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EXHIBIT 2
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EQUITY PURCHASE AGREEMENT
AMONG
EVOLUTION HOLDINGS, INC.,
XXXXXXXXXXXX.XXX, INC.,
XXXXXXX, INC.,
XXXXXXX WIRELESS, INC.
AND
CLAYCO CONSTRUCTION COMPANY, INC.
JUNE 30, 2000
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TABLE OF CONTENTS
Page
1. Definitions...........................................................1
2. Basic Transaction.....................................................5
(a) Purchase and Sale of Membership Interests....................5
(b) Purchase Price...............................................5
(c) Adjustment...................................................5
(d) The Closing..................................................7
(e) Deliveries at the Closing....................................7
3. Representations and Warranties of the Sellers.........................7
(A) Representations Concerning the Sellers.......................7
(a) Organization of Sellers......................................7
(b) Authorization................................................7
(c) Noncontravention.............................................8
(d) Investment...................................................8
(e) Membership Interests.........................................8
(B) Representations Concerning the LLC...........................9
(a) Organization of the LLC......................................9
(b) Noncontravention............................................10
(c) Brokers' Fees; Bonus or Stay Payments.......................10
(d) Title to Assets.............................................10
(e) Subsidiaries................................................10
(f) Financial Statements........................................10
(g) Events Subsequent to Most Recent Fiscal Month End...........11
(h) Accounts Receivable; Prepaids...............................11
(i) Legal Compliance............................................11
(j) Tax Matters.................................................12
(k) Real Property...............................................13
(l) Intellectual Property.......................................13
(m) Contracts...................................................14
(n) Bank Accounts; Powers of Attorney...........................15
(o) Litigation..................................................15
(p) Employees...................................................15
(q) Employee Benefits...........................................18
(r) Environmental, Health, and Safety Matters...................19
(s) Insurance...................................................20
(t) Warranties..................................................21
(u) Solvency....................................................21
(v) Customers and Suppliers.....................................21
(w) Absence of Certain Changes..................................21
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(x) Related Party Transactions..................................23
(y) Books and Records...........................................24
(z) Material Disclosures........................................24
(aa) Contributions and Payments..................................24
4. Representations and Warranties of the Buyer..........................24
(a) Organization of the Buyer...................................24
(b) Authorization of Transaction................................25
(c) Noncontravention............................................25
(d) Brokers' Fees...............................................25
(e) Financing...................................................25
(f) Financial Statements........................................25
5. Covenants............................................................26
(a) General.....................................................26
(b) Notices and Consents........................................26
(c) Operation of Business.......................................26
(d) Full Access; Confidential Information.......................26
(e) Exclusivity.................................................26
(f) Treatment of Over 90 Day Receivables........................27
(g) Maintenance and Access to Records...........................27
(h) General.....................................................27
(i) Litigation Support..........................................27
(j) Covenant Not to Compete.....................................27
(k) Buyer Notes.................................................28
(l) Employee Matters............................................28
(m) Confidentiality.............................................28
(n) Payment of Bonuses..........................................29
(o) Change of Name; Use of Name.................................29
(p) Closing Tax Return..........................................29
6. Conditions to Obligation to Close...................................29
(a) Conditions to Obligation of the Buyer.......................29
(b) Conditions to Obligation of the Seller......................31
7. Remedies for Breaches of this Agreement..............................32
(a) Survival of Representations and Warranties..................32
(b) Indemnification Provisions for Benefit of the Buyer.........32
(c) Buyer's Agreement to Indemnify..............................33
(e) Matters Involving Third Parties.............................34
(f) Determination of Adverse Consequences.......................35
(g) Application First to Buyer Notes............................35
(h) Exclusive Remedy............................................35
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(i) Accounts Receivable.........................................35
(j) Indemnification For Claims Under Guarantees.................35
8. Termination..........................................................36
(a) Termination of Agreement....................................36
(b) Effect of Termination.......................................36
9. Miscellaneous........................................................36
(a) Press Releases and Public Announcements.....................36
(b) No Third-Party Beneficiaries................................36
(c) Entire Agreement............................................36
(d) Succession and Assignment...................................36
(e) Counterparts................................................37
(f) Headings....................................................37
(g) Notices.....................................................37
(h) Governing Law...............................................38
(i) Amendments and Waivers......................................38
(j) Severability................................................38
(k) Expenses; Transfer Taxes....................................39
(l) Construction................................................39
(m) Incorporation of Exhibits and Schedules.....................39
Exhibit A Form of Buyer Note
Exhibit B Form of Escrow Agreement
Exhibit C Financial Statements
Exhibit D Buyer Financial Statements
Exhibit E Form of Employment Agreement
Exhibit F Form of Opinion of Counsel to the Seller
Exhibit G Form of Opinion of Counsel to the Buyer
Exhibit H Form of Services Agreement
Disclosure Schedule - Exceptions to Representations and Warranties
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EQUITY PURCHASE AGREEMENT
Agreement entered into as of June 30, 2000, by and among EVOLUTION
HOLDINGS, INC., a Delaware corporation ("EHI"), XXXXXXXXXXXX.XXX, INC., a
Delaware corporation ("EVCC") (collectively the "Buyer"), XXXXXXX, INC., a
Delaware corporation ("XxXxxxx"), XXXXXXX WIRELESS, INC., a Missouri corporation
("XxXxxxx Wireless") and CLAYCO CONSTRUCTION COMPANY, INC., a Missouri
corporation ("Clayco" and, with XxXxxxx Wireless, the "Sellers"). The Buyer,
Sellers and XxXxxxx are referred to collectively herein as the "Parties".
RECITALS
This Agreement contemplates a transaction in which the Buyer will
purchase all of the Membership Interests of XxXxxxx Clayco Wireless L.L.C., a
Missouri limited liability company (the "LLC").
XxXxxxx Wireless holds 450,000 Units of Membership Interests in the
LLC. Clayco holds 50,000 Units of Membership Interests in the LLC. Together, the
Sellers own all of the Membership Interests of the LLC.
XxXxxxx is the sole shareholder of XxXxxxx Wireless.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
AGREEMENT
1. Definitions.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including court costs and
reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code ss.1504(a).
"Allocable Portion" means, with respect to the share of either Seller
in a particular amount, 90% in the case of XxXxxxx Wireless and XxXxxxx and 10%
in the case of Clayco.
"Buyer" has the meaning set forth in the preface above.
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"Buyer Financial Statements" has the meaning set forth in ss.4(f)
below.
"Buyer Notes" has the meaning set forth in ss.2(b) below.
"Cash" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements.
"Closing" has the meaning set forth in ss.2(c) below.
"Closing Date" has the meaning set forth in ss.2(c) below.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, including the requirements of Part 6 of Subtitle B of Title I of ERISA and
Code ss.4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
business and affairs of the LLC that is not already generally available to the
public.
"Disclosure Schedule" has the meaning set forth in ss.3(B) below.
"Employee Benefit Plan" means any (a) employee benefit plan described
in ERISA ss.3(3), or Welfare Benefit Plan or material fringe benefit or other
retirement, bonus, or incentive plan or program, (b) any bonus, pension,
profit-sharing, incentive, deferred compensation, stock ownership, equity bonus,
equity option, retirement, vacation, disability, death benefit, unemployment,
hospitalization, medical, dental, severance, or other plan, agreement,
arrangement or understanding providing benefits to any current or former
employee, officer, member, or manager of the LLC or to which the LLC has any
liability or obligation.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, and ordinances
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, as such requirements are enacted and in effect
on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ERISA Affiliate" means each entity which is treated as a single
employer with Seller for purposes of Code ss.414.
"Escrow Agreement" shall have the meaning set forth in Section 2(e).
"Escrow Amount" means the aggregate face amount of the Over 90 Day
Receivables, including accrued interest thereon, if applicable.
"Financial Statement" has the meaning set forth in ss.3(B)(f) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, and applied on a consistent basis throughout the
periods involved.
"Indemnified Party" has the meaning set forth in ss.7(d) below.
"Indemnifying Party" has the meaning set forth in ss.7(d) below.
"Knowledge" means the best knowledge of the applicable Party after
reasonable investigation.
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person or is disclosed on any schedule to this Agreement.
"Material Adverse Effect" means any change, event or effect that is
materially adverse to the business, assets, condition (financial or otherwise)
of the LLC.
"Member" has the meaning set forth in the preface above.
"Membership Interest" means an equity interest in the LLC.
"Most Recent Buyer Financial Statements" has the meaning set forth in
ss.4(f) below.
"Most Recent Financial Statements" has the meaning set forth in
ss.3(B)(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in ss.3(g)
below.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
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"Net Worth" means the value on the LLC's books of the LLC's total
assets less the LLC's total liabilities calculated in accordance with GAAP;
provided, however, that there will be no reserve for doubtful receivables.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Over 90 Day Receivables" means the LLC's accounts receivable which as
of the Closing Date have remained outstanding for over 90 days, less $70,000.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, an estate, a joint stock company, a
trust, a joint venture, an unincorporated organization, or a governmental entity
(or any department, agency, or political subdivision thereof).
"Purchase Price" has the meaning set forth in ss.2(b) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings (which
contested taxes have been disclosed to Buyer on ss.3(B)(j) of the Disclosure
Schedule), or (c) purchase money liens and liens securing rental payments under
capital lease arrangements which are existing as of the date hereof and have
been disclosed to Buyer on ss.3(B)(d) of the Disclosure Schedule.
"Sellers" has the meaning set forth in the preface above.
"Services Agreement" shall have the meaning set forth in ss.6(a)(11).
