EXECUTION COPY
ACQUISITION AGREEMENT
AMONG
PRODUCTION RESOURCE GROUP, L.L.C.,
as Buyer,
AND
SIGNAL PERFECTION, LTD.
AND
THE SELLERS NAMED ON THE SIGNATURE PAGES HERETO,
as Sellers
August 13, 1998
TABLE OF CONTENTS
Page
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ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Contribute......................................................................................1
1.2 Agreement to Sell............................................................................................2
1.3 Purchase Price...............................................................................................2
1.4 Closing Obligations..........................................................................................2
1.5 The Closing..................................................................................................4
1.6 Earn Out.....................................................................................................4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SPL AND SELLERS
2.1 Organization and Good Standing...............................................................................5
2.2 Authority; No Conflict.......................................................................................6
2.3 No Third Party Options.......................................................................................7
2.4 Capitalization...............................................................................................7
2.5 Financial Statements.........................................................................................8
2.6 Books and Records............................................................................................9
2.7 Title to Properties; Encumbrances............................................................................9
2.8 Condition and Sufficiency of Assets..........................................................................9
2.9 Accounts Receivable.........................................................................................11
2.10 Inventory...................................................................................................11
2.11 No Undisclosed Liabilities..................................................................................11
2.12 Taxes.......................................................................................................12
2.13 No Material Adverse Change..................................................................................13
2.14 Employee Benefits...........................................................................................13
2.15 Compliance with Legal Requirements; Governmental Authorizations.............................................14
2.16 Legal Proceedings; Orders...................................................................................15
2.17 Absence of Certain Changes and Events.......................................................................16
2.18 Contracts; No Defaults......................................................................................18
2.19 Insurance...................................................................................................20
2.20 Environmental Matters.......................................................................................22
2.21 Employees...................................................................................................24
2.22 Labor Relations; Compliance.................................................................................24
2.23 Intellectual Property.......................................................................................24
2.24 Certain Payments............................................................................................27
2.25 Additional Information......................................................................................28
2.26 Disclosure..................................................................................................28
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2.27 Relationships with Related Persons..........................................................................28
2.28 Brokers or Finders..........................................................................................29
2.29 Investment Representations..................................................................................29
2.30 Sufficiency of Assets.......................................................................................29
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.1 Organization and Good Standing..............................................................................30
3.2 Authority; No Conflict......................................................................................30
3.3 Certain Proceedings.........................................................................................30
3.4 Earn Out....................................................................................................30
ARTICLE IV
COVENANTS OF SELLERS PRIOR TO CLOSING DATE
4.1 Access and Investigation....................................................................................31
4.2 Operation of the Businesses of SPL..........................................................................31
4.3 Negative Covenant...........................................................................................31
4.4 Required Approvals..........................................................................................32
4.5 Notification................................................................................................32
4.6 Payment of Indebtedness by Related Persons..................................................................32
4.7 No Negotiation..............................................................................................32
4.8 Best Efforts................................................................................................32
ARTICLE V
COVENANTS OF PURCHASER PRIOR TO CLOSING DATE
5.1 Approvals of Governmental Bodies............................................................................33
5.2 Best Efforts................................................................................................33
ARTICLE VI
CONDITIONS PRECEDENT TO PRG'S OBLIGATION TO CLOSE
6.1 Accuracy of Representations.................................................................................33
6.2 Disclosure Schedule.........................................................................................33
6.3 Sellers' Performance........................................................................................34
6.4 Consents....................................................................................................34
6.5 Due Diligence...............................................................................................34
6.6 No Proceedings..............................................................................................34
6.7 No Claim Regarding Share Ownership of Sale Proceeds.........................................................34
6.8 No Prohibition..............................................................................................34
6.9 SPL Financial Condition; No Material Adverse Change.........................................................34
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6.10 Closing Date Balance Sheet.................................................................................34
6.11 Lease......................................................................................................35
ARTICLE VII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
7.1 Accuracy of Representations.................................................................................35
7.2 PRG's Performance...........................................................................................35
7.4 No Proceedings..............................................................................................35
7.5 Officer's Certificate.......................................................................................35
7.6 Legal Opinion...............................................................................................35
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO MAKE EARN OUT PAYMENT
8.1 Conditions to Initial Closing...............................................................................36
8.2 Sellers' Performance........................................................................................36
8.3 No Prohibition..............................................................................................36
ARTICLE IX
TERMINATION
9.1 Termination Events..........................................................................................36
9.2 Effect of Termination.......................................................................................37
ARTICLE X
INDEMNIFICATION; REMEDIES
10.1 Survival; Right to Indemnification Not Affected By Knowledge...............................................37
10.2 Indemnification and Payment of Damages by Sellers..........................................................37
10.3 Indemnification and Payment of Damages by Sellers--Environmental Matters and Taxes.........................38
10.4 Indemnification and Payment of Damages by PRG..............................................................39
10.5 Time Limitations...........................................................................................39
10.6 Limitations on Amount--Sellers.............................................................................39
10.7 Procedure for Indemnification--Third Party Claims..........................................................40
10.8 Procedure for Indemnification--Other Claims................................................................41
10.9 Payment....................................................................................................41
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ARTICLE XI
DEFINITIONS
ARTICLE XII
POST-CLOSING COVENANTS
12.1 Covenant Not to Compete....................................................................................47
12.2 Pledge of Preferred Units..................................................................................48
12.3 Transactions with Related Persons..........................................................................49
ARTICLE XIII
GENERAL PROVISIONS
13.1 Expenses...................................................................................................49
13.2 Public Announcements.......................................................................................49
13.3 Confidentiality............................................................................................49
13.4 Notices....................................................................................................50
13.5 Dispute Resolution.........................................................................................51
13.6 Further Assurances.........................................................................................51
13.7 Waiver.....................................................................................................51
13.8 Entire Agreement and Modification..........................................................................52
13.9 Disclosure Schedule........................................................................................52
13.10 Assignments, Successors and No Third Party Rights.........................................................52
13.11 Severability..............................................................................................52
13.12 Section Headings, Construction............................................................................53
13.13 Governing Law.............................................................................................53
13.14 Counterparts..............................................................................................53
Schedule 1.2 Shareholder Loans
Schedule 2.4 (a) Shareholder List
Schedule 2.4 (b) Interests of SPL and Sellers
Schedule 2.29 Non-Accredited Investors
Exhibit A Form of Legal Opinion
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Exhibit B-1 Form of Employment Agreement - Xxxxxxx X. Xxxxx
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Exhibit B-2 Form of Employment Agreement - Xxxx X. Xxxxxxxxxxx Xx.
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Exhibit B-3 Form of Employment Agreement - Xxxxxxxxx X. Xxxxxx
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Exhibit C Form of Lease Agreement
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ACQUISITION AGREEMENT
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ACQUISITION AGREEMENT (the "Agreement"), dated as of August 13, 1998 by
and among PRODUCTION RESOURCE GROUP, L.L.C., a Delaware limited liability
company ("PRG"), as Buyer, and SIGNAL PERFECTION, LTD., a Maryland corporation,
("SPL") and THE SELLERS NAMED ON THE SIGNATURE PAGES HEREOF (collectively the
"Sellers"), as Sellers.
RECITALS
A. SPL is engaged, in the business of providing specialized audio,
video and show control design, fabrication and installation and related
products. Such business operations of SPL have been carried on under the name of
"Signal Perfection, Ltd." SPL has a principal place of business located at 0000
Xxxxxxxx Xxxxx, Xxxxxxxx, XX 00000. Sellers are the sole owners, of record and
beneficially, of all of SPL's issued and outstanding capital stock.
B. PRG is engaged in business as an integrated provider of goods and
services in a variety of related markets, including production management,
theatrical rental, scenery, rigging, supply of physical production elements
(including lighting, scenery, sound and costumes), promotion, themed
attractions, Broadway and touring shows, special events and exhibits and film
and television production, and desires to acquire 6,650 shares of the common
stock, no par value, of SPL (the "SPL Shares"), which shares represent 100% of
the outstanding equity of SPL.
C. Subject only to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Sellers desire
to sell and PRG desires to purchase the SPL Shares.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Contribute.
At the Closing, as defined in Section 1.5 hereof, each of the Sellers
shall contribute, convey, assign, transfer and deliver to PRG, upon and subject
to the terms and conditions of this Agreement, all of their respective rights,
titles and interests in and to an undivided interest in 15.375% of the stock of
SPL in exchange for 52,721 Preferred Units in PRG having an aggregate
liquidation preference of $1,230,000 (the "Preferred Units"). The Preferred
Units will be entitled to the same rights and privileges of Regular Units except
as specifically provided herein. In the event that, upon an initial public
offering in which equity is sold to the public, the value of the stock that
would otherwise be exchanged for the Preferred
Units (calculated at the offering price paid by the public) is less than the
liquidation preference of such Preferred Units, the Preferred Units will convert
into a number of shares with a value equal to the liquidation preference thereof
(calculated at the offering price paid by the public). In accordance with PRG's
credit agreement with The Bank of New York, as agent, SPL will be required to
pledge its units (without other recourse) to The Bank of New York, as agent, as
additional security for PRG's borrowings under such credit agreement. Subject to
the consent of The Bank of New York, as agent, and to PRG not being in default
under its credit agreement therewith (or with any substitute senior
institutional lender), SPL will have the right to require PRG to repurchase the
Preferred Units commencing three years after their original issuance at a price
equal to the liquidation preference thereof. PRG will use commercially
reasonable efforts to obtain the consent of The Bank of New York to allow the
redemption rights described in the immediately preceding sentence.
1.2 Agreement to Sell.
At the Closing, except as otherwise specifically provided in this
Section 1.2, each of the Sellers shall sell, convey, assign, transfer and
deliver to PRG and PRG shall purchase, upon and subject to the terms and
conditions of this Agreement, an undivided interest in 84.625% of the stock of
SPL.
1.3 Purchase Price.
(a) The aggregate "Purchase Price" for the SPL Shares shall up to ten
million six hundred fifty thousand dollars ($10,650,000) payable as follows:
(i) A cash payment of $6,770,000 (less the amount of the
receivable from LBM Associates, Inc. as set forth on Schedule 2.4(b)
which receivable will be assigned to Sellers at Closing) at closing
(the "Closing Cash Payment");
(ii) By delivery to the Sellers in proportion to their
respective Percentage Interests (as defined in Section 2.4) of a
certificate or certificates (the "Unit Certificates") for an aggregate
of 52,721 Preferred Units in PRG having an aggregate liquidation
preference of $1,230,000, as referred to in Section 1.1; and
(iii) By payment to each Seller on the Earn Out Date (as
defined in Section 1.6) an amount equal to the Earn Out Payment (as
defined in Section 1.6) multiplied by such Seller's respective
Percentage Interest as more fully described in Section 1.6.
1.4 Closing Obligations. At the Closing:
(a) The Sellers will deliver to PRG:
(i) certificates representing the SPL Shares together with
undated stock powers duly executed in blank by each applicable Seller
in respect of the SPL Shares;
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(ii) the share register, transfer records and minute books of
SPL complete and up to date (but not to include the events occurring at
or immediately prior to the Closing) and its certificate of
incorporation, bylaws, and corporate seals;
(iii) evidence of repayment of the shareholder loans set forth
in Schedule 1.2 in the approximate amount of $770,000;
(iv) a certificate executed by the chief executive officer of
SPL and each Seller certifying that the conditions specified in
Sections 6.1, 6.3(a), 6.4, 6.6, 6.7 and 6.8 hereof have been fulfilled
and representing and warranting to PRG that each of SPL's and Sellers'
representations and warranties in this Agreement is accurate in all
respects as of the Closing Date as if made on the Closing Date (giving
full effect to any supplements to the Disclosure Schedule that were
delivered by Sellers to PRG prior to the Closing Date in accordance
with Section 4.5);
(v) an opinion of Xxxxxx X. Xxxxxx, Esq., dated the Closing
Date, in the form of Exhibit A;
(vi) good standing certificates issued by the Secretary of
State of Maryland and each other state in which SPL is qualified to
conduct business;
(vii) a copy of the articles of incorporation of SPL certified
by the Secretary of State of Maryland;
(viii) resignations of each of the directors and officers of
SPL;
(ix) such other documents as PRG may reasonably request for
the purpose of (a) evidencing the accuracy of any of SPL's
representations and warranties, (b) evidencing the performance by SPL
of, or the compliance by SPL with, any covenant or obligation required
to be performed or complied with by SPL, (c) evidencing the
satisfaction of any condition referred to herein or (d) otherwise
facilitating the consummation or performance of any of the transactions
contemplated hereby;
(x) Each of Messrs. Xxxxxxx X. Xxxxx, Xxxx X. Xxxxxxxxxxx Xx.
and Xxxxxxxxx X. Xxxxxx shall execute and deliver an employment
agreement substantially in the form of Exhibits X-0, X-0 and B-3,
attached hereto, respectively (the "Employment Agreements"); and
(xi) The Sellers and SPL shall have executed and delivered a
lease substantially in the Form of Exhibit C.
(b) PRG shall:
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(i) deliver to the Sellers a certified or cashier's check or
wire transfer to an account or accounts designated by Sellers in an
amount equal to the Closing Cash Payment in partial payment of the
Purchase Price for the SPL Shares;
(ii) execute and deliver the Employment Agreements; and
(iii) deliver to the Sellers certificates representing the
Preferred Units.
1.5 The Closing. The closing (the "Closing") of the transaction shall
take place at 10:00 A.M., local time, on August 13, 1998 or such other date as
may be mutually agreed upon in writing by PRG and Sellers. The date of the
Closing is sometimes herein referred to as the "Closing Date." The closing shall
take place at the New York, New York offices of PRG, or at such other location
as the parties shall mutually agree.
