EXHIBIT 10.32
STOCK PURCHASE AGREEMENT
dated as of September 26, 1997
by and among
METALS USA, INC.
XXXXX METAL SERVICENTERS, INC.
and
the Stockholders named herein
TABLE OF CONTENTS
Page
1. AGREEMENT TO PURCHASE AND SELL.........................................1
1.1 Agreement to Purchase and Sell...................................1
1.2 Purchase Price...................................................1
1.3 The Closing......................................................1
1.4 Instruments of Transfer; Further Assurances......................2
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.....................2
2.1 Due Organization.................................................2
2.2 Authorization....................................................2
2.3 Capital Stock of the Company.....................................2
2.4 Subsidiaries.....................................................3
2.5 Financial Statements.............................................3
2.6 Liabilities and Obligations......................................4
2.7 Accounts and Notes Receivable....................................4
2.8 Permits and Intangibles..........................................4
2.9 Environmental Matters............................................5
2.10 Personal Property................................................6
2.11 Significant Customers; Material Contracts and Commitments........6
2.12 Real Property....................................................7
2.13 Insurance........................................................7
2.14 Compensation; Employment Agreements; Organized Labor Matters.....7
2.15 Employee Benefit Plans...........................................8
2.16 Conformity with Law; Litigation..................................9
2.17 Taxes...........................................................10
2.18 No Violations; All Required Consents Obtained...................11
2.19 Government Contracts............................................11
2.20 Absence of Changes..............................................11
2.21 Powers of Attorney..............................................12
2.22 Competing Lines of Business; Related-party Transactions.........12
2.23 Disclosure......................................................13
2.24 Prohibited Activities...........................................13
2.25 Certain Business Practices......................................13
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3. REPRESENTATIONS OF PURCHASER..........................................13
3.1 Due Organization................................................13
3.2 Authorization...................................................14
3.3 No Violations...................................................14
3.4 Validity of Obligations.........................................14
4. COVENANTS PRIOR TO CLOSING............................................14
4.1 Access and Cooperation; Due Diligence...........................14
4.2 Conduct of Business Pending Closing.............................14
4.3 Prohibited Activities...........................................15
4.4 No Shop.........................................................16
4.5 Notice to Bargaining Agents.....................................16
4.6 Agreements; Certain Indebtedness................................16
4.7 Notification of Certain Matters.................................17
4.8 Amendment of Schedules..........................................17
4.9 Further Assurances..............................................17
4.10 Compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 (the "HSR Act")........................17
4.11 Notices and Consents............................................18
4.12 Stockholder's Commitment........................................18
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS...................18
5.1 Representations and Warranties; Performance of Obligations......18
5.2 Satisfaction....................................................18
5.3 Consents and Approvals..........................................18
5.4 Employment and Consulting Agreements............................19
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER......................19
6.1 Representations and Warranties; Performance of Obligations......19
6.2 No Material Adverse Effect......................................19
6.3 Satisfaction....................................................19
6.4 Opinion of Counsel..............................................19
6.5 Consents and Approvals..........................................19
6.6 Good Standing Certificates......................................20
6.7 Employment Agreement............................................20
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7. POST-CLOSING COVENANTS................................................20
7.1 Future Cooperation..............................................20
7.2 Expenses........................................................20
7.3 Section 338(h)(10) Election.....................................20
7.4 Certain Bonuses.................................................21
8. INDEMNIFICATION.......................................................21
8.1 Survival of Stockholder's Representations and Warranties. .....21
8.2 General Indemnification by the Stockholders.....................22
8.3 Indemnification by Purchaser....................................22
8.4 Specific Indemnification........................................22
8.5 Third Person Claims.............................................23
8.6 Method of Payment...............................................23
8.7 Limitations on Indemnification..................................23
9. TERMINATION OF AGREEMENT..............................................24
9.1 Termination.....................................................24
9.2 Liabilities in Event of Termination.............................24
10. NONCOMPETITION........................................................25
10.1 Prohibited Activities...........................................25
10.2 Equitable Relief................................................25
10.3 Reasonable Restraint............................................26
10.4 Severability; Reformation.......................................26
10.5 Independent Covenant............................................26
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.............................26
11.1 General.........................................................26
11.2 Equitable Relief................................................27
11.3 Survival........................................................27
12. GENERAL...............................................................27
12.1 Successors and Assigns..........................................27
12.2 Entire Agreement................................................27
12.3 Counterparts....................................................27
12.4 Brokers and Agents..............................................28
12.5 Notices.........................................................28
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12.6 Governing Law...................................................28
12.7 Survival of Representations and Warranties......................28
12.8 Effect of Investigation; Knowledge..............................29
12.9 Exercise of Rights and Remedies.................................29
12.10 Time............................................................29
12.11 Reformation and Severability....................................29
12.12 Remedies Cumulative.............................................29
12.13 Captions........................................................29
12.14 Press Releases and Public Announcements.........................29
12.15 No Third-Party Beneficiaries....................................30
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ANNEXES
Annex I - Form of Employment Agreement; Terms and Conditions
Annex II - Form of Opinion of Counsel to Company and
Stockholders
Annex III - Form of Escrow Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of September 26, 1997 by and among Metals USA, Inc., a Delaware corporation
("Purchaser"), Xxxxx Metal Servicenters, Inc., a Michigan corporation (the
"Company"), and the Xxxxxxx X. Xxxxxxx Revocable Trust, the Xxxxxxx X. Xxxxxxxx
Revocable Trust, Xxxxxxxx X. Xxxxxx and Xxxxxx X. Xxxx, the stockholders of the
Company (the "Stockholders").
WHEREAS, the Stockholders desire to sell, and the Purchaser desires to
purchase, all of the issued and outstanding capital stock of the Company (the
"Shares") upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, contained herein, the parties hereto, intending to be legally bound,
agree as follows:
1. AGREEMENT TO PURCHASE AND SELL
1.1 AGREEMENT TO PURCHASE AND SELL. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as defined below), the
Stockholders hereby agree to sell, convey, transfer, assign and deliver to
Purchaser, and Purchaser hereby agrees to purchase from the Stockholders, all of
the Shares.
1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase Price")
for the Shares shall consist of $XX,XXX,XXX in cash, less the aggregate amount,
if any, distributed by the Company pursuant to Section 4.3 (iii) hereof (such
amount to be paid by wire transfer of immediately available funds in accordance
with wiring instructions to be provided by the Stockholders at least two
business days prior to the Closing). Subject to any such adjustments, and
subject to the escrow provisions contained herein, the Purchase Price shall be
paid to the Stockholders in accordance with Schedule 1.2 hereto. The
Stockholders may instruct Purchaser to wire the amounts due to each of them at
Closing into a single bank account.
1.3 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at such location or locations as may
be agreed upon by the parties, commencing at 9:00 a.m. local time on the second
business day following the satisfaction or waiver of all conditions to the
obligations of the parties to consummate the transactions contemplated
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hereby (other than conditions with respect to actions the respective parties
will take at the Closing itself) or such other date as the parties may mutually
determine (the "Closing Date").
1.4 INSTRUMENTS OF TRANSFER; FURTHER ASSURANCES. At the Closing, the
Stockholders shall deliver to Purchaser certificates representing the Shares,
duly endorsed (or accompanied by duly executed stock powers) with signatures
guaranteed by a commercial bank or member firm of the New York Stock Exchange.
