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Exhibit 10.11
STOCK PURCHASE AGREEMENT
AMONG
NORTH AMERICAN TEL-COM GROUP, INC.
AND
THE SOLE SHAREHOLDER OF BURN-TECHS, INC.
August 31, 1998
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TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS................................................................................... 1
2. PURCHASE AND SALE TRANSACTION................................................................. 6
(a) BASIC TRANSACTION.................................................................... 6
(b) CONSIDERATION........................................................................ 6
(c) THE CLOSING.......................................................................... 6
(d) DELIVERIES AT CLOSING................................................................ 6
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION..................................... 6
(a) REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.................................... 6
(b) REPRESENTATIONS AND WARRANTIES OF NORTH AMERICAN..................................... 8
4. REPRESENTATIONS AND WARRANTIES CONCERNING TARGET.............................................. 10
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER..................................... 10
(b) [INTENTIONALLY LEFT BLANK]........................................................... 10
(c) CAPITALIZATION....................................................................... 10
(d) NONCONTRAVENTION..................................................................... 11
(e) BROKERS' FEES........................................................................ 11
(f) TITLE TO ASSETS...................................................................... 11
(g) SUBSIDIARIES......................................................................... 11
(h) FINANCIAL STATEMENTS................................................................. 12
(i) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END..................................... 12
(j) UNDISCLOSED LIABILITIES.............................................................. 14
(k) LEGAL COMPLIANCE..................................................................... 14
(l) TAX MATTERS.......................................................................... 14
(m) REAL PROPERTY........................................................................ 16
(n) INTELLECTUAL PROPERTY................................................................ 17
(o) TANGIBLE ASSETS...................................................................... 19
(p) INVENTORY............................................................................ 19
(q) CONTRACTS............................................................................ 19
(r) NOTES AND ACCOUNTS RECEIVABLE........................................................ 20
(s) POWERS OF ATTORNEY................................................................... 20
(t) INSURANCE............................................................................ 20
(u) LITIGATION........................................................................... 21
(v) COMMITMENTS AND WARRANTIES........................................................... 21
(w) LIABILITY FOR SERVICES PERFORMED..................................................... 21
(x) EMPLOYEES............................................................................ 22
(y) EMPLOYEE BENEFITS.................................................................... 22
(z) GUARANTIES........................................................................... 24
(aa) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS............................................ 24
(ab) CERTAIN BUSINESS RELATIONSHIPS WITH TARGET........................................... 25
(ac) CUSTOMERS AND SUPPLIERS.............................................................. 25
(ad) DISCLOSURE........................................................................... 26
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5. PRE-CLOSING COVENANTS......................................................................... 26
(a) GENERAL.............................................................................. 26
(b) SHAREHOLDER DISTRIBUTION............................................................. 26
(c) NOTICES AND CONSENTS................................................................. 26
(d) OPERATION OF BUSINESS................................................................ 26
(e) PRESERVATION OF BUSINESS............................................................. 27
(f) FULL ACCESS.......................................................................... 27
(g) NOTICE OF DEVELOPMENTS............................................................... 27
(h) EXCLUSIVITY.......................................................................... 27
(i) NO TERMINATION OF SHAREHOLDER'S OBLIGATION BY SUBSEQUENT INCAPACITY.................. 27
6. POST-CLOSING COVENANTS........................................................................ 28
(a) GENERAL.............................................................................. 28
(b) LITIGATION SUPPORT................................................................... 28
(c) TRANSITION........................................................................... 28
(d) INDEPENDENT ACCOUNTANTS.............................................................. 28
(e) TAX MATTERS.......................................................................... 29
(f) STOCK OPTIONS........................................................................ 29
(g) AUDITED FINANCIAL STATEMENTS......................................................... 29
7. CONDITIONS TO OBLIGATION TO CLOSE............................................................. 29
(a) CONDITIONS TO OBLIGATION OF NORTH AMERICAN........................................... 29
(b) CONDITIONS TO OBLIGATION OF THE SHAREHOLDER.......................................... 31
8. REMEDIES FOR BREACHES OF THIS AGREEMENT....................................................... 32
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES........................................... 32
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF NORTH AMERICAN............................. 32
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SHAREHOLDER............................ 34
(d) MATTERS INVOLVING THIRD PARTIES...................................................... 34
(e) DETERMINATION OF ADVERSE CONSEQUENCES................................................ 35
9. POST-CLOSING ADJUSTMENT OF CONSIDERATION...................................................... 36
10. TAX MATTERS................................................................................... 38
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE..................................... 38
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE....................... 38
(c) COOPERATION ON TAX MATTERS........................................................... 38
(d) TAX SHARING AGREEMENTS............................................................... 39
(e) CERTAIN TAXES........................................................................ 39
11. TERMINATION................................................................................... 39
(a) TERMINATION OF AGREEMENT............................................................. 39
(b) EFFECT OF TERMINATION................................................................ 40
12. MISCELLANEOUS................................................................................. 40
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.............................................. 40
(b) NO THIRD-PARTY BENEFICIARIES......................................................... 40
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(c) ENTIRE AGREEMENT..................................................................... 40
(d) SUCCESSION AND ASSIGNMENT............................................................ 41
(e) COUNTERPARTS......................................................................... 41
(f) HEADINGS............................................................................. 41
(g) NOTICES.............................................................................. 41
(h) GOVERNING LAW........................................................................ 42
(i) AMENDMENTS AND WAIVERS............................................................... 42
(j) SEVERABILITY......................................................................... 42
(k) EXPENSES............................................................................. 42
(l) CONSTRUCTION......................................................................... 42
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES.................................... 43
(n) SPECIFIC PERFORMANCE................................................................. 43
(o) SUBMISSION TO JURISDICTION........................................................... 43
(p) WAIVER OF JURY TRIAL................................................................. 43
Exhibit A--Financial Statements
Exhibit B--Opinion of Target's Counsel
Exhibit C--Employment Agreements
Exhibit D--Opinion of North American's Counsel
Annex I-- Accredited Investor Status
Disclosure Schedule
North American Disclosure Schedule
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STOCK PURCHASE AGREEMENT
Agreement entered into as of August 31, 1998, by and among North
American Tel-Com Group, Inc., a Florida corporation ("North American" or the
"Buyer"), and Xxxxxxx Xxxxxxx, the sole shareholder (the "Shareholder") of
Burn-Techs, Inc., a Florida corporation (the "Target"). The Buyer and the
Shareholder are referred to collectively herein as the "PARTIES."
The Shareholder owns all of the outstanding capital stock of the
Target.
This Agreement contemplates the sale by the Shareholder of all of the
issued and outstanding capital stock of Target and the purchase thereof by
Buyer. The Shareholder will receive cash and capital stock in North American in
exchange for his shares of capital stock of Target.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"ACCREDITED INVESTOR" has the meaning set forth in Regulation
D promulgated under the Securities Act.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses, and any other cost of enforcing a party's rights under this
Agreement.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the
meaning of Code Section 1504(a) or any similar group defined under a similar
provision of state, local or foreign law.
"AMENDED AND RESTATED STOCKHOLDERS AGREEMENT" means that
certain Amended and Restated Stockholders Agreement among North American and
the shareholders of North American dated as of June 30, 1998.
"APPLICABLE RATE" means the corporate base rate of interest
publicly announced from time to time by PNC Bank, N.A.
"BASIS" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could form the
basis for any specified consequence.
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"CLOSING" has the meaning set forth in Section 2(c) below.
"CLOSING DATE" has the meaning set forth in Section 2(c)
below.
"CLOSING DATE BALANCE SHEET" has the meaning set forth in
Section 9(b) below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSIDERATION" has the meaning set forth in Section 2(b)
below.
"CONTROLLED GROUP OF CORPORATIONS" has the meaning set forth
in Code Section 1563.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 4
below.
"DRAFT CLOSING DATE BALANCE SHEET" has the meaning set forth
in Section 9(a) below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), (d) Employee Welfare Benefit Plan or (e)
bonus, incentive, stock purchase, stock ownership, stock option, stock
appreciation right, severance, salary continuation, termination, change of
control or other material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in
ERISA Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in
ERISA Section 3(1).
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean
all federal, state, local and foreign statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
Hazardous Materials (which, for purposes of this Agreement, shall xxxxx any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation), each as
amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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"ERISA AFFILIATE" means (i) any corporation included with
Target in a controlled group of corporations within the meaning of Section
414(b) of the Code; (ii) any trade or business (whether or not incorporated)
which is under common control with Target within the meaning of Section 414(c)
of the Code; (iii) any member of an affiliated service group of which Target is
a member within the meaning of Section 414(m) of the Code; or (iv) any other
person or entity treated as an affiliate of Target under Section 414(o) of the
Code.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"FINANCIAL STATEMENT" has the meaning set forth in Section
4(h) below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8(d)
below.
"INDEMNIFYING PARTY" has the meaning set forth in Section
8(d) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"KNOWLEDGE" means that which is known by a person and that of
which a person has constructive knowledge based upon information readily
available to that person in the performance of such person's duties. In the
case of North American or Target, "Knowledge" means the "Knowledge" of its
respective directors and executive officers.
"LIABILITY" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
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"MATERIAL ADVERSE EFFECT" means, individually or together
with other adverse effects, any material adverse effect on the assets,
liabilities, results of operations, business condition (financial or otherwise)
or prospects of Target or on Target's ability to consummate the transactions
contemplated hereby or the ability of North American to operate the business of
Target immediately after the Closing in substantially the same manner as such
business is conducted prior to Closing.
