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EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
regarding
XXXXX XXXXX & PARTNERS, INC.
by and among
XXXXX/XXXXXX, INC.
XXXXX/XXXXXX HOLDINGS, INC.
as Purchasers
and
XXXXX XXXXX
XXXXX X. XXXXXX
XXXXXX X. XXXX
XXXXX X. XXXXXXX
XXXXXX X. XXXXXXXX
XXXXX X. XXXXXXXX
as Stockholders
Dated as of June 21, 2000
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TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE AND SALE ................................................ 1
1.1 Purchase and Sale of Shares ................................ 1
1.2 Section 338(h)(10) Election ................................ 1
1.3 Assets Upon Sale ........................................... 2
1.4 Excluded Assets ............................................ 4
1.5 Liabilities Upon Sale ...................................... 4
1.6 Excluded Liabilities ....................................... 5
ARTICLE 2 CONSIDERATION FOR THE SHARES ..................................... 5
2.1 Purchase Price ............................................. 5
2.2 Contingent Consideration Payment ........................... 6
2.3 Holdings Stock ............................................. 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS ............... 9
3.1 Organization and Power ..................................... 9
3.2 Subsidiaries ............................................... 9
3.3 Authorization; No Breach ................................... 9
3.4 Financial Statements ....................................... 9
3.5 Absence of Undisclosed Liabilities ......................... 10
3.6 No Material Adverse Changes ................................ 11
3.7 Absence of Certain Developments ............................ 11
3.8 Title and Condition of Properties .......................... 12
3.9 Tax Matters ................................................ 13
3.10 Contracts and Commitments .................................. 14
3.11 Patents, Copyrights and Trademarks ......................... 16
3.12 Litigation; Proceedings .................................... 16
3.13 Brokerage .................................................. 16
3.14 Governmental Consent, etc .................................. 16
3.15 Employees .................................................. 17
3.16 Employee Benefit Plans ..................................... 17
3.17 Insurance .................................................. 19
3.18 Affiliated Transactions .................................... 19
3.19 Compliance with Laws; Permits; Certain Operations .......... 19
3.20 Environmental Health and Safety ............................ 19
3.21 Product and Warranty Claims ................................ 20
3.22 Disclosure ................................................. 20
3.23 Customers .................................................. 20
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASERS ..................... 20
4.1 Corporate Organization and Power ........................... 20
4.2 Shares Fully Paid and Nonassessable; No Liens .............. 20
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TABLE OF CONTENTS
(continued)
Page
4.3 Authorization; No Breach ................................... 21
4.4 No Violation ............................................... 21
4.5 Litigation ................................................. 22
4.6 Issuance of Holdings Stock ................................. 22
4.7 Brokerage .................................................. 22
4.8 Governmental Consent, etc .................................. 22
4.9 SEC Filings; Financial Statements .......................... 22
4.10 Purchasers Employee Benefits ............................... 23
4.11 Disclosure ................................................. 23
ARTICLE 5 CLOSING TRANSACTIONS ............................................. 23
5.1 The Closing ................................................ 23
5.2 Action to Be Taken at the Closing .......................... 23
5.3 Closing Documents .......................................... 23
5.4 Nonassignment .............................................. 25
ARTICLE 6 INDEMNIFICATION .................................................. 26
6.1 Indemnification by Stockholders ............................ 26
6.2 Indemnification by Purchasers .............................. 26
6.3 Method of Asserting Claims ................................. 26
6.4 Limitation of Liability .................................... 28
6.5 Contingent Consideration Amount ............................ 28
ARTICLE 7 TERMINATION ...................................................... 28
7.1 Termination ................................................ 28
7.2 Effect of Termination ...................................... 29
7.3 Effect of Closing .......................................... 29
ARTICLE 8 ADDITIONAL AGREEMENTS ............................................ 29
8.1 Survival ................................................... 29
8.2 Mutual Assistance .......................................... 29
8.3 Press Release and Announcements ............................ 30
8.4 Expenses ................................................... 30
8.5 Further Assurances ......................................... 30
8.6 Transition Assistance ...................................... 30
8.7 Confidentiality ............................................ 30
8.8 Non-Compete; Non-Solicitation .............................. 31
8.9 Employees of Company ....................................... 32
ARTICLE 9 MISCELLANEOUS .................................................... 32
9.1 Amendment and Waiver ....................................... 32
9.2 Notices .................................................... 32
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TABLE OF CONTENTS
(continued)
Page
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9.3 Assignment ................................................. 33
9.4 Severability ............................................... 33
9.5 No Third Party Beneficiaries ............................... 34
9.6 No Strict Construction ..................................... 34
9.7 Captions ................................................... 34
9.8 Complete Agreement ......................................... 34
9.9 Counterparts ............................................... 34
9.10 Governing Law .............................................. 34
9.11 Tax Consequences ........................................... 34
9.12 Remedies Cumulative ........................................ 34
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EXHIBITS
Exhibit A -- Deferred Compensation Plan
DISCLOSURE SCHEDULES
Schedule 1.2 -- Allocation of Purchase Price Schedule
Schedule 1.3(a) -- Tangible Property Schedule
Schedule 1.3(e) -- Patent, Copyright Trademark Schedule
Schedule 1.3(h) -- Customer Information Schedule
Schedule 1.4 -- Excluded Assets Schedule
Schedule 1.5 -- Lease Build-Out Schedule
Schedule 2.1 -- Consideration Allocation Schedule
Schedule 3.1 -- Qualifications Schedule
Schedule 3.5 -- Liabilities Schedule
Schedule 3.7 -- Developments Schedule
Schedule 3.8(d) -- Liens Schedule
Schedule 3.9 -- Tax Matters Schedule
Schedule 3.10(a) -- Contracts Schedule
Schedule 3.10(d) -- Customer Contracts Schedule
Schedule 3.11 -- Proprietary Rights Schedule
Schedule 3.12 -- Litigation Schedule
Schedule 3.14 -- Consents Schedule
Schedule 3.15 -- Employees Schedule
Schedule 3.16 -- Employee Benefits Schedule
Schedule 3.17 -- Insurance Schedule
Schedule 3.18 -- Affiliated Transactions Schedule
Schedule 3.19 -- Compliance Schedule
Schedule 3.22 -- Claims Schedule
Schedule 3.23 -- Customers Schedule
Schedule 4.5 -- Purchasers Litigation Schedule
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
June 21, 2000 by and among XXXXX/XXXXXX HOLDINGS, INC., a Delaware corporation
("Holdings"), XXXXX/XXXXXX, INC., a Delaware corporation ("CBI") (CBI and
Holdings shall be referred to individually as a "Purchaser" and together, the
"Purchasers"), XXXXX XXXXX & PARTNERS, INC., a Delaware corporation (the
"Company"), and XXXXX XXXXX, XXXXX X. XXXXXX, XXXXXX X. XXXX, XXXXX X. XXXXXXX,
XXXXXX X. XXXXXXXX and XXXXX X. XXXXXXXX (each individually, a "Stockholder" and
collectively, the "Stockholders").
WITNESSETH
WHEREAS, the Company is engaged in the business of executive
compensation consulting (the "Business"); and
WHEREAS, on the terms and subject to the conditions of this Agreement,
Purchasers desire to acquire from Stockholders, and Stockholders desire to sell
to Purchasers, all of the outstanding shares of the Company (the "Shares").
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Purchase and Sale of Shares. Subject to the terms and conditions of
this Agreement and in consideration of the obligations of Purchasers herein
provided, the Stockholders hereby agree to sell, convey, assign and deliver to
Purchasers, and Purchasers hereby agree to purchase from the Stockholders, at
the closing provided for herein (the "Closing"), all of the Shares in accordance
with the terms and conditions of this Agreement, free and clear of any and all
liens, security interests, mortgages, charges, restrictions, adverse claims,
encumbrances and rights of other persons of every nature and description
whatsoever.
1.2 Section 338(h)(10) Election. Purchasers and the Stockholders shall
file an election pursuant to Section 338(h) (10) of the Internal Revenue Code to
treat the purchase of the Shares as an asset purchase for federal income tax
purposes. In accordance therewith, on the Closing Date (as defined in
Section 8.1),the Company will be comprised of only those assets (the "Purchased
Assets") and those liabilities (the "Assumed Liabilities") as set forth in
Sections 1.3 and 1.5, respectively, of this Agreement, and all other assets
and liabilities of the Company shall have been earlier distributed or discharged
by the Stockholders, as the case may be. The aggregate deemed sale price under
Code Section 338 shall be allocated among the assets deemed to have been
purchased in accordance with Schedule 1.2 hereto. The parties shall report the
deemed sale consistently with such allocation for all purposes, including
without limitation, for purposes of filing all Returns (as defined in Section
3.9 hereto). Each party will promptly notify the other of any proceeding
relating to the allocation described in this Section l.2 and will keep the other
advised of the progress thereof.
