or other employees, or establishing, adopting or entering
into or amending any collective bargaining, bonus, incentive, deferred
compensation, profit sharing, stock option or purchase, insurance, pension,
retirement or other employee benefit plan;
(g) Refrain from (i) prepaying any loans (if any) from its
stockholders, officers or directors or any company affiliated with any of the
foregoing, including each of Southeast and Amerivend, (ii) making any change in
its borrowing arrangements, (iii) modifying, amending or terminating any of its
contracts except in as specifically provided in this Agreement and except with
respect to Laundry Leases in the ordinary course of business or (iv) waiving,
releasing or assigning any material rights or claims, except that Amerivend may
pay the Southeast Receivable;
(h) Refrain from changing accounting policies or procedures
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivable);
(i) Pay all accounts payable in the ordinary course of business and
in a manner consistent with past practice and in any event within 60 days unless
they are being disputed in good faith;
(j) Use its best efforts to prevent any change with respect to its
management and supervisory personnel and banking arrangements;
(k) Use its best efforts to keep intact its business organization,
to keep available its present officers and employees and to preserve the
goodwill of all suppliers, customers, independent contractors and others having
business relations with it;
(l) Have in effect and maintain at all times all insurance of the
kind, in the amount and with the insurers set forth in Schedule 2.21 attached
-------------
hereto or equivalent insurance with any substitute insurers approved in writing
by Buyer;
(m) Permit Buyer and its authorized representatives to have full
access to all its properties, assets, contracts, books, tax returns, records,
accounting, financial and other business files and information and furnish to
Buyer or its authorized representatives such financial and other information
with respect to its business or properties as Buyer may from time to time
reasonably request;
(n) refrain from entering into any executory agreement, commitment
or undertaking to do any of the activities prohibited by the foregoing
provisions; and
(o) provide monthly aging reports of accounts receivables and
monthly financial statements, including a balance sheet as of month-end and a
monthly income statement, as soon as practicable but not later than 21 days
after the last day of each month.
32
4.03 Consents. Prior to the Closing Date, each Company, each of its
--------
Subsidiaries and the Stockholders shall make all filings with and notifications
of governmental authorities, regulatory agencies and other entities required to
be made by such parties in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; and each
Company and the Stockholders shall obtain all authorizations, waivers, consents
and permits, in form and substance reasonably satisfactory to Buyer, from all
third parties, including, without limitation, applicable governmental
authorities, regulatory agencies, lessors, lenders and contract parties,
required to permit the continuation of the business of each Company and each
Subsidiary and the consummation of the transactions contemplated by this
Agreement, and to avoid any breach, default, termination, acceleration or
modification of any material agreement, contract, lease or permit as a result
of, or in connection with, the execution and performance of this Agreement.
4.04 Notice of Default. Promptly upon the occurrence of, or promptly upon
-----------------
either Company or any Stockholder becoming aware of the impending or threatened
occurrence of, any event which would cause or constitute a breach or default, or
would have caused or constituted a breach or default had such event occurred or
been known to such Company or such Stockholder prior to the date hereof, of any
of the representations, warranties or covenants of the Companies or the
Stockholders contained in or referred to in this Agreement or in any Schedule or
Exhibit referred to in this Agreement, the Companies or the Stockholders shall
give detailed written notice thereof to Buyer and the Companies and the
Stockholders shall use their best efforts to prevent or promptly remedy the
same.
4.05 Consummation of Agreement. Each Company and each Stockholder shall
-------------------------
use its or his best efforts to perform and fulfill all conditions and
obligations on their parts to be performed and fulfilled under this Agreement,
to the end that the transactions contemplated by this Agreement shall be fully
carried out. To this end, each Company will obtain prior to the Closing all
necessary authorizations or approvals of its stockholders and board of
directors.
4.06 Cooperation of the Companies and the Stockholders. Each Company and
-------------------------------------------------
each of the Stockholders shall cooperate with all reasonable requests of Buyer
and Buyer's counsel in connection with the consummation of the transactions
contemplated hereby.
4.07 No Solicitation of Other Offers. Unless and until this Agreement
-------------------------------
shall have been terminated, neither either Company nor any of the Stockholders
shall, nor shall the Company permit any of its directors, officers, employees or
agents to, directly or indirectly, (i) take any action to solicit, initiate
submission of or encourage, proposals or offers from any person relating to any
acquisition or purchase of all or (other than in the ordinary course of
business) a portion of the assets of, or any equity interest in, either Company,
any merger or business combination with either Company or any public or private
offering of interests in the Company (an "Acquisition Proposal"), (ii)
participate in any discussions or negotiations regarding an Acquisition Proposal
with any person or entity other than Buyer and its representatives, (iii)
furnish any information or afford access to the properties, books or records of
either Company to any person or entity that may consider making or has made an
33
offer with respect to an Acquisition Proposal other than Buyer and its
representatives, or (iv) otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do any of the foregoing. The Companies will promptly notify Buyer upon
receipt of any offer or indication that any person is considering making an
offer with respect to an Acquisition Proposal or any request for information
relative to either Company or for access to the properties, books and records of
either Company, and will promptly reject any such offer or request.
4.08 Confidentiality. The Companies and the Stockholders agree that,
---------------
unless and until the Closing has been consummated, each Company, its
Subsidiaries, its officers, directors, agents and representatives and the
Stockholders will hold in strict confidence, and will not use, any confidential
or proprietary data or information obtained from Buyer with respect to its
business or financial condition except for the purpose of evaluating,
negotiating and completing the transactions contemplated hereby. Information
generally known in Buyer's industry or which has been disclosed to the
Companies, any Subsidiary or the Stockholders by third parties which have a
right to do so shall not be deemed confidential or proprietary information for
purposes of this Agreement. If the transactions contemplated by this Agreement
are not consummated, each Company, its Subsidiaries and the Stockholders will
return to Buyer (or certify that they have destroyed) all copies of such data
and information, including, but not limited to, financial information, customer
lists, business and corporate records, worksheets, test reports, tax returns,
lists, memoranda and other documents prepared by or made available to the
Companies, its Subsidiaries or the Stockholders in connection with the
transactions.
