STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SHAREHOLDERS OF SURFACE SYSTEMS, INC.
AND
QUIXOTE TRANSPORTATION SAFETY, INC.
DATED AS OF
AUGUST 30, 2001
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INTERPRETATION...................................1
ARTICLE II PURCHASE AND SALE OF SHARES.....................................6
ARTICLE III THE CLOSING....................................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS.......................9
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................17
ARTICLE VI COVENANTS......................................................19
ARTICLE VII CONDITIONS....................................................25
ARTICLE VIII TERMINATION..................................................26
ARTICLE IX TAX MATTERS....................................................26
ARTICLE X SPECIAL AGREEMENTS..............................................27
ARTICLE XI SURVIVAL AND INDEMNIFICATION...................................27
ARTICLE XII MISCELLANEOUS.................................................30
STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT (the "AGREEMENT") is dated August 30,
2001, by and between QUIXOTE TRANSPORTATION SAFETY, INC., a Delaware
corporation, and THE SHAREHOLDERS OF SURFACE SYSTEMS, INC., who are listed on
EXHIBIT A attached hereto and incorporated herein by this reference
(collectively, the "SELLERS"). Certain capitalized terms used in this
Agreement have the meanings assigned to them in Article I.
WHEREAS, Sellers own all of the issued and outstanding Shares; and
WHEREAS, the Board of Directors of Purchaser and the Sellers have each
approved, and deem advisable and in the best interests of their respective
shareholders and partners to consummate the acquisition of the Company by
Purchaser, which acquisition is to be effected by the purchase of all the
outstanding capital stock of the Company upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context clearly requires otherwise:
"Accountants" has the meaning set forth in Section 2.3(c).
"Action" means any action, suit, proceeding, hearing or investigation
of, in or before any Governmental Entity.
"Affiliate" has the meaning set forth in Rule 12b-2 of the Exchange Act.
"Agreement" or "this Agreement" means this
Stock Purchase Agreement,
together with the Exhibits hereto and the Disclosure Schedule.
"Audits" has the meaning set forth in Section 4.26.
"August 22, 2001 Net Asset Value" means the Net Asset Value on August
22, 2001 plus the liabilities listed on Section 2.2 of the Disclosure
Schedule, the Downsizing Charges and the Retention Bonuses.
"Balance Sheet" means the most recent consolidated balance sheet of the
Company included in the Financial Statements.
"Balance Sheet Date" means the date of the Balance Sheet.
"Baseline Net Asset Value" means the sum of the amount of shareholders
equity set forth on the Company's audited balance sheet for the fiscal year
ending June 30, 2001, plus the amount of the liabilities listed on Section
2.2 of the Disclosure Schedules.
"Business Day" means a day other than Saturday, Sunday or any day on
which the principal commercial banks located in the State of
Missouri are
authorized or obligated to close under the laws of such state.
"Claim Notice Period" has the meaning set forth in Section 11.4(b).
"Closing" means the closing referred to in Section 3.1.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Surface Systems, Inc., a
Missouri corporation.
"Company Intellectual Property" means all Intellectual Property of the
Company described in the Disclosure Schedule which is all that is necessary
to conduct the business of the Company as presently conducted or as currently
proposed to be conducted.
"Company Material Adverse Effect" means any material adverse change in,
or material adverse effect on, the business, prospects, financial condition
or operations of the Company, taken as a whole; provided, that the effects of
changes that are generally applicable to (a) the industries and markets in
which the Company operates, (b) the United States economy, or (c) the United
States or European securities markets shall be excluded from the
determination of Company Material Adverse Effect; and PROVIDED, FURTHER, that
any adverse effect on the Company resulting from the execution of this
Agreement, any public announcement relating to this Agreement or the
Transaction or consummation of the Transaction shall also be excluded from
the determination of Company Material Adverse Effect.
"Company Subsidiary" means each Person which is a Subsidiary of the
Company.
"Competitor" has the meaning set forth in Section 6.6(b).
"Computer Software" means computer software programs, databases and all
documentation related thereto.
"Confidential Information" means any information concerning the Company
and its business that is not generally available to the public, is not
commonly known in the industry, or which is obtained from a third party that
is not, in disclosing such information, violating any confidentiality
obligation to which such third party may be subject.
"Confidentiality Agreement" means that Non-Disclosure Agreement dated
March 2, 1999 between Company and
Quixote Corporation.
"Copyrights" means U.S. and foreign registered and unregistered
copyrights (including those in Computer Software and databases), rights of
publicity and all registrations and applications to register the same.
"Deductible Amount" has the meaning set forth in Section 11.5.
"Determination Date" has the meaning set forth in Section 2.3(c).
"Disclosure Schedule" means the disclosure schedule of even date
herewith prepared and signed by Sellers and delivered to Purchaser
simultaneously with the execution hereof as amended or supplemented by
Sellers pursuant to the terms hereof.
"Downsizing Charges" means any and all costs and expenses incurred or
accrued relating to the Company's reduction in work force contemplated in
this Agreement.
"Encumbrances" means any and all liens, charges, security interests,
options, claims, mortgages, pledges, proxies, voting trusts or agreements,
obligations, understandings or arrangements or other restrictions on title or
transfer of any nature whatsoever.
"Environmental Laws" means any and all legal requirements relating to
the protection of the environment, including without limitation, legal
requirements regulating air pollution, water pollution, noise control,
wetlands, water courses, natural resources, wildlife, Hazardous Materials, or
any other activities or conditions which impact or relate to the environment,
or the protection of human health from exposure to Hazardous Materials.
Environmental Laws shall include, without limitation, the federal
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), the Resource Conservation and Recovery Act ("RCRA"), the Clean
Air Act, the Water Pollution Control Act, the Emergency Planning and
Community Right to Know Act ("EPCRA"), the Oil Pollution Act, and the Toxic
Substances Control Act ("TSCA"), various analogous state laws and local laws.
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"Environmental Liabilities" means any and all liabilities, written
claims or demands, assessments, obligations, causes of action, legal orders,
damages, losses, costs, expenses, injuries, or judgments arising out of,
relating to, or resulting from the presence, generation, use, handling,
transport, recycling, reclamation, disposal, treatment, storage, or Release
of any Hazardous Materials, or the failure or alleged failure to comply with
any Environmental Law on or before the Closing. Environmental Liabilities
include any cost of investigation, remediating, removing, or disposing of any
Hazardous Materials, any medical monitoring of or treatment to persons
exposed or allegedly exposed to such Hazardous Materials, and other related
costs or expenses, including without limitation, reasonable attorney's and
consultant's fees and reasonable disbursements; provided any such cost or
expense shall be both reasonable and either necessary or advisable given the
totality of the circumstances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA.
"Estimated August 22, 2001 Net Asset Value" has the meaning set forth in
Section 2.3(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
EPCRA.
"Financial Statements" means the audited consolidated balance sheets of
the Company, as at June 30, in each of the fiscal years 1999, 2000 and 2001,
together with consolidated statements of income, shareholders' equity and
cash flows for each of the twelve-month periods then-ended.
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" means a court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory authority or
agency.
"Hazardous Materials" means (i) oil or other petroleum products; (ii)
"hazardous wastes" as defined by RCRA or any similar Environmental Law; (iii)
"hazardous substances" as defined by CERCLA or any similar Environmental Law;
(iv) "hazardous materials" as defined by the federal Hazardous Materials
Transportation Act or any similar Environmental Law; (v) "pollutants" as
defined by the federal Clean Water Act or Clean Air Act, or any similar
Environmental Law; (vi) asbestos, PCBs, and other substances regulated by
TSCA or any similar Environmental Law; (vii) "hazardous chemicals" as defined
by OSHA's Hazard Communication Standard or any similar Environmental Law;
(viii) radioactive materials subject to the U.S. Atomic Energy Act or any
similar Environmental Law, regulation, ordinance or order; and (ix) any other
pollutant, contaminant, chemical, or substance defined or regulated as
hazardous or toxic by an Environmental Law.
"Horizon" means Horizon Capital Partners I, L.P., a Wisconsin limited
partnership.
"Horizon Shareholders" means Horizon, M.E. "Bob" Xxxxxx, Xxxx Xxxxxxxx,
Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxxxxx.
"Indebtedness" means (a) all indebtedness for borrowed money or for the
deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness that is
evidenced by a note, bond, debenture or similar instrument, (c) all
obligations under financing leases, (d) all obligations in respect of
acceptances issued or created, (e) all liabilities secured by any lien on any
property, and (f) all guarantee obligations.
"Indemnification Cap" has the meaning set forth in Section 11.5.
"Indemnified Party" means a Person entitled to indemnification pursuant
to Article XI.
"Indemnity Notice" has the meaning set forth in Section 11.4(b).
"Indemnity Response Period" has the meaning set forth in Section 11.4(b).
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"Individual Shareholders" means those individuals listed on EXHIBIT A,
attached hereto and incorporated herein by this reference.
"Initial August 22, 2001 Net Asset Value Statement" has the meaning set
forth in Section 2.3(b).
"Insurance Policy" means any insurance policy maintained by the Company
or any of their respective Affiliates, other than any State Workers'
Compensation Policy, the premiums of which are paid directly by the Company.
"Intellectual Property" means Trademarks, Patents, Copyrights, Trade
Secrets and Licenses.
"Knowledge" means actual (and not constructive or imputed) knowledge
after reasonable inquiry.
"Knowledge of Sellers" means the actual (and not constructive or
imputed) knowledge after a reasonable inquiry of the following individuals:
Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxx.
"Lawsuit" has the meaning set forth in Section 11.9.
"Lease" means each lease pursuant to which the Company leases any real
or personal property (excluding leases relating solely to personal property
calling for rental or similar periodic payments not exceeding $10,000 per
annum).
"Licenses" means all licenses and agreements pursuant to which the
Company has acquired rights in or to any Trademarks, Patents, Computer
Software or Copyrights, or licenses and agreements pursuant to which the
Company has licensed or transferred the right to use any of the foregoing.
"Losses" means any and all damages, awards, fines, costs, fees,
penalties, deficiencies, losses, amounts paid or incurred in defense and/or
settlement and related expenses, including, without limitation, interest,
court and other legal proceeding costs, fees of attorneys, accountants and
other experts or other expenses of litigation or other proceedings or of any
claim, default or assessment.
"Material" or "material" means with respect to any asset, liability or
other matter, or group or series of related assets, liabilities, or other
matters, $50,000 without regard to tax costs or benefits.
"Net Asset Value" means the sum of the amount of shareholders equity of
the Company as of a particular date, plus the amount of liabilities listed on
Section 2.2 of the Disclosure Schedule.
"Non-Compete Parties" has the meaning set forth in Section 6.6.
"Patents" means issued U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extensions thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and similar statutory
rights.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means a natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity or
organization.
"Plan" means each deferred compensation and each incentive compensation,
stock purchase, stock option and other equity compensation plan, program,
agreement or arrangement; each severance or termination pay, medical,
surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of Section 3(1) of ERISA); each profit-sharing,
stock bonus or other "pension" plan, fund or program (within the meaning of
Section 3(2) of ERISA); each employment, termination or severance agreement;
and each other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to by the Company or by any ERISA Affiliate, or to
which the Company or an ERISA Affiliate is party, whether written or oral,
for the
4
benefit of any director, employee or former employee of the Company or any
Company Subsidiary, including any similar plans or arrangements of any
Affiliated Company.
"Purchase Price" has the meaning set forth in Section 2.2.
"Purchaser" means Quixote Transportation Safety, Inc., a Delaware
corporation.
"Real Property" means all real property that is owned or used by the
Company or that is reflected as an asset of the Company on the Balance Sheet.
"Release" shall mean any and all releasing, spilling, leaking, pumping,
pouring, emitting emptying, discharging, injecting, escaping, leaching,
disposing, dumping, and any other means by which any Hazardous Materials are
introduced into or travel through the environment.
"Retained Employee" means each person who was an active or inactive
employee (including any such employee who is on any leave of absence, whether
paid or unpaid, including short or long term disability leave or workers'
compensation leave) of the Company immediately prior to the Closing Date.
"Retention Bonuses" has the meaning set forth in Section 7.3(c).
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the United States Securities and Exchange Commission.
"Sellers" shall have the meaning given to it in the first paragraph
hereof.
"Sellers' Representative" shall mean Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx
and Xxxxxx X. Xxxxxxx.
"Severally" shall mean with respect to any claim against a Seller under
this Agreement that each Seller's liability hereunder shall be limited to the
individual claim against such Seller subject to any applicable limitations
set forth in Article XI of this Agreement, and that such Seller shall not be
liable or obligated for any claims against, or any liabilities or obligations
of, any other Sellers under this Agreement.
"Shares" means all of the issued and outstanding stock of the Company.