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" means any federal, state, local, or foreign income, franchise,
sales, use, property, excise, payroll and other taxes, including any interest,
penalty, or addition thereto, whether disputed or not.
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"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto.
"Third Party Claim" has the meaning set forth in ss.7(d) below.
2. Basic Transaction.
(a) Purchase and Sale of Membership Interests. On and subject
to the terms and conditions of this Agreement, the Buyer agrees to
purchase from each of the Sellers, and each of the Sellers agrees to
sell, transfer, convey, and deliver to the Buyer, all of its Membership
Interest in the LLC, constituting in the aggregate One Hundred Percent
(100%) of the issued and outstanding Membership Interests in the LLC,
for the consideration specified below in this ss.2.
(b) Purchase Price. The Buyer agrees to pay to the Sellers at
the Closing $6 million (the "Purchase Price"), subject to adjustment as
provided in Section 2(c), by delivery of (i) its promissory notes (the
"Buyer Notes") in the form of Exhibit A attached hereto in the
aggregate principal amount of $500,000 and (ii) cash in the aggregate
amount of $5.5 million payable by wire transfer or delivery of other
immediately available funds as follows: (A) the Escrow Amount to the
Escrow Agent under the Escrow Agreement (as defined below), and (B) the
remainder to Sellers. The Purchase Price shall be allocated between the
Sellers in proportion to their respective Allocable Portions.
(c) Adjustment. An adjustment to the Purchase Price will be
calculated and paid in accordance with the following provisions:
(i) Within sixty (60) days after the Closing Date,
Sellers shall prepare a balance sheet as of the Closing Date
in accordance with GAAP in a manner consistent with the LLC's
past practices but excluding footnotes and other presentation
items (the "Closing Date Balance Sheet"). The Closing Date
Balance Sheet will not include any reserves of a type or
amount not historically used by the LLC. Buyer shall cause the
LLC and its employees to cooperate with, and be available to,
Sellers to prepare the Closing Date Balance Sheet. The cost of
preparation of the Closing Balance Sheet will be paid by the
LLC and accrued as an expense on the Closing Balance Sheet.
(ii) Sellers shall submit the Closing Date Balance Sheet
to Buyer within sixty (60) days after the Closing Date. Buyer
shall then have up to forty-five (45) days after the receipt
of Sellers' proposed Closing Date Balance Sheet to review it
with their certified public accountants, and each Party shall
be given access to the other's workpapers and the other's
accountants' workpapers for such purpose. Unless Buyer timely
delivers to Sellers an Objection Notice pursuant to ss.2
(c)(iii), the Net
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Worth value on the Closing Date shall be determined based upon
the Closing Date Balance Sheet submitted by Sellers to Buyer.
(iii) If Buyer agrees with the proposed Closing Date
Balance Sheet prepared by Sellers, then the Parties shall
execute the Closing Date Balance Sheet and proceed to make any
payment required pursuant to ss.2(c)(v) below. If Buyer
disagrees with the proposed Closing Date Balance Sheet
prepared by Sellers, then Buyer shall deliver written notice
("Objection Notice") to Sellers objecting to the proposed
Closing Date Balance Sheet. Such Objection Notice shall (i) be
delivered within forty-five (45) days after Buyer receives the
proposed Closing Date Balance Sheet, (ii) identify those items
in the proposed Closing Date Balance Sheet to which Buyer
objects, and (iii) state in reasonable detail the reasons for
such objection. Any items contained in the proposed Closing
Date Balance Sheet to which Buyer does not set forth an
objection in such Objection Notice shall be deemed accepted by
Buyer.
(iv) During the twenty (20) day period following delivery
of the Objection Notice, each Party will deliver to the other
Party any supporting documentation reasonably requested and
necessary to verify the assets and liabilities categories on
the proposed Closing Date Balance Sheet and calculate the
LLC's Net Worth on the Closing Date Balance Sheet, and
cooperate fully and in good faith to resolve any disputes they
may have with respect to the proposed Closing Date Balance
Sheet. If the Parties cannot agree on the proposed Closing
Date Balance Sheet within such period, any such dispute will
be resolved within thirty (30) days of submission by a Party
of a request for binding determination by a mutually
acceptable national accounting firm (the "Accounting Firm").
The Accounting Firm will calculate only those portions of the
proposed Closing Date Balance Sheet that have not been agreed
upon by the Parties and its calculation will be based solely
on the books, records and other information relevant to the
resolution of such disputes and available as of the Closing
Date, which information shall be submitted or made available
to the Accounting Firm by Sellers or Buyer. Any fees or
expenses payable to the Accounting Firm will be shared as
shall be determined by such Accounting Firm, taking into
account the relative merits of the Parties' respective
adjustment proposals.
(v) Upon the final determination of the Closing Date
Balance Sheet and the related Net Worth of the LLC, whether
such determination is made by agreement of the Parties or by
the Accounting Firm in accordance with the foregoing, the
Parties will proceed to calculate the adjustment to the
Purchase Price as follows: If the Net Worth on the final
Closing Date Balance Sheet is less than $1,325,000, then the
Purchase Price will be decreased by the amount that Net Worth
is less than $1,325,000. Such reduction will first be
reflected by a reduction in the principal amount of the Buyer
Notes and, if and to the extent the reduction exceeds
$500,000, by a reduction in the cash portion of the Purchase
Price and Sellers will deliver to Buyer the Buyer Notes and
Buyer will, if applicable, issue to the Sellers new Buyer
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Notes in the aggregate principal amount of $500,000 less the
amount of such reduction. If the adjustment exceeds $500,000,
Sellers will also deliver to Buyer cash in the amount of such
excess. Such deliveries will be made within ten (10) days
after such determination. The amount of the reduction in the
Purchase Price will be allocated to the Sellers in their
Allocable Portions
(d) The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of
Xxxxxxxxx Xxxxxxxx LLP in St. Louis, Missouri, commencing at 9:00 a.m.
local time on the second business day following the satisfaction or
waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions
with respect to actions the respective Parties will take at the Closing
itself) or such other date as the Parties may mutually determine (the
"Closing Date"); provided, however, that the Closing Date shall be no
later than June 30, 2000.
(e) Deliveries at the Closing. At the Closing, (i) the Sellers
will each deliver to the Buyer the various certificates, instruments,
and documents referred to in ss.6(a) below; (ii) the Buyer will deliver
to the Sellers the various assignments, certificates, instruments, and
documents referred to in ss.6(b) below; (iii) the Buyer will deliver to
the Sellers the Buyer Notes and cash in the aggregate amount of $5.5
million less the Escrow Amount; and (iv) Buyer will pay the Escrow
Amount to a mutually acceptable escrow agent to be held and disbursed
in accordance with an escrow agreement (the "Escrow Agreement")
substantially in the form of Exhibit B attached hereto.
3. Representations and Warranties of the Sellers.
(A) Representations Concerning the Sellers. Each of the
Sellers and XxXxxxx severally represents and warrants to the Buyer that
the statements contained in this ss.3(A) as to such Seller or XxXxxxx
are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this ss.3(A)).
(a) Organization of Sellers. Each of the Sellers and
XxXxxxx is a corporation duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority to
own, operate and lease the properties and to carry on its
business as such business is now being conducted.
(b) Authorization. Each Seller and XxXxxxx has full power
and authority to execute and deliver this Agreement, the
Escrow Agreement and XxXxxxx has full power and authority to
execute and deliver the Service Agreement ("Transaction
Documents"), to perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated
herein and therein. The Transaction
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Documents have been duly authorized by all necessary corporate
actions of the Sellers and XxXxxxx, and constitute the valid
and legally binding obligation of each Seller and XxXxxxx,
enforceable in accordance with their terms and conditions.
(c) Noncontravention. Neither the execution and the
delivery of the Transaction Documents by each Seller and
XxXxxxx, nor the performance by each Seller and XxXxxxx of its
obligations hereunder, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which each Seller
is subject or any provision of its charter or bylaws, (ii)
conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require
any notice or consent under any agreement, contract, lease,
license, instrument, or other arrangement to which each Seller
is a party or by which it is bound or to which any of its
assets is subject, or (iii) result in the creation of any
Security Interest on any of the Membership Interests. The
Sellers do not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any
government or governmental agency or any third party in order
for the Parties to consummate the transactions contemplated by
this Agreement.
(d) Investment. Each Seller and XxXxxxx (i) understands
that the Buyer Notes have not been, and will not be,
registered under the Securities Act, or under any state
securities laws, and are being offered and sold in reliance
upon federal and state exemptions for transactions not
involving any public offering, (ii) is acquiring the Buyer
Notes solely for its own account for investment purposes, and
not with a view to the distribution thereof, (iii) is an
accredited investor with knowledge and experience in business
and financial matters, (iv) has received information
concerning the Buyer and has had the opportunity to obtain
additional information as desired in order to evaluate the
merits and the risks inherent in holding the Buyer Notes and
(v) is able to bear the economic risk and lack of liquidity
inherent in holding the Buyer Notes.
(e) Membership Interests.
(i) Each Seller is the lawful record and beneficial
owner of its Allocable Portion of the Membership
Interests, the Membership Interests will, at the Closing,
be free and clear of any Security Interest, claim, charge,
option, or restriction (on transferability or otherwise)
whatsoever in law or in equity, and, upon consummation of
the transactions contemplated hereby, Buyer shall be
vested with lawful, valid and indefeasible title thereto,
free and clear of any Security Interest, claim, charge,
option, or restriction whatsoever.