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1.3 Assets Upon Sale. On the Closing Date, the assets of the Company
shall consist of those certain properties, assets, rights and interests, whether
real or personal, tangible or intangible, wherever located and by whomever
possessed, related to or used in, or otherwise associated with, the Business as
set forth below, and all other assets of the Company (including all Excluded
Assets as defined in Section 1.2 hereof) shall have been previously
distributed, transferred, assigned or otherwise conveyed from the Company:
(a) any and all, including all rights and interests in, office
equipment and other machinery and equipment, furniture, office furnishings,
artwork and supplies and other tangible personal property, whether owned or
leased (including, without limitation, items which have been fully depreciated
or expensed) located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx ("000 Park"), as set
forth on the "Tangible Property Schedule" attached hereto as Schedule 1.3(a);
(b) all assets, subject to all liabilities, deposited with
Fidelity Investments pursuant to the Company's deferred compensation plan, the
participants and relevant information related thereto is attached hereto as
Exhibit A (the "Deferred Compensation Plan");
(c) all rights and interests (and related liabilities) with
respect to the Company's lease regarding 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
including, without limitation, land, buildings, improvements and that certain
security deposit of Four Hundred Seventy-Five Thousand Six Hundred Twenty-Five
Dollars ($475,625) pursuant to that certain Lease Agreement dated as of
November 30, 1999 between Park Avenue Properties Associates LLC and the Company
(the "445 Lease Agreement");
(d) all supplies and work-in-process (including allocable
disbursements and out-of-pocket expenses relating thereto) as of the Closing
Date;
(e) all intangible assets and intellectual property
(including, without limitation, intellectual property, registered and
unregistered trademarks, service marks and trade names, trade dress and other
names, marks and slogans, including the name "Xxxxx Xxxxx" and "Xxxxx Xxxxx &
Partners, Inc." and all variations and permutations thereof, and all rights
related thereto for use in providing executive compensation consulting
services), all publishing and distribution rights, and all associated goodwill;
all contract rights; all statutory, common law and registered copyrights; all
patents, inventions, know-how, trade secrets and confidential information; all
registration applications for any of the foregoing; all interests in and to
telephone numbers and all listings pertaining to the Company in all telephone
books and other directories; together with all rights to use all of the
foregoing forever and all other rights in, to, and under the foregoing in all
countries, including, without limitation, such items as set forth on the
"Patent, Copyright and Trademarks Schedule" attached hereto as Schedule 1.3(e);
(f) all discoveries, improvements, processes, data,
confidential information, specifications and ideas, whether patentable or not,
all licenses and other similar agreements, and all drawings, records, books or
other indicia, however evidenced, of the foregoing; all rights in and
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to any products or other intellectual property rights under research or
development prior to or on the Closing Date related to the Business;
(g) the right to receive all mail and other communications
addressed to the Company, including, without limitation, mail and communications
from clients, suppliers, distributors, agents and others, but specifically
excluding accounts receivable payments for accounts receivable from clients
serviced prior to the Closing Date; provided that Purchasers agree to forward
any mail or communications received by Purchasers that is of a personal nature
to the applicable Stockholder, officer or employee of the Company promptly after
Purchasers' receipt thereof;
(h) all lists, records and files pertaining to clients served
over the past three (3) years, as referenced in the "Customer Information
Schedule" attached hereto as Schedule 1.3(h);
(i) all lists and records pertaining to suppliers,
distributors, personnel, customers and agents and all other books, ledgers,
files, documents, correspondence, business analysis, surveys, proposals, benefit
statements, reports and records of every kind and nature;
(j) all business and marketing plans and proposals and pricing
and cost information;
(k) all computer software and systems, including licenses
related thereto, proprietary or otherwise, including related source codes, data
and documentation;
(1) all creative materials (including, without limitation,
photographs, films, art work, color separations and the like) advertising and
promotional materials and all other printed or written materials;
(m) the minute books, ownership records, certificate of
incorporation, by-laws and corporate seal of the Company, together with annual
and other corporate reports filed with the State of Delaware and other states in
which the Company is qualified to do business, other documents and
correspondence that relate to the Company's corporate organization and
maintenance thereof; provided that, the Stockholders shall retain possession of,
or Purchasers shall provide Stockholders with access to, books, records and
other information necessary to prepare post-Closing taxes (including preparation
of returns and certain other matters and other post-Closing tax matters of any
kind);
(n) all goodwill as a going concern and all other intangible
property;
(o) the rights to that certain landlord workletter pursuant to
the 445 Lease Agreement; and
(p) cash in an amount equal to $625,000, representing accrued
bonuses and accrued vacation for the Company's employees for the period from
January 1, 2000 through the Closing Date.
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For purposes of the Agreement, the term "Purchased Assets" shall be limited to
properties, assets and rights which the Company shall own on the Closing Date.
Purchasers shall replace or cause to be replaced, so that the Company may
distribute to Shareholders prior to Closing, any security deposits and related
collateral, if any, used in the Business immediately prior to the Closing Date
but not included among the Purchased Assets (except for the letter of credit
held by the landlord pursuant to the 445 Lease Agreement which the Purchasers
agree to use their best efforts to have released promptly after the Closing).
1.4 Excluded Assets. Notwithstanding the foregoing, the following
assets of the Company (the "Excluded Assets") are expressly excluded from the
Purchased Assets on the Closing Date and shall have been previously distributed,
transferred, assigned or otherwise conveyed from the Company on or prior to the
Closing Date:
(a) all cash, cash equivalents and marketable securities as of
the Closing Date;
(b) all accounts and notes receivable as of the Closing Date;
(c) all prepayments, prepaid expenses (including, without
limitation, prepaid insurance premiums), rights to refunds, insurance
condemnation and claims proceeds, deferred charges, advance payments, deposits
and security deposits as of the Closing Date;
(d) any and all leasehold interests for real property located
at 300 Park; and
(e) those certain assets listed on the "Excluded Assets
Schedule" attached hereto as Schedule 1.4.
1.5 Liabilities Upon Sale. Subject to the conditions specified in this
Agreement, on the Closing Date, the Company shall have paid, performed,
satisfied or otherwise discharged in full all liabilities and obligations of the
Company other than the following liabilities and obligations which are important
to the operation of the Business as currently conducted (the "Assumed
Liabilities"):
(a) the obligations under the 445 Lease Agreement, including,
without limitation, the following:
(i) new office construction and outfitting cost in an
amount not in excess of One Million Nine Hundred Thousand Dollars
($1,900,000), which amount shall not be reduced by any landlord work
letter, a detailed description of which is attached hereto as
Schedule 1.5;
(ii) a security deposit in an amount not in excess of
Four Hundred Seventy-Five Thousand Six Hundred Twenty-Five Dollars
($475,625); and
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(iii) prepaid rent not in excess of Twenty-Four
Thousand Dollars ($24,000);
(b) the liabilities and obligations under the Deferred
Compensation Plan;
(c) Company's obligations and liabilities under the contracts
listed on the Contracts Schedule (Schedule 3.10(a) and on the Customer Contract
Schedule (Schedule 3.10(d) for any activity following the Closing Date, but
not including any obligation or liability accruing with respect thereto on or
prior to the Closing Date;
(d) Company's accrued bonus payable in the amount of
$3,533,163.26 to the employees;
(e) Company's accrued payroll tax as payable in the amount of
$2,647,857.52;
(f) Company's accrued legal fees payable in the amount of
$130,000; and
(g) the Company's obligation to pay accrued bonuses and
accrued vacation during the period from January 1, 2000 through the Closing
Date; provided, however, that no vacation accrual shall exceed six (6) weeks of
vacation.
1.6 Excluded Liabilities. Notwithstanding anything to the contrary
contained in this Agreement, on the Closing Date the Company shall have
previously indefeasibly paid, performed, satisfied, transferred for value or
otherwise discharged in full all known and quantifiable liabilities and
obligations of the Company other than the Assumed Liabilities (the "Excluded
Liabilities").
ARTICLE 2
CONSIDERATION FOR THE SHARES
2.1 Purchase Price. Subject to the terms and conditions of this
Agreement, in reliance on the representations and warranties of the
Stockholders, and in consideration of the obligations of the Stockholders
herein, the Purchasers will pay aggregate consideration for the Shares (the
"Purchase Price") to Stockholders as follows:
(a) on the Closing Date, by wire transfer of immediately
available funds to such account or accounts as shall have been designated in
writing by the Company, cash in an amount equal to (i) Twenty-Two Million One
Hundred Fifty-Four Thousand One Hundred Eighty-One Dollars ($22,154,181) as
detailed on Schedule 2.1 less (ii) One Hundred Thousand Dollars ($100,000) (the
"Deposit") made by Purchasers upon earlier entry into a letter of intent among
the Company, the Purchasers and the Stockholders which amount shall be wired to
the Stockholders as directed pursuant to that certain letter of direction;
(b) on the Closing Date, by the issuance of Two Hundred Fifty
Thousand (250,000) shares of Holdings's common stock ("Holdings Stock") to
Stockholders in accordance
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with Schedule 2.1 (the "Stock Consideration") valued at the closing price per
share of Holdings Stock, as published by THE WALL STREET JOURNAL, on the day
before the Closing Date; and
(c) on March 11, 2002, by wire transfer of immediately
available funds to such account or accounts as shall have been designated in
writing by the Stockholders, cash in an amount equal .to Two Million Dollars
($2,000,000) (the "Contingent Consideration"); provided that the provisions of
Section 2.2 hereof are satisfied in full.
2.2 Contingent Consideration Payment.
(a) Payment of the Contingent Consideration is contingent on
the achievement by the Company (or the Division (as hereinafter defined)) of
EBITA (as hereinafter defined) for the period from the Closing Date through
December 31, 2001 (the "Contingency Period") in an amount equal to or greater
than Seven Million Two Hundred Sixty Thousand Dollars ($7,260,000) (the
"EBITA Objective").
For purposes of this Section 2.2(a), "EBITA" means the
aggregate amount of all and every kind of revenue generated by the Company
during the Contingency Period, including, but not limited to, service fees,
rental income, out-of-pocket xxxxxxxx, consulting fees and professional fees
earned for work performed after the Closing less the sum of expenses during the
Contingency Period of the Business of a nature historically recognized as an
expense by the Company in the operation of the Business. For purposes hereof,
expenses of the Business during the Contingency Period shall specifically
include depreciation or write-offs of improvements to existing leases (other
than with respect to 000 Xxxx Xxxxxx) and, as an element of employee
compensation expense, the salaries of the Stockholders, but shall specifically
exclude (i.e., EBITA shall be determined without any deduction for)
amortization, interest or income tax expenses, corporate overhead of Purchasers,
payments or expenses of any kind relating to periods prior to Closing (including
previously accrued bonuses), intercompany expenses and any expenses related to
the transactions contemplated hereby. EBITA shall be determined, consistent with
historical revenue and expense recognition policies of the Company to the extent
such are in accordance and consistent with generally accepted accounting
principles of the United States ("GAAP"), by the Stockholders in their
capacities as managers of the Xxxxx Xxxxx division of Purchasers (the
"Division"), with the assistance of the Company's prior auditors at the expense
of the Company (which expenses as all other expenses relating to the Contingency
Determination (as hereinafter defined), shall be excluded from the EBITA
calculations) and submitted to Purchasers for approval. For purposes of
determining the Contingent Consideration, among other things, the Stockholders
shall have the authority to manage the operations of the Business of the
Division for thirty-six (36) months from the Closing Date.
(b) Within seventy-five (75) days of the end of the
Contingency Period, Stockholders shall prepare, in their capacity as managers of
the Division, and provide to Purchasers, a calculation of Division EBITA,
together with a statement of Stockholders that it was prepared in accordance
with this Agreement (the "Contingency Determination").
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(i) If Purchasers do not agree that the Contingency
Determination correctly states EBITA for the Contingency Period,
Purchasers shall promptly (but not later than twenty (20) days after
the delivery of such Contingency Determination) give written notice to
Stockholders of any exceptions thereto (in reasonable detail describing
the nature of the disagreement asserted); provided, however, that in no
event shall any exceptions reflect EBITA for any period less than the
EBITA included in the financial information filed with the SEC pursuant
to Section 13 of the Securities Exchange Act of 1934 by the Purchasers.