"Subsidiary" means, with respect to any Person, any corporation or other
organization, whether incorporated or unincorporated, of which (a) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or
by any one or more of its Subsidiaries, or by such Person and one or more of
its Subsidiaries, or (b) such Person or any other Subsidiary of such Person
is a general partner (excluding any such partnership where such Person or any
Subsidiary of such party does not have a majority of the voting interest in
such partnership).
"Taxes" means all federal, state, local and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties
applicable thereto.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any such
document prepared on a consolidated, combined or unitary basis and also
including any schedule or attachment thereto, and including any amendment
thereof.
"Third Party Claim" has the meaning set forth in Section 11.4(a).
"Third Party Claim Notice" has the meaning set forth in Section 11.4(a).
"Third Party Claim Notice Period" has the meaning set forth in Section
11.4(a).
"Third Party Claim Response Period" has the meaning set forth in Section
11.4(a).
"Title IV Plan" means a Plan that is subject to Section 302 or Title IV
of ERISA or Section 412 of the Code.
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"Trademarks" means U.S. and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names
and all registrations and applications to register the same.
"Trade Secrets" means all categories of trade secrets as defined in the
Uniform Trade Secrets Act, including business information.
"Transaction" means the transaction provided for or contemplated by this
Agreement.
"WARN Act" means the Worker Adjustment and Retraining Notification Act.
"Warrant" means that certain Series A Warrant issued by the Company in
favor of Horizon dated August 19, 1992.
"Weather Forecasting Business" means that portion of the Company's
business which uses the Company's meteorologists or systems to forecast
future weather events, including, without limitation, all sales, marketing,
administrative, financial and operational aspects of such business.
Interpretation.
(a) The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(b) Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
(c) The words "hereof," "herein" and "herewith" and words
of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit and schedule references
are to the articles, sections, paragraphs, exhibits and schedules of this
Agreement unless otherwise specified.
(d) The meaning assigned to each term defined herein shall
be equally applicable to both the singular and the plural forms of such term,
and words denoting any gender shall include all genders. Where a word or
phrase is defined herein, each of its other grammatical forms shall have a
corresponding meaning.
(e) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(f) A reference to any legislation or to any provision of
any legislation shall include any amendment to, and any modification or
re-enactment thereof, any legislative provision substituted therefore and all
regulations and statutory instruments issued thereunder or pursuant thereto.
(g) The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 SALE AND TRANSFER OF SHARES. Subject to the terms and
conditions of this Agreement, at the Closing, Sellers shall sell, convey,
assign, transfer and deliver to Purchaser all of the issued and outstanding
Shares and the Warrant, free and clear of all Encumbrances, and Purchaser
shall purchase, acquire and accept the Shares and the Warrant from Sellers.
Section 2.2 PURCHASE PRICE
Subject to the terms and conditions of this Agreement, in consideration
of the aforesaid sale, conveyance, assignment, transfer and delivery to
Purchaser of the Shares and the Warrant, Purchaser shall
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pay an aggregate purchase price of Eleven Million Eight Hundred Fifty
Thousand Dollars ($11,850,000) ("PURCHASE PRICE") as follows:
(a) PAYMENT OF OBLIGATIONS. An amount sufficient to satisfy
in full the obligations set forth on Section 2.2 of the Disclosure Schedule
shall be sent by Purchaser via wire transfer to the holders of such
obligations pursuant to properly executed payoff letters and conditioned upon
the release of all liens and encumbrances securing such obligations;
provided, however, (i) Sellers shall only be obligated to satisfy one half of
the Company's outstanding obligations to Xxxxx Xxxxxxx, and Purchaser shall
cause the Company to pay the other one half of the Company's obligation to
Xxxxx Xxxxxxx on or after the Closing Date, and (ii) Purchaser shall cause
any additional obligations incurred by Company in the ordinary course of
business to the Persons set forth on Section 2.2 of the Disclosure Schedule
for the period from August 23, 2001 through August 31, 2001 ("Interim
Period") to be paid in full on the Closing Date. Sellers and Purchaser agree
any Company obligations or liabilities arising during the Interim Period in
the ordinary course of business shall be deemed Purchaser's obligations and
shall not reduce the Purchase Price.
(b) CASH TO ESCROW AGENT. At the Closing, Purchaser shall
deliver to Meridian Bank ("Escrow Agent") One Million One Hundred Eighty Five
Thousand Dollars ($1,185,000).
(c) CASH TO SELLERS' REPRESENTATIVES. At the Closing,
Purchaser shall deliver to the Sellers' Representatives that portion of the
Purchase Price not paid pursuant to Sections 2.2(a) and 2.2(b) hereof.
The portion of the Purchase Price held by the Escrow Agent
and Sellers' Representatives shall be allocated among the Sellers, subject to
any indemnification claims made pursuant to this Agreement, as set forth on
Exhibit 2.2 attached hereto and made a part hereof and distributed to the
Sellers as provided in that certain Agreement among Shareholders of even date
herewith.
The Purchase Price paid at Closing shall be increased or
decreased to the extent that the Estimated August 22, 2001 Net Asset Value is
more or less than the Baseline Net Asset Value. Such increase or decrease
shall be allocated among the Sellers as set forth on Exhibit 2.2 hereto.
Section 2.3 NET ASSET VALUE ADJUSTMENT.
(a) Sellers have provided Purchaser with a certificate
prepared in good faith of Sellers' estimate of the Net Asset Value of the
Company as of August 22, 2001, which amount shall have added to it the amount
of the liabilities listed on Section 2.2 of the Disclosure Schedule, the
Downsizing Charges and the Retention Bonuses (the "ESTIMATED AUGUST 22, 2001
NET ASSET VALUE").
(b) For the purpose of calculating the August 22, 2001 Net
Asset Value, Sellers and Purchaser shall conduct a joint physical inventory
as of the close of business on August 22, 2001 of the Company's raw
materials, work in process and finished goods at the lower of cost or market
value consistent with the Company's past accounting practices, and Sellers
shall perform the remaining calculations necessary to determine the Net Asset
Value as of the close of business on August 22, 2001. As soon as practical
following the Closing Date, and in any event within thirty (30) days thereof,
Sellers shall prepare and deliver to Purchaser a schedule showing Sellers'
calculation of the Net Asset Value as of August 22, 2001 (the "INITIAL AUGUST
22, 2001 NET ASSET VALUE STATEMENT").
(c) Sellers shall provide the Purchaser and its
representatives with full access to the work papers of Sellers used to
calculate the Initial August 22, 2001 Net Asset Value Statement. If Purchaser
shall disagree with the Initial August 22, 2001 Net Asset Value Statement,
Purchaser shall notify Sellers' Representative of such disagreement, setting
forth in detail the particulars of such disagreement within fifteen (15) days
after its receipt of the Initial August 22, 2001 Net Asset Value Statement.
In the event of any such notice of disagreement, the Purchaser and Sellers
Representative shall use their reasonable efforts for a period of thirty (30)
days to resolve any disagreements with respect to the calculation of the
August 22, 2001 Net Asset Value (as defined below). If at the end of such
period, they are unable to resolve any disagreements, Sellers' Representative
and Purchaser hereby agree and elect to utilize the services of the
accounting firm of Deloitte & Touche (the "ACCOUNTANTS") to resolve such
disagreements. The Accountant shall resolve as promptly as practicable any
such disagreements acting as experts and not as arbitrators. The
7
determination of the Accountants shall (in the absence of manifest error) be
final, binding and conclusive on the parties. Sellers and Purchaser shall
share equally the fees and expenses incurred by the Accountants in resolving
such disagreements. The date of the final resolution of the Net Asset Value
as of August 22, 2001 shall be referred to as the "DETERMINATION DATE". The
Purchase Price shall be adjusted as follows:
(i) PAYMENT BY SELLERS. If the August 22, 2001 Net Asset
Value is less than the Estimated August 22, 2001 Net
Asset Value, Sellers shall within five Business Days
after the Determination Date pay to the Purchaser by
wire transfer an amount equal to the Estimated August
22, 2001 Net Asset Value minus the August 22, 2001
Net Asset Value.
(ii) PAYMENT BY PURCHASER. If the August 22, 2001 Net
Asset Value is greater than the Estimated August 22,
2001 Net Asset Value, Purchaser shall within five
Business Days after the Determination Date pay to
Sellers by wire transfer an amount equal to the
August 22, 2001 Net Asset Value minus the Estimated
August 22, 2001 Net Asset Value.
(iii) UNDISPUTED AMOUNTS. If pursuant to Section 2.3(c)
above, there is a dispute as to the final
determination of the August 22, 2001 Net Asset Value,
Sellers or Purchaser shall promptly cause to be paid
to the other, as appropriate, by wire transfer such
amounts as are not in dispute, pending final
determination of such dispute pursuant to Section
2.3(c).
(iv) INTEREST. Any adjustments in the Purchase Price
hereunder shall bear interest from the Closing Date
at the rate of seven percent (7%) per annum based on
a year consisting of 365 days.
Section 2.4 SALE OF WEATHER FORECASTING BUSINESS. If prior to the first
anniversary of the Closing Date, Purchaser sells the assets of Company's
Weather Forecasting Business, or Company is engaged in a merger,
recapitalization or other transaction that results in a change in control of
Company's Weather Forecasting Business, and the net amount received from the
transaction after payment of all transaction related expenses (including
legal, accounting and investment banking fees) is in excess of $3,000,000
then Purchaser shall pay to Sellers' Representatives fifty percent (50%) of
the net proceeds in excess of Three Million Dollars ($3,000,000).
ARTICLE III
THE CLOSING
Section 3.1 THE CLOSING. The sale and transfer of the Shares by Sellers
to Purchaser shall take place at the offices of Xxxxxxxxx Xxxxxxxx LLP, Xxx
Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000 at 10:00 a.m.,
local time, two Business Days following the satisfaction and/or waiver of all
conditions to close set forth in Article VII, unless another date or place is
agreed to in writing by each of the parties hereto. The parties hereto agree
that the Closing of the transactions contemplated herein shall be deemed
effective as of the close of business on August 31, 2001.
Section 3.2 DELIVERIES BY SELLERS. At the Closing, the Sellers shall
deliver to Purchaser:
(a) Certificates representing all the issued and
outstanding Shares, each such certificate to be duly and validly endorsed in
favor of Purchaser or accompanied by a separate stock power duly and validly
executed by Sellers respectively, and otherwise sufficient to vest in
Purchaser good title to such Shares;
(b) Resignations of each director of the Company;
(c) Executed copies of the consents referred to in Section
7.1(b); and
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(d) A certification of non-foreign status for Sellers in
the form and manner which complies with the requirements of Section 1445 of
the Code and the regulations promulgated thereunder.
Section 3.3 DELIVERIES BY PURCHASER. Simultaneously with the Closing,
Purchaser shall transfer the Purchase Price for the Shares to Sellers and to
such third parties as designated by Sellers prior to the Closing by wire
transfer in immediately available funds.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as set forth in the Disclosure Schedule prepared and signed by
Sellers and delivered to Purchaser simultaneously with the execution hereof
or as disclosed in, or as readily inferable from, the Financial Statements,
Sellers Severally (as limited by Section 11.5 hereof) represent and warrant
to Purchaser that all of the statements contained in this Article IV are true
as of the date of this Agreement (or, if made as of a specified date, as of
such date) and as of the Closing Date. For purposes of the representations
and warranties of Sellers contained herein, disclosure in any section of the
Disclosure Schedule of any facts or circumstances shall be deemed to be
adequate response and disclosure of such facts or circumstances with respect
to all representations or warranties by Sellers calling for disclosure of
such information, whether or not such disclosure is specifically associated
with or purports to respond to one or more or all of such representations or
warranties if it is reasonably apparent on the face of the Disclosure
Schedule that such disclosure is applicable. The inclusion of any information
in any section of the Disclosure Schedule or other document delivered by
Sellers pursuant to this Agreement shall not be deemed to be an admission or
evidence of the materiality of such item, nor shall it establish a standard
of materiality for any purpose whatsoever.
Section 4.1 ORGANIZATION OF HORIZON. Horizon is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Wisconsin, and has all requisite power and authority and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power,
authority, and governmental approvals would not have, individually or in the
aggregate, a material adverse effect on Sellers' ability to consummate the
Transaction.
Section 4.2 POWER OF INDIVIDUAL SHAREHOLDERS. Each of the Individual
Shareholders has full capacity, right, power and authority to execute and
deliver this Agreement and the other agreements, documents and instruments
necessary to consummate the Transaction and perform their obligations in
connection with the Transaction.
Section 4.3 AUTHORIZATION. Horizon has the requisite power and authority
to execute and deliver this Agreement and to consummate the Transaction and
to perform its obligations in connection with the Transaction. The execution,
delivery and performance by Horizon of this Agreement and the consummation of
the Transaction have been duly authorized by Horizon's general partner, and
no other action on the part of Horizon or any Affiliate of Horizon is
necessary to authorize the execution and delivery by Horizon of this
Agreement or the consummation of the Transaction.