4.09 Tax Returns. The Stockholders shall cooperate with Buyer to permit
-----------
Amerivend in accordance with applicable law to promptly prepare and file on or
before the due date or any extension thereof all federal, state and local tax
returns required to be filed by Amerivend with respect to taxable periods ending
on or before the Closing.
4.10 Filing Cooperation. Each Company and the Stockholders shall
------------------
cooperate with Buyer and it agents in connection with any filings to be made by
Buyer, including, without limitation, filings under (i) the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "Xxxx-Xxxxx-Xxxxxx Act"),
(ii) the Securities Act or (iii) the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and shall furnish all information required in connection
therewith. Such cooperation shall include, but not be limited to, obtaining any
consent to inclusion of each Company's financial statements and the audit
reports with respect thereto in any filing made pursuant to any federal or state
securities laws (and any public disclosure related thereto), whether before or
after the Closing. The Stockholders acknowledge and agree that they have
provided this Section of this Agreement to the Companies' outside accountants
and have obtained assurances that such accountants will provide such consent.
4.11 No Transfer of Securities. Unless and until this Agreement shall
-------------------------
have been terminated in accordance with its terms, no Stockholder shall directly
or indirectly exchange,
34
deliver, assign, pledge, encumber or otherwise transfer or dispose of any of the
capital stock of either Company (including any options in respect thereof), nor
shall any Stockholder directly or indirectly grant any right of any kind to
acquire, dispose of, vote or otherwise control in any manner any such
securities.
4.12 Use of Trade Name. After the Closing Date, neither Southeast nor any
-----------------
Stockholder, nor any person controlling, controlled by or under common control
with Southeast or any Stockholder will for any reason, directly or indirectly,
for itself or any other person, (a) use the name "Amerivend" or (b) use or
disclose any trade secrets, confidential information, know-how, proprietary
information or other intellectual property of Southeast transferred pursuant to
this Agreement. On the Closing Date, Southeast will file with the Georgia
Secretary of State a charter amendment changing its name such that it does not
include the word "Amerivend."
4.13 Updating of Information. Not later than the Closing Date, the
-----------------------
Companies and the Stockholders will deliver to Buyer information necessary to
update the Schedules hereto and the lists, documents and other information
furnished to Buyer as contemplated by this Agreement, in all cases consistent
with the terms of this Agreement.
4.14 0000 Xxxxxxxx Xxxxxx. To the extent that Amerivend does not have
--------------------
good and valid title to the laundry room located at 0000 Xxxxxxxx Xxxxxx, Xxxxx,
Xxxxxxx, free and clear of any and all Encumbrances, Amerivend and the
Stockholders shall take such actions as are necessary to cause Amerivend to
obtain such title prior to Closing.
SECTION 4A. CERTAIN TAX MATTERS.
--------------------------------
4A.01 Section 338(h)(10) Election.
---------------------------
(a) The Stockholders and Buyer shall jointly make, and the
Stockholders shall cause the beneficiaries of the Xxxxxx Trust and any other
person required for a valid election to make, (i) the joint election provided
for in Section 338(h)(10) of the Code and Treasury Regulation (S) 1.338(h)(10)-
1(d) (the "Section 338 Regulations") with respect to Amerivend and (ii) such
other similar elections, if any, under the laws of any state or local
jurisdiction analogous to the election provided for in Section 338(h)(10) of the
Code (the elections described in (i) and (ii) collectively, the "Section 338
Elections"). The Stockholders and Buyer shall comply fully with all filing and
other requirements necessary to effectuate the Section 338 Elections on a timely
basis and agree to cooperate in good faith with each other in the preparation
and timely filing of any tax returns required to be filed in connection with the
making of the Section 338 Elections, including the exchange of information and
the joint preparation and filing of IRS Form 8023-A and related schedules.
Except for the tax imposed by Section 1374 of the Code, the Stockholders will
pay any Taxes attributable to the Section 338 Elections and will indemnify Buyer
in accordance with Section 10.01 against any adverse consequences arising out of
any failure to pay such Taxes.
(b) At or prior to the Closing, Buyer and the Stockholders shall
jointly allocate the deemed sale price for the assets of Amerivend as determined
under Section 338 among the assets of Amerivend, which allocation shall be set
forth in Schedule 4A attached hereto, provided that Buyer and the Stockholders
-----------
agree that between $6,700,000 and
35
$7,000,000 of such deemed sale price shall be allocated to assets of Amerivend
which are depreciable for federal income tax purposes. Such allocation shall be
binding upon Buyer and the Stockholders for all purposes (including financial
accounting purposes, financial and regulatory reporting purposes and tax
purposes). Buyer and each Stockholder further agrees to file their Federal
income tax returns, any other tax returns, and any other reports required by
the Code, in accordance with said Schedule 4A and the foregoing.
-----------
(c) Xx. Xxxxxx, directly or through his designated representatives
and at his expense, shall have the right to, and Buyer agrees to take such
reasonable measures as may be necessary to permit Xx. Xxxxxx or his designated
representatives to, actively participate in the currently pending audit of
[Amerivend's and Xx. Xxxxxx'x 1993 and 1994 federal income tax returns] (the
"Audit"). Xx. Xxxxxx further agrees not to concede, compromise or settle any
issue which may arise in connection with the Audit which could, directly or
indirectly, give rise to a tax deficiency against which (i) Buyer has agreed to
indemnify Xx. Xxxxxx, without the prior consent of Buyer or (ii) could adversely
affect Buyer in any way. Buyer agrees to permit Xx. Xxxxxx, directly or through
his designated representatives and at his expense, to exclusively control all
stages of all administrative or judicial proceedings relating to the Audit
provided that such actions do not have any adverse impact on Buyer; provided,
however, that Buyer shall have the right to participate in such administrative
or judicial proceedings, and Xx. Xxxxxx agrees at all times to notify Buyer of
any significant developments with respect thereto.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
----------------------------------------------------
5.01 Making of Representations and Warranties. As a material inducement
----------------------------------------
to the Companies and the Stockholders to enter into this Agreement and
consummate the transactions contemplated hereby, Buyer hereby makes the
representations and warranties to the Companies and the Stockholders contained
in this Section 5.
