EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
AMONG
UNITED STATIONERS SUPPLY CO.
AND
CORPORATE EXPRESS, INC.
AND
CORPORATE EXPRESS CALLCENTER SERVICES, INC.
Dated as of July 1, 2000
TABLE OF CONTENTS
SECTION PAGE
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ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares........................................................................1
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1 Amount of Purchase Price...........................................................................2
2.2 Payment of Price...................................................................................2
2.3 Determination of Purchase Price Adjustment.........................................................2
ARTICLE III
CLOSING AND TERMINATION
3.1 Closing Date.......................................................................................3
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
4.1 Organization and Good Standing.....................................................................3
4.2 Authorization of Agreement.........................................................................4
4.3 Capitalization.....................................................................................4
4.4 No Subsidiaries....................................................................................5
4.5 Corporate Records..................................................................................5
4.6 Conflicts; Consents of Third Parties...............................................................5
4.7 Ownership and Transfer of Shares...................................................................6
4.8 Interim Financial Statements .....................................................................6
4.9 No Undisclosed Liabilities.........................................................................6
4.10 Absence of Certain Developments...................................................................6
4.11 Taxes.............................................................................................8
4.12 Real Property....................................................................................10
4.13 Tangible Personal Property.......................................................................11
4.14 Intangible Property..............................................................................12
4.15 Contracts........................................................................................13
4.16 Employee Benefits................................................................................14
4.17 Labor............................................................................................16
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SECTION PAGE
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4.18 Litigation.......................................................................................17
4.19 Compliance with Laws; Permits....................................................................17
4.20 Environmental Matters............................................................................17
4.21 Insurance........................................................................................18
4.22 Receivables; Payables............................................................................18
4.23 Related Party Transactions.......................................................................18
4.24 Customers ......................................................................................19
4.25 Banks............................................................................................19
4.26 No Misrepresentation.............................................................................19
4.27 Financial Advisors...............................................................................19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Organization and Good Standing....................................................................19
5.2 Authorization of Agreement........................................................................20
5.3 Conflicts; Consents of Third Parties..............................................................20
5.4 Litigation........................................................................................20
5.5 Financial Advisors.................................................................................21
ARTICLE VI
COVENANTS
6.1 Consents..........................................................................................21
6.2 Other Actions......................................................................................21
6.3 No Solicitation...................................................................................21
6.4 Preservation of Records...........................................................................22
6.5 Publicity.........................................................................................22
6.6 Repayment/Forgiveness of Loans....................................................................22
6.7 Use of Name.......................................................................................23
6.8 Environmental Matters.............................................................................23
6.9 Employees & Employee Benefits.....................................................................23
6.10 Bonus Payment....................................................................................24
6.11 Grant Repayment..................................................................................24
ARTICLE VII
DOCUMENTS TO BE DELIVERED
7.1 Documents to be Delivered by the Seller...........................................................25
7.2. Documents to be Delivered by the Purchaser.......................................................25
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SECTION PAGE
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ARTICLE VIII
DOCUMENTS TO BE DELIVERED
8.1 Non-Tax Indemnification...........................................................................26
8.2 Limitations on Indemnification for Breaches of Representations and Warranties.....................27
8.3 Non-Tax Indemnification Procedures................................................................27
8.4 Tax Matters.......................................................................................28
8.5 Tax Treatment of Indemnity Payments...............................................................34
ARTICLE IX
MISCELLANEOUS
9.1 Payment of Sales, Use or Similar Taxes............................................................34
9.2 Survival of Representations and Warranties........................................................34
9.3 Expenses..........................................................................................34
9.4 Dispute Resolution................................................................................34
9.5 Specific Performance..............................................................................35
9.6 Further Assurances................................................................................35
9.7 Submission to Jurisdiction; Consent to Service of Process.........................................36
9.8 Entire Agreement; Amendments and Waivers..........................................................36
9.9 Governing Law.....................................................................................36
9.10 Table of Contents and Headings...................................................................36
9.11 Notices..........................................................................................36
9.12 Severability.....................................................................................37
9.13 Binding Effect; Assignment.......................................................................37
9.14 Certain Definitions..............................................................................37
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of July 1, 2000 (the
"Agreement"), among UNITED STATIONERS SUPPLY CO., an Illinois corporation
existing under the laws of Illinois (the "Purchaser"), and CORPORATE EXPRESS,
INC. a Colorado corporation existing under the laws of Colorado (the
"Seller")and CORPORATE EXPRESS CALLCENTER SERVICES, INC., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Seller owns an aggregate of 10 shares of
common stock, $1.00 par value (the "Shares"), which Shares constitute all of
the issued and outstanding shares of capital stock of the Company; and
WHEREAS, the Seller desires to sell to Purchaser, and
Purchaser desires to purchase from the Seller, the Shares for the purchase price
and upon the terms and conditions hereinafter set forth; and
WHEREAS, certain terms used in this Agreement are defined in
Section 10.1;
WHEREAS, Buyer and Seller agree to make a joint 338(h)(10)
election and file federal form 8023 within the time period prescribed by law;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties hereby agree
as follows:
Article I
SALE AND PURCHASE OF SHARES
1.1 SALE AND PURCHASE OF SHARES. On the CLOSING DATE
(HEREINAFTER DEFINED) the Seller shall sell, assign, transfer, convey and
deliver to the Purchaser, and the Purchaser shall purchase from the Seller,
the Shares. The purchase and sale of the Shares pursuant to this Agreement
shall be effective as of 12:01 am on July 1, 2000 (the "EFFECTIVE TIME").
Article II
PURCHASE PRICE AND PAYMENT
2.1 AMOUNT OF PURCHASE PRICE. The purchase price for the
Shares shall be an amount equal to $11,300,000 (the "PURCHASE PRICE").
2.2 PAYMENT OF PURCHASE PRICE. On the CLOSING DATE, the
Purchaser shall pay the Purchase Price to Seller, which shall be paid by the
delivery to Seller by wire transfer of immediately available funds into an
account designated by the Seller.