1.6 Earn Out.
(a) Subject to the terms, conditions and limitations set forth herein,
on the Earn Out Date (as defined below) PRG will pay to Sellers, in proportion
to their respective Percentage Interests, an aggregate amount equal to the Earn
Out Payment, if any, to the extent earned pursuant to Section 1.6(b). If, on the
Earn Out Date, the common equity of PRG (or any successor in interest thereto)
is publicly traded, PRG may deliver to the Sellers, in lieu of payment of up to
one-half of the aggregate Earn Out Payment in cash, such number of publicly
traded securities of PRG as has an aggregate value equal to the amount of the
Earn Out Payment so replaced where the value of each such security will be
deemed to equal the average closing price per share for the ten trading days
immediately preceding the date of determination. Such securities may be issued
in a transaction which may or may not be registered under the Securities Act of
1933, as amended (including the rules and regulations promulgated thereunder,
the "Act").
(b) For the purposes hereof, "Earn Out Payment" means an amount equal
to:
(i) $2,650,000, if the cumulative EBITDA of SPL for the period
from March 1, 1998 through March 31, 2001 equals or exceeds $5,601,388;
(ii) $2,650,000, if the cumulative EBITDA of SPL for the
period from March 1, 1998 through March 31, 2002 equals or exceeds
$6,125,000; or
(iii) $1,800,000, if the cumulative EBITDA of SPL for the
period from March 1, 1998 through March 31, 2003 equals or exceeds
$6,100,000.
Each of the periods referenced in (i), (ii) and (iii) shall be an "Earn Out
Period." Upon payment of an amount described in clauses (i), (ii) or (iii), no
further Earn Out Payment shall be due or payable. The amounts of $5,601,388,
$6,125,000 and $6,100,000 referenced in clauses (i), (ii) and (iii) are referred
to as "Earn Out Targets." For the purposes hereof "EBITDA" means earnings before
interest, taxes, depreciation and amortization of SPL determined for the
applicable fiscal period or periods from the SPL portion PRG's consolidated and
consolidating financial statements for the applicable period; provided, however,
that except as otherwise
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agreed, EBITDA shall be calculated without regard to any corporate overhead
charge incurred by SPL other than a capital charge for borrowings in an amount
to be agreed upon by PRG and SPL.
(c) No later than 60 days after the end of each Earn Out Period, PRG
shall deliver to Sellers a balance sheet of SPL setting forth the EBITDA of SPL
for that Earn Out Period. Sellers shall have 30 days from receipt of such
balance sheet to notify PRG in writing of any objection to such balance sheet,
in which event, the dispute shall be resolved in accordance with Section 1.6(e)
hereof. If PRG does not receive written notice from Sellers of any objection
within 30 days after delivering such balance sheet to Sellers, PRG shall pay to
Sellers the applicable Earn Out Payment, if any, on the 35th day following
delivery of such balance sheet or such later date as to which all discrepancies
as to such balance sheet are resolved pursuant to Section 1.6(e) (the "Earn Out
Date").
(d) Notwithstanding anything herein to the contrary, the amount of the
Earn Out Payment will be reduced, on a dollar-for-dollar basis, in an amount
equal to any and all Damages incurred by PRG on or prior to the Earn Out Date,
subject to the limitations provided in Section 10.6.
(e) If Sellers notify PRG in writing of any objection within 30 days
after receipt of a balance sheet for an Earn Out Period, and include therein a
written statement of any discrepancies believed to exist. PRG will promptly pay
to Sellers any amount which is not in dispute. Sellers and PRG will attempt to
jointly resolve such discrepancies within 15 days of PRG's receipt of Sellers'
discrepancy statement, which resolution, if achieved, will be binding upon all
parties to this Agreement and not subject to dispute or review. If Sellers and
PRG cannot resolve the discrepancy within such 15-day period, PRG and Sellers
will jointly retain Ernst & Young LLP to review the applicable balance sheet
together with Sellers' discrepancy statement and any other relevant documents.
The cost of retaining Ernst & Young LLP shall be borne equally by the Sellers,
on the one hand, and PRG, on the other hand. Ernst & Young LLP will report its
conclusions which shall be conclusive and not subject to dispute or review.
(f) If the Earn-Out Targets set forth in clauses (i) or (ii) of Section
1.6(b) are met, PRG will contribute $350,000 to a bonus pool for the employees
of SPL which will be administered pursuant to a bonus plan the terms of which
will be determined by the President of SPL and approved by the board of
directors of SPL.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SPL AND SELLERS
Subject to the limitation on liability set forth in Section 10.6
herein, each of SPL and Sellers represent and warrant to PRG as follows:
2.1 Organization and Good Standing.
(a) Part 2.1 of the Disclosure Schedule contains a complete and
accurate list for SPL of its name, its jurisdiction of organization, other
jurisdictions in which it is authorized to do business and its capitalization
(including the identity of each shareholder and the number
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and class of shares held by each). SPL is a company duly organized, validly
existing and in good standing under the laws of the State of Maryland with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use and to perform all its obligations under Applicable Contracts. SPL is duly
qualified to do business as a foreign company and is in good standing in each
jurisdiction where the conduct of the business by it requires it to be so
qualified, except where the failure to be so qualified would not have a Material
Adverse Effect on the business or operations of SPL.
(b) Sellers have delivered to PRG copies of the Organizational
Documents of SPL, as currently in effect.
(c) Sellers have delivered to PRG a list of the officers and directors
of SPL.
2.2 Authority; No Conflict.
(a) The execution, delivery and performance of this Agreement by SPL
and Sellers have been duly authorized by all necessary action of SPL and
Sellers. This Agreement has been duly executed and delivered by SPL and Sellers
and constitutes the legal, valid and binding obligation of SPL and Sellers,
enforceable against SPL and Sellers in accordance with its terms. Upon the
execution and delivery by Sellers of this Agreement and the other documents
entered into in connection herewith with the acquisition contemplated hereby
(collectively, the "Sellers' Closing Documents"), the Sellers' Closing Documents
will constitute the legal, valid and binding obligations of Sellers, enforceable
against Sellers in accordance with their respective terms. SPL and Sellers have
the absolute and unrestricted right, power, authority and capacity to execute
and deliver this Agreement and the Sellers' Closing Documents and to perform
their obligations under this Agreement and the Sellers' Closing Documents.
(b) Except as set forth in Part 2.2 of the Disclosure Schedule, neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the transactions contemplated hereby will, directly or indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with or result in a violation of (A)
any provision of the Organizational Documents of SPL, or (B) any
resolution adopted by the board of directors or the shareholders of
SPL;
(ii) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any
of the transactions contemplated hereby or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which
SPL, Sellers, or any of the assets owned or used by SPL or Sellers may
be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization
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that is held by SPL or that otherwise relates to the business of, or
any of the assets owned or used by, SPL or Seller;
(iv) cause PRG, solely as a result of its acquisition of SPL
pursuant to this Agreement or SPL to become subject to, or to become
liable for the payment of, any transfer or similar Tax;
(v) violate, conflict with or result in the breach of any
term, condition or provision of, or require the consent of, any other
Person under, (a) any existing law, ordinance, or governmental rule or
regulation to which SPL or any Seller is subject, (b) any judgment,
order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which is
applicable to SPL or any Seller or (c) any mortgage, indenture,
agreement, contract, commitment, lease, plan, authorization, or other
instrument, document or understanding, oral or written, to which SPL or
any Seller is a party, by which SPL or any Seller may have rights or by
which any of the assets owned by SPL may be bound or affected, or give
any party with rights thereunder the right to terminate, modify,
accelerate or otherwise change the existing rights or obligations of
SPL or any Seller thereunder, in each case where such violation,
conflict or breach has had a Material Adverse Effect.
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any Applicable
Contract; or
(vii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by SPL, except
any Encumbrance created as a result of the acquisition of SPL pursuant
to this Agreement.
Except as set forth in Part 2.2 of the Disclosure Schedule, no Seller or SPL is
or will be required to give any notice to or obtain any Consent from any Person
in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the transactions contemplated hereby.
2.3 No Options. There are no existing agreements, options, commitments,
or rights with, of or to any Person to acquire any of any SPL's assets,
properties or rights or any interest therein, except for those contracts entered
into in the normal course of business consistent with past practice for the sale
of inventory of SPL and other than the Buy-Sell Agreement, dated February 18,
1997, between Sellers and SPL.
2.4 Capitalization.
(a) The authorized equity securities of SPL consist of 10,000 shares of
common stock, no par value, of which 6,650 shares are issued and outstanding.
The SPL Shares constitute all of the issued and outstanding equity securities of
SPL. Set forth on Schedule 2.4(a)
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is a complete and accurate list of all holders of equity securities of SPL, the
number of shares of each such class of equity securities held by each such
Person and the percentage of each such class so held, including in each case the
percentage of SPL Shares so held ("Percentage Interest"). The Sellers are and
will be on the Closing Date the record and beneficial owners and holders of all
of the issued and outstanding SPL Shares, free and clear of all Encumbrances.
Upon consummation of the purchase and sale of the SPL Shares as contemplated
hereby, PRG will own the SPL Shares, free and clear of all Encumbrances and no
other equity or other securities of SPL will be outstanding. No legend or other
reference to any purported Encumbrance appears upon any certificate representing
equity securities of SPL. All of the outstanding equity securities of SPL have
been duly authorized and validly issued and are fully paid and nonassessable.
There are no Contracts relating to the issuance, sale or transfer of any equity
securities or other securities of SPL. None of the outstanding equity securities
or other securities of SPL was issued in violation of the applicable securities
laws or any other Legal Requirement. Without limiting the foregoing, there are
no outstanding stock powers, powers of attorney or other similar delegations of
authority or instrument of transfer relating to any of the SPL shares.
(b) Except for CWF, LLC, Media Fabricators Structural Steel Fabricators
and LBM Associates Inc. (which interests are described on Schedule 2.4(b)
hereto), neither the Sellers nor SPL has any interest in any other corporation,
partnership, joint venture, limited liability company, trust or other entity
except, in the case of the Sellers, for interests of not more than one percent
in any publicly traded corporation whose stock is traded on a recognized
national securities exchange.
2.5 Financial Statements.
Sellers have delivered to PRG: combined balance sheets of SPL as of
February 28 of each of 1997 and 1998, and the related audited consolidated
statements of income, changes in stockholders' equity, and cash flow for each of
the fiscal years then ended, together with the report thereon of Ernst & Young
LLP ("E&Y"), certified public accountants, including in each case the notes
thereto. The 1998 financial statements have been audited by E&Y and the 1997
financial statements have been reviewed by E&Y. Such financial statements and
notes fairly present the financial condition and the results of operations,
changes in stockholders' equity and cash flow of SPL as at the respective dates
of and for the periods referred to in such financial statements, all in
accordance with GAAP, and the financial statements referred to in this Section
2.5 reflect the consistent application of such accounting principles throughout
the periods involved, except as disclosed in the notes to such financial
statements. In addition, the combined balance sheet of SPL as of the Closing
Date (including the notes thereto, the "Closing Date Balance Sheet") shall
fairly present the financial condition of SPL as of the Closing Date in
accordance with GAAP prepared in a manner consistent with the other financial
statements referred to herein. Except for CWF, LLC, no financial statements of
any Person other than SPL are required by GAAP to be included in the combined
financial statements of SPL. SPL has also provided the separate company
financial statements of SPL for the each of the years ended February 28, 1998
and 1997.
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2.6 Books and Records. The books of account, minute books, stock record
books and other records of SPL, all of which have been made available to PRG,
are complete and correct. The minute books of SPL contain (or will contain at
Closing) resolutions ratifying all prior actions taken by the shareholders, the
Boards of Directors, and committees of the Boards of Directors of SPL, in form
and substance reasonably satisfactory to PRG. At the Closing, all of those books
and records will be in the possession of SPL.
2.7 Title to Properties; Encumbrances. SPL does not own any fee
interest in any real property. Part 2.7 of the Disclosure Schedule contains a
complete and accurate list of all real property, including leaseholds or other
interests therein, held by or utilized by SPL. Sellers have delivered or made
available to PRG copies of the leases and other instruments (whether or not
recorded) by which SPL acquired such interests. SPL owns all the properties and
assets (whether real, personal or mixed and whether tangible or intangible) that
it purports to own located in the facilities owned or operated by it or
reflected as owned in the books and records of SPL, including all of the
properties and assets reflected in the audited consolidated balance sheet of SPL
as of February 28, 1998 (including the notes thereto, the "February 28 Balance
Sheet") (except for assets held under capitalized leases disclosed or not
required to be disclosed in Part 2.7 of the Disclosure Schedule and personal
property sold since the date of the February 28 Balance Sheet, as the case may
be, in the ordinary course of business), and all of the properties and assets
purchased or otherwise acquired by SPL since the date of the February 28 Balance
Sheet (except for personal property acquired and sold since the date of the
February 28 Balance Sheet in the ordinary course of business and consistent with
past practice), which subsequently purchased or acquired properties and assets
(other than inventory and short-term investments) are listed in Part 2.7 of the
Disclosure Schedule. All material properties and assets are free and clear of
all Encumbrances and are not, in the case of real property, subject to any
rights of way, building use restrictions, exceptions, variances, reservations or
limitations of any nature except, with respect to all such properties and
assets, (a) mortgages or security interests shown on the February 28 Balance
Sheet as securing specified liabilities or obligations, with respect to which no
default (or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) mortgages or security interests incurred in connection with
the purchase of property or assets after the date of the February 28 Balance
Sheet (such mortgages and security interests being limited to the property or
assets so acquired), with respect to which no default (or event that, with
notice or lapse of time, or both, would constitute a default) exists, (c) liens
for current taxes not yet due and (d) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially impairs the use of the property subject thereto, or impairs the
operations of SPL and (ii) zoning laws and other land use restrictions that do
not impair the present or anticipated use of the property subject thereto. All
buildings, plants and structures utilized by SPL lie wholly within the
boundaries of the real property utilized by SPL and do not encroach upon the
property of, or otherwise conflict with the property rights of, any other
Person.