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders jointly and severally represent and warrant to Purchaser
as follows:
2.1 DUE ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan (the
"State of Incorporation"), and has all requisite power and authority to carry on
its business as it is now being conducted. The Company is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a material adverse effect on the business, assets, operations or condition
(financial or otherwise), of the Company taken as a whole (as used herein with
respect to the Company, or with respect to any other person, a "Material Adverse
Effect"). Schedule 2.1 sets forth a list of all jurisdictions in which the
Company is authorized or qualified to do business. True, complete and correct
copies of the Certificate of Incorporation and By-laws, each as amended, of the
Company (the "Charter Documents") are all attached to Schedule 2.1. The stock
records of the Company, a copy of which is attached to Schedule 2.1, are correct
and complete in all material respects. There are no minutes in the possession of
the Company or the Stockholders which have not been made available to Purchaser,
and all of such minutes are correct and complete in all respects.
2.2 AUTHORIZATION. (i) The representatives of the Company executing this
Agreement have the authority to enter into and bind the Company to the terms of
this Agreement and (ii) the Company has the full legal right, power and
authority to enter into this Agreement and the transactions contemplated hereby,
all of which have been unanimously approved by all of the shareholders and the
Board of Directors of the Company. This Agreement has been validly executed and
delivered by the Company and the Stockholders and constitutes the legal, valid
and binding obligation of each of them enforceable in accordance with its terms.
2.3 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
Company consists solely of (i) 400,000 shares of common stock, par value $.01
per share, all of which
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400,000 shares are issued and outstanding and constitute all of the Shares. All
of the Shares are owned of record and beneficially by the Stockholders in the
amounts set forth on Schedule 2.3 and are owned free and clear of all liens,
security interests, pledges, charges, voting trusts, restrictions, encumbrances
and claims of every kind except for a Stock Voting, Restriction and Purchase and
Sale Agreement that will be terminated concurrently with the Closing and will be
of no effect at and after the Closing. All of the Shares have been duly
authorized and validly issued, are fully paid and nonassessable, and were
offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws concerning the issuance of securities. None of
the Shares were issued in violation of any preemptive rights or similar rights
of any person. No option, warrant, call, conversion right or commitment of any
kind exists which obligates the Company to issue any additional shares of its
capital stock or obligates any of the Stockholders to transfer any of the Shares
to any person except to Purchaser pursuant to this Agreement.
2.4 SUBSIDIARIES. Except as set forth on Schedule 2.4, the Company has no
subsidiaries or d/b/a names and has not conducted business under any other name
except its legal name as set forth in its Charter Documents. Except as set forth
in Schedule 2.4, the Company does not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
capital stock or any other equity interest in any corporation, association or
other business entity, and the Company is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 FINANCIAL STATEMENTS. Complete and correct copies of the following
financial statements are attached as Schedule 2.5:
(i) the balance sheets of the Company as of December 31, 1996, 1995
and 1994 and the related statements of operations, stockholder's equity
and cash flows for the three-year period ended December 31, 1996, together
with the related notes and schedules (such balance sheets, the related
statements of operations, stockholder's equity and cash flows and the
related notes and schedules are referred to herein as the "Year-end
Financial Statements"); and
(ii) the balance sheet (the "Interim Balance Sheet") of the Company
as of August 31, 1997 (the "Balance Sheet Date") and the related
statements of operations for the eight-month period ended August 31, 1997,
(such balance sheet and the related statements of operations are referred
to herein as the "Interim Financial Statements"). The Year-end Financial
Statements and the Interim Financial Statements are collectively called
the "Financial Statements".
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The Financial Statements have been prepared from the books and records of
the Company in conformity with generally accepted accounting principles applied
on a basis consistent with preceding years and throughout the periods involved
("GAAP") and present fairly the financial position and results of operations of
the Company as of the dates of such statements and for the periods covered
thereby. The books of account of the Company have been kept accurately in all
material respects in the ordinary course of business, the transactions entered
therein represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects.
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for on the face of the Financial Statements (rather than in
any notes thereto) or on Schedule 2.6 hereto, the Company has no liabilities or
obligations of any kind, whether accrued, absolute, secured or unsecured,
contingent or otherwise. Except and to the extent disclosed on Schedule 2.6,
there are no claims, liabilities or obligations, nor any reasonable basis for
assertion against the Company, of any claim, liability or obligation, of any
nature whatsoever. Except as expressly set forth on Schedule 2.6, all of the
liabilities of the Company listed on Schedule 2.6 are covered by the Company's
insurance policies, and no such liability will exceed the policy limits of such
insurance policies. Schedule 2.6 contains a reasonable estimate of the maximum
amount which may be payable with respect to liabilities which are not fixed. For
each such liability for which the amount is not fixed, Schedule 2.6 includes a
summary description of the liability together with copies of all relevant
documentation relating thereto.
2.7 ACCOUNTS AND NOTES RECEIVABLE. Schedule 2.7 sets forth an accurate
list of the accounts and notes receivable of the Company, as of the Balance
Sheet Date and generated subsequent to the Balance Sheet Date. Receivables from
and advances to employees and the Stockholders and any entities or persons
related to or affiliated with any of the Stockholders are separately identified
on Schedule 2.7. Schedule 2.7 also sets forth an accurate aging analysis of all
accounts, notes and other receivables as of the Balance Sheet Date, showing
amounts due in 30-day aging categories. Except to the extent reflected on
Schedule 2.7, all such accounts, notes and other receivables were incurred in
the ordinary course of business, are stated in accordance with GAAP and, to the
best knowledge of the Stockholders, all such accounts, notes and other
receivables as of the Balance Sheet Date are collectible in the amounts shown on
Schedule 2.7, net of reserves reflected in the balance sheet as of the Balance
Sheet Date.
2.8 PERMITS AND INTANGIBLES. The Company holds all licenses, franchises,
permits and other governmental authorizations required in connection with the
conduct of the Company's business. Schedule 2.8 sets forth an accurate list and
summary description of all such licenses, franchises, permits and other
governmental authorizations, including permits, titles (including
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licenses, franchises, certificates, trademarks, trade names, patents, patent
applications and copyrights owned or held by the Company or any of its employees
(including interests in software or other technology systems, programs and
intellectual property) (collectively, the "Intangible Assets") (it being
understood and agreed that a list of all environmental permits and other
environmental approvals is set forth on Schedule 2.9). The Intangible Assets and
other governmental authorizations listed on Schedules 2.8 and 2.9 are valid, and
the Company has not received any notice that any person intends to cancel,
terminate or not renew any such Intangible Assets or other governmental
authorization. The Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Intangible Assets and other governmental authorizations listed on
Schedules 2.8 and 2.9 and is not in violation of any of the foregoing. Except as
specifically set forth on Schedule 2.8 or 2.9, the transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company by, any such
Intangible Assets or other governmental authorizations.
2.9 ENVIRONMENTAL MATTERS. The Company has reviewed the reports of
independent environmental consultants attached hereto as Schedule 2.9A. The
Company has complied with and is in compliance with all federal, state, local
and foreign statutes (civil and criminal), laws, ordinances, regulations, rules,
notices, permits, judgments, orders and decrees applicable to any of them or any
of their respective properties, assets, operations and businesses relating to
environmental protection (collectively "Environmental Laws") including, without
limitation, Environmental Laws relating to air, water, land and the generation,
storage, use, handling, transportation, treatment or disposal of Hazardous
Wastes, Hazardous Materials and Hazardous Substances including petroleum and
petroleum products (as such terms are defined in any applicable Environmental
Law) except to the extent that noncompliance with any Environmental Laws, either
singly or in the aggregate, (i) has not had and will not have a Material Adverse
Effect on the Company or any of its businesses, and (ii) will not necessitate
any material expenditure by or on behalf of the Company. The Company has
obtained and adhered to all necessary permits and other approvals necessary to
treat, transport, store, dispose of and otherwise handle Hazardous Wastes,
Hazardous Materials and Hazardous Substances, a list of all of which permits and
approvals is set forth on Schedule 2.9, and have reported to the appropriate
authorities, to the extent required by all Environmental Laws, all past and
present sites owned and operated by the Company where Hazardous Wastes,
Hazardous Materials or Hazardous Substances have been treated, stored, disposed
of or otherwise handled. There have been no releases or threats of releases (as
defined in Environmental Laws) at, from, in or on any property owned or operated
by the Company except as permitted by Environmental Laws. There is no on-site or
off-site location to which the Company has transported or disposed of Hazardous
Wastes, Hazardous Materials or Hazardous Substances or arranged for the
transportation of Hazardous Wastes, Hazardous Materials or Hazardous Substances
which is the subject of any
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federal, state, local or foreign enforcement action or any other investigation
which could lead to any claim against the Company or Purchaser for any clean-up
cost, remedial work, damage to natural resources, property damage or personal
injury, including, but not limited to, any claim under (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, (ii)
the Resource Conservation and Recovery Act, (iii) the Hazardous Materials
Transportation Act or (iv) comparable state or local statutes and regulations.
