EXHIBIT 10.1
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER DATED NOVEMBER 22,
1999 by and among Xxxx Corp., Xxxx Machinery, Inc. and Nortrax Equipment
Company - Southeast, L.L.C.
TABLE OF CONTENTS
1.0 The Merger................................................................1
1.1 The Merger................................................................1
1.2 Effective Time; Closing...................................................2
1.3 Effect of the Merger......................................................2
1.4 Limited Liability Company Agreement.......................................2
1.5 Manager of the Survivor...................................................2
1.6 Conversion of Securities..................................................2
1.7 No Further Ownership Rights in Company Common Stock.......................3
1.8 Procedure at the Closing..................................................3
1.9 Adjustment of Merger Consideration........................................4
1.10 Payment of Escrowed Funds................................................6
2.0 Representations and Warranties of the Parent Concerning the Transaction...6
2.1 Organization of Parent; Due Authorization.................................6
2.2 Binding Obligation........................................................6
2.3 Status of the Shares......................................................7
2.4 Investment Bankers and Brokers Fees.......................................7
3.0 Representations and Warranties of the Survivor Concerning the Transaction.7
3.1 Organization, Power and Authority of the Survivor; Due Authorization......7
3.2 Binding Obligation; Noncontravention......................................7
3.3 Absence of Litigation.....................................................8
3.4 Brokers...................................................................8
3.5 Membership Interests of the Survivor......................................8
4.0 Representations and Warranties of the Parent Concerning the Company.......9
4.1 Organization, Power and Authority of the Company..........................9
4.2 Capital Stock of the Company..............................................9
4.3 Subsidiaries of the Company...............................................9
4.4 Financial Statements of the Company.......................................9
4.5 Liabilities of the Company................................................10
4.6 Tax Matters...............................................................10
4.7 Real Estate of the Company................................................12
4.8 Good Title to and Condition of the Companys Assets.......................13
4.9 Receivables of the Company................................................13
4.10 Licenses and Permits of the Company......................................13
4.11 Intellectual Property of the Company.....................................14
4.12 Adequacy of the Company's Assets; the Company's Relationships with its
Customers and Suppliers..................................................14
4.13 Documents of and Information with Respect to the Company.................14
4.14 Insurance Covering the Company and its Assets............................15
4.15 Litigation Involving the Company.........................................15
4.16 Records of the Company...................................................15
4.17 No Material Adverse Change...............................................16
4.18 Absence of Certain Acts or Events........................................16
4.19 Compliance with Laws by the Company......................................16
4.20 Environmental Matters....................................................17
4.21 Labor Relations of the Company...........................................18
4.22 Employee Benefits........................................................19
4.23 Product Warranties.......................................................20
4.24 Product Liability........................................................21
4.25 Transactions with Affiliates.............................................21
4.26 Year 2000................................................................21
4.27 Compliance with Cuba Act.................................................21
4.28 Accuracy of Information Furnished by the Parent and the Company..........21
4.29 Knowledge................................................................21
5.0 Additional Covenants of the Parent........................................22
5.1 Commercially Reasonable Best Efforts......................................22
5.2 Conduct of Business Pending the Closing...................................22
5.3 Access to the Company's Plants, Properties and Records....................23
5.4 Notice of Material Developments...........................................23
5.5 Confidentiality...........................................................23
5.6 No Other Discussions......................................................24
5.7 Transferred Real Property.................................................24
5.8 Access to Employees.......................................................24
5.9 Title Insurance...........................................................24
6.0 Additional Covenants of the Survivor......................................24
6.1 Commercially Reasonable Best Efforts......................................24
7.0 Additional Covenants of the Survivor, the Parent and the Company..........24
7.1 Access to Information.....................................................24
7.2 Consents and Approvals....................................................25
7.3 HSR Act Compliance........................................................25
7.4 Further Assurances........................................................25
7.5 Notification of Certain Matters...........................................26
7.6 Employee Matters..........................................................26
7.7 Company Indebtedness Under Credit Agreement...............................26
7.8 Xxxx Rental, Inc..........................................................26
7.9 Environmental Remediation.................................................27
8.0 Conditions to the Obligation of the Survivor..............................28
8.1 Accuracy of Representations and Warranties and Compliance with Obligations
..........................................................................28
8.2 Opinion of Counsel........................................................29
8.3 Certified Resolutions.....................................................29
8.4 Receipt of Necessary Consents.............................................29
8.5 [Intentionally Omitted]...................................................29
8.6 No Adverse Litigation.....................................................29
8.7 Resignations..............................................................29
8.8 HSR Act Waiting Period....................................................29
8.9 Transferred Real Property.................................................29
8.10 Release of Obligations...................................................29
8.11 Dealership Termination and Release Agreement.............................30
8.12 Survivor's Frustration of Closing Conditions.............................30
8.13 [Intentionally Omitted]..................................................30
8.14 Articles of Merger.......................................................30
8.15 Release of Liens.........................................................30
8.16 Escrow Agreement.........................................................30
9.0 Conditions to Obligation of the Company and the Parent....................30
9.1 Accuracy of Representations and Warranties and Compliance with Obligations
.........................................................................30
9.2 Opinion of Counsel........................................................31
9.3 Certified Resolutions.....................................................31
9.4 [Intentionally Omitted]...................................................31
9.5 Receipt of Necessary Consents.............................................31
9.6 Parent's Frustration of Closing Conditions................................31
9.7 No Adverse Litigation.....................................................31
9.8 Certificate of Merger.....................................................31
9.9 Escrow Agreement..........................................................31
10.0 Certain Actions After the Closing........................................31
10.1 Execution of Further Documents...........................................31
10.2 Tax Matters..............................................................31
10.3 Transfer of Assets.......................................................33
11.0 Indemnification..........................................................33
11.1 Agreement by the Parent to Indemnify.....................................33
11.2 Agreement by Survivor to Indemnify.......................................34
11.3 Limitations and Qualifications...........................................34
11.4 Indemnification Procedures...............................................35
11.5 Environmental Response...................................................37
11.6 Treatment of Indemnification Payments....................................38
11.7 Arbitration Procedure....................................................38
11.8 Mitigation...............................................................40
12.0 Miscellaneous............................................................40
12.1 Amendment and Modification...............................................40
12.2 Payment of Expenses......................................................40
12.3 Termination..............................................................41
12.4 Binding Effect...........................................................42
12.5 Entire Agreement.........................................................42
12.6 Headings.................................................................42
12.7 Execution in Counterpart.................................................42
12.8 Notices..................................................................42
12.9 Governing Law............................................................43
12.10 Publicity...............................................................43
12.11 Waiver..................................................................43
12.12 Severability............................................................44
12.13 Assignment..............................................................44
12.14 No Third-Party Beneficiaries............................................44
SCHEDULES
Schedule 1.9.1(a) Company Accounting Policies
Schedule 2.4 Investment Bankers' and Brokers' Fees
Schedule 4.1 Foreign Qualification of the Company
Schedule 4.2 Ownership of Capital Stock
Schedule 4.4 Financial Statements
Schedule 4.4.5 Pro Forma Adjustments
Schedule 4.7 Real Estate
Schedule 4.8 Liens and Encumbrances
Schedule 4.10 Licenses and Permits
Schedule 4.11 Proprietary Rights
Schedule 4.12 Customers
Schedule 4.13 Documents of and Information with Respect to the Company
Schedule 4.14 Litigation
Schedule 4.15 Insurance
Schedule 4.18 Absence of Certain Acts or Events
Schedule 4.19 Compliance with Laws
Schedule 4.20 Environmental Matters
Schedule 4.21 Labor Relations
Schedule 4.22 Employee Benefits
Schedule 4.23 Product Liability Claims; Product Warranties
Schedule 5.7 Transferred Real Property
Schedule 7.8 Rental Property
Schedule 7.9 Remediated Property
Schedule 8.4 Consents and Assignments
Schedule 8.13 Release of Liens
EXHIBITS
Exhibit A Opinion of Parent's Counsel
Exhibit B Dealership Termination and Release Agreement
Exhibit C Articles of Merger
Exhibit D Opinion of Survivor's Counsel
Exhibit E Certificate of Merger
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
This amended and restated agreement and plan of merger (the "Agreement") is made
and entered into this 22nd day of November, 1999 by and between Xxxx Corp., a
Delaware corporation (the "Parent"), Xxxx Machinery, Inc., a Florida corporation
(the "Company"), and Nortrax Equipment Company - Southeast, L.L.C., a Delaware
limited liability company (the "Survivor").
Recitals
WHEREAS, NORTRAX, Inc., a Delaware corporation ("Nortrax") and Parent and the
Company are parties to that certain Agreement and Plan of Merger dated as of
November 12, 1999 (the "Original Agreement"), providing for, among other things,
the merger of the Company with and into Nortrax;
WHEREAS, as of the date hereof, Nortrax has assigned, and Survivor has asssumed,
all of the rights and obligations of Nortrax under the Original Agreement;
WHEREAS, Survivor and the Company desire to amend and restate the Original
Agreement to provide for the Company to merge with and into Survivor (the
"Merger") upon the terms, and subject to the conditions, set forth in this
Agreement and in accordance with the laws of the States of Delaware and Florida;
WHEREAS, the Company has an authorized capitalization consisting of 5,000 shares
of common stock, $1.00 par value per share ("Company Common Stock"), of which
100 shares are issued and outstanding and all of which are owned by Parent; and
WHEREAS, the sole Member and Manager of Survivor and the Boards of Directors of
Parent and the Company deem it desirable, upon the terms and subject to the
conditions stated herein, that the Company be merged with and into Survivor and
that Survivor be the surviving limited liability company, with the Company
Common Stock converted into the Merger Consideration (as defined herein).
NOW, THEREFORE, in consideration of the agreements and obligations set forth
herein, the parties hereby agree as follows:
Covenants
In consideration of the mutual representations, warranties and covenants and
subject to the conditions herein contained, the parties hereto agree as follows:
1.0 The Merger
1.1 The Merger. Upon the terms and subject to the conditions set forth in
Sections 8.0 and 9.0, and in accordance with the Delaware Limited Liability
Company Act (the "DLLCA") and the Florida General Corporation Act (the "FGCA"),
at the Effective Time (as hereinafter defined), the Company shall be merged with
And into Survivor. As a result of the Merger, the separate corporate existence
of the Company shall cease and the Survivor shall continue as the surviving
entity of the Merger and shall succeed to all the rights, privileges, powers and
franchises and assume all the restrictions, disabilities, duties and obligations
of the Company in accordance with the DLLCA and the FGCA.
1.2 Effective Time; Closing. Unless this Agreement shall have been terminated,
as promptly as practicable after the satisfaction or, if permissible, waiver of
the conditions set forth in Sections 8.0 and 9.0, the parties hereto shall cause
the Merger to be consummated by filing (i) a Certificate of Merger (the
"Certificate of Merger") in the Office of the Secretary of State of the State of
Delaware, in such form as is required by, and executed in accordance with, the
relevant provisions of the DLLCA, and (ii) Articles of Merger (the "Articles of
Merger") with the Department of State of the State of Florida, in such form as
is required by, and executed in accordance with, the relevant provisions of the
FGCA. The Merger shall become effective upon filing of the Certificate of Merger
or at such time thereafter as is provided in the Certificate of Merger (the
"Effective Time"). Prior to such filing, a closing (the "Closing") shall be held
at the offices of Xxxx, Xxxx & Xxxxx, 00 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx, or such other place as the parties shall agree. The closing
shall occur at 10:00 A.M., local time, on the third business day after the last
of the conditions set forth in Sections 8.0 and 9.0 shall have been satisfied or
waived or such later date as determined by the mutual agreement of the Survivor
and the Company but shall not be later than January 31, 2000 or, if this
Agreement is terminated, the closing shall not occur. Throughout this Agreement,
such closing is referred to as the "Closing" and such date and time are referred
to as the "Closing Date."
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall
be as provided in the applicable provisions of the DLLCA and the FGCA.
1.4 Limited Liability Company Agreement. At the Effective Time, the limited
liability company agreement of the Survivor, as in effect immediately prior to
the Effective Time, shall be the limited liability company agreement of the
Survivor until thereafter amended as provided by the DLLCA.
1.5 Manager of the Survivor. The Manager of the Survivor immediately prior to
the Effective Time shall be the Manager of the Survivor immediately thereafter,
to hold office in accordance with the limited liability company agreement of the
Survivor until a successor is duly elected or appointed.
1.6 Conversion of Securities (a) At the Effective Time, by virtue of the Merger
and without any action on the part of the Company, the Survivor or the Parent,
the issued and outstanding shares of Company Common Stock immediately prior to
the Effective Time shall be converted into the right to receive from the
Survivor, in the aggregate, an amount in cash equal to $91,000,000, subject to
adjustment pursuant to Section 1.9 hereof (the "Merger Consideration").
(b) As of the Effective Time, all shares of Company Common Stock shall no longer
be outstanding and shall automatically be cancelled and retired and shall cease
to exist, and each holder of shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration; and
(c) Each limited liability company interest of Survivor issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding.
1.7 No Further Ownership Rights in Company Common Stock. The payment of the
Merger Consideration in accordance with the terms of this Agreement shall be
deemed to have been issued in full satisfaction of all rights pertaining to the
Company Common Stock.
1.8 Procedure at the Closing. At the Closing, the parties agree to take the
following steps in the order listed below (provided, however, that upon their
completion all such steps shall be deemed to have occurred simultaneously):
1.8.1 The Parent and the Company, as the case may be, shall deliver to the
Survivor the certificates, instruments and other documents required to be
delivered by the Parent pursuant to Section 8.0.
1.8.2 The Survivor shall deliver to the Parent and the Company, as the case
may be, the certificates, instruments and other documents required to be
delivered by the Survivor pursuant to Section 9.0.
1.8.3 The Parent shall deliver to the Survivor one or more certificates
evidencing all issued and outstanding shares of Company Common Stock (the
"Shares"), duly endorsed in blank or accompanied by duly executed stock
powers.
1.8.4 The Survivor shall deposit $500,000 into escrow (together with all
amounts earned thereon the "Escrowed Funds") pursuant to the terms of an
Escrow Agreement, the terms of which shall be agreed by the Parent and the
Survivor prior to the Closing (the "Escrow Agreement"), to be held for
funding any Environmental Response Action under Section 7.9 hereof and
distributed as provided in Section 1.10 hereof and the Escrow Agreement.
1.8.5 The Survivor shall pay to the Parent $90,500,000 (the "Closing
Payment") by wire transfer of immediately available funds to such account
or accounts as shall have been designated in writing by the Parent.