2.8 Condition and Sufficiency of Assets.
(a) The equipment of SPL is structurally sound, in good operating
condition and repair and is adequate for the uses to which it is being put, and
none of such equipment is in need of maintenance or repairs except for ordinary,
routine maintenance and repair that is not
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material in nature or cost. The equipment of SPL is sufficient for the continued
conduct of the SPL business after the Closing in substantially the same manner
as conducted prior to the Closing.
(b) Leased Real Property. With respect to the real property that is
leased by SPL (the "Real Property"):
(i) Sellers have delivered to PRG a true and complete copy of
every lease and sublease to which SPL is a tenant or subtenant (each a
"Lease" and collectively, the "Leases"); the Disclosure Schedule
describes each Lease by setting forth the name of the tenant, the name
of the landlord or sublandlord, a the commencement and expiration dates
of the current term, the security deposited by SPL with the landlord or
sublandlord, if any, the monthly rental (including base and all
additional rents), and whether the assignment of such Lease by SPL to
PRG requires the consent of the landlord or sublandlord.
(ii) Each Lease is, and at Closing shall be, in full force and
effect, shall constitute a legal and permissible use of the applicable
property, and has not been assigned, modified, supplemented or amended
except as listed on the Disclosure Schedule, and neither SPL nor the
landlord or sublandlord under any Lease is in material default under
any of the Leases, and no circumstances or state of facts presently
exists which, with the giving of notice or passage of time, or both,
would permit the landlord or sublandlord under any Lease to terminate
any Lease.
(iii) Utility Services. The water, electric, gas and sewer
utility services and the storm drainage facilities currently available
to the Real Property are adequate for the present use of the Real
Property by SPL in conducting its business and there is no condition
which will result in the termination of the present access from the
Real Property to such utility services and other facilities.
(iv) Access. There are no restrictions known to Sellers on
entrance to or exit from the Real Property to adjacent public streets
and no conditions known to Sellers which will result in the termination
of the present access from the Real Property to existing highways and
roads.
(v) Absence of Notice. SPL has no Knowledge of matters which
would materially adversely affect the use of the Real Property or which
would require the expenditure of more than $10,000 to cure breaches,
violations or like matters relating to such Real Property.
(vi) No Violations. The Real Property and the present uses
thereof comply in all material respects with all regulations and Legal
Requirements of all Governmental Bodies having jurisdiction over the
Real Property, and SPL has no reason to believe, and no Knowledge that
the Real Property or any improvements erected or situate thereon, or
the uses conducted thereon or therein, violate any
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regulations, Legal Requirement or Order of any Governmental Body having
jurisdiction over the Real Property.
(vii) No Encumbrances. Between the date of this Agreement and
Closing, neither SPL nor Sellers will have sold, mortgaged or
encumbered the Leases.
(viii) Executory Contracts. The Disclosure Schedule contains a
description of all executory contracts made by or on behalf of SPL, or
by which SPL is bound, with respect to the real property ("Executory
Contracts"), including, without limitation, operation, management,
maintenance, utility, and construction contracts. At Closing, Sellers
shall deliver to PRG a true and complete copy (the original execution
copy, if available) of each of the Executory Contracts.
2.9 Accounts Receivable. All accounts receivable of SPL that are
reflected on the February 28 Balance Sheet or on the Closing Date Balance Sheet
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Closing Date Balance
Sheet (which reserves are adequate and calculated consistent with past practice
and, in the case of the reserve as of the Closing Date, will not represent a
greater percentage of the Accounts Receivable as of the Closing Date than the
reserve reflected in the February 28 Balance Sheet represented of the Accounts
Receivable reflected therein and will not have a Material Adverse Effect in the
composition of such Accounts Receivable in terms of aging). Except for those
receivables specifically indicated on Part 2.9 which will be collectible by
March 31, 1999, subject to such reserves, each of the Accounts Receivable either
has been or will be collected in full, without any set-off, within 90 days after
the day on which it first becomes due and payable. There is no contest, claim or
right of set-off, other than returns in the ordinary course of business, under
any Contract with any obligor of an Account Receivable relating to the amount or
validity of such Accounts Receivable. Part 2.9 of the Disclosure Schedule
contains a complete and accurate list of all Accounts Receivable as of the date
of the February 28 Balance Sheet, which list sets forth the aging of such
Accounts Receivable.
2.10 Inventory. All inventory of SPL, whether or not reflected in the
February 28 Balance Sheet, consists of a quality and quantity usable and salable
or rentable in the ordinary course of business, except for obsolete items and
items of below-standard quality, all of which have been written off or written
down to net realizable value in the February 28 Balance Sheet or on the Closing
Date Balance Sheet, as the case may be. All inventories not written off have
been priced at the lower of cost or net realizable value on a first in, first
out basis. The quantities of each item of inventory (whether raw materials,
work-in-process or finished goods) are not excessive, but are reasonable in the
present circumstances of SPL.
2.11 No Undisclosed Liabilities. Except as set forth in Part 2.11 of
the Disclosure Schedule, SPL has no Knowledge of any liabilities or obligations
of any nature
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(whether absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the February 28 Balance Sheet and
current liabilities incurred in the ordinary course of business, consistent with
past practice since the date thereof, and which in the aggregate do not and
could not cause a Material Adverse Effect. For purposes of this Agreement, the
term "liabilities" shall include, without limitation, any indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or unfixed, known or unknown, asserted or
unasserted, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured.
2.12 Taxes.
(a) SPL has filed or caused to be filed on a timely basis all Tax
Returns that are or were required to be filed by or with respect to it,
(including extensions). Sellers have delivered to PRG copies of, and Part 2.12
of the Disclosure Schedule contains a complete and accurate list of, all such
Tax Returns filed since January 1, 1995. SPL has paid, or made provision for the
payment of, all Taxes that have or may have become due pursuant to those Tax
Returns or otherwise, or pursuant to any assessment received by Sellers or SPL,
except such Taxes, if any, as are listed in Part 2.12 of the Disclosure Schedule
and are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided in the February 28
Balance Sheet. SPL is not a member of any affiliated, consolidated or unitary
group (as defined in the Internal Revenue Code of 1986, as amended (the "Code"))
of companies or similar group of companies ("Group Company").
(b) Part 2.12 of the Disclosure Schedule contains a complete and
accurate list of all audits of all such Tax Returns, including a reasonably
detailed description of the nature and outcome of each audit. All deficiencies
proposed as a result of such audits have been paid, reserved against, settled
or, as described in Part 2.12 of the Disclosure Schedule, are being contested in
good faith by appropriate proceedings. Part 2.12 of the Disclosure Schedule
describes all adjustments to the Tax Returns filed by SPL for all taxable years
since January 1, 1995, and the resulting deficiencies proposed by the tax
authorities. Except as described in Part 2.12 of the Disclosure Schedule, no
Seller or SPL has given or been requested to give waivers or extensions (or is
or would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of SPL or for which SPL
may be liable.
(c) The charges, accruals and reserves with respect to Taxes on the
books of SPL are adequate (determined in accordance with GAAP) and are at least
equal to SPL's liability for Taxes. There exists no proposed tax assessment
against SPL except as disclosed in the February 28 Balance Sheet or in Part 2.12
of the Disclosure Schedule. All Taxes that SPL is or was required by Legal
Requirements to withhold or collect have been duly withheld or collected and, to
the extent required, have been paid to the proper Governmental Body or other
Person.
(d) All Tax Returns filed by (or that include on a consolidated basis)
SPL are true, correct and complete. There is no tax sharing agreement that will
require any payment by SPL after the date of this Agreement.
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(e) SPL has not filed a consent under section 341(f) of the Code. SPL
has not made any payments and is not obligated to make any payments, and is not
a party to any agreement that could obligate it to make any payments that will
not be deductible under Code section 280G. SPL 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). SPL 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.
(f) The parties recognize that SPL may be deemed to have transacted
business in several jurisdictions. In so doing, issues may arise as to the
liability of SPL for sales, use, franchise and income taxes in said states other
than Maryland. While the Sellers believe that all requisite tax returns have
been filed and taxes paid, if any Governmental Body, other than the State of
Maryland and any State in which SPL maintains or has maintained a place of
business or from which more than 10% of SPL's net revenues in any fiscal year
have been derived, shall assert or assess or threaten to assert or assess any
liability for sales, use, franchise and income taxes against SPL, the Sellers
shall have no responsibility or liability for the defense or payment of same and
SPL shall procure that SPL pays such taxes. This Section 2.12(f) shall not
exclude the liability of the Sellers under this Agreement in respect of such
taxes in the State of Maryland and any State in which SPL maintains or has
maintained a place of business or from which more than 10% of SPL's net revenues
in any fiscal year have been derived.
2.13 No Material Adverse Effect. Since the date of the February 28
Balance Sheet, there has not been any event that has had a Material Adverse
Effect and no event has occurred or circumstance exists that could reasonably be
expected to result in a Material Adverse Effect with respect to SPL, the SPL
Shares or any Seller with respect to such Seller's interest in SPL Shares.
2.14 Employee Benefits.
(a) Part 2.14 of the Disclosure Schedule sets forth a complete list of
all pension and other employee benefit, fringe benefit and compensation plans
and arrangements covering directors, employees, former directors or employees,
or their respective dependents, of SPL (the "Plans"). The Plans have been
administered in accordance with and otherwise comply with all Legal Requirements
and with their terms; may be amended or terminated by SPL at any time without
notice or approval and without any liability other than for benefits previously
accrued as of the amendment or termination date; and, if intended to be tax
qualified, are and have always been so tax qualified and have received favorable
rulings to this effect covering such Plans since their inception.
(b) All SPL contributions and payments due and owing to or with respect
to the Plans have been timely paid or properly accrued and reserved on the
February 28 Balance Sheet, and SPL has complied with any minimum funding
requirements imposed by Legal Requirement or the terms of any Plan, and no Plan
has any accumulated funding deficiency. There exists no pending or Threatened
dispute or claim with respect to any Plan. No Plan is the subject of audit or
notice of intended audit by any Governmental Body. No fiduciary breach or
-13-
prohibited transaction has occurred with respect to any Plan. There are no
actual or potential liabilities affecting SPL by virtue of any Plan previously
or currently sponsored or maintained by any member of any Group Company of with
SPL is or was a part.
(c) There are no multi-employer or multiple employer plans (as defined
in the U.S. Internal Revenue Code and/or the U.S. Employee Retirement Income
Security Act ("ERISA") and related laws and regulations) which include SPL. No
Plan has been terminated and no reportable event (as defined in ERISA and
related laws and regulations) has occurred with respect to any Plan.
2.15 Compliance with Legal Requirements; Governmental Authorizations.
(a) Except as set forth in Part 2.15 of the Disclosure Schedule, and
except for such violations as could not reasonably be expected to have a
Material Adverse Effect on PRG:
(i) SPL is, and at all times since January 1, 1995 has been,
in full compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a
violation by SPL of, or a failure on the part of SPL to comply with,
any Legal Requirement, or (B) may give rise to any obligation on the
part of SPL to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature; and
(iii) no Group Company has received, at any time since January
1, 1993, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of, or failure to
comply with, any Legal Requirement, or (B) any actual, alleged,
possible or potential obligation on the part of SPL to undertake, or to
bear all or any portion of the cost of, any remedial action of any
nature.
(b) Part 2.15 of the Disclosure Schedule contains a complete and
accurate list of each Governmental Authorization that is held by SPL or that
otherwise relates to the business of, or to any of the assets owned or used by,
SPL. Each Governmental Authorization listed or required to be listed in Part
2.15 of the Disclosure Schedule is valid and in full force and effect. Except as
set forth in Part 2.15 of the Disclosure Schedule:
(i) SPL is, and at all times since January 1, 1995 has been,
in full compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in
Part 2.15 of the Disclosure Schedule;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result
directly or indirectly in a violation of or a failure to comply with
any term or requirement of any
-14-
Governmental Authorization listed or required to be listed in Part 2.15
of the Disclosure Schedule, or (B) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation or termination of, or
any modification to, any Governmental Authorization listed or required
to be listed in Part 2.15 of the Disclosure Schedule;
(iii) no Group Company has received, at any time since January
1, 1993, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of or failure to
comply with any term or requirement of any Governmental Authorization,
or (B) any actual, proposed, possible or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification
to, any Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be
listed in Part 2.15 of the Disclosure Schedule have been duly filed on
a timely basis with the appropriate Governmental Bodies, and all other
filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.
(c) The Governmental Authorizations listed in Part 2.15 of the
Disclosure Schedule collectively constitute all of the Governmental
Authorizations necessary to permit SPL to conduct and operate its business
lawfully in the manner it currently conducts and operates such business and to
permit SPL to own and use its assets in the manner in which it currently own and
use such assets.
2.16 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.16 of the Disclosure Schedule, there
is no pending Proceeding the result of which could reasonably be expected to
have a Material Adverse Effect:
(i) that has been commenced by or against SPL or that
otherwise relates to or may affect the business of, or any of the
assets owned or used by, SPL; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any
of the transactions contemplated hereby.
(b) no such Proceeding has been Threatened, and no event has occurred
or circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding. Sellers have delivered to PRG copies of all
pleadings, correspondence and other documents relating to each Proceeding listed
in Part 2.16 of the Disclosure Schedule. The
-15-
Proceedings listed in Part 2.16 of the Disclosure Schedule will not have a
Material Adverse Effect on the business, operations, assets, condition or
prospects of SPL.