The Purchasers hereby agree to furnish such EBITA information to the
Stockholders promptly after each such filing. If Stockholders and
Purchasers reconcile their differences, the Contingency Determination
shall be adjusted accordingly and shall thereupon become final and
conclusive upon all of the parties hereto. If Stockholders and
Purchasers are unable to reconcile their differences in writing within
twenty (20) days after written notice of exceptions is delivered by
Purchasers, the items in dispute shall be submitted to the Chicago
office of a mutually acceptable accounting firm selected from among the
five largest accounting firms in the United States in terms of gross
revenue for final determination (the "Independent Auditors"). If
Stockholders and Purchasers are unable to mutually agree on such
accounting firm within five (5) days after expiration of the twenty
(20) day period, the Chicago office of a "big-five" accounting firm,
which accounting firm has not within the previous two (2) years
performed services for Purchasers or the Stockholders or any affiliate,
shall be selected after elimination of one firm by the Stockholders and
one firm by Purchasers. The determination of the accounting firm so
selected shall be set forth in writing and shall be conclusive and
binding upon the parties. The Contingency Determination shall be deemed
adjusted in accordance with the determination of the Independent
Auditors and shall become binding, final and conclusive upon all of the
parties hereto. The Independent Auditors shall consider only the items
in dispute and shall be instructed to act within thirty (30) days (or
such longer period as Stockholders and Purchasers may agree) to resolve
all items in dispute. If Purchasers do not give notice of any exception
within twenty (20) days after the delivery of the Contingency
Determination or if Purchasers, in their discretion, give written
notification of acceptance of the Contingency Determination prior to
the end of such twenty (20) day period, such Contingency Determination
shall thereupon become binding, final and conclusive upon all the
parties hereto.
(ii) If the Independent Auditors shall determine that
the amount of the Division EBITA during the Contingency Period is equal
to or greater than the EBITA Objective, then the Purchasers shall pay
the fees and expenses of the Independent Auditors. If the Independent
Auditors shall determine that the amount of the Division EBITA during
the Contingency Period is less than the EBITA Objective, then the
Stockholders shall pay the fees and expenses of the Independent
Auditors.
2.3 Holdings Stock. Holdings shall issue the Holdings Stock (as
hereinafter defined) to the Stockholders subject to the conditions and
restrictions set forth in this Section 2.3 and otherwise provided for herein.
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(a) During the period beginning on the Closing Date and ending
on the one (1) year anniversary of the Closing Date consistent with Rule 144
(the "Restriction Period"), Stockholders or their assignees shall not sell,
assign, exchange, transfer, distribute or otherwise dispose of (in each case, a
"transfer") any shares of Holdings Stock received by them hereunder, without the
prior written consent of Purchasers, which shall not be unreasonably withheld.
Following the Restriction Period, Stockholders may transfer their respective
shares of Holdings Stock so long as such transfer is in accordance with the
Securities Act of 1933, as amended. Purchasers shall file with the Securities
Exchange Commission all reports necessary to make the provisions of Rule 144
promulgated in connection with the Securities Exchange Act of 1933 available to
the Stockholders. The certificates evidencing the Holdings Stock delivered to
Stockholders pursuant to this Agreement shall bear a legend substantially in the
form set forth below:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
ASSIGNED (OTHER THAN IN CONNECTION WITH A PLEDGE), EXCHANGED,
TRANSFERRED, DISTRIBUTED, CHANGED OR OTHERWISE DISPOSED OF,
AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED SALE, ASSIGNMENT (OTHER THAN IN CONNECTION WITH A
PLEDGE), EXCHANGE, TRANSFER, DISTRIBUTION, OR OTHER
DISPOSITION, OTHER THAN IN ACCORDANCE WITH SECTION 2.3 OF THAT
CERTAIN STOCK PURCHASE AGREEMENT DATED AS OF JUNE 21, 2000, BY
AND AMONG ISSUER, XXXXX/XXXXXX, INC., XXXXX XXXXX & PARTNERS,
INC., XXXXX XXXXX, XXXXX X. XXXXXX, XXXXXX X. XXXX, XXXXX X.
XXXXXXX, XXXXXX X. XXXXXXXX AND XXXXX X. XXXXXXXX.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION (COLLECTIVELY, THE "SECURITIES
LAWS") AND MAY NOT BE SOLD, DISPOSED OF OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION, EXCEPT IN
ACCORDANCE WITH AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF ANY APPLICABLE SECURITIES LAWS PROVIDED THAT
XXXXX/XXXXXX HOLDINGS, INC. SHALL HAVE RECEIVED AN OPINION OF
COUNSEL ACCEPTABLE TO IT CONFIRMING THAT THE REQUIREMENTS OF
SUCH EXEMPTION HAVE BEEN SATISFIED.
The Purchasers agree that after two (2) years from the date hereof, at
the request of a Stockholder, Holdings shall effect the issuance of replacement
certificates representing such shares
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of Holdings Stock without the legends above so long as the Stockholder is not an
Affiliate (as such term is defined in Rule 144) of Holdings at the time of such
request.
(b) No Stockholder shall transfer any shares of the Holdings
Stock at any time if such transfer would constitute a violation of any federal
or state securities or "blue sky" laws, rules or regulations (collectively,
"Securities Laws"), or a breach of the conditions to any exemption from
registration of the Holdings Stock under any such Securities Law, or a breach of
any undertaking or agreement of Stockholders entered into with Purchasers
pursuant to such Securities Laws or in connection with obtaining an exemption
thereunder. Purchasers agree to provide the Stockholders with revised stock
certificates reflecting the Holdings Stock removing the first legend listed
above following the date when the restrictions on transferability in the first
sentence of Section.2.3.(a) have expired.
(c) For purposes of this Agreement (and the restrictions set
forth in this Section 2.3), the term "Holdings Stock" shall mean and include (i)
the shares of Holdings issued, granted, conveyed and delivered to Stockholders
pursuant to Section 2.1 hereof, and (ii) any and all other additional shares of
capital stock of Holdings issued or delivered by Holdings with respect to the
shares of Holdings Stock described in clause (i) hereof, including, without
limitation, any shares of capital stock of Holdings issued or delivered with
respect to such shares as a result of any stock split, stock dividend, stock
distribution, recapitalization or similar transaction.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
As an inducement to Purchasers to enter into this Agreement, the
Company and the Stockholders hereby, jointly and severally, represent and
warrant to Purchasers as of the Closing Date that:
3.1 Organization and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware. The
Company is qualified to do business as a foreign corporation and is in good
standing in the jurisdictions specified on the "Qualifications Schedule"
attached hereto as Schedule 3.1, which are all jurisdictions in which ownership
of its properties or the conduct of its business requires it to be so qualified,
except where the failure to be so qualified would not have a material adverse
effect on the financial condition of the Company ("Material Adverse Effect").
The Company has all requisite corporate power and authority and all material
licenses, permits and other authorizations necessary or adequate to own and
operate its properties and to carry on its business as now conducted as they
relate to the Business. The copies of the by-laws and certificate of
incorporation of the Company which have been previously furnished to Purchasers
reflect all amendments made thereto at any time prior to the date of this
Agreement and are correct and complete in all material respects.
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3.2 Subsidiaries. Neither the Company nor any Stockholder owns any
stock, partnership interest, joint venture interest or other security or
interest in any other corporation, organization or entity related to the
Business.
3.3 Authorization; No Breach. The execution, delivery and performance
of this Agreement and the other agreements contemplated hereby and the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Company and each Stockholder. No other corporate act or
proceeding on the part of the Company, its Board of Directors or the
Stockholders is necessary to authorize the execution, delivery or performance of
this Agreement, any other agreement contemplated hereby or the consummation of
the transactions contemplated hereby or thereby. This Agreement has been duly
executed and delivered by the Company and the Stockholders and this Agreement
constitutes and the other agreements contemplated hereby upon execution and
delivery by the Company and the Stockholders shall each constitute, a valid and
binding obligation of the Company and the Stockholders, enforceable in
accordance with their terms. The execution, delivery and performance of this
Agreement and the other agreements contemplated hereby by the Company and the
Stockholders and the consummation of the transactions contemplated hereby and
thereby do not and shall not (a) conflict with or result in any breach of any of
the provisions of; (b) constitute a default under, result in a violation of, or
cause the acceleration of any obligation under; (c) result in the creation of
any lien, security interest, charge or encumbrance upon any of the Shares or the
Purchased Assets; or (d) require any authorization, consent, approval, exemption
or other action by or notice to any court or other governmental body under the
provisions of the Company's certificate of incorporation, by-laws, any material
indenture, mortgage, lease, loan agreement or other agreement or instrument to
which the Company or the Stockholders are bound or affected or any law, statute,
rule, regulation, judgment, order or decree to which the Company or the
Stockholders are subject or by which any of the Shares or the Purchased Assets
are bound.
3.4 Financial Statements. The Company has furnished Purchasers with
copies of (a) its audited balance sheets as of December 31, 1999 (the "Latest
Balance Sheet Date") and December 31, 1998 and the related audited financial
statements for the twelve (12) month period then ended, and (b) unaudited
financial statements for the Company as at and for the three (3) month period
ended March 31, 2000. Each of the foregoing financial statements has been based
upon the information contained in the Company's books and records (which are
accurate and complete in all material respects) and fairly presents the
financial condition and results of operations of the Company as of the times and
for the periods referred to therein, and such financial statements contain
proper accruals and have been prepared using the accrual basis of accounting
consistently applied throughout the periods indicated in accordance with GAAP,
except that such unaudited financial statements do not contain footnote
disclosures and except for normal year-end adjustments.
3.5 Absence of Undisclosed Liabilities. Except as set forth in the
"Liabilities Schedule" attached hereto as Schedule 3.5, as of the Closing,
the Company shall have no liabilities or obligations, whether accrued, absolute,
contingent, unliquidated or otherwise, whether or not known to the Company or
any Stockholder, whether due or to become due, arising out of or related to
transactions entered into at or prior to the Closing, or out of any action or
inaction by the Company, any Stockholder or any employee, agent, licensee or
contractor of the Company at or prior to the
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Closing, or out of any state of facts existing at or prior to the Closing,
regardless of when any such liability or obligation is asserted, including,
without limitation, taxes with respect to or based upon transactions or events
occurring on or before the Closing, liabilities and obligations reflected on the
Company's Latest Balance Sheet, and liabilities and obligations which have
arisen after the date of the Company's Latest Balance Sheet in the ordinary
course of business, except (a) the Assumed Liabilities, and (b) liabilities and
obligations with respect to post Closing Date actions taken by Purchasers or
related to business of the Purchasers under agreements, contracts, leases or
commitments described on the Contracts Schedule and the Customer Contracts
Schedule (as such terms are defined in Section 3.10 hereof) or under
agreements, leases, contracts and commitments which are not required pursuant to
this Agreement to be disclosed thereon (but not liabilities for breaches
thereof).
3.6 No Material Adverse Changes. Except as set forth in the
Developments Schedule (as defined in Section 3.7), since the date of the Latest
Balance Sheet, there has been no material adverse change in the financial
condition, operating results, assets, operations, employee relations or customer
relations of the Company or the Business.