Section 4.4 EXECUTION; VALIDITY OF AGREEMENT. This Agreement has been
duly executed and delivered by Sellers, and, assuming due and valid
authorization, execution and delivery hereof by Purchaser, is a valid and
binding obligation of Sellers, enforceable against Sellers in accordance with
its terms except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors' rights generally, and
(b) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and
would be subject to the discretion of the court before which any proceeding
therefore may be brought.
Section 4.5 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
in Section 4.5 of the Disclosure Schedule and for the filings, permits,
authorizations, consents and approvals as may be required
9
under, and other applicable requirements of, the Securities Act and state
securities or blue sky laws, none of the execution, delivery or performance
of this Agreement by Sellers, the consummation by Sellers of the Transaction
or compliance by Sellers with any of the provisions hereof will:
(a) conflict with or result in any breach of any provision
of the Articles of Incorporation of Company or the Certificate of Limited
Partnership of Horizon,
(b) require any filing with, or the obtaining of any
permit, authorization, consent or approval of, any Governmental Entity,
(c) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which Company or Sellers are a party or by which Sellers, Company or any of
their respective properties or assets may be bound, or
(d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Sellers or Company or any of their
properties or assets, excluding from the foregoing clauses (b), (c) and (d)
such violations, breaches or defaults which
(i) would not, individually or in the aggregate,
have a Company Material Adverse Effect or a
material adverse effect on Sellers' ability
to consummate the Transaction, or
(ii) would become applicable as a result of the
business or activities in which Purchaser is
or proposes to be engaged or as a result of
any acts or omissions by, or the status of
any facts pertaining to, Purchaser.
Section 4.6 OWNERSHIP AND POSSESSION OF SHARES. The record and
beneficial owner of all issued and outstanding Shares is set forth in Section
4.6 of the Disclosure Schedule and Sellers either own or have the right to
sell all of such Shares pursuant to the terms of this Agreement. The
certificates representing such Shares are free and clear of all Encumbrances
whatsoever.
Section 4.7 GOOD TITLE CONVEYED. The stock certificates, stock powers,
endorsements, assignments and other instruments to be executed and/or
delivered by Sellers to Purchaser at the Closing will be valid and binding
obligations of Sellers, enforceable in accordance with their respective
terms, and will vest in Purchaser good title to all the Shares, free and
clear of all Encumbrances.
Section 4.8 CAPITALIZATION. The authorized capital stock of the Company
consists of 5,000,000 shares of Common Stock, $0.025 par value, and 120,000
shares of Series A Convertible Preferred Stock, par value $1.00. As of the
date hereof:
(a) 456,900 shares of such Class A Common Stock and 71,517
shares of such Preferred Stock are outstanding,
(b) no such common stock or preferred stock is owned by any
Person other than Sellers as shown in Section 4.6 of the Disclosure Schedule,
and
(c) except for 2,108,100 common shares held as treasury
stock, no such common stock or preferred stock is issued and held in the
treasury of the Company. All the outstanding shares of the Company are duly
authorized, validly issued, fully paid and non-assessable. Except as set
forth above and as set forth in Section 4.8 of the Disclosure Schedule, as of
the date hereof, (x) there are no shares of capital stock of the Company
authorized, issued or outstanding; and (y) except as set forth in Section 4.8
of the Disclosure Schedule, there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements
or commitments of any character, relating to the issued or unissued capital
stock of the Company, obligating the Company to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock of the
Company.
10
Section 4.9 ORGANIZATION OF COMPANY; QUALIFICATION OF COMPANY. The
Company:
(a) is a corporation duly organized, validly existing and
in good standing under the laws of the State of
Missouri;
(b) has full corporate power and authority to carry on its
business as it is now being conducted and to own the properties and assets it
now owns; and
(c) as set forth on Schedule 4.9 attached hereto and made a
part hereof, is duly qualified or licensed to do business as a foreign
corporation in good standing in every jurisdiction in which such
qualification is required or, if the Company is not so qualified in any such
jurisdiction, it can become so qualified in such jurisdiction without a
Company Material Adverse Effect. The Company has heretofore delivered to
Purchaser complete and correct copies of the certificate of incorporation and
by-laws of the Company as presently in effect.
Section 4.10 SUBSIDIARIES AND AFFILIATED COMPANIES. Section 4.10 of the
Disclosure Schedule sets forth the name, jurisdiction of incorporation and
authorized capital stock of each Company Subsidiary and the jurisdictions in
which each Company Subsidiary is qualified to do business. All the
outstanding capital stock of each Company Subsidiary is owned directly or
indirectly by the Company, with the Company having the right to deliver and
sell the same pursuant to this Agreement, and all such stock of the Company
Subsidiaries is free and clear of all Encumbrances, and all material claims
or charges of any kind, and is validly issued, fully paid and nonassessable.
Each Company Subsidiary:
(a) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation;
(b) has full corporate power and authority to carry on its
business as it is now being conducted and to own the properties and assets it
now owns; and
(c) is duly qualified or licensed to do business as a
foreign corporation in good standing in every jurisdiction in which such
qualification is required or, if a Company Subsidiary is not so qualified in
any such jurisdiction, it can become so qualified in such jurisdiction
without a Company Material Adverse Effect.
Section 4.11 FINANCIAL STATEMENTS. True and complete copies of the
Financial Statements are included in Section 4.11 of the Disclosure Schedule.
The Financial Statements have been prepared from, are in accordance with and
accurately reflect, the books and records of Company, comply in all material
respects with applicable accounting requirements, have been prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as may be stated in the notes thereto) and fairly present
the consolidated financial position and the consolidated results of
operations and cash flows of Company, as of the times and for the periods
referred to therein.
Section 4.12 POWERS OF ATTORNEY. There are no outstanding Powers of
Attorney executed on behalf of the Company.
Section 4.13 NO UNDISCLOSED LIABILITIES. Except for liabilities and
obligations incurred in the ordinary course of business, since the Balance
Sheet Date, the Company has not incurred any liabilities or obligations
material to the Company, taken as a whole, contingent or otherwise, that
would be required to be disclosed, reflected or reserved against in a
consolidated balance sheet of the Company (including the related notes
thereto, where appropriate) prepared in accordance with GAAP.
Section 4.14 ABSENCE OF CERTAIN CHANGES. Except as:
(a) disclosed in the Financial Statements or
(b) expressly required by this Agreement, since the Balance
Sheet Date:
(i) no event that would result in a Company
Material Adverse Effect has occurred, and
11
(ii) the Company has not taken any action that,
if taken after the date hereof, would
constitute a violation of Sections 6.1(a)
through (l).
Section 4.15 ASSETS; PROPERTIES; ENCUMBRANCES. Except for property and
assets sold since the Balance Sheet Date in the ordinary course of business
and as set forth on Section 4.15 of the Disclosure Schedules, the Company has
good title to all the properties and assets reflected on the Balance Sheet,
free and clear of all Encumbrances not disclosed on the Balance Sheet or set
forth in Section 4.15 of the Disclosure Schedule. All of the property and
assets on the Balance Sheet are in good working condition (except for
ordinary wear and tear) and constitute all of the properties and assets
necessary to conduct the Company's business as it is conducted on the date
hereof. Except as set forth on Section 4.15 of the Disclosure Schedule, all
of the Company's properties and assets are located in St. Louis County,
Missouri, Buffalo, Albany and Rochester, New York in connection with the
contract with the New York Department of Transportation, and on Company owned
vans throughout the United States.
Section 4.16 REAL PROPERTY. The Company owns no real property directly
or indirectly.
Section 4.17 LEASES. A true and complete copy of each Lease has
heretofore been delivered to Purchaser. Each Lease is valid, binding and
enforceable in accordance with its terms and is in full force and effect.
There is no existing default by the Company under any of the Leases which
constitutes a Company Material Adverse Effect.
Section 4.18 Contracts and Commitments.
(a) Section 4.18 of the Disclosure Schedule sets forth, as
of the date hereof, a true, complete and correct list of every contract,
agreement, loan, lease, license, guarantee, understanding or commitment that
(i) provides for aggregate future payments during the next two years by the
Company, or to the Company, of more than Fifty Thousand Dollars ($50,000.00)
and has an unexpired term exceeding one year (including purchase orders,
invoices and leasing transactions entered into or incurred in the ordinary
course of business); (ii) was entered into by the Company with a stockholder,
officer, director or significant employee of the Company or the Sellers or
any of their Affiliates; (iii) is a collective bargaining or similar
agreement; (iv) involves an agreement with any bank, finance company, venture
capital firm or similar organization for Indebtedness of the Company; (v)
materially restricts the Company from engaging in any business or activity
anywhere in the world; (vi) is an employment agreement, consulting agreement
or similar arrangement; or (vii) concerns a joint venture or a partnership.
(b) As of the date hereof, (i) there is not and, to the
Knowledge of Sellers, there has not been claimed or alleged by any Person,
with respect to any contract listed in Section 4.18 of the Disclosure
Schedule any existing default or event that, with notice or lapse of time or
both, would constitute a default or event of default on the part of the
Company, or to the Knowledge of Sellers, on the part of any other party
thereto, except such defaults, events of default and other events that would
not result in a Company Material Adverse Effect, (ii) each contract listed in
Section 4.18 of the Disclosure Schedule is, and after giving effect to the
Closing hereunder and the consummation of the Transactions will be,
enforceable by the Company, against each Person (other than the Company)
which is a party thereto, except: (x) as otherwise required by the terms of
this Agreement, (y) for such failures to be so enforceable as do not and
would not have a Company Material Adverse Effect, and (z) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally and general
principles of equity (whether considered in a proceeding at law or in
equity), and no party to any such contract has repudiated any provision of
such contract; and (iii) no consent, approval, authorization or waiver from,
or notice to, any Governmental Entity or other Person is required in order to
maintain in full force and effect any of the contracts listed in Section 4.18
of the Disclosure Schedule, other than (A) such consents and waivers that
have been obtained and are unconditional and in full force and effect and
such notices that have been duly given and (B) such consents, approvals,
authorizations, waivers or notices the failure of which to have or give would
not have a Company Material Adverse Effect.
Section 4.19 CUSTOMERS AND SUPPLIERS. Except as listed on Section 4.19
of the Disclosure Schedule, since the Balance Sheet Date, there has not been
any material adverse change in the business
12
relationship of the Company with any customer who accounted for more than 10%
of the Company's sales (on a consolidated basis) during the year ended June
30, 2001, and for the period since the Balance Sheet Date, or any supplier
from whom the Company purchased more than 10% of the goods or services (on a
consolidated basis) which it purchased during the same periods. To the
Knowledge of Sellers, the Company has no arrangements or contracts with
customers or suppliers that individually or in the aggregate have, or could
have in the future, a material adverse effect on the Company's operating
profit. To the Knowledge of Sellers, there is no reason to believe
consummation of this Transaction has resulted or will result in a Company
Material Adverse Effect. Section 4.19 of the Disclosure Schedule shall also
set forth the ten largest customers and suppliers of Company as of June 30,
2001.
Section 4.20 INSURANCE. Section 4.20 of the Disclosure Schedule sets
forth a true and complete list and description of all Insurance Policies in
effect as of the date hereof, providing coverage with respect to the business
or assets of the Company. Except as set forth in Section 4.20 of the
Disclosure Schedule, each of such policies has been issued to the Company.
Each of such policies is valid and binding and in full force and effect in
all material respects, all premiums due thereunder have been paid when due
(except for any failures to pay any such premiums that, individually or in
the aggregate, would not have a Company Material Adverse Effect), and neither
the Sellers nor the Company has received any notice of cancellation or
termination in respect of any such policy.
Section 4.21 CASUALTIES. Since the Balance Sheet Date, the Company has
not been affected as a result of flood, fire or explosion which constitutes a
Company Material Adverse Effect.
Section 4.22 LITIGATION. Except as set forth in Section 4.22 of the
Disclosure Schedule, there is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Entity pending or, to
the Knowledge of Sellers, threatened against or involving the Company that is
expected to have a Company Material Adverse Effect or that questions or
challenges the validity of this Agreement or any action taken or to be taken
by the Company pursuant to this Agreement or in connection with the
Transaction.
Section 4.23 ENVIRONMENT, HEALTH, AND SAFETY. Except as set forth on
Section 4.23 of the Disclosure Schedule:
(a) The Company has complied in all material respects, and
is currently in compliance, with all Environmental Laws, no Action has been
filed or commenced against the Company alleging any failure so to comply, and
Sellers know of no conditions or circumstances which might reasonably cause
an allegation that they have failed to comply. Without limiting the
generality of the preceding sentence, the Company has obtained and been in
compliance in all material respects with all of the terms and conditions of
all permits, licenses, and other authorizations which are required under, and
has complied in all material respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables which are contained in, all Environmental Laws.