(c) Except as set forth in Part 2.16 of the Disclosure Schedule, and
except for such Orders as could not reasonably be expected to have a Material
Adverse Effect:
(i) there is no Order to which SPL, or any of the assets owned
or used by SPL, is subject;
(ii) no Seller is subject to any Order that relates to the
business of, or any of the assets owned or used by, SPL; and
(iii) no officer or director of SPL is subject to any Order
that prohibits such officer or director from engaging in or continuing
any conduct, activity or practice relating to the business of SPL.
(d) Except as set forth in Part 2.16 of the Disclosure Schedule, and
where the breach of the following representations could not reasonably be
expected to have a Material Adverse Effect:
(i) SPL is, and at all times since January 1, 1995 has been,
in full compliance with all of the terms and requirements of each Order
to which it, or any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any
Order to which SPL, or any of the assets owned or used by SPL, is
subject; and
(iii) SPL has no Knowledge regarding any actual, alleged,
possible or potential violation of, or failure to comply with, any term
or requirement of any Order to which SPL, or any of the assets owned or
used by SPL, is or has been subject.
2.17 Absence of Certain Changes and Events. Except as set forth in Part
2.17 of the Disclosure Schedule, since the date of the February 28 Balance
Sheet, SPL has conducted its businesses only in the ordinary course of business
and there has not been any:
(a) change in SPL's authorized or issued share capital; grant of any
option or right to purchase share capital of SPL; issuance of any security
convertible into or exchangeable for such share capital; grant of any
registration rights; purchase, redemption, retirement or other acquisition by
SPL of any shares of any such share capital; or declaration or payment of any
dividend or other distribution or payment in respect of share capital;
(b) amendment to the Organizational Documents of SPL;
-16-
(c) declaration, setting aside or payment of any dividend or
distribution or making or agreeing to make any other distribution or payment in
respect of its capital shares or redemption, purchase or other acquisition or
agreement to redeem, purchase or acquire any of its capital shares;
(d) increase by SPL in any bonuses, salaries or other compensation to
any shareholder, director, officer or (except in the ordinary course of
business) employee or entry into any employment, severance or similar Contract
with any director, officer or employee, except that as of June 1, 1998, the
salaries of the Sellers will be as set forth in the Letter of Intent, dated
April 3, 1998 from PRG to SPL;
(e) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement or other employee benefit plan for or with any employees of SPL;
(f) damage, destruction or loss, whether or not covered by insurance,
(i) materially and adversely affecting its business, operations, assets,
properties or prospects or (ii) of any item or items carried on its books of
account individually or in the aggregate of more than $25,000 or suffered any
repeated, recurring or prolonged shortage, cessation or interruption of supplies
or utility or other services required to conduct its business and operations;
(g) entry into, termination of, or receipt of notice of termination of
(i) any license, distributorship, dealer, sales representative, joint venture,
credit or similar agreement or (ii) any Applicable Contract or transaction
involving a total remaining commitment by or to SPL of at least $50,000;
(h) sale (other than sales of inventory or obsolete equipment in the
ordinary course of business), lease or other disposition of any asset or
property of SPL or mortgage, pledge or imposition of any lien or other
encumbrance on any material asset or property of SPL, including the sale, lease
or other disposition of any of the Intellectual Property Assets;
(i) making or suffering any amendment or termination of any material
agreement, contract, commitment, lease or plan to which it is a party or by
which it is bound (except for change orders that occur in the ordinary course of
business), or cancellation, modification or waiver of any substantial debts or
claims held by it or waiver of any rights of substantial value, whether or not
in the ordinary course of business, other than with the prior written consent of
PRG;
(j) material change in the accounting methods used by SPL;
(k) incurrence of any liabilities, other than liabilities incurred in
the ordinary course of business consistent with past practice, or discharge or
satisfaction of any lien or encumbrance, or payment of any liabilities, other
than in the ordinary course of business consistent with past practice, or
failure to pay or discharge when due any liabilities of which the failure to pay
or discharge has caused or will cause any material damage or risk of material
loss to it or any of its assets or properties other than with the prior written
consent of PRG;
-17-
(l) creation of, incurrence, assumption or guarantee of any
indebtedness for money borrowed, or mortgaging, pledging or subjecting of any of
its assets to any mortgage, lien, pledge, security interest, conditional sales
contract or other encumbrance of any nature whatsoever, except for Permitted
Liens, other than with the prior written consent of PRG. For purposes of this
Section 2.17, "Permitted Liens" shall mean (a) liens for current real or
personal property taxes not yet due and payable, (b) liens disclosed in Section
2.17 of the Disclosure Schedule, (c) statutory liens for amounts not yet due and
payable, and (d) liens that individually and in the aggregate are immaterial in
character, amount, and extent, and which do not detract from the value or
interfere with the present or proposed use of the properties they affect, (e)
liens incurred in the ordinary course of business;
(m) event which has caused a Material Adverse Effect with respect to
SPL, the SPL Shares or any Seller with respect to such Seller's interest in SPL
Shares;
(n) commitment or agreement for capital expenditures or capital
additions or betterments except such as may be involved in ordinary repair,
maintenance or replacement of its assets, other than with the prior written
consent of PRG;
(o) notice or actual Knowledge of any actual or threatened labor
trouble, strike or other occurrence, event or condition of any similar character
which has had or might have an adverse effect on its business, operations,
assets, properties or prospects; or
(p) agreement, whether oral or written, by SPL to do any of the
foregoing.
2.18 Contracts; No Defaults.
(a) Part 2.18(a) of the Disclosure Schedule contains a complete and
accurate list, and Sellers have delivered to PRG true and complete copies, of:
(i) each Contract or group of related Contracts that involves
performance of services or delivery of goods or materials by SPL of an
amount or value in excess of $50,000;
(ii) each Contract or group of related Contracts that was not
entered into in the ordinary course of business and that involves
expenditures or receipts of or by SPL in excess of $50,000;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Contract or group
of related Contracts affecting the ownership of, leasing of, title to,
use of, or any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than $50,000 and with terms of less than one year);
(iv) each mortgage, indenture, credit agreement, letter of
credit or other financing agreement;
-18-
(v) each licensing agreement or other Contract or group of
related Contracts with respect to patents, trademarks, copyrights or
other intellectual property, including agreements with current or
former employees, consultants or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual Property
Assets;
(vi) each collective bargaining agreement and other Contract
or group of related Contracts to or with any labor union or other
employee representative of a group of employees;
(vii) each joint venture, partnership and other Contract or
group of related Contracts (however named) involving a sharing of
profits, losses, costs or liabilities by SPL with any other Person;
(viii) each Contract or group of related Contracts containing
covenants that in any way purport to materially restrict the business
activity of SPL or any Related Person of SPL or materially limit the
freedom of SPL or any Related Person of SPL to engage in any line of
business or to compete with any Person;
(ix) each Contract or group of related Contracts providing for
payments to or by any Person based on sales, purchases or profits,
other than direct payments for goods;
(x) each power of attorney that is currently effective and
outstanding;
(xi) each Contract or group of related Contracts entered into
other than in the ordinary course of business that contains or provides
for an express undertaking by SPL to be responsible for consequential
damages;
(xii) each Contract or group of related Contracts for capital
expenditures in excess of $50,000;
(xiii) each written warranty, guaranty and other similar
undertaking with respect to contractual performance extended by SPL;
and
(xiv) each amendment, supplement and modification (whether
oral or written) in respect of any of the foregoing.
Part 2.18(a) of the Disclosure Schedule sets forth reasonably complete
details concerning such Contracts or group of related Contracts, including the
parties to the Contracts and the amount of the remaining commitment of SPL under
the Contracts.
(b) Except as set forth in Part 2.18(b) of the Disclosure Schedule, to
the Knowledge of Sellers and SPL, no officer or director of SPL is bound by any
Contract that purports to limit the ability of such officer or director to (i)
engage in or continue any conduct, activity or practice relating to the business
of SPL or (ii) assign to SPL or to any other Person any rights to any invention,
improvement or discovery.
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(c) Except as set forth in Part 2.18(c) of the Disclosure Schedule,
each Contract identified or required to be identified in Part 2.18(a) of the
Disclosure Schedule is in full force and effect and is valid and enforceable in
accordance with its terms.
(d) Except as set forth in Part 2.18(d) of the Disclosure Schedule:
(i) SPL is in full compliance with all applicable terms and
requirements of each Applicable Contract under which SPL has any
obligation or liability or by which SPL or any of the assets owned or
used by SPL is bound;
(ii) each other Person that has any obligation or liability
under any Applicable Contract under which SPL has any rights is in full
compliance with all applicable terms and requirements of such
Applicable Contract;
(iii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) may contravene, conflict with, or
result in a material violation or breach of, or give SPL or other
Person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Applicable Contract; and
(iv) no Group Company has given to or received from any other
Person, any notice or other communication (whether oral or written)
regarding any actual, alleged, possible or potential violation or
breach of, or default under, any Applicable Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to SPL
under current or completed Applicable Contracts with any Person and no such
Person has made written demand for such renegotiation.
(f) The Applicable Contracts relating to the sale, design, manufacture
or provision of products or services by SPL have been entered into in the
ordinary course of business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in violation of any Legal
Requirement.
2.19 Insurance.
(a) Sellers have delivered to PRG:
(i) true and complete copies of all policies of insurance to
which SPL is a party or under which SPL, or any director or officer of
SPL in their capacity as such, is or has been covered at any time
within the three years preceding the date of this Agreement; and
(ii) true and complete copies of all pending applications for
policies of insurance.
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(b) Part 2.19(b) of the Disclosure Schedule describes:
(i) any self-insurance arrangement by or affecting SPL,
including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by SPL; and
(iii) all obligations of SPL to third parties with respect to
insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is
provided.
(c) Part 2.19(c) of the Disclosure Schedule sets forth, by year, for
the current policy year and each of the three preceding policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance
policy for an amount in excess of $25,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance and period of coverage; and
(C) the amount and a brief description of the claim;
and
(iii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost
of such claims.
(d) Except as set forth on Part 2.19(d) of the Disclosure Schedule:
(i) All policies to which SPL is a party or that provide
coverage to either Seller, SPL, or any director or officer of SPL:
(A) are valid, outstanding and enforceable;
(B) are issued by an insurer that, to the Knowledge
of Sellers and SPL, is financially sound and reputable;
(C) taken together, provide, in the reasonable
opinion of Sellers and SPL, adequate insurance coverage for
the assets and the operations of SPL;
(D) are sufficient for compliance with all Legal
Requirements and Applicable Contracts to which SPL is a party
or by which any of them is bound;
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(E) will continue in full force and effect following
the consummation of the transactions contemplated hereby; and
(F) do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of
SPL.
(ii) SPL has not received, with regard to any policies
described in this Section 2.19 (A) any refusal of coverage or any
notice that a defense will be afforded with reservation of rights, or
(B) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder other than those that have been
replaced or allowed to intentionally lapse.
(iii) SPL has paid all premiums due, and has otherwise
performed all of their respective obligations, under each policy to
which SPL is a party or that provides coverage to SPL or director
thereof.
(iv) SPL has given notice to the insurer of all claims that
may be insured thereby.
2.20 Environmental Matters. Except as set forth in Part 2.20 of the
Disclosure Statement:
(a) SPL is, and at all times has been, in material compliance with, and
has not been and is not in violation of or liable under, any Environmental Law.
No Seller or Group Company has any basis to expect, nor has any of them or any
other Person for whose conduct they are or may be held to be responsible
received, any actual or Threatened order, notice or other communication from (i)
any Governmental Body or private citizen acting in the public interest, or (ii)
the current or prior owner or operator of any Facilities, of any actual or
potential violation or failure to comply with any Environmental Law, or of any
actual or Threatened obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal or mixed)
in which Sellers or SPL has had an interest, or with respect to any property or
Facility at or to which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used or processed by Sellers, SPL, or any other
Person for whose conduct they are or may be held responsible, or from which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled or received.
(b) SPL is not aware of, nor has it received notice of, pending or
Threatened claims, Encumbrances, or other restrictions of any nature, resulting
from any Environmental, Health and Safety Liabilities or arising under or
pursuant to any Environmental Law, with respect to or affecting any of the
Facilities or any other properties and assets (whether real, personal or mixed)
in which Sellers or SPL has or had an interest.
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(c) No Seller or Group Company has Knowledge of any basis to expect,
nor has any of them or any other Person for whose conduct they are or may be
held responsible, received, any citation, directive, inquiry, notice, Order,
summons, warning or other communication that relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual or potential violation or failure to
comply with any Environmental Law, or of any alleged, actual or potential
obligation to undertake or bear the cost of any Environmental, Health and Safety
Liabilities with respect to any of the Facilities or any other properties or
assets (whether real, personal or mixed) in which Sellers or SPL had an
interest, or with respect to any property or facility to which Hazardous
Materials generated, manufactured, refined, transferred, imported, used or
processed by Sellers, SPL, or any other Person for whose conduct they are or may
be held responsible, has been transported, treated, stored, handled,
transferred, disposed, recycled or received.
(d) No Seller or Group Company, or any other Person for whose conduct
they are or may be held responsible, has any Environmental, Health and Safety
Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal or mixed) in which Sellers or SPL
(or, to the Knowledge of Sellers and SPL, any predecessor), has or had an
interest, or at any property geologically or hydrologically adjoining the
Facilities or any such other property or assets.
(e) There are no Hazardous Materials present on or in the Environment
at the Facilities or at any geologically or hydrologically adjoining property,
including any Hazardous Materials contained in barrels, above or underground
storage tanks, landfills, land deposits, dumps, equipment (whether moveable or
fixed) or other containers, either temporary or permanent, and deposited or
located in land, water, sumps or any other part of the Facilities or such
adjoining property, or incorporated into any structure therein or thereon. No
Seller, Group Company, any other Person for whose conduct they are or may be
held responsible, or to the Knowledge of Sellers and SPL, any other Person, has
permitted or conducted, or is aware of, any Hazardous Activity conducted with
respect to the Facilities or any other properties or assets (whether real,
personal or mixed) in which Sellers or SPL has or had an interest except in full
compliance with all applicable Environmental Laws.