1.8.6 The Survivor and the Parent shall execute and deliver a cross receipt
acknowledging receipt from the other, respectively, of the Shares and the
Closing Payment.
1.9 Adjustment of Merger Consideration
1.9.1 Closing Net Asset Statement. As soon as practicable after the
Closing, but in any event within 45 days following the Closing Date,
Survivor (with the assistance of Xxxxxx X. Xxxxxxx, if he accepts
employment with the Survivor following the Effective Time) shall deliver to
Parent a statement (the "Closing Net Asset Statement") of Survivor's
determination of the net assets of the Company as of the Closing. The
Closing Net Asset Statement shall be prepared in accordance with generally
accepted accounting principles applied on a consistent basis with the
Company's historical financial statements ("GAAP") and all assets and
liabilities listed in the Closing Net Asset Statement shall be valued based
upon GAAP as of such date. The Closing Net Asset Statement shall be
prepared as if it were a year-end balance sheet in accordance with GAAP,
and shall reflect a pro rata amount of all year-end adjustments and
accruals in accordance with GAAP; provided, however, that no accruals for
Taxes resulting from the treatment of the merger as a taxable sale of
assets shall be made on the Closing Net Asset Statement. Each category of
assets and liabilities to be included in the Closing Net Asset Statement
will be determined in accordance with the policies described in Schedule
1.9.1(a).
1.9.2 Physical Inventory. Parent and Survivor shall jointly conduct a
physical count of the Inventory and Rental Equipment (as such items are
referred to in the Pro Forma Balance Sheet) in the days immediately prior
to the Closing Date. The Inventory and Rental Equipment will be priced at
the lower of cost or market determined in accordance with the accounting
policies set forth on Schedule 1.9.1(a) and the total dollar amount of
Inventory and Rental Equipment determined in accordance therewith shall be
the Inventory and Rental Equipment values, respectively, on the Closing Net
Asset Statement. If Parent and Survivor are unable to agree on the
valuation of any particular item of Inventory or Rental Equipment pursuant
hereto, Parent and Survivor shall refer their differences with respect to
such particular item of Inventory or Rental Equipment to a nationally
recognized firm of personal property appraisers as to which Parent and
Survivor mutually agree (the "Appraiser"), who shall, acting as experts and
not as arbitrators, determine, and only with respect to the particular item
of Inventory or Rental Equipment so submitted, determine the value of such
item of Inventory or Rental Equipment. Parent and Survivor shall direct the
Appraiser to use its commercially reasonable best efforts to render its
determination as soon as practicable. The Appraiser's determination shall
be conclusive and binding upon Survivor and Parent and the valuation of
such item of Inventory or Rental Equipment shall be used by the Survivor to
prepare the Closing Net Asset Statement and shall not be subject to
adjustment pursuant to Section 1.9.3. The fees and disbursements of the
Appraiser shall be shared equally by Survivor and Parent.
1.9.3 Final Closing Net Asset Statement. Parent shall, within 30 days after
the delivery by Survivor of the Closing Net Asset Statement, complete their
review of the closing net asset value (defined as total assets less current
liabilities as of the Closing) of the Company as derived from the Closing
Net Asset Statement (the"Closing Net Asset Value"). In the event that
Parent determines that the Closing Net Asset Value as derived from the
Closing Net Asset Statement has not been determined in accordance with GAAP
or was not arrived at in accordance with this Section 1.9, Parent shall
inform Survivor in writing (the "Parent's Objection"), setting forth a
specific description of the basis of Parent's Objection and the adjustments
to such Closing Net Asset Value which Parent believes should be made, on or
before the last day of such 30-day period. Survivor shall then have 30 days
to review and respond to Parent's Objection. If Parent and Survivor are
unable to resolve all of their disagreements with respect to the
determination of the foregoing items within 30 days following the
completion of Survivor's review of Parent's Objection, they shall refer
their remaining differences (except with respect to any disputes regarding
the valuation of Inventory which shall be resolved pursuant to Section
1.9.2) to an internationally recognized firm of independent public
accountants as to which Parent and Survivor mutually agree (the "CPA
Firm"), who shall, acting as experts and not as arbitrators, determine, and
only with respect to the remaining differences so submitted, whether and to
what extent, if any, the Closing Net Asset Value as derived from the
Closing Net Asset Statement, requires adjustment. Parent and Survivor shall
direct the CPA Firm to use its commercially reasonable best efforts to
render its determination within 30 days. The CPA Firm's determination shall
be conclusive and binding upon Survivor and Parent. The fees and
disbursements of the CPA Firm shall be shared equally by Survivor and
Parent. Survivor and Parent shall make readily available to the CPA Firm
all relevant books and records and any work papers (including those of the
parties' respective accountants) relating to the Closing Net Asset
Statement and all other items reasonably requested. The "Final Closing Net
Asset Statement" shall be (i) the Closing Net Asset Statement in the event
that (x) no Parent's Objection is delivered to Survivor during the 30-day
period specified above, or (y) Parent and Survivor so agree, (ii) the
Closing Net Asset Statement, adjusted in accordance with the Parent's
Objection in the event that Survivor does not respond to Parent's Objection
within the 30-day period following receipt by Survivor of Parent's
Objection, or (iii) the Closing Net Asset Statement, as adjusted by the CPA
Firm.
1.9.4 Access to Information. Parent shall provide Survivor and its
accountants full access to its books and records, any other financial
information, including work papers of its accountants, and to any employees
to the extent necessary for Survivor to prepare the Closing Net Asset
Statement. Parent and its accountants shall have full access to all
information used by Survivor in preparing the Closing Net Asset Statement,
including the work papers of its accountants.
1.9.5 Adjustment of Merger Consideration. The Merger Consideration shall be
adjusted based on the Closing Net Asset Value derived from the Final
Closing Net Asset Statement (the "Final Net Asset Value") as follows:
(a) If the Final Net Asset Value is greater than $81,477,850, the
Merger Consideration will be increased by the difference.
(b) If the Final Net Asset Value is less than $81,477,850, the Merger
Consideration will be reduced by the difference.
After giving effect to the adjustments set forth
in paragraphs (a) and (b) above:
(c) If the net Merger Consideration is increased, the increase in the
Merger Consideration shall be paid by Survivor to Parent.
(d) If the Merger Consideration is decreased, the decrease in the
Merger Consideration shall be paid to Survivor by Parent.
1.9.6 Payment Terms. Payments pursuant to this Section 1.9 shall be made
within five days following the issuance of the Final Closing Net Asset
Statement, by causing such payments to be credited in immediately available
funds to such account or accounts of Survivor or Parent, as the case may
be, as may be designated by it.
1.10 Payment of Escrowed Funds. Parent and
Survivor shall direct the escrow agent under the Escrow Agreement (the
"Escrow Agent"), and the Escrow Agreement shall provide, that the Escrowed
Funds shall be used to pay the Remediation Costs. The Parent and the
Survivor agree that they will direct the Escrow Agent to pay such
Remediation Costs promptly upon the receipt by either the Parent or the
Survivor of any valid invoice or xxxx relating to the any Environmental
Response Action under Section 7.9 hereof or comprising the Remediation
Costs. To the extent there remains Escrowed Funds following the completion
of the Environmental Response Actions contemplated by Section 7.9 hereof
and payment in full of all Remediation Costs, the Parent and the Survivor
shall direct the Escrow Agent to pay to the Parent such remaining Escrowed
Funds.
2.0 Representations and Warranties of the Parent Concerning the Transaction
In order to induce the Survivor to enter into this Agreement and to
consummate the transactions contemplated hereunder, the Parent makes the
following representations and warranties:
2.1 Organization of Parent; Due Authorization The Parent is a corporation
duly organized and legally existing in good standing under the laws of the
State of Delaware, with full corporate power and authority to enter into
this Agreement and to carry out the transactions and agreements
contemplated hereby. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action of the Parent.
2.2 Binding Obligation.
This Agreement has been duly executed and delivered by the Parent and is a
valid and binding obligation of the Parent, enforceable in accordance
with its terms, subject to (a) applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws affecting
creditors' rights generally, and (b) general principles of equity,
including, without limitation, standards of materiality, good faith,
fair dealing and reasonableness, equitable defenses and limits on
the availability of equitable remedies, whether such principles are
considered at law or in equity. Except as disclosed in Schedule 2.2,
neither the execution and delivery of this Agreement by the Parent
nor the consummation of the transactions contemplated hereby will:
(i) conflict with or violate any provision of the certificate of
incorporation or bylaws of the Parent, (ii) conflict with or violate
any provision of the articles of incorporation or bylaws of the
Company, (iii) conflict with or violate any law, ordinance or regulation or
any decree or order of any court or administrative or other governmental
body which is either applicable to, binding upon or enforceable against the
Parent or the Company, and except as would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below) on the Parent
or the Company; or (iv) result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under, any mortgage,
contract, agreement, indenture, will, trust or other instrument which is
either binding upon or enforceable against the Parent, the Company or the
assets and properties of the Company except as would not, individually or
in the aggregate, have a Material Adverse Effect on the Parent or the
Company. Except that the Company is required to file the Articles of Merger
with the Department of State of the State of Florida, no permit, consent,
approval or authorization of, or declaration to or filing with, any
regulatory or other government authority is required in connection with the
execution and delivery of this Agreement by the Parent or the Company and
the consummation by them of the transactions contemplated hereby, except
where the failure to obtain such permits, consents, approval,
authorizations, individually or in the aggregate, would not have a Material
Adverse Effect on the Parent or the Company or which would affect in any
material way the right of the Survivor to own or control the business of
the Company following the Effective Time.
2.3 Status of the Shares. The Parent is the lawful owner of all of the
Shares and has valid marketable title thereto, free and clear of all liens,
pledges, encumbrances, security interests, restrictions on transfer (other
than restrictions under federal and state securities laws), claims and
equities of every kind. Except for this Agreement, there are no outstanding
warrants, options or rights of any kind to acquire from the Parent any of
the Shares.
2.4 Investment Bankers' and Brokers Fees. Except as set forth
on Schedule 2.4, neither the Parent nor the Company has any obligation to
pay any fees or commissions to any investment banker, broker, finder or
agent with respect to the transactions contemplated by this Agreement.
3.0 Representations and Warranties of the Survivor Concerning the
Transaction
In order to induce the Parent to enter into this Agreement and to
consummate the transactions contemplated hereunder, the Survivor makes the
following representations and warranties:
3.1 Organization, Power and Authority of the Survivor; Due
Authorization. The Survivor is a limited liability company duly organized
and validly existing under the laws of the State of Delaware, with full
power and authority to enter into this Agreement and to carry out the
transactions and agreements contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action of
the Survivor.
3.2 Binding Obligation; Noncontravention. This Agreement has been duly
executed and delivered by the Survivor and is a valid and binding obligation of
the Survivor, enforceable in accordance with its terms, subject to (a)
applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or similar laws affecting creditors' rights generally, and (b)
general principles of equity, including, without limitation, standards of
materiality, good faith, fair dealing and reasonableness, equitable defenses and
limits on the availability of equitable remedies, whether such principles are
considered at law or in equity. Neither the execution and delivery of this
Agreement by the Survivor nor the consummation of the transactions contemplated
hereby will: (i) conflict with or violate any provision of the certification of
formation or limited liability company agreement of the Survivor, (ii) conflict
with or violate any law, ordinance or regulation or any decree or order of any
court or administrative or other governmental body which is either applicable
to, binding upon or enforceable against the Survivor, except as would not,
individually or in the aggregate, have a Material Adverse Effect on the
Survivor; or (iii) result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice under, any mortgage, contract,
agreement, indenture or other instrument which is either binding upon or
enforceable against the Survivor or the assets or properties of the Survivor
except as would not, individually or in the aggregate, have a Material Adverse
Effect on the Survivor. Except that the Survivor is required to file the
Certificate of Merger and Articles of Merger with the relevant governmental
authorities, no permit, consent, approval or authorization of, or declaration to
or filing with, any regulatory or other governmental authority is required in
connection with the execution and delivery of this Agreement by the Survivor and
the consummation of the transactions contemplated hereby.
3.3 Absence of Litigation. There are no actions, suits, claims,
governmental investigations or arbitration proceedings pending or, to the
Knowledge of the Survivor, threatened against or affecting the Survivor or any
of its assets or properties that would prevent the Survivor from consummating
the transactions contemplated by this Agreement. There are no outstanding
orders, decrees or stipulations issued by any federal, state, local or foreign
judicial or administrative authority in any proceeding to which the Survivor is
or was a party that would prevent the Survivor from consummating the
transactions contemplated by this Agreement.
3.4 Brokers. Except as set forth on Schedule 3.4, the Survivor has no
obligation to pay any fees or commissions to any investment banker, broker,
finder or agent with respect to the transactions contemplated by this Agreement.
3.5 Membership Interests of the Survivor. As of the date hereof, all of the
issued and outstanding units of membership interest of the Survivor are owned by
NORTRAX, Inc., a Delaware corporation. All of the issued and outstanding units
of membership interest of the Survivor are validly authorized and issued, fully
paid and non-assessable. There are no outstanding warrants, options or rights of
any kind to acquire from the Survivor any units of its membership interests or
securities of any kind, and there are no pre-emptive rights with respect to the
issuance or sale of shares of any securities of the Survivor. The Survivor has
no obligation to acquire any of its issued and outstanding units of membership
interest or any other security issued by it from any holder thereof.
4.0 Representations and Warranties of the Parent Concerning the Company.
In order to induce the Survivor to enter into this Agreement and to
consummate the transactions contemplated hereunder, the Parent makes the
following representations and warranties:
4.1 Organization, Power and Authority of the Company. The Company is a
corporation duly organized and legally existing in good standing under the laws
of the State of Florida, and has full corporate power and authority and all
licenses and permits necessary to own or lease its properties and to carry on
its business as it is now being conducted except where the failure to have such
licenses or permits would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company is legally qualified to transact
business as a foreign corporation, and is in good standing, in the jurisdictions
identified in Schedule 4.1, those being the only jurisdictions in which its
business or property is such as to require that it be thus qualified, except
where the failure to so qualify would not have a Material Adverse Effect on the
Company. For the purposes of this Agreement, with respect to a person, Material
Adverse Effect means a material adverse effect on the business, financial
condition or results of operations of such person, except for any effects
resulting from general economic, regulatory, political or industry-wide
conditions.