(b) The Company has no material Environmental Liabilities,
and there are no conditions or circumstances which might reasonably result in
any material Environmental Liabilities; (and there is no basis related to the
past or present operations, properties, or facilities of any of the Company,
its predecessors and Affiliates for any present or future Action against the
Company giving rise to any material Environmental Liabilities), including any
material Environmental Liabilities with respect to: (x) noncompliance with
any applicable Environmental Laws, or (y) the presence or Release or
threatened Release of any Hazardous Materials, or (z) personal injury,
wrongful death, or other tortious conduct relating specifically to any
Hazardous Materials used, manufactured, sold, or disposed of by or on behalf
of the Company.
(c) To the Knowledge of Sellers, all properties and
equipment used in the business of the Company and its predecessors and
Affiliates have been free of asbestos, PCBs, methylene chloride,
trichloroethylene, 1,2-transdichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances.
13
(d) All product labeling of the Company has been in
material conformity with applicable laws (including rules and regulations
thereunder), with respect to the Company's business.
Section 4.24 COMPLIANCE WITH LAWS. To the Knowledge of Sellers, the
Company has complied in a timely manner and in all material respects with all
laws, rules and regulations, ordinances, judgments, decrees, orders, writs
and injunctions of all United States federal, state, local, foreign
governments and agencies thereof that apply to the business, properties or
assets of the Company.
Section 4.25 EMPLOYEE BENEFIT PLANS.
(a) Section 4.25 of the Disclosure Schedule contains a true
and complete list of all Plans of the Company. The Company has heretofore
made available to Purchaser a true and complete copy of each written Plan and
any amendments thereto and each agreement creating or modifying any related
trust or other funding vehicle.
(b) There does not currently exist and has never existed
any employee pension benefit plan as such term is defined in Section 3(2) of
ERISA, ever subject to Section 302 of ERISA, and maintained by Company or any
ERISA Affiliate at any time, or to which the Company or any ERISA Affiliate
was obligated to make any contribution.
(c) There is no pending or, to the Knowledge of Sellers,
threatened claim in respect of any of the Plans, other than claims for
benefits in the ordinary course of business.
(d) With respect to each Plan: (i) no liability under Title
IV or Section 302 of ERISA has been incurred by the Company or any ERISA
Affiliate; (ii) the PBGC has not instituted proceedings to terminate any Plan
and no condition exists that presents a material risk that such proceedings
will be instituted; (iii) each Plan which is intended to qualify under
Section 401(a) of the Code has been determined to be so qualified by the IRS,
and no circumstance has occurred or exists which might cause such plan to
cease being so qualified; (iv) each Plan that provides health, medical or
dental benefits, including drug reimbursement or vision benefits, or provides
short or long term disability benefits, death benefits, accidental death or
dismemberment benefits or other similar benefits, does so on a fully insured
basis; (v) each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including ERISA,
and the Code; and (vi) neither the Company nor any ERISA Affiliate, nor to
the Knowledge of Sellers, other "disqualified person" (within the meaning of
Section 4975 of the Code) or "party in interest" (within the meaning of
Section 3(14) of ERISA) has taken any action with respect to any Plan which
could subject such plan (or its related trust) or the Company, or any ERISA
Affiliate or any officer, director or employee of the Company, or any ERISA
Affiliate or any related trust, to penalty or tax under Section 502(l) or
Section 502(I) of ERISA or Section 4975 of the Code.
(e) Neither the Company nor any ERISA Affiliate has any
contingent liability, whether direct or indirect, contingent or otherwise,
under Sections 4063, 4064, 4069, 4204, or 4212(c) or ERISA.
(f) The Company has complied in all respects with the
health care continuation requirements of Part 6 of Title I of ERISA and with
applicable state law.
(g) The Company and each ERISA Affiliate are in compliance
with the requirements of the Occupational Health and Safety Act ("OHSA") and
has no liabilities pursuant to OHSA, and no inspections or audits have been
conducted within the six-month period ending on the Closing Date.
(h) Neither the Company nor each ERISA Affiliate has any
self-insured Plans.
(i) Except as disclosed at Section 4.25 of the Disclosure
Schedule, neither the Company nor any ERISA Affiliate maintains any stock
option, stock bonus or other plan based on the equity of the Company.
(j) Neither the Company nor any ERISA Affiliate maintains
any Plan, practice or policy or has made any oral commitment to provide an
employee benefit the cost for which is not reflected on the Financial
Statements.
14
(k) Each Plan that is subject to laws other than United
States laws has been operated and administered in all material respects in
accordance with such applicable laws and is in compliance with all applicable
laws of the United States.
Section 4.26 TAX MATTERS.
(a) The Company has filed (or has had filed on its behalf)
or will file or cause to be filed, all Tax Returns required by applicable law
to be filed by it prior to or as of the Closing Date. All such Tax Returns
and amendments thereto are or will be prepared in accordance with applicable
law.
(b) The Company has paid (or has had paid on its behalf)
all Taxes due with respect to any period ending prior to or as of the Closing
Date other than Taxes for which there is an accrual on the Balance Sheet.
(c) There are no liens for Taxes upon any property or
assets of the Company, except for liens for Taxes not yet due.
(d) No federal, state, local or foreign audits,
examinations, investigations or other administrative proceedings (such
audits, examinations, investigations and other administrative proceedings
referred to collectively as "Audits") or court proceedings are presently
pending with regard to any Taxes or Tax Returns filed by or on behalf of the
Company. The Company does not expect any Governmental Authority to assess any
additional Taxes for any period for which Tax Returns have been filed. There
is no dispute or claim concerning any Tax liability of Company, to Sellers'
Knowledge, claimed or raised by any Governmental Authority.
(e) There are no outstanding requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company.
(f) Company has no liability for Taxes of any other Person
or entity, has no Tax liability as a successor or transferee, and has no Tax
liability for Taxes of any person (other than the Company) pursuant to
Section 1.1502-6 of the Treasury Regulations or similar provisions of state,
local or foreign Tax laws.
(g) Company has no liability pursuant to any written
agreement to share, allocate or reimburse Taxes or Tax benefits.
Section 4.27 INTELLECTUAL PROPERTY. The Company owns, or is licensed to
use or otherwise possesses legally enforceable rights in, the Company
Intellectual Property all of which is described in Section 4.27 of the
Disclosure Schedules. There are no oppositions, cancellations, invalidity
proceedings, interferences or re-examination proceedings presently pending
with respect to the Company Intellectual Property that are reasonably likely
to have a Company Material Adverse Effect. To the Knowledge of Sellers, the
conduct of the business of the Company and the Company Intellectual Property
do not infringe any Intellectual Property rights of any Person. The Company
has not received any notice from any other Person pertaining to or
challenging the right of the Company to use any of the Company Intellectual
Property, or to make, use, offer, or sell any present or planned product or
service of the Company.
Section 4.28 LABOR MATTERS.
(a) There is no labor strike, dispute, slowdown, stoppage
or lockout actually pending, or to the Knowledge of Sellers, threatened
against the Company.
(b) Except as set forth in Section 4.28 of the Disclosure
Schedule, the Company is not a party to or bound by any collective bargaining
agreement with any labor organization applicable to employees of the Company.
15
(c) Except as set forth in Section 4.28 of the Disclosure
Schedule, no labor union has been certified by the National Labor Relations
Board as bargaining agent for any of the employees of the Company.
(d) The Company has not experienced any material work
stoppage or other material labor difficulty during the two-year period ending
on the date hereof.
(e) There is no unfair labor practice charge or complaint
against the Company pending or threatened before the National Labor Relations
Board.
(f) Since the enactment of the WARN Act, the Company has
not effectuated a "plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating units within any
site of employment or facility of the Company, and there has not occurred a
"mass layoff" (as defined in the WARN Act) affecting any site of employment
or facility of the Company.
Section 4.29 BANK ACCOUNTS. Section 4.29 of the Disclosure Schedule sets
forth:
(a) the names and locations of all banks, trust companies,
savings and loan associations and other financial institutions at which the
Company maintains safe deposit boxes, checking accounts or other accounts of
any nature, and
(b) the names of all Persons authorized to draw thereon,
make withdrawals therefrom or have access thereto.
Section 4.30 BROKERS OR FINDERS. Neither Sellers nor the Company has
entered into any agreement or arrangement entitling any agent, broker,
investment banker, financial advisor or other firm or person to any brokers'
or finder's fee or any other commission or similar fee in connection with the
Transaction except for ABN Ambro Incorporated whose fees and expenses will be
paid by the Sellers in accordance with Sellers' agreement with such firm.
Section 4.31 RECEIVABLES, INVENTORY AND PAYABLES. All accounts
receivable, inventory and accounts payable of the Company have arisen, and as
of the Closing Date will have arisen, from bona fide transactions in the
ordinary course of business consistent with past practice, and no items of
inventory are held by the Company on behalf of third parties or consignment
from third parties, respectively.
Section 4.32 PRODUCT WARRANTY; PRODUCT LIABILITY; PRODUCT SAFETY.
(a) Each product manufactured, sold, leased, or delivered
by the Company has, to the Knowledge of Sellers, been in conformity with all
contractual commitments and all express and implied warranties, and the
Company has no liability (and there is no basis for any present or future
action against it giving rise to any liability) for replacement or repair
thereof or other damages in connection therewith, subject only to the reserve
for product warranty claims set forth on the Balance Sheet, as adjusted for
the passage of time through the Closing Date in accordance with the past
custom and practice of the Company. No product manufactured, sold, leased, or
delivered by the Company is subject to any guaranty, warranty, or other
indemnity beyond the contractual conditions of sale.
(b) Except for the Lawsuit, the Company has no liability
(and, to the Knowledge of Sellers, there is no basis for any present or
future action, against it giving rise to any liability) arising out of any
death or injury to individuals or damage to property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or
delivered by the Company.
(c) The Company has not been required to file any
notification or other report with or provide information to any product
safety agency, commission, board or other Governmental Entity of any
jurisdiction concerning actual or potential hazards with respect to any
product manufactured or sold by the Company. Each product manufactured,
distributed or sold by the Company complies in all material respects with all
product safety standards of each applicable product safety agency,
commission, board or other Governmental Entity.
16
(d) The Company has not made any misrepresentation or
furnished any information containing any material omission to any product
safety testing laboratory or similar organization. The Company has not failed
to obtain approval of any product, component or process which is used,
manufactured or licensed by the Company and which is legally required to be
approved by any independent or government-sponsored testing laboratory,
industry trade association or similar body, agency or association.
Section 4.33 CERTAIN BUSINESS RELATIONSHIPS. Except as set forth on
Section 4.33 of the Disclosure Schedule, the Company has not been involved in
any business arrangement or relationship with the Sellers and their
Affiliates within the past twelve (12) months, and no Affiliate of Sellers
owns any asset, tangible or intangible, which is used in the Company's
business. No officer, director, employee or agent of the Company or its
Affiliates, acting for or on behalf of the Company, has directly or
indirectly, made any payment, kickback, bribe, gift rebate, payoff or other
payment to obtain (or pay for) favorable treatment in securing business, to
obtain (or pay for) special concessions, or in violation of any legal
requirements, or has established or maintained any fund or asset that has not
been recorded in the books and records of the Company.
Section 4.34. BOOKS AND RECORDS. Except for payroll services and records
provided and maintained with ADP and routine archival data storage, none of
the records, systems, data or information of the Company is recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held or
accessible by any means (including, but not limited to, an electronic
mechanical or photographic process, computerized or not) which are not under
the exclusive ownership and direct control of the Company.
Section 4.35 DISCLOSURE. Neither this Agreement (including the
representations and warranties set forth herein, and the Disclosure Schedule)
nor the Financial Statements, nor any other document, certificate, financial
statement or other instrument required to be furnished to Purchaser pursuant
to this Agreement, contains or will contain any untrue statement of a
material fact relating to the Company, Sellers or their respective
Affiliates. This Agreement (including without limitation these
representations and warranties and the Disclosure Schedule) and the Financial
Statements do not omit to state a material fact necessary in order to make
the statement so contained herein or therein not misleading.
Section 4.36 NO OTHER REPRESENTATIONS. Except for the representations
and warranties expressly contained in this Article IV, neither the Sellers
nor any other person or entity acting on behalf of the Sellers make any
representation or warranty, express or implied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrant to Sellers that:
Section 5.1 ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Delaware, and has all
requisite corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry
on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority,
and governmental approvals would not have, individually or in the aggregate,
a material adverse effect on Purchaser's ability to consummate the
Transaction.
Section 5.2 AUTHORIZATION; VALIDITY OF AGREEMENT. Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the Transaction. The execution, delivery and performance by
Purchaser of this Agreement and the consummation of the Transaction have been
duly authorized by the Board of Directors of Purchaser, and no other
corporate action on the part of Purchaser is necessary to authorize the
execution and delivery by Purchaser of this Agreement or the consummation of
the Transaction. No vote of, or consent by, the holders of any class or
series of stock or other equity issued by Purchaser is necessary to authorize
the execution and delivery by Purchaser of this Agreement or the consummation
by it of the Transaction. This Agreement has been duly executed and delivered
by Purchaser, and, assuming due and valid authorization, execution and
delivery hereof by Sellers, is a valid and binding
17
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors' rights generally, and
(b) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and
would be subject to the discretion of the court before which any proceeding
therefore may be brought.