(f) There has been no Release or, Threat of Release, of any Hazardous
Materials at or from the Facilities or at any other locations where any
Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used or processed from or by the Facilities, or from or by
any other properties and assets (whether real, personal or mixed) in which
Sellers or SPL has or had an interest, or to the Knowledge of Sellers and SPL
any geologically or hydrologically adjoining property, whether by Sellers, SPL,
or any other Person.
(g) Sellers have delivered to PRG true and complete copies and results
of any reports, studies, analyses, tests or monitoring possessed or initiated by
Sellers or SPL pertaining to Hazardous Materials or Hazardous Activities in, on
or under the Facilities, or concerning compliance by Sellers, SPL, or any other
Person for whose conduct they are or may be held responsible, with Environmental
Laws.
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2.21 Employees.
(a) Part 2.21 of the Disclosure Schedule contains a complete and
accurate list of the following information for each employee or director of SPL,
including each employee on leave of absence or layoff status: employer; name;
job title; current compensation paid or payable and any change in compensation
since January 1, 1997; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under SPL's pension or other employee
benefit plan.
(b) To the Knowledge of SPL or Sellers, no officer, senior employee or
director of SPL is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition or proprietary rights
agreement, between such employee or director and any other Person ("Proprietary
Rights Agreement") that in any way materially adversely affects or will
materially affect (i) the performance of his duties as an officer, senior
employee or director of SPL, or (ii) the ability of SPL to conduct its business,
including any Proprietary Rights Agreement with Sellers or SPL by any such
officer, senior employee or director. To Sellers' Knowledge, no director,
officer or other key employee of SPL intends to terminate his employment with
SPL.
(c) Part 2.21 of the Disclosure Schedule also contains a complete and
accurate list of the following information for each retired employee or director
of SPL, or their dependents, receiving benefits or scheduled to receive benefits
in the future: name, pension benefit, pension option election and other
benefits.
2.22 Labor Relations; Compliance. Since January 1, 1995, no Group
Company has been or is a party to any collective bargaining or other labor
Applicable Contract. Since January 1, 1995, there has not been, there is not
presently pending or existing, and there is not Threatened, (a) any strike,
slowdown, picketing, work stoppage or employee grievance process or (b) any
Proceeding against or affecting SPL relating to the alleged violation of any
Legal Requirement pertaining to labor relations or employment matters, including
any charge or complaint filed by an employee or union with any Governmental
Body, organizational activity, or other labor or employment dispute against or
affecting SPL or their premises, and to Sellers' Knowledge no event has occurred
or circumstance exists that could provide the basis for any work stoppage or
other labor dispute. SPL has complied in all material respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and health
and plant closing. No Group Company is liable for the payment of any
compensation, damages, taxes, fines, penalties or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
2.23 Intellectual Property.
(a) The term "Intellectual Property Assets" includes:
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(i) the names "Signal Perfection," and "Signal Perfection,
Ltd." all fictional business names, trading names, registered and
unregistered trademarks, service marks and applications (collectively,
"Marks");
(ii) all patents, patent applications and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished
works (collectively, "Copyrights");
(iv) all rights in mask works (collectively, "Rights in Mask
Works"); and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings and blue prints (collectively, "Trade
Secrets");
in each case, owned, used or licensed by SPL as licensee or
licensor.
(b) Part 2.23(b) of the Disclosure Schedule contains a complete and
accurate list and summary description, including any royalties paid or received
by SPL, of all Applicable Contracts relating to the Intellectual Property Assets
to which SPL is a party or by which SPL is bound, except for any license implied
by the sale of a product and perpetual, paid-up licenses for commonly available
software programs with a value of less than $500 under which a Group Company is
the licensee. There are no outstanding and or Threatened disputes or
disagreements with respect to any such agreement.
(c) Know-How Necessary for the Business.
The Intellectual Property Assets are all those necessary for
the operation of SPL's businesses as they are currently conducted or as
reflected in the business plan given to PRG. One or more of SPL is the
owner of all right, title and interest in and to each of the
Intellectual Property Assets, free and clear of all liens, security
interests, charges, encumbrances, equities and other adverse claims,
and has the right to use without payment to a third party all of the
Intellectual Property Assets.
(d) Patents.
(i) Part 2.23(d) of the Disclosure Schedule contains a
complete and accurate list and summary description of all Patents
including the identity of the Group Company holding each patent. SPL is
the owner of all right, title and interest in and to each of the
Patents, free and clear of all liens, security interests, charges,
encumbrances, entities and other adverse claims.
(ii) All of the issued Patents are currently in compliance
with formal legal requirements (including payment of filing,
examination and maintenance
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fees and proofs of working or use), are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling due
within ninety days after the Closing Date.
(iii) No Patent has been or is now involved in any
interference, reissue, reexamination or opposition proceeding. To
Sellers' Knowledge, there is no potentially interfering patent or
patent application of any third party. The Disclosure Schedule
indicates all non-infringement opinions received by Sellers or SPL.
(iv) No Patent is infringed or, to Sellers' Knowledge, has
been challenged or Threatened in any way. None of the products
manufactured and sold, nor any process or know-how used, by SPL
infringes or is alleged to infringe any patent or other proprietary
right of any other Person.
(v) All products made, used or sold under the Patents have
been marked with the proper patent notice.
(e) Trademarks.
(i) Part 2.23(e) of Disclosure Schedule contains a complete
and accurate list and summary description of all Marks and of all
jurisdictions in which the Marks have been registered. One or more of
SPL is the owner of all right, title and interest in and to each of the
Marks, free and clear of all liens, security interests, charges,
encumbrances, equities and other adverse claims.
(ii) All Marks that have been registered are currently in
compliance with all formal Legal Requirements (including the timely
post-registration filing of affidavits of use and incontestability and
renewal applications), are valid and enforceable.
(iii) No Xxxx has been or is now involved in any opposition,
invalidation or cancellation and, to Sellers' Knowledge, no such action
is Threatened with the respect to any of the Marks.
(iv) To Sellers' Knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(v) No Xxxx is infringed or, to Sellers' Knowledge, has been
challenged or Threatened in any way. None of the Marks used by SPL
infringes or is alleged to infringe any trade name, trademark, or
service xxxx of any third party.
(vi) All products and materials containing a Xxxx xxxx the
proper registration notice where permitted by law.
(f) Copyrights.
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(i) Part 2.23(f) of the Disclosure Schedule contains a
complete and accurate list and summary description of all Copyrights.
One or more of SPL is the owner of all right, title and interest in and
to each of the Copyrights, free and clear of all liens, security
interests, charges, encumbrances, equities and other adverse claims.
(ii) All the Copyrights have been registered and are currently
in compliance with formal Legal Requirements, are valid and
enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the date of Closing.
(iii) No Copyright is infringed or, to Sellers' Knowledge, has
been challenged or Threatened in any way. None of the subject matter of
any of the Copyrights infringes or is alleged to infringe any copyright
of any third party or is a derivative work based on the work of a third
party.
(iv) All works encompassed by the Copyrights have been marked
with the proper copyright notice.
(g) Trade Secrets.
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate and sufficient in
detail and content to identify and explain it and to allow its full and
proper use without reliance on the Knowledge or memory of any
individual.
(ii) Sellers and SPL have taken all reasonable precautions to
protect the secrecy, confidentiality and value of their Trade Secrets.
(iii) One or more of SPL has good title and an absolute (but
not necessarily exclusive) right to use the Trade Secrets. The Trade
Secrets are not part of the public knowledge or literature, and, to
Sellers' Knowledge, have not been used, divulged or appropriated either
for the benefit of any Person (other than one or more of SPL) or to the
detriment of SPL. No Trade Secret is subject to any adverse claim or
has been challenged or threatened in any way.
2.24 Certain Payments. Since January 1, 1995, no Group Company or
director, officer, agent or employee of SPL, or to Sellers' Knowledge any other
Person associated with or acting for or on behalf of SPL, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback or other payment to any Person, private or public, regardless
of form, whether in money, property or services, which could reasonably be
expected to cause PRG or SPL to incur any liabilities (which liabilities would
have a Material Adverse Effect) (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of SPL or any Related Person of SPL or (iv) in violation of any Legal
-27-
Requirement; or (b) established or maintained any fund or asset that has not
been recorded in the books and records of SPL.
2.25 Additional Information. The Disclosure Schedule contains complete
and accurate lists and summary descriptions of the following:
(a) all inventory, equipment and furniture and fixtures of SPL included
in the February 28 Balance Sheet, specifying such items as are owned and such as
are leased and, with respect to the owned property, specifying its net book
value as such date and, with respect to the leased property as to which a Group
Company is lessee, specifying the identity of the lessor, the rental rate and
the unexpired term of the lease;
(b) all names under which SPL has conducted any business or which it
has otherwise used during the last five years;
(c) a schedule of used equipment sales by the Sellers for each
applicable period; and
(d) all customer and vendor lists and all historic data in its
possession with respect to prior sales to customers and purchases from vendors.
2.26 Disclosure.
(a) No representation or warranty of Sellers or SPL in this Agreement
and no statement in the Disclosure Schedule omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 4.5 will contain any untrue
statement or omit to state a material fact necessary to make the statements
therein or in this Agreement, in light of the circumstances in which they were
made, not misleading.
(c) There is no fact known to either Sellers or SPL that has specific
application to either Seller or SPL (other than general economic or industry
conditions) and that has resulted in a Material Adverse Effect or, as far as
either Seller can reasonably foresee, could result in a Material Adverse Effect
that has not been set forth in this Agreement or the Disclosure Schedule.
2.27 Relationships with Related Persons. Except as set forth in Part
2.27 of the Disclosure Schedule or for relationships arising solely as a result
of the Sellers' ownership interests in SPL, no Seller or any Related Person of
Sellers or of SPL has, or since January 1, 1995 has had, any interest in any
property (whether real, personal or mixed and whether tangible or intangible),
used in or pertaining to SPL's businesses. Except as set forth in Part 2.27 of
the Disclosure Schedule, no Seller or any Related Person of Sellers or of SPL
is, or since January 1, 1995 has owned (of record or as a beneficial owner) an
equity interest or any other financial or profit interest in, a Person that has
(i) had business dealings or a material financial interest in any transaction
with SPL or (ii) engaged in competition with SPL with respect to any line of the
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products or services of SPL (a "Competing Business") in any market presently
served by SPL except for passive investments in less than one percent of the
outstanding share capital of any Competing Business that is publicly traded on
any recognized exchange or in an over-the-counter market. Except as set forth in
Part 2.27 of the Disclosure Schedule, no Seller or any Related Person of Sellers
or of SPL is a party to any Applicable Contract with, or has any claim or right
against, SPL.
2.28 Brokers or Finders. SPL shall pay the fees or expense of lawyers,
accountants or other professional advisors in connection with this Agreement or
the transactions contemplated hereby, except for any broker's success or similar
fee payable to Xxxxxx Xxxxx & Co., Inc., which fee shall be paid by Sellers,
with respect to the transactions contemplated by this Agreement.
2.29 Investment Representations.
Each Seller represents and warrants to PRG that:
(a) He will be purchasing the Preferred Units for his own account
without the participation of any other Person, with the intent of holding the
Preferred Units for investment and without the intent of participating, directly
or indirectly, in a distribution of the Preferred Units and not with a view to,
or for resale in connection with, any distribution of the Preferred Units or any
portion thereof;
(b) He can sustain a complete loss of this investment in the Preferred
Units and has no need for liquidity in this investment;
(c) He will have evaluated the risk of investing in the Preferred Units
and will be acquiring the Preferred Units based only upon his independent
examination and judgment as to the prospect of the Company as determined from
information obtained directly by him from the Company or Related Persons
thereof;
(d) He is a resident of the state indicated in his address listed in
his employment agreement with the Company. He shall advise the Company
immediately prior to his purchase of the Preferred Units if his state of
residence changes;
(e) Except as set forth on Schedule 2.29, he qualifies as an
"accredited investor" as defined in Regulation D promulgated pursuant to the
Act.
(f) Each Seller has received and reviewed a copy of PRG's Registration
Statement on Form S-4 and such other materials pertaining to PRG as such Seller
desires and has been provided sufficient opportunity to question members of the
management of PRG.
2.30 Sufficiency of Assets for Growth. SPL currently has all assets and
financial and other resources necessary to achieve the Earn Out Targets.
Notwithstanding anything herein to the contrary, the immediately preceding
sentence shall not be deemed a guaranty of the achievement of the Earn Out
Targets.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
PRG represents and warrants to SPL and Sellers as follows:
3.1 Organization and Good Standing. PRG is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
3.2 Authority; No Conflict.
(a) The execution, delivery and performance of this Agreement by PRG
have been duly authorized by all necessary action of PRG and its members and
managers. This Agreement has been duly executed and delivered by PRG and
constitutes the legal, valid and binding obligation of PRG enforceable against
PRG in accordance with its terms. PRG has the absolute and unrestricted right,
power and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement except as specifically set forth herein.
(b) Except as set forth in Section 6.4 hereof, neither the execution
and delivery of this Agreement by PRG nor the consummation or performance of any
of the transactions contemplated hereby by PRG will give any Person the right to
prevent, delay or otherwise interfere with any of the transactions contemplated
hereby pursuant to:
(i) any provision of PRG's Organizational Documents;
(ii) any resolution adopted by the board of advisors or the
members of PRG;
(iii) any Legal Requirement or Order to which PRG may be
subject; or
(iv) any Applicable Contract to which PRG is a party or by
which PRG may be bound.
(c) Except as set forth in Section 6.4 hereof, PRG is not and will not
be required to obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the transactions contemplated hereby.