"MOST RECENT BALANCE SHEET" means the balance sheet contained
within the Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth
in Section 4(h) below.
"MOST RECENT FISCAL PERIOD END" has the meaning set forth in
Section 4(h) below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in
Section 4(h) below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA
Section 3(37).
"NATIONAL SECURITIES EXCHANGE" shall have the meaning
ascribed to that term in the rules and regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
"NORTH AMERICAN" has the meaning set forth in the preface
above.
"NORTH AMERICAN CLASS A COMMON SHARES" means any share of the
Class A Common Stock, par value $.01 per share, of North American.
"NORTH AMERICAN CLASS B COMMON SHARES" means any share of the
Class B Common Stock, par value $.01 per share, of North American.
"NORTH AMERICAN COMMON STOCK" means any share of the common
stock, par value $.01 par share, of North American.
"NORTH AMERICAN SERIES A PREFERRED SHARES" means any share of
the Series A Convertible Preferred Stock, par value $.01 per share, of North
American.
"NORTH AMERICAN PREFERRED STOCK" means any share of the
preferred stock, par value $.01 per share, of North American.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"PARTY" has the meaning set forth in the preface above.
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"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA
Section 406 and Code Section 4975.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section
4043.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act
of 1934, as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens that could not reasonably be expected to have
a Material Adverse Effect, (b) liens for Taxes not yet due and payable or for
Taxes that the taxpayer is contesting in good faith through appropriate
proceedings disclosed on Section 4(l) of the Disclosure Schedule, (c) purchase
money liens and liens securing rental payments under capital lease arrangements
disclosed in the Most Recent Financial Statements, and (d) other liens arising
in the Ordinary Course of Business and not incurred in connection with the
borrowing of money, so long as such liens could not reasonably be expected to
have a Material Adverse Effect.
"SHAREHOLDER DISTRIBUTION" has the meaning set forth in
Section 5(b) below.
"SUBSIDIARY" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"TARGET" has the meaning set forth in the preface above.
"TARGET SHARE" means any share of the Common Stock, no par
value, of Target.
"TARGET SHAREHOLDER" means any Person who or which holds any
Target Shares.
"TAX" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition
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thereto, whether disputed or not, and any obligations under any agreements or
arrangements with respect to any of the foregoing.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 8(d)
below.
"SHAREHOLDER" has the meaning set forth in the preface above.
2. PURCHASE AND SALE TRANSACTION.
(a) BASIC TRANSACTION. On and subject to the terms and
conditions of this Agreement, North American agrees to purchase from the
Shareholder, and the Shareholder agrees to sell to North American, all of the
Target Shares for the consideration specified below in this Section 2.
(b) CONSIDERATION. North American agrees to deliver at
Closing to the Shareholder (x) cash in the amount of $560,000.00 payable by
wire transfer or other immediately available funds and (y) 30,000 North
American Class B Common Shares, with a value of $1.4959 per share
(collectively, the "Consideration"). The Consideration shall be subject to
adjustment pursuant to the provisions of Section 9 hereof.
(c) THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of Holland &
Knight LLP in Fort Lauderdale, Florida, effective at 9:00 a.m. local time on
August 31, 1998 or such other date, time and place as the Parties may mutually
determine (the "CLOSING DATE").
(d) DELIVERIES AT CLOSING. At the Closing, (i) the
Shareholder will deliver to North American the various certificates,
instruments, and documents referred to in Section 7(a) below, (ii) North
American will deliver to the Shareholder the various certificates, instruments,
and documents referred to in Section 7(b) below, (iii) the Shareholder will
deliver to North American stock certificates representing all of his Target
Shares, endorsed in blank or accompanied by duly executed assignment documents,
and (iv) North American will deliver to the Shareholder the Consideration
specified in Section 2(b) above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder represents and warrants to North American that the statements
contained in this Section 3(a) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
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Agreement throughout this Section 3(a)), except as set forth on Section 3(a) of
the Disclosure Schedule (as hereinafter defined).
(i) AUTHORIZATION OF TRANSACTION. The Shareholder
has full power and authority to execute and deliver this Agreement and
to perform his obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of the Shareholder, enforceable
in accordance with its terms and conditions except to the extent
enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency or moratorium laws, or other laws affecting
the enforcement of creditors' rights or by the principles governing
the availability of equitable remedies. The Shareholder need not give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency or any
other Person in order to consummate the transactions contemplated by
this Agreement.
(ii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the Shareholder is subject or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Shareholder is
a party or by which he is bound or to which any of his assets is
subject.
(iii) BROKERS' FEES. The Shareholder has, or prior
to Closing will have, paid any fees or commissions due from the
Shareholder to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement. The Shareholder agrees
that he will pay any additional amounts that may become due from him
or Target to any such broker, finder or agent in the future, including
as a result of any indemnification obligations.
(iv) INVESTMENT. The Shareholder (A) understands
that the North American Class B Common Shares that he will receive as
part of the Consideration have not been, and will not be, registered
under the Securities Act, or under any state securities laws, and are
being offered and sold in reliance upon federal and state exemptions
for transactions not involving any public offering, (B) is acquiring
such North American Class B Common Shares solely for his own account
for investment purposes, and not with a view to the distribution
thereof, (C) has received certain information concerning North
American and has had the opportunity to obtain additional information
as desired in order to evaluate the merits and the risks inherent in
holding the North American Class B Common Shares, and (D) is able to
bear the economic risk and lack of liquidity inherent in holding the
North American Class B Common Shares, and (F) is an Accredited
Investor for the reasons set forth on Annex I.
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(v) TARGET SHARES. The Shareholder holds of record
and owns beneficially all of the Target Shares, free and clear of any
restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, security interests,
liens or other encumbrances, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. The Shareholder
is not a party to any option, warrant, purchase right, or other
contract or commitment that could require the Shareholder to sell,
transfer, or otherwise dispose of any capital stock of Target (other
than this Agreement). The Shareholder is not a party to any voting
trust, proxy, shareholders agreement, or other agreement or
understanding with respect to the voting of any capital stock of
Target.
(vi) DISCLOSURE. Neither this Agreement nor any of
the exhibits, attachments, written statements, documents, certificates
or other items prepared for or supplied to North American by the
Shareholder with respect to the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make each statement contained
herein or therein not misleading. There is no fact which the
Shareholder has not disclosed to North American herein and of which
the Shareholder is aware which could be anticipated to have a Material
Adverse Effect.
(b) REPRESENTATIONS AND WARRANTIES OF NORTH AMERICAN. North
American represents and warrants to the Shareholder that the statements
contained in this Section 3(b) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3(b)), except as set forth in the Disclosure
Schedule delivered by North American to the Shareholder on the date hereof (the
"North American Disclosure Schedule").
(i) ORGANIZATION OF NORTH AMERICAN. North American
is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida. Correct and complete
copies of the charter and bylaws of North American (as amended to
date) are included as part of the North American Disclosure Schedule.
The names and titles of each officer and director of North American is
set forth on the North American Disclosure Schedule.
(ii) CAPITALIZATION OF NORTH AMERICAN. The entire
authorized capital stock of North American consists of (i) 98,000,000
shares of North American Common Stock, including (i) 10,000,000 North
American Class A Common Shares, 20,000,000 North American Class B
Common Shares, and 68,000,000 Shares of undesignated North American
Common Stock and (ii) 2,000,000 shares of North American Preferred
Stock, including 100,000 designated as North American Series A
Preferred Shares. The issued and outstanding capital stock of North
American consists of 2,412,350 North American Class A Common Shares,
7,502,850 North American Class B Shares and 100,000 North American
Series A Preferred Shares, held of record as set forth on the North
American
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Disclosure Schedule. All of the issued and outstanding North American
Class A Common Shares, North American Class B Common Shares, and North
American Series A Preferred Shares have been duly authorized, validly
issued, fully paid, and nonassessable. Except as set forth in the
North American Disclosure Schedule, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments
that could require North American to issue, sell, or otherwise cause
to become outstanding any of its capital stock. Except as set forth in
the North American Disclosure Schedule, there are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to North American. Except as set forth in
the North American Disclosure Schedule, there are no voting trusts,
proxies or other agreements or understandings with respect to the
voting of the capital stock of North American.
(iii) AUTHORIZATION OF TRANSACTION. North American
has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of North American, enforceable in
accordance with its terms and conditions except to the extent
enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency or moratorium laws, or other laws affecting
the enforcement of creditors' rights or by the principles governing
the availability of equitable remedies. North American need not give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency or any
other Person in order to consummate the transactions contemplated by
this Agreement.
(iv) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which North American is subject or any provision of its charter or
bylaws or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or
other arrangement to which North American is a party or by which North
American is bound or to which any of its assets is subject (or result
in the imposition of any Security Interest upon any of its assets).
North American need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Person,
government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(v) BROKERS' FEES. North American has, or prior to
the Closing will have, paid any fees or commissions due from North
American to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement. North American agrees
that it will pay any additional amounts that may become due from North
American
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to any such broker, finder or agent in the future, including as a
result of any indemnification obligations.