2.3 DETERMINATION OF PURCHASE PRICE ADJUSTMENT.
(a) Within 15 days following the CLOSING DATE, the Seller
shall prepare and deliver to the Purchaser a balance sheet of Company as at the
close of business on June 30, 2000 (the "CLOSING BALANCE SHEET"). The Closing
Balance Sheet shall be based upon the books and records of Company, shall be
prepared in accordance with GAAP applied on a basis consistent with that of the
preceding fiscal year, except as described on SCHEDULE 2.3(a) and shall present
fairly the financial position of Company as at June 30, 2000. PURCHASE PRICE
ADJUSTMENT shall be the difference between the Tangible Book Value ("TANGIBLE
BOOK VALUE") on the Closing Balance Sheet and $7.6 million, less $652,000.
SCHEDULE 2.3(a) contains a description of certain accounting adjustments to be
made (or not made as the case may be) in preparation of the Closing Balance
Sheet. Notwithstanding the fact that the Closing Balance Sheet shall show
intercompany loans payable by Company to Seller, such intercompany loans shall
be forgiven by Seller and therefore will not be included in calculating Tangible
Book Value.
(b) The Purchaser and Purchaser's regular independent
public accountants, Ernst & Young LLP ("Purchaser's Accountants"), shall have
the opportunity to examine the work papers, schedules and other documents
prepared or reviewed by Seller in connection with the preparation of the
CLOSING BALANCE SHEET and of the Purchase Price Adjustment referred to in
subparagraph (a) hereof and consult with those individuals involved in the
preparation of the CLOSING BALANCE SHEET. The Purchaser shall have a period
of forty (40) days after delivery of the CLOSING BALANCE SHEET and the
Purchase Price Adjustment to present in writing to Seller any objections the
Purchaser may have to any of the matters set forth therein, which objections
shall be set forth in reasonable detail. If no objections are raised within
such 40-day period, the CLOSING BALANCE SHEET and the determination of
PURCHASE PRICE ADJUSTMENT shall be deemed accepted and approved by the
Purchaser and by the Seller and payment to either the Seller or Purchaser, as
the case may be, shall be made no later than the fifth (5th) business day
following the expiration of such 40-day period.
If the Purchaser shall raise any objections within the
aforesaid 40-day period, Seller and Purchaser shall attempt to resolve the
matter or matters in dispute. If such dispute cannot be resolved by the
Purchaser and the Seller within forty (40) days after the delivery of the
CLOSING BALANCE SHEET and the Purchase Price Adjustment, then
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the specific matter in dispute shall be submitted to Deloitte & Touche, or,
if such firm declines to act in such capacity, such other firm of independent
public accountants mutually acceptable to the Purchaser and the Seller, which
firm shall make a final and binding determination as to such matter or
matters within sixty (60) days of their receipt thereof. Deloitte & Touche
shall send its written determination as to the correct PURCHASE PRICE
ADJUSTMENT to the Purchaser and the Seller. Payment to either the Seller or
Purchaser, as the case may be shall then take place no later than five (5)
business days following the receipt of such document by the Purchaser and the
Seller by wire transfer of immediately available funds to an account
designated by the recipient.
The parties agree to cooperate with each other and each
other's authorized representatives and with Deloitte & Touche in order that
any and all matters in dispute shall be resolved as soon as practicable and
that a final determination of the PURCHASE PRICE ADJUSTMENT shall be made.
The determination of Deloitte & Touche shall be binding upon the parties.
(c) PURCHASE PRICE ADJUSTMENT will not be subject to the
Deductible in Section 8.2(a).
(d) The fees and expenses of Deloitte & Touche, or any
other accounting firm selected by the Purchaser and the Seller to resolve
disputes pursuant to subparagraph (b) above shall be paid one-half by the
Purchaser and one-half by the Seller.
Article III
CLOSING
3.1 CLOSING DATE.
(a) The closing of the sale and purchase of the Shares
provided for in Section 1.1 hereof (the "Closing") shall take place at 12:01
a.m. on July 1, 2000, or on such other date as the Seller and the Purchaser may
designate in writing. The date on which the Closing shall be held is referred to
in this Agreement as the "CLOSING DATE."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser that:
4.1 ORGANIZATION AND GOOD STANDING.
Each of the Company and the Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its
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incorporation as set forth above and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now conducted. The Company is duly qualified or authorized to do
business as a foreign corporation and is in good standing under the laws of
each jurisdiction in which it owns or leases real property and each other
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to have such qualification would not have a Material Adverse Effect.
4.2 AUTHORIZATION OF AGREEMENT. The Seller has all
requisite power, authority and legal capacity to execute and deliver this
Agreement and each other agreement, document, or instrument or certificate
contemplated by this Agreement or to be executed by the Seller in connection
with the consummation of the transactions contemplated by this Agreement (the
"Seller Documents"), and to consummate the transactions contemplated hereby
and thereby. This Agreement has been, and each of the Seller Documents will
be at or prior to the Closing, duly and validly executed and delivered by the
Seller and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each of the
Seller Documents when so executed and delivered will constitute, legal, valid
and binding obligations of the Seller, enforceable against the Seller in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
3,000 shares of Common Stock, $1.00 par value, (the "Common Stock"). 10
Shares represent all of the issued and outstanding Shares of Common Stock
which were duly authorized for issuance and are validly issued, fully paid
and non-assessable and were not issued in violation of any preemptive rights.
(b) There is no existing option, warrant, call, right,
commitment or other agreement of any character to which the Seller or the
Company is a party requiring, and there are no securities of the Company
outstanding which upon conversion or exchange would require, the issuance,
sale or transfer of any additional shares of capital stock or other equity
securities of the Company or other securities convertible into, exchangeable
for or evidencing the right to subscribe for or purchase shares of capital
stock or other equity securities of the Company. Neither the Seller nor the
Company is a party to any voting trust or other voting agreement with respect
to any of the shares of Common Stock or to any agreement relating to the
issuance, sale, redemption, transfer or other disposition of the capital
stock of the Company. The Company has no voting indebtedness. The Company has
no stock appreciation or other rights payable based upon an increase in the
value of its equity.