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(ii) All of the outstanding Membership Interests have
been duly authorized and are validly issued, fully paid
and nonassessable. There are no outstanding rights,
subscriptions, warrants, options, conversion rights,
commitments or agreements of any kind outstanding to
purchase or otherwise acquire from the LLC, or to cause
the LLC to issue or purchase, any of its Membership
Interests, or securities or obligations of any kind
convertible into, exchangeable for or evidencing the right
to acquire any Membership Interests.
(iii) The capital account of each Seller as of the
date of the Most Recent Fiscal Month End Financial
Statements with respect to its Membership Interests is as
set forth in ss.3(A)(e)(iii) of the Disclosure Schedule.
(B) Representations Concerning the LLC. The Sellers and
XxXxxxx represent and warrant to the Buyer that the statements
contained in this ss.3(B) are correct and complete as of the date of
this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted
for the date of this Agreement throughout this ss.3(B)), except as set
forth in the disclosure schedule accompanying this Agreement and
initialed by the Parties (the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this ss.3(B).
(a) Organization of the LLC.
(i) The LLC is a limited liability company duly
organized, validly existing, and in good standing under
the laws of Missouri and has all requisite power and
authority to own, operate and lease its properties and to
carry on its business as such business is now being
conducted. Except as disclosed on ss.3(B)(a) of the
Disclosure Schedule, the LLC is duly qualified or licensed
to transact business as a foreign limited liability
company and is in good standing in all jurisdictions where
its present activities require it to be so qualified,
licensed or in good standing except where the failure to
so qualify will not have a Material Adverse Effect.
ss.3(B)(a) of the Disclosure Schedule contains a list of
all jurisdictions in which the LLC is qualified or
licensed to transact business as a foreign entity.
(ii) Complete and correct copies of the Articles of
Organization of the LLC, and all amendments thereto, and
of the Operating Agreement of the LLC, as amended, have
been furnished to Buyer. The LLC is not in default in the
performance, observation or fulfillment of its Articles of
Organization or the Operating Agreement.
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(b) Noncontravention. Neither the execution and the
delivery of the Transaction Documents, nor the consummation of
the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the LLC is
subject or any provision of the charter or Operating Agreement
of the LLC or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice or consent under any
agreement, contract, lease, license, instrument, or other
arrangement to which the LLC is a party or by which it is
bound or to which any of its assets is subject or result in
the imposition of any Security Interest upon any of its
assets. The LLC does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval
of any government or governmental agency or third party in
order for the Parties to consummate the transactions
contemplated by this Agreement.
(c) Brokers' Fees; Bonus or Stay Payments. Neither
the LLC nor the Members has any liability or obligation to pay
any fees or commissions to any broker, finder, or agent
(whether an employee or third party) with respect to the
transactions contemplated by this Agreement for which the
Buyer or LLC could become liable or obligated.
(d) Title to Assets. Section 3(B)(d) of the
Disclosure Schedule identifies all material vehicles,
furniture, and equipment used in the business of the LLC and
the LLC possesses all such assets. The LLC has good and
marketable title to, or a valid leasehold or license interest
in, all material tangible and intangible assets it uses
regularly in the conduct of its business, free of any and all
Security Interests, charges, assessments, conditional sales
agreements, claims, encumbrances and rights of third parties
of any kind or type whatsoever. The LLC owns or leases all
tangible personal property and assets that it possesses and
that are necessary for the conduct of its business as
presently conducted and no such tangible personal property or
assets are provided by any agreement with an affiliate. All
items of the tangible personal property and assets owned or
leased by the LLC are in good working condition, normal wear
and tear excepted, to conduct the LLC's business as now
conducted or proposed to be conducted.
(e) Subsidiaries. The LLC has no Subsidiaries and no
ownership, partnership, joint venture or other interest, of
record or beneficially, in any other business or entity.
(f) Financial Statements. Attached hereto as Exhibit
C are the following financial statements (collectively the
"Financial Statements"): (i) audited balance sheets and
statements of operations, equity, and cash flow as of and for
the fiscal years ended June 30, 1997, June 30, 1998, and June
30, 1999 for the LLC; and (ii) unaudited
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balance sheet and statement of income (the "Most Recent
Financial Statements") as of and for the 11 months ended May
31, 2000 (the "Most Recent Fiscal Month End") for the LLC. The
Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby and present fairly the
financial condition of the LLC as of such dates and the
results of operations of the LLC for such periods; provided,
however, that the Most Recent Financial Statements are subject
to normal year-end adjustments and lack footnotes and other
presentation items. There are no liabilities of the LLC,
whether known, unknown, contingent or otherwise that are
required by GAAP to be reflected on the Most Recent Financial
Statements that are not accurately reflected in the Most
Recent Financial Statements, except for trade payables, line
of credit borrowings and other liabilities incurred in the
ordinary course of business since the date of such statements.
(g) Events Subsequent to Most Recent Fiscal Month
End. Since the Most Recent Fiscal Month End, there has not
been any material adverse change in (i) the financial
condition, business, assets, properties, (ii) damage,
destruction or loss materially affecting the LLC, (iii) to the
Knowledge of the Sellers or XxXxxxx based solely on
conversations with management of the LLC, any actions by a
competitor to the LLC's business which would adversely affect
the financial position or market share of the LLC, or (iv) to
the Knowledge of Sellers and XxXxxxx, any event, condition or
state of facts, including, without limitation, the enactment,
adoption or promulgation of any law, rule or regulation, the
occurrence of which materially and adversely does or would
affect the results of operations or the business or financial
condition of the LLC. Without limiting the generality of the
foregoing, since that date the LLC has not engaged in any
practice, taken any action, or entered into any transaction
outside the Ordinary Course of Business.
(h) Accounts Receivable; Prepaids. All accounts
receivable of LLC are (i) reflected properly on its books and
records, (ii) valid receivables which were the result of bona
fide transactions in the ordinary course of the LLC's
business; provided, however, that no representation is made
with respect to the Over 90 Day Receivables because they are
covered by the Escrow Agreement. To the Knowledge of Sellers
and XxXxxxx, based solely on conversations with management of
the LLC, the LLC's receivables (including, without limitation,
accounts receivable, loans receivable, notes, advances and
receivables due from Affiliates) which are reflected properly
on its books and records are valid receivables. All prepaid
expenses which are included in the assets of the LLC represent
bona fide prepayments made by the LLC.
(i) Legal Compliance. Section 3(B)(i) of the
Disclosure Schedule sets forth a true and complete list of
material licenses, permits, certificates, approvals, bonds and
other authorizations of governmental authorities (and all
other Persons) held by the LLC, or employees of the LLC, as
are necessary for the conduct of its business (the
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"Business Licenses"). Each Business License is valid and in
full force and effect in accordance with its terms. The LLC,
or the employee of the LLC as the case may be, has all
Business Licenses required to carry on the business as now
conducted by it and to own and operate the business as now
owned and operated by it. The LLC, or the employee of the LLC
as the case may be, is in material compliance with the terms
of each Business License and has not received any notice or
claim pertaining to the failure to obtain, or the breach or
violation of the terms of, any such Business License. Neither
the LLC nor the Sellers has received any notice of any
proceeding or investigation likely to result in the suspension
or revocation of any such authorization. The LLC has complied
and is in compliance with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal,
state, local, and foreign governments (and all agencies
thereof), and neither Sellers nor the LLC has received any
notice of any claimed violation.
(j) Tax Matters.
(i) The LLC has filed, when due, all Tax
Returns that it was required to file, no filing
extensions for any Tax Returns are presently
outstanding, and the LLC has paid and discharged in
full all Taxes when due (whether or not shown on any
Tax Return).
(ii) ss.3(B)(j) of the Disclosure Schedule lists
Tax Returns filed with respect to the LLC for taxable
periods ended on or after June 30, 1999, indicates
those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the
subject of audit or to the LLC's or Sellers'
Knowledge proposed to be audited by the Internal
Revenue Service or any applicable State tax
authority. The LLC has delivered to the Buyer correct
and complete copies of all federal Tax Returns and
examination reports.
(iii) The Sellers have not waived, and have not
been requested to waive, any statute of limitations
in respect of the LLC's Taxes.
(iv) All Taxes that the LLC or any Subsidiary is
or was required to withhold or collect have been duly
and timely withheld or collected and, to the extent
required by law, have been paid to the proper
governmental body or other authority or entity.
(v) The LLC is not a party to any Tax
allocation or sharing agreement.
(vi) The LLC has not been a member of an
Affiliated Group filing a consolidated federal Tax
Return.
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(vii) There are no Taxes of LLC or deficiencies
in Taxes or claims for Taxes against LLC for any
taxable period that could become a liability of, or
which could be assessed against or collected from,
Buyer as a result of or after the transfer
contemplated by this Agreement.
(k) Real Property.
(i) The LLC owns no real property.
(ii) ss.3(B)(k)(ii) of the Disclosure Schedule
lists all real property leased or subleased to the
LLC. The Sellers have delivered to the Buyer correct
and complete copies of the leases and subleases
listed in ss.3(B)(k)(ii) of the Disclosure Schedule
(as amended to date). Each lease and sublease listed
in ss.3(k)(ii) of the Disclosure Schedule is legal,
valid, binding, enforceable, and in full force and
effect, except where the illegality, invalidity,
nonbinding nature, unenforceability, or
ineffectiveness would not have a material adverse
effect on the financial condition or operations of
the LLC. Except as set forth in Schedule 3(K)(ii),
there are no facts or conditions affecting any of the
Leased Real Property which would, individually or in
the aggregate, interfere in any material respect with
the use, occupancy or operation thereof as currently
used, occupied and operated. With respect to any
Leased Real Property, and any material buildings,
structures and improvements located thereon or
therein, such buildings, fixtures and improvements,
and the present use thereof, comply in all material
respects with all known zoning laws, ordinances and
regulations of the government or other authorities
having jurisdiction thereof, including provisions
relating to permissible nonconforming uses, if any,
and such premises are not affected or threatened by
any condemnation or eminent domain proceeding. The
LLC is not in default and has not received written
notice of default under any such lease, and to the
Knowledge of the Sellers and XxXxxxx, there has been
no default thereunder by any third party.