3.7 Absence of Certain Developments. Except as set forth in the
"Developments Schedule" attached hereto as Schedule 3.7, since the date of the
Latest Balance Sheet dated as of December 31, 1999, the Company has not:
(a) mortgaged, pledged or subjected to any lien, charge or any
other encumbrance, any portion of the Purchased Assets;
(b) sold, assigned or transferred, or agreed to do so, any of
the Purchased Assets, or canceled without fair consideration any material debts
or claims owing to or held by it other than in the ordinary course of business;
(c) sold, assigned, transferred, abandoned or permitted to
lapse any patents, trademarks, trade names, copyrights, trade secrets or other
intangible assets, or disclosed any material proprietary confidential
information to any person;
(d) made or granted, or agreed to make or grant, any bonus or
any wage or salary increase to any employee or group of employees or made or
granted any increase in the Deferred Compensation Plan or any other employee
benefit plan or arrangement (except, in each case, in accordance with past
custom and practice) or adopted any new employee benefit plan or arrangement;
(e) made, or agreed to make, any capital expenditures or
commitments therefor except relating to the 445 Lease Agreement as permitted
herein;
(f) made, or agreed to make, any loans or advances to, or
guaranties for the benefit of, any persons;
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(g) suffered any extraordinary losses or waived any rights of
material value, whether or not in the ordinary course of business or consistent
with past practice;
(h) entered into, or agreed to enter into, any other material
transaction other than in the ordinary course of business;
(i) made, or agreed to make, any charitable contributions or
pledges in excess of $1,000;
(j) made any purchase commitment in excess of the normal,
ordinary and usual requirements of its business or at any price in excess of the
then current market price or upon terms and conditions more onerous than those
usual and customary in the industry, or made any change in its selling, pricing,
advertising or personnel practice inconsistent with its prior practice and
prudent business practices prevailing in the industry; or
(k) suffered any material damage, destruction or casualty loss
to the Purchased Assets, whether or not covered by insurance.
3.8 Title and Condition of Properties.
(a) The Company owns no real estate.
(b) To the knowledge of the Stockholders, the 445 Lease
Agreement is in full force and effect, and the Company holds a valid and
existing leasehold interest under such lease for the term set forth in the 445
Lease Agreement. The 445 Lease Agreement constitutes the only lease under which
Purchasers are acquiring from the Company a leasehold interest in real estate.
The Company has delivered to Purchasers complete and accurate copies of the 445
Lease Agreement, and such lease has not been modified in any respect, except to
the extent that such modifications are disclosed by the copies delivered to
Purchasers. The Company is not in default under such lease, and no other party
to such lease has the right to terminate, accelerate performance under or
otherwise modify such lease, including upon the giving of notice or the passage
of time. To the best of the Company's knowledge, no third party to such lease is
in default under such lease. No real estate other than the premises demised by
the 445 Lease Agreement is necessary for the conduct of the Business
(c) All furniture and equipment of the Company located at 300
Park is included among the Purchased Assets, and the Company agrees to take all
steps necessary to deliver such furniture and equipment to the premises leased
pursuant to the 445 Lease Agreement promptly upon occupancy thereof by the
Company.
(d) Except as set forth in the "Liens Schedule" attached
hereto as Schedule 3.8(d), the Company owns good and marketable title, free and
clear of all liens, charges, security interests, encumbrances, encroachments and
claims of others, to all of the Purchased Assets, and at the Closing, the
Company shall have good and marketable title to all of the personal property
included within the Purchased Assets, free and clear of all liens, security
interests, charges, encumbrances and
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claims of others. At the Closing, the Stockholders shall sell, assign, transfer
and convey to Purchasers the Shares, free and clear of all liens, security
interests, charges, encumbrances and claims of others.
(e) The Company is not in violation of any applicable zoning,
building, fire or other ordinance or other law, regulation or requirement
relating to the operation of the premises leased pursuant to the 445 Lease
Agreement, including, without limitation, applicable environmental protection
and occupational health and safety laws and regulations. Within the three (3)
years prior to the date of this Agreement, the Company has received no notice of
any violation or any condemnation proceeding with respect to any properties
owned, used or leased by the Company.
(f) The Purchased Assets comprise all assets and services
required for the continued conduct of the Business as now being conducted by the
Company in the ordinary course. The Purchased Assets are in all material
respects adequate for the purposes for which such assets are currently used or
are held for use.
3.9 Tax Matters.
(a) Except as set forth on the "Tax Matters Schedule" attached
hereto as Schedule 3.9, the Company has duly filed all federal, foreign, state
and local tax information and tax returns of any and every nature and
description (the "Returns") required to be filed by it or otherwise with respect
to the Company's properties, assets, income, franchise, leases, licenses, sales
or use (all such returns being accurate and complete in all material respects)
and has duly accrued, paid or made provision for the payment of all taxes
(including, without limitation, any interest, penalty or additions to tax
thereto) (the "Taxes") shown to be due on said Returns, other than Taxes which
are being contested in good faith and by appropriate proceedings. The Company
has properly accrued on the Latest Balance Sheet in accordance with GAAP a
provision for the payment of all Taxes due or claimed to be due or for which the
Company is otherwise liable. The "Tax Matters Schedule" sets forth any Tax with
respect to which any federal, foreign, state, local or other taxing authority
has conducted an examination or is in the process of examining and the tax
period to which such examination relates. Except as set forth on the "Tax
Matters Schedule", neither the IRS nor any foreign, state, local or other taxing
authority is in the process of examining any federal, foreign, state, local or
other Return of the Company. To the knowledge of the Stockholders, there are no
disputes pending or claims asserted in writing upon the Company. Except for any
waiver or agreement which has terminated or expired, the Company has not given
any waiver or made any other agreement extending the statutory period of
limitation applicable to any Return or agreed to the extension of any other
period of time with respect to a Tax assessment or deficiency. The Company has
in effect no power of attorney or authorization to anyone to represent it with
respect to any Taxes. To the knowledge of the Stockholders, no claim has ever
been made by an authority in a jurisdiction where the Company does not file a
Return that the Company is or may be subject to taxation by that jurisdiction.
The Company has not filed any consolidated federal income tax return with an
"affiliated group" (within the meaning of Code Section 1504), where the Company
was not the common parent of the group. The Company is not nor has it been, a
party to any tax allocation agreement or arrangement pursuant to which it has
any contingent or outstanding liability to any Person for any Tax. The Company
has no liability for Taxes as a transferee of, or successor to, any
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Person. The Company has not filed a consent under Code Section 341(f). The
Company has provided to Purchasers or their representatives complete and correct
copies of its federal, state and local income tax Returns filed on or prior to
the date hereof and all examination reports, if any, relating to the audit of
such Returns by the IRS or other taxing authority for each taxable year
beginning on or after 1996. Except as disclosed on the "Tax Matters Schedule",
to the knowledge of the Stockholders, there exists no proposed assessment
against the Company or notice, whether formal or informal, of any deficiency or
claim for additional Tax.
(b) All Taxes required to be withheld from employees,
independent contractors, stockholders, or creditors of the Company, including
but not limited to, income taxes, back-up withholding taxes, social security and
unemployment insurance taxes or taxes collected from customers or others,
including, but not limited to, sales, use or other taxes, have been withheld or
collected and paid, when due, to the appropriate governmental authority.
(c) The Company is not a party to any contract, agreement or
other arrangement that could result in the payment of any amount that would not
be deductible by reason of Code Section 280G.
3.10 Contracts and Commitments.
(a) Except as set forth in Section 3.16 or in the "Contracts
Schedule" attached hereto as Schedule 3.10(a) or in the "Customer Contracts
Schedule" attached hereto as Schedule 3.10(d), the Company is not a
party to any:
(i) bonus, pension, profit sharing, retirement or deferred
compensation plan or stock purchase, stock option, hospitalization
insurance or similar plan or practice, whether formal or informal, or
severance agreements or arrangements;
(ii) written contract for the employment of any officer,
individual employee or other person on a full-time, part-time or
consulting basis;
(iii) mortgaging, pledging or otherwise placing a lien on
any of the Purchased Assets;
(iv) guarantee of any obligation for borrowed money or
otherwise, other than endorsements made for collection in the ordinary
course of business;
(v) agreement or commitment with respect to the lending or
investing of funds to or in other persons or entities;
(vi) license or royalty agreement related to the Business;
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(vii) lease or agreement related to the Business under
which it is lessee of or holds or operates any personal property owned
by any other party;
(viii) lease or agreement related to the Business under
which it is lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by it;
(ix) contract or group of related contracts related to the
Business with the same party for the purchase or sale of products or
services other than the Customer Contracts (as defined in
Section 3.10(d) hereof);
(x) other contract related to the Business with any party
continuing over a period of more than six (6) months from the date or
dates thereof, not terminable by it on thirty (30) days' or less notice
without penalties;
(xi) contract which prohibits it from freely engaging in
business anywhere in the world; or
(xii) contract relating to the distribution of its
products as it relates to the Business.
(b) Except as specifically disclosed in the Contracts Schedule
or the Customer Contracts Schedule, (i) no contract or commitment related to the
Business has been breached in any material respect by the Company or, to the
Stockholders' knowledge, canceled by the other party; (ii) the Company has in
all material respects performed all the obligations required to be performed by
it to the date of this Agreement and is not in receipt of any claim of default
under any material lease, contract, commitment or other agreement related to the
Business to which it is a party; and (iii) no event has occurred which with the
passage of time or the giving of notice or both would result in a breach or
default under any material lease, contract, instrument or other agreement
related to the Business to which the Company is a party and which is related to
the Business.
(c) Purchasers have been supplied with a true and correct copy
of all written contracts which are referred to on the Contract Schedule and
Customer Contracts Schedule, together with all amendments, waivers or other
changes thereto.
(d) The Stockholders have no knowledge of any (i) pending or
threatened termination, cancellation, limitation, modification or change in any
of the Company's business relationships with any customer or group of customers
related to the Business or (ii) changes or pending changes in any business
relationships or other circumstances that could result in the loss of any
customers related to the Business after the date hereof. Each written contract,
agreement or lease with customers of the Company relating to future performance
or services by the Company in the Business existing on the date hereof is listed
on Schedule 3.10(d)("Customer Contracts"). Except as set forth in the
Customer Contract Schedule, (A) each of the Customer Contracts is valid,
enforceable and in full force and effect in accordance the terms thereof, (B)
there is no existing default or event or condition which, with notice or lapse
of time, or both, would constitute an event
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of default under any Customer Contract, (C) no Customer Contract has been
amended, modified, supplemented or otherwise altered orally, in writing or by
course of conduct, and (D) no Customer Contract requires the consent of the
customer or any other party to effect a valid transfer of ownership of the
Company without causing a default or giving rise to a right of termination
thereunder.