Section 5.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act and state and
foreign securities or blue sky laws, none of the execution, delivery or
performance of this Agreement by Purchaser, the consummation by Purchaser of
the Transaction or compliance by Purchaser with any of the provisions hereof
will:
(a) conflict with or result in any breach of any provision
of the certificate of incorporation or by-laws of Purchaser,
(b) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity,
(c) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which Purchaser or any of its Subsidiaries is a party or by which any of them
or any of their respective properties or assets may be bound, or
(d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Purchaser, any of its Subsidiaries or any of
their properties or assets, excluding from the foregoing clauses (b), (c) and
(d) such violations, breaches or defaults which would not, individually or in
the aggregate, have a material adverse effect on Purchaser's ability to
consummate the Transaction.
Section 5.4 Acquisition of Shares for Investment; Ability to Evaluate
and Bear Risk.
(a) Purchaser is acquiring the Shares for investment and
not with a view toward, or for sale in connection with, any distribution
thereof, nor with any present intention of distributing or selling the
Shares. Purchaser agrees that the Shares may not be sold, transferred,
offered for sale, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act and any applicable state or foreign
securities laws, except pursuant to an exemption from such registration under
such act and such laws.
(b) Purchaser is able to bear the economic risk of holding
the Shares for an indefinite period, and has knowledge and experience in
financial and business matters such that it is capable of evaluating the
risks of the investment in the Shares.
Section 5.5 AVAILABILITY OF FUNDS. Purchaser currently has access to
sufficient immediately available funds in cash or cash equivalents and will
at the Closing have sufficient immediately available funds, in cash, to pay
the Purchase Price for the Shares pursuant to Article II and to pay any other
amounts payable pursuant to this Agreement and to effect the Transaction.
Section 5.6 LITIGATION. There is no claim, action, suit, proceeding or,
governmental investigation pending or, to the Knowledge of Purchaser,
threatened against Purchaser or any of its Subsidiaries by or before any
court or Governmental Entity that, individually or in the aggregate, would
have or would reasonably be expected to impede the ability of Purchaser to
complete the Closing in all respects.
Section 5.7 INVESTIGATION BY PURCHASER; SELLERS LIABILITY. Purchaser has
conducted its own independent investigation, review and analysis of the
business, operations, assets, liabilities, results of operations, financial
condition, software, technology and prospects of the Company which
investigation, review and analysis was done by Purchaser and, to the extent
Purchaser deemed appropriate, by Purchaser's representatives. Purchaser
acknowledges that it and its representatives have been provided adequate
access to the personnel, properties, premises and records of the Company for
such purpose. In entering into this
18
Agreement, Purchaser acknowledges that it has relied solely upon the
aforementioned investigation, review and analysis and not on any factual
representations or opinions of the Sellers or any of Sellers' representatives
(except the specific representations and warranties of Sellers set forth in
Article IV of this Agreement and schedules thereto), and Purchaser:
(a) acknowledges that none of the Sellers, the Company nor
any of their respective directors, officers, shareholders, employees,
controlling persons, agents, advisors or representatives makes or has made
any oral or written representation or warranty, either express or implied, as
to the accuracy or completeness of any of the information (including in the
descriptive memorandum relating to the Company provided to the Purchaser, in
materials furnished in Sellers' data room, in presentations by the Company's
management or otherwise) provided or made available to the Purchaser or their
respective directors, officers, employees, controlling persons, agents or
representatives upon which Sellers are liable; and
(b) agrees, to the fullest extent permitted by law,
excepting fraud, that none of the Sellers, the Company nor any of their
respective directors, officers, employees, shareholders, controlling persons,
agents, advisors or representatives shall have any liability or
responsibility whatsoever to Purchaser or its directors, officers, employees,
controlling persons, agents or representatives on any basis (including in
contract or tort, under federal, state or foreign securities laws or
otherwise) based upon any information provided or made available, or
statements made (including in the descriptive memorandum relating to the
Company provided to the Purchaser, in materials furnished in Sellers' data
room, in presentations by the Company 's management or otherwise), to
Purchaser or its directors, officers, employees, controlling persons,
advisors, agents or representatives (or any omissions therefrom), including
in respect of the specific representations and warranties of Sellers set
forth in this Agreement, except that the foregoing limitations shall not
apply to Sellers insofar as Sellers make the specific representations and
warranties set forth in Article IV of this Agreement.
Section 5.8 BROKERS OR FINDERS. Neither Purchaser nor any of its
Affiliates has entered into any agreement or arrangement entitling any agent,
broker, investment banker, financial advisor or other firm or Person to any
broker's or finder's fee or any other commission or similar fee in connection
with the Transaction.
ARTICLE VI
COVENANTS
Section 6.1 INTERIM OPERATIONS OF THE COMPANY. Except (i) as expressly
provided in this Agreement, (ii) as set forth in the Disclosure Schedule, and
(iii) as may be consented to in writing by Purchaser (such consent not to be
unreasonably withheld or conditioned), Sellers shall assure that, after
August 22, 2001, and prior to the Closing Date:
(a) the business of the Company shall be conducted in the
same manner as heretofore conducted and only in the ordinary course;
(b) the Company shall not: (i) amend its certificate of
incorporation or by-laws or similar organizational documents, (ii) issue,
sell, transfer, pledge, dispose of or encumber any shares of any class or
series of its capital stock, or securities convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to
acquire, any shares of any class or series of its capital stock, (iii)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to any shares of any class or series of its
capital stock, (iv) split, combine or reclassify any shares of any class or
series of its stock, (v) redeem, purchase or otherwise acquire directly or
indirectly any shares of any class or series of its capital stock, or any
instrument or security which consists of or includes a right to acquire such
shares, or (vi) make or authorize any capital expenditure in excess of
$50,000 in any monthly period ended on the monthly anniversary of the date
hereof;
(c) the Company shall not: (i) incur or assume any
long-term debt, (ii) modify the terms of any Indebtedness or other liability,
other than modifications of short term debt in the ordinary and usual course
of business and consistent with past practice, or (iii) assume or guarantee
the obligations of any other Person, except in the ordinary course of
business;
19
(d) the Company shall not make any change in the
compensation payable or to become payable to any of its employees (other than
normal recurring increases in the ordinary course of business or pursuant to
any Plan existing on the date hereof);
(e) the Company shall not voluntarily permit any Insurance
Policy naming it as a beneficiary or a loss payable payee to be cancelled or
terminated prior to the Closing Date without notice to Purchaser, except
policies providing coverage for losses not in excess of $500,000 which are
replaced without diminution of or gaps in coverage;
(f) the Company shall not adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company;
(g) the Company shall not change in any material respect
any of the accounting methods used by it unless required by GAAP, as
applicable;
(h) the Company shall not take, or agree to or commit to
take, any action that would result in any of the conditions to the Closing
set forth in Article VII not being satisfied, or would make any
representation or warranty of Sellers contained herein inaccurate in any
material respect at, or as of any time prior to, the Closing Date, or that
would materially impair the ability of Purchaser or Sellers to consummate the
Closing in accordance with the terms hereof or materially delay such
consummation;
(i) the Company shall not sell, lease, transfer, or assign
any of its assets, tangible or intangible, other than for a fair
consideration in the ordinary course of business;
(j) the Company shall not accelerate, terminate, modify or
cancel any contractual obligation (or series of related contractual
obligations);
(k) the Company shall not delay or postpone the payment of
accounts payable and other liabilities outside the ordinary course of
business; and
(l) the Company shall not enter into any agreement,
contract, commitment or arrangement to do any of the things described in
Subsections (a) through (k) above.
Section 6.2 ACCESS; CONFIDENTIALITY.
(a) Sellers shall cause the Company prior to the Closing to:
(i) give Purchaser and its authorized
representatives reasonable access to all
books, records, personnel, offices and other
facilities and properties of the Company,
(ii) permit Purchaser to make such copies and
inspections thereof as Purchaser may
reasonably request, and
(iii) cause the officers of the Company to furnish
Purchaser with such financial and operating
data and other information with respect to
the business and properties of the Company
as Purchaser may from time to time
reasonably request; provided that any such
access shall be conducted at Purchaser's
expense, at a reasonable time, under the
supervision of the Sellers' or Company's
personnel and in such a manner as to
maintain the confidentiality of this
Agreement and the transactions contemplated
hereby and not to interfere with the normal
operation of the business of Sellers or the
Company.
(b) The provisions of the Confidentiality Agreement shall
remain binding and in full force and effect. The information contained
herein, in the Disclosure Schedule or delivered to Purchaser or its
authorized representatives pursuant hereto shall be deemed to be Confidential
Information (as defined and subject to the exceptions contained in the
Confidentiality Agreement) until the Closing. Except as otherwise provided in
Section 6.4, Purchaser shall cause its consultants, advisors and
representatives to treat the terms
20
of this Agreement after the date hereof as strictly confidential (unless
compelled to disclose by judicial or administrative process or, in the
opinion of legal counsel, by other requirements of law and then subject to
the provisions of the Confidentiality Agreement).
Section 6.3 EFFORTS AND ACTIONS TO CAUSE CLOSING TO OCCUR.
(a) Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, Purchaser and Sellers shall use their
respective commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done and cooperate with each other in
order to do, all things necessary, proper or advisable (subject to any
applicable laws) to consummate the Closing and the Transaction as promptly as
practicable, including the preparation and filing of all forms, registrations
and notices required to be filed to consummate the Closing and the
Transaction and the taking of such actions as are necessary to obtain any
requisite approvals, authorizations, consents, orders, licenses, permits,
qualifications, exemptions or waivers by any third party or Governmental
Entity. In addition, no party hereto shall take any action after the date
hereof that could reasonably be expected to materially delay the obtaining
of, or result in not obtaining, any permission, approval or consent from any
Governmental Entity or other Person required to be obtained prior to Closing.
Nothing contained in this Agreement shall require the Sellers or the Company
to pay any consideration to any other Person from whom any such approvals,
authorizations, consents, orders, licenses, permits, qualifications,
exemptions or waiver is requested.
(b) In addition to and without limiting the agreements of
the parties contained above, Purchaser and Sellers shall:
(i) take promptly all actions necessary to make
the filings required of them or any of their
respective Affiliates under any law,
(ii) comply at the earliest practicable date with
any request for additional information or
documentary material received by the
Company, Purchaser, Sellers or any of their
respective Affiliates from any state
attorney general or other Governmental
Entity in connection with antitrust matters,
(iii) cooperate with each other in connection with
resolving any investigation or other inquiry
concerning the Transaction commenced by any
state attorney general or any other
Governmental Entity,
(iv) use their best efforts to resolve such
objections, if any, as may be asserted with
respect to the Transaction under any
antitrust law, and
(v) advise the other parties promptly of any
material communication received by such
party from any state attorney general or any
other Governmental Entity regarding the
Transaction, and of any understandings,
undertakings or agreements (oral or written)
such party proposes to make or enter into
with any Governmental Entity in connection
with the Transaction.
Section 6.4 PUBLICITY. Neither the Sellers, the Company, the Purchaser
nor any of their respective Affiliates shall issue or cause the publication
of any press release or other internal or external announcement with respect
to this Agreement or the Transaction without prior consultation with Sellers
and Purchaser, except as may be required by law or by any listing agreement
with a national securities exchange or trading market and then only after
Sellers have been afforded a reasonable opportunity to review and comment on
the same.
Section 6.5 EMPLOYEES; EMPLOYEE BENEFITS.
(a) For a period of not less than one year following the
Closing, Purchaser shall cause the Company to maintain plans for the benefit
of the employees of the Company which provide benefits that are substantially
similar in the aggregate to the benefits provided under the Company's Plans
as of the Closing.
21
(b) With respect to each employee benefit plan, practice or
policy of Purchaser or any of its Affiliates, Purchaser will use its best
efforts to cause: (i) each Retained Employee to be given credit under such
plan for vesting and for all other purposes for which such service is either
taken into account or recognized the same as if service with the Company were
service with the Purchaser; and (ii) Retained Employees to be given full
credit for amounts paid under any Plan during the same calendar year in which
they commence participation in a comparable employee benefit plan of
Purchaser for purposes of applying deductibles, copayments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms
and conditions of the comparable employee benefit plan of Purchaser. Retained
Employees shall not have to satisfy any waiting periods, evidence of
insurability or pre-existing condition limitations with respect to any
health, life or dental benefits, except to the extent employees of Purchaser
and its Affiliates subsequent to the date hereof are also subject to such
requirements or limitations.