(l) Intellectual Property. ss.3(B)(l) of the
Disclosure Schedule identifies each patent, trademark, service
xxxx, domain name, trade name and copyright, and United States
or foreign registrations and applications for registration of
any of them, and any other similar intellectual property
rights, used by the LLC in its business, and identifies each
license, agreement, or other permission which the LLC has
granted to any third party with respect to any of its
intellectual property. The LLC owns or has the legal right to
use, pursuant to one or more written agreements, a true and
complete copy of which has been delivered to Buyer, all such
intellectual property, and, has the right to use such
intellectual property without infringing on the rights or
intellectual property of any third party. No other Persons
possess any license, sublease or other right to use any
intellectual property owned by the LLC. All intellectual
property created by employees or independent contractors of
the LLC, in which equipment, supplies,
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facilities, or trade secret information of the LLC was used or
was developed while in the employment of the LLC and either
relates to the LLC's business or to the LLC's anticipated
research or development, has been assigned to the LLC. No
royalties or fees are payable by the LLC to any party by
reason of the use by the LLC of any of such intellectual
property. The LLC has not received any claims that it or its
products or services have infringed the Intellectual Property
rights of others, and neither the LLC, Sellers or XxXxxxx are
aware of any infringement by others of the LLC's intellectual
property.
(m) Contracts.
(i) ss.3(B)(m) of the Disclosure Schedule lists
the following written or oral contracts and
agreements to which the LLC is a party (the "Material
Contracts"):
(A) all loan agreements, indentures,
mortgages, security agreements, notes,
installment obligations, capital leases, or other
instruments relating to the borrowing of money
(or guarantees thereof);
(B) all contracts, involving consideration
in excess of $50,000 or which have a term in
excess of one (1) year;
(C) all leases of real property and of
material personal property;
(D) all contracts limiting the ability of
LLC to conduct its business or to otherwise
compete in its business, including as to manner
or place, or limiting the ability of any Person
to compete with the LLC;
(E) all contracts providing for the
extension of credit to the extent not consistent
with Sellers' normal credit practices;
(F) all acquisition, disposition, merger,
joint venture, "partnering" and similar
agreements or understandings;
(G) all collective bargaining agreements,
employment, consulting, non-competition and
retainer agreements, and Employee Benefit Plans;
(H) all agreements between the Sellers or
any affiliates and the LLC, or any of the Sellers
or Affiliates relating to the LLC; and
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(I) all other contracts or arrangements,
without regard to monetary amount, which were not
entered into by the LLC in the ordinary course of
business or which is material to the business of
the LLC.
The LLC has made available to the Buyer a correct and
complete copy of each contract or other agreement
listed in ss.3(B)(m) of the Disclosure Schedule (as
amended to date) other than the original Revolving
Credit Agreement with Mercantile Bank N.A.
(ii) Each Material Contract ("Contracts") (i)
was entered into in the ordinary course of the LLC's
business, is in full force and effect on the date of
this Agreement and is valid, binding and enforceable
in accordance with its terms; (ii) neither the LLC
nor any other party is in breach of or default under
any of the Contracts and has not received any written
notice or claim of any such breach or default from
any party; and (iii) no event or action has occurred,
is pending or is threatened, which, after the giving
of notice, passage of time or otherwise, could
constitute or result in any such breach or default by
the LLC or any other party under any of the
Contracts.
(n) Bank Accounts; Powers of Attorney. ss.3(B)(n) of
the Disclosure Schedule sets forth a true and complete list of
(a) all accounts and credit arrangements maintained by the LLC
and all persons authorized to sign or act on behalf of the LLC
with respect thereto, and all safe deposit boxes and other
similar custodial arrangements, and (b) the names of all
persons holdings powers of attorney from the LLC or otherwise
authorized to act on behalf of the LLC with respect to any
matters and a summary of the terms thereof.
(o) Litigation. Except as set forth in ss.3(B)(o) of
the Disclosure Schedule, the LLC (i) is not subject to any
outstanding award, arbitration decision, injunction, judgment,
order, decree, ruling, claim or charge, and (ii) is not a
party nor, to the Knowledge of Sellers or XxXxxxx, has it been
threatened with, any action, suit, proceeding, hearing, or
investigation of, in or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction, or any arbitration or mediation panel or
service.
(p) Employees.
(i) Schedule 3(B)(p)(i) sets forth a true and
complete list of the name, title, current location
and base salary or hourly rate of every employee of
the LLC, including employees on personal, military,
family, educational or medical leave, employees
receiving sickness disability benefits or
occupational, illness and injury benefits, and
employees on long-term disability as of the date
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of this Agreement, together with a statement of the
basis, amount and nature of any other remuneration,
whether in cash or kind, paid to each such employee
during the current fiscal year or accrued for or
payable to each such employee in the future, and the
basis for accrual and amount of all vacation and
severance benefits to which such employee was
entitled as of the Most Recent Fiscal Month End.
(ii) Except as set forth on Schedule 3(B)(p)(ii):
(A) The LLC is not a party to or bound by
any oral or written understanding, commitment,
employment agreement or any collective bargaining
agreement with respect to any of its employees;
nor any oral or written understanding commitment
or contract between the LLC and any independent
contractor or consultant;
(B) There is not pending or, to the Sellers'
and the LLC's Knowledge, threatened any strike,
walkout or other work stoppage or any union
organizing effort relating to the LLC employees;
(C) With respect to its employees, the LLC
is in compliance with all Federal and state laws
with respect to employment and employment
practices, terms and conditions of employment,
and wages and hours, and is not engaged in any
unfair labor practice, and there is no unfair
labor practice complaint against the LLC with
respect to any of its employees pending before
any governmental authority;
(D) The LLC is not a party to any collective
bargaining agreement and there is no union
organizing claim pending with respect to the
LLC's employees. No organized labor
representation question exists respecting the LLC
employees, and no grievance or any arbitration
proceeding is pending and no claim therefor
exists or to the Sellers' Knowledge is threatened
with respect to such employees;
(E) The LLC has not experienced any labor
strike, stoppage, slowdown, concerted labor
activity, or other material labor difficulty
during the last three years and to the Knowledge
of Sellers, none of the above is threatened;
(F) There are no pending (or, to Sellers'
Knowledge, threatened) lawsuits, disputes,
controversies, claims, administrative actions,
charges or proceedings of any kind by or with
employees or former employees of the LLC,
including but not limited to:
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(1) overtime pay, other than overtime
pay for the current payroll period;
(2) wages or salary for any period other
than the current payroll period;
(3) vacation, time off or pay in lieu of
vacation or time off, or other than that
earned with respect to the current fiscal
year; or
(4) any violation of any law relating to
minimum wages or maximum hours of work; or
(5) matters related to employee
benefits, workers' compensation, approved
leave of absence matters, or equal
employment;
(6) violation of any federal, state or
local anti-discrimination statute, breach of
the terms of employment or wrongful
discharge, whether arising under any
contract (oral or written) or statute, or
any tort.
(G) Except as set forth on Schedule
3(B)(p)(G), the LLC has no outstanding commitment
or agreement to effect any general or specific
wage or salary increase for any of its employees,
has not increased the salary or wages or granted
or agreed to grant any Bonuses or other
additional compensation of any employees since
the date of the Most Recent Financial Statements,
and has no plan or outstanding commitment to
implement or amend any Employee Benefit Plan.
(H) Except for persons hired on a
short-term, temporary basis, none of the persons
employed in the LLC's business is provided to the
LLC under contract with a third party.
(I) The LLC is not in violation of the
Americans with Disabilities Act of 1990 or any
law, regulation or order relating to employment
discrimination, harassment or occupational
safety, nor has the LLC received any unresolved
complaint from any Federal or state agency or
regulatory body alleging violations of any such
laws or regulations, nor is Seller implementing
any orders or consent decrees remedying any such
prior violation.
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(q) Employee Benefits.
(i) ss.3(B)(q)(i) of the Disclosure
Schedule lists each Employee Benefit Plan that the
LLC maintains or to which the LLC contributes or has
any obligation or liability to contribute.
(A) Except as described in
ss.3(B)(a)(i) of the Disclosure Schedule,
each such Employee Benefit Plan (and each
related trust, insurance contract, or fund)
complies in form and in operation in all
respects with the applicable requirements of
ERISA and the Code.
(B) As of the Closing Date, all
contributions (including all employer
contributions and employee salary reduction
contributions but not including payments
under the LLC's vacation plan for accrued
but unused vacation time) which are due have
been paid to each such Employee Benefit Plan
which is an Employee Pension Benefit Plan.
(C) Each such Employee Benefit
Plan which is an Employee Pension Benefit
Plan and which is intended to be qualified
under Code ss.401(a) has received a
determination letter from the Internal
Revenue Service to the effect that it meets
the requirements of Code ss.401(a).
(D) Neither the LLC nor any
ERISA Affiliate maintains any Employee
Pension Benefit Pan (other than a
Multiemployer Plan) which is subject to
Title IV of ERISA.
(E) The LLC has delivered to
the Buyer, if applicable, correct and
complete copies of the plan documents and
summary plan descriptions, written summaries
of each unwritten Employee Benefit Plan, the
most recent determination letter received
from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all
related trust agreements, insurance
contracts, employee handbooks and other
funding agreements which implement each such
Employee Benefit Plan.