3.11 Patents. Copyrights and Trademarks. Set forth on the "Patent,
Copyright and Trademark Schedule" attached hereto as Schedule 1.1(e) is a list
and summary description of all patents, patent applications, trademarks, service
marks, trade names, corporate names and copyrights owned by the Company which
are related to the Business or used by the Company in the conduct of the
Business. The Company owns and possesses all right, title and interest in and to
the proprietary rights listed on the "Proprietary Rights Schedule" attached
hereto as Schedule 3.11. To the best knowledge of the Stockholders, the Company
has not received any notices of infringement, misappropriation, invalidity or
conflict from any third party with respect to such proprietary rights. To the
best knowledge of the Stockholders, the Company has not infringed,
misappropriated or otherwise conflicted with any proprietary rights of any third
parties and, to the best of the Company's or any Stockholder's knowledge, the
Company's proprietary rights have not been infringed by any third parties.
3.12 Litigation; Proceedings. Except as disclosed on the "Litigation
Schedule" attached hereto as Schedule 3.12, there are no actions, suits,
proceedings, orders or, to any Stockholders' knowledge, investigations pending
or threatened against or affecting the Company, the Purchased Assets or Assumed
Liabilities, at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. No officer, director, employee or agent of
the Company has been or is authorized to make or receive, and the Company and
each Stockholder knows of no such person making or receiving, any bribe,
kickback or other illegal payment at any time.
3.13 Brokerage. There are no claims for brokerage commissions, finders
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of the
Company or any Stockholder.
3.14 Governmental Consent, etc.
(a) No material permit, consent, approval or authorization of,
or declaration to or filing with, any governmental or regulatory authority is
required in connection with the execution, delivery or performance of this
Agreement by the Company, or the consummation by the Company of any of the
transactions contemplated hereby and thereby, except as disclosed on the
"Consents Schedule" attached hereto as Schedule 3.14.
(b) The "Consents Schedule" sets forth all governmental
approvals or third-party consents necessary for the conduct of the Business, the
absence of which would have a Material Adverse Effect. To the best knowledge of
the Stockholders, all such governmental approvals and consents have been duly
obtained and are in full force and effect, and the Company is in compliance
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with each of such governmental approvals and consents held by it with respect to
the Purchased Assets and the Business.
3.15 Employees. To the best knowledge of the Stockholders, except as
set forth on the "Employees Schedule" attached hereto as Schedule 3.15, no key
employee, nor group of the Company's employees related to the Business, has
affirmatively expressed to the Stockholders their intention to terminate
employment with the Company. The Company has complied in all material respects
with all applicable laws relating to the employment of labor and independent
contractors related to the Business, including provisions thereof relating to
wages, hours, equal opportunity, immigration, collective bargaining,
disabilities, family leave and the payment of social security and other taxes.
3.16 Employee Benefit Plans.
(a) The "Employee Benefits Schedule" attached hereto as Schedule
3.16 contains a list of each and every employee benefit plan, within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which the Company and/or any corporation, partnership or
other trade or business which is or would be a member of a controlled group of
corporations, group of trades or business under common control, or an affiliated
service group including the Company, under the provisions of Code Section
414(b), (c), (m) or (o) (each an "ERISA Affiliate") maintains, to which the
Company or any ERISA Affiliate contributes, or is obligated to contribute, or
under which any employee or former employee, officer or former officer,
director, or former director, shareholders or former shareholder of the Company
or any ERISA Affiliate (collectively, "Participants"), or any beneficiary of any
Participant, is covered or has benefit rights and pursuant to which any
liability of the Company or any ERISA Affiliate exists or is reasonably likely
to occur, and each other arrangement, program or plan pursuant to which any
benefit is or shall be provided by the Company or any ERISA Affiliate to any
Participant or any Participant's beneficiary, whether formal or informal,
including, without limitation, those providing any form of medical, health or
dental insurance, life, disability and accidental death and dismemberment
insurance, severance pay or benefits continuation, nonqualified deferred
compensation, relocation assistance, vacation pay, tuition aid or matching gifts
for charitable contributions to educational or cultural institutions
(collectively, the "Benefit Plans"). Except as set forth on the "Employee
Benefits Schedule," neither the Company nor any ERISA Affiliate maintains or has
entered into any Benefit Plan or other document, plan or agreement which
contains any change in control provisions which would cause an increase or
acceleration of benefits or benefit entitlements to Participants or their
beneficiaries, or other provisions, which would cause an increase in liability
of the Company or to Purchasers as a result of the transactions contemplated by
this Agreement or any related action thereafter. Each of such Benefit Plans that
is an employee pension benefit plan within the meaning of Section 3(2) of ERISA
that is intended to be a qualified plan under Code Section 401(a) has been
amended to comply in all material respects with current law as required and each
such plan has obtained a favorable determination letter with respect to such
amendment. Neither the Company nor any Stockholder is aware of any facts or
circumstances that might jeopardize the qualified status of any such Benefit
Plan.
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(b) Except as set forth in the Employee Benefits Schedule, all
accrued contributions and other payments to be made by the Company or any ERISA
Affiliate to any Benefit Plan through the date of the Latest Balance Sheet have
been made or reserves adequate for such purposes as of the date of the Latest
Balance Sheet have been set aside therefor and reflected on the Latest Balance
Sheet. Neither the Company nor any ERISA Affiliate is in default in performing
any of its contractual obligations under any of the Benefit Plans or any related
trust agreement or insurance contract, and there are no outstanding liabilities
of any Benefit Plan other than liabilities for benefits to be paid to
Participants and beneficiaries in such Benefit Plan in the ordinary course of
business.
(c) There is no pending litigation or overtly threatened litigation
or pending claim (other than benefit claims made in the ordinary course) by or
on behalf of or against any of the Benefit Plans (or with respect to the
administration of any of the Benefit Plans) now or heretofore maintained by the
Company or any ERISA Affiliate which allege violations of applicable state or
federal law.
(d) Each Benefit Plan is and has been in compliance in all respects
with, and each such Plan is and has been operated in accordance with the
applicable laws, rules and regulations governing such Plan, including, without
limitation, the rules and regulations promulgated by the Department of Labor,
the Pension Benefit Guaranty Corporation ("PBGC") and the IRS under ERISA, the
Code or any other applicable law.
(e) None of the Benefit Plans is or ever has been subject to Title
IV of ERISA, and neither the Company nor any ERISA Affiliate is or has been
required to contribute to an employee benefit plan that is a "multiemployer
plan" within the meaning of Section 3(37) of ERISA nor has been so required
during the five (5) year period ending on the Closing Date.
(f) All reporting and disclosure requirements of ERISA and the Code
applicable to the Benefit Plans have been satisfied.
(g) Neither the Company nor any ERISA Affiliate has any liability
on account of any accumulated funding deficiency (as defined in Code Section
412) or on account of any failure to make contributions to or pay benefits under
any Benefit Plan, nor is the Company aware of any claim pending or threatened to
be brought by any party regarding such matters. No prohibited transaction has
occurred with respect to any Benefit Plan that would result, directly or
indirectly, in the imposition of any excise tax under Code Section 4975.
(h) None of the Benefit Plans provides for (or has ever provided
for) medical or health care or benefits for any former employee of the Company
or any ERISA Affiliate, except to the extent required by Code Section 4980B or
Part 6 of Title I of ERISA.
(i) The Company and all of its ERISA Affiliates have complied with
the requirements of Part 6 of Title I of ERISA and Code Section 4980B.
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(j) None of the Company, any ERISA Affiliate or any Stockholder is
in possession of any facts which would indicate that any insurance company which
has issued an insurance policy or policies under any of the Benefit Plans is in
danger of becoming insolvent, within the meaning of applicable state law.
(k) The transactions contemplated by this Agreement will not
entitle any Participant or any Participant's beneficiary in any Benefit Plan to
any severance benefit under the terms of any Benefit Plan or any personnel or
employment policy of the Company or any ERISA Affiliate.
3.17 Insurance. The "Insurance Schedule" attached hereto as Schedule
3.17 lists and briefly describes each insurance policy maintained by the Company
with respect to the Purchased Assets. The Company has delivered to the
Purchasers complete and correct copies of all such policies together with all
riders and amendments thereto. All of such insurance policies are in full force
and effect, and, to the best knowledge of the Stockholders, the Company is not
and never has been in default with respect to its obligations under any of such
insurance policies. During the three (3) year period ending on the date hereof,
the Company has not ever been refused any insurance coverage for which it has
applied or had any insurance policy canceled.
3.18 Affiliated Transactions. Except as set forth on the "Affiliated
Transaction Schedule" attached hereto as Schedule 3.18, no officer, director,
member or affiliate of the Company or any person related by blood or marriage to
any such person or any entity in which any such person owns any beneficial
interest is a party to any agreement, contract, commitment or transaction
related to the Business with the Company or has any interest in any property
included among the Purchased Assets.
3.19 Compliance with Laws; Permits; Certain Operations. The Company and
its officers, directors, Stockholders, agents and employees have complied in all
material respects with all applicable laws and regulations of foreign, federal,
state and local governments and all agencies thereof which apply to the Business
or the Purchased Assets or to which the Company may otherwise be subject, and,
to the best knowledge of the Stockholders, no written claims have been filed
against the Company alleging a violation of any such law or regulation, except
as set forth on the "Compliance Schedule" attached hereto as Schedule 3.19. In
particular, but without limiting the generality of the foregoing, the Company
has not violated, or received a notice or charge asserting any violation of the
Immigration Reform and Control Act of 1986, the Occupational Safety and Health
Act of 1970, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, the
Toxic Substances Control Act of 1976, the Americans With Disabilities Act, or
any other state or federal act (including rules and regulations thereunder)
regulating or otherwise affecting the employment of aliens, employee health and
safety, the environment, zoning, building, fire or other ordinances.
3.20 Environmental Health and Safety.
(a) The Company and its predecessors and affiliates has complied
with, and is currently in compliance with, all laws relating to the environment,
health and safety, including but
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not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery Act of 1976 and
the Occupational Safety and Health Act of 1970, each as amended (the
"Environmental Health and Safety Laws"), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand or notice has been
threatened, filed or commenced against it alleging any failure so to comply,
alleging any liability under any Environmental, Health and Safety Laws or
requesting any investigation related thereto. No condition exists or event has
occurred which, with or without notice or the passage of time, would constitute
a violation of or give rise to a lien under any Environmental, Health and Safety
Laws. Without limiting the generality of the preceding sentences, the Company,
and its predecessor and affiliates, has obtained and been in compliance, and is
currently in compliance, with all of the terms and conditions of all permits,
licenses and other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables which are
contained in, all such laws.
(b) All Purchased Assets, properties and equipment used in the
Business have been free of asbestos, PCB's, methylene chloride,
trichlorethylene, 1, 2 - trans-dichloroethylene, dioxins, dibenzofurans and
other hazardous substances.