(vi) DISCLOSURE. Neither this Agreement nor any of
the exhibits, attachments, written statements, documents, certificates
or other items prepared for or supplied to the Shareholder by North
American with respect to the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state any material
fact necessary in order to make each statement contained herein or
therein not misleading. There is no fact which North American has not
disclosed to the Shareholder of which North American or any of its
officers or directors is aware and which could be anticipated to have
a Material Adverse Effect on the operations of North American after
the Closing.
4. REPRESENTATIONS AND WARRANTIES CONCERNING TARGET. The Shareholder
represents and warrants to North American that the statements contained in this
ss.4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout
this Section 4), except as set forth in the Disclosure Schedule delivered by
the Shareholder to North American on the date hereof and initialed by the
Parties (the "DISCLOSURE SCHEDULE"). The Disclosure Schedule shall be effective
to modify only those representations and warranties to which the Disclosure
Schedule makes explicit reference. The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Target
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation. Target is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Target has full corporate power and
authority and all licenses, permits, and authorizations necessary to carry on
the businesses in which it is engaged and in which it presently proposes to
engage and to own and use the properties owned and used by it. Section 4(a) of
the Disclosure Schedule lists the directors and officers of Target. Correct and
complete copies of the charter and bylaws of Target (as amended to date) are
included as part of Section 4(a) of the Disclosure Schedule. The minute books
(containing the records of meetings of the shareholders, the board of
directors, and any committees of the board of directors), the stock certificate
books, and the stock record books of Target are correct and complete and a true
and correct copy thereof has been provided to North American. Target is not in
default under or in violation of any provision of its charter or bylaws.
(b) [INTENTIONALLY LEFT BLANK]
(c) CAPITALIZATION. The entire authorized capital stock of
Target consists of 500 Target Shares, of which 100 Target Shares are issued and
outstanding and no Target Shares are held in treasury. All of the issued and
outstanding Target Shares have been duly authorized, are validly issued, fully
paid and nonassessable, and are held of record and owned beneficially
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by the Shareholder. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights,
preemptive rights or other contracts or commitments that could require Target
to issue, sell, or otherwise cause to become outstanding any of its capital
stock or securities convertible or exchangeable for, or any options,
warranties, or rights to purchase, any of such capital stock. There are no
outstanding obligations of Target to repurchase, redeem or otherwise acquire
any capital stock or any securities convertible into or exchangeable for such
capital stock or any options, warrants or rights to purchase such capital stock
or securities. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to Target.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting, transfer, dividend or other rights (such as registration
rights under the Securities Act) of the capital stock of Target.
(d) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which Target is subject or any
provision of the charter or bylaws of Target or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Target is a party or by which it is bound or to which any
of its assets is subject (or result in the imposition of any Security Interest
upon any of its assets). Target need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any Person,
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(e) BROKERS' FEES. Target has, or prior to Closing will have,
paid any fees or commissions due from Target to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement. Shareholder
agrees that he will pay any additional amounts that may become due from Target
to any such broker, finder or agent in the future, including as a result of any
indemnification obligations.
(f) TITLE TO ASSETS. Target has good and marketable title to,
or a valid leasehold interest in, the properties and assets used by it, located
on its premises, or shown on the Most Recent Balance Sheet or acquired after
the date thereof, free and clear of all Security Interests (other than the
Security Interests disclosed on the face of the Most Recent Balance Sheet),
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet, none of which disposals are
expected to have a Material Adverse Effect. The consummation of the
transactions contemplated by this Agreement will not affect Target's good and
marketable title to, or valid leasehold interest in, the properties and assets
described in the preceding sentence.
(g) SUBSIDIARIES. Except as set forth in Section 4(g) of the
Disclosure Schedule, Target does not currently have, and has never had, any
Subsidiaries and does not own any securities of any other Person.
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(h) FINANCIAL STATEMENTS. Attached hereto as EXHIBIT A are
the following internally prepared financial statements (collectively the
"FINANCIAL STATEMENTS"): (i) balance sheets and statements of income as of and
for the fiscal year ended December 31, 1997 (the "MOST RECENT FISCAL YEAR END")
for Target; (ii) balance sheets and statements of income as of and for the
fiscal year ended December 31, 1996 and (iii) balance sheets and statements of
income, (the "MOST RECENT FINANCIAL STATEMENTS") as of and for the period from
January 1, 1998, through July 31, 1998 for Target (the "MOST RECENT FISCAL
PERIOD END"). Except for the utilization of tax depreciation therein, the
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of Target as of such
dates and the results of operations of Target for such periods, are correct and
complete, and are consistent with the books and records of Target (which books
and records are correct and complete).
(i) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since
the Most Recent Fiscal Year End and except as disclosed in the Disclosure
Schedule, there has not occurred any Material Adverse Effect and Target has not
engaged in any transactions outside of the Ordinary Course of Business. Without
limiting the generality of the foregoing, since that date:
(i) Target has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) Target has not entered into any agreements,
contracts, leases, or licenses either involving more than $10,000 in
the aggregate, having a term greater than 12 months or outside the
Ordinary Course of Business;
(iii) no party (including Target) has accelerated,
terminated, modified, or cancelled any agreements, contracts, leases,
or licenses involving more than $10,000 in the aggregate to which
Target is a party or by which it is bound;
(iv) Target has not imposed or allowed to be imposed
any Security Interest upon any of its assets, tangible or intangible;
(v) Target has not made any capital expenditures
involving more than $10,000 in the aggregate or outside the Ordinary
Course of Business;
(vi) Target has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any
other Person;
(vii) Target has not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation
involving more than $10,000 in the aggregate;
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(viii) Target has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) Target has not cancelled, compromised, waived,
or released any right or claim either involving more than $10,000 in
the aggregate and outside the Ordinary Course of Business;
(x) Target has not granted any license or sublicense
of any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in
the charter or bylaws of Target;
(xii) Target has not issued, sold, or otherwise
disposed of any of its capital stock or securities convertible into or
exchangeable for such stock, or granted any options, warrants, or
other rights to purchase or obtain any of such capital stock or
securities;
(xiii) Target has not declared, set aside, or paid
any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock or other securities;
(xiv) Target has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its
property involving more than $10,000 in the aggregate;
(xv) Target has not made any loan to, or entered
into any other transaction with, any of its directors, officers, and
employees or their "Associates" (as defined in Rule 12b-2 under the
Exchange Act);
(xvi) Target has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvii) Target has not granted any increase in any
compensation of any of its directors, officers, or other employees;
(xviii) Target has not adopted, amended, modified,
or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, or employees (or taken any such action with
respect to any other Employee Benefit Plan);
(xix) Target has not made any other change in
employment terms for any of its directors, officers, or employees
outside the Ordinary Course of Business;
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(xx) Target has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course
of Business;
(xxi) there has not been any other material
occurrence, event, incident, action, failure to act, or transaction
outside the Ordinary Course of Business involving Target;
(xxii) Target has not increased, or experienced any
change in assumptions underlying or method of calculating, any bad
debt, contingency, tax or other reserves or changed its accounting
practices, methods or assumptions (including changes in estimates or
valuation methods) or written down the value of any assets;
(xxiii) Target has not granted any bonuses or made
any other payments of any kind (other than base compensation in the
Ordinary Course of Business) to any officer, director or employee of
Target, or to any Person related to any of the foregoing Persons; and
(xxiv) Target has not committed to any of the
foregoing.
(j) UNDISCLOSED LIABILITIES. Except as disclosed in Section
4(j) of the Disclosure Schedule, Target does not have any Liability, except for
(i) Liabilities set forth on the face of the Most Recent Balance Sheet (rather
than in any notes thereto) and (ii) Liabilities which have arisen after the
Most Recent Fiscal Year End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law and none of which could reasonably be expected to have a Material Adverse
Effect).
(k) LEGAL COMPLIANCE. Target and its corporate predecessors
and Affiliates have complied, in all material respects, with all applicable
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply.
(l) TAX MATTERS.
(i) Target has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in
all respects. All Taxes owed by Target (whether or not shown on any
Tax Return) have been paid or are fully and adequately accrued and
adequately disclosed on the Most Recent Balance Sheet. Target is not
currently the beneficiary of any extension of time within which to
file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where Target does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. There are no
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Security Interests on any of the assets of Target that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) Target has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder,
or other third party.
(iii) Neither Shareholder nor Target has Knowledge
that any authority expects to assess any additional Taxes for any
period for which Tax Returns have been filed. There is no action, suit
or proceeding, investigation, dispute or claim now pending or
threatened concerning any Tax Liability of Target or proposed
adjustment to the taxable income of Target either (A) claimed or
raised by any authority in writing or (B) as to which the Shareholder
and Target has Knowledge based upon personal contact with any agent of
such authority. Section 4(l) of the Disclosure Schedule contains a
summary of all Tax Returns filed with respect to Target for the last
three completed tax years, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the
subject of audit. The Shareholder has made available to North American
correct and complete copies of all Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed to by Target
since January 1, 1994.