(ii) With respect to each Employee
Benefit Plan that the LLC or any ERISA Affiliate
maintains or has maintained during the prior six
years or to which any of them contributes, or has
been required to contribute during the prior six
years:
(A) No action, suit,
proceeding, hearing, or investigation with
respect to the administration or the
investment of the assets of any
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such Employee Benefit Plan (other than
routine claims for benefits) has been
asserted, or to Sellers' Knowledge is
currently threatened.
(B) Neither the LLC nor any ERISA
Affiliate has incurred any liability under
Title IV of ERISA (including any withdrawal
liability under a Multiemployer Plan) with
respect to any such Employee Benefit Plan
which is an Employee Pension Benefit Plan.
(C) Except as set forth in
ss.3(B)(q)(ii), the LLC has no liability
(contingent or otherwise) with respect to
any terminated Employee Benefit Plan.
(iii) The LLC has no obligation to provide
post-retirement medical or life insurance benefits to
its employees.
(iv) The consummation of the transactions
contemplated by this Agreement will not give rise to
any liability, including, without limitation,
liability for severance pay, or accelerate the time
of payment or vesting or increase the amount of
compensation or benefits due to any employee, member
or director of the LLC (whether current, former, or
retired) or their beneficiaries solely by reason of
such transactions.
(r) Environmental, Health, and Safety Matters.
(i) The LLC is in compliance with all
Environmental, Health, and Safety Requirements.
(ii) The LLC has obtained and complied in
all material respects with, and is in compliance in
all material respects, with, all permits, licenses
and other authorizations that are required pursuant
to Environmental, Health, and Safety Requirements for
the occupation of its facilities and the operation of
its business; a list of all such permits, licenses
and other authorizations is set forth in
ss.3(B)(r)(ii) of the Disclosure Schedule.
(iii) The LLC has not treated, stored,
disposed of, arranged for or permitted the disposal
of, transported, handled, or released any substance,
including without limitation any hazardous substance
(as defined under any Environmental, Health, and
Safety Requirements), or owned or operated any
property or facility in a manner that has given or
would give rise to liabilities under Environmental,
Health, and Safety Requirements, including any
liability for response costs, corrective action
costs, personal injury, property damage, natural
resources damage or attorneys' fees.
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(iv) The LLC has not received any written
notice report or other information regarding any
actual or alleged material violation of
Environmental, Health, and Safety Requirements, or
any material liabilities or potential material
liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any
investigatory, remedial or corrective obligations,
relating to the LLC or its facilities arising under
Environmental, Health, and Safety Requirements, the
subject of which would have a material adverse effect
on the financial condition of the LLC.
(v) The execution and delivery of this
Agreement will not result in any obligations for site
investigation or cleanup, or notification to or
consent of government agencies or third parties,
pursuant to any of the so-called
"transaction-triggered" or "responsible property
transfer" Environmental, Health, and Safety
Requirements.
(vi) The LLC has not expressly assumed or
undertaken any liability, including, without
limitation, any obligation for corrective or remedial
action, of any other person relating to
Environmental, Health, and Safety Requirements.
(vii) No facts, events or conditions
relating to the present facilities, properties or
operations of the LLC will prevent, hinder or limit
continued compliance with Environmental, Health, and
Safety Requirements, give rise to any investigatory,
remedial or corrective obligations pursuant to
Environmental, Health, and Safety Requirements, or
give rise to any other liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise)
pursuant to Environmental, Health, and Safety
Requirements, including without limitation, any
relating to onsite or offsite releases or threatened
releases of hazardous materials, substances or
wastes, personal injury, property damage or natural
resources damage.
(viii) The LLC and any facilities operated
by the LLC are not subject to, and have not been
subject to, any administrative or judicial
proceedings, or any investigations of which the LLC
has notice, pursuant to any Environmental Health, and
Safety Requirements.
(s) Insurance. All of the insurable assets of the LLC
are insured for the benefit of the LLC against loss or damage
by theft, fire and all other hazards and risks of a character
and in amounts usually insured against by persons operating
similar properties in the localities where such properties are
located, under valid and enforceable policies issued by
insurance carriers of substantial assets. A list of all of
insurance policies of the LLC, indicating carriers, the name
of the insureds, the insurer, the premium, the expiration
date, the period to which it relates, the deductibles and loss
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retention amounts and the amounts of coverage, is set forth in
ss.3(B)(s) of the Disclosure Schedules. All such policies of
insurance are in full force and effect on the date hereof, and
shall remain in full force and effect through the Closing Date
in accordance with their terms. Neither the LLC, the Sellers
nor XxXxxxx has received notice of termination of any such
policies.
(t) Warranties. Except for LLC's standard warranties
as set forth on the Disclosure Schedule, neither LLC nor any
predecessor has given any warranty in respect of goods or
services supplied or agreed to be supplied by it.
(u) Solvency. No order has been made, petition
presented or resolution passed for the winding up (or other
process whereby the business is terminated and the assets of
the LLC are distributed among its creditors and/or members) of
LLC. There are no cases or proceedings pending under any
applicable insolvency, reorganization or similar law in any
jurisdiction concerning LLC, and no circumstances exist which,
under applicable laws, would justify any such cases or
proceedings. No receiver or trustee has been appointed with
respect to all or any portion of LLC's business or assets. LLC
has not stopped paying its debts as they fall due. No
distress, execution of other process has been levied on any
asset of LLC. LLC has capital sufficient to carry on its
business and all businesses in which it is about to engage.
(v) Customers and Suppliers. Since January 1, 2000,
no customer, client, subcontractor or supplier of Seller has:
(a) stopped or indicated an intention to stop, trading with or
supplying LLC, (b) reduced, or indicated an intention to
change, substantially the terms on which it is prepared to
trade with or supply LLC (other than normal price and quota
changes). To Sellers' Knowledge based solely on conversations
with management of the LLC, no customer, client,
subcontractor, or supplier of LLC is likely to, as a result of
the transactions contemplated hereby: (i) not trade with or
supply Buyer, (ii) reduce substantially its trading with or
provision of services or supplies to Buyer, as compared to
LLC, or (iii) change the terms on which it is prepared to
trade with or supply Buyer (other than normal price and quota
changes), as compared to LLC.
(w) Absence of Certain Changes. Except as set forth
on Schedule 3(B)(w) Disclosure Schedule, since the date of the
Most Recent Financial Statement, the business has been
conducted in the ordinary course, and LLC has not:
(A) amended its Articles of Association, By-laws
or other organizational documents;
(B) declared, paid or made any dividend or other
distribution or payment in respect of shares of its
equity interests or purchased, retired or
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redeemed, or obligated itself to purchase, retire or
redeem, any shares of its equity interests;
(C) except for normal increases in
compensation and benefits based on periodic reviews
of individuals and consistent with its past practices
(i) made any increase in the compensation or benefits
payable or to become payable by it to any director,
officer or employee, (ii) made any material amendment
to its Employee Plans, (iii) established any new
Employee Plans, or (iv) entered into any employment
agreement or other contract or arrangement (whether
written or oral) with respect to the performance of
personal services;
(D) made any investment of a capital nature
in excess of $5,000 individually or $25,000 in the
aggregate;
(E) entered into, amended, sought a waiver
or extension under or terminated any Material
Agreement or engaged in any transaction, in each
case, that is not in the normal course of business
and consistent with past practices, or defaulted
under any Material Agreement;
(F) created, incurred, assumed or guaranteed
any liability or obligation for borrowed money;
(G) sold, transferred, leased to others,
granted or suffered Security Interest against or
otherwise disposed of any of its material assets,
except for Inventory sold in the ordinary course of
business and items of obsolete equipment no longer
used or useful in the Business;
(H) received any notice of termination of
any contract, lease or other agreement, which
termination has had or could reasonably be expected
to have a Material Adverse Effect;
(I) suffered any damage, destruction or loss
(whether or not covered by insurance) which, in any
one case or in the aggregate, has had or could
reasonably be expected to have a Material Adverse
Effect;
(J) encountered (i) any labor union
organizing activity or had any actual or threatened
employee strikes, work-stoppages, slow-downs or lock-
outs or (ii) any significant deterioration in its
relationships with employees;
(K) suffered any other change or event that,
individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect;
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(L) made any loan to or guarantee or
assumption of any loan or obligation on behalf of any
Member, director, officer or employee of LLC or any
associate of any of the foregoing;
(M) made any change in its accounting
principles, methods or practices or in the manner it
keeps its books and records or any change of its
current practices with regards to sales, receivables,
payables or accrued expenses;
(N) entered into or amended any contract or
other arrangement between LLC any of its officers,
directors, stockholders or Affiliates;
(O) made any payment, discharge or
satisfaction of any Liabilities of Seller, other than
payments, discharges or satisfactions in the Ordinary
Course of Business and consistent with past
practices;
(P) experienced any change in ownership of
its Membership Interests; or entered into any
agreement or made any commitment to take any of the
types of actions described in or which would result
in the consequences described in clauses (A)-(P).
(x) Related Party Transactions Except as set forth on
the ss.3(B)(x) Disclosure Schedule, none of (i) LLC, (ii) any
member of LLC or any Affiliate of any such member or any
Associate of any such member or Affiliate or (iii) any officer
or director of LLC (or any immediate family member of any such
officer or director) or any Affiliate or Associate of the
foregoing:
(A) now has or at any time subsequent to the date
of the Most Recent Financial Statement had, either
directly or indirectly, an equity or debt interest in
any Person (except for LLC) which furnishes or sells,
or during such period furnished or sold, services or
products to LLC, or purchases, or during such period
purchased, from LLC any goods or services, or
otherwise does, or during such period did, business
with LLC, or
(B) now has or was a party to any contract,
commitment or agreement to which LLC is, or during
such period was, a party or under which any of them
is or was obligated or bound or to which any of their
properties may be or may have been subject, or
(C) has any direct or indirect ownership or other
interest in any of the assets used or useful in the
business..