(c) If any Retained Employee is discharged by the Company
as of or after the Closing, then Purchaser shall be responsible for any and
all severance costs for such Retained Employee, including all payments owing
under any Plan. Purchaser shall be responsible and assume all liability for
all notices or payments due to any Retained Employees, and all notices,
payments, fines or assessments due to any Governmental Entity, pursuant to
any applicable foreign, federal, state or local law, common law, statute,
rule or regulation with respect to the employment, discharge or layoff of
employees by the Company after the Closing, including the WARN Act, section
4980B of the Code and any rules or regulations as have been issued in
connection with the foregoing.
(d) From and after the Closing, Purchaser shall be
responsible for, and shall indemnify and hold harmless Sellers and their
Affiliates and their officers, directors, employees, Affiliates and agents
and the fiduciaries (including plan administrators) of the Plans from and
against any and all claims, losses, damages, costs and expenses (including
attorneys' fees and expenses) and other liabilities and obligations relating
to or arising out of:
(i) all salaries, wages, commissions, employee
incentive or other compensation, severance,
holiday, vacation, health, dental or
retirement benefits accrued but unpaid as of
the Closing,
(ii) post-Closing bonuses due to any Retained
Employee,
(iii) the liabilities assumed by Purchaser under
this Section 6.5 or any failure by Purchaser
to comply with the provisions of this
Section 6.5,
(iv) for any events occurring post Closing with
respect to any Plan,
(v) the completion of the termination of those
Plans listed on the Disclosure Schedule and
identified as Plans in the process of being
terminated, and
(vi) any claims of, or damages or penalties
sought by, any Retained Employee, or any
Governmental Entity on behalf of or
concerning any Retained Employee, with
respect to any act or failure to act by
Purchaser to the extent arising from the
employment, discharge, layoff or termination
of any Retained Employee.
(e) Effective as of the Closing, Purchaser shall:
(i) assume liability for all active workers'
compensation cases attributable to Retained
Employees as of the Closing;
(ii) provide Retained Employees with coverage for
all workers' compensation benefits, and
(iii) from and after the Closing be responsible
for all workers' compensation claims filed
by Retained Employees regardless of whether
the underlying event for such claims
occurred prior to the Closing.
22
SECTION 6.6. CONFIDENTIALITY; COVENANT NOT TO COMPETE.
(a) Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxx, Xxxxxx X. Xxxxxxx
and the Horizon Shareholders (together "NON-COMPETE PARTIES") shall, and
shall cause their respective Affiliates to, treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
Purchaser or destroy, at the request and option of Purchaser, all tangible
embodiments (and all copies) of the Confidential Information which is in
their possession. In the event that any of the Non-Compete Parties are
requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, then any of the Non-Compete Parties will notify Purchaser
promptly of the request or requirement so that Purchaser may seek an
appropriate protective order or waive compliance with the provisions of this
Section 6.6. If, in the absence of a protective order or the receipt of a
waiver hereunder any of the Non-Compete Parties are, on the advice of
counsel, compelled to disclose any Confidential Information to any tribunal
or else stand liable for contempt, any of the Non-Compete Parties shall use
its, his or her best efforts to obtain, at the request of Purchaser, an order
or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as Purchaser
shall designate.
(b) The Non-Compete Parties agree that for a period of two
years after the Closing Date, they will not, and they shall cause their
respective Affiliates not to, either alone or in conjunction with any other
Person, directly or indirectly:
(i) own, manage, operate, provide financing to,
or join, control or participate in the
ownership, management, operation or control
of, or provision of financing to, any
business located or doing business in North
America, Japan or Europe (including England)
(whether in corporate, proprietorship or
partnership form or otherwise), if such
business is competitive with the Company's
Business as conducted on the Closing Date or
as it has been conducted during the twelve
(12) month period prior to the Closing Date.
The "Company's Business" shall mean the
development, distribution or sale of
products or services related to (a) pavement
temperature sensing or forecasting, and (b)
weather forecast information;
(ii) for the direct or indirect benefit of any
Person engaged in the Company's Business (a
"COMPETITOR"), seek to procure orders from,
or do business with, or procure directly or
indirectly with any other Person, or procure
orders from or do business with, any Person
who or which has been a customer of the
Company at any time during the period of
twelve (12) months prior to the Closing
Date; or
(iii) for the direct or indirect benefit of any
Competitor, engage, employ, solicit or
contact with a view to the engagement or
employment by any Person, any Person who has
been an employee, officer or manager of the
Company in the twelve (12) months prior to
the Closing Date, in any case if the
employee, officer or manager either was, as
a part of his or her duties, privy to
Confidential Information or know-how or
would be in a position to exploit the trade
connections of the Company.
Provided, however, that ownership or acquisition by Non-Compete Parties
of an aggregate of (calculated for Sellers and Affiliates, collectively) less
than five percent (5%) of the outstanding stock of any publicly traded
company that is substantially similar to or which competes with the Company
shall not constitute a violation of this Section 6.6.
(c) Non-Compete Parties acknowledge and agree that: (i)
they regard the restrictions contained in Section 6.6 as reasonable and
designed to provide Purchaser with limited, legitimate and reasonable
protection against subsequent diminution of the value attributable to any
actions of the Non-
23
Compete Parties or any of their Affiliates contrary to such covenants, and
(ii) because the legal remedies of Purchaser may be inadequate in the event
of a breach of, or other failure to perform, any of the covenants and
obligations set forth in Section 6.6, Purchaser may, in addition to obtaining
any other remedy or relief available to it (including, without limitation,
consequential and other damages at law), obtain specific enforcement of
Section 6.6 and other equitable remedies. The Non-Compete Parties also
acknowledge and agree that no breach by Purchaser of, or other failure by
Purchaser to perform, any of the covenants or obligations of Purchaser under
this Agreement shall relieve any of the Non-Compete Parties of any of their
obligations under Section 6.6.
(d) If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 6.6 is
invalid or unenforceable, the Non-Compete Parties and Purchaser agree that
the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision, and this Agreement shall be enforceable
as so modified after the expiration of the time within which the judgment may
be appealed.
Section 6.7 INTERCOMPANY ARRANGEMENTS. Except as otherwise expressly
contemplated by this Agreement and as set forth in Section 6.7 of the
Disclosure Schedule, all agreements and commitments, whether written, oral or
otherwise, which are solely between the Company, on the one hand, and
Sellers, on the other hand, shall be terminated and of no further effect,
simultaneously with the Closing without any further action of or any
liability to the parties thereto.
Section 6.8 MAINTENANCE OF BOOKS AND RECORDS. Purchaser shall preserve,
until at least the fifth anniversary of the Closing Date, all pre-Closing
Date records possessed or to be possessed by the parties hereto relating to
the Company. After the Closing Date and up until at least the fifth
anniversary of the Closing Date, upon any reasonable request from Sellers or
Sellers' Representatives, Purchaser shall:
(a) provide to Seller or Sellers' Representatives
reasonable access to such records during normal business hours, and
(b) permit Seller or Sellers' Representatives to make
copies of such records, in each case at no cost to them (other than for
reasonable out-of-pocket expenses); provided that nothing herein shall
require Purchaser to disclose any information to Seller or Sellers'
Representatives if such disclosure would jeopardize any attorney-client or
other legal privilege or contravene any applicable law. Such records may be
sought under this Section for any reasonable purpose, including to the extent
reasonably required in connection with the audit, accounting, Tax,
litigation, federal securities disclosure or other similar needs of Seller.
Notwithstanding the foregoing, any and all such records may be destroyed by
Purchaser if Purchaser sends to the Sellers' Representatives written notice
of its intent to destroy such records, specifying in reasonable detail the
contents of the records to be destroyed; such records may then be destroyed
after the 30th day following such notice unless the Sellers' Representatives
notify Purchaser that Sellers' Representatives desire to obtain possession of
such records, in which event Purchaser shall transfer the records to Sellers'
Representatives and Sellers' Representatives shall pay all reasonable
expenses of Purchaser in connection therewith.
Section 6.9 NO ADVERSE ACTION BY SELLERS OR PURCHASER.
(a) Sellers will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
or supplier of the Company from maintaining the same business relationships
with the Company after the Closing as it maintained with the Company prior to
the Closing.
(b) Purchaser shall cause the Company, for a period of six
(6) years, to keep in effect in its Certificate of Incorporation or Bylaws,
or other corresponding documents, and shall cause such Certificate of
Incorporation or Bylaws to provide for indemnification of the officers and
directors of Company as of August 22, 2001, to the extent required under
Company's current Articles of Incorporation and Bylaws.
24
(c) In the event that the Company or any of its successors
or assigns: (i) consolidates with or merges into any other Person and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially
all of its properties and assets to any Person, then, and in each such case,
to the extent necessary to effectuate the purpose of this Section 6.9,
Purchaser shall cause the Company to make proper provision so that the
successors and assigns of the Company shall succeed to the obligations set
forth in this Section 6.9 and none of the actions described in clauses (i) or
(ii) shall be taken until such provision is made.
ARTICLE VII
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE CLOSING.
The respective obligations of each of the parties to effect the Closing shall
be subject to the satisfaction at or prior to the Closing Date of each of the
following conditions:
(a) STATUTES; COURT ORDERS. No statute, rule or regulation
shall have been enacted or promulgated by any Governmental Entity which
prohibits the consummation of the Closing; there shall be no order or
injunction of a court of competent jurisdiction in effect precluding
consummation of the Closing; provided that the parties shall use their
commercially reasonable efforts to have any such order or injunction vacated
or lifted; and there shall not be pending any suit, action or proceeding by
any Governmental Entity seeking to restrain or prohibit the consummation of
the Closing or the performance of the Transaction; and
(b) CONSENTS OBTAINED. The third-party consents identified
in Section 4.5 of the Disclosure Schedule shall have been obtained.
Section 7.2 CONDITIONS TO OBLIGATIONS OF PURCHASER TO EFFECT THE
CLOSING. The obligations of Purchaser to consummate the Closing shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Sellers set forth in this Agreement shall
be true and complete as of the date of this Agreement and as of the Closing
Date (or if made as of a specified date, only as of such date);
(b) SELLERS BREACH. Sellers shall not have failed to
perform in any material respect any obligation or to comply in any material
respect with any covenant of Sellers to be performed or complied with by it
under this Agreement;
(c) PAYMENT OF LIABILITIES. The payment and satisfaction by
the Sellers of the Company obligations set forth in Section 2.2 of the
Disclosure Schedule and the release of all liens related to such
encumbrances; and
(d) REDUCTION IN FORCE. The Company shall have had a
reduction in work force satisfactory to Company and Purchaser in their
reasonable discretion; provided, however, all Downsizing Costs incurred in
connection with such reduction in work force shall not reduce the August 22,
2001 Net Asset Value.
Section 7.3 CONDITIONS TO OBLIGATIONS OF SELLERS TO EFFECT THE CLOSING.
The obligations of Sellers to consummate the Closing shall be subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Purchaser set forth in this Agreement shall
be true and complete as of the date of this Agreement and as of the Closing
Date (or if made as of a specified date, as of such date);
(b) PURCHASER'S BREACH. Purchaser shall not have failed to
perform in any material respect any obligation or to comply in any material
respect with any covenant of Purchaser to be performed or complied with by it
under this Agreement;
25
(c) EMPLOYMENT TERMS. Purchaser and Xxxxxx X. Xxxxxxx and
Xxxxxx X. Xxxx having reached an arrangement regarding their continued
employment, and Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxx having been paid by the
Company on or before Closing retention bonuses in the aggregate amount of
$150,000 as promised by the Company's Board of Directors to them nine months
ago at the start of the sale process in order to insure they would remain
with the Company through the completion of the sale process ("Retention
Bonuses");
(d) DIRECTOR AND OFFICER COVERAGE. The Company shall have
obtained or continued coverage for its Directors and Officers in a form and
content, and for a price, satisfactory to Sellers' Representatives in their
reasonable discretion; and
(e) OPTION HOLDER TERMINATION. The Company shall have
entered into Option Termination Agreements with all of the individuals and
entities holding stock options for 200 or fewer shares of the Company's
common stock and who are not otherwise shareholders of the Company.
ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION. This Agreement may be terminated or the
Transaction may be abandoned at any time prior to the Closing Date:
(a) By the mutual written consent of Purchaser and Sellers;
(b) By Purchaser or Sellers if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action (which
order, decree, ruling or other action the parties hereto shall use their
commercially reasonable efforts to lift) which permanently restrains, enjoins
or otherwise prohibits the acquisition by Purchaser of the Shares and such
order, decree, ruling or other action shall have become final and
non-appealable;
(c) By either party if the Closing shall not have occurred
on or prior to September 30, 2001, and such party is not in willful breach of
this Agreement at the time such party terminates this Agreement;
(d) By Sellers if Purchaser shall have breached in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach cannot be or has not
been cured within thirty (30) days after the giving of written notice by
Sellers Representative to Purchaser specifying such breach; or
(e) By Purchaser if Sellers shall have breached any
representation, warranty, covenant or other agreement contained in this
Agreement which would give rise to the failure of a condition set forth in
Article VII, which breach cannot be or has not been cured within thirty (30)
days as to the giving of written notice by Purchaser to Sellers specifying
such breach.