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4.4 NO SUBSIDIARIES. The Company does not, directly or
indirectly, own any stock or other equity interest in any other Person.
4.5 CORPORATE RECORDS.
(a) The Seller has delivered to the Purchaser true, correct
and complete copies of the certificate of incorporation (certified by the
Secretary of State or other appropriate official of the applicable jurisdiction
of organization) and by-laws (certified by the secretary, assistant secretary or
other appropriate officer) or comparable organizational documents of the
Company.
(b) The minute books of the Company previously made available
to the Purchaser contain complete and accurate records of all meetings and
accurately reflect all other corporate action of the stockholders and board of
directors (including committees thereof) of the Company. The stock certificate
books and stock transfer ledgers of the Company previously made available to the
Purchaser are true, correct and complete. All stock transfer taxes levied or
payable with respect to all transfers of shares of the Company prior to the date
hereof have been paid and appropriate transfer tax stamps affixed.
4.6 CONFLICTS; CONSENTS OF THIRD PARTIES. Except as set forth
on Schedule 4.6:
(a) Neither the execution and delivery by the Seller of
this Agreement and the Seller Documents, the consummation of the transactions
contemplated hereby or thereby, nor compliance by the Seller with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach
of, any provision of the certificate of incorporation or by-laws or
comparable organizational documents of the Company or Seller; (ii) conflict
with, violate, result in the breach or termination of, or constitute a
default under any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Company or Seller is a party or
by which any of them or any of their respective properties or assets is
bound; (iii) violate any statute, rule, regulation, order or decree of any
GOVERNMENTAL BODY or authority by which the Company or Seller is bound; or
(iv) result in the creation of any LIEN upon the properties or assets of the
Company except, in case of clauses (ii), (iii) and (iv), for such violations,
breaches or defaults as would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any
Person or GOVERNMENTAL BODY is required on the part of the Seller or the
Company in connection with the execution and delivery of this Agreement or
the Seller Documents, or the compliance by the Seller or the Company, as the
case may be, with any of the provisions hereof or thereof including
Purchaser's rights under this Agreement (e.g., without limitation, no
assignment necessary for the 000 Xxxxx Xxxx Xxxxxx, Xxxxxx-Xxxxx Lease
Agreement with the Redevelopment Authority for the City of Xxxxxx-Xxxxx)
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(c) All grants, loans or similar financial obligations of
the Company to any federal, state or local government entity are set forth on
SCHEDULE 4.6(C) ("Grants"). Seller has complied with and fulfilled all
requirements under the Grants, except for the 1000 full time employment job
provisions of the Xxxxxx-Xxxxx Equipment Grant.
4.7 OWNERSHIP AND TRANSFER OF SHARES. Except as set forth
on Schedule 4.7, the Seller is the record and beneficial owner of the Shares,
free and clear of any and all LIENS. The Seller has the corporate power and
authority to sell, transfer, assign and deliver such Shares as provided in
this Agreement, and such delivery will convey to the Purchaser good and
marketable title to such Shares, free and clear of any and all LIENS.
4.8 INTERIM FINANCIAL STATEMENTS. The Seller has delivered
to the Purchaser copies of the unaudited balance sheet of the Company as at
May 31, 2000 and the related statement of income of the Company for the 5
month period then ended (such statements are referred to herein as the
"INTERIM FINANCIAL STATEMENTS"). Except as described on SCHEDULE 4.8, or as
set forth on SCHEDULE 2.3, each of the INTERIM FINANCIAL STATEMENTS is, and
the CLOSING BALANCE SHEET when delivered will be, complete and correct in all
material respects, has been prepared in accordance with GAAP and in
conformity with the practices consistently applied by the Company without
modification of the accounting principles used in the preparation thereof and
presents fairly the financial position and results of operations of the
Company as at the dates and for the periods indicated.
4.9 NO UNDISCLOSED LIABILITIES. The Company has no
indebtedness, obligations or liabilities of any kind (whether accrued,
absolute, contingent or otherwise, and whether due or to become due) that
would have been required to be reflected in, reserved against or otherwise
described on the INTERIM FINANCIAL STATEMENTS or in the notes thereto in
accordance with GAAP which was not fully reflected in, reserved against or
otherwise described in the INTERIM FINANCIAL STATEMENTS or was not incurred
in the ordinary course of business consistent with past practice, except as
set forth on SCHEDULE 2.3.