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(y) Books and Records.
(A) Except for those systems covered by the
Services Agreement, none of the records, systems,
data or information of LLC is recorded, stored,
maintained, operated or otherwise wholly or partly
dependent on or held or accessible by any means
(including, but not limited to, an electronic,
mechanical or photographic process computerized or
not) which are not under the exclusive ownership and
direct control of LLC.
(B) The books of account, and other records
of LLC, all of which have been made available to
Buyer, are complete and correct and have been
maintained in accordance with sound business
practices, including the maintenance of an adequate
system of internal controls.
(z) Material Disclosures. No statement,
representation or warranty made by LLC or the Parties in this
Agreement, or in any certificate, statement, list, schedule or
other document furnished or to be furnished to Buyer
hereunder, contains, or when so furnished will contain, any
untrue statement of a material fact, or fails to state, or
when so furnished will fail to state, a material fact
necessary in order to make the statements contained herein or
therein, in light of the circumstances in which they are or
will be made, not misleading.
(aa) Contributions and Payments. Neither the LLC, Sellers nor
XxXxxxx, nor, to the Knowledge of Sellers or XxXxxxx, any of their
representatives acting on their behalf, (i) has made or agreed to make
any contributions, payments, or gifts of cash or other property to any
finder, customer, client, subcontractor, vendor, agent, government
official or other Person, in the United States or any other country,
where either the payment or the purpose of such contribution, payment
or gift was illegal under any federal, state, local or foreign law;
(ii) has made, promised, accepted or received any bribe or kickback,
contract awarding fee, developer fee, or any unlawful contributions,
payments, gifts or expenditures; or (iii) has established or maintained
any unrecorded fund or asset for any purposes or has made any false or
artificial entries on any of the LLC's books for any reason.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Sellers and to XxXxxxx that the statements contained in this
ss.4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
ss.4), except as set forth in the Disclosure Schedule. The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this ss.4.
(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
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(b) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred
to in ss.2 above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the Buyer is subject or any provision of its charter or bylaws
or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to
which any of its assets is subject. The Buyer does not need to give any
notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in ss.2 above).
(d) Brokers' Fees. The Buyer has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
the Sellers or XxXxxxx could become liable or obligated. Buyer is
obligated to pay a fee to Communications Equity Associates, but Sellers
and XxXxxxx are not responsible therefor.
(e) Financing. Buyer has and will have at Closing sufficient
cash to pay the cash portion of the Purchase Price in accordance with
the terms of this Agreement and all other payments required to be made
by it hereunder.
(f) Financial Statements. Attached hereto as Exhibit D are the
following financial statements (collectively, the "Buyer Financial
Statements") of the Buyer: unaudited consolidated balance sheet as of
May 31, 2000 and the consolidated statements of income, cash flows and
stockholders' equity for the five months then ended. The Buyer
Financial Statements (including the notes thereto) have been prepared
in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and present fairly the financial condition of
the Buyer as of such dates and the results of operations of the Buyer
for such periods; provided, however, that the Buyer Financial
Statements are subject to normal year-end adjustments and lack
footnotes and other presentation items.
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5. Covenants. The Parties agree as follows:
(a) General. Each of the Parties will use its reasonable
commercial efforts to take all action and to do all things necessary,
proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction,
but not waiver, of the closing conditions set forth in ss.6 below).
(b) Notices and Consents. The Sellers will give any notices to
third parties, and the Sellers will use their reasonable commercial
efforts to obtain any third party consents that are required in
connection with the consummation of the transaction by Sellers. Each of
the Parties will give any notices to, make any filings with, and use
its reasonable commercial efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in
connection with the matters referred to in ss.3(B)(b) and ss.4(c)
above.
(c) Operation of Business. Prior to the Closing, the LLC will
not engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business including but not
limited to the matters set forth in ss.3(B)(w) above.
(d) Full Access; Confidential Information. Prior to the
closing, the Sellers will permit representatives of the Buyer to have
full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the LLC, to all
premises, properties, personnel, books, records (including tax
records), contracts, and documents of or pertaining to the LLC. The
Buyer will treat and hold as such any Confidential Information it
receives from the Sellers or the LLC in the course of the reviews
contemplated by this ss.5(d), will not use any of the Confidential
Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, will return to the
Sellers all tangible embodiments (and all copies) of the Confidential
Information which are in its possession; provided, however, that the
foregoing shall not apply to (i) information in the public domain or
that becomes public through disclosure by any party other than Sellers
or their affiliates or their respective employees, officers, directors,
shareholders, outside advisors, agents, affiliates and representatives,
so long as such information is not made public by such other party in
breach of a confidentiality obligation, (ii) information that may be
required to be disclosed by applicable law, provided Sellers
immediately give Buyer notice of any request or demand for such
information upon receipt of such request or demand along with a copy of
any written correspondence, pleading or other communication concerning
the request or demand or (iii) any information that is required to be
disclosed by Sellers in connection the enforcement of this Agreement.
(e) Exclusivity. The Sellers will not solicit, initiate, or
encourage the submission of any proposal or offer from any Person
relating to the acquisition of all or substantially all of the
Membership Interest or assets of the LLC (including any acquisition
structured as a merger, consolidation, or equity exchange); provided,
however, that the Sellers will remain free to
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participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in
any other manner any effort or attempt by any Person to do or seek any
of the foregoing to the extent their fiduciary duties may require.
(f) Treatment of Over 90 Day Receivables. After the Closing,
each payment received by Buyer from a person or entity whose account
receivable is included among the Over 90 Day Receivables will be
applied by Buyer to such person or entity's Over 90 Day Receivable
until it is paid in full. Buyer will use reasonable due diligence to
collect each of the Over 90 Day Receivables. On the 120th day after the
Closing Date, Buyer shall collect from the Escrow Amount the then
unpaid balance of the Over 90 Day Receivables in accordance with the
Escrow Agreement and assign such unpaid Over 90 Day Receivables to
Sellers, and direct that the remaining portion of the Escrow Amount be
disbursed to Sellers.
(g) Maintenance and Access to Records. Buyer shall retain for
a period of six years all records of the LLC. Buyer shall provide
representatives of the Sellers and their respective successors and
assigns access to such records upon reasonable notice and at reasonable
times at Sellers' expense.
(h) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including
the execution and delivery of such further instruments and documents)
as any other Party reasonably may request, all at the sole cost and
expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under ss.7 below).
(i) Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand
in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure
to act, or transaction on or prior to the Closing Date involving the
LLC, each of the other Parties will cooperate with the contesting or
defending Party and its counsel in the contest or defense, make
available his or its personnel, and provide such testimony and access
to its books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting
or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under ss.7 below).
(j) Covenant Not to Compete. For a period of three (3) years
from and after the Closing Date, none of the Sellers will engage in the
United States, directly or indirectly, on its behalf or on the behalf
of any other Person, or as a shareholder, independent contractor,
partner, principal, or controlling person of an entity or in any other
capacity, in the business of construction, construction management, and
engineering services for cell sites in the wireless and
telecommunications industries, or in the business of network
engineering or network design services of wireless and
telecommunication networks; provided, however, that no owner of less
than 5% of the outstanding stock of any publicly traded corporations
shall be deemed to engage
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solely by reason thereof in such business. In addition, none of the
Sellers will for a period of three (3) years solicit for hire or hire
any employees of the Buyer or the LLC. If the final judgment of a court
of competent jurisdiction declares that any term or provision of this
ss.5(j) is invalid or unenforceable, the Parties agree that the court
making the determination of invalidity or unenforceability shall have
the power to reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision with a term
or provision, and that this Agreement shall be enforceable as so
modified after the expiration of the time within which the judgment may
be appealed.
(k) Buyer Notes. Each Buyer Note will be imprinted with a
legend substantially in the following form:
Neither this Note nor the securities issuable upon the
conversion hereof have been registered under the
Securities Act of 1933, as amended, or the securities laws
of any state. They may not be sold, offered for sale,
pledged or hypothecated in the absence of an effective
registration statement as to the securities under said act
or securities laws or an opinion of counsel satisfactory
to the Company that such registration is not required.
(l) Employee Matters. Buyer shall cause the LLC to continue to
provide medical benefit coverage for its employees and dependants of
such employees so that the Sellers will have no liability to provide
continuation coverage under COBRA for such employees and/or their
dependants.
(m) Confidentiality. Following the Closing, Sellers and
XxXxxxx will, and will cause their employees, officers, directors,
shareholders, outside advisors, agents, affiliates and representatives
to, treat all Confidential Information of the LLC confidentially and
with commercially reasonable care and discretion, and will not use or
disclose any such information to third parties; provided, however, that
the foregoing shall not apply to (i) information in the public domain
or that becomes public through disclosure by any party other than
Sellers or their affiliates or their respective employees, officers,
directors, shareholders, outside advisors, agents, affiliates and
representatives, so long as such information is not made public by such
other party in breach of a confidentiality obligation, (ii) information
that may be required to be disclosed by applicable law, provided
Sellers immediately give Buyer notice of any request or demand for such
information upon receipt of such request or demand, along with a copy
of any written correspondence, pleading or other communication
concerning the request or demand, (iii) any information that is
required to be disclosed by Sellers in connection with the enforcement
of this Agreement or (iv) any information required by federal
securities laws to be discussed by XxXxxxx.