3.21 Product and Warranty Claims. Except as disclosed in the "Claims
Schedule" attached hereto as Schedule 3.21, neither the Company nor any
Stockholder has knowledge of or has received during the past five (5) years any
written claim or written notice with respect to any occurrence arising out of
the use of, or related to, the services provided by or on behalf of the Company
related to the Business, which has resulted in any such claim or notice that any
such services do not conform to any agreement, representation or warranty made
by the Company (or implied by law) with respect to such services.
3.22 Disclosure. No representation or warranty of the Company and the
Stockholders contained in this Agreement and no statement of the Company and the
Stockholders contained in any certificate, schedule, exhibit or other document
delivered to the Purchasers at the Closing contains or will contain any untrue
statement of any material fact, or omits or will omit to state any material fact
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not false or misleading. There is no
material fact which has not been disclosed in writing to Purchasers of which the
Company, any Stockholder, or any officer, director or key employee of the
Company is aware and which materially adversely affects or could reasonably be
anticipated to materially adversely affect the Company, the Business or the
Purchased Assets.
3.23 Customers. The Company has delivered to Purchasers an accurate
list (which is set forth on the "Customers Schedule" attached hereto as
Schedule 3.23) of the 20 largest (by receipts) customers of the Company during
each of the last two (2) years.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Purchasers hereby represent and warrant to the Company and the
Stockholders as of the date hereof and as of the Closing Date that:
4.1 Corporate Organization and Power. Each Purchaser is a corporation
duly organized and validly existing under the laws of the State of Delaware with
full corporate power and authority to enter into this Agreement and the other
agreements contemplated hereby and perform its obligations hereunder and
thereunder. Each Purchaser is qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which ownership of its
properties and or the conduct of its business requires it to be so qualified
except where the failure to be so qualified or in good standing would not have a
material adverse effect on the financial condition or operations of such
Purchaser.
4.2 Shares Fully Paid and Nonassessable; No Liens. The shares of common
stock of Holdings to be issued to the Stockholders, or its assigns, pursuant to
this Agreement will have been duly authorized and, when issued in accordance
with the terms of this Agreement, will be validly issued, fully paid and
nonassessable and at Closing the Holdings Stock shall be free and clear of all
liens, security interests, charges, encumbrances and claims of others.
4.3 Authorization; No Breach. The execution, delivery and performance
by each Purchaser of this Agreement and the other agreements contemplated hereby
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all requisite corporate action, and no other
corporate proceedings on the part of either Purchaser are necessary to authorize
the execution, delivery or performance of this Agreement or the other agreements
contemplated hereby. This Agreement constitutes and, upon execution and delivery
by each Purchaser, the other agreements contemplated hereby shall each
constitute a valid and binding obligation of each Purchaser enforceable against
each Purchaser in accordance with their respective terms. The execution,
delivery and performance of this Agreement and the other agreements contemplated
hereby by the Purchasers and the consummation of the transactions contemplated
hereby and thereby do not and shall not (a) conflict with or result in any
breach of any of the provisions of; (b) constitute a default under, result in a
violation of, or cause the acceleration of any obligation under; (c) result in
the creation of any lien, security interest, charge or encumbrance upon any of
the Holdings Stock; or (d) require any authorization, consent, approval,
exemption or other action by or notice to any court or other governmental body
under the provisions of the Purchasers' certificate of incorporation, by-laws,
any indenture, mortgage, lease, loan agreement or other agreement or instrument
to which the Purchasers are bound or affected or any law, statute, rule,
regulation, judgment, order or decree to which the Holdings Stock are subject or
by which any of the Holdings Stock is bound.
4.4 No. Violation. Neither Purchaser is subject to or obligated under
its respective certificate of incorporation, any applicable law, rule or
regulation of any governmental authority, or any agreement or instrument, or any
license, franchise or permit, or subject to any order, writ,
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injunction or decree which would materially adversely affect its ability to
perform this Agreement or the other agreements contemplated hereby.
4.5 Litigation. Except as disclosed on the "Purchasers Litigation
Schedule" attached hereto as Schedule 4.5, there are no actions, suits,
proceedings, orders or investigations pending or, to the best of each
Purchaser's knowledge, threatened against or affecting such Purchaser, at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which would materially adversely affect such Purchaser's performance
under this Agreement or the consummation of the transactions contemplated
hereby. No officer, director or employee of the Purchasers has been or is
authorized to make or receive, and the Purchasers know of no such person making
or receiving any bribe, kickback or other illegal payment at any time.
4.6 Issuance of Holdings Stock. The shares of Holdings Stock that are
required to be issued by Holdings to the Stockholders pursuant to, and in
accordance with, the terms and conditions set forth in this Agreement, shall,
upon issuance and delivery, be duly authorized, validly issued, fully paid and
non-assessable.
4.7 Brokerage. Other than certain amounts owed Xxxxxxx X. Xxxxxx by the
Purchasers, there are no claims for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of
Purchasers.
4.8 Governmental Consent. etc. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental or
regulatory authority is required in connection with the execution, delivery or
performance of this Agreement by Purchasers, or the consummation by Purchasers
of any of the transactions contemplated hereby.
4.9 SEC Filings; Financial Statements.
(a) Holdings has filed all forms, reports and documents required to
be filed with the Securities Exchange Commission ("SEC") since January 1, 2000,
and has heretofore delivered or made available to the Company and the
Stockholders, in the form filed with the SEC, its (i) Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, (ii) all proxy statements relating
to Holdings' meetings of stockholders (whether annual or special) held or called
since January 1, 2000, (iii) Quarterly Reports on Form 10-Q for the fiscal
quarter ended March 31, 2000 and (iv) all other reports or registration
statements filed by Holdings with the SEC since January 1, 2000. Holdings' SEC
Reports (A) were prepared in all material respects in accordance with the
requirements of the 1933 Act or the Exchange Act, as the case may be, and the
rules and regulations promulgated under each of such respective acts, and (B)
did not at the time they were filed contain any untrue statement or a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
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(b) The financial statements, including all related notes and
schedules contained in Holdings' SEC Reports (or incorporated by reference
therein) fairly present the consolidated financial position of Holdings and its
subsidiaries as at the respective dates thereof and the consolidated results of
operations and cash flows of Holdings and its subsidiaries for the periods
indicated in accordance with GAAP applied on a consistent basis throughout the
periods involved (except for changes in accounting principles, if any, disclosed
in the notes thereto) and subject in the case of interim financial statements to
normal year-end adjustments.
4.10 Purchasers Employee Benefits. The "Purchasers Employee Benefits
Schedule" attached hereto as Schedule 4.10 contains a list of each and every
employee benefit plan within the meaning of Section 3(3) of ERISA, applicable to
the Stockholders upon their becoming employees of CBI.
4.11 Disclosure. No representation or warranty of Purchasers contained
in this Agreement or in any certificate, list, schedule, exhibit or other
document referred to in this Agreement, whether heretofore or hereafter
furnished to the Company or the Stockholders contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not false or misleading. There is no
material fact which has not been disclosed in writing to the Company or the
Stockholders of which Purchasers or any officer, director or key employee of
Purchasers is aware which materially adversely affects, or could reasonably be
anticipated to materially adverse affect, Purchasers.
ARTICLE 5
CLOSING TRANSACTIONS
5.1 The Closing. Subject to the conditions contained in this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Vedder, Price, Xxxxxxx & Kammholz at 10:00
a.m. local time on June 21, 2000, or at such other place or on such other date
as may be mutually agreeable to the parties. The date and time of the Closing
are referred to herein as the "Closing Date."
5.2 Action to Be Taken at the Closing. The sale, conveyance, assignment
and delivery of the Shares and the payment of the Purchase Price pursuant to the
terms of this Agreement shall take place at the Closing, and, simultaneously,
the other transactions contemplated by this Agreement shall take place by the
delivery of all of the closing documents set forth in Section 5.3
5.3 Closing Documents.
(a) The Company and the Stockholders shall deliver to Purchasers at
the Closing the following documents, duly executed by the Company where
necessary to make them effective:
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(i) copies of all obtained third party and governmental
consents, approvals, releases and filings required in order to effect
the transactions contemplated by this Agreement;
(ii) such stamped recordable warranty deeds, instruments of
sale, transfer, assignment, conveyance and delivery (including all
vehicle titles), as are required in order to transfer to Purchasers
good and marketable title to the Shares, free and clear of all liens,
charges, security interests and other encumbrances;
(iii) the Shares duly endorsed over to Purchasers together
with a stock power for each Share executed in blank;
(iv) corporate books and records, including the minute book,
of the Company;
(v) certified copies of the resolutions duly adopted by the
Board of Directors and the Stockholders of the Company authorizing the
execution, delivery and performance of this Agreement and each of the
other agreements contemplated hereby, and the consummation of all other
transactions contemplated by this Agreement;
(vi) all of the Company's contracts and commitments, files,
books, records and other data relating to the Company, the Business and
the Purchased Assets;
(vii) copies of good standing certificates in all
jurisdictions where the Company is qualified to do business;
(viii) a certificate of the Secretary of the Company,
certifying as to the correctness and completeness, including all
amendments, of the by-laws and certificate of incorporation of the
Company;
(ix) an Employment Agreement and an Intellectual Property and
Confidentiality Agreement between the Company and each Stockholder;
(x) Investment Letters establishing that each Stockholder is
an accredited investor;
(xi) the Company's Counsel Opinion; and
(xii) such other documents or instruments as Purchasers
reasonably may request to effect the transactions contemplated hereby.
All of the foregoing documents in this Section 5.3(a) shall be reasonably
satisfactory in form and substance to Purchasers and shall be dated the Closing
Date.
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(b) Purchasers shall deliver to the Company and the Stockholders at
the Closing the following items, duly executed by Purchasers where necessary to
make them effective:
(i) the amount of the Purchase Price payable at Closing as
provided in Section 2.1;
(ii) copies of all necessary third party and governmental
consents, approvals, releases and filings required in order for
Purchasers to effect the transactions contemplated by this Agreement;
(iii) the Employment Agreements;
(iv) Purchasers' Counsel Opinion; and
(v) such other documents or instruments as the Company
reasonably may request to effect the transactions contemplated hereby.
All of the foregoing documents in this Section 5.3(b) shall be reasonably
satisfactory in form and substance to the Company and shall be dated as of the
Closing Date.