4.2 Capital Stock of the Company. The authorized capital stock of the
Company consists solely of 5,000 shares of common stock, par value $1.00 per
share, 100 shares of which are issued, outstanding and owned of record and
beneficially by the Parent and none of which are issued and held in the
Company's treasury. All voting rights in the Company are vested exclusively in
its shares of common stock, and there are no voting trusts, proxies or other
agreements or understandings with respect to the voting of the capital stock of
the Company. All of the issued and outstanding shares of common stock of the
Company are validly authorized and issued, fully paid and non-assessable. There
are no outstanding warrants, options or rights of any kind to acquire from the
Company any shares of its common stock or securities of any kind, and there are
no pre-emptive rights with respect to the issuance or sale of shares of capital
stock of the Company. The Company has no obligation to acquire any of its issued
and outstanding shares of common stock or any other security issued by it from
any holder thereof.
4.3 Subsidiaries of the Company. The Company has no equity interest or the
right or obligation to acquire an equity interest in any other person or entity.
4.4 Financial Statements of the Company. Set forth in Schedule 4.4 are the
following financial statements of the Company:
4.4.1 audited balance sheets at December 31 of each of the years 1998,
1997, and 1996;
4.4.2 an unaudited balance sheet of the Company at June 30,
4.4.3 audited statements of income and retained earnings and statements
of cash flow for each year in the three-year period ended December 31, 1998;
4.4.4 an unaudited statement of income and retained earnings of the
Company for the six month period ended June 30, 1999; and
4.4.5 an unaudited pro forma balance sheet of the Company at June 30,
1999 (the "Pro Forma Balance Sheet) attached hereto as Schedule 4.4.5,
Such financial statements present fairly, in all material respects, the
financial position of the Company at each of the said balance sheet dates
and the results of its operations for each of the said periods covered, and
they have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis except as may be disclosed in the
notes thereto. The unaudited balance sheet of the Company at June 30, 1999
(including the notes pertaining thereto) is referred to herein as the "1999
Balance Sheet."
4.5 Liabilities of the Company. The Company has, or at the Closing will
have, no material liabilities or obligations, either accrued, absolute,
contingent or otherwise, except: (i) to the extent reflected or taken into
account in determining net worth in the Pro Forma Balance Sheet and not
heretofore paid or discharged; (ii) to the extent clearly disclosed and
specifically set forth in Schedule 4.5 hereof; and (iii) trade payables, accrued
expenses and purchase money financing, in each case incurred in the ordinary
course of business, consistent with prior practice, since the date of the Pro
Forma Balance Sheet; provided, however, in no event shall the Company have any
intercompany obligations as of the Closing that have not been entered into on an
arms' length basis.
4.6 Tax Matters.
4.6.1 As used in this Agreement, (i) "Tax" means any federal, state, local
or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits, withholding, social
security, unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not, (ii) "Tax
Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule
or attachment thereto, and including any amendment thereof, (iii) "Code"
means the Internal Revenue Code of 1986, as amended, and (iv) "Affiliated
Group" means any affiliated group within the meaning of Code Section
1504(a).
4.6.2 The Company has timely filed (or joined in the filing of) all Tax
Returns required to be filed by it, other than those the failure of which
to file would not have a Material Adverse Effect on the Company. All such
Tax Returns were correct and complete in all material respects. The Company
has paid in full all Taxes which have become due or are disputing such
taxes in good faith. The amounts provided in the 1999 Balance Sheet for
Taxes are adequate to cover all material unpaid liabilities for all Taxes
which were accrued through, or applicable to the period ended, June 30,
1999 and for which the Company may be liable in its own right or as a
transferee of the assets of, or successor to, any other person or entity.
There is no material Tax deficiency proposed or to the Knowledge (as
defined herein) of the Parent and the Company threatened against the
Company. There are no liens for Taxes upon any property or assets of the
Company, except for those not yet due and payable. The Company has made all
payments of estimated Taxes when due in amounts sufficient to avoid the
imposition of any material penalty.
4.6.3 All material Taxes which the Company was required by law to withhold
or to collect have been duly withheld and collected, and have been paid
over to the proper governmental entity or are being held by the Company in
separate bank accounts for such payment, and all such withholdings and
collection and all other payments due in connection therewith as of the
date of the 1999 Balance Sheet are duly reflected on the 1999 Balance
Sheet.
4.6.4 None of the Tax Returns of the Company is under audit or examination
by any tax authority, and there are no outstanding agreements or waivers
extending the statute of limitations applicable to any federal or state
income Tax Returns of the Company for any period. No claim has ever been
made by an authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. The
Parent has previously delivered to the Survivor accurate and complete
copies of all federal and state income Tax Returns, examination reports and
statements of deficiencies filed, prepared and assessed against or agreed
to by the Company since December 31, 1995.
4.6.5 Neither the Parent nor the Company has filed a consent under Code
Section 341(f) concerning collapsible corporations. The Company has not
made any payments, is not obligated to make any payments, and is not a
party to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Code Section 280G.
The Company has not been a member of an Affiliated Group filing a
consolidated federal income Tax Return other than a group the common parent
of which is the Parent.
4.6.6 Each Affiliated Group of which the Company has been a member has
filed all income Tax Returns that it was required to file for each taxable
period during which the Company was a member of the group, other than those
the failure of which to file would not have a Material Adverse Effect on
the Company. All such Tax Returns were correct and complete in all material
respects. All income Taxes owed by any such Affiliated Group (whether or
not shown on any Tax Return) have been paid for each taxable period during
which the Company was a member of the group or adequate reserves for such
Taxes have been established and are properly recorded in the financial
statements of the Company. The Company does not have any liability for the
Taxes of any person other than the Company. There is no tax deficiency
proposed or to the Knowledge of the Parent threatened against any such
Affiliated Group.
4.7 Real Estate of the Company.
4.7.1Schedule 4.7 accurately and completely sets forth, with respect to
every parcel of real estate owned by the Company (the "Real Estate"):
(i) the address thereof; (ii) the legal description and approximate size
thereof; and (iii) a brief description of the principal improvements and
buildings thereon, all of which are within the property, set-back and
building lines.
4.7.2 Schedule 4.7 accurately and completely sets forth, with respect to
every parcel of real estate leased by the Company (the "Leasehold
Premises"): (i)"the lessor thereof and the date and term of the lease
governing such property; (ii) the address thereof; (iii) the legal
description and the approximate size thereof; and (iv) a brief description
of the principal improvements and buildings thereon, all of which are
within the property, set-back and building lines of the Leasehold Premises.
The Parent has previously delivered or made available to the Survivor
accurate and complete copies of each of the leases covering the Leasehold
Premises, and none of such leases has been amended or modified except to
the extent that such amendments or modifications are disclosed in such
copies or in Schedule 4.7. All of the leases covering the Leasehold
Premises are in full force and effect, and the Company is not in default or
breach under any such lease, other than as would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. No event has
occurred which with the passage of time or the giving of notice or both
would cause a material breach of or default under any such lease. Neither
the Parent nor the Company has Knowledge of any material breach or
anticipated breach by the other parties to such lease.
4.7.3 The Company has good and marketable title to each parcel of the Real
Estate and a valid leasehold interest in each of the Leasehold Premises,
free and clear of all liens, mortgages, pledges, charges, encumbrances,
assessments, restrictions, covenants and easements or title defects of any
nature whatsoever, except for Permitted Encumbrances. Permitted
Encumbrances shall mean liens for real estate taxes not yet due and
payable, and such imperfections of title and encumbrances, if any, as are
not substantial in character, amount or extent and do not materially
detract from the value, or interfere with the present use, of such
properties or otherwise impair business operations in any material respect.
4.7.4 The buildings located on the Real Estate and the Leasehold Premises
are each in good operating condition, normal wear and tear excepted, and
are in the aggregate sufficient to satisfy the Company's current normal
operations and business activities.
4.7.5 Each parcel of the Real Estate and the Leasehold Premises: (i) has
direct access to public roads or access to public roads by means of a
perpetual access easement, such access being sufficient to satisfy the
current and reasonably anticipated normal transportation requirements of
the Company's business as presently conducted at such parcel; and (ii) is
served by all utilities, including but not limited to water, electricity,
natural gas, sewer and telephone, in such quantity and quality as are
sufficient to satisfy the current normal operations and business activities
of the Company's business as conducted at such parcel.
4.7.6 Neither the Parent nor the Company has received notice of: (i) any
condemnation proceeding with respect to any portion of the Real Estate or
the Leasehold Premises, and to the Knowledge of the Parent or the Company
no proceeding is contemplated by any governmental authority; or (ii) any
special assessment which may affect the Real Estate or the Leasehold
Premises, and to the Knowledge of the Parent or the Company no such special
assessment is contemplated by any governmental authority.
4.8 Good Title to and Condition of the Company's Assets. The Company has
good title to all of the assets and properties that it owns other than the Real
Estate and Leasehold Premises, free and clear of all liens, mortgages, pledges,
encumbrances or charges of every kind, nature, and description whatsoever,
except those set forth in Schedule 4.8. The Company's fixed assets are in good
operating condition, normal wear and tear excepted. The inventory and supplies
of the Company consist of items of a quality and quantity usable and saleable in
the normal course of the Company's business at values in the aggregate at least
equal to the values at which such items are carried on its books.
4.9 Receivables of the Company. Except as set forth on Schedule 4.9, all of
the receivables set forth or reflected in the 1999 Balance Sheet, were, as of
the dates as of which the information is given therein, and as of the Closing
Date all of the Company's receivables will be, valid accounts receivable which
are or will be current and collectible and which have been or will be, within 90
days after the Closing Date, collected in full except to the extent of the
allowance for uncollectible receivables set forth on the 1999 Balance Sheet as
adjusted for operations and transactions through the Closing Date in accordance
with past practice of the Company. For purposes of determining whether a
receivable of a particular customer has been collected, payments received from
that customer shall be applied on a first-in, first-out basis, except for cash
on delivery payments and except as otherwise directed by the customer in the
case of accounts and disputed in good faith.
4.10 Licenses and Permits of the Company. The Company possesses all
licenses and other required governmental or official approvals, permits or
authorizations, the failure to possess which would have a Material Adverse
Effect on the Company. All such licenses, approvals, permits and authorizations
are in full force and effect, the Company is in compliance with their
requirements except where the failure to comply with such requirements would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company, and no proceeding is pending or, to the Knowledge of the Parent or the
Company, threatened to revoke or amend any of them in any material respect.
Schedule 4.10 contains an accurate and complete list of all such licenses,
approvals, permits and authorizations. None of such licenses, approvals, permits
and authorizations is or will be impaired or in any way affected by the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except where, individually or in the aggregate, such
impairment or effect would not have a Material Adverse Effect on the Company or
would not affect in any material way the right of the Survivor to own or control
the business of the Company following the Effective Time.
4.11 Intellectual Property of the Company. The Company possesses all
proprietary rights, the failure to possess which would have a Material Adverse
Effect on the Company, including without limitation patents, trade secrets,
technology, know-how, copyrights, trademarks, trade names, and rights to any of
the foregoing, to carry on its business as now being conducted without conflict
with valid proprietary rights of others. Schedule 4.11 contains an accurate and
complete list of all such proprietary rights (the "Proprietary Rights"). Except
as set forth on Schedule 4.11, (i) the Company has good and valid title to, or
licenses pursuant to valid license agreements to use, all of the Proprietary
Rights, (ii) there have been no claims made against the Parent or the Company
for the assertion of the invalidity, abuse, misuse, or unenforceability of any
of such rights, and to the Knowledge of the Parent or the Company, there are no
grounds for the same, (iii)neither the Parent nor the Company has received a
notice of conflict with the asserted rights of others within the last five
years, and (iv) to the Knowledge of the Parent or the Company, the conduct by
the Parent or the Company of the Company's business has not materially infringed
any such rights of others.
4.12 Adequacy of the Company's Assets; the Company's Relationships with its
Customers and Suppliers. The assets and properties of the Company constitute, in
the aggregate, all of the property necessary for the conduct of the Company's
business in the manner in which and to the extent to which it is currently being
conducted. Neither the Parent nor the Company has received any written or oral
communication providing that: any current customer or customers of the Company
which, either individually or in the aggregate, accounted for over 5% of the
total net sales of the Company for the 12 month period ended September 30, 1999,
or any current supplier to the Company of items essential to the conduct of its
business, which items cannot be replaced by the Company at comparable cost to
the Company and the loss of which would have a Material Adverse Effect on the
Company, may terminate its business relationship with the Company. Except as set
forth in Schedule 4.12, neither the Parent nor any Affiliate (as hereinafter
defined) of the Parent other than the Company, nor any officer, director or
employee of the Company, has any material direct or indirect interest in any
customer, supplier or competitor of the Company or in any person from whom or to
whom the Company leases real or personal property, or in any other person with
whom the Company is doing business, other than an interest of less than 1% of
the outstanding capital stock of any such person if such person's capital stock
is publicly traded on any recognized exchange or in the over-the-counter market.
Except as set forth in Schedule 4.12, the Company is not restricted by agreement
from carrying on its business anywhere in the world. As used in this Agreement,
the term "Affiliate" means, with respect to a specified person, any other person
which directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the persons specified.
4.13 Documents of and Information with Respect to the Company. Schedule
4.13 accurately and completely lists the following: (i) each loan, credit
agreement, guarantee, security agreement or similar document or instrument to
which the Company is a party or by which it is bound with an aggregate
obligation of the Company in excess of $25,000; (ii) each lease of personal
property to which the Company is a party or by which it is bound with an
aggregate obligation of the Company in excess of $25,000; (iii) any other
agreement, contract or commitment to which the Company is a party or by which it
is bound which involves a future commitment by the Company in excess of $50,000
and which cannot be terminated without liability on 90 days or less notice;
(iv) each power of attorney executed by or on behalf of the Company; (v) the
name and current annual salary of each salaried employee of the Company whose
current annual salary is in excess of $30,000 and the profit sharing, bonus or
any other form of compensation (other than salary) paid or payable by the
Company to or for the benefit of each such person, and any employment or other
agreement of the Company with any of its officers or employees; (vi the name of
each of the Company's officers and directors; and (vii) the name of each bank in
which the Company has an account or safe-deposit box, the name in which the
account or box is held and the names of all persons authorized to draw thereon
or to have access thereto. The Parent has previously furnished the Survivor with
an accurate and complete copy of each such agreement, contract or commitment
listed in Schedule 4.13. There has not been any material default in any
obligation to be performed by the Company, or by the Parent on behalf of the
Company, under any such instrument.
4.14 Insurance Covering the Company and its Assets. The Company carries (or
the Parent carries on behalf of the Company) insurance, which the Parent
reasonably believes is adequate in character and amount, with reputable
insurers, covering all of the Company's assets, properties and business, and the
Company has provided all required performance and other surety bonds. Schedule
4.14 accurately and completely lists each policy of insurance in force with
respect to the Company, its assets and properties, and each of the performance
or other surety bonds maintained by the Company in the conduct of its business.