3.3 Certain Proceedings. There is no pending Proceeding that has been
commenced against PRG and that challenges, or may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the transactions
contemplated hereby. To PRG's Knowledge, no such Proceeding has been Threatened.
3.4 Earn Out. PRG recognizes that SPL will require working capital to
operate its business and meet the Earn Out Targets. Following Closing, PRG shall
provide working capital to SPL consistent with SPL's business needs subject,
however, to PRG's business practices and constraints.
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ARTICLE IV
COVENANTS OF SELLERS PRIOR TO CLOSING DATE
4.1 Access and Investigation. Between the date of this Agreement and
the Closing Date, Sellers will, and will cause SPL and its Representatives to,
(a) afford PRG and its Representatives and prospective lenders and their
Representatives (collectively, "PRG's Advisors") full and free access to SPL's
personnel, properties (including subsurface testing), contracts, books and
records, and other documents and data, (b) furnish PRG and PRG's Advisors with
copies of all such contracts, books and records, and other existing documents
and data as PRG may reasonably request and (c) furnish PRG and PRG's Advisors
with such additional financial, operating and other data and information as PRG
may reasonably request.
4.2 Operation of the Businesses of SPL. Between the date of this
Agreement and the Closing Date, Sellers will, and will cause SPL to:
(a) conduct the business of SPL only in the ordinary course of
business;
(b) not declare, set aside or pay any dividend or distribution or make
or agree to make any other distribution or payment in respect of its capital
shares or redeem, purchase or otherwise acquire or agree to redeem, purchase or
acquire any of its capital shares;
(c) use their best efforts to preserve intact the current business
organization of SPL, keep available the services of the current officers,
employees and agents of SPL, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents and others having
business relationships with SPL;
(d) not enter into any commitments or arrangements with new
distributors, sales agents or licensees or modify in any material respect or
terminate existing relationships with distributors, sales agents or licensees,
in all cases, without PRG's consent;
(e) confer with PRG concerning operational matters of a material
nature, including regarding any material negotiations or other material
communications relating to any commitment or arrangement with distributors,
sales agents and licensees or the modification or termination of any existing
relationship with any distributor, sales agent or licensee;
(f) otherwise report periodically to PRG concerning the status of the
business, operations and finances of SPL; and
(g) notify PRG of any changes in the terms of the insurance policies
and binders referred to on the insurance portion of the Disclosure Schedule.
4.3 Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Sellers will
not, and will cause SPL not to, without the prior consent of PRG, take any
affirmative action, or fail to take any reasonable action within their or its
control, as a result of which any of the changes or events listed in Section
2.17 is likely to occur.
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4.4 Required Approvals. As promptly as practicable after the date of
this Agreement, Sellers will, and will cause SPL to, make all filings required
by Legal Requirements to be made by them in order to consummate the transactions
contemplated hereby. Between the date of this Agreement and the Closing Date,
Sellers will, and will cause SPL to, (a) cooperate with PRG with respect to all
filings that PRG elects to make or is required by Legal Requirements to make in
connection with the transactions contemplated hereby, and (b) cooperate with PRG
in obtaining all consents identified in Section 6.4 hereof.
4.5 Notification. Between the date of this Agreement and the Closing
Date, SPL and each Seller will promptly notify PRG in writing if Seller or SPL
becomes aware of any fact or condition that causes or constitutes a breach of
any of SPL's or Sellers' representations and warranties as of the date of this
Agreement, or if any Seller or SPL becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Disclosure Schedule if the
Disclosure Schedule were dated the date of the occurrence or discovery of any
such fact or condition, Sellers will promptly deliver to PRG a supplement to the
Disclosure Schedule specifying such change, which change shall be included in
the Disclosure Schedule only upon PRG's written consent to such inclusion.
During the same period, SPL and each Seller will promptly notify PRG of the
occurrence of any breach of any covenant of Sellers in this Article 4 or of the
occurrence of any event that may make the satisfaction of the conditions in
Article 6 impossible or unlikely.
4.6 Payment of Indebtedness by Related Persons. Sellers will cause all
indebtedness owed to SPL by any Seller or any Related Person of any Seller to be
paid in full prior to Closing.
4.7 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Article 9, neither the Sellers nor SPL will, and, they
will ensure that their Related Persons and their respective officers, employees,
agents and representatives will not, directly or indirectly (a) enter into any
agreement or arrangement involving the possible acquisition of any shares or
material assets of SPL (other than sales of inventory in the ordinary course of
business), (b) solicit or encourage offers from, engage in any discussion with,
or provide any financial or other SPL information to, any Person relating to any
such acquisition, or (c) respond to any inquiries from any Person relating to
any such acquisition except to inform such Person that discussions are under way
with another party, without naming PRG.
4.8 Best Efforts. Between the date of this Agreement and the Closing
Date, Sellers will use their best efforts to cause the conditions in Articles 6
and 7 to be satisfied.
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ARTICLE V
COVENANTS OF PURCHASER PRIOR TO CLOSING DATE
5.1 Approvals of Governmental Bodies. As promptly as practicable after
the date of this Agreement, PRG will, and will cause each of its Related Persons
to, make all filings required by Legal Requirements to be made by them to
consummate the transactions contemplated hereby. Between the date of this
Agreement and the Closing Date, PRG will, and will cause each Related Person to,
cooperate with Sellers with respect to all filings that Sellers are required by
Legal Requirements to make in connection with the transactions contemplated
hereby, and cooperate with Sellers in obtaining all consents identified in Part
2.2 of the Disclosure Schedule; provided that this Agreement will not require
PRG to dispose of or make any change in any portion of its business or to incur
any other burden to obtain a Governmental Authorization. As promptly as
practicable after the date of this Agreement, if not done previously, PRG will
use commercially reasonable efforts to obtain the consent of the required banks
under PRG's credit agreement with The Bank of New York, as agent for the
consummation of the transactions contemplated by this Agreement.
5.2 Best Efforts. Subject to the provisions of Section 5.1, between the
date of this Agreement and the Closing Date, PRG will use its best efforts to
cause the conditions in Article 6 and 7 to be satisfied.
ARTICLE VI
CONDITIONS PRECEDENT TO PRG'S OBLIGATION TO CLOSE
PRG's obligation to purchase the SPL Shares and to take the other
actions required to be taken by PRG at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by PRG, in whole or in part):
6.1 Accuracy of Representations.
Each of Sellers' representations and warranties must be true, correct
and accurate in all respects as of the Closing Date as if made on the Closing
Date.
6.2 Disclosure Schedule.
Any information, changes or supplement to the Disclosure Schedule must
be consented to by PRG. If PRG and Sellers cannot mutually agree, in whole or
part, upon an amendment to the Disclosure Schedule, PRG's sole remedy shall be
to terminate this Agreement. If in any such event, if this Agreement is not so
terminated then such disputed Disclosure Schedule or the disputed portion
thereof shall be deemed to be consented to.
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6.3 Sellers' Performance.
(a) Each of the covenants and obligations that Sellers are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
must have been duly performed and complied with.
(b) Each document required to be delivered pursuant to Section 1.4 must
have been delivered.
6.4 Consents. Each of the Consents identified in Part 2.2 of the
Disclosure Schedule must have been obtained and must be in full force and effect
and PRG shall have obtained the consent of the Required Lenders, as defined in
PRG's Credit Agreement with The Bank of New York, as agent.
6.5 Due Diligence. PRG shall have completed its due diligence
examination of SPL, and the results of such due diligence examinations shall be
satisfactory to PRG in all respects.
6.6 No Proceedings. Since the date of this Agreement, there must not
have been commenced or Threatened against Sellers or SPL, or against any person
affiliated with Sellers or SPL, any Proceeding (a) involving any challenge to,
or seeking damages or other relief in connection with, any of the transactions
contemplated hereby or (b) that may have the effect of preventing, delaying,
making illegal or otherwise interfering with any of the transactions
contemplated hereby.
6.7 No Claim Regarding Share Ownership of Sale Proceeds. There must not
have been made or Threatened by any Person any claim asserting that such Person
(a) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any share of, or any other voting, equity or
ownership interest in, SPL, or (b) is entitled to all or any portion of the
Purchase Price payable for the SPL Shares.
6.8 No Prohibition. Neither the consummation nor the performance of any
of the transactions contemplated hereby will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause PRG or any Person affiliated with
PRG to suffer any Material Adverse Effect under, (a) any applicable Legal
Requirement or Order or (b) any Legal Requirement or Order that has been
published, introduced or otherwise formally proposed by or before any
Governmental Body.
6.9 SPL Financial Condition; No Material Adverse Effect. PRG shall be
satisfied that there shall have been no event that has caused a Material Adverse
Effect in the business, assets, operations, prospects or financial condition of
SPL since February 28, 1998.
6.10 Closing Date Balance Sheet. The Sellers shall have delivered to
PRG a pro forma Closing Date Balance Sheet in form and substance satisfactory to
PRG.
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6.11 Lease. SPL, as tenant, shall, on the Closing date, execute and
deliver to CWF, as landlord, a lease agreement substantially in the form of
Exhibit D with respect to the Facility.
ARTICLE VII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
SPL's and Sellers' obligations to sell the SPL Shares and to take the
other actions required to be taken by Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part):
7.1 Accuracy of Representations. Each of PRG's representations and
warranties in this Agreement must be true, correct and accurate as of the
Closing Date as if made on the Closing Date.
7.2 PRG's Performance.
(a) Each of the covenants and obligations that PRG is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
must have been performed and complied with in all material respects.
(b) PRG must have made the Closing Cash Payment required to be made by
PRG pursuant to Section 1.3(a)(i).
(c) PRG shall have delivered each of the documents or other items
required by Section 1.4(b).
7.3 No Proceedings. Since the date of this Agreement, there must not
have been commenced or Threatened against PRG, or against any Person affiliated
with PRG, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the transactions contemplated hereby, or
(b) that may have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the transactions contemplated hereby.
7.4 Officer's Certificate. SPL and Sellers shall have received a
certificate from an officer of PRG dated the Closing Date certifying that the
conditions specified in Sections 7.1, 7.2(a) and 7.3 hereof have been fulfilled.
7.6 Legal Opinion. Xxxxxx X. Manners, general counsel for PRG, shall
have delivered to Sellers a written opinion, dated the Closing Date, in form and
substance reasonably satisfactory to Sellers.
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ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASER'S
OBLIGATION TO MAKE EARN OUT PAYMENT
PRG's obligation to make the Earn Out Payment and to take the other
actions required to be taken by PRG on the applicable Earn Out Date, is subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by PRG in whole or in part):
8.1 Conditions to Initial Closing. The Closing shall have occurred.
8.2 Sellers' Performance. If any Seller shall be in default or breach
of any covenant or agreement other than a covenant or agreement not to compete
contained herein or in any employment agreement with SPL or PRG, after giving
effect to any cure provision in any such employment agreement, any Earn Out
Payment due to such Seller shall be offset by the amount of damages incurred by
PRG. If any Seller shall be in default or breach of any covenant or agreement
not to compete contained herein or in any employment agreement with SPL or PRG,
after giving effect to any cure provision in any such employment agreement, PRG
shall have no obligation to make any Earn Out Payment to such Seller.
8.3 No Prohibition. The payment of the Earn Out Payment or Earn Out
Payments contemplated hereby will not, directly or indirectly (with or without
notice or lapse of time) violate any law or regulation applicable to PRG.
Furthermore, the payment of any Earn Out Payment shall not be prohibited by the
terms of PRG's credit facilities nor shall the making of any such payment cause
a default thereunder; provided however, if any Earn Out Payment is so
prohibited, such Earn Out Payment shall bear interest at a rate equivalent to
the rate payable to PRG's senior institutional lenders, and shall become payable
at such point when such payment is not longer so prohibited or would no longer
cause such a default.
ARTICLE IX
TERMINATION
9.1 Termination Events. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) by PRG or Sellers if a material breach of any provision of this
Agreement has been committed by the other party and such breach has not been
waived;
(b) (i) by PRG if any of the conditions in Article 6 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of PRG to comply with its
obligations under this Agreement) and PRG has not waived such condition on or
before the Closing Date; or (ii) by Sellers, if any of the conditions in Article
7 has not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Sellers to
comply with their
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obligations under this Agreement) and Sellers have not waived such condition on
or before the Closing Date;
(c) by mutual consent of PRG and Sellers; or
(d) by either PRG or Sellers if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before 10 business
days from the date hereof, or such later date as the parties may agree upon.
9.2 Effect of Termination. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 13.3 will survive; provided, however, that if
this Agreement is terminated by a party because of the breach of the Agreement
by the other party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of the
other party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
ARTICLE X
INDEMNIFICATION; REMEDIES
10.1 Survival; Right to Indemnification Not Affected By Knowledge. All
representations, warranties, covenants and obligations in this Agreement, the
Disclosure Schedule, the supplements to the Disclosure Schedule, the certificate
delivered pursuant to Section 1.4(a)(iv) and any other certificate or document
delivered pursuant to this Agreement will survive the Closing 30 days following
the filing by PRG of its quarterly report on Form 10-Q for the three-month
period ended March 31, 1999; provided, however, that the representations and
warranties in Sections 2.12 and 2.20 hereof shall survive for their respective
statutes of limitations applicable to taxes and environmental matters. The
waiver of any condition based on the accuracy of any representation or warranty,
or on the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, payment of Damages, or other remedy based
on such representations, warranties, covenants and obligations.