4.10 ABSENCE OF CERTAIN DEVELOPMENTS. Except as expressly
contemplated by this Agreement or as set forth on SCHEDULE 4.10, since
December 31, 1999:
(i) there has not been any MATERIAL ADVERSE CHANGE nor has
there occurred any event which is reasonably likely to result in a MATERIAL
ADVERSE CHANGE;
(ii) there has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the property and assets
of the Company having a replacement cost of more than $25,000 for any single
loss or $100,000 for all such losses;
(iii) there has not been any declaration, setting aside or
payment of any dividend or other distribution in respect of any shares of
capital stock of the Company or
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any repurchase, redemption or other acquisition by the Seller or the Company
of any outstanding shares of capital stock or other securities of, or other
ownership interest in, the Company;
(iv) the Company has not awarded or paid any bonuses to
employees of the Company, except to the extent accrued on the INTERIM FINANCIAL
STATEMENTS or already paid out, or entered into any employment, deferred
compensation, severance or similar agreement (nor amended any such agreement) or
agreed to increase the compensation payable or to become payable by it to any of
the Company's directors, officers, employees, agents or representatives or
agreed to increase the coverage or benefits available under any severance pay,
termination pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with such directors, officers, employees, agents or
representatives (other than normal increases in the ordinary course of business
consistent with past practice and that in the aggregate have not resulted in a
material increase in the benefits or compensation expense of the Company) ;
(v) there has not been any change by the Company in accounting
or tax reporting principles, methods or policies, except as set forth on
SCHEDULE 2.3 or SCHEDULE 4.8;
(vi) the Company has not entered into any transaction or
CONTRACT or conducted its business other than in the ordinary course consistent
with past practice;
(vii) the Company has not failed to promptly pay and discharge
current liabilities except where disputed in good faith by appropriate
proceedings and properly reflected in the Company's books and records;
(viii) the Company has not made any loans, advances or capital
contributions to, or investments in, any Person or paid any fees or expenses to
the Seller or any AFFILIATE of the Seller except in accordance with the past
practices and in the ordinary course of business;
(ix) the Company has not mortgaged, pledged or subjected to
any LIEN any of its assets, or acquired any assets or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any assets of the
Company, except for assets acquired or sold, assigned, transferred, conveyed,
leased or otherwise disposed of in the ORDINARY course of business consistent
with past practice;
(x) the Company has not discharged or satisfied any LIEN,
or paid any obligation or liability (fixed or contingent), except in the
ordinary course of business consistent with past practice and which, in the
aggregate, would not be material to the Company;
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(xi) the Company has not canceled or compromised any debt
or claim or amended, canceled, terminated, relinquished, waived or released
any CONTRACT or right except in the ordinary course of business consistent
with past practice and which, in the aggregate, would not be material to the
Company;
(xii) the Company has not made or committed to make any
capital expenditures or capital additions or betterments in excess of $50,000
individually or $250,000 in the aggregate;
(xiii) the Company has not instituted or settled any
material Legal Proceeding;
(xiv) the Company has collected accounts receivable in the
ordinary course consistent with past practices; and
(xv) neither the Seller nor the Company has agreed to do
anything set forth in this Section 4.10.
4.11 TAXES.
(a) Except as set forth on SCHEDULE 4.11, (A) all TAX
RETURNS required to be filed by or on behalf of the Company or any AFFILIATED
Group of which the Company is or was a member have been properly prepared and
duly and timely filed with the appropriate taxing authorities in all
jurisdictions in which such TAX RETURNS are required to be filed (after
giving effect to any valid extensions of time in which to make such filings),
and all such TAX RETURNS were true, complete and correct in all material
respects; (B) all amounts shown on such TAX RETURNS (including interest and
penalties) as due from the Company either directly, as part of the
consolidated TAX RETURN of another taxpayer, or otherwise, have been fully
and timely paid, and adequate reserves or accruals for TAXES have been
provided in the INTERIM FINANCIAL STATEMENTS with respect to any period for
which TAX RETURNS have not yet been filed or for which Taxes are not yet due
and owing; and (C) no agreement, waiver or other document or arrangement
extending or having the effect of extending the period for assessment or
collection of TAXES (including, but not limited to, any applicable statute of
limitation), has been executed or filed with the IRS or any other taxing
authority by or on behalf of the Company and no power of attorney with
respect to any Tax matter is currently in force.
(b) The Company has complied in all material respects with
all applicable laws, rules and regulations relating to the payment and
withholding of TAXES and has duly and timely withheld from employee salaries,
wages and other compensation and has paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over for all
periods under all applicable laws.
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(c) Purchaser has received complete copies of (A) all
federal, state, local and foreign income or franchise TAX RETURNS of the
Company (or, in the case of TAX RETURNS filed for an AFFILIATED Group, the
portion of such consolidated TAX RETURNS relating to the Company) relating to
the taxable periods within the last three years and (B) any audit report
issued within the last three years relating to TAXES due from or with respect
to the Company its income, assets or operations. All income and franchise TAX
RETURNS filed by or on behalf of the Company for the taxable years ended on
the respective dates set forth on SCHEDULE 4.11 have been examined by the
relevant taxing authority or the statute of limitations with respect to such
TAX RETURNS has expired.
(d) SCHEDULE 4.11 lists all material types of TAXES paid
and material types of TAX RETURNS filed by or on behalf of the Company and
indicates those TAXES with respect to which the Company is or has been a
member of an AFFILIATED Group. Except as set forth on SCHEDULE 4.11, no claim
has been made by a taxing authority in a jurisdiction where the Company does
not file TAX RETURNs such that it is or may be subject to taxation by that
jurisdiction.
(e) Except as set forth on SCHEDULE 4.11, all deficiencies
asserted or assessments made as a result of any examinations by the IRS or
any other taxing authority of the TAX RETURNS of or covering or including
Seller or the Company have been fully paid, and there are no other audits or
investigations by any taxing authority in progress, nor have the Seller or
the Company received any notice from any taxing authority that it intends to
conduct such an audit or investigation. No issue has been raised by a
federal, state, local or foreign taxing authority in any prior examination
which, by application of the same or similar principles, could reasonably be
expected to result in a proposed deficiency for any subsequent taxable period.
(f) Except as set forth on SCHEDULE 4.11, neither the
Company nor any other Person (including Seller) on behalf of the Company has
(A) filed a consent pursuant to Section 341(f) of the CODE or agreed to have
Section 341(f)(2) of the CODE apply to any disposition of a subsection (f)
asset (as such term is defined in Section 341(f)(4) of the CODE) owned by the
Company, (B) agreed to or is required to make any adjustments pursuant to
Section 481(a) of the CODE or any similar provision of state, local or
foreign law by reason of a change in accounting method initiated by the
Company or has any knowledge that the Internal Revenue Service has proposed
any such adjustment or change in accounting method, or has any application
pending with any taxing authority requesting permission for any changes in
accounting methods that relate to the business or operations of the Company,
(C) executed or entered into a closing agreement pursuant to Section 7121 of
the CODE or any predecessor provision thereof or any similar provision of
state, local or foreign law with respect to the Company, or (D) requested any
extension of time within which to file any TAX RETURN, which TAX RETURN has
since not been filed.
(g) No property owned by the Company is (i) property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8)
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of the Internal Revenue CODE of 1954, as amended and in effect immediately
prior to the enactment of the Tax Reform Act of 1986, (ii) "tax-exempt use
property" within the meaning of Section 168(h)(1) of the CODE or (iii) is
"tax-exempt bond financed property" within the meaning of Section 168(g) of
the CODE.