The Company has no contingent liability in connection with any release of any
Hazardous Waste, Hazardous Material or Hazardous Substance into the environment.
2.10 PERSONAL PROPERTY. Schedule 2.10 sets forth an accurate list (except
that detail relating to any personal property acquired prior to 1985 is provided
on a best efforts basis only) of (a) all personal property included in "plant,
property and equipment" on the balance sheet of the Company, (b) all other
personal property owned by the Company with a book value in excess of $10,000
(i) as of the Balance Sheet Date and (ii) acquired since the Balance Sheet Date
and (c) all leases and agreements in respect of personal property, including, in
the case of each of (a), (b) and (c), (1) true, complete and correct copies of
all such leases and (2) an indication as to which assets are currently owned, or
were formerly owned, by Stockholders, relatives of Stockholders, or Affiliates
of the Company or the Stockholders. Except as set forth on Schedule 2.10, (i)
all material personal property used by the Company in its business is either
owned by the Company or leased by the Company pursuant to a lease included on
Schedule 2.10, (ii) all of the personal property listed on Schedule 2.10 is, in
the aggregate, in good working order and condition, ordinary wear and tear
excepted and (iii) all leases and agreements included on Schedule 2.10 are in
full force and effect and constitute valid and binding agreements of the parties
(and their successors) thereto in accordance with their respective terms. Except
as set forth on Schedule 2.10, the Company has good and marketable title to the
tangible and intangible personal property it purports to own, subject to no
security interest, pledge, lien, claim, conditional sales agreement,
encumbrance, charge or restriction on transfer.
2.11 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS. Schedule
2.11 sets forth a list of (i) all customers representing 1% or more of the
Company's revenues in any of the periods covered by the Financial Statements
("Significant Customers"), and (ii) all material contracts, commitments and
similar agreements to which the Company is a party or by which it or any of its
properties are bound (including, but not limited to, contracts with Significant
Customers, joint venture or partnership agreements, contracts with any labor
organizations, strategic alliances and options to purchase land). True, complete
and correct copies of such agreements are attached to Schedule 2.11. Except as
described on Schedule 2.11, (i) none of the Company's Significant Customers have
canceled or substantially reduced or, to the knowledge of the Company, are
currently attempting or threatening to cancel a contract or substantially reduce
utilization of the
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services provided by the Company, and (ii) the Company has complied with all
material commitments and obligations pertaining to it, and is not in default
under any contracts or agreements listed on Schedule 2.11 and no notice of
default under any such contract or agreement has been received. Except as
specifically set forth on Schedule 2.11, the transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the Company by, any such
contracts or agreements. Schedule 2.11 also includes a summary description of
all plans or projects relating to the Company's business involving the opening
of new operations, expansion of existing operations, the acquisition of any
property, business or assets requiring, in any event, the payment of more than
$10,000.
2.12 REAL PROPERTY. Schedule 2.12 includes a list of all real property
owned or leased by the Company at the date hereof, and all other real property,
if any, used by the Company in the conduct of its business. True, complete and
correct copies of all leases and agreements in respect of real property leased
by the Company are attached to Schedule 2.12, and an indication as to which such
properties, if any, are currently owned, or were formerly owned, by Stockholders
or affiliates of the Company or Stockholders is included in Schedule 2.12.
Except as set forth on Schedule 2.12, all of such leases included on Schedule
2.12 are in full force and effect and constitute valid and binding agreements of
the parties (and their successors) thereto in accordance with their respective
terms.
2.13 INSURANCE. The Company has been covered during the past ten years by
insurance in scope and amount customary and reasonable for the businesses in
which the Company has engaged during such period. Schedule 2.13 sets forth an
accurate list as of the Balance Sheet Date of all insurance policies now carried
by the Company and an accurate list of all insurance loss runs and workers
compensation claims received for the past three policy years. True, complete and
correct copies of all insurance policies currently in effect are attached to
Schedule 2.13. Such insurance policies evidence all of the insurance that the
Company is required to carry pursuant to all of its contracts and other
agreements and pursuant to all applicable laws, and provide adequate coverage
against the risks involved in the Company's business. None of such policies is a
"claims made" policy except the Employer's liability policy (Forefront Policy).
All of such insurance policies are currently in full force and effect and shall
remain in full force and effect through the Closing Date.
2.14 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
Schedule 2.14 sets forth an accurate list showing all officers, directors and
key employees of the Company, listing all employment agreements with such
officers, directors and key employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons as of (i) the Balance Sheet Date and (ii)
the date hereof.
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Except as set forth on Schedule 2.14, since the Balance Sheet Date, there have
been no increases in the compensation payable or any special bonuses to any
officer, director, key employee or other employee, except ordinary salary
increases implemented on a basis consistent with past practices.
Except as set forth on Schedule 2.14, (i) the Company is not bound by or
subject to (and none of its respective assets or properties is bound by or
subject to) any arrangement with any labor union, (ii) no employees of the
Company are represented by any labor union or covered by any collective
bargaining agreement, (iii) to the knowledge of the Company, no campaign to
establish such representation is in progress and (iv) there is no pending or, to
the best of the Company's knowledge, threatened, labor dispute involving the
Company and any group of its employees. The Company has not experienced any
labor interruptions over the past five years. The Company's relationship with
its employees is good.
2.15 EMPLOYEE BENEFIT PLANS. Schedule 2.15 sets forth an accurate schedule
showing all employee benefit plans of Company, including all agreements or
arrangements (other than agreements or arrangements set forth on Schedule 2.14)
containing "golden parachute" or other similar provisions, and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans, if any, described on Schedule 2.15, the Company does not sponsor,
maintain or contribute to any plan program, fund or arrangement that constitutes
an "employee pension benefit plan," nor does the Company have any obligation to
contribute to or accrue or pay any benefits under any deferred compensation or
retirement funding arrangement on behalf of any employee or employees (such as,
for example, and without limitation, any individual retirement account or
annuity, any "excess benefit plan" (within the meaning of Section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or any
non-qualified deferred compensation arrangement). For the purposes of this
Agreement, the term "employee pension benefit plan" shall have the same meaning
as is given that term in Section 3(2) of ERISA. The Company has not sponsored,
maintained or contributed to any employee pension benefit plan and is not
required to contribute to any retirement plan pursuant to the provisions of any
collective bargaining agreement establishing the terms and conditions or
employment of any of the Company's employees other than the plans set forth on
Schedule 2.15.