10.2 Indemnification and Payment of Damages by Sellers. Subject to the
monetary and proportionate share limitations of Section 10.6 hereof, each Seller
will indemnify and hold harmless PRG, SPL, and their respective Representatives,
members, managers, advisors, stockholders, controlling persons and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
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(a) any breach of any representation or warranty made by Sellers in
this Agreement without giving effect to any supplement to the Disclosure
Schedule;
(b) any breach by either Seller of any covenant or obligation of such
Seller in this Agreement or in any other Transaction Document;
(c) any product shipped or manufactured by, or any services provided
by, SPL prior to the Closing Date; or
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with either Seller or SPL (or any
Person acting on their behalf) in connection with any of the transactions
contemplated hereby, including, without limitation, any fees or expenses payable
to Xxxxxx Xxxxx & Co., Inc.
The remedies provided in this Section 10.2 will not be exclusive of or
limit any other remedies that may be available to PRG or the other Indemnified
Persons.
10.3 Indemnification and Payment of Damages by Sellers--Environmental
Matters and Taxes. In addition to the provisions of Section 10.2 and pursuant to
Section 10.1, Sellers will indemnify and hold harmless PRG, SPL and the other
Indemnified Persons for, and will pay to PRG, SPL and the other Indemnified
Persons the amount of, any Damages (including costs of cleanup, containment or
other remediation) arising, directly or indirectly, from or in connection with:
(a) any Environmental, Health and Safety Liabilities arising out of or
relating to: (i) the ownership, operation or condition at any time on or prior
to the Closing Date of the Facilities or any other properties and assets
(whether real, personal or mixed and whether tangible or intangible) in which
Sellers or SPL has or had an interest; (ii) any Hazardous Materials or other
contaminants that were present on the Facilities or such other properties and
assets at any time on or prior to the Closing Date; (iii) any Hazardous
Materials or other contaminants, wherever located, that were, or were allegedly,
generated, transported, stored, treated, Released or otherwise handled by
Sellers or SPL or by any other Person for whose conduct they are or may be held
responsible at any time on or prior to the Closing Date; or (iv) any Hazardous
Activities that were, or were allegedly, conducted by Sellers or SPL or by any
other Person for whose conduct they are or may be held responsible;
(b) any bodily injury (including illness, disability and death, and
regardless of when any such bodily injury occurred, was incurred or manifested
itself), personal injury, property damage (including trespass, nuisance,
wrongful eviction and deprivation of the use of real property), or other damage
of or to any Person, including any employee or former employee of Sellers or SPL
or any other Person for whose conduct they are or may be held responsible, in
any way arising from or allegedly arising from any Hazardous Activity conducted
or allegedly conducted with respect to the Facilities or the operation of SPL
prior to the Closing Date, or from Hazardous Material that was (i) present or
suspected to be present on or before the Closing Date on or at the Facilities
(or present or suspected to be present on any other property, if such
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Hazardous Material emanated or allegedly emanated from any of the Facilities and
was present or suspected to be present on any of the Facilities on or prior to
the Closing Date) or (ii) Released or allegedly Released by Sellers or SPL or
any other Person for whose conduct they are or may be held responsible, at any
time on or prior to the Closing Date.
(c) PRG will be entitled to control any Cleanup, any related
Proceeding, and, except as provided in the following sentence, any other
Proceeding with respect to which indemnity may be sought under this Section
10.3. The procedure described in Section 9.8 will apply to any claim solely for
monetary damages relating to a matter covered by this Section 10.3.
(d) any liability for Taxes imposed on SPL for periods prior to the
Closing date except to the extent (i) shown on the February 28 Balance Sheet or
(ii) attributable to income earned or operations in periods commencing on or
after March 1, 1998.
10.4 Indemnification and Payment of Damages by PRG. PRG will indemnify
and hold harmless Sellers, and will pay to Sellers the amount of any Damages
arising, directly or indirectly, from or in connection with (a) any breach of
any representation or warranty made by PRG in this Agreement or in any
certificate delivered by PRG pursuant to this Agreement, (b) any breach by PRG
of any covenant or obligation of PRG in this Agreement or (c) any claim by any
Person against either Seller for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by such Person with PRG (or any Person acting on its behalf) in connection
with any of the transactions contemplated hereby.
10.5 Time Limitations. If the Closing occurs, Sellers will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Sections 2.2, 2.3, 2.4, 2.12, and 2.20,
unless on or before June 30, 1999 PRG notifies Sellers of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
PRG; a claim with respect to Sections 2.2, 2.3, 2.4, 2.12, and 2.20, or a claim
for indemnification or reimbursement not based upon any representation or
warranty or any covenant or obligation to be performed and complied with prior
to the Closing Date, may be made at any time within the longest applicable
statute of limitations. If the Closing occurs, PRG will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, unless on or before June 30, 1999 Sellers notify PRG of a claim specifying
the factual basis of that claim in reasonable detail to the extent then known by
Sellers.
10.6 Limitations on Amount--Sellers.
(a) Sellers will have no liability (for indemnification or otherwise)
with respect to any Damages until the total of all Damages exceeds $50,000 but
shall then be liable for all Damages above $50,000 up to the maximum limitations
contained herein.
(b) The maximum Damages for any breach of the representation or
warranties are set forth in Sections 2.1, 2.3, 2.4, 2.12, 2.20 and 2.28 shall be
an aggregate of $3 million.
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(c) Except as set forth in subsection (b), the maximum Damages for any
breach of the representations and warranties contained herein shall be an
aggregate of $500,000.
(d) Any Damages shall first be paid from the Preferred Units (valued at
their liquidation preference) and, if necessary, next from the Earn Out Payment
(to the extent then payable) before being paid from any other sources.
(e) Each Seller's maximum liability for Damages shall be equal to such
Seller's proportionate share of the $500,000 or $3 million maximum Damages
provided in this Section 10.6 based on such Seller's Percentage Interest in SPL.
(f) PRG may elect to recover a liability determined hereunder by
repurchasing from the Sellers (pro rata in accordance with their respective
Percentage Interests) for $.001 per Preferred Unit such aggregate number of
Preferred Units as the aggregate liquidation preference therefore equals the
amount of the applicable Damages. For example, if PRG suffers $23,330 in Damages
for which it is entitled to indemnification payments hereunder, PRG may
repurchase from Sellers (pro rata in accordance with their respective Percentage
Interests) the number of Preferred Units that have an aggregate liquidation
preference of $23,330 at a purchase price of $.001 per Preferred Unit, in such
case, PRG would be entitled to purchase 1,000 Preferred Units at their $23.33
per Preferred Unit liquidation preference at a total purchase price of $1.00.
The Sellers hereby grant to PRG a power of attorney to effectuate the foregoing
transfers of Preferred Units, such power of attorney being irrevocable and
coupled with an interest.
10.7 Procedure for Indemnification--Third Party Claims.
(a) Promptly after receipt by an indemnified party of notice of the
commencement of any Proceeding against it, such indemnified party will, if a
claim is to be made against an indemnifying party under such Section, give
notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnified party's failure to give such notice.
(b) If any Proceeding is brought against an indemnified party and it
gives notice to the indemnifying party of the commencement of such Proceeding,
the indemnifying party will, unless the claim involves Taxes, be entitled to
participate in such Proceeding to the extent that it wishes unless (i) the
indemnifying party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding or to assume the defense
of such Proceeding with counsel satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will not, as long
as it diligently conducts such defense, be liable to the indemnified party under
this Article 10 for any fees of other counsel or any other expenses with respect
to the defense of such Proceeding in each case subsequently incurred by the
indemnified party in connection with the defense of such
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Proceeding, other than reasonable costs of investigation. If the indemnifying
party assumes the defense of a Proceeding, (i) it will be conclusively
established for purposes of this Agreement that the claims made in that
Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within 30
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party, join in the right to
defend, compromise or settle such Proceeding, but the indemnifying party will
not be bound by any determination of a Proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of any
court of competent jurisdiction located in the State of New York for purposes of
any claim that an Indemnified Person may have under this Agreement with respect
to such Proceeding or the matters alleged therein, and agree that process may be
served on Sellers with respect to such a claim anywhere in the world.
10.8 Procedure for Indemnification--Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
10.9 Payment. Upon the determination of a liability hereunder, if any
party (a "Paying Party") is required to make a payment to another party (the
"Receiving Party"), subject to the limitations of Section 10.6, the Paying Party
shall make such payment within 10 days after such determination of the amount of
any claim for indemnification made hereunder. Payments of amounts owed by SPL or
Sellers to PRG may be made by offsetting the amounts against any other funds
payable to SPL or the Sellers by PRG. If the amount owed to PRG is greater than
$1.23 million, PRG shall make a claim for indemnification only after any Earn
Out Payment is determined. In the event that the Receiving Party is not promptly
paid in full for any such claim pursuant to the foregoing provisions, it shall
have the right (subject to the limitations set forth in Section 10.6),
notwithstanding any other rights that it may have against any other Person or
entity, to set-off the unpaid amount of any such claim against any amounts owed
by it under this Agreement or any other Transaction Document, including, without
limitation, any Earn Out Payment. Upon the payment in full of any claim, either
by set-off or otherwise, the Paying Party
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shall be subrogated to the rights of the Receiving Party against any Person or
entity with respect to the subject matter of such claim.
ARTICLE XI
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 11:
11.1 "Applicable Contract" means any Contract (a) under which SPL has
or may acquire any rights, (b) under which SPL has or may become subject to any
obligation or liability or (c) by which SPL or any of the assets owned or used
by it is or may become bound.
11.2 "Closing" is defined in Section 1.5.
11.3 "Closing Cash Payment" is defined in Section 1.3.
11.4 "Closing Date" means the date and time as of which the Closing
actually takes place.
11.5 "Closing Date Balance Sheet" is defined in Section 2.5.
11.6 "Consent" means approval, consent, ratification, waiver or other
authorization (including any Governmental Authorization).
11.7 "Contract" means any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
11.8 "Damages" is defined in Section 10.2.
11.9 "Disclosure Schedule" means the disclosure schedule delivered by
Sellers to PRG concurrently with the execution and delivery of this Agreement.
11.10 "Earn Out Date" is defined in Section 1.6.
11.11 "Earn Out Payment" is defined in Section 1.6.
11.12 "Earn Out Target" is defined in Section 1.6.
11.13 "EBITDA" is defined in Section 1.6.
11.14 "Employment Agreements" is defined in Section 1.4(a)(x).
11.15 "Encumbrance" means any charge, claim, condition, equitable
interest, lien, option, pledge, security interest, right of first refusal or
restriction of any kind, including any restriction on use, voting, transfer,
receipt of income or exercise of any other attribute of ownership.
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11.16 "Environment" means soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins and wetlands), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life and any
other environmental medium or natural resource.
11.17 "Environmental, Health and Safety Liabilities" means any cost,
damages, expense, liability, obligation or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to:
(a) any environmental, health or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment or other remediation or response
actions required by applicable Environmental Law or Occupational Safety and
Health Law (whether or not such action has been required or requested by any
Governmental Body or any other Person) and for any natural resource damages; or
(d) any other compliance, corrective, investigative or remedial
measures required under Environmental Law or Occupational Safety and Health Law.
11.18 "Environmental Law" means any Legal Requirement that requires or
relates to:
(a) advising appropriate authorities, employees and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits or other prohibitions and of the commencements of
activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species or ecological amenities;
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(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing the
threat of release or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
11.19 "Executory Contracts" is defined in Section 2.8.
11.20 "Facilities" means any real property, leaseholds or other
interests in real property currently or formerly owned or operated by SPL and
any buildings, plants, structures or equipment (including motor vehicles, tank
cars and rolling stock) currently or formerly owned or operated by SPL.
11.21 "February 28 Balance Sheet" is defined in Section 2.7.
11.22 "GAAP" means generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the February
28 Balance Sheet and the other financial statements referred to in Section 2.5
were prepared.
11.23 "Governmental Authorization" means any approval, consent,
license, permit, waiver or other authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
11.24 "Governmental Body" means any:
(a) nation, state, city, district or other political subdivision or
jurisdiction of any nature;
(b) national, local, foreign or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental ministry, agency, branch, department, official or
entity and any court or other tribunal);
(d) multinational organization or body; or
(e) body exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature.
11.25 "Group Company" is defined in Section 2.12.
11.26 "Hazardous Activity" means the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment or use
(including any withdrawal or other use of groundwater)
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of Hazardous Materials in, on, under, about or from the Facilities or any part
thereof into the Environment, and any other act, business, operation or thing
that increases the danger, or risk of danger, or poses an unreasonable risk of
harm to Persons or property on or off the Facilities, or that may affect the
value of the Facilities or SPL.
11.27 "Hazardous Materials" means any waste or other substance that is
listed, defined, designated or classified as, or otherwise determined to be,
hazardous, radioactive or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
11.28 "Intellectual Property Assets" is defined in Section 2.23.
11.29 "Knowledge." An individual will be deemed to have "Knowledge" of
a particular fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting business
in the ordinary course.
An entity will be deemed to have "Knowledge" of a particular fact or
other matter if any individual who is serving, or who has at any time served, as
a director, officer, partner or trustee of such entity (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter.
11.30 "Legal Requirement" means any national, local, foreign,
international, multinational or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute or treaty.
11.31 "Material Adverse Effect" means a diminution in the value of PRG
in an amount equal to $55,000, or with respect to any Person, the occurrence of
any event which could reasonably be expected to cause a material adverse change
to the prospects of such Person and its subsidiaries, taken as a whole, or on
the ability of such Person or any Related Person to consummate the transactions
contemplated hereby.
11.32 "Material Interest" means 5% or more of the share capital of or
other ownership interest in any Person.
11.33 "Occupational Safety and Health Law" means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
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11.34 "Order" means any award, decision, injunction, judgment, order,
ruling, subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.
11.35 "Organizational Documents" means (a) the memorandum, articles or
certificate of incorporation or association and the bylaws and any similar
constitutive document of a company; (b) the partnership or other similar
agreement of any general or limited partnership or any association or other
entity; (c) any charter or similar document adopted or filed in connection with
the creation, formation or organization of any Person; (d) any filing or
registration with any trade, commercial or other similar registry; and (e) any
amendment to any of the foregoing.