(h) The Seller is not a foreign person within the meaning
of Section 1445 of the CODE.
(i) On the Closing Date, Seller shall cause the termination
and cancellation of any duties and obligations of the Company under any tax
sharing, tax allocation, tax indemnity or other similar agreement and shall
cause the Release of the Company from any liabilities with respect to any
such Agreement.
(j) There is no contract, agreement, plan or arrangement
covering any person that, individually or collectively, could give rise to
the payment of any amount that would not be deductible by the Buyer, the
AFFILIATES or their respective AFFILIATES by reason of Section 280G of the
CODE, or would constitute compensation in excess of the limitation set forth
in Section 162(m) of the CODE.
(k) The Company is not subject to any private letter ruling
of the IRS or comparable rulings of other taxing authorities.
(l) There are no LIENS as a result of any unpaid TAXES upon
any of the assets of the Company.
(m) Except as set forth on SCHEDULE 4.11, the Company has
no elections in effect for federal income tax purposes under Sections 108,
168, 338, 441, 463, 472, 1017, 1033 or 4977 of the CODE.
4.12 REAL PROPERTY.
(a) SCHEDULE 4.12(A) sets forth a complete list of (i) all
real property and interests in real property owned in fee by the Company
(individually, an "Owned Property" and collectively, the "Owned Properties"),
and (ii) all real property and interests in real property leased by the
Company (individually, a "Real Property Lease" and the real properties
specified in such leases, together with the Owned Properties, being referred
to herein individually as a "COMPANY PROPERTY" and collectively as the
"Company Properties") as lessee or lessor. The Company has good and
marketable fee title to all Owned Property, free and clear of all LIENS of
any nature whatsoever except (A) LIENS set forth on SCHEDULE 4.12(A) and (B)
Permitted Exceptions. The COMPANY PROPERTY constitutes all interests in real
property currently used or currently held for use in connection with the
business of the Company and which are necessary for the continued operation
of the business of the Company as the business is currently conducted. The
Company has a valid and enforceable leasehold interest under each of the Real
Property Leases, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and
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subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity), and the
Company has not received any written notice of any default or event that with
notice or lapse of time, or both, would constitute a default by the Company
under any of the Real Property Leases. All of the COMPANY PROPERTY,
buildings, fixtures and improvements thereon owned or leased by the Company
are in good operating condition and repair (subject to normal wear and tear).
The Seller has delivered or otherwise made available to the Purchaser true,
correct and complete copies of (i) all deeds, title reports and surveys for
the Owned Properties and (ii) the Real Property Leases, together with all
amendments, modifications or supplements, if any, thereto.
(b) The Company has all material certificates of occupancy
and Permits of any GOVERNMENTAL BODY necessary or useful for the current use
and operation of each COMPANY PROPERTY, and the Company has fully complied
with all material conditions of the Permits applicable to them. No default or
violation, or event that with the lapse of time or giving of notice or both
would become a default or violation, has occurred in the due observance of
any Permit. No material Permit will be void or terminable nor will any term
thereof be shortened, as a result of the change of control of the Company.
(c) There does not exist any actual or, to the best
knowledge of the Company and Seller, threatened or contemplated condemnation
or eminent domain proceedings that affect any COMPANY PROPERTY or any part
thereof, and neither the Seller nor the Company has received any notice, oral
or written, of the intention of any GOVERNMENTAL BODY or other Person to take
or use all or any part thereof.
(d) Neither the Seller nor the Company has received any
written notice from any insurance company that has issued a policy with
respect to any COMPANY PROPERTY requiring performance of any structural or
other repairs or alterations to such COMPANY PROPERTY.
(e) The Company is not obligated under or a party to, any
option, right of first refusal or other CONTRACTUAL right to purchase,
acquire, sell, LEASE, assign or dispose of any real estate or any portion
thereof or interest therein.
4.13 TANGIBLE PERSONAL PROPERTY.
(a) SCHEDULE 4.13(a) sets forth all capital assets of the
Company as of June 30, 2000, which assets constitute all capital assets
necessary to run the Company.
(b) SCHEDULE 4.13(b) sets forth all leases of personal
property ("Personal Property Leases") involving annual payments in excess of
$25,000 relating to personal property used in the business of the Company or
to which the Company is a party or by which the properties or assets of the
Company is bound. The Seller has delivered or otherwise made available to the
Purchaser true, correct and complete copies of the
11
Personal Property Leases, together with all amendments, modifications or
supplements thereto. Except as set forth on SCHEDULE 4.13(c), no Personal
Property necessary to operate the Company's business is owned or leased by
the Seller. As to those Personal Property Leases set forth on SCHEDULE
4.13(c) Seller represents that it has the authority to provide Purchaser with
access to the subject equipment for a period of one year from the date hereof
for all leased property and three months for telecommunication services under
the MCI agreement.
(c) Except as set forth in SCHEDULE 4.13(c), the Company has a
valid leasehold interest under each of the Personal Property Leases, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and there is no
default under any Personal Property Lease by the Company or, to the best
knowledge of the Company and Seller, by any other party thereto, and to
Company's and Seller's knowledge no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default thereunder.
(d) Except as set forth on SCHEDULE 4.13(d), the Company has
good and marketable title to all of the items of tangible personal property
reflected in the INTERIM FINANCIAL STATEMENTS (except as sold or disposed of
subsequent to the date thereof in the ordinary course of business consistent
with past practice), free and clear of any and all LIENS other than the
Permitted Exceptions. All such items of tangible personal property which,
individually or in the aggregate, are material to the operation of the business
of the Company are in good condition and in a state of good maintenance and
repair (ordinary wear and tear excepted) and are suitable for the purposes used.
(e) All of the items of tangible personal property used by the
Company under the Personal Property Leases are in good condition and repair
(ordinary wear and tear excepted) and are suitable for the purposes used. The
Company's owned and leased personal property constitute all the personal
property reasonably necessary for the general operation of the Company's
business.