5.02 Organization of Buyer. Buyer is a corporation duly organized,
---------------------
validly existing and in good standing under the laws of the State of Delaware
with full corporate power to own or lease its properties and to conduct its
business in the manner and in the places where such properties are owned or
leased or such business is conducted by it.
5.03 Authority of Buyer. Buyer has full right, authority and power to
------------------
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by the Buyer pursuant to this Agreement and to carry out
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Buyer of this Agreement and each such other agreement, document
and instrument have been duly authorized by all necessary corporate action of
Buyer and no other action on the part of Buyer is required in connection
therewith. This Agreement and each other agreement, document and instrument
constitute, or when executed and delivered will constitute, valid and binding
obligations of Buyer enforceable in accordance with their terms, except as
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting
36
enforcement of creditors' rights and (ii) general principles of equity that
restrict the availability of equitable remedies. The execution, delivery and
performance by Buyer of this Agreement and each such agreement, document and
instrument:
(A) does not and will not violate any provision of the Certificate of
Incorporation or by-laws of Buyer; and
(B) does not and will not violate any federal, state or local laws
applicable to Buyer or require Buyer to obtain any approval, consent or waiver
of, or make any filing with, any person or entity (governmental or otherwise)
which has not been obtained or made.
5.04 Litigation. There is no litigation pending or, to Buyer's knowledge,
----------
threatened against Buyer which would prevent or hinder the consummation of the
transactions contemplated by this Agreement.
5.05 Finder's Fee. Buyer has not incurred or become liable for any
------------
broker's commission or finder's fee which would be payable by any Stockholder or
either Company relating to or in connection with the transactions contemplated
by this Agreement.
SECTION 6. COVENANTS OF BUYER.
-------------------------------
6.01 Making of Covenants and Agreements. Buyer hereby makes the covenants
----------------------------------
and agreements set forth in this Section 6.
6.02 Confidentiality. Buyer agrees that, unless and until the Closing has
---------------
been consummated, Buyer and its officers, directors, agents and representatives
will hold in strict confidence, and will not use, any confidential or
proprietary data or information obtained from the Companies or the Stockholders
with respect to the business or financial condition of the Companies and its
Subsidiaries except for the purpose of evaluating, negotiating and completing
the transactions contemplated hereby. Information generally known in the
industries of the Companies and its Subsidiaries or which has been disclosed to
Buyer by third parties which have a right to do so shall not be deemed
confidential or proprietary information for purposes of this Agreement. If the
transactions contemplated by this Agreement are not consummated, Buyer will
return to the Companies (or certify that it has destroyed) all copies of such
data and information, including, but not limited to, financial information,
customer lists, business and corporate records, worksheets, test reports, tax
returns, lists, memoranda and other documents prepared by or made available to
Buyer in connection with the transactions. Notwithstanding the foregoing, Buyer
shall be permitted to disclose such information about the Companies, their
Subsidiaries, the Stockholders and the transactions contemplated hereby as may
be legally required, and otherwise reasonably necessary, in the preparation,
completion, filing and distribution of such reports, filings and other documents
required by the Securities Act, the Exchange Act or New York Stock Exchange
rules.
37
6.03 Consents. Buyer shall make all filings with and notifications of
--------
governmental authorities, regulatory agencies and other entities required to be
made by Buyer in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby; and Buyer shall
obtain all authorizations, waivers, consents and permits, from all third
parties, including, without limitation, applicable governmental authorities,
regulatory agencies, lessors, lenders and contract parties, required to permit
the consummation of the transactions contemplated by this Agreement, and to
avoid any breach, default, termination, acceleration or modification of any
material agreement, contract, lease or permit as a result of, or in connection
with, the execution and performance of this Agreement.
6.04 Consummation of Agreement. Buyer shall use its best efforts to
-------------------------
perform and fulfill all conditions and obligations on its part to be performed
and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out.
SECTION 7. CONDITIONS.
-----------------------
7.01 Conditions to the Obligations of Buyer. The obligation of Buyer to
--------------------------------------
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of the Companies and the Stockholders contained
in this Agreement shall be true and correct in all material respects (except for
such representations and warranties that are qualified by their terms as to
materiality, which representations and warranties as so qualified shall be true
in all respects) as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing; and each Company and each of the
Stockholders shall, on or before the Closing, have performed all of their
obligations hereunder which by the terms hereof are to be performed on or before
the Closing.
(b) No Material Change. There shall have been no change in the
------------------
financial condition, prospects, properties, assets, liabilities, business or
operations of either Company or any Subsidiary since the date hereof which has
resulted in or is reasonably likely to result in a Material Adverse Effect on
the Companies and theirs Subsidiaries taken as a whole, whether or not in the
ordinary course of business.
(c) Net Worth. Immediately prior to giving effect to the
---------
transactions contemplated by this Agreement, the consolidated net worth of
Amerivend (total assets minus total liabilities determined in accordance with
GAAP) at the Closing Date shall not be less than $4,691,503, which the parties
hereto agree was the consolidated net worth of Amerivend at December 31, 1996.
38
(d) Certificate from Officers. The Stockholders shall have
-------------------------
delivered to Buyer a certificate signed by each Stockholder and by each
Company's President and Chief Financial Officer or Treasurer dated as of the
Closing Date to the effect that the statements set forth in paragraphs (a), (b)
and (c) above are true and correct.