All premiums and other payments which have become due under the policies of
insurance listed in Schedule 4.14 have been paid in full, all of such policies
are now in full force and effect and neither the Parent nor the Company has
received any notice from any insurer, agent or broker of the cancellation of, or
any increase in premium with respect to, any of such policies or bonds, other
than in the ordinary course of business. Since December 31, 1996, neither the
Parent nor the Company has received notification from any insurer, agent or
broker denying or disputing any claim in excess of $50,000 made by or on behalf
of the Company or denying or disputing any coverage for any such claim or the
amount of any claim. Except as set forth in Schedule 4.14, the Company has no
claim against any of its insurers under any of such policies pending or
anticipated and there has been no occurrence of any kind which would give rise
to any such claim.
4.15 Litigation Involving the Company. Except as set forth in Schedule
4.15, there are no actions, suits, claims, governmental investigations or
arbitration proceedings pending or, to the Knowledge of the Parent or the
Company, threatened against or affecting the Company or any of its assets or
properties. There are no outstanding orders, decrees or stipulations issued by
any federal, state, local or foreign judicial or administrative authority in any
proceeding to which the Company (or the Parent with respect to the Company) is
or was a party.
4.16 Records of the Company. The Parent has previously furnished the
Survivor with copies of the Company's articles of incorporation and all
amendments thereto to date (certified by the Secretary of State of the State of
Florida) and of the Company's bylaws (certified by the Company's secretary), and
such copies are correct and complete in all respects. All of the Company's
operating data and records, including without limitation, customer lists and
financial, accounting and credit records (the "Company Records"), are accurate
and complete in all respects and there are no material matters as to which
appropriate entries have not been made in the Company Records. A record of all
actions taken by the shareholders and the board of directors of the Company and
all minutes of their meetings are contained in the minute books of the Company
and are accurate and complete. The record books and stock ledgers of the Company
contain an accurate and complete record of all issuances, transfers and
cancellations of shares of capital stock of the Company.
4.17 No Material Adverse Change. Since the date of the 1999 Balance Sheet,
to the Knowledge of the Parent or the Company, there have not been any changes
in the business or properties of the Company, or in its consolidated financial
condition, other than changes occurring in the ordinary course of business which
in the aggregate have not had a Material Adverse Effect on the Company. There is
not, to the Knowledge of the Parent or the Company, any threatened event or
condition of any character whatsoever which would reasonably be expected to have
a Material Adverse Effect on the Company.
4.18 Absence of Certain Acts or Events. Except as disclosed in Schedule
4.18, since the date of the 1999 Balance Sheet, the Company has not (and the
Parent on the Company's behalf has not): (i) authorized or issued any of its
shares of capital stock (including any held in its treasury) or any other
securities; (ii) declared or paid any dividend or made any other distribution of
or with respect to its shares of capital stock or other securities or purchased
or redeemed any shares of its capital stock or other securities; (iii) paid any
bonus or increased the rate of compensation of any of its employees other than
in the ordinary course of business consistent with past practice; (iv) sold,
leased, transferred or assigned any of its assets other than in the ordinary
course of business; (v) made or obligated itself to make capital expenditures
aggregating more than $250,000; (vi) paid any of the legal, accounting or other
expenses of the Parent in connection with the transactions contemplated hereby;
(vii) other than in the ordinary course of business, incurred any material
obligations or liabilities (including any indebtedness) or entered into any
material transaction, except for this Agreement and the transactions
contemplated hereby; or (viii) suffered any theft, damage, destruction or
casualty loss in excess of $50,000.
4.19 Compliance with Laws by the Company. Except as set forth in Schedule
4.19, the Company is in compliance with all laws, regulations and orders
applicable to the Company, its assets, properties and business, except where the
failure to be in compliance would not, individually or in the aggregate, have a
Material Adverse Effect on the Company (it being understood between the parties
that for purposes of this Section 4.19 any violation that is reasonably likely
to result in criminal charges being filed against the Company or any of its
employees shall be deemed to have a Material Adverse Effect on the Company).
Since December 31, 1996, neither the Parent nor the Company has received
notification of any asserted past or present failure by the Company, or the
Parent on the Company's behalf, to comply with any laws, and to their Knowledge,
no proceeding with respect to any such violation is contemplated. Neither the
Company nor, to the Knowledge of the Parent or the Company, any employee of the
Company, has made any payment of funds in connection with the business of the
Company prohibited by law, and no funds have been set aside to be used in
connection with the business of the Company for any payment prohibited by law.
Without limiting the foregoing, the Company (and the Parent with respect to its
employees involved in the business of the Company) is and at all times has been
in material compliance with the terms and provisions of the Immigration Reform
and Control Act of 1986 (the "Immigration Act"). With respect to each Employee
(as defined in 8 C.F.R. 274a. 1(f)) involved in the business of the Company for
whom compliance with the Immigration Act by Company or the Parent is required,
the Company has in its possession a complete and true copy of (i) each such
employee's Form I-9 (Employment Eligibility Verification Form), and (ii) all
other records, documents or other papers prepared, procured and/or retained by
the Parent pursuant to the Immigration Act. The Company (and the Parent on
behalf of the Company) has not been cited, fined, served with a notice of intent
to fine or with a cease and desist order, nor has any action or administrative
proceeding been initiated or, to the Knowledge of the Parent or the Company,
threatened against the Company (or the Parent on behalf of the Company) by
reason of any actual or alleged failure to comply with the Immigration Act.
4.20 Environmental Matters.
4.20.1 Except as disclosed on Schedule 4.20 hereto, (i) the business and
operations of the Company do not violate any applicable Environmental Law
(as defined below) in effect as of the date hereof except for such
violations that would not, individually or in the aggregate, have a
Material Adverse Effect on the Company; (ii) the Company is in possession
of all Environmental Permits (as defined below) required under any
applicable Environmental Law for the conduct or operation of the business
of the Company (or any part thereof), and the Company is in all material
respects in compliance with all of the requirements and limitations
included in such Environmental Permits, except where the failure to
possess, or noncompliance with, such Environmental Permits would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company; (iii) neither the Parent nor the Company has received any notice
from any governmental authority that the Company's business or operations
are in violation of any Environmental Law or any Environmental Permit or
that it is responsible (or potentially responsible) for Remedial Action (as
defined below) in any location; (iv) the Company is not the subject of any
federal, state, local or private litigation or administrative proceedings
involving a demand for damages or other potential liability with respect to
violations of Environmental Laws which, if resolved adversely to the
Company, would reasonably be expected to have a Material Adverse Effect on
the Company; (v) to the Knowledge of the Parent or the Company, there has
been no Release of any Contaminant at any property currently, or in the
past, owned, operated, leased or occupied by the Company, the Company has
not buried, dumped, disposed of or spilled or released any Contaminant at
any location that Remedial Action (as defined below) is requested, required
or being undertaken, and no Contaminants are located at any property
currently, or in the past, owned, operated, leased or occupied by the
Company, in each case where the cost of remediation of such property would
reasonably be expected to have a Material Adverse Effect on the Company;
(vi) the Company has not used any Underground Storage Tanks (as defined
below), and there are not now nor, to the Knowledge of the Parent or the
Company, have there been Underground Storage Tanks on the property
currently, or in the past, owned, operated, leased or occupied by the
Company, (vii) the Company has not transported, stored, treated or
disposed, nor has it arranged for any third parties to transport, store,
treat or dispose of Contaminants or other waste to or at any location other
than a site lawfully permitted to receive such Contaminants or other waste
for such purposes, nor has it performed or arranged such transportation,
storage, treatment or disposal in material contravention of any applicable
Environmental Law, except for such violation that would not reasonably be
expected to have a Material Adverse Effect on the Company, and (viii) to
the Knowledge of the Company or the Parent, the Company has not transported
or disposed, nor has it arranged for any third parties to transport or
dispose, any Contaminants to or at a site which, pursuant to CERCLA (as
defined below) or any similar state law, (a) has been placed on the
National Priorities List or its state equivalent, or (b) the Environmental
Protection Agency or the relevant state agency has proposed or is proposing
to place on the National Priorities List or its state equivalent. The
foregoing representations in this Section 4.20.1 are the sole and exclusive
representations of the Parent concerning environmental matters.
4.20.2 For purposes of this Agreement: (i) "Environmental Law" means any
law, statute, regulation or order, consent decree or settlement agreement
which relates to or otherwise imposes liability or standards of conduct
concerning pollution or human health or the environment (including ambient
air, water, or land) including (but not limited to) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"),
as amended, the Resource Conservation and Recovery Act ("RCRA"), as
amended, the Federal Water Pollution Control Act, as amended, the Toxic
Substances Control Act, as amended, the Clean Air Act, as amended, any
so-called "Super Lien" law relating to Contaminants, the Occupational
Safety and Health Act, as amended, the Safe Drinking Water Act and any
other similar federal, state or local statutes and regulations and written
and legally binding guidance promulgated pursuant to the above statutes;
(ii "Environmental Permit" means any permit, license, approval, consent or
other authorization required by or pursuant to any applicable Environmental
Law; (iii) "Contaminant" means any hazardous substance defined as such
under CERCLA, any solid or hazardous waste under RCRA, and or any petroleum
or petroleum-derived substance or waste; (iv) "Release" means release,
spill, emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment or
into or out of the Real Estate, the Transferred Real Property (as defined
in Section 5.7 hereof) or the Leasehold Premises, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or
property; (v)"Remedial Action" means actions requested or required to
(A) clean up, remove, treat or in any other way address Contaminants in the
environment; (B) prevent the Release or threat of Release or minimize the
further Release of any Contaminant; (C) perform pre-remedial studies and
investigations and post-remedial monitoring care; or (D) correct any
violation of any Environmental Law; and (vi) "Underground Storage Tanks"
shall have the meaning given in RCRA and state law regulating tanks that
store Contaminants located partially or fully below the surface of the
ground.
4.21 Labor Relations of the Company. Except as set forth in Schedule 4.21,
the Company (and the Parent on behalf of the Company) is not a party to or
bound by any collective bargaining agreement or any other agreement with a
labor union, and to the Knowledge of the Parent or the Company, there has
been no effort by any labor union to organize any employees of the Company
(or employees of the Parent who are or are likely to become employees of
the Company) into one or more collective bargaining units. There is not
pending or, to the Knowledge of the Parent or the Company, threatened any
labor dispute, strike or work stoppage which affects or which may affect
the business of the Company or which may interfere with its continued
operation. Neither the Company nor any agent, representative or employee of
the Company has committed any unfair labor practice as defined in the
National Labor Relations Act, as amended, and there is not now pending or,
to the Knowledge of the Parent or the Company, threatened any charge or
complaint against the Company (or the Parent on the part of the Company) by
or with the National Labor Relations Board or any representative thereof.
There has been no strike, walkout or work stoppage involving any of the
employees of the Company during the four-year period prior to the date
hereof. Neither the Parent nor the Company is aware that any executive or
key employee or group of employees has any plans to terminate his, her or
their employment with the Company.
4.22 Employee Benefits.
4.22.1 Neither the Company, nor any corporation or business which is now or
at the relevant time was a member of a controlled group of corporations or
trades or businesses including the Company, within the meaning of Section
414 of the Code, maintains or contributes to, or at any time since December
31, 1993 maintained or contributed to: (i) any non-qualified deferred
compensation or retirement plans or arrangements; (ii) any qualified
defined contribution retirement plans or arrangements; (iii) any qualified
defined benefit pension plan; (iv) any other plan, program, agreement or
arrangement under which former employees of the Company or their
beneficiaries are entitled, or current employees of the Company will be
entitled following termination of employment, to medical, health, life
insurance or other benefits other than pursuant to benefit continuation
rights granted by state or federal law; or (v) any other material employee
benefit, health, welfare, medical, disability, life insurance, stock, stock
purchase or stock option plan, program, agreement, arrangement or policy,
except in each case as described in Schedule 4.22 attached hereto. The
plans described in Schedule 4.22 are referred to herein as the "Plans."
4.22.2 The administration of the Plans complies in all material respects
with the requirements of the Employee Retirement Income Security Act of
1974 ("ERISA"), and the Plans meet any applicable requirements for
favorable tax treatment under the Code in both form and operation. All of
the Plans which constitute employee pension benefit plans or employee
welfare plans subject to ERISA and the trusts or other funding vehicles
related to the Plans have been maintained in material compliance in both
form and operation with the requirements of ERISA including, but not
limited to, the preparation and filing of all required reports with respect
to the Plans, the submission of such reports to the appropriate
governmental authorities, the timely preparation and distribution of all
required employee communications (including, without limitation, any notice
of plan amendment which is required prior to the effectiveness of such
amendment), the proper and timely purchase and maintenance of required
surety bonds and the proper and timely disposition of all benefit claims.
The costs of administering the Plans, including fees for the trustee and
other service providers which are customarily paid by the Company (or by
the Parent on behalf of the Company), have been paid or will be paid prior
to the Closing or are reflected in the 1999 Balance Sheet. There have been
no prohibited transactions as defined in Section 406 of ERISA or Section
4975 of the Code with respect to any of the Plans or any parties in
interest or disqualified persons with respect to the Plans or any reduction
or curtailment of accrued benefits with respect to any of the Plans. There
are no pending or threatened claims, lawsuits, or arbitrations which have
been asserted or instituted against the Plans, any fiduciaries thereof with
respect to their duties to the Plans or the assets of any of the trusts
under any of the Plans.
4.22.3 All required contributions for all Plan years ending prior to the
Closing Date have been made and adequate accruals for contributions with
respect to all current Plan years are reflected in the 1999 Balance Sheet.
Except as provided in Schedule 4.22.3, the Company has no plans, programs,
agreements or arrangements and has made no other commitments to its
employees, former employees or their beneficiaries under which it has any
obligation to provide any retiree or other employee benefit payments.
4.22.4 The Parent has furnished the Survivor with true and complete copies
of: (i) the Plans and any related trusts or funding vehicles, policies or
contracts and the related summary plan descriptions with respect to each
Plan; (ii) the most recent determination letters received from the Internal
Revenue Service regarding the Plans and copies of any pending applications,
filings or notices with respect to any of the Plans with the Internal
Revenue Service, the Pension Benefit Guaranty Corporation, the Department
of Labor or any other governmental agency; (iii) the latest financial
statements and annual reports for each of the Plans and related trusts or
funding vehicles, policies or contracts as of the end of the most recent
plan year with respect to which the filing date for such information has
passed; (iv) the reports of the most recent actuarial valuations of the
Plans; (v) copies of any investment management agreement under any Plan and
any fiduciary insurance policies, surety bonds, rules, regulations or
policies of the trustees or of any committee thereunder; and (vi) copies of
any communications or notices provided to employees or plan participants
with respect to the Plans.