(iv) Target has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(v) Target has not filed a consent under Code
Section 341(f) concerning collapsible corporations. Target has not
made any payments, is not obligated to make any payments, or is not a
party to any agreement that under certain circumstances could obligate
it to make any payments that will not be deductible under Code Section
280G or that would give rise to any obligation to indemnify any Person
for any excise tax payable pursuant to Code Section 4999. The Target
has not been a United States real property holding corporation within
the meaning of Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii). Target has disclosed on
its federal income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income Tax within
the meaning of Code Section 6662. Neither Target nor any predecessor
or affiliate thereof is a party to any Tax allocation, sharing,
indemnification or similar agreement. Target (A) has not been a member
of an Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Target) and (B)
does not have any Liability for the Taxes of any Person (other than
any of Target and its Subsidiaries) under Reg. Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise. No indebtedness of
Target consists of "corporate acquisition indebtedness" within the
meaning of Code Section 279.
(vi) Section 4(l) of the Disclosure Schedule sets
forth as of the most recent practicable date the basis for Federal
income tax purposes of Target in its assets and the
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amount of any net operating loss, net capital loss, unused investment
or other credit, unused foreign tax credit or excess charitable
contribution allocable to Target.
(vii) The unpaid Taxes of Target (A) did not, as of
the Most Recent Fiscal Period End, exceed the reserve for Tax
Liability set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) and (B) do not, and will not as of
the Closing Date, exceed that reserve as adjusted for the passage of
time through the Closing Date in accordance with the past custom and
practice of Target in filing its Tax Returns.
(m) REAL PROPERTY. Target does not own any real property.
ss.4(m) of the Disclosure Schedule lists and describes briefly all real
property leased or subleased to Target. The Shareholder has delivered to North
American correct and complete copies of the leases and subleases listed in
ss.4(m) of the Disclosure Schedule (as amended to date). With respect to each
lease and sublease listed in Section 4(m) of the Disclosure Schedule:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby;
(iii) no party to the lease or sublease is in breach
or default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the lease or sublease has
repudiated any provision thereof;
(v) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(vi) Target has not received a notice from the
lessor indicating that the lease will not be renewed at the end of its
current term for any additional terms provided for in the lease;
(vii) the term of the lease will continue for a
minimum of six months past the Closing Date;
(viii) the representations and warranties set forth
in subsections (i) through (vii) above are true and correct with
respect to the underlying lease of each sublease;
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(ix) Target has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(x) all facilities leased or subleased thereunder
have received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(xi) all facilities leased or subleased thereunder
are supplied with utilities and other services necessary for the
operation of said facilities; and
(xii) the Shareholder is not aware of any pending or
threatened foreclosure or other enforcement proceedings relating to
the real property underlying the leases or subleases set forth in
Section 4(m) of the Disclosure Schedule that could result in Target's
loss of possession of such real property.
(n) INTELLECTUAL PROPERTY.
(i) Target owns or has the right to use pursuant to
license, sublicense, agreement, or permission in writing all
Intellectual Property necessary for the operation of the businesses of
Target as presently conducted and as presently proposed to be
conducted. Each item of Intellectual Property owned or used by Target
immediately prior to the Closing hereunder will be owned or available
for use by Target on identical terms and conditions immediately
subsequent to the Closing hereunder. Target has taken all necessary
action to maintain and protect each item of Intellectual Property that
it owns or uses.
(ii) Target has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and none of the Shareholder and the
directors and officers (and employees with responsibility for
Intellectual Property matters) of Target has ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that
Target must license or refrain from using any Intellectual Property
rights of any third party). To the Knowledge of Shareholder and
Target, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of Target.
(iii) Section 4(n)(iii) of the Disclosure Schedule
identifies each patent or registration which has been issued to Target
with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which
Target has made with respect to any of its Intellectual Property, and
identifies each license, agreement, or other permission which Target
has granted to any third party with respect to any of its Intellectual
Property (together with any exceptions). The Shareholder has delivered
to North American correct and complete copies of all such patents,
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registrations, applications, licenses, agreements, and permissions (as
amended to date) and has made available to North American correct and
complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Section
4(n)(iii) of the Disclosure Schedule also identifies each trade name
or unregistered trademark used by Target in connection with any of its
businesses. With respect to each item of Intellectual Property
required to be identified in Section 4(n)(iii) of the Disclosure
Schedule:
(A) Target possesses all right, title, and
interest in and to the item, free and clear of any Security
Interest, license, or other restriction;
(B) the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) Target has never agreed to indemnify
any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Section 4(n)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that any third party
owns and that Target uses pursuant to license, sublicense, agreement,
or permission. The Shareholder has delivered to North American correct
and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in Section 4(n)(iv) of
the Disclosure Schedule:
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby;
(C) no party to the license, sublicense,
agreement, or permission is in breach or default, and no
event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any provision
thereof;
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(E) the representations and warranties set
forth in subsections (A) through (D) above are true and
correct with respect to the underlying license of each
sublicense;
(F) the underlying item of Intellectual
Property is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual
Property; and
(H) Target has never granted any sublicense
or similar right with respect to the license, sublicense,
agreement, or permission.
(v) To the Knowledge of Shareholder and Target,
Target will not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of
third parties as a result of the continued operation of its businesses
as presently conducted and as presently proposed to be conducted.
(vi) None of the Shareholder and Target has any
Knowledge of any new products, inventions, procedures, or methods of
manufacturing or processing that any competitors or other third
parties have developed which reasonably could be expected to supersede
or make obsolete any product or process of any of Target.
(o) TANGIBLE ASSETS. Target owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of
its business as presently conducted and as presently proposed to be conducted.
Each such tangible asset is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it presently
is used. Section 4(o) of the Disclosure Schedule lists all tangible assets
owned by Target.
(p) INVENTORY. Target has no inventory.
(q) CONTRACTS. Section 4(q) of the Disclosure Schedule lists
all the contracts and other agreements to which Target is a party. The
Shareholder has delivered to North American a correct and complete copy of each
written agreement listed in Section 4(q) of the Disclosure Schedule (as amended
to date). With respect to each such agreement:
(i) the agreement is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
with respect to Target, and to the
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Knowledge of the Shareholder, with respect to any other parties
thereto, following the consummation of the transactions contemplated
hereby;
(iii) neither Target, nor to the Knowledge of the
Shareholder, any other party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration,
under the agreement; and
(iv) neither Target, nor to the Knowledge of the
Shareholder, any other party has repudiated any provision of the
agreement. Section 4(q) of the Disclosure Schedule lists each currently
outstanding bid or proposal for business submitted by Target in excess
of $100,000.
(r) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of Target are reflected properly on the Most Recent Balance Sheet in
accordance with GAAP, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and will be collected in accordance
with their terms at their recorded amounts, subject only to the reserve for bad
debts set forth on the face of the Most Recent Balance Sheet (rather than in
any notes thereto) as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of Target.
(s) POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of Target.
(t) INSURANCE. Section 4(t) of the Disclosure Schedule
includes a true, correct and complete list of all policies of insurance
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which Target is a
party, a named insured, or otherwise the beneficiary of coverage. Genuine and
complete copies of each of the insurance policies listed in Section 4(t) of the
Disclosure Schedule have been provided to North American. With respect to each
such insurance policy:
(i) the policy is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
with respect to Target, and to the Knowledge of the Shareholder, with
respect to any other parties thereto, following the consummation of
the transactions contemplated hereby;
(iii) neither Target nor, to the Knowledge of the
Shareholder, any other party to the policy is in breach or default
(including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy;
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(iv) to the Knowledge of the Shareholder, neither
Target, any ERISA Affiliate nor North American shall be subject to a
retroactive rate adjustment, loss sharing arrangement or other actual
or contingent liability; and
(v) to Shareholder's and Target's Knowledge, no
party to the policy has repudiated any provision thereof. Target has
been fully covered at all times during the past five years by
insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period.
Section 4(t) of the Disclosure Schedule describes any self-insurance
arrangements affecting Target.
(u) LITIGATION. Section 4(u) of the Disclosure Schedule sets
forth each instance in which Target (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party, or
to the Knowledge of Shareholder and Target, is threatened to be made a party to
any claim, action, suit, proceeding, hearing, or investigation of, in or before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator. Except as set forth in
ss.4(u) of the Disclosure Schedule, there is no other pending, or to the
knowledge of Shareholder and Target, threatened claim, arbitration proceeding,
action, suit, investigation or other proceeding against or involving Target or
any property or rights of Target or any officer or director or Target. None of
the actions, suits, proceedings, hearings, and investigations set forth in
ss.4(u) of the Disclosure Schedule could result in any Material Adverse Effect.
Neither the Shareholder nor the directors and officers (and employees with
responsibility for litigation matters) of Target has any reason to believe that
any such action, suit, proceeding, hearing, or investigation may be brought or
threatened against Target.
(v) COMMITMENTS AND WARRANTIES. All services provided by the
Target have been performed in conformity with all applicable contractual
commitments (written or oral) and all express and implied warranties (written
or oral), and Target has no Liability and, to the Knowledge of the Shareholder
and Target, there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) in connection with any such services.
ss.4(v) of the Disclosure Schedule includes copies of the standard forms of
agreement entered into between Target and its customers. Target has not entered
into any written or oral agreements with any of its customers that include
guaranties, warranties, or indemnity provisions other than those contained in
the agreements included as part of Section 4(v) of the Disclosure Schedule.
Neither Target nor the Shareholder has received notice
(written or oral) from any of its customers stating that the customer intends
to reduce the volume of business that it currently conducts with Target or to
cease doing business with Target. Target has not entered into any minimum
purchase commitments or guaranteed pricing agreements.
(w) LIABILITY FOR SERVICES PERFORMED. Target has no Liability
(and, to Share- holder's Knowledge, there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any
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Liability) arising out of any injury to individuals or property as a result of
or in connection with any services provided by Target.