(e) Approval of Buyer's Counsel. All actions, proceedings,
---------------------------
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by Xxxxxxx, Procter & Xxxx LLP, as
counsel for Buyer, and such counsel shall have received on behalf of Buyer such
other certificates, opinions and documents in form satisfactory to such counsel,
as Buyer may reasonably require from the Companies and the Stockholders to
evidence compliance with the terms and conditions hereof as of the Closing and
the correctness as of the Closing of the representations and warranties of the
Companies and the Stockholders and the fulfillment of their respective
covenants.
(f) Opinion of Counsel. On the Closing Date, Buyer shall have
------------------
received from the Law Offices of Xxxxxxx X. Xxxxxx, Xx., P.A., counsel for the
Companies and the Stockholders, an opinion as of said date, in the form attached
hereto as Exhibit C.
---------
(g) No Litigation. There shall have been no determination by Buyer,
-------------
acting in good faith, that the consummation of the transactions contemplated by
this Agreement has become inadvisable or impracticable by reason of the
institution or threat by any person or any federal, state, foreign or other
governmental authority of litigation, proceedings or other action against Buyer,
either Company, any Subsidiary or any Stockholder.
(h) Consents. Each Company and the Stockholders shall have made all
--------
filings with and notifications of governmental authorities, regulatory agencies
and other entities required to be made by the Companies, their Subsidiaries or
the Stockholders in connection with the execution and delivery of this
Agreement, the performance of the transactions contemplated hereby and the
continued operation of the business of the Companies and their Subsidiaries by
Buyer subsequent to the Closing. The Companies, the Stockholders and Buyer
shall have received all authorizations, waivers, consents and permits, in form
and substance reasonably satisfactory to Buyer, from all third parties,
including, without limitation, the landlord of Amerivend's office space in
Orlando, Florida, applicable governmental authorities, regulatory agencies,
lessors, lenders and contract parties, required to permit the continuation of
the business of the Companies and each Subsidiary and the consummation of the
transactions contemplated by this Agreement, and to avoid a breach, default,
termination, acceleration or modification of any indenture, loan or credit
agreement or any other material agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award as a result of, or in connection with, the
execution and performance of this Agreement.
(i) Xxxx-Xxxxx-Xxxxxx. All required filings under the Xxxx-Xxxxx-
-----------------
Xxxxxx Act shall have been completed and all applicable time limitations under
such Act shall have expired
39
without a request for further information by the relevant federal authorities
under such Act, or in the event of such a request for further information, the
expiration of all applicable time limitations under the Act shall have occurred
without the objection of such federal authorities.
(j) Non-Competition Agreement. Xx. Xxxxxx shall have executed and
-------------------------
delivered to Buyer a Non-Competition Agreement in substantially the form of
Exhibit D attached hereto.
---------
(k) FIRPTA Withholding. At or prior to the Closing, Buyer shall
------------------
have received from each Stockholder a "transferor's certificate of non-foreign
status" as provided in the Treasury Regulations under Section 1445 of the Code
in the form attached hereto as Exhibit E.
---------
(l) Employee Programs. Amerivend shall have taken all steps
-----------------
necessary under the relevant documents and applicable law to maintain the
qualification of each Employee Program of Amerivend identified in Schedule 2.28
-------------
notwithstanding the purchase of the Amerivend Shares by Buyer.
(m) Resignations. Amerivend shall have delivered to Buyer
------------
resignations of all of the directors of Amerivend and of such officers of
Amerivend as may be requested by Buyer at least five (5) days prior to the
Closing, such resignations to be effective at the Closing.
(n) Releases. Amerivend shall have delivered to Buyer general
--------
releases signed by each Stockholder and by each officer and director of
Amerivend and each of its Subsidiaries of all claims which any of them have
against Amerivend, any Subsidiary and Buyer in the form attached hereto as
Exhibit F.
---------
(o) Real Estate. Buyer and Xx. Xxxxxx shall have entered into,
-----------
and Xx. Xxxxxx shall cause any co-owners of any of the Xxxxxx Real Estate to
enter into, mutually satisfactory documentation providing for the purchase by
Buyer from Xx. Xxxxxx (and any co-owners) of the real property, together with
buildings and improvements thereon, owned by Mr, Xxxxxx at 0000 XX 00xx Xxxxxx,
Xxxxx, Xxxxxxx 00000 (the "Miami Property"), 0000 Xxxxx Xxxxx, Xxxxx, Xxxxxxx
00000 (the "Tampa Property" and 0000 Xxxxxxxx Xxxxxxx, Xxxxxx, Xxxxxxx 00000-
5832 (the "Ausell Property") and, together with the Miami Property and the Tampa
Property, the "Xxxxxx Real Estate") for cash purchase prices equal to either, in
Buyer's sole discretion, (A) $900,000 for the Miami Property, $385,000 for the
Tampa Property and the appraised value for the Ausell Property determined by
reference to the appraisal report currently being prepared by NationsBank of
Florida, N.A. (each, a "NationsBank Appraised Value") or (B) the average of the
NationsBank Appraised Value for a property and the appraised value of such
property determined by reference to an appraisal by a second qualified real
estate appraiser engaged by Buyer (each, an "Average Appraised Value"). If the
purchase of one or more of the properties comprising the Xxxxxx Real Estate
cannot be consummated by the Closing Date, then, until the closing of such
purchase can occur, Amerivend (or Buyer, as its successor) and Xx. Xxxxxx will
continue to operate under the terms of the existing lease(s) to
40
which they are parties with respect to such property or properties (the
"Existing Leases"). In addition, in the event that Buyer cannot obtain a written
commitment to issue a title insurance policy and survey with respect to any
property comprising the Xxxxxx Real Estate, which title commitment and survey
shows (i) the state of title to such property to be as represented in this
Agreement, (ii) no exceptions for gaps in the chain of title, (iii) no
Encumbrances, encroachments or title defects, and (iv) no violations of any
applicable zoning or other ordinance, statute, rule or regulation, which
violation could materially impair the use of such property by Buyer, then Buyer
shall not be obligated to purchase such property and Amerivend (or Buyer, as its
successor) and Xx. Xxxxxx will continue to operate under the terms of the
Existing Lease with respect to such property.