Section 8.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement or abandonment of the Transaction by any party hereto pursuant
to the terms of this Agreement, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant
to which such termination of this Agreement or abandonment of the Transaction
is made, and there shall be no liability or obligation thereafter on the part
of any party hereto except for fraud or for willful breach of this Agreement
prior to such termination of this Agreement or abandonment of the Transaction.
ARTICLE IX
TAX MATTERS
Section 9.1 COOPERATION. After the Closing Date, Purchaser and Sellers
shall make available to the other, as reasonably requested, and to any taxing
authority in the event requested by the other, all information, records or
documents relating to tax liabilities or potential tax liabilities of the
Company for all periods ending prior to or including the Closing Date, and
shall preserve all such information, records, and documents until the
expiration of any applicable statute of limitations or extensions thereof.
Purchaser shall prepare and provide to Sellers any federal, state, local or
foreign tax information package requested by Sellers for Sellers' use in
preparing the returns required to be filed by Sellers. Such tax information
packages
26
shall be completed by Purchaser and provided to Sellers within sixty (60)
days after the Closing Date. Each party will compensate the other for the
reasonable costs and expenses of providing information, rendering assistance
or preparing returns for taxable periods (or portions thereof) for which the
other is responsible.
ARTICLE X
SPECIAL AGREEMENTS
Section 10.1 INSURANCE.
Sellers and Purchaser agree that all claims with respect to insured
events occurring prior to the Closing shall be administered in accordance
with the terms of the policies applicable to such claims. Purchaser shall
cooperate fully with Sellers to enable Sellers to comply with the
requirements of the relevant insurance carrier and Purchaser shall provide
(or cause the Company and its employees to provide) such information and
assistance as Sellers may reasonably request in connection with any such
claim. Any monies received by Sellers or any Affiliate of Sellers as a result
of such a claim shall be promptly paid over to Purchaser or the Company.
ARTICLE XI
SURVIVAL AND INDEMNIFICATION
Section 11.1 SURVIVAL. Subject to Section 11.7 hereof, the parties
hereto agree that their respective representations and warranties, covenants
and agreements contained in this Agreement shall survive the Closing.
Section 11.2 INDEMNIFICATION BY SELLERS. Subject to the other provisions
of this Article XI, Sellers shall for a period of two (2) years from and
after the Closing Date Severally indemnify and hold harmless and defend
Purchaser and its stockholders, directors, officers, employees,
representatives and agents (collectively, in this Article XI hereof referred
to as the "PURCHASER INDEMNIFIED PARTIES") from and against any and all
Losses suffered or incurred by the Purchaser Indemnified Parties after the
Closing as a result of or arising out of:
(a) The falsity or incorrectness of or breach of any
representation or warranty of Sellers in this Agreement or in any schedule,
certificate or agreement furnished to Purchaser by Sellers pursuant to this
Agreement; or
(b) The failure by Sellers to perform any covenant or
agreement of Sellers under this Agreement or under any schedule, certificate
or agreement furnished to Purchaser by Sellers pursuant to this Agreement;
provided, however, in addition to Section 11.5 hereof, the liability of each
Seller under this Section 11.2 shall be limited to a percentage of each claim
brought under this Article 11 determined by dividing (a) the amount of the
Purchase Price received by each Seller, by (b) the Purchase Price less the
liabilities satisfied pursuant to Section 7.2(c) hereof.
Section 11.3 INDEMNIFICATION BY PURCHASER. Subject to the other
provisions of this Article XI, Purchaser shall for a period of two (2) years
from and after the Closing Date indemnify and hold harmless Sellers and their
respective stockholders, directors, officers, employees, representatives,
agents and heirs from and against any and all Losses suffered or incurred by
such Indemnified Party after the Closing as a result of or arising out of:
(a) The falsity or incorrectness of or breach of any
representation or warranty of Purchaser in this Agreement or under any
schedule, certificate or agreement furnished to any of Sellers by Purchaser
pursuant to this Agreement; or
(b) the failure by Purchaser to perform any covenant or
agreement of Purchaser under this Agreement or under any schedule,
certificate or agreement furnished to any of Sellers by Purchaser pursuant to
this Agreement.
27
Section 11.4 METHOD OF ASSERTING CLAIMS. All claims for indemnification
by any Indemnified Party under this Article XI shall be asserted and resolved
as follows:
(a) THIRD PARTY CLAIMS. If any claim or demand in respect
of which an Indemnified Party might seek indemnity under this Article XI is
asserted against such Indemnified Party by a Person (a "THIRD PARTY CLAIM"),
the Indemnified Party shall give written notice (the "THIRD PARTY CLAIM
NOTICE") and the details thereof including an estimate of the claimed Losses,
copies of all relevant pleadings, documents and information to the
Indemnifying Party within a period of thirty (30) days following the
assertion of the Third Party Claim against the Indemnified Party (the "THIRD
PARTY CLAIM NOTICE PERIOD"). If the Indemnified Party fails to provide the
Third Party Claim Notice within the Third Party Claim Notice Period, the
Indemnifying Party will not be obligated to indemnify the Indemnified Party
with respect to such Third Party Claim to the extent that the Indemnifying
Party's ability to defend has been prejudiced by such failure of the
Indemnified Party. Within twenty (20) days after its receipt of the Third
Party Claim Notice by the Indemnified Party (the "THIRD PARTY CLAIM RESPONSE
PERIOD"), the Indemnifying Party shall, in writing, either acknowledge or
deny its obligations to indemnify and defend under this Article XI.
If the Indemnifying Party acknowledges its obligations to
indemnify and defend the Indemnified Party against the Third Party Claim,
then the Indemnifying Party shall defend such Third Party Claim by all
appropriate proceedings, which proceedings will be diligently prosecuted to a
final conclusion or will be settled, at the discretion of the Indemnifying
Party; provided, however, that the Indemnifying Party shall not enter into
any settlement that does not fully and finally release the Indemnified Party
from all claims, unless consented to by the Indemnified Party. The
Indemnified Party will cooperate fully in such defense, including, without
limitation, by making available to the Indemnifying Party all books, records
and documents within the Indemnified Party's control or that it can
reasonably obtain relating to the Third Party Claim, and all costs or
expenses incurred by it at the request of the Indemnifying Party shall be
paid by the Indemnifying Party. The Indemnified Party may, at the
Indemnifying Party's cost and expense, at any time to prevent default or
protect its interests file any pleadings or take any other action that the
Indemnified Party reasonably believes to be necessary or appropriate to
protect its interests due to the failure of the Indemnified Party to
diligently defend such action. The Indemnified Party, at its expense, may
participate in, but not control, any defense or settlement of any Third Party
Claim conducted by the Indemnifying Party pursuant to this Section 11.4(a).
(b) OTHER CLAIMS. In the event any Indemnified Party should
have a claim under this Article XI against any Indemnifying Party that does
not involve a Third Party Claim, the Indemnified Party shall promptly give
written notice (the "INDEMNITY NOTICE") and the details thereof, including an
estimate of the claimed Losses, copies of all relevant information and
documents to the Indemnifying Party within a period of thirty (30) days
following the discovery of the claim by the Indemnified Party (the "CLAIM
NOTICE PERIOD"). The failure by any Indemnified Party to give the Indemnity
Notice within the Claim Notice Period shall not impair the Indemnified
Party's rights hereunder except to the extent that an Indemnifying Party
demonstrates that it has been prejudiced thereby. The Indemnifying Party will
notify the Indemnified Party within a period of twenty (20) days after the
receipt of the Indemnity Notice by the Indemnifying Party (the "INDEMNITY
RESPONSE PERIOD") whether the Indemnifying Party disputes its liability to
the Indemnified Party under this Article XI with respect to such claim.
Section 11.5 LIMITATIONS ON INDEMNIFICATION. Any claim for
indemnification by Purchaser or Sellers under Section 11.2 or 11.3 hereof
must be brought prior to the second anniversary of the Closing Date. No
amount of indemnity shall be payable by Sellers in the case of a claim by any
Purchaser Indemnified Party under Section 11.2(a) unless, until and only to
the extent that such Purchaser Indemnified Party has suffered or incurred
Losses consisting of actual damages aggregating in excess of $100,000 (of
claims $15,000 or more individually) (the "DEDUCTIBLE AMOUNT") whereupon such
Purchaser Indemnified Party shall be entitled to claim indemnification for
the amount in excess of the Deductible Amount; provided, however, that in no
event shall the aggregate claims against Sellers under this Article XI be in
excess of fifty percent (50%) of that amount ("INDEMNIFICATION CAP")
determined by subtracting from the Purchase Price the liabilities satisfied
pursuant to Section 7.2(c) hereof. Sellers agree to hold ten percent (10%) of
the Purchase
28
Price in an interest bearing escrow account (interest payable to Sellers) for
a period of two years from the Closing Date pursuant to an agreement with the
Escrow Agent for the purpose of compensating Purchaser Indemnified Party in
the event such party is entitled to an indemnity claim. Sellers may, together
or separately, at any time and at their own discretion, substitute an
irrevocable letter of credit equal to ten percent (10%) of the Purchase Price
for the escrowed funds. In addition, Purchaser and Sellers agree that no
funds shall be distributed by the Seller Representatives to the Sellers until
the earlier of the settlement or dismissal of the Lawsuit or the second
anniversary of the Closing Date.
Section 11.6 EXCLUSIVE REMEDIES. Excepting claims based on fraud, the
sole and exclusive remedies for any party hereto with respect to any claim
relating to this Agreement or the transactions contemplated hereby and the
facts and circumstances relating and pertaining hereto shall be governed by
this Agreement (whether any such claim shall be made in contract, breach of
warranty, tort or otherwise); provided, however, that, in the event of a
breach of the Agreement that does not result in termination of the Agreement
by the non-breaching party, the foregoing shall not limit the availability to
any party hereof of injunctive and other equitable relief, including specific
performance.
Section 11.7 TIME LIMITS ON CLAIMS. No claim or action shall be brought
under this Article XI hereto for breach of a representation or warranty more
than two years following the Closing Date.
Section 11.8 TAX EFFECT AND INSURANCE. The liability of the Indemnifying
Party with respect to any Loss shall be reduced by the tax benefit actually
realized and any insurance proceeds received by the Indemnified Party as a
result of any such Losses and shall include any tax detriment actually
suffered by the Indemnified Party as a result of such Losses. The amount of
any such tax benefit or detriment shall be determined by taking into account
the effect, if any and to the extent determinable, of timing differences
resulting from the acceleration or deferral of items of gain or loss
resulting from such Losses and shall otherwise be determined so that payment
by the Indemnifying Party, as adjusted to give effect to any such tax benefit
or detriment, will make the Indemnified Party as economically whole as is
reasonably practical with respect to the Losses upon which the Indemnified
Party's claim is based.
Section 11.9 KANSAS LAWSUIT. Notwithstanding any of the other terms or
provisions contained in this Article XI or this Agreement, Sellers agree they
shall each Severally hold harmless and indemnify Purchaser for any and all
liabilities, costs and expenses incurred by Purchaser or the Company after
Closing pertaining to that certain litigation pending in the District Court
of Neosho County, Kansas, Case No. 00C35E, which is styled COMMERCIAL BANK OF
XXXXXXX AND XXXXXXXXX XXXXX AS CO-CONSERVATORS FOR JAYSE XXXXXX XXXXX, A
MINOR, VS. FORD MOTOR COMPANY, INC. ET AL. (the "Lawsuit") provided further,
the aggregate indemnification provided for in this Section 11.9 shall be net
of any insurance proceeds available to the Company from or through any
insurance coverage held by the Company. Any claims for indemnification
payable by the Sellers hereunder shall first be paid out of any available
insurance proceeds, second from the escrowed funds provided for in Section
11.5 hereof, and, third, from the Sellers. Any claim for indemnification
under this Section 11.9 shall not be subject to the Deductible Amount, but
shall be subject to the Indemnification Cap provided for in Section 11.5
hereof.
29
ARTICLE XII
MISCELLANEOUS
Section 12.1 FEES AND EXPENSES. All costs and expenses incurred in
connection with this Agreement and the consummation of the Transaction
through August 22, 2001, shall be paid by the party incurring such expenses,
except as specifically provided to the contrary in this Agreement; provided
that at the Closing the Company shall pay the reasonable costs and expenses
(including, without limitation, attorney fees, accounting fees and investment
banking fees) incurred by the Sellers in connection with the Transaction. Any
expenses for fees incurred after August 22, 2001 shall be paid by Purchaser.