(x) EMPLOYEES. To the Knowledge of the Shareholder and
Target, no executive, key employee, or group of employees has any plans to
terminate employment with Target. Target is not currently, nor at any prior
time has been, a party to or bound by any collective bargaining agreement, nor
has Target experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. Target has not committed
any unfair labor practice. Neither the Shareholder nor Target has any Knowledge
of any organizational effort presently being made or threatened by or on behalf
of any labor union with respect to employees of Target.
(y) EMPLOYEE BENEFITS.
(i) Section 4(y) of the Disclosure Schedule lists
each Employee Benefit Plan that Target or any ERISA Affiliate
maintains, contributes to, or is required to contribute to or under
which Target or any ERISA Affiliate has any liability.
(A) Each such Employee Benefit Plan (and
each related trust, insurance contract, or fund) complies in
form and in operation in all respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(B) All required reports and disclosures
(including Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1's, and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Section 4980B have been met with
respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) All contributions (including all
employer contributions and employee salary reduction
contributions) which are due have been paid to each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each
such Employee Pension Benefit Plan or accrued in accordance
with the past custom and practice of Target and in accordance
with GAAP. All premiums or other payments for all periods
ending on or before the Closing Date have been paid with
respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which
is an Employee Pension Benefit Plan now meets and at all
times since inception has met the requirements of a
"qualified plan" under Code Section 401(a) and has received,
within the last two years, a favorable determination letter
from the Internal Revenue Service.
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(E) As of the Closing Date, the market
value of assets under each such Employee Benefit Plan which
is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) will equal or exceed the present value of
all vested and nonvested Liabilities thereunder determined in
accordance with PBGC methods, factors, and assumptions
applicable to an Employee Pension Benefit Plan terminating on
such date.
(F) The Shareholder has delivered to North
American correct and complete copies of the plan documents
and summary plan descriptions including all amendments
thereto, the most recent determination letter received from
the Internal Revenue Service, the three most recent Form 5500
Annual Reports (including all schedules thereto), the three
most recent annual premium payment forms filed with the PBGC,
and all related trust agreements, insurance contracts, and
other funding agreements which implement each such Employee
Benefit Plan.
(ii) With respect to each Employee Benefit Plan that
Target or any ERISA Affiliate maintains, contributes to, or is
required to contribute to or under which Target or any ERISA Affiliate
has any liability:
(A) No such Employee Benefit Plan which is
an Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or partially
terminated or been the subject of a Reportable Event as to
which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been
instituted or threatened.
(B) There have been no Prohibited
Transactions with respect to any such Employee Benefit Plan.
No Fiduciary has any Liability for breach of fiduciary duty
or any other failure to act or comply in connection with the
administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing,
or investigation with respect to any such Employee Benefit
Plan (other than routine claims for benefits) is pending or
threatened. Neither the Shareholder nor Target has any
Knowledge of any Basis for any such action, suit, proceeding,
hearing, or investigation.
(C) Neither Target nor any ERISA Affiliate
has incurred, and none of the Shareholder, the directors and
officers (and employees with responsibility for employee
benefits matters) of Target has any reason to expect that
Target or any ERISA Affiliate will incur, any Liability to
the PBGC (other than PBGC premium payments) or otherwise
under Title IV of ERISA (including any withdrawal Liability)
or under the Code with respect to any such Employee Benefit
Plan which is an Employee Pension Benefit Plan.
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(iii) Neither Target nor any ERISA Affiliate
contributes to, ever has contributed to, or ever has been required to
contribute to, any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iv) Neither Target nor any ERISA Affiliate
maintains or contributes to, or has ever been required to contribute
to, any Employee Welfare Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their dependents
(other than in accordance with Code Section 4980B).
(z) GUARANTIES. Target is not a guarantor or otherwise liable
for any Liability or obligation (including indebtedness) of any other Person.
(aa) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) Target and its corporate predecessors and
Affiliates have complied and are in compliance with all Environmental,
Health, and Safety Requirements.
(ii) Without limiting the generality of the
foregoing, Target and its Affiliates have obtained and complied with,
and are in compliance with, all permits, licenses and other
authorizations that are required pursuant to Environmental, Health,
and Safety Requirements for the occupation of its facilities and the
operation of its business; a list of all such permits, licenses and
other authorizations is set forth on Section 4(aa) of the Disclosure
Schedule.
(iii) Neither Target nor its corporate predecessors
or Affiliates has received any written or oral notice, report or other
information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any liabilities or
potential liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or
corrective obligations, relating to any of them or its facilities
arising under Environmental, Health, and Safety Requirements.
(iv) None of the following exists at any property or
facility owned or operated by Target: (1) underground storage tanks,
(2) asbestos-containing material in any form or condition, (3)
materials or equipment containing polychlorinated biphenyls, or (4)
landfills, surface impoundments, or disposal areas.
(v) None of Target or its corporate predecessors or
Affiliates has treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or
operated any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or
would give rise to liabilities, including any liability for response
costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the
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Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as
amended ("SWDA") or any other Environmental, Health, and Safety
Requirements.
(vi) Neither this Agreement nor the consummation of
the transactions that are the subject of this Agreement will result in
any obligations for site investigation or cleanup, or notification to
or consent of government agencies or third parties, pursuant to any of
the so-called "transaction-triggered" or "responsible property
transfer" Environmental, Health, and Safety Requirements.
(vii) Neither Target nor its corporate predecessors
or Affiliates has, either expressly or by operation of law, assumed or
undertaken any liability, including without limitation any obligation
for corrective or remedial action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(viii) No facts, events or conditions relating to
the past or present facilities, properties or operations of Target or
any of its corporate predecessors or Affiliates will prevent, hinder
or limit continued compliance with Environmental, Health, and Safety
Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental, Health, and Safety Requirements
(whether on-site or off-site), or give rise to any other liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise)
pursuant to Environmental, Health, and Safety Requirements, including
without limitation any relating to onsite or offsite releases or
threatened releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources damage.
(ab) CERTAIN BUSINESS RELATIONSHIPS WITH TARGET. Neither the
Shareholder, his Affiliates, any director or employee of Target, or any
relatives of the Shareholder, or any person living in the same residence as
such persons, has been involved in any business arrangement or relationship
with Target within the past 12 months, and neither the Shareholder nor his
respective Affiliates nor any of such other persons owns leases, licenses, or
otherwise has any interest in any asset, tangible or intangible, which is used
in the business of Target or any contract, lease or commitment to which Target
is a party. Target is not indebted to any officer, director or employee of
Target for any liability or obligation. No officer, director or employee of
Target is indebted to Target for any liability or obligation.
(ac) CUSTOMERS AND SUPPLIERS. No purchase order or commitment
of Target is in excess of normal requirements, nor are prices provided therein
in excess of current market prices for the products or services to be provided
thereunder. No material supplier of Target has advised Target in writing during
the past 12 months that it will stop, or decrease the rate of, supplying
materials, products or services to Target and no material customer of Target
has advised Target in writing during the past 12 months that it will stop, or
decrease the rate of buying materials, products or services from Target.
ss.4(ac) of the Disclosure Schedule sets forth a list of (a) each customer that
accounted for more that 5% of the consolidated revenues of
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Target during the last full fiscal year or the interim period through the date
of the Most Recent Financial Statements and the amount of revenues accounted
for by such customer during each such period and (b) each supplier that is the
sole supplier of any significant product or component to Target. The
consummation of the transactions contemplated hereby will not have a Material
Adverse Effect on Target's relationship with any customer or supplier listed in
ss.4(ac) of the Disclosure Schedule.
(ad) DISCLOSURE. Neither this Agreement nor any of the
exhibits, attachments, written statements, documents, certificates or other
items prepared for or supplied to North American by or on behalf of Target or
the Shareholder with respect to the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make each statement contained herein or therein not
misleading. There is no fact which Target or the Shareholder has not disclosed
to North American herein and of which the Shareholder, Target, or any of
Target's officers or directors is aware and which could be anticipated to have
a Material Adverse Effect.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his or its best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions
set forth in Section 7 below).
(b) SHAREHOLDER DISTRIBUTION. Target shall declare, and
record as a liability of Target, a cash distribution to be paid to the
Shareholder in an amount equal to the estimated federal income tax to be paid
by the Shareholder, with respect to the earnings and profits of Target, for the
period from January 1, 1998 through the Closing Date (the "SHAREHOLDER
DISTRIBUTION").
(c) NOTICES AND CONSENTS. The Shareholder will cause Target
to give any notices to third parties, and will cause Target to use its best
efforts to obtain any third party consent required in connection with the
matters referred to in Section 4(d) above. Each of the Parties will (and the
Shareholder will cause Target to) give any notices to, make any filings with,
and use its best efforts to obtain any authorizations, consents, and approvals
of governments and governmental agencies in connection with the matters
referred to in Section 3(a)(ii), Section 3(b)(iv), and Section 4(d) above.
(d) OPERATION OF BUSINESS. The Shareholder will not cause or
permit Target to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Shareholder will not cause or permit Target to
(i) declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase, or otherwise acquire any of
its capital stock, except for the Shareholder Distribution; or (ii) otherwise
engage in any practice, take any
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action, or enter into any transaction of the sort described in Section 4(i)
above. The Shareholder will immediately notify North American in writing with
respect to any proposed capital expenditures in excess of $10,000.