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(n) Payment of Bonuses. Buyer will, on or before July 31,
2000, pay or cause the LLC to pay bonuses accrued and reflected on the
Closing Balance Sheet in amounts and to the employees of the LLC listed
on Schedule 3(B)(p)(G) hereto.
(o) Change of Name; Use of Name. Within ten business days
after the Closing, Buyer will cause the LLC to file with the Secretary
of State of Missouri an amendment to the LLC's Articles of Association
changing the LLC's name to a name that does not include the word
"XxXxxxx" or "Clayco." For a period of 120 days after the Closing, the
LLC may use the name "XxXxxxx Clayco Wireless" so long as the LLC first
files with the Secretary of State of Missouri a fictitious name
registration indicating that the LLC is doing business as XxXxxxx
Clayco Wireless. Until the first anniversary of the Closing Date, the
LLC may, in conjunction with the use of its new name, include the
language "formerly XxXxxxx Clayco Wireless." In no event will Buyer or
the LLC use the name "XxXxxxx" or "Clayco" except during the periods
and in the ways authorized by this ss.5(n). Following the Closing, the
Buyer will not, and will cause the LLC not to indicate to any third
party that the Buyer or the LLC is in any way affiliated with XxXxxxx
or Clayco.
(p) Closing Tax Return. Sellers will prepare and file a final
federal income tax return for the LLC through the Closing Date and
provide a copy of such return to the Buyer.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of
the Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions, any of which may be waived in whole or in part by Buyer in
its sole discretion:
(i) the representations and warranties set forth
in ss.3 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) each Seller shall have fully performed and
complied with all of its covenants, agreements and conditions
hereunder in all material respects through the Closing;
(iii) there shall not be any claim, action,
investigation, proceeding, injunction, judgment, order,
decree, ruling, or charge in effect which, if adversely
determined, might (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) result in the
payment of substantial damages by Buyer as a result of the
transactions contemplated hereby, (c) materially and adversely
affect the business or assets of the LLC or (d) materially
affect Buyer's rights with respect to the Membership Interests
subsequent to the Closing Date;
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(iv) the Sellers shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in ss.6(a)(i)-(iii) is satisfied in all
respects;
(v) the Buyer (or the LLC) and Xxxx Xxxxxxxxxx shall
have entered into an employment agreement in form and
substance as set forth in Exhibit E attached hereto and the
same shall be in full force and effect;
(vi) the Buyer shall have received from counsel to
the Sellers an opinion in form and substance as set forth in
Exhibit F attached hereto, addressed to the Buyer, and dated
before or as of the Closing Date;
(vii) the Buyer and the Sellers shall have signed the
Escrow Agreement attached here to as Exhibit B;
(viii) there shall have been no material change in
the business, results of operations or financial condition of
the LLC since April 30, 2000;
(ix) Buyer shall have received any consents of third
parties, and any authorizations, orders, grants, consents,
permits and approvals of all relevant governmental
authorities, required in connection with the consummation of
the transactions contemplated under this Agreement, without
the imposition of any materially burdensome conditions or
restrictions, which consents shall continue to be in full
force and effect on the Closing Date;
(x) Buyer shall have received the resignations of
Xxxxx X. XxXxxxx, Xxxxxx Xxxxxxx, Xxxxxx X. Xxxxx and Xxxxxxx
Xxxxxx, as managers of the LLC;
(xi) Buyer shall have received such bills of sale or
other assignment documents reasonably acceptable to Buyer for
the transfer of Membership Interests;
(xii) Sellers, Buyer and the LLC shall have entered
into a services agreement (the "Services Agreement") in the
form attached as Exhibit H, providing for provision of
employee benefit, payroll and other services by XxXxxxx to the
LLC and providing for the transfer of assets funding the
accounts of the LLC employees under the XxXxxxx Retirement
Action Plan to a plan, described in Code ss.401(k), to be
established by the LLC for such employees for the period of
time specified in the Agreement.
(xiii) all actions to be taken by the Sellers in
connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance
to the Buyer;
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(xiv) Buyer shall have completed to its reasonable
satisfaction a due diligence review of the LLC;
(xv) To the extent there are any assets or files of
the LLC, including but not limited to files regarding employee
of the LLC, in the possession of Sellers or XxXxxxx, Sellers
or XxXxxxx, as the case may be, shall have delivered
possession of such assets or files to Buyer;
(xvi) Sellers shall have delivered to Buyer lien
searches from St. Louis County, Missouri and the Missouri
Secretary of State dated as of a date not more than twenty
(20) business days prior to the Closing Date and showing no
Uniform Commercial Code, judgment, tax or other lien filings
against the LLC, other than security interests or other
filings which will be released at closing; and
(xvii) Sellers shall have delivered to the Buyer a
certified copy of the resolution the Board of Directors of
each of the Sellers authorizing the execution of this
Agreement and the consummation of the transactions described
herein.
The Buyer may waive any condition specified in this ss.6(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of
the Sellers to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions, any of which may be waived in whole or in part by the
Sellers in their sole discretion:
(i) the representations and warranties set forth
in ss.4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Buyer shall have fully performed and
complied with all of its covenants, agreements and conditions
hereunder in all material respects through the Closing;
(iii) there shall not be any claim, action,
investigation, proceeding, injunction, judgment, order,
decree, ruling, or charge in effect which, if adversely
determined, might (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) result in the
payment of substantial damages by Sellers as a result of the
transactions contemplated hereby, (c) materially and adversely
affect the business or assets of the LLC or (d) materially
affect Buyer's rights with respect to the Membership Interests
subsequent to the Closing Date;
(iv) the Buyer shall have delivered to the Sellers a
certificate to the effect that each of the conditions
specified above in ss.6(b)(i)-(iii) is satisfied in all
respects;
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(v) the Buyer (or the LLC) and Xxxx Xxxxxxxxxx
shall have entered into an employment agreement in form and
substance as set forth in Exhibit E attached hereto and the
same shall be in full force and effect;
(vi) XxXxxxx shall have been released from its
guarantee of the LLC's borrowings under its line of credit;
(vii) the Sellers shall have received from counsel
to the Buyer an opinion in form and substance as set forth in
Exhibit G attached hereto, addressed to the Sellers, and dated
before or as of the Closing Date;
(viii) the Buyer and the Sellers shall have signed
the Escrow Agreement attached hereto as Exhibit B;
(ix) all actions to be taken by the Buyer in
connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance
to the Sellers; and
(x) Buyer shall deliver to the Sellers a certified
copy of the resolution of the Board of Directors of Buyer
authorizing the execution of this Agreement and the
consummation of the transactions described herein.
The Sellers may waive any condition specified in this ss.6(b) if they
execute a writing so stating at or prior to the Closing.
7. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. All of the
representations, warranties, covenant, obligations and agreements of
the LLC, Sellers or XxXxxxx contained in ss.3(B)(f)-(i), ss.3(B)(k)-(q)
and ss.3(B)(s)-(aa) of this Agreement shall survive the Closing and
continue in full force and effect for a period of one eighteen (18)
months thereafter, unless Sellers, the LLC or XxXxxxx knew or had
reason to know of a misrepresentation or breach of warranty, in which
case such representation or warranty shall survive the Closing and
continue in full force and effect forever (subject to any applicable
statutes of limitations). All of the other representations and
warranties of the Buyer and the Sellers, contained in this Agreement
shall survive the Closing and continue in full force and effect forever
thereafter (subject to any applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of the Buyer.
Sellers (and XxXxxxx with respect to XxXxxxx Wireless) shall severally
indemnify and hold harmless Buyer and its Affiliates (collectively, the
"Buyer Indemnitees") from its Allocable Portion of any and all Adverse
Consequences arising out of or relating to:
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(i) any inaccuracy or misrepresentation in or
breach of any representation or warranty made by Sellers or
XxXxxxx in this Agreement or any other document in connection
with the transactions contemplated hereby;
(ii) any breach by the Sellers or XxXxxxx of any
covenant or agreement to be performed by Sellers or XxXxxxx
hereunder after the Closing or the failure of Sellers or
XxXxxxx to fulfill any obligation to be fulfilled by Sellers
or XxXxxxx hereunder after the Closing;
(iii) any claim brought by any person relating to
claims with respect to or transactions in the Membership
Interests of the LLC occurring prior to the Closing Date,
including, but not limited to, claims for breach of any
federal or state securities laws; and
(iv) any claim brought by any Person relating to
the matter disclosed on ss.3(B)(r) of the Disclosure Schedule.
(c) Buyer's Agreement to Indemnify. Buyer shall indemnify and
hold harmless Sellers and their Affiliates (collectively, the "Seller
Indemnitees") from any and all Adverse Consequences arising out of or
relating to any inaccuracy or misrepresentation in or breach of any
representation, warranty, covenant or agreement made by Buyer in this
Agreement.
(d) Limitations.
(i) Notwithstanding anything herein to the
contrary, the Sellers and XxXxxxx shall not have any
obligation to indemnify the Buyer with respect to the breach
of the representations or warranties of the Sellers and
XxXxxxx contained in ss.3(B)(f)-(i), ss.3(B)(k)-(q) and
3(B)(s)-(aa) of this Agreement (other than a knowing breach):
(A) until the Buyer has suffered Adverse Consequences by
reason of all such breaches in excess of an aggregate
deductible equal to the sum of $50,000 plus the amount (if
any) by which the LLC's Net Worth reflected on the Closing
Balance Sheet exceeds $1,325,000 (after which point the
Sellers and XxXxxxx will be obligated only to indemnify the
Buyer from and against further such Adverse Consequences) or
thereafter (B) to the extent the Adverse Consequences the
Buyer has suffered by reason of all such breaches exceeds a $1
million aggregate ceiling (after which point the Sellers and
XxXxxxx will have no obligation to indemnify the Buyer from
and against further such Adverse Consequences); and Clayco's
maximum aggregate obligation to indemnify Buyer shall not
exceed 10% of such Adverse Consequences (not more than
$100,000 in the aggregate) and XxXxxxx and XxXxxxx Wireless'
maximum obligation to indemnify Buyer shall not exceed 90% of
such Adverse Consequences (not more than $900,000 in the
aggregate).