(p) Clearwater Lease. Amerivend and Xx. Xxxxxx shall have
----------------
terminated the lease by Amerivend of Xx. Xxxxxx'x condominium in Clearwater,
Florida, and Amerivend and Buyer shall have been released from all obligations
thereunder, all pursuant to documentation in form and substance satisfactory to
Buyer.
(q) Release of Liens. All Encumbrances on the assets of Amerivend
----------------
and the Southeast Assets shall have been terminated and released (other than the
non-monetary judgments described under Item 5 on Schedule 2.05 attached hereto)
and Buyer shall have received UCC-3 termination statements and such other
documents evidencing such terminations.
(r) Parachute Payments. Amerivend shall have paid $1,000,000 to
------------------
each of Xxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxxxx pursuant to Section 3.C of
their respective employment agreements with Amerivend, each of Xx. Xxxxxxxxx and
Xx. Xxxxxxxxx shall have released Amerivend and Buyer from all obligations under
such Section and each such employment agreement shall be amended as of the
Closing to delete such Section, all pursuant to documentation in form and
substance satisfactory to Buyer.
(s) Payoff Letters. Amerivend shall have delivered to Buyer payoff
--------------
letters with respect to the indebtedness described on Schedule 1.03 attached
-------------
hereto.
(t) Asset Transfer. Southeast shall have delivered to Buyer the
--------------
bills of sale, assignments, and other instruments of transfer and assignment in
accordance with the provisions hereof, transferring to Buyer all of Southeast's
right, title and interest in and to the Southeast Assets, free and clear of all
Encumbrances.
(u) Retainer Agreement. Amerivend and Xxxxxxx X. Xxxxxx, Xx., P.A.
------------------
shall have terminated the Professional Services Agreement to which they are
parties and entered into a new agreement, in form and substance reasonably
satisfactory to Buyer, which may be terminated by Amerivend on and after
December 31, 1998 without any payment or penalty.
41
(v) Escrow Agreement. The Escrow Agreement shall have been executed
----------------
and delivered by the parties thereto.
7.02 Conditions to Obligations of the Companies and the Stockholders. The
---------------------------------------------------------------
obligations of the Companies and the Stockholders to consummate this Agreement
and the transactions contemplated hereby is subject to the fulfillment, prior to
or at the Closing, of the following conditions precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as though made on and as of the
Closing Date. Buyer shall, on or before the Closing, have performed all of its
obligations hereunder which by the terms hereof are to be performed on or before
the Closing. Buyer shall have delivered to the Companies and the Stockholders a
certificate of the President or any Vice President of Buyer dated the Closing
Date to such effect.
(b) Approval of the Companies' Counsel. All actions, proceedings,
----------------------------------
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by the Law Offices of Xxxxxxx X. Xxxxxx,
Xx., P.A., as counsel for the Companies and the Stockholders, and such counsel
shall have received on behalf of the Companies and the Stockholders such other
certificates, opinions and documents in form satisfactory to such counsel, as
the Companies may reasonably require from Buyer to evidence compliance with the
terms and conditions hereof as of the Closing and the correctness as of the
Closing of the representations and warranties of Buyer and the fulfillment of
its covenants.
(c) No Litigation. There shall have been no determination by the
-------------
Companies, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state, foreign or
other governmental authority of litigation, proceedings or other action against
Buyer, either Company, any Subsidiary or any Stockholder.
(d) Xxxx-Xxxxx-Xxxxxx. All required filings under the Xxxx-Xxxxx-
-----------------
Xxxxxx Act shall have been completed and all applicable time limitations under
such Act shall have expired without a request for further information by the
relevant federal authorities under such Act, or in the event of such a request
for further information, the expiration of all applicable time limitations under
the Act shall have occurred without the objection of such federal authorities.
42
(e) Non-Competition Agreement. Buyer shall have executed and
-------------------------
delivered to Xx. Xxxxxx a Non-Competition Agreement in substantially the form of
Exhibit D attached hereto.
---------
(f) Real Estate. Buyer and Xx. Xxxxxx shall have entered into
-----------
mutually satisfactory documentation providing for the purchase by Buyer from Xx.
Xxxxxx of the Xxxxxx Real Estate for cash purchase prices equal to either, in
Buyer's sole discretion, (A) the NationsBank Appraised Values or (B) the Average
Appraised Values. If the purchase of one or more of the properties comprising
the Xxxxxx Real Estate cannot be consummated by the Closing Date, then, until
the closing of such purchase can occur, Amerivend (or Buyer, as its successor)
and Xx. Xxxxxx will continue to operate under the terms of the Existing Lease(s)
with respect to such property or properties.
(g) The Escrow Agreement shall have been executed and delivered by
the parties thereto.
SECTION 8. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED.
--------------------------------------------------------
8.01 Termination. At any time prior to the Closing, this Agreement may be
-----------
terminated as follows:
(i) by mutual written consent of all of the parties to this
Agreement;
(ii) by Buyer, provided that Buyer is not in material breach of
this Agreement, (A) if either Company or any Stockholder is in material breach
of this Agreement and such breach shall remain uncured for a period of five (5)
business days after Buyer shall have given written notice of such breach to
Amerivend and, if applicable, such Stockholder, (B) if either Company or any
Stockholder shall have explicitly or by conduct repudiated this Agreement and
such repudiation shall have remained uncured for a period of five (5) business
days after Buyer shall have given written notice thereof to Amerivend and, if
applicable, such Stockholder, or (C) if at or prior to Closing, any of the
conditions in Section 7.01 shall not have been satisfied, complied with or
performed in all material respects (unless such failure of satisfaction,
noncompliance or nonperformance is the result directly or indirectly of any
action or failure to act on the part of Buyer) and Buyer shall not have waived
such failure of satisfaction, noncompliance or nonperformance;
(iii) by Amerivend, provided that neither Company nor any of the
Stockholders is in material breach of this Agreement, (A) if Buyer is in
material breach of this Agreement and such breach shall remain uncured for a
period of five (5) business days after Amerivend shall have given written notice
of such breach to Buyer, (B) if Buyer shall have explicitly or by conduct
repudiated this Agreement and such repudiation shall have remained uncured for a
period of five (5) business days after Amerivend shall have given written notice
thereof to Buyer, or (C) if at or prior to Closing, any of the conditions in
Section 7.02 shall not
43
have been satisfied, complied with or performed in all material respects (unless
such failure of satisfaction, noncompliance or nonperformance is the result
directly or indirectly of any action or failure to act on the part of either
Company or any Stockholder) and Amerivend shall not have waived such failure of
satisfaction, noncompliance or nonperformance; or
(iv) by Buyer or Amerivend, if the Closing has not occurred on
or before April 30, 1998.