(e) PRESERVATION OF BUSINESS. The Shareholder will cause
Target to keep its business and properties substantially intact, including its
present operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers, and employees.
(f) FULL ACCESS. The Shareholder will permit, and will cause
Target to permit, representatives of North American to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of Target, to all premises, properties, personnel, books,
records (including Tax records), contracts, and documents of or pertaining to
Target. At the request of North American, Shareholder will permit, and will
cause Target to permit, North American's lenders, and their respective counsel,
to have the same access as permitted to North American in accordance with the
immediately preceding sentence.
(g) NOTICE OF DEVELOPMENTS. Each of the Parties will give
prompt written notice to the other Parties of any breach of any of the
representations and warranties in Section 4 above. Each Party will give prompt
written notice to the others of any breach of any of his or its own
representations and warranties in Section 3 above. No disclosure by any Party
pursuant to this Section 5(g), however, shall be deemed to amend or supplement
the North American Disclosure Schedule or the Disclosure Schedule or to prevent
or cure any misrepresentation, breach of warranty, or breach of covenant.
(h) EXCLUSIVITY. The Shareholder will not (and the
Shareholder will not cause or permit Target to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of Target (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate
in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing. The
Shareholder will notify North American immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
(i) NO TERMINATION OF SHAREHOLDER'S OBLIGATION BY SUBSEQUENT
INCAPACITY. Shareholder specifically agrees that his obligations hereunder,
including, without limitation, the obligations pursuant to Section 8 hereof,
shall not be eliminated by his death or incapacity.
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6. POST-CLOSING COVENANTS. The Parties agree as follows with respect
to the period following the Closing.
(a) GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Section 8 below). The Shareholder acknowledges and agrees that
from and after the Closing North American will be entitled to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort relating to Target.
(b) LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Target, each of the other Parties will cooperate
with him or it and his or its counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
ss.8 below).
(c) TRANSITION. The Shareholder will not take any action that
is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of Target from
maintaining the same business relationships with Target after the Closing as it
maintained with Target prior to the Closing. The Shareholder will refer all
customer inquiries relating to the businesses of Target to North American from
and after the Closing.
(d) INDEPENDENT ACCOUNTANTS. After the Closing, Shareholder
shall (i) use reasonable efforts to cause Target's past and present independent
auditors and accounting personnel to make available to North American and its
representatives all financial information, including the right to examine all
working papers pertaining to audits or reviews previously or hereafter made by
such auditors, and (ii) provide such cooperation as North American and its
representatives may reasonably request in connection with any audit or review
of Target that North American may direct its representatives to make. Without
limiting the generality of the foregoing, the Shareholder agrees that he will
cooperate with, and cause Target's past and present independent auditors,
accounting personnel and other necessary persons to cooperate with North
American in the preparation, at North American's expense, of any documents
filed by North American with the U.S. Securities and Exchange Commission in
connection with an offering of securities, to the extent information about
Target is required therein.
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(e) TAX MATTERS. The Shareholder covenants and agrees not to
take any action, or fail to take any action, with respect to Taxes, that would
have a Material Adverse Effect on North American on or after the Closing Date,
including, without limitation, amending or otherwise supplementing any Tax
Return or report of Target with respect to any period prior to the Closing Date
without the consent of North American. If any taxing authority conducts any
audit or investigation relating to Target prior to the Closing Date, North
American may, in its sole election, have the right to supervise such audit or
investigation and provide any response required in connection therewith.
(f) STOCK OPTIONS. North American has adopted a stock
incentive plan (the "Stock Incentive Plan") pursuant to which stock options and
other forms of stock-based compensation may be awarded to the officers,
directors and employees of North American and its subsidiaries. The key
employees of Target shall be eligible to receive awards under the Stock
Incentive Plan of options to acquire shares of North American stock. Within 60
days of the Closing, the officers of Target shall recommend to the Stock Option
Committee under the Stock Incentive Plan the terms, conditions and amounts of
awards to be granted and the identity of the key employees of Target to receive
such awards; however, all such awards, and the terms and conditions thereof,
shall be finally determined by the Stock Option Committee.
(g) AUDITED FINANCIAL STATEMENTS. At the request of North
American, Shareholder shall cause Target's auditors to prepare audited
consolidated balance sheets and statements of income, changes in stockholders'
equity, and cash flow including the audit report thereon as of and for the
12-month periods ended December 31, 1996 and December 31, 1997 for the Target.
Except as set forth in Section 8(b)(ii) hereof, all costs associated with the
preparation and audit of Target's December 31, 1996 and December 31, 1997
financial statements shall be paid by North American.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF NORTH AMERICAN. The
obligation of North American to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in
Section 3(a) and Section 4 above shall be true and correct in all
material respects at and as of the Closing Date and there shall not
have occurred any Material Adverse Effect;
(ii) the Shareholder and Target shall have performed
and complied with all of his and its covenants hereunder in all
material respects through the Closing;
(iii) Target shall have procured all of the third
party consents specified in Section 5(b) above;
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(iv) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction, or
before any arbitrator, wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of
the transactions contemplated by this Agreement to be rescinded
following consummation, (C) have a Material Adverse Effect on the
right of Target to own its assets and to operate its businesses (and
no such injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(v) the Parties shall have received all
authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(a)(ii), Section
3(b)(iv), and Section 4(d) above;
(vi) North American shall have received from counsel
to the Shareholder an opinion in form and substance as set forth in
EXHIBIT B attached hereto, addressed to North American and dated as of
the Closing Date;
(vii) all actions to be taken by the Shareholder in
connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to North American;
(viii) at least five business days prior to the
Closing, North American shall have received a balance sheet prepared
by Target, estimating the assets, liabilities and shareholders' equity
of Target as of the Closing Date (the "Estimated Closing Balance
Sheet"). The Estimated Closing Balance Sheet shall be prepared in
accordance with the method set forth in Section 9(a) for the
preparation of the Draft Closing Balance Sheet and will reflect (A)
shareholders' equity ("Shareholders' Equity") of at least $265,000.00
and (B) cash ("Cash") of at least $60,000.00. North American shall not
have objected to, challenged or otherwise repudiated any of the
amounts included in the Estimated Closing Balance Sheet;
(ix) North American shall have received an
appraisal, from an appraiser selected by North American, that states
that the fair market value of Target's tangible assets listed in
Section 4(o) of the Disclosure Schedule is at least equal to the book
value, i.e., cost less depreciation, of such assets reflected in the
Closing Balance Sheet.
(x) at least five business days prior to the
Closing, Shareholder shall have delivered to North American a
statement of income of Target for the four months ended April 30, 1998
which reflects earnings before interest, taxes, depreciation and
amortization expense ("EBITDA") of at least $225,000.00.
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(xi) Shareholder shall have delivered to North
American financial projections for Target for the calendar years 1998,
1999 and 2000, which reflect at least 10% growth in gross revenues per
year and net income before income taxes on a pro-forma basis equal to
at least 10% of revenues per year.
(xii) Target shall have delivered evidence of its
qualification to do business in each jurisdiction where it is so
qualified and a certificate of good standing issued by the Secretary
of State of each such jurisdiction demonstrating that Target is in
good standing in that jurisdiction;
(xiii) Xxxxxxx Xxxxxxx shall have entered into an
Employment Agreement with Target in the form attached hereto as
EXHIBIT C;
(xiv) the Shareholder shall have signed the Amended
and Restated Stockholders' Agreement;
(xv) the board of directors of North American shall
have approved the consummation of the transactions contemplated by
this Agreement; and
(xvi) all actions to be taken by the Shareholder in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to North American.
North American may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SHAREHOLDER. The
obligation of the Shareholder to consummate the transactions to be performed by
him in connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in
Section 3(b) above shall be true and correct in all material respects
at and as of the Closing Date;
(ii) North American shall have performed and
complied with all of its covenants hereunder in all material respects
through the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction, or before any arbitrator, wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
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(iv) the Parties shall have received all
authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(a)(ii), Section
3(b)(iv), and Section 4(d) above;
(v) Shareholder shall have received from counsel to
North American an opinion in form and substance as set forth in
EXHIBIT D attached hereto, addressed to the Shareholder, and dated as
of the Closing Date;
(vi) this Agreement and the transactions
contemplated hereby shall have been approved by the Board of Directors
of North American;
(vii) all actions to be taken by North American in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Shareholder.
The Shareholder may waive any condition specified in this Section 7(b) if he
executes a writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties, covenants and agreements of the Parties contained
in this Agreement or in any certificate, document, instrument or agreement
delivered pursuant to this Agreement shall survive the Closing hereunder
(notwithstanding any due diligence investigations that may have been undertaken
by the damaged Party) and continue in full force and effect for a period of
five years following the Closing. Notwithstanding the foregoing, a claim for
indemnification in respect of a breach of the representations and warranties
set forth in Section 3(a), 3(b), 4(a)-(f), 4(l), 4(y) and 4(aa) may be made at
anytime following the Closing Date, until the expiration of the applicable
statute of limitations, and are not subject to the foregoing limitation.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF NORTH AMERICAN.