Except for and to the extent of any immaterial funding deficiency as and
to the extent described in the July 1, 1996 Xxxxx report to the Company, a copy
of which is attached hereto as part of Schedule 2.15, the Company is not now,
and will not as a result of its past activities become, liable to the Pension
Benefit Guaranty Corporation or to any multi employer employee pension benefit
plan under the provisions of Title IV of ERISA; provided, however, that this
representation
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shall not be deemed to be incorrect solely as a result of either (i) decreases
in the value of plan assets after the Closing Date or (ii) any failure of the
Company to fund any such plan as required by law after the Closing Date. All
employee benefit plans listed on Schedule 2.15 and the administration thereof
are in substantial compliance with their terms and all applicable provisions of
ERISA and the regulations issued thereunder, as well as with all other
applicable federal, state and local statutes, ordinances and regulations. All
accrued contribution obligations of Company with respect to any plan listed on
Schedule 2.15 have either been fulfilled in their entirety or are fully
reflected on the balance sheet of the Company as of the Balance Sheet Date. All
plans listed on Schedule 2.15 that are intended to qualify (the "Qualified
Plans") under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code" are, and have been, so qualified and have been determined by the
Internal Revenue Service to be so qualified. Except as disclosed on Schedule
2.15, all reports and other documents required to be filed with any governmental
agency or distributed to plan participants or beneficiaries have been timely
filed or distributed, and copies thereof are included as part of Schedule 2.15.
Neither the Stockholders, any plan listed in Schedule 2.15 nor the Company has
engaged in any transaction prohibited under the provisions of Section 4975 of
the Code or Section 406 of ERISA. No plan listed in Schedule 2.15 has incurred
an accumulated funding deficiency, as defined in Section 412(a) of the Code and
Section 302(1) of ERISA; and the Company has not incurred any liability for
excise tax or penalty due to the Internal Revenue Service or any liability to
the Pension Benefit Guaranty Corporation. There have been no terminations,
partial terminations or discontinuance of contributions to any such Qualified
Plan intended to qualify under Section 401(a) of the Code without notice to and
approval by the Internal Revenue Service; no plan listed in Schedule 2.15
subject to the provisions of Title IV of ERISA has been terminated; there have
been no "reportable events" (as that phrase is defined in Section 4043 of ERISA)
with respect to any such plan listed in Schedule 2.15; the Company has not
incurred liability under Section 4062 of ERISA; and no circumstances exist
pursuant to which the Company could have any direct or indirect liability
whatsoever (including, but not limited to, any liability to any multi employer
plan or the PBGC under Title IV of ERISA or to the Internal Revenue Service for
any excise tax or penalty, or being subject to any statutory lien to secure
payment of any such liability) with respect to any plan now or heretofore
maintained or contributed to by any entity other than the Company that is, or at
any time was, a member of a "controlled group" (as defined in Section
412(n)(6)(B) of the Code) that includes the Company.
2.16 CONFORMITY WITH LAW; LITIGATION. Except as set forth on Schedule
2.16, there are no claims, actions, suits or proceedings, pending or, to the
best knowledge of the Stockholders, threatened, against or affecting the
Company, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over the Company. Except as set forth on
Schedule 2.16, no notice of any claim, action, suit or proceeding, whether
pending or threatened, has been received by the Company during
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the last five years and, to the best knowledge of the Stockholders, there is no
basis therefor. Except as set forth on Schedule 2.16, to the best knowledge of
the Stockholders, the Company has conducted for the past five years and now
conducts its business in compliance with all laws, regulations, writs,
injunctions, decrees and orders applicable to the Company or its assets. To the
best knowledge of the Stockholders, the Company is not in violation of any law
or regulation or any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over any of them. To the best knowledge of the Stockholders,
the Company has conducted and is conducting its business in substantial
compliance with the requirements, standards, criteria and conditions set forth
in applicable federal, state and local statutes, ordinances, permits, licenses,
orders, approvals, variances, rules and regulations, including all such permits,
licenses, orders and other governmental approvals set forth on Schedules 2.8 and
2.9.
2.17 TAXES. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments including, without
limitation, income, gross receipts, excise, property, sales, withholding, social
security, unemployment, occupation, use, service, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof, whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest, fines, penalties or additional amounts
attributable to or imposed with respect to any such taxes, charges, fees, levies
or other assessments. The Company has timely filed all requisite federal, state
and other tax returns or extension requests for all fiscal periods ended on or
before the Balance Sheet Date. Except as set forth on Schedule 2.17, there are
no examinations in progress or claims against the Company for federal, state or
other taxes (including penalties and interest) for any period or periods prior
to or on the Balance Sheet Date and no notice of any claim for taxes, whether
pending or threatened, has been received. All Taxes, including interest and
penalties (whether or not shown on any tax return) owed by the Company or any
member of an affiliated or consolidated group which includes or included the
Company have been paid. The amounts shown as accruals for taxes on the Financial
Statements are sufficient for the payment of all taxes of the kinds indicated
(including penalties and interest) for all periods shown. Copies of (i) any tax
examinations, (ii) extensions of time for filing and (iii) the federal and local
income tax returns and franchise tax returns of Company (including any
subsidiaries) for the last three fiscal years, or such shorter period of time as
any of them shall have existed, are attached hereto as Schedule 2.17. The
Stockholders made a valid election under the provisions of Subchapter S of the
Code and the Company has not, within the past five years, been taxed under the
provisions of Subchapter C of the Code. The Stockholders shall pay, and they
hereby indemnify the Company and Purchaser against, all income taxes payable for
all periods through and including the Closing Date. The Company uses the accrual
method of accounting for income tax purposes, and the Company's methods of
accounting have not changed
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in the past five years. The Company is not an investment company as defined in
Section 351(e)(1) of the Code.
2.18 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not in
violation of any of its Charter Documents. To the best knowledge of the
Stockholders, neither the Company nor any other party thereto is in material
default under any lease, instrument, license, permit or material agreement to
which the Company is a party or by which its properties are bound (the "Material
Documents"). Except as set forth in Schedule 2.18, (a) the execution of this
Agreement by the Company and the performance by the Company of its obligations
hereunder and the consummation of the transactions contemplated hereby will not
result in any violation or breach or constitute a default under, any of the
terms or provisions of the Material Documents or the Charter Documents, and (b)
at and after the Closing the Company will be entitled to the rights and benefits
the under the Material Documents to which the Company is entitled immediately
prior to the Closing. Except as set forth on Schedule 2.18 (and except for
consents already obtained), none of the Material Documents requires notice to,
or the consent or approval of, any governmental agency or other third party with
respect to any of the transactions contemplated hereby in order to remain in
full force and effect and consummation of the transactions contemplated hereby
will not give rise to any right to termination, cancellation or acceleration or
loss of any right or benefit. Except as set forth on Schedule 2.18, none of the
Material Documents prohibits the use or publication of the name of any other
party to such Material Document, and none of the Material Documents prohibits or
restricts the Company or will prevent or restrict the Company or the Purchaser
from freely providing services to any person.
2.19 GOVERNMENT CONTRACTS. The Company is not a party to any governmental
contract subject to price redetermination or renegotiation.
2.20 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted its operations in the ordinary course of business and, except as set
forth on Schedule 2.20, there has not been:
(i) any material adverse change in the business, assets, or
financial condition of the Company;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting any of the material assets or
the business of the Company;
(iii) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant of any options, warrants, calls, conversion rights or commitments;
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(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the Company;
(v) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by the Company to any of its
officers, directors, stockholders, employees, consultants or agents;
(vi) any work interruptions, labor grievances or claims filed, or
any event or condition of any character, materially adversely affecting
the business of the Company;
(vii) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of Company to any person,
including, without limitation, the Stockholders and their affiliates;
(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company, including without limitation any
indebtedness or obligation of any Stockholder or any affiliate thereof;
(ix) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of the Company's business;
(xi) any waiver of any material rights or claims of the Company;
(xii) any amendment or termination of any material contract,
agreement, license, permit or other right to which the Company is a party;
(xiii) any transaction by the Company outside the ordinary course of
its business;
(xiv) any cancellation or termination of a material contract with a
customer or client prior to the scheduled termination date; or
(xv) any distribution of property or assets by the Company.