4.23 Product Warranties. Each product manufactured, sold, leased, or
delivered by the Company has conformed with all applicable contractual
commitments and all express and implied warranties except, either individually
or in the aggregate, where the failure to conform with all applicable
contractual commitments and express and implied warranties would not have a
Material Adverse Effect on the Company, and the Company has no material
liability (and, to the Knowledge of the Parent or the Company, there is no basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against it giving rise to any material
liability) for replacement or repair thereof or other damages in connection
therewith, subject only to the reserve for product warranty claims set forth on
the 1999 Balance Sheet, as adjusted for operations and transactions through the
Closing Date in accordance with past practice of the Company. Except as set
forth on Schedule 4.23, no product manufactured, sold, leased, or delivered by
the Company is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease provided by the
manufacturer or supplier of the product. Schedule 4.23 includes copies of the
standard terms and conditions of sale or lease for the Company (containing
applicable guaranty, warranty, and indemnity provisions).
4.24 Product Liability. The Company has no material liability (and, to the
Knowledge of the Parent or the Company, there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any material liability)
arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or
delivered by the Company.
4.25 Transactions with Affiliates. Except as set forth in Schedule 4.25,
since December 31, 1998, (i) no officer, director or Affiliate of Parent has
provided or caused to be provided any assets, services or facilities used or
held for use in connection with the business of the Company with a value in
excess of $25,000, and (ii) the Company has not provided or caused to be
provided any assets, services or facilities to any such officer, director or
Affiliate with a value in excess of $25,000. Except as disclosed in Schedule
4.25, each of the transactions listed in Schedule 4.25 has been engaged in on an
arm's-length basis.
4.26 Year 2000. None of the material computer software, computer firmware,
computer hardware and computer chips with embedded software or instruction sets
that are used or relied on by the Company in connection with the operation of
the business of the Company will in any material way cease to function, generate
incorrect data, or produce incorrect results when processing, providing or
receiving (i) date-related data in and between the years 1999 and 2000 and (ii)
date-related data in connection with any valid date in the twentieth and
twenty-first centuries.
4.27 Compliance with Cuba Act. The Company has complied with, and is and
will be in compliance with, the provisions of that certain Florida act relating
to disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder or is exempt
therefrom. Neither the Company nor any of its Affiliates is presently doing
business with the government of Cuba or with any person or affiliate located in
Cuba.
4.28 Accuracy of Information Furnished by the Parent and the Company. The
representations, statements and information made or furnished by the Parent or
the Company to the Survivor, including without limitation those contained in
this Agreement and the various schedules attached hereto, do not contain and
shall not contain any untrue statement of a material fact and do not omit and
shall not omit any material fact necessary to make the information contained
therein not misleading.
4.29 Knowledge. "Knowledge" means, with respect to any representation,
warranty or statement of any party in this Agreement that is qualified by such
party's "knowledge," the actual knowledge of such party and all knowledge that a
reasonably prudent person should have if such person duly performed his or her
duties as an officer, director, manager or employee, as the case may be, of such
party with due care, and made reasonable and diligent inquiry and exercised due
diligence and care with respect to the matter to which such qualification by
knowledge applies. The term "knowledge" as used herein with respect to the
Parent shall be limited to the knowledge of Xxxxx X. Xxxxxxxxxx and Xxxx Xxxxx.
The term "knowledge" as used herein with respect to the Company shall be limited
to the knowledge of Xxxxxx X. Xxxxxxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxx Enkee, Xxxxx Xxxxxx, Xxxxx Xxxxxx, Rich Rise, Xxx Xxxxxx, Xxxxxxx Xxxxxx,
and Xxxxx Xxxxxxx. The term "knowledge" as used herein with respect to the
Survivor shall be limited to the knowledge of its Manager and its officers and
directors.
5.0 Additional Covenants of the Parent
5.1 Commercially Reasonable Best Efforts. The Parent and the Company will
use their commercially reasonable best efforts to cause to be satisfied as soon
as practicable and prior to the Closing Date all of the conditions set forth in
Section 8.0 to the obligation of the Survivor to consummate the Merger.
5.2 Conduct of Business Pending the Closing. From and after the execution
and delivery of this Agreement and until the Closing Date, except as otherwise
provided by the prior written consent of the Survivor (such consent not to be
unreasonably withheld):
5.2.1 the Company will, and the Parent will cause the Company to, conduct
its business and operations in all material respects in the manner in which
the same have heretofore been conducted (except as otherwise required by
this Agreement) and the Company will, and the Parent will use its
commercially reasonable best efforts to cause the Company to, (i) preserve
its business organization intact, (ii) keep available the services of its
officers, employees, agents and distributors, and (iii) preserve its
relationships with customers, suppliers and others having dealings with the
Company;
5.2.2 the Company will, and the Parent will cause the Company to, maintain
all of its properties in customary repair, order and condition, reasonable
wear and use and damage by unavoidable casualty excepted, and to maintain
insurance of such types and in such amounts upon all of its properties and
with respect to the conduct of its business as are in effect on the date of
this Agreement; and
5.2.3 the Company will not, and the Parent will not permit the Company to,
(i) authorize or issue any shares of its capital stock (including any held
in its treasury) or any other securities, (ii) declare or pay any dividend
or make any other distribution of or with respect to its shares of capital
stock or other securities or purchase or redeem any shares of its capital
stock or other securities; (iii) pay any bonus in excess of $5,000
individually or $100,000 in the aggregate or increase the rate of
compensation of any of its employees other than in the ordinary course of
business or as set forth on Schedule 5.2.3 or enter into any new employment
agreement or amend any existing employment agreement; (iv) sell, lease,
transfer or assign any of its assets other than in the ordinary course of
business; (v) make or obligate itself to make capital expenditures, other
than purchases of equipment for resale in the ordinary course of business,
aggregating more than $150,000 in the aggregate or $75,000 with respect to
any single capital expenditure; (vi) pay any of the legal, accounting or
other expenses of the Parent in connection with the transactions
contemplated hereby; (vii) incur any material obligations or liabilities or
enter into any material transaction; or (viii) amend its articles of
incorporation or bylaws.
5.3 Access to the Company's Plants, Properties and Records. From and after
the execution and delivery of this Agreement, the Company will, and the Parent
will cause the Company to, afford to the representatives of the Survivor access,
during normal business hours and upon reasonable notice, to the Company's
premises sufficient to enable the Survivor to inspect the assets and properties
of the Company and to prepare filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx") with respect to any acquisitions which
the Survivor may propose to make following the Closing and which would require
information regarding the Company to be included therein, and the Company will,
and the Parent will cause the Company to, furnish to such representatives during
such period all such information relating to the foregoing investigation and
filings under the HSR Act as the Survivor may reasonably request; provided,
however, that any furnishing of such information to the Survivor and any
investigation by the Survivor shall not affect the right of the Survivor to rely
on the representations and warranties made by the Parent in or pursuant to this
Agreement, and, provided further that the Survivor will hold in confidence all
documents and information concerning the Company so furnished, and, if the
Merger pursuant hereto shall not be consummated, such confidence shall be
maintained and the Survivor will not use or disclose to any person any such
document or information (except to the extent that such information can be shown
to be previously available to the Survivor and not subject to confidentiality
restrictions, publicly available, or disclosed to the Survivor by a person who
is not obligated to maintain the confidentiality of such information) and, at
the Company's request, the Survivor shall return to the Company all information
furnished to the Survivor by the Company or the Parent in connection with the
transactions contemplated by this Agreement.
5.4 Notice of Material Developments. The Parent and/or the Company will
give prompt written notice to the Survivor of any material development affecting
the assets, properties, business, financial condition or results of operation of
the Company, including, without limitation, any development which results in the
inaccuracy of any of the representations and warranties of the Parent made
herein. However, no disclosure pursuant to this Section 5.4 shall be deemed to
amend or supplement any of such representations and warranties, or any of the
schedules hereto.
5.5 Confidentiality. Subject to compliance with applicable laws, the Parent
will treat and hold confidential all information concerning the business and
affairs of the Company that is not already generally available to the public
(the "Confidential Information"), refrain from using any of the Confidential
Information except in connection with this Agreement and the operation of the
Company's business prior to the Closing, and deliver promptly to the Survivor or
destroy, at the request and option of the Survivor, all tangible embodiments
(and all copies) of the Confidential Information which are in its possession. In
the event that the Parent is requested or required (by oral question or request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any Confidential
Information, that Parent will notify the Survivor promptly of the request or
requirement so that the Survivor may seek an appropriate protective order or
waive compliance with the provisions of this Section 5.5.
5.6 No Other Discussions. The Parent will not, prior to the Closing Date,
directly or indirectly through any of its Affiliates, directors, employees,
financial advisors or other agents or representatives, solicit or entertain
offers from, negotiate with or in any manner encourage, discuss, accept or
consider any proposal of any other person relating to the acquisition of any
material portion of the assets, stock or business of the Company, either solely
or as part of a sale of a larger portion or all of the Parent's stock, material
portion of assets and business. Parent further agrees to give Survivor prompt
written notice in the event that Parent or any of its agents or representatives
is contacted by any other person with respect to any such possible transaction
described in the preceding sentence.
5.7 Transferred Real Property. Prior to the Closing Date, Parent shall
transfer to the Company each of the parcels of real property used in connection
with the Company's operations at the locations identified on Schedule 5.7 (the
"Transferred Real Property"). The Transferred Real Property shall be transferred
to the Company free and clear of all liens, mortgages, pledges, encumbrances or
charges of every kind, nature and description whatsoever except for Permitted
Encumbrances.
5.8 Access to Employees. The Parent and the Company shall cooperate with
the Survivor by permitting the Survivor prior to the Closing (i) to meet with
the employees of the Company at such times as shall be approved by Parent or its
representatives (which approval shall not be unreasonably withheld), and (ii) to
distribute to the employees such forms and other documents relating to
employment by the Survivor following the Closing as the Survivor shall
reasonably request.
5.9 Title Insurance. Parent shall cooperate with Survivor to enable
Survivor to obtain no later than 15 days prior to the Closing, a commitment for
an ALTA Owner's Title Insurance Policy - Form B-1970 for each parcel of Real
Estate and Transferred Real Property (the "Title Commitment"), issued by a title
insurance company reasonably satisfactory to Survivor (the "Title Company")
together with a legible copy of all documents referenced in the Title
Commitment.
6.0 Additional Covenants of the Survivor
6.1 Commercially Reasonable Best Efforts. The Survivor will use its
commercially reasonable best efforts to cause to be satisfied as soon as
practicable and prior to the Closing Date all of the conditions set forth in
Section 9.0 to the obligation of the Parent and the Company to consummate the
Merger pursuant to this Agreement and in Section 8.4 and 8.5 to the obligation
of the Survivor to consummate the Merger pursuant to this Agreement.
7.0 Additional Covenants of the Survivor, the Parent and the Company
7.1 Access to Information. Each of the Survivor and the Parent agrees that
it will cooperate with and make available to the other party, during normal
business hours, all books and records, information and employees (without
substantial disruption of employment) retained and remaining in existence or in
its employ after the Closing Date which are necessary or useful in connection
with preparation of financial statements, any tax inquiry, audit, investigation
or dispute, any audit by exchanges or data providers, any litigation or
investigation or any other matter requiring any such books and records,
information or employees for any reasonable business purpose. The party
requesting any such books and records, information or employees shall bear all
of the out-of-pocket costs and expenses (including, without limitation,
attorneys' fees, but excluding reimbursement for salaries and employee benefits)
reasonably incurred in connection with providing such books and records,
information or employees and shall keep all such information confidential. The
Parent may require certain financial information relating to the Company for
periods prior to the Closing Date for the purpose of preparing financial
statements, filing Tax Returns and other governmental reports, and the Survivor
agrees to furnish such information to the Parent at the Parent's request and
expense.
7.2 Consents and Approvals. Each of the Parent, the Company and the
Survivor shall use its commercially reasonable best efforts to obtain (or, in
the case of the Parent, cause the Company to obtain) all necessary consents,
waivers, authorizations and approvals and make any filings (a) listed in
Schedule 7.2 (such list including, without limitation, all contracts, agreements
or commitments of the Company that require consent to the assignment of such
contracts, agreements or commitments as a result of the Merger) and (b) of or
with all Government Entities required in connection with the execution, delivery
and performance by it of this Agreement or to permit the Survivor to conduct the
business of the Company as being conducted by it immediately prior to the
Closing.
7.3 HSR Act Compliance. The Survivor agrees to use its commercially
reasonable best efforts to make, or cause to be made, appropriate filings
pursuant to the HSR Act with respect to the transactions (the "Formation
Transaction") contemplated by that certain Joint Venture Agreement (the "Joint
Venture Agreement") dated the date hereof by and among the Company, Deere &
Company, Xxxx Deere Construction Holdings, Inc., Credit Suisse First Boston
Equity Partners, L.P., Credit Suisse First Boston Equity Partners (Bermuda),
L.P., and EMA Private Equity Fund 1999, L.P. The Survivor hereto shall use its
commercially reasonable best efforts to make, or cause to be made, such filings
promptly, to respond to any requests for additional information and documentary
material that may be requested pursuant to the HSR Act and to cause the waiting
periods under the HSR Act to terminate or expire at the earliest possible date.
7.4 Further Assurances. Subject to the terms and conditions herein
provided, the Parent, the Company and the Survivor each agree to use their
commercially reasonable best efforts to (i) take, or cause to be taken, all
actions, and to do, or cause to be done as promptly as practicable, all things
necessary, proper or advisable under applicable laws to consummate and effect
the transactions contemplated by this Agreement, including providing all notices
and making all registrations, filings and applications necessary or desirable
for the consummation of the transactions contemplated herein; (ii) defend any
lawsuits or other legal proceedings (whether judicial or administrative)
challenging this Agreement or the consummation of the transactions contemplated
herein, including seeking to have any stay or temporary restraining order
entered by any court or other governmental authority vacated or reversed; (iii)
fulfill or obtain the fulfillment of all other conditions to Closing; and (iv)
upon the request of a party hereto at any time after the Closing Date, to
execute and deliver any further instruments of assignment, transfer, conveyance,
endorsement, direction or authorization and other documents as the requesting
party or its counsel may request in order to perfect title of the Survivor and
its successors and assigns to assets of the Company immediately prior to the
Closing or to otherwise effect the purposes of this Agreement.