4.14 INTANGIBLE PROPERTY.
(a) SCHEDULE 4.14(a) contains a complete and correct list
of each patent, trademark, trade name, service xxxx and copyright owned or
used by Company as well as all registrations thereof and pending applications
therefor, and each license or other agreement relating thereto. Except as set
forth on SCHEDULE 4.14(a), each of the foregoing is owned by the party shown
on such Schedule as owning the same, free and clear of all mortgages, claims,
Liens, security interests, charges and encumbrances and is in good standing
and not the subject of any challenge. There have been no claims made and
neither the Seller or the Company has received any notice or otherwise knows
or has reason to believe that any of the foregoing is invalid or conflicts
with the asserted rights of others. The Company possesses all patents, patent
licenses, trade names, trademarks, service marks, brand marks, brand names,
copyrights, know-how, formulate and other
12
proprietary and trade rights necessary for the conduct of its business as now
conducted, not subject to any restrictions and without any known conflict
with the rights of others and the Company has not forfeited or otherwise
relinquished any such patent, patent license, trade name, trademark, service
xxxx, brand xxxx, brand name, copyright, know-how, formulate or other
proprietary right necessary for the conduct of its business as conducted on
the date hereof. The Company is not under any obligation to pay any royalties
or similar payments in connection with any license to any the Seller or any
AFFILIATE thereof.
(b) Except as set forth on SCHEDULE 4.14.(b) the Company has
all rights to any Source Code whether developed internally or externally used or
needed in the conduct of its business.
4.15 CONTRACTS. SCHEDULE 4.15 sets forth all of the
following CONTRACTS to which the Company is a party or by which it is bound
(collectively, the "CONTRACTS"): (i) CONTRACTs with the Seller or any current
officer or director of the Seller or the Company; (ii) CONTRACTs with any
labor union or association representing any employee of the Company; (iii)
CONTRACTS pursuant to which any party is required to purchase or sell a
stated portion of its requirements or output from or to another party; (iv)
CONTRACTS for the sale of any of the assets of the Company other than in the
ordinary course of business consistent with past practice or for the grant to
any person of any preferential rights to purchase any of its assets; (v)
joint venture agreements; (vi) material CONTRACTs containing covenants of the
Company not to compete in any line of business or with any person in any
geographical area or covenants of any other person not to compete with the
Company in any line of business or in any geographical area; (vii) CONTRACTs
relating to the acquisition by the Company of any operating business or the
capital stock of any other person; (viii) CONTRACTS relating to the borrowing
of money; or (ix) any other CONTRACTS, other than Real Property Leases, which
involve the expenditure or receipt of more than $150,000 in the aggregate or
$25,000 annually or require performance by any party more than one year from
the date hereof. There have been made available to the Purchaser, its
AFFILIATES and their representatives true and complete copies of all of the
CONTRACTS. Except as disclosed on SCHEDULE 4.15, all CONTRACTS related to the
Company are in its name. Except as set forth on SCHEDULE 4.15, all of the
CONTRACTS and other agreements are in full force and effect and are the
legal, valid and binding obligations of the Company, enforceable against it
in accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding at law
or in equity). Except as set forth on SCHEDULE 4.15, the Company is not in
default in any material respect under any CONTRACTS, nor, to the knowledge of
the Company and the Seller, is any other party to any CONTRACT in default
thereunder in any material respect.
4.16 Employee Benefits.
(a) SCHEDULE 4.16(a) sets forth a complete and correct list of
all "employee benefit plans", as defined in Section 3(3) of the Employee
Retirement Income
13
Security Act of 1974, as amended ("ERISA"), and any other pension plans or
employee benefit arrangements, programs or payroll practices (including,
without limitation, severance pay, vacation pay, company awards, salary
continuation for disability, sick leave, retirement, deferred compensation,
bonus or other incentive compensation, stock purchase arrangements or
policies, hospitalization, medical insurance, life insurance and scholarship
programs) maintained or contributed to by the Company or to which the Company
contributes or is obligated to contribute or has any liability thereunder
with respect to employees of the Company ("Employee Benefit Plans"). There is
no liability which could arise to Purchaser or the Company from any employee
benefit plan, as defined in Section 3(3) of ERISA, or any other pension plans
or employee benefit arrangements, programs, payroll practices (including,
without limitation, severance pay, vacation pay, company awards, salary
continuation for disability, sick leave, retirement, deferred compensation,
bonus or other incentive compensation, stock purchase arrangements or
policies, hospitalization, medical insurance, life insurance and scholarship
programs) which the Company or any trade or business (whether or not
incorporated) which are under control, or which are treated as a single
employer, with Company under Section 414(b),(c), (m) or (o) of the CODE
("ERISA Affiliate") maintained or contributed to or with respect to which the
Company or an ERISA Affiliate has any liability other than liability to the
extent accrued on the Closing Balance Sheet from plans set forth on SCHEDULE
4.16(A) specifically identified as assumed liabilities by the Company
("Assumed LIABILITIES").
(b) The Company neither has nor would have any withdrawal or other
liability (contingent or otherwise) under Title IV of ERISA with respect to any
plan subject to 4063 or 4064 of ERISA or multiemployer plan (as defined in
Section 4001(a)(3) of ERISA) if the Shares had not been purchased from Seller at
the EFFECTIVE TIME in accordance with the terms of this Agreement.
(c) Each of the Employee Benefit Plans and Pension Plans intended to
qualify under Section 401 of the CODE ("Qualified Plans") so qualify and the
trusts maintained thereto are exempt from federal income taxation under Section
501 of the CODE, and, except as disclosed on SCHEDULE 4.16(c), nothing has
occurred with respect to the operation of any such plan which could cause the
loss of such qualification or exemption or the imposition of any liability,
penalty or tax under ERISA or the CODE.
(d) There are no Employee Benefit Plans which are defined benefit plans
or money purchase pension plans. All contributions and premiums required by law
or by the terms of any Employee Benefit Plans or any agreement or commitment
relating thereto have been timely made.