2.21 POWERS OF ATTORNEY. Schedule 2.21 sets forth a schedule as of the
date of this Agreement of the name of each person, corporation, firm or other
entity holding any general or special power of attorney from the Company and a
description of the terms of each such power.
2.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS. Except as
set forth on Schedule 2.22, neither any of the Stockholders nor any other
affiliate of the Company owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of or otherwise receives remuneration
from, any business which is a competitor, lessor, lessee, customer or supplier
of the Company. Except as set forth on Schedule 2.22, no officer, director or
stockholder of the
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Company has, nor during the period beginning January 1, 1990 through the date
hereof had, any interest in any property, real or personal, tangible or
intangible, used in or pertaining to the Company's business.
2.23 DISCLOSURE. The Stockholders have provided Purchaser with all the
information that Purchaser has requested in analyzing whether to consummate the
transactions contemplated hereby. None of the information so provided nor any
representation or warranty of the Stockholders contained in this Agreement
contains any untrue statement or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact known to the
Stockholders which has specific application to the Company or its business or
assets (other than general economic or industry conditions) which materially
adversely affects or, so far as the Stockholders can reasonably foresee,
materially threatens, the Company or its business or assets, or the condition
(financial or otherwise), results of operations or prospects of the Company,
which has not been described in this Agreement or the Schedules hereto.
2.24 PROHIBITED ACTIVITIES. Except as set forth on Schedule 2.24, the
Company has not, between the Balance Sheet Date and the date hereof, taken any
of the actions (Prohibited Activities) described in Section 4.3.
2.25 CERTAIN BUSINESS PRACTICES. Neither the Company nor any person acting
on behalf of the Company has given or offered anything of value to any
governmental official, political party or candidate for government office nor
has it or any of them otherwise taken any action which would cause the Company
to be in violation of the Foreign Corrupt Practices Act of 1977, as amended, or
any law of similar effect.
3. REPRESENTATIONS OF PURCHASER
Purchaser represents and warrants that all of the following
representations and warranties in this Section 3 are true at the date of this
Agreement and shall be true at the time of Closing.
3.1 DUE ORGANIZATION. Purchaser is duly incorporated, validly existing and
in good standing under the laws of the state of Delaware, and has the requisite
power and authority to carry on its business as it is now being conducted.
Purchaser is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business makes such qualification
necessary, except where the failure to be so authorized or qualified would not
have a Material Adverse Effect.
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3.2 AUTHORIZATION. (i) The representative of Purchaser executing this
Agreement has the authority to enter into and bind Purchaser to the terms of
this Agreement and (ii) Purchaser has the full legal right, power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby.
3.3 NO VIOLATIONS. The execution of this Agreement and the performance of
the obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any violation or breach or constitute a default under
any of the terms or provisions of the Restated Certificate of Incorporation, as
amended, or Bylaws, of Purchaser.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this Agreement
by Purchaser and the performance of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Purchaser and this
Agreement has been duly and validly authorized by all necessary corporate action
and is a legal, valid and binding obligation of Purchaser.
4. COVENANTS PRIOR TO CLOSING
4.1 ACCESS AND COOPERATION; DUE DILIGENCE. Between the date of this
Agreement and the Closing Date, the Company will afford to the officers and
authorized representatives of Purchaser access to all of the Company's sites,
properties, books and records and will furnish Purchaser with such additional
financial and operating data and other information as to the business and
properties of the Company as Purchaser may from time to time reasonably request.
The Company will cooperate with Purchaser, its representatives, auditors and
counsel in the preparation of any documents or other material which may be
required in connection with the transactions contemplated by this Agreement.
Purchaser, the Stockholders and the Company will treat all information obtained
in connection with the negotiation and performance of this Agreement as
confidential in accordance with the provisions of Section 11 hereof.
4.2 CONDUCT OF BUSINESS PENDING CLOSING. Between the date of this
Agreement and the Closing Date, the Company will, except as set forth on
Schedule 4.2:
(i) carry on its respective businesses in substantially the same
manner as it has heretofore and not introduce any material new method of
management, operation or accounting;
(ii) maintain its respective properties and facilities, including
those held under leases, in as good working order and condition as at
present, ordinary wear and tear excepted;
(iii) perform in all material respects all of its respective
obligations under agreements relating to or affecting its respective
assets, properties or rights;
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(iv) use all reasonable efforts to keep in full force and effect
present insurance policies or other comparable insurance coverage;
(v) use its reasonable efforts to maintain and preserve its business
organization intact, retain its respective present key employees and
maintain its respective relationships with suppliers, customers and others
having business relations with the Company;
(vi) maintain compliance with all material permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities; and
(vii) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments without the knowledge and consent
of Purchaser (which consent shall not be unreasonably withheld), provided
that debt and/or lease instruments may be replaced without the consent of
Purchaser if such replacement instruments are on terms at least as
favorable to the Company as the instruments being replaced.
4.3 PROHIBITED ACTIVITIES. Except as set forth on Schedule 4.3, between
the date hereof and the Closing Date, the Company will not, without prior
written consent of Purchaser:
(i) make any change in its Articles of Incorporation or By-laws;
(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind;
(iii) declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or purchase,
redeem or otherwise acquire or retire for value any shares of its stock,
except that the Company may declare and pay dividends to the Stockholders
in an aggregate amount not exceeding the lesser of (a) the Stockholders'
Accumulated Adjustments Accounts or (b) $18,136,000; it being agreed that
any such dividends will reduce the Purchase Price by the amount of such
dividends;
(iv) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, except in the normal
course of business consistent with past practice in an amount not in
excess of $10,000;
(v) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or
hereafter acquired, except (1) with respect to purchase money liens
incurred in connection with the acquisition of equipment with an aggregate
cost not in excess of $10,000 necessary or desirable for the conduct of
the businesses of the Company, (2) (A) liens for taxes either not yet due
or being contested in good faith and by appropriate proceedings (and for
which contested taxes adequate reserves have been established and are
being maintained) or (B) materialmen's, mechanics', workers', repairmen's,
employees' or other like liens arising in the ordinary
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courseof business (the liens set forth in clause (2) being referred to
herein as "Statutory Liens");
(vi) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(vii) negotiate for the acquisition of any business or the start-up
of any new business;
(viii) merge or consolidate or agree to merge or consolidate with or
into any other corporation or other entity;
(ix) waive any material rights or claims of the Company, provided
that the Company may negotiate and adjust bills in the course of good
faith disputes with customers in a manner consistent with past practice;
(x) commit a material breach or amend or terminate any material
agreement, permit, license or other right of the Company;
(xi) enter into any other transaction outside the ordinary course of
its business or prohibited hereunder; or
(xii) increase or commit to any increase in the salary, bonus,
commission or other compensation of any officer, director, employee or
agent of the Company.
4.4 NO SHOP. None of the Stockholders, the Company, nor any agent,
officer, director, trustee or any representative of any of the foregoing will,
during the period commencing on the date of this Agreement and ending with the
earlier to occur of the Closing Date or the termination of this Agreement in
accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers from
any person for,
(ii) participate in any discussions pertaining to, or
(iii) furnish any information to any person other than Purchaser or
its authorized agents relating to, any acquisition or purchase of all or a
material amount of the assets of, or any equity interest in, the Company
or a merger, consolidation or business combination involving the Company.