7.5 Notification of Certain Matters. Each of the Parent, the Company and
the Survivor shall give prompt notice to the other of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement.
7.6 Employee Matters. Following the Closing, the Survivor shall have no
obligation to employ any of the persons currently employed by the Company or to
continue, or institute any replacement or substitution for, any vacation,
severance, incentive, bonus, profit sharing, pension or other employee benefit
plan or program of the Company. The Survivor shall, or shall cause the Company
to, grant to each person who is an employee of the Company immediately prior the
Closing Date (the "Company Employee") full service credit under the all benefit
plans maintained by the Survivor following the Closing (the "Survivor Plans")
for service with the Company and its subsidiaries for all purposes, except to
the extent that benefits would be duplicated in respect of the same period of
service. The Survivor shall waive any and all pre-existing condition limitations
and exclusions and waiting periods that may otherwise apply to the Company
Employees under the Survivor Plans and shall cause such Company Employees to
receive full credit for amounts paid or accrued towards any deductible or
copayment requirements incurred during the current plan year. This Section 7.6
shall survive the Closing Date, and is intended to be for the benefit of, and
shall be enforceable by the Company and shall be binding on Survivor and its
successors and assigns.
7.7 Company Indebtedness Under Credit Agreement. The Parent agrees that on
or prior to Closing it will repay in full all of the Company's indebtedness
under the Amended and Restated Credit Agreement dated May 1, 1998 among the
Company, the Parent, Xxxx Rental, Inc., Bankers Trust Company, as Agent and
other Lenders (the "Credit Agreement"), and that it will take all action
necessary to (i) terminate the Company's obligations under the Credit Agreement
effective as of the Closing Date with no further obligation or liability of the
Company thereunder and (ii) release the Company from its guarantees of the
Parent's 10% Senior Subordinated Notes issued May 1998 and the Parent's 10%
Senior Subordinated Notes issued December 1998 effective as of the Closing Date
with no further obligation or liability of the Company thereunder.
7.8 Xxxx Rental, Inc. Survivor and Parent shall use their commercially
reasonable best efforts to negotiate, execute and deliver at the Closing one or
more agreements providing for (i) Xxxx Rental, Inc. ("Rental") to continue to
lease the parcels of real estate listed on Schedule 7.8 at the rental rates set
forth on Schedule 7.8 for a period of three months following the Closing and at
fair market value rental rates thereafter (such fair market rental rates to be
determined by agreement between the parties prior to the Closing) and on other
customary terms and conditions (including termination 60 days following the
occurrence of a change in control of Rental or Parent) for a period of up to one
year following the Closing Date, or for such shorter period as Rental wishes to
continue to lease each such parcel of real estate and (ii) service and supply
arrangements between the Survivor and Rental following the Closing.
7.9 Environmental Remediation.
7.9.1 Each of the Survivor, the Parent and the Company agree to cooperate
with the preparation as soon as practicable after the date hereof of a
written cost estimate by Dames & Xxxxx (the "Remediation Cost Estimate") to
be provided to both Survivor and Parent for the investigation, corrective
action, cleanup, removal, remediation, or other response action
(collectively "Environmental Response Action") relating to the Release or
presence of Contaminants at, from, in, to, on, or under, the locations of
the Company listed on Schedule 7.9 hereof (the "Remediated Property") as
described in the Phase II environmental assessments conducted by Dames &
Xxxxx on or about November or December, 1999. In connection therewith, the
Company shall cooperate and render to Dames & Xxxxx and the Survivor
reasonable access to the Remediated Property, making appropriate personnel
available and providing factual background and technical data. Any
Environmental Response Action selected by Dames & Xxxxx for calculation of
the Remediation Cost Estimate shall be selected in a Commercially
Reasonable Manner (as defined in Section 11.5.3) and shall require the
Least Costly Alternative. The Least Costly Alternative shall be that
Environmental Response Action that is the least expensive alternative: (i)
consistent with the requirements of F.A.C. Chapter 62-770 and the
Contaminant Cleanup Target Levels set forth in Tables I-VI in F.A.C.
Chapter 62-777; and (ii) which does not result in a material adverse impact
upon the Survivor's use of the Real Estate, the Leasehold Premises and the
Transferred Real Property, or ability to conduct the business of the
Survivor on such properties. In the event Parent and Survivor cannot agree
that the selected Environmental Response Action is the Least Costly
Alternative, such dispute shall be resolved pursuant to Section 11.7.
7.9.2 After the Closing, Survivor shall undertake the Environmental
Response Action contemplated in the Remediation Cost Estimate in a
Commercially Reasonable Manner (as defined in Section 11.5.3). The
implemented Environmental Response Action shall be the Least Costly
Alternative as modified, authorized or approved by the Florida Department
of Environmental Protection. The costs and expenses to undertake the
Environmental Response Action (such costs being the "Remediation Costs"),
shall be paid with the Escrowed Funds pursuant to Section 1.10 hereof and
the Escrow Agreement, and, to the extent the Escrowed Funds are
insufficient to pay for the Remediation Costs, the Parent shall be
responsible for the remaining amount of the Remediation Costs.
7.9.3 Parent shall have the right to participate fully in any meetings or
negotiations between the Survivor and any third party (including, without
limitation, any governmental authority, consultants or other experts)
retained in connection with the scope, nature and implementation of any
Environmental Response Action contemplated in the Remediation Cost
Estimate. The Survivor shall keep Parent reasonably informed with respect
to the implementation of such Environmental Response Action, shall provide
Parent with reasonable advance written notice of meetings or negotiations
with respect thereto, and shall promptly provide Parent with copies of all
documents provided to or received from any third party with respect to such
Environmental Response Action. Parent shall have the right, upon reasonable
prior notice, to enter the Remediated Property for the purposes of
observing and understanding all activities relating to such Environmental
Response Action and obtaining split samples of any sampling conducted in
connection therewith; in undertaking the foregoing, Parent shall make all
reasonable efforts to minimize interference with the Survivor's ability to
conduct its business. The Survivor shall cooperate and render to Parent
access to the Remediated Property, making appropriate personnel available
and providing factual background and technical data.
7.9.4 Any disputes arising between the parties under this Section 7.9
(including, without limitation, disputes regarding whether an Environmental
Response Action is the Least Costly Alternative and performed in a
Commercially Reasonable Manner) shall be resolved pursuant to Section 11.7.
7.9.5 With the exception of Section 11.3, the provisions of this Section
7.9 with respect to the matters described in the Phase II environmental
assessments conducted by Dames & Xxxxx on or about November or December, 1999
shall constitute the exclusive remedy of the Survivor, its affiliates, their
respective officers, directors, employees and assigns with respect to the
matters covered under Section 7.9.
8.0 Conditions to the Obligation of the Survivor
The obligation of the Survivor to purchase the Shares shall be subject to
the fulfillment or waiver at or prior to the Closing Date of each of the
following conditions:
8.1 Accuracy of Representations and Warranties and Compliance with
Obligations. Each of the representations and warranties of the Parent set forth
in this Agreement (without giving effect to any limitation as to "materiality,"
"material" or "Material Adverse Effect" set forth therein) shall be true and
correct as of the date of this Agreement and (except those representations and
warranties that address matters only as of a particular date which need be true
and accurate as of such date) as of immediately before the Closing (except,
however, Survivor acknowledges that the Transferred Real Property shall no
longer be leased by the Company but shall be owned by the Company; as such,
Parent represents and warrants that the representations and warranties contained
in Section 4.7 hereof with respect to the Real Property shall be true and
correct with respect to the Transferred Real Property) such that the cumulative
effect of all such failures to be so true and correct are not reasonably likely
to have a Material Adverse Effect on the Company. The Parent shall have
performed and complied with all of its obligations required by this Agreement to
be performed or complied with at or prior to the Closing Date in all material
respects. The Parent shall have delivered to the Survivor a certificate, dated
as of the Closing Date and signed by the Secretary of the Parent, certifying
that such representations and warranties are thus true and correct such that the
cumulative effect of all failures to be true and correct (without giving effect
to any limitation as to "materiality," "material" or "Material Adverse Effect"
set forth therein) are not reasonably likely to have a Material Adverse Effect
on the Company and that all such obligations of the Parent and the Company have
been thus performed and complied with in all material respects.
8.2 Opinion of Counsel. The Survivor shall have received an opinion dated
the Closing Date from Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel for the
Parent, in form and substance as set forth in Exhibit A attached hereto.
8.3 Certified Resolutions. The Parent and the Company shall have delivered
to the Survivor a copy of a resolution adopted by the Boards of Directors of the
Parent and the Company authorizing the transactions contemplated by this
Agreement, certified as of the Closing Date by the Secretary of the Parent and
the Company, respectively.
8.4 Receipt of Necessary Consents. All necessary consents or approvals of
third parties to any of the transactions contemplated hereby listed on Schedule
8.4 shall have been obtained and shown by written evidence satisfactory to the
Survivor.
8.5 [Intentionally Omitted.]
8.6 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the Merger or any other
transaction contemplated hereby, or which might affect the right of the Survivor
to own or control the business of the Company and which, in the reasonable
judgment of the Survivor, makes it inadvisable to proceed with the Merger.
8.7 Resignations. The Parent shall have delivered to the Survivor the
written resignations of the sole director of the Company and the written
resignations of such officers of the Company as may be requested by the
Survivor.
8.8 HSR Act Waiting Period. The waiting period imposed by the HSR Act with
respect to the Formation Transaction shall have expired or been terminated and
no injunction or other order prohibiting the Formation Transaction shall have
been entered by any court.
8.9 Transferred Real Property. The Transferred Real Property shall have
been transferred to the Company in accordance with and pursuant to the terms of
Section 5.7 hereof.
8.10 Release of Obligations. The Survivor shall have received evidence, in
form and substance satisfactory to it, that (i) all intercompany accounts and
obligations of the Company to the Parent (except for executory purchase or lease
agreements for equipment at fair market value prices and/or warranty/service
obligations for equipment) and (ii) all of the Company's obligations for the
repayment of borrowed money (including guarantees of obligations of the Parent
and its Affiliates) have been satisfied or released or will be satisfied or
released upon the Closing (the Parent hereby acknowledging and agreeing that it
shall be solely responsible for the payment of all amounts necessary to pay and
retire such indebtedness).
8.11 Dealership Termination and Release Agreement. The Parent shall have
executed and delivered to Xxxx Deere Construction Equipment Company the
Dealership Termination and Release Agreement in form attached hereto as Exhibit
B.
8.12 Survivor's Frustration of Closing Conditions. The Survivor may not
rely on the failure of any conditions set forth in Section 8.0 hereof above to
be satisfied if such failure was caused by the Survivor's failure to act in good
faith or to comply with the provisions of Section 7.2.
8.13 [Intentionally Omitted.]
8.14 Articles of Merger. The Company shall have executed and delivered to
the Survivor the Articles of Merger, substantially in the form attached hereto
as Exhibit C.
8.15 Release of Liens. At or prior to the Closing, the Company shall have
received for filing (i) releases of all liens, judgments, mortgages and each
other monetary lien referred to or included in the Title Commitments and (ii)
duly executed UCC-3s in valid form releasing those liens evidenced by the
financing statements referred to on Schedule 8.15 and any other financing
statements referred to or included in the Title Commitments.
8.16 Escrow Agreement. The Escrow Agent and the Parent shall have executed
and delivered to the Survivor the Escrow Agreement.
9.0 Conditions to Obligation of the Company and the Parent
The obligation of the Parent and the Company to consummate the Merger shall
be subject to the fulfillment at or prior to the Closing Date of each of the
following conditions:
9.1 Accuracy of Representations and Warranties and Compliance with
Obligations. Each of the representations and warranties of the Survivor set
forth in this Agreement (without giving effect to any limitation as to
"materiality," "material" or "Material Adverse Effect" set forth therein) shall
be true and correct as of the date of this Agreement and (except those
representations and warranties that address matters only as of a particular date
which need be true and accurate as of such date) as of immediately before the
Closing such that the cumulative effect of all such failures to be so true and
correct are not reasonably likely to have a Material Adverse Effect on the
Survivor. The Survivor shall have performed and complied with all of its
obligations required by this Agreement to be performed or complied with at or
prior to the Closing Date in all material respects. The Survivor shall have
delivered to the Parent a certificate, dated as of the Closing Date and signed
by the Manager of the Survivor, certifying that such representations and
warranties are thus true and correct such that the cumulative effect of all
failures to be true and correct (without giving effect to any limitation as to
"materiality," "material" or "Material Adverse Effect" set forth therein) are
not reasonably likely to have a Material Adverse Effect on the Survivor and that
all such obligations of the Survivor have been thus performed and complied with
in all material respects.
9.2 Opinion of Counsel. The Parent shall have received an opinion, dated
the Closing Date, from Xxxx, Xxxx & Xxxxx, counsel for the Survivor, in form and
substance as set forth in Exhibit D attached hereto.
9.3 Certified Resolutions. The Survivor shall have delivered to the Parent
a copy of resolutions adopted by the Manager and the sole Member of the Survivor
authorizing the transactions contemplated by this Agreement, certified as of the
Closing Date by the Secretary of the Survivor.
9.4 [Intentionally Omitted.]
9.5 Receipt of Necessary Consents. All consents or approvals of third
parties listed on Schedule 8.4 shall have been obtained and shown by written
evidence reasonably satisfactory to the Company.
9.6 Parent's Frustration of Closing Conditions. The Parent may not rely on
the failure of any conditions set forth in Section 9.0 herein to be satisfied if
such failure was caused by the Parent's failure to act in good faith or to
comply with the provisions of Section 7.2.
9.7 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the Merger or any other
transaction contemplated hereby, or which, in the reasonable judgment of the
Company, makes it inadvisable to proceed with the Merger.
9.8 Certificate of Merger. The Survivor shall have executed and delivered
to the Company the Certificate of Merger, substantially in the form attached
hereto as Exhibit E.
9.9 Escrow Agreement. The Escrow Agent and the Survivor shall have executed
and delivered to the Parent the Escrow Agreement.
10.0 Certain Actions After the Closing
10.1 Execution of Further Documents. From and after the Closing, upon the
reasonable request of the Survivor or the Parent, the other party shall
execute, acknowledge and deliver all such further acts, deeds, as
signments, transfers, conveyances, powers of attorney and assurances as may
be required to convey and transfer to and vest in the Survivor and protect
its right, title and interest in and to any and all of the assets of the
Company and as may be appropriate otherwise to carry out the transactions
contemplated by this Agreement.
10.2 Tax Matters.
10.2.1 Any tax sharing or allocation agreement between the Company and the
Parent or any Affiliate of the Parent shall terminate as of the Closing
Date and shall have no further effect for any taxable year (whether the
current year, a future year or a past year).