(i) In the event the Shareholder breaches (or in the
event that any third party alleges facts that, if true, would mean
that the Shareholder has breached) any of his representations,
warranties (or any of such representations or warranties is untrue or
inaccurate), covenants and agreements contained herein or in any
certificate, document, instrument or agreement delivered pursuant to
this Agreement, and, provided that the Indemnified Buyers (as
hereafter defined) make a written claim for indemnification against
the Shareholder pursuant to Section 12(g) below within the applicable
claim period provided in 8(a) above, then the Shareholder agrees to
indemnify North American and each of its officers, directors,
employees, representatives and shareholders (the "Indemnified Buyers")
from and against the entirety of any Adverse Consequences the
Indemnified Buyers may suffer through and after the date of the claim
for indemnification
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(including any Adverse Consequences the Indemnified Buyers may suffer
after the end of any applicable claim period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the
alleged breach).
(ii) Without limiting any other indemnification
provided in this Section 8, the Shareholder agrees to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences the Indemnified Buyers may suffer resulting from, arising
out of, relating to, in the nature of, or caused by any Liability of
Target (x) for any Taxes of Target with respect to any Tax year or
portion thereof ending on or before the Closing Date or for any Tax
year beginning before and ending after the Closing Date to the extent
allocable (determined in a manner consistent with Section 9(b)) to the
portion of such period beginning before and ending on the Closing
Date), (A) to the extent such Taxes are not reflected in the reserve
for Tax Liability shown on the face of the Most Recent Balance Sheet,
or (B) to the extent such Taxes (and related legal and accounting
fees) are incurred by North American in connection with auditing
adjustments made to the Financial Statements by Target's auditors; or
(y) for the unpaid Taxes of any Person (other than Target) under Reg.
Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(iii) Without limiting any other indemnification
provided in this Section 8, Shareholder agrees to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences they may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the activities of any entity which
at any time has been owned, in whole or in part, by Target.
(iv) Without limiting any other indemnification
provided in this Section 8, Shareholder agrees to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences they may suffer resulting from, or arising out of,
relating to, or in the nature of or caused by any claim by a
stockholder or former stockholder of Target or any other Person
seeking to assert: (i) ownership or rights to ownership of any shares
of capital stock of Target or any Subsidiary, (ii) any rights of a
stockholder (other than the right to receive the Consideration)
including any option, preemptive rights or rights to receive notice or
to vote, (iii) any rights under Target's charter, bylaws or other
constituent documents, or (iv) any claim that his shares of capital
stock were to be repurchased by Target.
(v) Without limiting any other indemnification
provided in this Section 8, Shareholder agrees to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences they may suffer resulting from, or arising out of,
relating to, or in the nature of or caused by any claim by a
dissenting shareholder that the Consideration is less than the fair
value of his shares.
(vi) Without limiting any other indemnification
provided in this Section 8, Shareholder agrees to indemnify the
Indemnified Buyers from and against the entirety of
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any Adverse Consequences they may suffer as a result of a taxing
authority taking the position that any former or current subcontractor
of Target should have been, at any time prior to the Closing Date,
treated as an employee of Target.
(vii) Without limiting any other indemnification
provided in this Section 8, Shareholder agrees to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences they may suffer as a result of Target's failure to be
duly authorized to conduct business and in good standing under the
laws of any jurisdiction where such qualification is or has been
required as of or prior to the Closing Date.
(viii) Without limiting any other indemnification
provided in this Section 8, Shareholder agrees to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences they may suffer as a result of any warranty claims made
against Target after the Closing Date for services begun or completed
by Target prior to the Closing Date.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SHAREHOLDER.
In the event North American breaches (or in the
event any third party alleges facts that, if true, would mean North
American had breached) any of its representations, warranties (or any
of such representations or warranties is untrue or inaccurate),
covenants and agreements contained herein or in any certificate,
document, instrument or agreement delivered pursuant to this
Agreement, and, provided that the Shareholder makes a written claim
for indemnification against North American pursuant to Section 12(g)
below within the applicable claim period provided in 8(a) above, then
North American agrees to indemnify the Shareholder and each of his
representatives (the "Indemnified Shareholders") from and against the
entirety of any Adverse Consequences the Indemnified Shareholders may
suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Indemnified Shareholders may
suffer after the end of any applicable claim period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach
(or the alleged breach).
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any party
entitled to indemnification hereunder (the "INDEMNIFIED PARTY") with
respect to any matter (a "THIRD PARTY CLAIM") which may give rise to a
claim for indemnification against any other Party (the "INDEMNIFYING
PARTY") under this Section 8, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing; PROVIDED,
HOWEVER, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent)
the Indemnifying Party thereby is materially prejudiced.
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(ii) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party
so long as (A) the Indemnifying Party notifies the Indemnified Party
in writing within 15 business days after the Indemnified Party has
given notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of any
Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, (E) the named
parties to the Third Party Claim do not include both the Indemnified
Party and the Indemnifying Party, and (F) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with
Section 8(d)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense
of the Third Party Claim, (B) the Indemnified Party will not consent
to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be unreasonably withheld, conditioned or
delayed), and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party
(not to be unreasonably withheld, conditioned or delayed).
(iv) In the event any of the conditions in
Section 8(d)(ii) above is or becomes unsatisfied, however, (A) the
Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party
Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith), (B) the Indemnifying
Parties will reimburse the Indemnified Party promptly and periodically
for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (C) the Indemnifying
Parties will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 8.
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
take into account the time cost of money (using the Applicable Rate as the
discount rate) in determining
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Adverse Consequences for purposes of this Section 8. All indemnification
payments under this Section 8 shall be deemed adjustments to the Consideration.
(f) RIGHT OF OFFSET AGAINST SHAREHOLDER DISTRIBUTION. North
American shall have the right to offset, up to the amount of the Shareholder
Distribution made pursuant to Section 5(b) hereof, any Adverse Consequences it
may suffer in lieu of seeking any indemnification to which it is entitled under
this Section 8. North American's right of offset shall not constitute a
limitation of North American's rights hereunder or as a measure of liquidated
damages and North American may seek full indemnification for all damages
suffered and may pursue all rights and remedies available to it, at law or in
equity, against the Shareholder, without seeking recourse against any other
party and without exercising its right of offset hereunder.
(g) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy (including without limitation any
such remedy arising under Environmental, Health, and Safety Requirements) any
Party may have with respect to Target, or the transactions contemplated by this
Agreement. The Shareholder hereby agrees that he will not make any claim for
indemnification against Target by reason of the fact that he was a director,
officer, employee, or agent of Target or was serving at the request of Target
as a partner, trustee, director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs, amounts
paid in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise) with
respect to any action, suit, proceeding, complaint, claim, or demand brought by
the Buyer against the Shareholder (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this Agreement, applicable law, or
otherwise).
9. POST-CLOSING ADJUSTMENT OF CONSIDERATION.
(a) Within 90 days after the Closing Date, North American
will prepare and deliver to Shareholder a draft balance sheet (the "DRAFT
CLOSING DATE BALANCE SHEET") for Target as of the close of business on the
Closing Date (determined as though the Parties had not consummated the
transactions contemplated by this Agreement), prepared in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements;
except that the Draft Closing Date Balance Sheet shall include all of the same
types of adjustments as were made in connection with the preparation of the
Most Recent Financial Statements.
(b) If the Shareholder has any objections to the Draft
Closing Date Balance Sheet, he will deliver a detailed statement describing his
objections to North American within 30 days after receiving the Draft Closing
Date Balance Sheet. North American and the Shareholder will use reasonable
efforts to resolve any such objections themselves. If the Parties do not obtain
a final resolution within 30 days after North American has received the
statement of objections, however, North American and Shareholder will select an
accounting firm mutually acceptable to them to resolve any remaining
objections. If North American and the Shareholder are unable to agree on the
choice of an accounting firm, they will select a nationally-recognized
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accounting firm by lot (after excluding their respective regular outside
accounting firms). The determination of any accounting firm so selected will be
set forth in writing and will be conclusive and binding upon the Parties. North
American will revise the Draft Closing Date Balance Sheet as appropriate to
reflect the resolution of any objections thereto pursuant to this Section 9(b).
The "Closing Date Balance Sheet" shall mean the Draft Closing Date Balance
Sheet together with any revisions thereto pursuant to this Section 9(b).
(c) In the event the Parties submit any unresolved objections
to an accounting firm for resolution as provided in Section 9(b) above, any
expenses relating to the engagement of the accounting firm shall be allocated
between the Shareholder and North American by the accounting firm in proportion
to the amount in dispute which is decided in favor of the challenging party.
(d) North American will make the work papers and back-up
materials used in preparing the Draft Closing Date Balance Sheet available to
the Shareholder and his accountants and other representatives at reasonable
times and upon reasonable notice during (A) the preparation by North American
of the Draft Closing Date Balance Sheet, (B) review by the Shareholder of the
Draft Closing Date Balance Sheet, and (C) the resolution by the Parties of any
objections thereto.