4.5 NOTICE TO BARGAINING AGENTS. Prior to the Closing Date, the Company
shall satisfy any requirement for notice of the transactions contemplated by
this Agreement under applicable collective bargaining agreements, and shall
provide Purchaser with proof that any required notice has been sent.
4.6 AGREEMENTS; CERTAIN INDEBTEDNESS. Upon the request of Purchaser, at,
or at any time after, the Closing, the Stockholders and the Company shall
terminate any existing agreements to which the Company and any of the
Stockholders is a party. In addition, at or prior to the Closing,
-16-
the Stockholders shall repay to the Company all outstanding indebtedness of the
Stockholders to the Company.
4.7 NOTIFICATION OF CERTAIN MATTERS. The Stockholders and the Company
shall give prompt notice to Purchaser of (i) the occurrence or non-occurrence of
any event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of the Company or the Stockholders contained herein
to be untrue or inaccurate in any material respect at or prior to the Closing
and (ii) any material failure of any Stockholder or the Company to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by such person hereunder. Purchaser shall give prompt notice to the Company of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
of Purchaser contained herein to be untrue or inaccurate in any material respect
at or prior to the Closing and (ii) any material failure of Purchaser to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder. The delivery of any notice pursuant to this Section
4.7 shall not be deemed to (i) modify the representations or warranties
hereunder of the party delivering such notice, (ii) modify the conditions to
Closing set forth herein, or (iii) limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
4.8 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Closing occurs to
notify the other parties hereto with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules.
4.9 FURTHER ASSURANCES. The parties hereto agree to execute and deliver,
or cause to be executed and delivered, such further instruments or documents or
take such other action as may be reasonably necessary or convenient to carry out
the transactions contemplated hereby.
4.10 COMPLIANCE WITH THE XXXX-XXXXX-XXXXXX ANTITRUST IMPROVEMENTS ACT OF
0000 (XXX "XXX XXX"). All parties to this Agreement hereby recognize that one or
more filings under the HSR Act may be required in connection with the
transactions contemplated herein. If it is determined by the parties to this
Agreement that filings under the HSR Act are required, then: (i) each of the
parties hereto agrees to cooperate and use its best efforts to comply with the
HSR Act, (ii) such filings and expiration or termination of the applicable
waiting period thereunder shall be deemed a condition precedent in addition to
the conditions precedent set forth elsewhere in this Agreement, and (iii) the
parties agree to cooperate and use their best efforts to cause all filings
-17-
required under the HSR Act to be made. If filings under the HSR Act are
required, the costs and expenses thereof (including filing fees) shall be borne
by Purchaser.
4.11 NOTICES AND CONSENTS. The Company will give any notices to third
parties, and the Company will use its best efforts to obtain any third party
consents, that may be necessary to consummate the transactions contemplated
hereby or that Purchaser may request.
4.12 STOCKHOLDER'S COMMITMENT. The Stockholders hereby agree to cause the
Company to comply with its obligations under this Agreement and to use its best
efforts to cause the conditions to the Closing to be satisfied.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS
The obligations of the Stockholders with respect to actions to be taken on
the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions. If any such conditions has not
been satisfied, the Stockholders shall have the right to terminate this
Agreement, or in the alternative, waive any condition not so satisfied. Any act
or action of the Stockholders in consummating the Closing shall constitute a
waiver of any conditions not so satisfied. However, no such waiver shall be
deemed to affect the survival of the representations and warranties of Purchaser
contained in Section 3 or the indemnification obligations contained in Section
8.
5.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of Purchaser contained in Section 3 shall be true
and correct in all material respects as of the Closing Date as though such
representations and warranties had been made as of that time; all of the terms,
covenants and conditions of this Agreement to be complied with and performed by
Purchaser on or before the Closing Date shall have been duly complied with and
performed in all material respects; and certificates to the foregoing effect
dated the Closing Date and signed by the President or any Vice President of
Purchaser shall have been delivered to the Stockholders.
5.2 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall be reasonably satisfactory to the Stockholders and their
counsel.
5.3 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated
-18-
hereby shall have been obtained and made and no action or proceeding shall have
been instituted or threatened to restrain or prohibit the transactions
contemplated hereby.
5.4 EMPLOYMENT AND CONSULTING AGREEMENTS. The person identified in Annex I
hereto shall have been afforded an opportunity to enter into an Employment
Agreement with the Company upon the terms and conditions and in the form
attached as Annex I.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser with respect to actions to be taken on the
Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions.
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All the
representations and warranties of the Stockholders contained in this Agreement
shall be true and correct in all material respects as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date; all of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Stockholders and the Company
on or before the Closing Date, as the case may be, shall have been duly
performed or complied with in all material respects; and the Stockholders shall
have delivered to Purchaser certificates dated the Closing Date and signed by
them to such effect.
6.2 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to the Company which would constitute a Material Adverse
Effect, and the Company shall not have suffered any material loss or damages to
any of its material assets, whether or not covered by insurance, or any material
adverse change, loss or damage to the Company's business.
6.3 SATISFACTION. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been approved
by counsel to Purchaser.
6.4 OPINION OF COUNSEL. Purchaser shall have received an opinion from
counsel to the Company and the Stockholders, dated the Closing Date, in the form
annexed hereto as Annex II.
6.5 CONSENTS AND APPROVALS. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; all consents
and approvals of third parties listed on Schedule 2.18 shall have been obtained;
and no action or proceeding shall have been instituted or threatened to restrain
or prohibit the transactions contemplated hereby and no governmental agency
-19-
or body shall have taken any other action or made any request of Purchaser as a
result of which Purchaser deems it inadvisable to proceed with the transactions
hereunder.
6.6 GOOD STANDING CERTIFICATES. The Stockholders shall have delivered to
Purchaser certificates, dated as of a date no later than the Closing Date, duly
issued by the appropriate governmental authority in the State of Incorporation
and in each state in which the Company is authorized to do business, showing the
Company is in good standing and authorized to do business and that all state
franchise taxes for the Company for all periods prior to the Closing have been
filed and paid.
6.7 EMPLOYMENT AGREEMENT. The person identified in Section 5.4 shall have
entered into the Employment Agreement referred to therein.
7. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
7.1 FUTURE COOPERATION. The Stockholders, the Company and Purchaser shall
each deliver or cause to be delivered to the other following the date hereof
such additional instruments as the other may reasonably request for the purpose
of transferring, assigning and delivering to Purchaser and its assigns the
Shares and fully carrying out the intent of this Agreement. Purchaser shall
provide the Stockholders reasonable access to the books and records of the
Company after the Closing Date for purposes of tax compliance and any other
reasonable purpose.
7.2 EXPENSES. Purchaser will pay the fees, expenses and disbursements of
Purchaser and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Stockholders will pay the fees, expenses and disbursements
of the Stockholders and their respective agents, representatives, financial
advisors, accountants and counsel incurred in connection with the execution,
delivery and performance of this Agreement, except that Purchaser agrees to pay
the reasonable expenses of Stockholders' accountants in connection with the due
diligence review of the Company.
7.3 SECTION 338(H)(10) ELECTION. Stockholders will join with Purchaser in
making an election under Section 338(h)(10) of the Code (and any corresponding
elections under state, local or foreign tax law) (collectively a "Section
338(h)(10) Election") with respect to the purchase and sale of the Shares.
Stockholders will pay any tax (including any state, local or foreign tax)
attributable to the making of the Section 338(h)(10) Election (or an election
under state, local or foreign law similar to the Section 338(h)(10) Election)
and will indemnify Purchaser and the
-20-
Company against any tax liabilities resulting therefrom. The parties agree that
the Purchase Price and the liabilities of the Company (plus other relevant
items) will be allocated to the assets of the Company for all purposes
(including tax and financial accounting purposes) as shown on Schedule 7.3.