(e) Except as disclosed on SCHEDULE 4.16(e), the benefit liabilities,
as defined in Section 4001(a)(16) of ERISA, of each employee pension plan
subject to Title IV of ERISA maintained, contributed to or with respect to which
the Company or any ERISA Affiliate has any liability ("Pension Plan") using the
actuarial assumptions that would be used by the Pension Benefit Guaranty
Corporation (the "PBGC") in the event it terminated each such
14
plan do not exceed the fair market value of the assets of each such plan and
would not result in any liability to the Company. The liabilities of each
Employee Benefit Plan that has been terminated or otherwise wound up, have
been fully discharged in full compliance with applicable Law.
(f) There has been no "reportable event" as that term is defined in
Section 4043 of ERISA and the regulations thereunder with respect to any of
the Employee Benefit Plans or Pension Plans subject to Title IV of ERISA
which would require the giving of notice, or any event requiring notice to be
provided under Section 4041(c)(3)(C) or 4063(a) of ERISA.
(g) There has been no violation of ERISA with respect to the filing
of applicable returns, reports, documents and notices regarding any of the
Employee Benefit Plans or Pension Plans with the Secretary of Labor or the
Secretary of the Treasury or the furnishing of such notices or documents to
the participants or beneficiaries of the Employee Benefit Plans or Pension
Plans.
(h) True, correct and complete copies of the following documents,
with respect to each of the Employee Benefit Plans, have been delivered to
the Purchaser (A) any plans and related trust documents, and all amendments
thereto, (B) the most recent Forms 5500 for the past three years and
schedules thereto, (C) the most recent financial statements for the past
three years, (D) the most recent Internal Revenue Service determination
letter, (E) the most recent summary plan descriptions (including letters or
other documents updating such descriptions) and (F) written descriptions of
all non-written agreements relating to the Employee Benefit Plans.
(i) There are no pending LEGAL PROCEEDINGS which have been asserted
or instituted against any of the Employee Benefit Plans or Pension Plans, the
assets of any such plans or the Company, or the plan administrator or any
fiduciary of the Employee Benefit Plans or Pension Plans with respect to the
operation of such plans (other than routine, uncontested benefit claims), and
there are no facts or circumstances which could form the basis for any such
LEGAL PROCEEDING.
(j) Each of the Employee Benefit Plans and Pension Plans has been
maintained, in all material respects, in accordance with its terms and all
provisions of applicable Law. All amendments and actions required to bring
each of the Employee Benefit Plans and Pension Plans into conformity in all
material respects with all of the applicable provisions of ERISA and other
applicable Laws have been made or taken except to the extent that such
amendments or actions are not required by law to be made or taken until a
date after the CLOSING DATE and are disclosed on SCHEDULE 4.16(j).
(k) The Company and any ERISA Affiliate which maintains a "benefits
plan" within the meaning of Section 5000(b)(1) of ERISA, have complied with
the notice and continuation requirements of Section 4980B of the CODE or Part
6 of Title I of ERISA and the applicable regulations thereunder.
15
(l) None of the Seller, any ERISA Affiliate or any organization to
which any is a successor or parent corporation, has divested any business or
entity maintaining or sponsoring a defined benefit pension plan having
unfunded benefit liabilities (within the meaning of Section 4001(a)(18) of
ERISA) or transferred any such plan to any person other than the Seller or
any ERISA Affiliate during the five-year period ending on the CLOSING DATE.
(m) Neither the Company nor "party in interest" or "disqualified
person" with respect to the Employee Benefit Plans or Pension Plans has
engaged in a "prohibited transaction" within the meaning of Section 4975 of
the CODE or Section 406 of ERISA.
(n) None of the Company, or any ERISA Affiliate has terminated any
Employee Benefit Plan or Pension Plan subject to Title IV of ERISA without
having first obtained a favorable ruling from the IRS, or incurred any
outstanding liability under Section 4062 of ERISA to the Pension Benefit
Guaranty Corporation or to a trustee appointed under Section 4042 of ERISA.
(o) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (either alone or upon
the occurrence of any additional or subsequent events) will (i) result in any
payment becoming due to any employee of Company; (ii) increase any benefits
otherwise payable under any Employee Benefit Plan or Pension Plan; or (iii)
result in the acceleration of the time of payment or vesting of any such
benefits.
(p) No stock or other security issued by Company or any ERISA
Affiliate forms a part of the assets of any Employee Benefit Plan or Pension
Plan.
4.17 LABOR.
(a) The Company is not party to any labor or collective
bargaining agreement and there are no labor or collective bargaining
agreements which pertain to employees of the Company.
(b) No employees of the Company are represented by any
labor organization. No labor organization or group of employees of the
Company has made a pending demand for recognition, and there are no
representation proceedings or petitions seeking a representation proceeding
presently pending or, to the best knowledge of the Company or the Seller,
threatened to be brought or filed, with the National Labor Relations Board or
other labor relations tribunal. There is no organizing activity involving the
Company pending or, to the best knowledge of the Company or the Seller,
threatened by any labor organization or group of employees of the Company.
(c) There are no (i) strikes, work stoppages, slowdowns,
lockouts or arbitrations or (ii) material grievances or other labor disputes
pending or, to the best knowledge of the Seller, threatened against or
involving the Company. There are no
16
unfair labor practice charges, grievances or complaints pending or, to the
best knowledge of the Company or the Seller, threatened by or on behalf of
any employee or group of employees of the Company.
4.18 LITIGATION. Except as set forth in SCHEDULE 4.18, there
is no suit, action, proceeding, investigation, claim or order pending or, to the
knowledge of the Seller or the Company, overtly threatened against the Company
or the Seller (or to the knowledge of the Seller or the Company, pending or
threatened, against any of the officers, directors or key employees of the
Company with respect to their business activities on behalf of the Company), or
to which the Seller or the Company is otherwise a party, which, if adversely
determined, would have a Material Adverse Effect on the Company or the
consummation of the transaction contemplated hereby, before any court, or before
any governmental department, commission, board, agency, or instrumentality; nor
to the knowledge of the Seller or the Company is there any reasonable basis for
any such action, proceeding, or investigation. Neither the Seller nor the
Company is subject to any judgment, order or decree of any court or governmental
agency except to the extent the same are not reasonably likely to have a
Material Adverse Effect on the Company or the consummation of the transaction
contemplated hereby and the Company is not engaged in any legal action to
recover monies due it or for damages sustained by it.