8.02 Effect of Termination. All obligations of the parties hereunder
---------------------
shall cease upon any termination pursuant to Section 8.01; provided, however,
-------- -------
that (i) the provisions of this Section 8, Section 4.08, Section 6.02 and
Section 11 hereof shall survive any termination of this Agreement, (ii) nothing
herein shall relieve any party from any liability for a material error or
omission in any of its representations or warranties contained herein or a
material failure to comply with any of its covenants, conditions or agreements
contained herein, and (iii) any party may proceed as further set forth in
Section 8.03 below.
8.03 Right to Proceed. Anything in this Agreement to the contrary
----------------
notwithstanding, if any of the conditions specified in Section 7.01 hereof have
not been satisfied, Buyer shall have the right to proceed with the transactions
contemplated hereby without waiving any of its rights hereunder, and if any of
the conditions specified in Section 7.02 hereof have not been satisfied, the
Stockholders shall have the right to proceed with the transactions contemplated
hereby without waiving any of their rights hereunder.
SECTION 9. SURVIVAL
--------------------
9.01 Survival of Warranties. Each of the representations, warranties,
----------------------
agreements, covenants and obligations herein or in any Schedule, Exhibit,
Certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and shall survive the Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto.
SECTION 10. INDEMNIFICATION
----------------------------
10.01 Indemnification by Southeast and the Stockholders. Southeast and
-------------------------------------------------
the Stockholders jointly and severally agree subsequent to the Closing to
indemnify and hold Amerivend, each Subsidiary, Buyer and their respective
subsidiaries and affiliates and persons serving as officers, directors, partners
or employees thereof (individually, a "Buyer Indemnified Party" and,
collectively, the "Buyer Indemnified Parties") harmless from and against any
damages, liabilities, losses, taxes, fines, penalties, costs and expenses
(including, without limitation, reasonable fees of counsel) of any kind or
nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or
44
settlement of the foregoing) which may be sustained or suffered by any of them
arising out of or based upon any of the following matters:
(a) Fraud, intentional misrepresentation or a deliberate or willful
breach by either Company or any Stockholder of any of their representations,
warranties or covenants under this Agreement or in any Certificate, Schedule or
Exhibit delivered pursuant hereto;
(b) Any other breach of any representation, warranty or covenant of
either Company or any Stockholder under this Agreement or in any Certificate,
Schedule or Exhibit delivered pursuant hereto, or by reason of any claim, action
or proceeding asserted or instituted arising out of any matter or thing
constituting a breach of such representations, warranties or covenants;
(c) Any liability of Amerivend or any Subsidiary for Taxes arising
from an event or transaction prior to the Closing or as a result of the Closing
which have not been paid or provided for or reserved against by Amerivend in the
Base Balance Sheet, including, without limitation, any increase in Taxes due to
the unavailability of any loss or deduction claimed by Amerivend or a
Subsidiary; provided, however, that neither Southeast nor the Stockholders shall
have any obligation under this Section 10.01(c) for any Taxes imposed by Section
1374 of the Code which arise by virtue of any election under Section 338(h)(10)
of the Code; and
(d) Any liability of Southeast.
10.02 Limitations on Indemnification by Southeast and the Stockholders.
----------------------------------------------------------------
Notwithstanding the foregoing, the right of Buyer Indemnified Parties to
indemnification under Section 10.01 shall be subject to the following
provisions:
(a) No indemnification shall be payable pursuant to Subsection
10.01(b) above to any Buyer Indemnified Party, unless the total of all claims
for indemnification pursuant to Section 10.01 shall exceed $25,000 in the
aggregate, whereupon the full amount of such claims shall be recoverable in
accordance with the terms hereof; and
(b) No indemnification shall be payable to a Buyer Indemnified Party
with respect to claims under Subsection 10.01(b) which are asserted after the
date which is eighteen (18) months after the Closing Date (the "Expiration
Date"); provided that (i) if on or prior to the Expiration Date a specific state
of facts shall have become known which may give rise to a claim for
indemnification under Subsection 10.01(b) and a Buyer Indemnified Party shall
have given written notice to the Stockholders of such facts known by such Buyer
Indemnified Party at such time, then the right to indemnification with respect
to such claim shall remain in effect without regard to when such matter shall be
finally determined and disposed of and (ii) claims under Subsection 10.01(b) for
indemnification for Taxes or environmental matters or based upon or related to a
breach of any representation, warranty or covenant with respect to Taxes
45
or tax related matters or environmental matters may be asserted until the 60th
day following expiration of the statute of limitations (if any) applicable to
such claim.
The limitations contained in this Subsection 10.02 shall not apply to the
indemnification obligations of Southeast and the Stockholders arising under
Subsections 10.01(a) and 10.01(c).