10.2.2 The Parent agrees to indemnify the Company and the Survivor from and
against any Taxes and any and all related expenses and fees, including
court costs and attorneys' fees and expenses, resulting from, arising out
of or related to any liability of the Company for Taxes of any Person other
than the Company (i) under Treasury Reg. Sec. 1.1502-6 (or any similar
provision of state, local or foreign law), (ii) as a transferee or
successor, (iii) by contract or (iv) otherwise.
10.2.3 The parties intend that the Merger will be treated for federal and
state income Tax purposes as a taxable sale of the assets of the Company by
the Company to the Survivor and agree to so treat the Merger on all income
Tax Returns. The Parent will include the income and gain of the Company
(including any income or gain arising from such sale of assets, any
deferred income triggered into income and any excess loss accounts taken
into income under the applicable provisions of the consolidated return
regulations) on the Parent's consolidated federal income Tax Returns and
any combined, unitary or consolidated state income Tax Returns for a group
that includes at least one member of the Parent's Affiliated Group (other
than the Company) and the Company for all periods through and including the
Closing Date and pay any federal income Taxes attributable to such income.
The Survivor will furnish Tax information to the Parent for inclusion in
the Parent's federal consolidated income Tax Return for the period which
includes the Closing Date in accordance with the Company's past practice.
The Parent shall prepare and file all Tax Returns for the Company for all
periods and shall pay all Taxes due in connection with such Tax Returns.
Survivor shall pay to Parent within five (5) business days of (i) receipt
of notice of such filing by Parent, an amount equal to the portion of such
Taxes due pursuant to the filing of any Tax Returns under this Section
10.2.3 for which an accrual was made on the Closing Net Asset Statement or
(ii) receipt of notice of payment by Parent of additional Tax pursuant to a
Final Determination for pre-closing periods, an amount equal to such
payment, but only to the extent such payment does not exceed the amount
accrued for Taxes on the Closing Net Asset Statement minus the amount, if
any, previously paid to Parent by Survivor pursuant to clause (i) or (ii)
hereof. The Parent agrees to indemnify the Survivor against all Taxes of or
with respect to the Company for all taxable periods, except for Taxes for
which an accrual was made on the Closing Net Asset Statement and with
respect to which no payment has been made to Parent by Survivor pursuant to
the preceding sentence. For purposes of this section 10.2.3, "Final
Determination" means the final resolution of liability for any Tax for a
taxable period, (i) by IRS Form 870 or 870-AD (or any successor forms
thereto), on the date of acceptance by or on behalf of the IRS, or by a
comparable form under the laws of other jurisdictions; except that a Form
870 or 870-AD or comparable form that reserves (whether by its terms or by
operation of law) the right of the taxpayer to file a claim for refund
and/or the right of the taxing authority to assert a further deficiency
shall not constitute a Final Determination; (ii) by a decision, judgment,
decree, or other order by a court of competent jurisdiction, which has
become final and unappealable; (iii) by a closing agreement or accepted
offer in compromise under Section 7121 or 7122 of the Code, or comparable
agreements under the laws of other jurisdictions; or (iv) by any other
final disposition.
10.2.4 The Parent and the Survivor agree that the Merger Consideration and
the liabilities of the Company (plus other relevant items) will be
allocated to the assets of the Company for all purposes (including Tax
purposes) as agreed to by the Parent and the Survivor following the
Closing. The Parent, the Company and the Survivor will file all Tax Returns
and information reports in a manner consistent with such allocation. The
Parent and the Survivor agree that they will prepare and file any notices
or other filings required pursuant to Section 1060 of the Code and that any
such notices or filings will be prepared based on such allocation or as
required by law.
10.2.5 The Survivor and the Parent shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section 10.2 and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any
such Tax Return, audit, litigation or other proceeding. Any information
shared in connection with Taxes shall be kept confidential, except as may
otherwise be necessary in connection with the filing of Tax Returns or any
audit, litigation or other proceeding with respect to Taxes.
10.3 Transfer of Assets. From and after the Closing, if the Parent or the
Survivor shall discover that the Parent or any of its Affiliates (other than the
Company) is the owner of any assets which prior to the Closing were assets used
solely or primarily in the business and operations of the Company, then on the
reasonable request of the Survivor, the owner of the assets so discovered shall
effect the legal transfer and physical delivery of the same without any further
consideration, to the end that the Company (or any successor or other party
thereto designated by the Survivor) shall possess all of the assets used solely
or primarily in the business and operations of the Company.
11.0 Indemnification
11.1 Agreement by the Parent to Indemnify. The Parent and any successor
hereby agrees to indemnify and hold harmless the Survivor and its
Affiliates and any successor to all or any part of the business of the
Company (an "Indemnified Party") in respect of the aggregate of all
Indemnifiable Damages. For purposes of this Agreement, "Indemnifiable
Damages" with respect to the Survivor or its Affiliates means the aggregate
of all expenses, losses, costs, deficiencies, liabilities and damages
(including reasonable counsel fees and expenses reasonably incurred in
investigating or defending third party claims) incurred or suffered by any
Indemnified Party resulting from (i) any breach of any representation or
warranty made by the Parent in this Agreement (without regard to any
qualification concerning "Material Adverse Effect" or "materiality"), or
(ii) any default in the performance of any of the covenants or agreements
made by the Parent in this Agreement. The right to payment of Indemnifiable
Damages or other remedy based on representations, warranties, covenants and
obligations will not be affected by any investigation conducted with
respect to, or any Knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement
or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant or obligation.
11.2 Agreement by Survivor to Indemnify. The Survivor and any successor
hereby agrees to indemnify and hold harmless the Parent and its Affiliates
and any successor to all or any part of the business of the Parent (an
"Indemnified Party") in respect of the aggregate of all Indemnifiable
Damages. For purposes of this Agreement, "Indemnifiable Damages" with
respect to the Parent or its Affiliates means the aggregate of all
expenses, losses, costs, deficiencies, liabilities and damages (including
reasonable counsel fees and expenses reasonably incurred in investigating
or defending third party claims) incurred or suffered by an Indemnified
Party resulting from (i) any breach of any representation or warranty made
by the Survivor in this Agreement (without regard to any qualification to
"Material Adverse Effect" or "materiality"), or (ii) any default in the
performance of any of the covenants or agreements made by the Survivor in
the Agreement. The right to payment of Indemnifiable Damages or other
remedy based on representations, warranties, covenants and obligations will
not be affected by any investigation conducted with respect to, or any
Knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any
such representation, warranty, covenant or obligation.
11.3 Limitations and Qualifications.
11.3.1 Each of the representations and warranties of the Parent and
Survivor made in this Agreement or pursuant hereto and the indemnity
obligations set forth in this Section 11.0 or elsewhere in this Agreement
shall survive for a period of eighteen (18) months after the Closing Date;
provided, however, that the representations and warranties made in Sections
2.1, 2.2, 2.3, 2.4, 3.1, 3.2, 3.4, 3.5, 4.1, 4.2 and 4.3 hereof (the
"Excluded Representations and Warranties") and the indemnification
obligations of the parties contained in Section 10.2, shall each survive
indefinitely (in each case, the "Survival Period"). No claim for the
recovery of Indemnifiable Damages based upon the breach of such
representations and warranties or upon any of the other indemnity
obligations set forth in this Agreement may be asserted by an Indemnified
Party after the Survival Period; provided, however, that claims first
asserted in writing pursuant to the terms of Section 11.4 within the
Survival Period (whether or not the amount of any such claim has become
ascertainable within such period) shall not thereafter be barred.
11.3.2 Except as may be expressly provided otherwise, Parent and/or its
successors and assigns and Survivor and/or its successors and assigns, as
the case may be (an "Indemnifying Party"), shall not be liable for
Indemnifiable Damages of the other party until the aggregate amount of all
such Indemnifiable Damages (from any source) exceeds $1,000,000, and then
only to the extent the aggregate amount of Indemnifiable Damages exceed
such $1,000,000 amount. The total amount of Indemnifiable Damages
recoverable by the Survivor or the Parent under this Section 11.0 shall be
limited to $10,000,000 (the "Indemnification Cap"). The $10,000,000
Indemnification Cap and $1,000,000 deductible referred to above shall not
apply, however, to the indemnification obligations of the parties hereto
resulting from the breach of any of the Excluded Representation and
Warranties or arising under Section 10.2. Any qualification to "Material
Adverse Effect" or "materiality" in any of the Parent's or the Survivor's
representations and warranties in this Agreement shall not be taken into
account in determining the magnitude of Indemnifiable Damages payable by
the Parent or the Survivor under this Section 11.0, as the case may be, and
for the purposes of calculating the $1,000,000 basket under this Section
11.3.2.
11.3.3 Subject to the limitations imposed as a result of the Survival
Period, nothing herein shall prevent an Indemnified Party from obtaining
equitable relief in any appropriate case.
11.3.4 In the event of any inaccuracy of the representations and warranties
set forth in Section 4.9, the amount of Indemnifiable Damages shall be
deemed to be the aggregate amount of the accounts receivable not collected
by the Survivor within the periods specified in Section 4.9, except to the
extent of the allowance for uncollectible receivables referred to in
Section 4.9.
11.3.5 Any limitation on Indemnifiable Damages recoverable by the Parent or
the Survivor under this Section 11.3 shall not apply to Indemnifiable
Damages resulting from the Survivor's or the Parent's, as the case may be,
fraudulent or intentional misrepresentation.
11.3.6 In determining the amount of any Indemnifiable Damages hereunder,
there shall be taken into account any applicable insurance coverage (net of
the expenses of recovery).
11.3.7 Notwithstanding anything in this Agreement to the contrary, Parent
agrees to indemnify and hold harmless the Survivor and its Affiliates and
any successor to all or any part of the business of the Company in respect
of the aggregate of all Remediation Costs. Parent acknowledges that the
indemnification obligation contained in this Section 11.3.7 is in addition
to the other indemnification obligations it may have under this Agreement
and the limitations contained in this Section 11.3 or elsewhere in this
Agreement (including, but not limited to, the $1,000,000 deductible
referred to in Section 11.3.2) shall not restrict or limit the Parent's
obligations under this Section 11.3.7 with respect to the Remediation
Costs; provided, however, in the event the Remediaton Costs actually paid
and discharged by the Parent exceed $750,000, the amount in excess of
$750,000 shall reduce the amount of the $10,000,000 Indemnification Cap
under Section 11.3.2 on a dollar for dollar basis; provided, however, the
$10,000,000 Indemnification Cap shall not be reduced by this Section 11.3.7
by an amount in excess of $2,750,000.
11.4 Indemnification Procedures.
11.4.1 An Indemnified Party making a claim for indemnification pursuant to
Section 11.1 above must give the Indemnifying Party written notice of such
claim describing such claim and the nature and amount of Indemnifiable
Damages (to the extent that the nature and amount of such Indemnifiable
Damages is known at such time) (an "Indemnification Claim Notice") promptly
after the Indemnified Party receives any written notice of any action,
lawsuit, proceeding, investigation or other claim (a "Proceeding") against
or involving the Indemnified Party by a governmental body or other third
party or otherwise discovers the liability, obligation or facts giving rise
to such claim for indemnification; provided that the failure to notify or
delay in notifying an Indemnifying Party will not relieve the Indemnifying
Party of its obligations pursuant to Section 11.1, except to the extent
that (and only to the extent that) such failure shall have caused the
damages for which the Indemnifying Party is obligated to be greater than
such damages would have been had the Indemnified Party given the
Indemnifying Party prompt notice hereunder.
11.4.2 With respect to the defense of any Proceeding against or involving
an Indemnified Party for which indemnification is provided in Section 11.1,
at its option an Indemnifying Party may appoint as lead counsel of such
defense any legal counsel selected by the Indemnifying Party.
11.4.3 The Indemnified Party will be entitled to participate in the defense
of such claim and to employ counsel of its choice for such purpose at its
own expense; provided that, notwithstanding the foregoing, the Indemnifying
Party will bear the reasonable fees and expenses of such separate counsel
incurred prior to the date upon which the Indemnifying Party effectively
assumes control of such defense pursuant to Section 11.4.2. Notwithstanding
any provision herein to the contrary, the Indemnifying Party will not be
entitled to assume control of the defense of such claim, and will pay the
reasonable fees and expenses of legal counsel retained by the Indemnified
Party, if
(i) the Indemnified Party reasonably believes that there exists or could
arise a conflict of interest which, under applicable principles of legal
ethics, could prohibit a single legal counsel from representing both the
Indemnified Party and the Indemnifying Party in such Proceeding, or
(ii) in the reasonable judgment of the Survivor, the Indemnifying Party has
failed or is failing to prosecute or defend vigorously such claim.
11.4.4 The Indemnifying Party will not enter into any settlement of any
claim or Proceeding or cease to defend any claim or Proceeding which such
party is defending in accordance with the provisions of this Section 11.0
without first obtaining the prior written consent of the Indemnified Party
(which consent shall not be unreasonably withheld) unless the sole relief
is monetary damages that are paid in full by the Indemnifying Party. If the
Indemnified Party does not consent to a settlement of any claim that the
Indemnifying Party is defending pursuant to this Section 11.0 (a "Proposed
Settlement") and the final settlement of such claim involves a larger
amount of monetary damages than the Proposed Settlement, the Indemnifiable
Damages shall be deemed to be the amount of monetary damages provided in
the Proposed Settlement and the Indemnified Party shall be responsible for
any amount of monetary damages in excess of such amount.
11.5 Environmental Response. Notwithstanding anything to the contrary in
Section 11.4 or elsewhere in this Agreement, except as provided in Section
7.9, the Survivor shall determine the manner of resolution of, and shall
otherwise control the management and implementation of any part of the
defense, response, proceedings or settlement relating to any Indemnifiable
Damages for which Parent has an indemnity obligation under Section 11.1
which involves or relates to an Environmental Response Action relating to
the Real Estate, the Leasehold Premises or the Transferred Real Property,
in accordance with the following procedures:
11.5.1 The Survivor shall provide written notice to the Parent (each such
notice an ("Environmental Response Action Notice") setting forth with
reasonable particularity the nature of the condition or event giving rise
to the related Environmental Response Action Notice, the nature of the
activities undertaken or to be undertaken by the Survivor with respect
thereto (to the extent then determinable), and the estimated costs
associated with such activities (to the extent then capable of being
estimated).