Purchaser and the Company and Stockholders will file all tax returns (including
amended returns and claims for refund) and information reports in a manner
consistent with such allocation.
7.4 CERTAIN BONUSES. Purchaser will cause the Company to pay bonuses to
the non-Stockholder employees of the Company in the first quarter of 1998 in
amounts to be determined by Xx. Xxxx Xxxxxxx, such bonuses to be consistent with
the Company's prior practice. Purchaser acknowledges that the Company intends to
pay bonuses to the Stockholders at or immediately prior to the Closing in the
aggregate amount of approximately $250,000.
8. INDEMNIFICATION
The Stockholders and Purchaser each make the following covenants that are
applicable to them, respectively:
8.1 SURVIVAL OF STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Stockholders made in
this Agreement and in the documents and certificates delivered in connection
herewith shall survive the Closing for a period of two years from the Closing
Date, except that:
(i) such representations and warranties that relate to Taxes,
including without limitation the representations and warranties set forth
in Section 2.17, shall survive until the expiration of the applicable
statutes of limitations for such Taxes (including any extensions thereof);
and
(ii) such representations and warranties that relate to
environmental matters, including without limitation the representations
and warranties set forth in Section 2.9 hereof, such representations and
such warranties that relate to illegal acts and fraud and abuse ("Illegal
Acts"), including without limitation the representations and warranties
set forth in Sections 2.8, 2.16 and 2.25 hereof, and the indemnification
provided in Section 8.4, shall survive for a period of six years after the
Closing Date; provided, however, that representations and warranties and
indemnification provisions with respect to which a claim is made within
the applicable survival period shall survive until such claim is finally
determined and paid.
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(b) The representations and warranties of Purchaser made in this
Agreement and in the certificates delivered in connection herewith shall survive
the Closing for a period of two years following the Closing Date, provided,
however, that representations and warranties with respect to which a claim is
made within such two year period shall survive until such claim is finally
determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
8.2 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The Stockholders covenant
and agree that they will jointly and severally indemnify, defend, protect, and
hold harmless Purchaser and its subsidiaries and officers, directors, employees,
stockholders, agents, representatives and affiliates at all times from and after
the date of this Agreement until the Expiration Date from and against all
claims, damages actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) (collectively "Damages") incurred
by such indemnified person as a result of or incident to (i) any breach of any
representation or warranty of any Stockholder set forth herein or in the
certificates or other documents delivered in connection herewith, and (ii) any
breach or nonfulfillment of any covenant or agreement by the Company or the
Stockholders under this Agreement.
8.3 INDEMNIFICATION BY PURCHASER. Purchaser covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholders at all times
from and after the date of this Agreement until the Expiration Date from and
against all Damages incurred by the Stockholders as a result of (i) any breach
of any representation or warranty of Purchaser set forth herein or in the
certificates delivered in connection herewith; and (ii) any breach or
nonfulfillment of any covenant or agreement by Purchaser under this Agreement.
8.4 SPECIFIC INDEMNIFICATION. In addition to the indemnification provided
for in Section 8.1, each Stockholder covenants and agrees that he will jointly
and severally indemnify, defend, protect and hold harmless Purchaser and each of
its subsidiaries, officers, directors, employees, stockholders, agents,
representatives and affiliates from and against all Damages incurred by any of
them in connection with the presence, emanation, migration, disposal, release or
threatened release of any oil or other petroleum products or hazardous materials
or substances on or within any of the properties presently or previously owned
or leased by the Company or any predecessor of the Company as a result of (i)
the presence of and closure or removal of any underground storage tank on such
property prior to the Closing, (ii) the operations of the Company or any
predecessor of the
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Company prior to the Closing, (iii) the condition of such properties prior to
the Closing, including any future manifestations of such conditions or (iv) the
activities of any Stockholder prior to the Closing, but only to the extent that
such remediation is either (i) required by applicable federal, state or local
authorities or (ii) in accordance with reasonable business practices in the
interest of employee health or safety.
8.5 THIRD PERSON CLAIMS. Promptly after any party hereto (the "Indemnified
Party") has received notice of or has knowledge of any claim by a person not a
party to this Agreement ("Third Person") or the commencement of any action or
proceeding by a Third Person that may give rise to a right of indemnification
hereunder, such Indemnified Party shall give to the party obligated to provide
indemnification hereunder (an "Indemnifying Party") written notice of such claim
or the commencement of such action or proceeding; provided, however, that the
failure to give such notice will not relieve such Indemnifying Party from
liability under this Section with respect to such claim, action or proceeding,
except to the extent that the Indemnifying Party has been actually prejudiced as
a result of such failure. The Indemnifying Party (at its own expense) shall have
the right and shall be given the opportunity to associate with the Indemnified
Party in the defense of such claim, suit or proceedings, and may select counsel
for the Indemnified Party, such counsel to be reasonably satisfactory to the
Indemnified Party. The Indemnified Party shall not, except at its own cost, make
any settlement with respect to any such claim, suit or proceeding without the
prior consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed. It is understood and agreed that in situations where
failure of the Indemnified Party to settle a claim expeditiously could have an
adverse effect on the Indemnified Party, the failure of the Indemnifying Party
to act upon the Indemnified Party's request for consent to such settlement
within five business days of the Indemnifying Party's receipt of notice thereof
from the Indemnified Party shall be deemed to constitute consent by the
Indemnifying Party of such settlement for purposes of this Section.
8.6 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash. If Purchaser reasonably believes that it or any other Indemnified Party
has suffered, or will suffer, Damages for which it or any other Indemnified
Party would be entitled to indemnification pursuant to this Agreement, Purchaser
may, at its sole option and by notice in writing to the Stockholders, elect to
withhold payment of an amount equal to the amount of such Damages from any
amounts owing by Purchaser to the Stockholders.
8.7 LIMITATIONS ON INDEMNIFICATION. Purchaser and the other persons or
entities indemnified pursuant to this Section shall not assert any claim for
indemnification hereunder against the Stockholders until such time as, and
solely to the extent that, the aggregate of all claims which such persons may
have against such the Stockholders shall exceed $100,000 (the "Indemnification
Threshold"). The Stockholders shall not assert any claim for indemnification
hereunder against
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Purchaser until such time as, and solely to the extent that the aggregate of all
claims which Stockholders may have against Purchaser shall exceed the
Indemnification Threshold.
No person shall be entitled to indemnification under this Section 8 if and
to the extent that such person's claim for indemnification is directly or
indirectly caused by a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement.
The maximum aggregate liability Stockholders shall have to Purchaser under
this Section 8 for any Damages or other losses relating to environmental matters
or claims ("Environmental Claims") shall be $1,000,000. The maximum aggregate
liability Stockholders shall have to Purchaser under this Section 8 for any
Damages or other losses relating to matters or claims other than Environmental
Claims shall be $1,300,000. The maximum aggregate liability Stockholders shall
have to Purchaser under this Section 8 (whether for Environmental Claims or for
other matters or claims) shall be $1,800,000 (the "Indemnification Limit"). A
portion of the Purchase Price equal to the Indemnification Limit shall be
deposited at the Closing with an escrow agent reasonably satisfactory to
Purchaser and Stockholders and held and released in accordance with the
provisions of an Escrow Agreement in the form of Annex III hereto.