Section 12.2 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified and supplemented in any and all respects, but only by a written
instrument signed by all of the parties hereto expressly stating that such
instrument is intended to amend, modify or supplement this Agreement.
Section 12.3 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if mailed, delivered
personally, telecopied (which is confirmed) or sent by an overnight courier
service, such as FedEx, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
If to Purchaser, to:
Quixote Transportation Systems, Inc.
Xxxxx 0000
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and a copy to:
XxXxxxx Xxxxx & Xxxxx
40th Floor
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxx Schiave
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Sellers, to:
Xxxxxx X. Xxxxxxx
Surface Systems, Inc.
00000 Xxxxxxx Xxxx Xxxx
Xx. Xxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and a copy to:
Horizon Capital Partners I, L.P.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
30
Xxxxxxxxx Xxxxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Section 12.4 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the
parties and delivered to the other parties.
Section 12.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement:
(a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof, and
(b) are not intended to confer any rights or remedies upon
any Person other than the parties hereto and thereto, the Indemnified
Parties, and the Retained Employees.
Section 12.6 SEVERABILITY. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction. If the final judgment of
a court of competent jurisdiction or other authority declares that any term
or provision hereof is invalid, void or unenforceable, the parties agree that
the court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable
term or provision.
Section 12.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Missouri without giving
effect to the principles of conflicts of law thereof.
Section 12.8 VENUE. Each of the parties hereto:
(a) consents to submit itself to the personal jurisdiction
of the U.S. District Court in St. Louis,
Missouri or the Circuit Court of St.
Louis County,
Missouri in the event any dispute that the parties fail to
resolve arises out of this Agreement or the Transaction,
(b) agrees that it shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court, and
(c) agrees that it shall not bring any action relating to
this Agreement and the Transaction in any court other than courts set forth
above. In any such proceeding, the parties agree to accept service of process
by mail at the addresses herein provided for notice.
Section 12.9 TIME OF ESSENCE. Each of the parties hereto hereby agrees
that, with regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
Section 12.10 EXTENSION; WAIVER. At any time prior to the Closing Date,
either party hereto may:
(a) extend the time for the performance of any of the
obligations or other acts of the other party,
31
(b) waive any inaccuracies in the representations and
warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement, or
(c) waive compliance by the other parties with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by or on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of those rights.
Section 12.11 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
content of the other parties, except that Purchaser may assign any or all of
its rights and interests hereunder to any direct or indirect wholly owned
Subsidiary of Purchaser, provided that no such assignment shall release
Purchaser from its obligations under this Agreement. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors and assigns.
Section 12.12 SELLERS' REPRESENTATIVES POWER OF ATTORNEY.
(a) SELLERS' REPRESENTATIVES. The Sellers hereby appoint
and constitute Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx as
Sellers' Representatives hereunder, to exercise the powers on behalf of
Sellers set forth in this Agreement; and the Sellers' Representatives hereby
accept such appointment. The Sellers' Representatives shall act by majority
vote of the Sellers' Representatives, except as otherwise provided herein. In
the event of the death, resignation or inability to act of Xxxxxx X. Xxxxxxx
or Xxxxxx X. Xxxxxx, or any successor to Xxxxxx X. Xxxxxxx or Xxxxxx X.
Xxxxxx, a successor Sellers' Representative, shall be designated by Horizon
Capital Partners I Limited Partnership. In the event of the death,
resignation or inability to act of Xxxxxx X. Xxxxxxx, or any successor to
Xxxxxx X. Xxxxxxx, the successor Sellers' Representative shall be Xxxxxx X.
Xxxx. In the event of the death, resignation or inability to act of Xxxxxx X.
Xxxx, or any successor to Xxxxxx X. Xxxx, a successor Sellers' Representative
shall be designated by the two remaining Sellers' Representatives. Sellers'
Representatives shall promptly notify Purchaser of the appointment of any
successor Sellers' Representative. In the event the Sellers' Representatives
incur any costs or expenses on behalf of the Sellers in performing their
duties in connection with the transactions contemplated herein, the Sellers
agree the Sellers' Representatives shall be reimbursed all such amounts first
from Sellers funds on deposit with them and second from the escrowed funds
held by the Escrow Agent.
(b) POWER OF ATTORNEY. Each Seller, by his execution of
this Agreement, hereby constitutes and appoints the Sellers' Representatives
his true and lawful attorney in fact, with full power in his name and on his
behalf:
(i) to receive on behalf of such Seller the
proceeds of sale of such Seller's Shares and
Warrants being sold hereunder, including the
escrow fund, to pay expenses therefrom and
to hold such proceeds subject to the terms
hereof and the instructions of such Seller
with respect to the ultimate disbursement
thereof;
(ii) to act on such Seller's behalf according to
the terms of this Agreement, including,
without limitation, the power: to amend this
Agreement in accordance with Section 12.2
(any such amendment to be made only with the
unanimous consent of the Sellers'
Representatives then currently designated)
or terminate this Agreement in accordance
with Article VIII; to waive compliance with
conditions precedent to the Sellers'
obligations set forth in Article VII; to
consent to the assignment of rights under
this Agreement in accordance with Section
12.11; to execute the Escrow Agreement and
to give instructions to the Escrow Agent
under the Escrow
32
Agreement; to give and receive notices on
behalf of all the Sellers; and to act on
their behalf in connection with any matter
as to which the Sellers are an "Indemnified
Party" under Article VIII hereof; including
the power and authority to compromise,
settle or consent to the entry of judgment
with respect to all Claims of Purchaser,
Purchaser's Affiliates and Company and the
power and authority to retain legal counsel
and other professionals and experts (it
being agreed that each Seller shall be
responsible for and shall promptly reimburse
the Sellers' Representatives for the
percentage of the costs and expense paid or
incurred by the Sellers' Representatives in
connection with claims equal to each
Seller's pro rata liability for such
claims).
(iii) in general, to do all things and to perform
all acts, including, without limitation,
executing and delivering all agreements,
certificates, receipts, instructions and
other instruments contemplated by or deemed
advisable in connection with this Agreement.
(iv) each Seller hereby gives and grants unto
each Sellers' Representative full authority
and power to do and perform any and all acts
necessary or incident to the performance and
execution of the powers granted pursuant to
this Section 12.12(b), and the power to do
and perform all acts authorized in this
section as fully to all intents and purposes
as such Seller might or could do if
personally present; and each Seller hereby
ratifies and confirms all that such Sellers'
Representatives shall lawfully do or cause
to be done by virtue of this Section
12.12(b).
Section 12.13 RESOLUTION OF DISPUTES.
(a) ARBITRATION. Any dispute, controversy or claim arising
out of or relating to this Agreement or any contract or agreement entered
into pursuant hereto or the performance by the parties of its or their terms
shall be settled by arbitration (irrespective of the amount in controversy)
held in St. Louis,
Missouri in accordance with the American Arbitration
Association Commercial Rules then in effect, except as specifically otherwise
provided in this Article 12.13. Except as modified herein the Federal
Arbitration Act, 9 USC ss. 1 et. seq. shall apply to any arbitration
hereunder.
(b) ARBITRATORS. If the matter in controversy (exclusive of
attorney fees and expenses) shall appear, as at the time of the demand for
arbitration, to exceed Two Million Dollars ($2,000,000), then the panel to be
appointed shall consist of three (3) independent and impartial arbitrators,
none of whom shall be appointed by either party; otherwise, one independent
and impartial arbitrator. All arbitrators shall be drawn in accordance with
the American Arbitration Commercial Rules.
(c) PROCEDURES, NO APPEAL. The arbitrator(s) shall allow
such discovery as the arbitrator(s) determine appropriate under the
circumstances and shall resolve the dispute as expeditiously as practicable,
and if reasonably practicable, within one hundred twenty (120) days after the
selection of the arbitrator(s). The arbitrator(s) shall give the parties
written notice of the decision, with the reasons therefor set out, and shall
have thirty (30) days thereafter to reconsider and modify such decision if
any party so requests within ten (10) days after the decision. Thereafter,
the decision of the arbitrator(s) shall be final, binding, and nonappealable
with respect to all persons, including (without limitation) persons who have
failed or refused to participate in the arbitration process.
(d) AUTHORITY. The arbitrator(s) shall have authority to
award relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorneys fees and expenses in such
manner as is determined to be appropriate by the arbitrator(s).
33
(e) ENTRY OF JUDGMENT. Judgment upon the award rendered by
the arbitrator(s) may be entered in any court having personam and subject
matter jurisdiction. Buyer and each Seller hereby submit to the in personam
jurisdiction of the Federal and District courts in St. Louis,
Missouri, for
the purpose of confirming any such award and entering judgment thereon.
(f) CONFIDENTIALITY. All proceedings under this Article 11,
and all evidence given or discovered pursuant hereto, shall be maintained in
confidence by all parties.
(g) CONTINUED PERFORMANCE. The fact that the dispute
resolution procedures specified in this Article 12.13 shall have been or may
be invoked shall not excuse any party from performing its obligations under
this Agreement and during the pendency of any such procedure all parties
shall continue to perform their respective obligations in good faith, subject
to any rights to terminate this Agreement that may be available to any party.
(h) TOLLING. All applicable statutes of limitation shall be
tolled while the procedures specified in this Article 12.3 are pending. The
parties will take such action, if any, required to effectuate such tolling.
(i) ESCROW AGENT UNNECESSARY. The parties agree that the
Escrow Agent is not a necessary party to and shall not be jointed in or made
party to any arbitration proceeding commenced under this Article 12.13.
IN WITNESS WHEREOF, Purchaser and Sellers have executed this Agreement
or caused this Agreement to be executed by either its authorized officer
thereunto duly authorized or himself, as the case may be, as of the date
first written above.
QUIXOTE TRANSPORTATION SAFETY, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------------------
Title: Chairman
-------------------------------------
34
SIGNATURE PAGE FOR
STOCK PURCHASE AGREEMENT
BY AND AMONG SURFACE SYSTEMS, INC.,
QUIXOTE TRANSPORTATION SAFETY, INC.
AND THE SHAREHOLDERS OF SURFACE SYSTEMS, INC. LISTED ON EXHIBIT A
DATED AUGUST 30, 2001
Horizon Partners, Ltd.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
-------------------------------
Its: Chairman
-------------------------------
/s/ M.E. Xxx Xxxxxx
-------------------------------
M.E. Xxx Xxxxxx
/s/ Xxxxxx Xxxxxxxx
-------------------------------
Xxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxx
-------------------------------
Xxxxxx Xxxxxx
/s/ Xxxx Xxxxxxx
-------------------------------
Xxxx Xxxxxxx
/s/ Xxx Xxxxxxx
-------------------------------
Xxx Xxxxxxx
/s/ Xxxx Xxxxxxx
-------------------------------
Xxxx Xxxxxxx
/s/ Xxxx Raw
-------------------------------
Xxxx Raw
/s/ Xxxx Xxxxxx
-------------------------------
Xxxx Xxxxxx
/s/ Xxx Xxxxx
-------------------------------
Xxx Xxxxx
/s/ Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxx
-------------------------------
Xxxxxx X. Xxxx
/s/ Xxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxx
-------------------------------
Xxxxxx Xxxxxx
/s/ Xxxx Xxxxxx
-------------------------------
Xxxx Xxxxxx
/s/ Xxx Xxxxxxxx
-------------------------------
Xxx Xxxxxxxx
/s/ Xxxxx Xxxxx
-------------------------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxx
-------------------------------
Xxxxx Xxxxx
/s/ Xxxx Xxxxxx
-------------------------------
Xxxx Xxxxxx
/s/ Xxxxx X. Xxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxx Xxxxx
-------------------------------
Xxxxx Xxxxx
/s/ Xxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx Xxxx
-------------------------------
Xxxxxx Xxxx
/s/ Xxxxxx X. Xxxxxxxxxx, Xx.
-------------------------------
Xxxxxx X. Xxxxxxxxxx, Xx.
/s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxx
/s/ Xxxxxx X. XxXxxxx
-------------------------------
Xxxxxx X. XxXxxxx
/s/ Xxxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxxx X. Xxxxxxxx
/s/ Xxxxx Xxxxxxxxx
-------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxx X. Xxxxxxxxxxx
-------------------------------
Xxx X. Xxxxxxxxxxx
/s/ Xxxx Xxxxx
-------------------------------
Xxxx Xxxxx
EXHIBIT A
LIST OF SELLERS (36)
Horizon Capital Partners I Limited Partnership
Xxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxxxxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxx
Xxxx Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxx
Xxxxx X. Xxxxxxxx
Xxxx Xxx
Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxx X. Xxxxxxxxxxx
Xxxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxxx
M. E. Xxx Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxx Xxxxx
Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Xxxxxxx X. XxXxxxx
Xxx X. Xxxxxxxx
Xxxxxx Xxxxx
Xxxxxx X. Xxxxxxxxxx, Xx.
Xxxxxx X. Xxxxxxx
Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxx
Xxxxxxx X. Xxxxxx