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(ii) Notwithstanding anything herein to the
contrary, Buyer shall not have any obligation to indemnify the
Sellers or XxXxxxx with respect to a breach of any
representation or warranty of the Buyer in ss.4(c) or (f) of
this Agreement (other than a knowing breach): (A) until
Sellers and XxXxxxx have suffered Adverse Consequences by
reason of all such breaches in excess of $50,000 (after which
point Buyer will be obligated only to indemnify the Sellers
and XxXxxxx from and against further such Adverse
Consequences) or thereafter (B) to the extent the Adverse
Consequences the Sellers and XxXxxxx have suffered by reason
of all such breaches exceeds a $1 million aggregate ceiling
(after which point the Buyer will have no obligation to
indemnify the Sellers and XxXxxxx from and against further
such Adverse Consequences).
(iii) With respect to claims for indemnification
with respect to matters for which there is a limited survival
period, such claim must be brought within the survival period
and the indemnification shall extend to all Adverse
Consequences arising out of such claim, whether it arises
before or after such survival date.
(e) Matters Involving Third Parties.
(i) If any third party shall notify any Party
(the "Indemnified Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for
indemnification against any other Party (the "Indemnifying
Party") under this ss.7, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing.
The failure of such Indemnified Party to give notice of any
claim for indemnification promptly shall not adversely affect
such Indemnified Party's right to indemnity hereunder except
to the extent that such failure adversely affects the right of
the Indemnifying Party to assert any reasonable defense to
such claim.
(ii) Any Indemnifying Party will have the right at
any time to assume and thereafter conduct the defense of the
Third Party Claim with counsel of his or its choice reasonably
satisfactory to the Indemnified Party; provided, however, that
the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably) unless the
judgment or proposed settlement involves only the payment of
money damages and does not impose an injunction or other
equitable relief upon the Indemnified Party.
(iii) Unless and until an Indemnifying Party
assumes the defense of the Third Party Claim as provided in
ss.7(e)(ii) above, however, the Indemnified Party may defend
against the Third Party Claim in any manner he or it
reasonably may deem appropriate.
(iv) In no event will the Indemnified Party
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
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prior written consent of each of the Indemnifying Parties (not
to be withheld unreasonably).
(f) Determination of Adverse Consequences. The Parties shall
make appropriate adjustments for tax benefits and insurance coverage
and take into account the time cost of money (using the Applicable Rate
as the discount rate) in determining Adverse Consequences for purposes
of this ss.7. All indemnification payments under this ss.7 shall be
deemed adjustments to the Purchase Price.
(g) Application First to Buyer Notes. Indemnification
obligations of Sellers hereunder shall first be applied to a reduction
of principal and accrued interest on the Buyer Notes. If the Sellers'
indemnification obligations exceed the aggregate unpaid principal and
interest on the Buyer Notes at the time such obligation is established,
Sellers will pay such excess to Buyer in cash, subject to the
limitations in ss.7(d)(i), above. All such reductions and payments
shall be made by Sellers in their Allocable Portions.
(h) Exclusive Remedy. The Buyer, the Sellers and XxXxxxx
acknowledge and agree that the foregoing indemnification provisions in
this ss.7 (and the Escrow Agreement with respect to the subject matter
thereof) shall be the exclusive remedy of the Parties with respect to
the transactions contemplated by this Agreement.
(i) Accounts Receivable. In the event Buyer asserts a claim
for indemnification because of a breach by the Sellers of ss.3(B)(h) of
this Agreement, Buyer will assign to the Sellers the uncollected
accounts receivable which are the subject of such claim for
indemnification upon payment of such indemnification claim.
(j) Indemnification For Claims Under Guarantees. Buyer agrees
to indemnify and hold harmless XxXxxxx from any and all Adverse
Consequences incurred after Closing as a result of XxXxxxx'x guarantee
of the Industrial Lease dated December 29, 1998 between the LLC as
lessee and the State of California Public Employees' Retirement System
as the lessor. Also, Buyer agrees to indemnify and hold harmless
XxXxxxx and Clayco from any and all Adverse Consequences incurred after
Closing with respect to the contractors license bonds underwritten by
Reliance Insurance Company listed on Schedule ss.3(B)(i) attached
hereto which XxXxxxx and Clayco have guaranteed by a Continuing
Agreement of Indemnity-Contractors' Form, dated October 9, 1996. The
indemnification provided by this ss.7(j) shall not be subject to the
limitations in ss.7(d)(ii) above, and any payment to Sellers pursuant
to this ss.7(j) will not reduce the aggregate $1 million ceiling
contained in ss.7(d)(ii) with respect to indemnification claims that
are not made pursuant to this ss.7(j). The indemnification provisions
of this ss.7(j) shall survive the Closing and continue in full force
forever (subject to any applicable statutes of limitations).
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8. Termination.
(a) Termination of Agreement. The Parties may terminate this
Agreement by mutual written consent at any time prior to the closing.
The Sellers may terminate this Agreement if the transactions
contemplated hereby have not been consummated by the close of business
on June 30, 2000.
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to ss.8(a) above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to
any other Party (except for any liability of any Party then in breach);
provided, however, that the confidentiality provisions contained in
ss.5(d) above shall survive termination.
9. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of
the other Party; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its reasonable
best efforts to advise the other Party prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the
Parties and supersedes any prior understandings, agreements, or
representations by or between the Parties, written or oral, to the
extent they related in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. All covenants, agreements,
statements, representations, warranties and indemnities in this
Agreement by and on behalf of any of the Parties hereto shall bind and
inure to the benefit of their respective successors and permitted
assigns. Except as provided herein, no Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party.
Buyer shall have the right to assign and/or delegate all or any portion
of its rights and obligations under this Agreement to any wholly owned
subsidiary of Buyer, or any wholly owned subsidiary under common
control with Buyer, provided that no such assignment and/or
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delegation shall relieve Buyer of its obligations hereunder in the
event that its assignee fails to perform the obligations delegated.
Specifically, but not in limitation of the immediately preceding
sentence, in the event that Buyer determines that in order to make
certain the consummation of the transactions contemplated hereby on or
before the Closing Date, it would be advisable for its
designee/assignee to purchase directly from the Sellers all or some
portion of the Membership Units, the Sellers and XxXxxxx shall take
such actions as are reasonably requested by Buyer to effectuate the
same.
(e) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same instrument. This
Agreement shall become effective when each Party hereto shall have
received a counterpart hereof signed by the other Parties hereto.
(f) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to the Sellers and XxXxxxx:
------------------------------
c/x XxXxxxx, Inc. and c/o Clayco Construction Company, Inc.
0000X Xxxxxxx Xxxx 0000 Xxxxxxxxx Xxxxxxxx Xxxxxx Xxxxx
Xx. Xxxxx, XX 00000 Xx. Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxx Attn: Xxxxxxx X. Xxxxxx
Vice President, Secretary Fax No.: (000) 000-0000
and Chief Financial Officer
Fax No.: (000) 000-0000
Copy to:
--------
Xxxxxxxxx Xxxxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxx, Xx.
Fax No.: (000) 000-0000
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If to the Buyer:
---------------
Evolution Holdings, Inc.
0000 X. Xxxxxxxx Xxxxx, Xxx X-000
Xxxxxxxx, XX 00000-0000
Attn: President
Fax No.: (000) 000-0000
Copy to:
-------
XxXxxxx Xxxxx & Xxxxx
000 Xxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Fax No.: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail,
or electronic mail), but no such notice, request, demand, claim, or
other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other
Party notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Missouri
without giving effect to any choice or conflict of law provision or
rule (whether of the State of Missouri or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than
the State of Missouri.
(i) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and
signed by the Buyer, the Sellers and XxXxxxx. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty
or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that
is held to be invalid or unenforceable by any court or tribunal of
competent jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof, and such provision shall
be carried out as nearly as possible according to its original terms
and intent to eliminate such invalidity or unenforceability.
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(k) Expenses; Transfer Taxes. Each of the Parties will bear
its own costs and expenses (including legal fees and expenses) incurred
in connection with this Agreement and the transactions contemplated
hereby. Sellers will pay all transfer taxes, document stamps or other
charges relating to the transfer of the Membership Interests. The
Sellers shall not cause, suffer or permit the LLC to pay or incur any
expenses in connection with the transactions contemplated by this
Agreement, including but not limited to attorney's, accountants' or
other advisors' fees.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law shall
be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including"
shall mean including without limitation.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
*****
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
EVOLUTION HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Title: President
--------------------------------------------
XXXXXXXXXXXX.XXX, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Title: President
--------------------------------------------
XXXXXXX WIRELESS, INC.
By: /s/ Xxxxx X. XxXxxxx
-----------------------------------------------
Title: President
--------------------------------------------
CLAYCO CONSTRUCTION COMPANY, INC.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------------
Title: Senior Vice President
--------------------------------------------
XXXXXXX, INC.
By: /s/ Xxxxx X. XxXxxxx
-----------------------------------------------
Title: President
--------------------------------------------
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