(e) (i)If the Shareholders' Equity set forth in the Closing
Date Balance Sheet, plus the Shareholders' Equity set forth in the closing date
balance sheet of State Wide CATV, Inc., a New York corporation, prepared in
accordance with Section 9(a) of the Stock Purchase Agreement of even date
herewith (the "State Wide Agreement") between North American and the sole
shareholder of State Wide (the "State Wide Closing Date Balance Sheet") is less
than $765,000.00, the Shareholder will pay to North American an amount equal to
such deficiency pursuant to the provisions of Section 9(e) of the State Wide
Agreement; (ii) if Cash set forth in the Closing Date Balance Sheet, plus the
cash set forth in the State Wide Closing Date Balance Sheet is less than
$150,000.00, the Shareholder will pay to North American an amount equal to such
deficiency pursuant to the provisions of Section 9(e) of the State Wide
Agreement; and (iii) if the state and federal income taxes accrued on the
Closing Date Balance Sheet are in excess of the state and federal income taxes
actually paid by Target with respect to the period ending on the Closing Date,
North American will pay to the Shareholder an amount equal to such excess
within five business days after the date on which Target pays such state and
federal income taxes.
(ii)If the state and federal income taxes accrued on
the Closing Date Balance Sheet are in excess of the state and federal income
taxes actually paid by Target with respect to the period ending on the Closing
Date, North American will pay to the Shareholder an amount equal to such excess
within five business days after the date on which Target pays such state and
federal income taxes.
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10. TAX MATTERS. The following provisions shall govern the allocation
of respon- sibility between North American and Shareholder for certain Tax
matters following the Closing Date:
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE.
Shareholder shall prepare or cause to be prepared and timely file or cause to
be timely filed all Tax Returns for Target for all tax periods ending on or
prior to the Closing Date which are filed after the Closing Date (the
"Pre-Closing Period"). Such Tax Returns shall be prepared by treating items on
such Tax Return in a manner consistent with the past practices with respect to
such items, unless otherwise required by law. Shareholder shall permit North
American to review and comment on each such Tax Return described in the
preceding sentence prior to filing. North American shall pay the amounts due
for Taxes of Target with respect to the Pre-Closing Periods, up to the amount
reflected in the reserve for Tax Liability shown on the face of the Most Recent
Balance Sheet. Upon completion of North American's review of the Tax Return,
and immediately prior to the due date thereof, North American shall deliver the
Shareholder Distribution to the Shareholder. Shareholder agrees that he will
pay, when due, all amounts due for Taxes of Target with respect to Pre-Closing
Periods that exceed the reserve for Tax Liability, and all amounts due for
Taxes of the Shareholder with respect to Pre-Closing Periods.
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. North American shall prepare or cause to be prepared and file or cause to
be filed any Tax Returns of Target for Tax periods which begin before the
Closing Date and end after the Closing Date. North American shall permit
Shareholder to review and comment on each such Tax Return described in the
preceding sentence prior to filing. Shareholder shall pay to North American
within fifteen (15) days after the date on which Taxes are paid with respect to
such periods an amount equal to the portion of such Taxes which relates to the
portion of such Taxable period ending on the Closing Date to the extent such
Taxes are not reflected in the reserve for Tax Liability shown on the face of
the Most Recent Balance Sheet. For purposes of this Section 10, in the case of
any Taxes that are imposed on a periodic basis and are payable for a Taxable
period that includes (but does not end on) the Closing Date, the portion of
such Tax which relates to the portion of such Taxable period ending on the
Closing Date shall (x) in the case of any real and personal property Taxes, be
deemed to be the amount of such Tax for the entire Taxable period multiplied by
a fraction the numerator of which is the number of days in the Taxable period
ending on the Closing Date and the denominator of which is the number of days
in the entire Taxable period, and (y) in the case of any other Tax be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date. Any credits relating to a Taxable period that begins
before and ends after the Closing Date shall be taken into account as though
the relevant Taxable period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with the prior practice of Target.
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(c) COOPERATION ON TAX MATTERS.
(i) North American, Target and Shareholder shall
cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns pursuant to
this Section 10 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. Target agrees (A) to
retain all books and records with respect to Tax matters pertinent to
Target relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the
extent notified by North American or Shareholder, any extensions
thereof) of the respective taxable periods, and to abide by all record
retention agreements entered into with any taxing authority, and (B)
to give each other Party reasonable written notice prior to
transferring, destroying or discarding any such books and records and,
if any other Party so requests, Target or Shareholder, as the case may
be, shall allow such other Party to take possession of such books and
records.
(ii) North American and Shareholder further agree,
upon request, to use their best efforts to obtain any certificate or
other document from any governmental authority or any other Person as
may be necessary to mitigate, reduce or eliminate any Tax that could
be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(iii) North American and Shareholder further agree,
upon request, to provide the other party with all information that
either party may be required to report pursuant to Section 6043 of the
Code and all Treasury Department Regulations promulgated thereunder.
(d) TAX SHARING AGREEMENTS. All tax sharing agreements or
similar agreements with respect to or involving Target shall be terminated as
of the Closing Date and, after the Closing Date, Target shall not be bound
thereby or have any liability thereunder.
(e) CERTAIN TAXES. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by
Shareholder when due, and Shareholder will, at its own expense, file all
necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees, and, if required by applicable law, North American will, and will cause
its Affiliates to, join in the execution of any such Tax Returns and other
documentation.
11. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement as provided below:
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(i) North American and the Shareholder may terminate
this Agreement by mutual written consent at any time prior to the
Closing;
(ii) North American may terminate this Agreement by
giving written notice to the Shareholder at any time prior to the
Closing (A) in the event the Shareholder has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect, North American has notified the Shareholder of
the breach, and the breach has continued without cure for a period of
30 days after the notice of breach or (B) if the Closing shall not
have occurred on or before September 30, 1998, by reason of the
failure of any condition precedent under Section 7(a) hereof (unless
the failure results primarily from North American itself breaching any
representation, warranty, or covenant contained in this Agreement);
and
(iii) the Shareholder may terminate this Agreement
by giving written notice to North American at any time prior to the
Closing (A) in the event North American has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect, the Shareholder has notified North American of
the breach, and the breach has continued without cure for a period of
30 days after the notice of breach or (B) if the Closing shall not
have occurred on or before September 30, 1998, by reason of the
failure of any condition precedent under Section 7(b) hereof (unless
the failure results primarily from the Shareholder himself breaching
any representation, warranty, or covenant contained in this
Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 11(a) above, all rights and obligations of the
Parties hereunder shall terminate without any Liability of any Party to any
other Party (except for any Liability of any Party then in breach).
12. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of North American and the Shareholder; PROVIDED, HOWEVER, that any
Party may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
best efforts to advise the other Parties prior to making the disclosure).
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns and the Indemnified Parties
referred to in Section 8 hereof.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior
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understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the Parties
named herein and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of his or its rights, interests, or
obligations hereunder without the prior written approval of North American and
the Shareholder; PROVIDED, HOWEVER, that North American may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates,
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases North American nonetheless shall remain
responsible for the performance of all of its obligations hereunder) and (iii)
without the approval of the Shareholder assign its rights and interests
hereunder to its lenders (and any agent for the lenders), and the Parties
consent to any exercise by such lenders (and such agents) of their rights and
remedies with respect to such collateral.
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
IF TO THE SHAREHOLDER: COPY TO:
---------------------- --------
Xxxxxxx Xxxxxxx Xxxxxxxxxxx Xxxxxx, Esq.
0000 X. Xxxxxxxx Xxxxxx Xxxxx & Associates, P.A.
Xx. Xxxxxxxxxx, Xxxxxxx 00000 000 Xxxxx Xxxx Xxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
IF TO NORTH AMERICAN: COPY TO:
--------------------- --------
North American Tel-Com Group, Inc. Holland & Knight LLP
0000 Xxxxx Xxx, Xxxxx 000 One East Broward Boulevard, Suite 1300
West Palm Beach, FL 33401 Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx Attn: Xxxx Xxxxxx, Esq.
Fax: (000) 000-0000 Fax: (000) 000-0000
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Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Florida without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Florida.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
North American and the Shareholder. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(k) EXPENSES. Each of the Parties will bear his or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in
the negotiation of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
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(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The
Exhibits, Annexes, Schedules and Certificates identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) SPECIFIC PERFORMANCE. Each of the Parties acknowledges
and agrees that the other Parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 12(o) below), in addition to any other remedy to which they may
be entitled, at law or in equity.
(o) SUBMISSION TO JURISDICTION. Each of the Parties submits
to the exclusive jurisdiction of any state or federal court sitting in
Hillsborough County, Florida, in any action or proceeding arising out of or
relating to this Agreement and agrees that all claims in respect of the action
or proceeding shall be heard and determined in any such court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Any Party may
make service on any other Party by sending or delivering a copy of the process
to the Party to be served at the address and in the manner provided for the
giving of notices in Section 12(g) above. Each Party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law or at
equity.
In any action or proceeding arising out of or relating to this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs from the other party to the action or proceeding. For
purposes of this Agreement, the "prevailing party" shall be deemed to be that
party who obtains substantially the result sought, whether by settlement,
mediated or otherwise, or judgment. For purposes of this Agreement, the term
"attorneys' fees" shall include, without limitation, the actual attorneys' fees
incurred in retaining counsel for advice, negotiations, suit, appeal, or any
other legal proceeding, including mediation and arbitration.
(p) WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND TO
THE FULLEST EXTENT PERMITTED BY LAW WAIVE ANY RIGHTS THAT THEY MAY HAVE TO
CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
*****
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
NORTH AMERICAN TEL-COM GROUP, INC.
By:
-------------------------------------
Xxxxxxx X. Xxxxxxxx
President
SHAREHOLDER:
-----------------------------------------
Xxxxxxx Xxxxxxx
44