10.03 Indemnification by Buyer. Buyer agrees to indemnify and hold
------------------------
Southeast and the Stockholders (individually, each a "Stockholder Indemnified
Party" and, collectively, the "Stockholder Indemnified Parties") harmless from
and against any damages, liabilities, losses and expenses (including, without
limitation, reasonable fees of counsel) of any kind or nature whatsoever
(whether or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing) which may be sustained
or suffered by any of them arising out of or based upon (a) any breach of any
representation, warranty or covenant made by Buyer in this Agreement or in any
Certificate delivered by Buyer hereunder, or by reason of any claim, action or
proceeding asserted or instituted arising out of any matter or thing
constituting such a breach and (b) any Taxes imposed by Section 1374 of the Code
which arise by virtue of any election under Section 338(h)(10) of the Code.
10.04 Limitation on Indemnification by Buyer. Notwithstanding the
--------------------------------------
foregoing, the right of Stockholder Indemnified Parties to indemnification under
Section 10.03 shall be subject to the following provisions:
(a) No indemnification pursuant to Section 10.03(a) shall be payable
to any Stockholder Indemnified Party, unless the total of all claims for
indemnification pursuant to Section 10.03 shall exceed $25,000 in the aggregate,
whereupon the full amount of such claims shall be recoverable in accordance with
the terms hereof; and
(b) No indemnification shall be payable to any Stockholder
Indemnified Party with respect to claims under Section 10.03(a) above which are
asserted after the Expiration Date; provided that if on or prior to the
Expiration Date a specific state of facts shall have become known which may give
rise to a claim for indemnification under Subsection 10.03(a) and a Stockholder
Indemnified Party shall have given written notice to Buyer of such facts known
by such Stockholder Indemnified Party at such time, then the right to
indemnification with respect to such claim shall remain in effect without regard
to when such matter shall be finally determined and disposed of.
The limitations contained in this Section 10.04 shall not apply to the
indemnification obligations of Buyer arising under Section 10.03(b).
10.05 Notice; Defense of Claims. An indemnified party may make claims for
-------------------------
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims can be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the indemnified party shall also give written notice thereof to the indemnifying
party promptly after it receives notice of the claim or
46
liability being asserted, but the failure to do so shall not relieve the
indemnifying party from any liability except to the extent that it is prejudiced
by the failure or delay in giving such notice. Such notice shall summarize the
bases for the claim for indemnification and any claim or liability being
asserted by a third party. Within 20 days after receiving such notice the
indemnifying party shall give written notice to the indemnified party stating
whether it disputes the claim for indemnification and whether it will defend
against any third-party claim or liability at its own cost and expense. If the
indemnifying party fails to give notice that it disputes an indemnification
claim within 20 days after receipt of notice thereof, it shall be deemed to have
accepted and agreed to the claim, which shall become immediately due and
payable. The indemnifying party shall be entitled to direct the defense against
a third-party claim or liability with counsel selected by it (subject to the
consent of the indemnified party, which consent shall not be unreasonably
withheld) as long as the indemnifying party is conducting a good faith and
diligent defense. The indemnified party shall at all times have the right to
fully participate in the defense of a third-party claim or liability at its own
expense directly or through counsel; provided, however, that if the named
-----------------
parties to the action or proceeding include both the indemnifying party and the
indemnified party and the indemnified party is advised that representation of
both parties by the same counsel would be inappropriate under applicable
standards of professional conduct, the indemnified party may engage separate
counsel at the expense of the indemnifying party. If no such notice of intent to
dispute and defend a third-party claim or liability is given by the indemnifying
party, or if such good faith and diligent defense is not being or ceases to be
conducted by the indemnifying party, the indemnified party shall have the right,
at the expense of the indemnifying party, to undertake the defense of such claim
or liability (with counsel selected by the indemnified party), and to compromise
or settle it, exercising reasonable business judgment. If the third-party claim
or liability is one that by its nature cannot be defended solely by the
indemnifying party, then the indemnified party shall make available such
information and assistance as the indemnifying party may reasonably request and
shall cooperate with the indemnifying party in such defense, at the expense of
the indemnifying party.
10.06 Claims Against Indemnification Escrow. In the event that a Buyer
-------------------------------------
Indemnified Party sustains or incurs losses (including, without limitation,
attorneys fees) for which it is entitled to indemnification from Southeast or
the Stockholders under this Agreement, in addition to all other rights or
remedies that such Buyer Indemnified Party may have (including the right to
collect directly from Southeast or the Stockholders), such Buyer Indemnified
Party shall be entitled to receive in cash from the Escrow Agent an amount equal
to the losses (including, without limitation, attorneys fees), sustained or
incurred by such Buyer Indemnified Party, in accordance with the Escrow
Agreement.
SEC MISCELLANEOUS.
------------------
11.01 Fees and Expenses. Buyer shall pay its own expenses and costs
-----------------
associated with the preparation of this Agreement and the consummation of the
transactions contemplated hereby. Each of Southeast and the Stockholders shall
pay all of their fees and expenses and all
47
fees and expenses of Amerivend in connection with the preparation of this
Agreement and the consummation of the transactions contemplated hereby, and no
expenses of either Company or the Stockholders relating in any way to the
transactions contemplated hereby, including, without limitation, legal,
accounting or other professional expenses and any broker's commission or
finder's fee, shall be charged to, paid by or reflected in any account of
Amerivend, any Subsidiary or Buyer.
11.02 Governing Law. This Agreement shall be construed under and governed
-------------
by the internal laws of The Commonwealth of Massachusetts without regard to its
conflict of laws provisions.
11.03 Notices. Any notice, request, demand or other communication
-------
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three (3) days after deposit in
United States post office facilities properly addressed with postage prepaid.
All notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
TO BUYER: Xxx-Xxxx Corporation
-------- 00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Chief Executive Officer
With a copy to: Xxxxxxx, Procter & Xxxx LLP
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Cable, Esq.
TO EITHER COMPANY Xxxxxx X. Xxxxxx
------------------- 0000 Xxxxxxxx Xxxxxx
OR ANY STOCKHOLDER: Apt. PH-5
------------------- Xxxxx, XX 00000
Fax: (000) 000-0000
With a copy to: Law Offices of Xxxxxxx X. Xxxxxx, Xx., P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Xx., Esq.