11.36 "Percentage Interests" is defined in Section 2.4.
11.37 "Person" means any individual, company, partnership, limited
liability company, Governmental Body or other entity of any nature.
11.38 "Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
11.39 "PRG" is defined in the first paragraph of this Agreement.
11.40 "Regular Units" means the "Regular Units" issued by PRG pursuant
to its Organizational Documents as such term is defined therein.
11.41 "Related Person" means with respect to a Person:
(a) any Person that, individually or jointly, directly or indirectly
controls, is directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person (including, without limitation,
officers and directors thereof); or
(b) any Person that holds a Material Interest in such specified Person
(or any Person in which such specified Person holds a Material Interest).
11.42 "Release" means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping or other releasing into the Environment,
whether intentional or unintentional.
11.43 "Representative" means with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor or other representative
of such Person, including legal counsel, accountants and financial advisors.
11.44 "Sellers" is defined in the first paragraph of this Agreement.
11.45 "SPL Shares" is defined in the Recitals of this Agreement.
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11.46 "Subsidiary" means with respect to any Person (the "Owner"), of
which securities or other interests having the power to elect a majority of that
entity's board of directors or similar governing body, or otherwise having the
power to direct the business and policies of that entity (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries.
11.47 "Taxes" means all taxes, however denominated, including interest,
penalties and other additions to tax that may become payable, imposed by any
Legal Requirement or any Governmental Body, including all taxes, withholdings
and other charges in respect of income, profits, gains, payroll, unemployment
insurance, social security or other social benefits taxes, sales, use, value
added, ad valorem, excise, franchise, gross receipts, business licenses,
occupations, real or personal property, stamps, transfers, environment and
workers' compensation, which SPL is required to pay, withhold or collect.
11.48 "Tax Return" means any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
11.49 "Threat of Release" means a substantial likelihood of a Release
that may require action in order to prevent or mitigate damage to the
Environment that may result from such Release.
11.50 "Threatened." A claim, Proceeding, dispute, action or other
matter will be deemed to have been "Threatened" if any demand or statement has
been made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent person to conclude that such a claim, Proceeding,
dispute, action or other matter is likely to be asserted, commenced, taken or
otherwise pursued in the future.
11.51 "Transaction Document." This Agreement, including all schedules
and exhibits hereto, and any employment agreement entered into in connection
herewith.
ARTICLE XII
POST-CLOSING COVENANTS
12.1 Covenant Not to Compete. Sellers and each of their affiliates
agrees that during the "Non-Compete Term" (as hereinafter defined) and except on
behalf of PRG or SPL, neither they nor any of their affiliates will, directly or
indirectly:
(a) own, manage, operate, join, control or participate in the
ownership, management, operation or control of any business, whether in
corporate, proprietorship or partnership form or otherwise where such
business is competitive with the business conducted by SPL or PRG
including, without
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limitation, any business which provides audio visual products and
services in North America or any other business if SPL, PRG or such
affiliate has taken substantial steps in anticipation of commencing
such business and Sellers or their affiliates were aware of such steps;
(b) take any action, directly or indirectly, to finance, guarantee or
provide any other material assistance to any Person or other entity
engaged in any of the businesses set forth in subparagraph(a) above;
(c) influence or attempt to influence any Person or other entity that
is a contracting party with PRG or SPL at any time to terminate any
written or oral agreement with PRG or SPL except to the extent that he
is acting on behalf of PRG or SPL in good faith;
(d) solicit or engage in business with any person who was an SPL or PRG
customer during the Non-Compete Term; or
(e) either on its own account or in conjunction with or on behalf of
any other Person, solicit, entice away from PRG or SPL or hire any
officer, employee or customer of either such Person as of the date
hereof or at any time thereafter, whether or not such officer, employee
or customer would commit a breach of contract by reason of leaving
service or transferring business.
The "Non-Compete Term" shall commence on the date hereof and end on the
fifth anniversary of the date hereof.
The parties hereto specifically acknowledge and agree that the remedy
at law for any breach of the foregoing will be inadequate and that the PRG, in
addition to any other relief available to it, shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damage. In
the event that the provisions of this Section 12.1 should ever be deemed to
exceed the limitation provided by applicable law, then the parties hereto agree
that such provisions shall be reformed to set forth the maximum limitations
permitted. The parties acknowledge that the covenant contained herein is an
essential part of the transaction embodied herein.
The parties further agree that any obligations of Sellers pursuant to
this Section 12.1 shall not apply in the event that PRG breaches any of its
representations, warranties, covenants or obligations under this Agreement;
provided, however, that Sellers shall have complied with all notice provisions
of this Agreement and dispute resolution procedures pursuant to Section 13.5
hereof.
12.2 Pledge of Preferred Units. Sellers agree to pledge to The Bank of
New York, as agent, for security for payment of the obligation of PRG under its
credit agreement, all of their right, title and interest in the Preferred Units
such pledge to be evidenced by a pledge or other agreement in form and substance
satisfactory to The Bank of New York and PRG.
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12.3 Transactions with Related Persons. From and after the date hereof,
no Seller or any Related Person of Sellers or of SPL shall own (of record or as
a beneficial owner) an equity interest or any other financial or profit interest
in, a Person that has (i) had business dealings or a material financial interest
in any transaction with SPL or (ii) engaged in a Competing Business in any
market presently served by SPL except for passive investments in less than one
percent of the outstanding share capital of any Competing Business that is
publicly traded on any recognized exchange or in an over-the-counter market.
ARTICLE XIII
GENERAL PROVISIONS
13.1 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution and performance of this
Agreement and the transactions contemplated hereby, including all fees and
expenses of agents, representatives, counsel and accountants. SPL will pay all
amounts payable to its accountants, attorneys and solicitors in connection this
Agreement and the transactions contemplated hereby; provided, however, that
Sellers shall be responsible for any fees or expenses payable to Xxxxxx Xxxxx &
Co., Inc. in connection with this Agreement and the transactions contemplated
hereby. In the event of termination of this Agreement, the obligation of each
party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party. Notwithstanding
anything herein to the contrary, the Sellers shall bear the costs of all
transfer and other Taxes incurred in connection with the transfer of the SPL
Shares or the transactions entered into in connection herewith or in
contemplation hereof.
13.2 Public Announcements. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated hereby will be
issued, if at all, at such time and in such manner as PRG and SPL jointly
determines; provided, however, that PRG shall be permitted to make any
disclosure which it reasonably believes to be necessary or advisable in order to
comply with its public reporting requirements. Unless consented to by PRG in
advance or required by Legal Requirements, prior to the Closing, Sellers shall,
and shall cause SPL to, and PRG shall keep this Agreement strictly confidential
and may not make any disclosure of this Agreement to any Person; provided,
however, that PRG shall make public disclosures in accordance with its public
reporting requirements. Sellers and PRG will consult with each other concerning
the means by which SPL's employees, customers and suppliers and others having
dealings with SPL will be informed of the transactions contemplated hereby, and
PRG will have the right to be present for any such communication.
13.3 Confidentiality.
(a) Between the date of this Agreement and the Closing Date, PRG, SPL
and Sellers will maintain in confidence, and will cause the directors, officers,
employees, agents and advisors of PRG and SPL to maintain in confidence, any
written, oral or other information obtained in confidence from another party or
SPL in connection with this Agreement or the transactions contemplated hereby,
unless (i) such information is already known to such party or
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to others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (ii) the use of such
information is necessary or appropriate in making any filing including, without
limitation, any filing with the Securities and Exchange Commission, or obtaining
any consent or approval required for the consummation of the transactions
contemplated hereby, or (iii) the furnishing or use of such information is
required by law, regulation or legal process.
(b) If the transactions contemplated hereby are not consummated, each
party will return or destroy such written information and copies thereof.
Whether or not the Closing takes place, Sellers waive, and will upon PRG's
request cause SPL to waive, any cause of action, right or claim arising out of
the access of PRG or its representatives to any trade secrets or other
confidential information of SPL except for the intentional competitive misuse by
PRG of such trade secrets or confidential information.
13.4 Notices. All notices, requests, demands, and other communications
required or permitted by this Agreement shall be in writing in the English
language and (a) delivered by messenger; (b) transmitted by telecopier; or (c)
delivered by a reputable international courier service, with courier charges
paid or payable by the sender. All such notices and other communications shall
be addressed as follows to the respective parties set forth below or to such
other address as any such party may hereafter specify in writing:
Notices to PRG shall be addressed to:
Xxxxxx X. Manners, Esq.
General Counsel
Production Resource Group, L.L.C.
000 Xxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxx Xxxx 00000
facsimile: (000) 000-0000
With a copy to:
Xxxx X. Xxxx, Esq.
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
facsimile: (000) 000-0000
Notices to SPL shall be addressed to:
Xxxx X. Xxxxxxxxxxx, Xx.
Signal Perfection, Ltd.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
facsimile: (000) 000-0000
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With a copy to:
Xxxxxx X. Xxxxxx
Suite 402
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
facsimile: (000) 000-0000
Notices to the Individual Sellers shall be addressed to the address set
forth next to their name on the signature pages hereof:
Notices shall be deemed to have been given (i) on the day of delivery
(evidenced by a signed receipt) if delivered by messenger; (ii) one business day
after it has been delivered to a reputable international courier service; or
(iii) on the day sent by telecopy if the transmission is confirmed by the
sender's telecopier.
13.5 Dispute Resolution.
(a) Except as set forth in clause (b) below, any disagreement,
difference or dispute between any of the parties hereto relating in any way to
this Agreement, the rights or obligations of the parties hereunder or the
transactions contemplated hereby shall be settled by arbitration held in New
York, New York, in accordance with the procedural rules of The American
Arbitration Association. The arbitration shall be held before a single
arbitrator. The arbitrator shall be selected by the mutual agreement of Sellers
and PRG, but if they do not so agree within 20 days after the date of the notice
referred to above, the selection shall be made pursuant to the rules from the
panels of arbitrators maintained by such Association. Any award or other
decision of the arbitrators shall be final, unappealable and binding on the
parties. Any party may seek judgment upon any award in any court having
jurisdiction or an application may be made to such court for the judicial
acceptance of the award and for an order of enforcement.
(b) Notwithstanding clause (a) above, any party hereto may bring an
action in any court of competent jurisdiction (i) for provisional relief pending
the outcome of arbitration, including pre-judgment attachment or sequestration
of assets, (ii) for injunctive relief, including specific enforcement of the
obligations of a party hereunder or (iii) to compel arbitration or enforce any
arbitral award. For purposes of any proceeding authorized by this clause (b),
each party hereby consents to the non-exclusive jurisdiction of the state and
federal courts of competent jurisdiction located in the State of New York.
13.6 Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
13.7 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement
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will operate as a waiver of such right, power or privilege, and no single or
partial exercise of any such right, power or privilege will preclude any other
or further exercise of such right, power, or privilege or the exercise of any
other right, power or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
13.8 Entire Agreement and Modification. This Agreement, when executed
and delivered, supersedes all prior agreements between the parties with respect
to its subject matter (including the letter of intent between PRG and Sellers
dated April 3, 1998) and constitutes (along with the documents referred to in
this Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.
13.9 Disclosure Schedule.
(a) The disclosures in the Disclosure Schedule, and those in any
Supplement thereto, must relate only to the representations and warranties in
the Section of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Disclosure Schedule (other than an
exception expressly set forth as such in the Disclosure Schedule with respect to
a specifically identified representation or warranty), the statements in the
body of this Agreement will control.
13.10 Assignments, Successors and No Third Party Rights. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties except that PRG may assign any of its rights under this
Agreement to any affiliate of PRG. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
13.11 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
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13.12 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
13.13 Governing Law. This Agreement will be governed by and construed
and interpreted in accordance with the laws of the State of New York, U.S.A.
without regard to conflicts of laws principles.
13.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original of this Agreement
and all of which, when taken together, will be deemed to constitute one and the
same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
PRODUCTION RESOURCE GROUP, L.L.C.
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chairman & CEO
SIGNAL PERFECTION, LTD.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxx
---------------------------------------
Xxxx X. Xxxxxxxxxxx, Xx.
/s/ Xxxx X. Xxxxxxxxxxx, Xx.
---------------------------------------
Xxxxxxxxx X. Xxxxxx
/s/ Xxxxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx XxXxxxx
/s/ Xxxxxx XxXxxxx
---------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
---------------------------------------
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Schedule 1.2
Shareholder Loans
CWF, LLC, an entity which is owned 100% by Sellers in the same proportions in
which they currently own SPL stock, is the maker of a $770,000 promissory note
payable to SPL, which note shall be repaid at Closing.
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Schedule 2.4(a)
Shareholder List
Name Number of Shares
---- ----------------
Xxxxxxx X. Xxxxx 2,380
Xxxx X. Xxxxxxxxxxx 2,380
Xxxxxxxxx X. Xxxxxx 1,190
Xxxxxx XxXxxxx 000
Xxx Xxxxxx 350
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Schedule 2.4(b)
Interests of SPL and Sellers
Sellers own partnership interests in CWF, LLC in the same proportions
as they currently own stock in SPL. These represent 100% of the equity of CWF,
LLC.
Media Fabricators has never issued any debt or equity instruments.
Media Fabricators is a Shell Entity owned 100% by CWF, LLC.
LBM Associates, Inc. is a construction company in which SPL purchased
an equity interest. This interest will be transferred to the Sellers at Closing.
There is a $34,110 receivable from LBM Associates, Inc. which will be assigned
to the Sellers at Closing.
Structural Steel Fabricators is a construction company in which CWF,
LLC owns a 19% interest.
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Schedule 2.29
Non-Accredited Investors
Xxxxxxxxx X. Xxxxxx
Xxxxxx XxXxxxx
Xxxxxx Xxxxxx
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