5.4 Nonassignment. Without in any way limiting the Company's
obligation to obtain those consents required hereunder for the sale, transfer,
assignment and delivery of the Shares and the Purchased Assets to Purchasers
hereunder, if any such consent is not obtained or if such assignment is not
permitted irrespective of consent and the Closing hereunder is consummated, the
Company shall cooperate with Purchasers in any reasonable arrangement requiring
no direct or indirect cost to the Stockholders designed by Purchasers following
consultation with the Stockholders to provide Purchasers with the rights and
benefits of the Shares and the Purchased Assets, including enforcement for the
benefit of Purchasers of any and all rights of the Company against any other
person arising out of breach or cancellation by such other person and, if
requested by Purchasers, the Company shall act as an agent on behalf of
Purchasers or as Purchasers shall otherwise reasonably require. If requested by
the Stockholders, the Purchasers shall act as an agent on behalf of the
Stockholders for purposes of collecting the accounts receivable included in the
Excluded Assets (the "Company Accounts Receivable") provided, however, the
Purchasers make no representations regarding the collectability of such accounts
receivable. The Stockholders and Purchasers further agree that the Company may
use the proceeds of the Company Accounts Receivable to pay off any accounts
payable which constitute Excluded Liabilities (the "Company Accounts Payable").
Any Company Accounts Receivable not utilized to pay Company Accounts Payable
shall be paid to the Stockholders on a monthly basis in accordance with their
pro rata percentage ownership of the Company immediately prior to Closing. The
Purchasers and Stockholders agree that any proceeds received by the Company as
payment of an account receivable shall be applied to pay the specific account
receivable noted in documentation accompanying such payment or as otherwise
would reasonably be determined. If no such designation or determination is made,
the payment shall be applied to all accounts receivable, including but not
limited to the Company Accounts Receivable, on a first-in, first-out basis.
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ARTICLE 6
INDEMNIFICATION
6.1 Indemnification by Stockholders. The Stockholders severally and
not jointly agree to and shall indemnify in full Purchasers and their respective
officers, directors, employees, agents, stockholders and partners (collectively,
the "Purchaser Indemnified Parties") and defend and hold them harmless against
any loss, liability, deficiency, damage, expense or cost (including reasonable
legal expenses), that Purchaser Indemnified Parties may suffer, sustain or
become subject to, as a result of (a) any misrepresentation in any of the
representations or breach of any of the warranties of the Company or the
Stockholders contained in this Agreement or in any exhibits, schedules,
certificates or other agreements or documents delivered or to be delivered at or
before Closing pursuant to the terms of this Agreement (collectively, the
"Related Documents"); (b) any breach of, or failure to perform, any agreement or
covenant of the Company or the Stockholders contained in this Agreement or any
of the Related Documents, including, without limitation, all claims, losses and
damages in connection with the Excluded Liabilities; or (c) any matter disclosed
on any schedule hereto which is not an Assumed Liability (collectively,
"Purchaser Losses"). Subject to Section 6.5, in the event any Purchaser
Indemnified Party incurs any Purchaser Losses, Purchasers, in addition to all
other rights and remedies available to Purchasers, shall have the right to set
off the amount of such Purchaser Losses, as finally determined in accordance
herewith, against the amount of the Purchase Price which is owed pursuant to the
Contingent Consideration, but Purchasers shall specifically have no right of
off-set against any other agreement or right of any kind entered into as of the
Closing Date including, without limitation, any provision pursuant to any
Stockholder Employment Agreement or any amendment thereto.
6.2 Indemnification by Purchasers. Purchasers, jointly and severally,
agree to indemnify in full the Stockholders (the "Stockholder Indemnified
Party") and hold them harmless against any losses, loss, liability, deficiency,
damage, expense or cost (including reasonable legal expenses), which the
Stockholder Indemnified Party may suffer, sustain or become subject to as a
result of (a) any misrepresentation in any of the representations or breaches of
any of the warranties of Purchasers contained in this Agreement or in any of the
Related Documents; (b) any breach of, or failure to perform, any agreement or
covenant of Purchasers contained in this Agreement or any of the Related
Documents, including, without limitation, all claims, losses and damages in
connection with the Assumed Liabilities; or (c) any matter disclosed on any
schedule hereto which is not an Excluded Liability (collectively, "Stockholder
Losses") (Purchaser Losses and Stockholder Losses shall collectively be referred
to as the "Losses").
6.3 Method of Asserting Claims. As used herein, an "Indemnified Party"
shall refer to a "Purchaser Indemnified Party" or "Stockholder Indemnified
Party," as applicable, the "Notifying Party" shall refer to the party hereto
whose Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or administrative,
instituted by any third party for the liability or the costs or expenses of
which are Stockholder Losses or Purchaser Losses, as the case may be
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(any such third party action or proceeding being referred to as a "Claim"), the
Notifying Party shall give the Indemnifying Party prompt notice thereof, as well
as information in reasonable detail with respect to such Claim (including copies
of any summons, complaint or other pleadings received and any other related
documentation). The failure to give such notice shall not affect any Indemnified
Party's ability to seek reimbursement unless such failure has adversely affected
the Indemnifying Party's ability to defend successfully a Claim. The
Indemnifying Party shall be entitled to contest and defend such Claim; provided
that the Indemnifying Party (i) has a reasonable basis for concluding that such
defense may be successful and (ii) diligently contests and defends such Claim.
Notice of the intention so to contest and defend shall be given by the
Indemnifying Party to the Notifying Party within twenty (20) business days after
the Notifying Party's notice of such Claim (but, in all events, at least five
(5) business days prior to the date that an answer to such Claim is due to be
filed). Such contest and defense shall be conducted by reputable attorneys
employed by the Indemnifying Party. The Notifying Party shall be entitled at any
time, at its own cost and expense (which expense shall not constitute a Loss
unless the Notifying Party reasonably determines that the Indemnifying Party is
not adequately representing the Indemnified Party because of a conflict of
interest), to participate in such contest and defense and to be represented by
attorneys of its or their own choosing. The Notifying Party shall cooperate with
the Indemnifying Party in the conduct of such defense. Neither the Notifying
Party nor the Indemnifying Party may concede, settle or compromise any Claim
without the consent of the other party, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, in the event the
Indemnifying Party fails or is not entitled to contest and defend a claim, the
Notifying Party shall be entitled to contest, defend and settle such Claim.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party that does not involve a Claim, the Notifying Party shall
deliver a notice of such claim with reasonable promptness to the Indemnifying
Party. If the Indemnifying Party notifies the Notifying Party that it does not
dispute the claim described in such notice or fails to notify the Notifying
Party within thirty (30) days after delivery of such notice by the Notifying
Party whether the Indemnifying Party disputes the claim described in such
notice, the Loss in the amount specified in the Notifying Party's notice shall
be conclusively deemed a liability of the Indemnifying Party and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified Party on
demand. If the Indemnifying Party has timely disputed its liability with respect
to such claim, a representative of each of the Indemnifying Party and the
Notifying Party (or their respective designees) shall proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through the
negotiations of such representatives or designees within sixty (60) days after
the delivery of the Notifying Party's notice of such claim, such dispute (except
for any such dispute which gives rise or could give rise to equitable relief
under this Agreement) shall be resolved fully and finally in Chicago, Illinois
by an arbitrator selected pursuant to, and an arbitration governed by, the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitrator shall resolve the dispute within thirty (30) days after selection and
judgment upon the award rendered by such arbitrator may be entered in any court
of competent jurisdiction.
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6.4 Limitation of Liability. Any monetary liability of the
Stockholders to Purchasers pursuant to this Agreement, including any indemnity,
shall be limited to a maximum amount of Fifteen Million Dollars ($15,000,000) in
the aggregate. Each Stockholder shall share severally in and be limited to the
proportionate share of any indemnity and any liability under this Agreement in
proportion to such Stockholder's ownership of the Company immediately prior to
the Closing. Payment of or set-off (to the extent permitted herein) with respect
to any such obligations shall be subject to reaching a minimum aggregate
obligation (a "Basket") of Two Hundred Fifty Thousand Dollars ($250,000),
whereupon the entire aggregate amount of all obligations and liabilities shall
be immediately due and payable to the extent that the amount thereof exceeds the
Basket; provided, however, that neither such dollar limitation nor the Basket
(although the indemnity shall remain several and proportionate as to each
respective Stockholder) shall apply to any claim for Taxes or under ERISA; and
further provided, that a Basket of One Hundred Twenty-Five Thousand Dollars
($125,000) shall apply to a breach of Section 3.5 hereof so long as the facts
forming the basis for any such breach do not otherwise constitute any breach of
another representation, warranty or agreement in this Agreement.
6.5 Contingent Consideration Amount. The Company and Stockholders agree
that, in addition to any other right or remedies available to Purchasers,
Purchasers may set off against any Contingent Consideration owed Stockholders
for any amounts owed Purchasers by the Stockholders under Section 6.1 of this
Agreement, but any right of set-off shall specifically not be applicable to any
payments made pursuant to any employment agreements with Stockholders. Any right
to set-off against the Contingent Consideration shall be subject to final
determination of liability in accordance herewith; provided, however, that the
Company and Stockholders shall promptly pay in full or as otherwise required
herein any undisputed amount of such obligation. The Stockholders may, at their
election, satisfy any liability pursuant to this Article 6 by delivery of shares
of Holdings Stock valued at fair market value.
ARTICLE 7
TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of Purchasers and the Stockholders;
(b) by either Purchasers or the Stockholders if there has been a
material misrepresentation or breach of warranty or breach of covenant on the
part of the other party in the representations and warranties or covenants set
forth in this Agreement and any such misrepresentation or breach, if capable of
cure, is not cured within fifteen (15) days after written notice thereof to such
other party, or if events have occurred which have made it impossible to satisfy
a condition precedent to the terminating party's obligations to consummate the
transactions contemplated hereby (other than as a result of any willful act or
omission by the terminating party); or
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(c) by either Purchasers or the Stockholders if the transactions
contemplated hereby have not been consummated by July 15, 2000 unless the terms
hereof are extended by mutual agreement of the parties; provided that neither
Purchasers nor the Stockholders shall be entitled to terminate this Agreement
pursuant to this Subsection (c) if such party's willful breach of this Agreement
has prevented the consummation of the transactions contemplated hereby.
7.2 Effect of Termination. In the event of termination of this
Agreement as provided above, this Agreement shall forthwith become void, and
there shall be no liability on the part of either the Stockholders or
Purchasers, except for willful breaches of this Agreement prior to the time of
such termination and except for the provisions of Section 8.7.
7.3 Effect of Closing. The Company and Purchasers shall be deemed to
have waived their respective rights to terminate this Agreement upon the
completion of the Closing.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Survival. Except as otherwise provided in this Agreement, the
representations, warranties, covenants and agreements set forth in this
Agreement or in any Related Document shall survive the Closing Date as provided
herein and the consummation of the transactions contemplated hereby and shall
not be affected by any examination made for or on behalf of Purchasers or the
Stockholders. The representations and warranties respecting title, Taxes and
ERISA shall survive through the period of the relevant statute of limitations
and all other representations, warranties, covenants and agreements set forth in
this Agreement or in any Related Document shall survive through March 31, 2002.