48
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
11.04 Entire Agreement. This Agreement, including the Schedules and
----------------
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings, including the letter of intent
among Amerivend, Xxx-Xxxx Corporation and Xx. Xxxxxx dated February 18, 1998.
11.05 Assignability; Binding Effect. This Agreement shall only be
-----------------------------
assignable by Buyer, whether in whole or in part, to an entity controlling,
controlled by or under common control with Buyer upon written notice to the
Companies and the Stockholders, and such assignment shall not relieve Buyer of
any liability hereunder. This Agreement may not be assigned by either Company
or the Stockholders without the prior written consent of Buyer. This Agreement
shall be binding upon and enforceable by, and shall inure to the benefit of, the
parties hereto and their respective successors and permitted assigns.
11.06 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
11.07 Execution in Counterparts. For the convenience of the parties and
-------------------------
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
11.08 Amendments. This Agreement may not be amended or modified, nor may
----------
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by Buyer, each Company and the Stockholders'
Representative, or in the case of a waiver, the party waiving compliance.
11.09 Publicity and Disclosures. No press releases or public disclosure,
-------------------------
either written or oral, of the transactions contemplated by this Agreement,
shall be made by a party to this Agreement without the prior knowledge and
written consent of Buyer, the Companies and the Stockholders' Representative;
provided, however, that Buyer shall be permitted to disclose such information
-------- -------
about the Companies, their Subsidiaries, the Stockholders and the transactions
contemplated hereby as may be legally required, and otherwise reasonably
necessary, in the preparation, completion, filing and distribution of such
reports, filings and other documents required by the Securities Act, the
Exchange Act or New York Stock Exchange rules; provided, further, that Buyer
-------- -------
shall be permitted to make such press releases related to the execution of this
Agreement as may be reasonably approved by the Stockholders' Representative.
49
11.10 Consent to Jurisdiction. Each of the parties hereby consents to
-----------------------
personal jurisdiction, service of process and venue in the federal or state
courts of The Commonwealth of Massachusetts for any claim, suit or proceeding
arising under this Agreement, or in the case of a third-party claim subject to
indemnification hereunder, in the court where such claim is brought.
11.11 Specific Performance. The parties agree that it would be
--------------------
difficult to measure damages which might result from a breach of this Agreement
by either Company or the Stockholders and that money damages would be an
inadequate remedy for such a breach. Accordingly, if there is a breach or
proposed breach of any provision of this Agreement by either Company or the
Stockholders, and Buyer does not elect to terminate under Section 8, Buyer shall
be entitled, in addition to any other remedies which it may have, to an
injunction or other appropriate equitable relief to restrain such breach without
having to show or prove actual damage to Buyer.
11.12 Bulk Sales Law. Buyer hereby waives compliance by Southeast of any
--------------
applicable bulk sales law and Southeast agrees to make full and prompt payment
of all amounts owed by Southeast to its creditors. Southeast and Xx. Xxxxxx,
jointly and severally, agree (in addition to and independent of the
indemnification obligations contained in Section 10) to indemnify and hold Buyer
harmless from, and reimburse Buyer for, any loss, cost, expense, liability or
damage (including reasonable counsel fees and disbursements and expenses) which
Buyer may suffer or incur by virtue of the non-compliance by Southeast with such
laws.
[End of Text]
50
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
MAC-GRAY SERVICES, INC.
By:
--------------------------
Name:
Title:
AMERIVEND CORPORATION
By:
--------------------------
Name:
Title:
AMERIVEND SOUTHEAST
CORPORATION
By:
--------------------------
Name:
Title:
--------------------------
Xxxxxx X. Xxxxxx
XXXXXX X. XXXXXX GRANTOR
RETAINED ANNUITY TRUST
By: NationsBank, N.A., as Trustee
By:
--------------------------
Name:
Title:
51
List of Exhibits and Schedules
------------------------------
Exhibit A List of Stockholders, Stockholdings and Consideration to be Paid
B Form of Indemnification Escrow Agreement
C Form of Opinion of Counsel for the Companies and the Stockholders
D Form of Non-Competition Agreement
E FIRPTA Representation
F Form of General Release
Schedule
1.02(a)(i) Southeast Inventory
1.02(a)(ii) Southeast Equipment
1.02(b) Southeast Vehicles
1.03 Indebtedness
1.08 Southeast Allocation
2.03 Voting Agreements, etc.
2.04 Subsidiaries
2.05 Liens, etc.
2.06(a) Real Property
2.06(b) Personal Property
2.07 Laundry Leases
2.08 Equipment
2.09 Title
2.10 Financial Statements
2.11 Tax Disclosures
2.12 Affiliated Accounts Receivable
2.13 Inventories
2.14 Absence of Changes
2.16 Banking Arrangements
2.17 Intellectual Property
2.18 Contracts, etc.
2.19 Litigation
2.20 Compliance with Laws
2.21 Insurance
2.22 Warranty Claims
2.25 Permit; Burdensome Agreements
2.27 Transactions with Interested Persons
2.28 Employee Benefit Programs
2.29 Environmental Matters
2.30 Officers and Directors
2.31 Labor Matters
2.33 Backlog
2.34 Customers, Distributors and Suppliers
2.36 Stock Repurchases
4A Amerivend Allocation
52
EXHIBIT A
---------
List of Stockholders, Stockholdings and Consideration to be Paid
----------------------------------------------------------------
==========================================================
Name of Ownership of Consideration
Stockholder Company Shares Payable
by Buyer
----------------------------------------------------------
Xxxxxx X. Xxxxxx 382 Amerivend Shares 76.4% of
Amerivend
Purchase Price
----------------------------------------------------------
Xxxxxx X. Xxxxxx
Grantor Retained 118 Amerivend Shares 23.6% of
Annuity Trust Amerivend
Purchase Price
==========================================================
53