11.5.2 Parent shall have the right to participate fully in any meetings or
negotiations between the Survivor and any third party (including, without
limitation, any governmental authority, consultants or other experts) with
respect to any Environmental Response Action, including, without
limitation, the scope, nature and schedule for implementation of any action
relating thereto. The Survivor shall consult with Parent prior to
submitting to any third party any information with respect to any
Environmental Response Action. The Survivor shall keep Parent reasonably
informed with respect to any Environmental Response Action, shall provide
Parent with reasonable advance written notice of meetings or negotiations
with third parties, and shall promptly provide Parent with copies of all
documents provided to or received from any third party with respect to any
Environmental Response Action. The Survivor agrees that it shall contact
Parent at the same time, or as soon thereafter as is reasonably
practicable, that it contacts any third party with respect to any problem
that might result in Indemnifiable Damages relating to any Environmental
Response Action. Parent shall have the right, upon reasonable prior notice,
to enter the Real Estate, the Leasehold Premises or the Transferred Real
Property for the purposes of observing and understanding all activities
relating to any Environmental Response Action and obtaining split samples
of any sampling conducted in connection therewith; in undertaking the
foregoing, Parent shall make all reasonable efforts to minimize
interference with the Survivor's ability to conduct its business. The
Survivor shall cooperate and render to Parent access to the Real Estate,
the Leasehold Premises or the Transferred Real Property, making appropriate
personnel available and providing factual background and technical data.
11.5.3 With respect to any Environmental Response Action (other than
pursuant to Section 7.9), the Survivor shall act only in a Commercially
Reasonable Manner and select and implement the least expensive corrective
measure consistent with Environmental Laws that does not result in a
material adverse impact upon the Survivor's use of the Real Estate, the
Leasehold Premises and the Transferred Real Property or the ability of the
Survivor to conduct the business of the Survivor on such properties.
"Commercially Reasonable Manner" shall be determined from the perspective
of a reasonable business person acting (without regard to the availability
of indemnification hereunder) to avoid or mitigate a loss or liability or
potential loss or liability.
11.5.4 In the event Parent objects to all or any part of an Environmental
Response Action Notice on a timely basis in accordance with this Section,
in whole or in part, then Parent shall notify the Survivor in writing of
its specific disagreement (and the basis therefor) regarding such
Environmental Response Action. If Parent's objection relates to the nature
of the proposed activities or response of the Survivor to the relevant
condition or event, then Parent shall provide an alternative proposal
describing in reasonable detail the proposed activities or response,
including estimated costs associated therewith ("Dispute Notification"),
within 45 days of its receipt of the related Environmental Response Action
Notice. The Survivor and Parent shall thereafter negotiate in good faith in
an attempt to reach agreement as to the disputed Environmental Response
Action Notice and the Dispute Notification. In the event that the Survivor
and Parent are unable to resolve the dispute within 30 days after receipt
of a Dispute Notification by Survivor, then the Parent or the Survivor may
provide written notice to the other of its intent to submit the matter to
arbitration, and such dispute shall be resolved by arbitration pursuant to
the terms set forth in Section 11.7 of this Agreement.
11.5.5 For any Indemnifiable Damages for which the Survivor claims that the
Parent has an indemnity obligation under Section 11.1 and that does not
involve an Environmental Response Action relating to the Real Estate, the
Leasehold Premises or the Transferred Real Property, the procedures set
forth in Section 11.4 shall apply.
11.6 Treatment of Indemnification Payments. All amounts paid by the
Survivor or Parent, as the case may be, under the terms of this Section 11.0
shall be treated, to the extent allowed under applicable tax law as adjustments
to the Merger Consideration, and each of the Survivor and Parent expressly
covenants and agrees to treat all such payments as Merger Consideration
adjustments to the greatest extent possible under applicable tax laws. To the
extent any payment made under this Section 11.0 is not permitted to be treated
as a Merger Consideration adjustment under applicable tax laws, the amount of
such payment to the Indemnified Party shall be increased by the amount of any
tax cost to the Indemnified Party of the receipt of the indemnification payment.
Any payments to be made to an Indemnified Party shall be reduced (but not below
zero) by an amount equal to the tax benefits to the Indemnified Party, if any,
attributable to the loss giving rise to such payment.
11.7 Arbitration Procedure.
11.7.1 Survivor and Parent agree that the arbitration procedure set forth
below shall be the sole and exclusive method for resolving and remedying
disputed claims for money damages arising out of the provisions of Section
11.0 (a "Dispute"). Nothing in this Section 11.7 shall prohibit a party
from instituting litigation to enforce any Final Determination (as defined
below). The parties hereby agree and acknowledge that, except as otherwise
provided in this Section 11.7 or in the Commercial Arbitration Rules of the
American Arbitration Association as in effect from time to time, the
arbitration procedures and any Final Determination hereunder shall be
governed by, and shall be enforced pursuant to the Federal Arbitration Act.
11.7.2 In the event that any party asserts that there exists a Dispute,
such party shall deliver a written notice to each other party involved
therein specifying the nature of the asserted Dispute and requesting a
meeting to attempt to resolve the same. If no such resolution is reached
within ten business days after such delivery of such notice, the party
delivering such notice of Dispute (the "Disputing Person") may, within 45
business days after delivery of such notice, commence arbitration hereunder
by delivering to each other party involved therein a notice of arbitration
(a "Notice of Arbitration"). Such Notice of Arbitration shall specify the
matters as to which arbitration is sought, the nature of any Dispute, the
claims of each party to the arbitration and shall specify the amount and
nature of any damages, if any, sought to be recovered as a result of any
alleged claim, and any other matters required by the Commercial Arbitration
Rules of the American Arbitration Association as in effect from time to
time.
11.7.3 Survivor and Parent each shall select one arbitrator (the
arbitrators so selected shall be referred to herein as the "Survivor's
Arbitrator" and the "Parent's Arbitrator," respectively). In the event that
either party fails to select an arbitrator as set forth herein within 20
days from the delivery of a Notice of Arbitration, then the matter shall be
resolved by the arbitrator selected by the other party. The Parent's
Arbitrator and the Survivor's Arbitrator shall select a third independent,
neutral arbitrator expert in the subject matter of the Dispute, and the
three arbitrators so selected shall resolve the matter according to the
procedures set forth in this Section 11.7. If the Parent's Arbitrator and
the Survivor's Arbitrator are unable to agree on a third arbitrator within
20 days after their selection, the Parent's Arbitrator and the Survivor's
Arbitrator shall each prepare a list of three independent arbitrators. The
Parent's Arbitrator and the Survivor's Arbitrator shall each have the
opportunity to designate as objectionable and eliminate one arbitrator from
the other arbitrator's list within seven days after submission thereof, and
the third arbitrator shall then be selected by lot from the arbitrators
remaining on the lists submitted by the Parent's Arbitrator and the
Survivor's Arbitrator.
11.7.4 The arbitrator(s) selected pursuant to Section 11.7.3 above will
determine the allocation of the costs and expenses of arbitration among the
parties hereto based upon the percentage which the portion of the contested
amount not awarded to each party bears to the amount actually contested by
such party.
11.7.5 The arbitration shall be conducted in New York, New York under the
Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, except as modified by the agreement of all of the
parties to this Agreement. The arbitrator(s) shall so conduct the
arbitration that a final result, determination, finding, judgment and/or
award (the "Final Determination") is made or rendered as soon as
practicable, but in no event later than 90 business days after the delivery
of the Notice of Arbitration nor later than ten days following completion
of the arbitration. The Final Determination must be agreed upon and signed
by the sole arbitrator or by at least two of the three arbitrators (as the
case may be). The Final Determination shall be final and binding on all
parties, subject to the provisions of the Federal Arbitration Act for
modifying or vacating an arbitration award.
11.7.6 Judgment on the Final Determination made by the arbitrators may be
entered in any state or federal court located in New York, New York. For
the purpose of any action or proceeding instituted with respect to any
Final Determination, each party hereto hereby irrevocably submits to the
jurisdiction of such courts, irrevocably consents to the service of process
by registered mail or personal service and hereby irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter have as to personal jurisdiction, the laying of the venue of any
such action or proceeding brought in any such court and any claim that any
such action or proceeding brought in any court has been brought in an
inconvenient forum.
11.7.7 Any party required to make a payment pursuant to this Section 11.0
shall pay the party entitled to receive such payment within three days of
the delivery of the Final Determination to such responsible party. In
addition, such party shall promptly reimburse the other party for any and
all reasonable costs and expenses of any nature or kind whatsoever
(including but not limited to all reasonable attorneys' fees) incurred in
seeking to enforce any Final Determination.
11.8 Mitigation. The Indemnified Party shall take all commercially
reasonable steps to mitigate damages in respect of any claim for which it is
seeking indemnification, including, without limitation, using commercially
reasonable best efforts to effect recovery of available insurance claims in
connection with such claim, and shall use commercially reasonable efforts to
avoid any costs or expenses associated with such claim and, if such costs and
expenses cannot be avoided, to minimize the amount thereof.
12.0 Miscellaneous
12.1 Amendment and Modification. The parties hereto may amend, modify and
supplement this Agreement in such manner as may be agreed upon by them in
writing.
12.2 Payment of Expenses. Each party to this Agreement shall pay all of the
expenses incurred by it in connection with this Agreement, including without
limitation its legal and accounting fees and expenses, and the commissions, fees
and expenses of any person employed or retained by it to bring about, or to
represent it in, the transactions contemplated hereby.
12.3 Termination.
12.3.1 Anything to the contrary herein notwithstanding, this Agreement may
be terminated and the transactions contemplated hereby may be abandoned:
12.3.1.1 by the mutual written consent of the parties hereto at any time
prior to the Closing Date;
12.3.1.2 by either the Parent or the Survivor if any court or governmental
entity with jurisdiction over such matters shall have issued an order
restraining, enjoining or otherwise prohibiting the sale or purchase of the
Shares hereunder and such order, decree, ruling or other action shall have
become final and unappealable; provided; however, that the provisions of
this Section 12.3.1.2 shall not be available to any party unless such party
shall have used its commercially reasonable best efforts to oppose any such
order or to have such order vacated or made inapplicable to the
transactions contemplated by this Agreement;
12.3.1.3 by the Survivor in the event of the material breach by the Parent
of any provision of this Agreement, which breach is not remedied by the
Parent within 10 days after receipt of notice thereof from the Survivor;
12.3.1.4 by the Parent in the event of the material breach by the Survivor
of any provision of this Agreement, which breach is not remedied by the
Survivor within 10 days after receipt of notice thereof from Parent; or
12.3.1.5 by any party hereto if the Closing has not taken place by January
31, 2000 provided that, the right to terminate this Agreement under Section
12.3.1.5 shall not be available to either party whose material
misrepresentations, breach of warranty or failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of
the Closing to occur on or before such date.
12.3.1.6 in the event the Remediation Cost Estimate exceeds $3,500,000, by
the Parent at any time before the end of the seventh business day following
receipt by the Parent of the Remediation Cost Estimate.
12.3.1.7 in the event the Remediation Cost Estimate exceeds $20,000,000, by
the Survivor at any time before the end of the seventh business day
following receipt by the Survivor of the Remediation Cost Estimate.
If this Agreement is terminated pursuant to Section 12.3.1.1, neither party
shall have any liability for any costs, expenses, loss of anticipated
profit or any further obligation for breach of warranty or otherwise to any
other party to this Agreement. Any termination of this Agreement pursuant
to Sections 12.3.1.2, 12.3.1.3, 12.3.1.4, 12.3.1.5, 12.3.1.6 or 12.3.1.7
shall be without prejudice to any other rights or remedies of the
respective parties.
12.3.2 The risk of any loss to the assets and properties of the Company and
all liability with respect to injury and damage occurring in connection
therewith shall be the sole responsibility of the Parent until the time of
the Closing.
12.4 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, permitted
assigns, heirs and legal representatives.
12.5 Entire Agreement. This instrument and the exhibits and schedules
attached hereto contain the entire agreement of the parties hereto with respect
to the purchase of the Shares and the other transactions contemplated herein,
and supersede all prior understandings and agreements of the parties with
respect to the subject matter hereof. Any reference herein to this Agreement
shall be deemed to include the schedules and exhibits attached hereto.
12.6 Headings. The descriptive headings in this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
12.7 Execution in Counterpart. This Agreement may be executed in
counterparts, each of which shall be deemed an original.
12.8 Notices. Any notice, request, information or other document to be
given hereunder shall be in writing. Any notice, request, information or other
document shall be deemed duly given four business days after it is sent by
registered or certified mail, postage prepaid, to the intended recipient,
addressed as follows:
If to the Parent, addressed to such party as follows:
Xxxx Corp.
0000 X.X. 00xx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxxx
with a copy to: .
Xxxxx, Xxxxx, Xxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxx
If to the Survivor, addressed to:
Nortrax Equipment Company - Southeast, L.L.C.
0000 0xx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
with a copy to:
Xxxx, Xxxx & Xxxxx
00 Xxxx Xxxxxxx Xx.; Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx X. XxXxxxxx
Any party may send any notice, request, information or other document to be
given hereunder using any other means (including personal delivery, courier,
messenger service, facsimile transmission, telex or ordinary mail), but no such
notice, request, information or other document shall be deemed duly given unless
and until it is actually received by the party for whom it is intended. Any
party may change the address to which notices hereunder are to be sent to it by
giving written notice of such change of address in the manner herein provided
for giving notice.
12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed therein, without regard to the conflicts of law principles
of such State.
12.10 Publicity. No press release or other public announcement related to
this Agreement or the transactions contemplated hereby will be issued by any
party hereto without the prior approval of the other parties (which approval
shall not be unreasonably withheld), except that any party may make such public
disclosure which it believes in good faith to be required by law or by the terms
of any listing agreement with a securities exchange (in which case such party
will consult with the other party to the extent reasonably practicable prior to
making such disclosure).
12.11 Waiver. At any time prior to the Closing, either party hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or (c)
waive compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party to be bound thereby. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any other
right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
12.12 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
12.13 Assignment. Neither this Agreement nor any of the parties' rights
hereunder shall be assignable to any party hereto without prior written consent
of the other parties hereto.
12.14 No Third-Party Beneficiaries. This Agreement is for the sole benefit
of the parties hereto and their permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
XXXX CORP.
________________________________________
By: Xxxxx X. Xxxxxxxxxx
Its: President, Chief Executive Officer,
Secretary and Treasurer
XXXX MACHINERY, INC.
_______________________________________
By: Xxxxx X. Xxxxxxxxxx
Its: President, Chief Executive Officer,
Secretary and Treasurer
NORTRAX EQUIPMENT COMPANY
SOUTHEAST, L.L.C.
By: NORTRAX, INC.
Its: Manager
________________________________________
By: Xxxx X. Xxxxxxxx
Its: Vice President