8.2 Mutual Assistance.
(a) The Stockholders shall prepare or cause to be prepared and file
or cause to be filed all Returns for the Company for all periods ending on or
prior to the Closing Date which are filed after the Closing Date. The
Stockholders shall permit the Purchasers to review and comment on each such
Return described in the preceding sentence prior to filing. The Stockholders
shall include any income, gain, loss, deduction or other tax items for such
periods on their Returns in a manner consistent with the Schedule K-1s prepared
by the Stockholders for such periods. The Stockholders shall bear the expense of
preparing such Returns.
(b) The Purchasers, the Company and the Stockholders shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filings of Returns pursuant to this Section 8.2 and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Company and the Stockholders agree (i) to
retain all books and records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations
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(and, to the extent notified by the Purchasers or the Stockholders, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any tax authority, and (ii) to
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so requests,
the Company or Stockholders, as the case may be, shall allow the other party to
take possession of such books and records.
8.3 Press Release and Announcements. No press release related to this
Agreement or the transactions contemplated hereby, or other announcements to the
customers or suppliers of the Company, shall be issued without the joint
approval of Purchasers and the Stockholders. No other public announcement
related to this Agreement or the transactions contemplated hereby shall be made
by either party, except as required by law, in which event the parties shall
consult as to the form and substance of any such announcement required by law.
8.4 Expenses. Each party shall pay all of its expenses in connection
with the negotiation of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated by this
Agreement. Each respective Stockholder shall pay the cost of recording all
documents necessary to place title to the Shares in the condition warranted by
or required of such Stockholder by this Agreement. The Company shall pay the
cost of recording all documents necessary to place title to the Purchased Assets
in the condition warranted by or required of the Company by this Agreement.
8.5 Further Assurances. After the Closing, the Company shall, and
shall cause its affiliates to, execute and deliver such further instruments of
conveyance and transfer and take such additional action as Purchasers may
reasonably request to effect, consummate, confirm or evidence the transfer to
Purchasers of the Shares. Each Stockholder shall execute such documents as may
be necessary to assist Purchasers (or their designees) in preserving or
perfecting their rights in the Shares.
8.6 Transition Assistance. From the date hereof and until five (5)
years after the Closing, each Stockholder shall not in any manner take any
action which is designed or intended to have the effect of disparaging or
discrediting the Purchasers with customers, suppliers, lessors, employees, sales
agents and other business associates.
8.7 Confidentiality. If the transactions contemplated by this
Agreement are not consummated, Purchasers shall maintain the confidentiality of
all information and materials received by it reasonably designated by the
Company as confidential, and Purchasers shall return to the Company or destroy
any materials (and copies thereof) obtained from the Company in connection with
the transactions contemplated hereby. Whether or not the transactions
contemplated hereby are consummated, the Company and the Stockholders shall
maintain the confidentiality of all information and materials regarding
Purchasers and their affiliates, reasonably designated as confidential by
Purchasers. If the transactions contemplated by this Agreement are consummated,
the Company and the Stockholders shall maintain the confidentiality of all
proprietary and other non-public information regarding the Shares, the Business
and the Purchased Assets and shall turn over to Purchasers all such materials in
their possession.
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8.8 Non-Compete: Non-Solicitation.
(a) Although it is understood among the parties that each
Stockholder desires to no longer engage in the Business other than as permitted
by this Agreement or any other Related Document (including the Employment
Agreements), as an additional inducement to Purchasers to enter into and to
perform their obligations under this Agreement, each Stockholder agrees that,
for a period of five (5) years after the Closing Date (the "Non-Competition
Period"), such Stockholder shall not, in the United States or in any foreign
country in which the Company currently does business, directly or indirectly,
either for itself or any other person or entity, (i) carry on or be engaged in
the Business or any other business which is in competition with the Business as
existing on the date hereof, or (ii) solicit business from, or sell to, any of
the Company's customers in the United States or in any foreign country in which
the Company does business (the "Territory") or any other person, firm or
corporation in the Territory to whom the Company has sold products within five
(5) years preceding the date of this Agreement where such solicitation or sale
would involve the sale of products competitive with the Business.
Notwithstanding anything herein to the contrary, in the event there is a
conflict between this Section 8.8 and the non-compete provisions in the
Employment Agreements or the provisions in this Section 8.8 are otherwise more
restrictive than the provisions in the Employment Agreements, then the
provisions in the Employment Agreements shall govern.
(b) Each Stockholder agrees that for a period of five (5) years
after the Closing, it shall not directly or indirectly offer employment to or
hire any current or future employee of the Company without the prior written
consent of Purchasers.
(c) If, at the time of enforcement of this Section 8.8, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area.
(d) Each Stockholder recognizes and affirms that in the event of
breach by it of any of the provisions of this Section 8.8 money damages would be
inadequate and neither Purchasers nor any Stockholder would have any adequate
remedy at law. Accordingly, each Stockholder and Purchasers agree that the other
party shall have the right, in addition to any other rights and remedies
existing in its favor, to enforce its rights and the obligations under this
Section 8.8 by an action or actions for specific performance, injunction and/or
other equitable relief without posting any bond or security to enforce or
prevent any violations, whether anticipatory, continuing or future, of the
provisions of this Section 8.8, including, without limitation, the extension of
the Non-Competition Period by a period equal to (i) the length of the violation
of this Section 8.8 plus (ii) the length of any court proceedings necessary to
stop such violation. In the event of a breach or violation by a Stockholder of
any of the provisions of this Section 8.8, the running of the Non-Competition
Period, but not of any Stockholders' obligations under this Section 8.8, shall
be tolled during the period during which the occurrence of any such breach or
violation is investigated and during the continuance of any such breach or
violation.
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8.9 Employees of Company. CBI agrees to offer, or cause the Company to
continue the, employment of all current employees of the Company. In determining
the level of benefits provided such persons, all of the employees shall be
credited with their years of service with the Company to the maximum extent
possible under Purchasers' existing policies and programs. All such offers of
employment shall be on the terms and conditions established by the Company or
Purchasers and shall be contingent upon employment commencing with the Company
or Purchasers only following the Closing Date. Notwithstanding anything herein
to the contrary, Purchasers agree to allocate and grant promptly following the
Closing for distribution by the Stockholders to key professional staff employed
in the Business who are not Stockholders (with the right to reallocate to such
professional staff any forfeited options), options under Purchasers' stock
option plan to purchase at least Fifty-Three Thousand Four Hundred (53,400)
shares of Holdings Stock, which shall vest 20% per year over five (5) years
beginning one year from the Closing Date. The Company and the Stockholders agree
not to willfully discourage any individuals who are offered employment with the
Company or Purchasers from accepting such employment with the Company or
Purchasers.
ARTICLE 9
MISCELLANEOUS
9.1 Amendment and Waives. This Agreement may be amended, and any
provision of this Agreement may be waived; provided that, except as otherwise
provided herein, any such amendment or waiver shall be binding on the Company
and Stockholders only if such amendment or waiver is set forth in a writing
executed by the Company and Stockholders and that any such amendment or waiver
shall be binding upon Purchasers only if such amendment or waiver is set forth
in a writing executed by Purchasers. No course of dealing between or among any
persons having any interest in this Agreement shall be deemed effective to
modify, amend or discharge any part of this Agreement or any rights or
obligations of any person under or by reason of this Agreement.
9.2 Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when personally delivered, mailed
by first class mail, return receipt requested or delivered by a nationally
recognized courier service. Notices, demands and communications to the Company,
the Stockholders or Purchasers shall, unless another address is specified in
writing in accordance herewith, be sent to the address indicated below:
Notices to each Xxxxx Xxxxx
Stockholder at the Xxxxx X. Xxxxxx
following address: Xxxxxx X. Xxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxx Xxxxx & Partners, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxx Xxxxxx, LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
Notices to Purchasers: Xxxxx/Xxxxxx Holdings, Inc.
000 Xxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Block, Esq.
Lane X. Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
9.3 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legatees, personal representatives, successors and permitted
assigns (including all successors and assignees in the event of the Company's
liquidation) as the case may be, but neither this Agreement nor any of the
rights, interests or obligations hereunder of the Company and Stockholders shall
be assignable by the Company and Stockholders without the prior written consent
of Purchasers. Either Purchaser may assign its interest under this Agreement
without restriction to any of its affiliates, existing as of the date hereof or
in the future; provided that each Purchaser unconditionally guarantees to the
Company and Stockholders at the time of such assignment the prompt and complete
performance of all of such affiliates' obligations hereunder.
9.4 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
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9.5 No Third Party Beneficiaries. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any other persons other than the parties hereto and
their respective successors, permitted assigns, heirs, legatees and personal
representatives, as the case may be, nor is anything in this Agreement intended
to relieve or discharge the obligation or liability of any third persons to any
party, nor shall any provision give any third parties any right of subrogation
or action over or against any party. This Agreement is not intended to and does
not create any third party beneficiary rights whatsoever.
9.6 No Strict Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
person.
9.7 Captions. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and shall not
be deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
9.8 Complete Agreement. This document and the documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
9.9 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument.
9.10 Governing Law. The internal law, not the law of conflicts, of the
State of Illinois shall govern all questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement.
9.11 Tax Consequences. No party specifically makes any representation
or warranty of any kind or nature with respect to the tax consequences of the
transactions contemplated by this Agreement to the other or the other's officers
or directors.
9.12 Remedies Cumulative. Except as set forth herein, all remedies of
the parties provided herein shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other remedies available
to the parties, by judicial proceedings or otherwise, to enforce the performance
or observance of the covenants and agreements contained herein.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the date first written above.
PURCHASERS: XXXXX/XXXXXX, INC.
By: /s/ XXXXXX X. XXXX
----------------------------------------------
Its:
---------------------------------------------
XXXXX/XXXXXX HOLDINGS, INC.
By: /s/ XXXXXX X. XXXX
----------------------------------------------
Its:
---------------------------------------------
THE COMPANY: XXXXX XXXXX & PARTNERS, INC.
By: /s/ XXXXX XXXXX
----------------------------------------------
Its: President
---------------------------------------------
STOCKHOLDERS:
/s/ XXXXX XXXXX
-------------------------------------------------
Xxxxx Xxxxx
/s/ XXXXX X. XXXXXX
-------------------------------------------------
Xxxxx X. Xxxxxx
/s/ XXXXXX X. XXXX
-------------------------------------------------
Xxxxxx X. Xxxx
/s/ XXXXX X. XXXXXXX
-------------------------------------------------
Xxxxx X. Xxxxxxx
/s/ XXXXXX X. XXXXXXXX
-------------------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ XXXXX X. XXXXXXXX
-------------------------------------------------
Xxxxx X. Xxxxxxxx