9. TERMINATION OF AGREEMENT
9.1 TERMINATION.This Agreement may be terminated at any time prior to the
Closing Date solely:
(i) by mutual consent of Purchaser and the Stockholders;
(ii) by the Purchaser or by the Stockholders, if the transactions
contemplated by this Agreement to take place at the Closing shall not have
occurred by December 31, 1997 (the "Termination Date"), unless the failure
of such transactions to be consummated is due to the willful failure of
the party seeking to terminate this Agreement to perform any of its
obligations under this Agreement to the extent required to be performed by
it prior to or on the Closing Date; or
(iii) by the Purchaser or by the Stockholders if a material breach
or default shall be made by the other in the observance or in the due and
timely performance of any of the covenants or agreements contained herein,
and the curing of such default shall not have been made within ten days
after written notice thereof is delivered to the breaching or defaulting
party by the other party.
9.2 LIABILITIES IN EVENT OF TERMINATION. The termination of this Agreement
will in no way limit any obligation or liability of any party based on or
arising from a breach or default by such
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party with respect to any of its representations, warranties, covenants or
agreements contained in this Agreement including, but not limited to, legal and
audit costs and out of pocket expenses.
10. NONCOMPETITION
10.1 PROHIBITED ACTIVITIES. The Stockholders will not, for a period of
five years following the Closing Date, for any reason whatsoever, directly or
indirectly, for themselves or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation or business of whatever
nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any business offering services or products in direct
competition with Purchaser or any of its subsidiaries within 200 miles of
where Purchaser or any of its subsidiaries conducts business (the
"Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of Purchaser or any of its subsidiaries for the
purpose or with the intent of enticing such employee away from or out of
the employ of Purchaser or any of its subsidiaries;
(iii) call upon any person or entity which is, at that time, or
which has been, within one year prior to the Closing Date, a customer of
Purchaser or any of its subsidiaries within the Territory for the purpose
of soliciting or selling products or services in direct competition with
Purchaser or any of its subsidiaries within the Territory.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit any Stockholder from acquiring as a passive investor with no
involvement in the operations or management of the business, not more than one
percent (1%) of the capital stock of a competing business whose stock is
publicly traded on a national securities exchange or over-the-counter market.
The provisions of this Section 10 are independent of the noncompetition
provisions contained in any employment agreement to which any of the
Stockholders may be or may become a party in connection with the transactions
contemplated hereby. All such provisions are intended to be observed and
enforced in accordance with their terms.
10.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses to Purchaser as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to
Purchaser for which it would have no other adequate remedy, each Stockholder
agrees that the foregoing covenant may be enforced by Purchaser in the event of
breach by such Stockholder, by injunctions, restraining orders and other
equitable actions.
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10.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that the
foregoing covenants in this Section impose a reasonable restraint on the
Stockholders in light of the activities and business of Purchaser and its
subsidiaries on the date of the execution of this Agreement and the current
plans of Purchaser.
10.4 SEVERABILITY; REFORMATION. The covenants in this Section are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
10.5 INDEPENDENT COVENANT. The Stockholders acknowledge that their
covenants set forth in this Section 10 are material conditions to Purchaser's
willingness to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All of the covenants in this Section 10 shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against Purchaser or any subsidiary thereof, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Purchaser of such covenants. It is specifically agreed that the period of five
years stated at the beginning of this Section 10, during which the agreements
and covenants of each Stockholder made in this Section 10 shall be effective,
shall be computed by excluding from such computation any time during which such
Stockholder is in violation of any provision of this Section 10. The covenants
contained in Section 10 shall not be affected by any breach of any other
provision hereof by any party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
11.1 GENERAL. The Stockholders recognize and acknowledge that they have
access to certain confidential information of the Company, such as operational
policies, pricing and cost policies, and other information, that are valuable,
special and unique assets of the Company and Purchaser. The Stockholders agree
that they will not disclose such confidential information, or any confidential
information of Purchaser to which they may have access in the future, to any
person, firm, corporation, association or other entity for any purpose or reason
whatsoever, except (a) to authorized representatives of Purchaser, (b) following
the Closing, such information may be disclosed by any Stockholder as may be
required in the course of performing his duties for the Company and (c) to
counsel and other advisers, provided that such advisers (other than counsel)
agree to the confidentiality provisions of this Section 11.1, unless (i) such
information becomes
-26-
known to the public generally through no fault of the Stockholders, or (ii)
disclosure is required by law or the order of any governmental authority under
color of law, provided, that prior to disclosing any information pursuant to
this clause (ii), the Stockholders shall give prior written notice thereof to
Purchaser and provide Purchaser with the opportunity to contest such disclosure.
In the event of a breach or threatened breach by any of the Stockholders of the
provisions of this Section, Purchaser shall be entitled to injunctive or other
equitable relief restraining such Stockholders from disclosing, in whole or in
part, such confidential information. Nothing herein shall be construed as
prohibiting Purchaser from pursuing any other available remedy for such breach
or threatened breach, including the recovery of damages.
11.2 EQUITABLE RELIEF. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which Purchaser would
have no other adequate remedy, the Stockholders agree that the foregoing
covenants may be enforced against them by injunctions, restraining orders and
other appropriate equitable relief.
11.3 SURVIVAL. The obligations of the parties under this Article 11 shall
survive the termination of this Agreement for a period of five years.
12. GENERAL
12.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
Purchaser, and the heirs and legal representatives of the Stockholders.
12.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Stockholders, the
Company and Purchaser, and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement, upon
execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and may be modified or amended only by
a written instrument executed by the Stockholders, the Company and Purchaser.
12.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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12.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
12.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, or by facsimile, as follows:
If to Purchaser, addressed to it at:
Metals USA, Inc.
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile No. (000) 000-0000
If to the Company, addressed to it at:
Xxxxx Metal Servicenters, Inc.
0000 X. Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
If to the Stockholders, addressed to them at their addresses as set
forth on Schedule 12.5,
or to such other address as any party hereto shall specify pursuant to this
Section 12.5 from time to time.
12.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Michigan other than its principles governing conflicts
of laws.
12.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties until the applicable Expiration
Date.
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12.8 EFFECT OF INVESTIGATION; KNOWLEDGE.
(a) No investigation by the parties hereto in connection with this
Agreement or otherwise shall affect the representations and warranties of the
parties contained herein or in any certificate or other document delivered in
connection herewith and each such representation and warranty shall survive such
investigation.
(b) As used herein, the phrase "best knowledge" of any person shall
mean (i) such person's actual knowledge of the relevant facts, and (ii) the
knowledge a reasonable third person would assume such first person would have
had by reason of such first person's position as an officer, director or
stockholder of the Company, even if such first person did not have actual
knowledge of such fact.
12.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
12.10 TIME. Time is of the essence with respect to this Agreement.
12.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
12.12 REMEDIES CUMULATIVE. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
12.13 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
12.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior
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written approval of the other party; provided, however, that any party may make
any public disclosure it believes in good faith is required by applicable law or
any listing or trading agreement concerning its publicly-traded securities.
12.15 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
METALS USA, INC.
By:/S/ A. L. FRENCH
Name: A. L. French
Title: CEO
XXXXX METAL SERVICENTERS, INC.
By:/S/ XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx
Title: President
Stockholders:
Xxxxxxx X. Xxxxxxx Revocable Trust
By:/S/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxxx Revocable Trust
By:/S/ XXXXXXX X. XXXXXXXX
/S/ XXXXXXXX X. XXXXXX
Xxxxxxxx X. Xxxxxx
/S/ XXXXXX X. XXXX
Xxxxxx X. Xxxx
Schedule 1.2
PURCHASE CASH AT
NAME STOCK PRICE ADJUSTMENTS ESCROW CLOSING
Xxxxxxx X. Xxxxxxx Revocable Trust
Xxxxxxx X. Xxxxxxxx Revocable Trust
Xxxxxxxx X. Xxxxxx
Xxxxxx X. Xxxx