4.19 COMPLIANCE WITH LAWS; PERMITS.
(a) The Company is in compliance with all LAWs applicable to
the Company or to the conduct of the business or operations of the Company or
the use of its properties (including any leased properties) and assets, except
for such non-compliances as would not, individually or in the aggregate, have a
Material Adverse Effect. The Company has all governmental permits and approvals
from state, federal or local authorities which are required for the Company to
operate its business, except for those the absence of which would not,
individually or in the aggregate, have a Material Adverse Effect.
4.20 ENVIRONMENTAL MATTERS.
(a) the operations of the Company are in compliance with all
applicable ENVIRONMENTAL LAWS and all permits issued pursuant to ENVIRONMENTAL
LAWS or otherwise;
(b) the Company has obtained all permits required under all
applicable ENVIRONMENTAL LAWS necessary to operate its business;
(c) the Company is not the subject of any outstanding written
order or CONTRACT with any governmental authority or person respecting (i)
ENVIRONMENTAL LAWS, (ii) Remedial Action or (iii) any Release or threatened
Release of a HAZARDOUS MATERIAL;
17
(d) the Company has not received any written communication
alleging either or both that the Company may be in violation of any
ENVIRONMENTAL LAW, or any permit issued pursuant to ENVIRONMENTAL LAW, or may
have any liability under any ENVIRONMENTAL LAW;
(e) to Seller's AND COMPANY'S knowledge, the Company does
not have any current contingent liability in connection with any Release of
any HAZARDOUS MATERIALS into the indoor or outdoor environment (whether
on-site or off-site);
(f) to the Seller's AND COMPANY'S knowledge, there are no
investigations of the business, operations, or currently or previously owned,
operated or leased property of the Company pending or threatened which could
lead to the imposition of any liability pursuant to ENVIRONMENTAL LAW;
(g) there is not located at any of the properties of the
Company any (i) underground storage tanks, (ii) asbestos-containing material
or (iii) equipment containing polychlorinated biphenyls; and,
(h) the Seller has provided to the Purchaser all
environmentally related audits, studies, reports, analyses, and results of
investigations that have been performed with respect to the currently or
previously owned, leased or operated properties of the Company.
4.21 INSURANCE. Intentionally deleted - no transfer of
policies.
4.22 RECEIVABLES; PAYABLES.
(a) All accounts receivable of the Company have arisen from
bona fide transactions in the ordinary course of business consistent with past
practice. The accounts receivable balance of the Company reflected on the
INTERIM FINANCIAL STATEMENTS are good and collectible at the aggregate recorded
amounts thereof , net of any applicable reserve for returns or doubtful accounts
reflected thereon, RESERVES IN RESPECT THEREOF are adequate and were calculated
and recorded in a manner consistent with past practice, except as described on
SCHEDULE 2.3, and in accordance with GAAP consistently applied.
(b) All accounts payable of the Company reflected in the
INTERIM FINANCIAL STATEMENTS and the CLOSING BALANCE SHEET when delivered are or
will be the result of bona fide transactions in the ordinary course of business.
4.23 RELATED PARTY TRANSACTIONS. Any intercompany loans made
to Company will be forgiven by Seller on or prior to Closing to the extent
included in the Purchase Price pursuant to Section 2.3; neither the Seller nor
any of its AFFILIATES has borrowed any moneys from or has outstanding any
indebtedness or other similar obligations to the Company. Except as set forth in
SCHEDULE 4.23, neither the Seller, the Company, any AFFILIATE of the Company or
the Seller nor any officer or employee of any
18
of them (i) owns any direct or indirect interest of any kind in, or controls
or is a director, officer, employee or partner of, or consultant to, or
lender to or borrower from or has the right to participate in the profits of,
any Person which is (A) a competitor, supplier, customer, landlord, tenant,
creditor or debtor of the Company, (B) engaged in a business related to the
business of the Company, or (C) a participant in any transaction to which the
Company is a party or (ii) is a party to any CONTRACT with the Company.
4.24 CUSTOMERS. SCHEDULE 4.24 sets forth a list of the
customers of the Company, during the fiscal year ended December 31, 1999, and
year to date May 31, 2000, showing the approximate total sales by the Company to
each such customer, during such periods. Except as set forth on SCHEDULE 4.24,
since May 31, 2000, there has not been any MATERIAL ADVERSE CHANGE in the
business relationship of the Company with any customer listed on SCHEDULE 4.24.
4.25 BANKS. SCHEDULE 4.25 contains a complete and correct list
of the names and locations of all banks in which Company has accounts or safe
deposit boxes and the names of all persons authorized to draw thereon or to have
access thereto. Except as set forth on SCHEDULE 4.25, no person holds a power of
attorney to act on behalf of the Company.
4.26 NO MISREPRESENTATION. No representation or warranty of
Seller contained in this Agreement or in any schedule hereto or in any
certificate or other instrument furnished by Seller to the Purchaser pursuant to
the terms hereof, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading.
4.27 FINANCIAL ADVISORS. No Person has acted, directly or
indirectly, as a broker, finder or financial advisor for the Seller or the
Company in connection with the transactions contemplated by this Agreement for
which the Company or Purchaser will be obligated for any fee or commission or
like payment in respect thereof.
Article V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Seller
that:
5.1 ORGANIZATION AND GOOD STANDING. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois.
5.2 AUTHORIZATION OF AGREEMENT. The Purchaser has full
corporate power and authority to execute and deliver this Agreement and each
other agreement, document, instrument or certificate contemplated by this
Agreement or to be executed by the Purchaser in connection with the consummation
of the transactions contemplated
19
hereby and thereby (the "Purchaser Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Purchaser of this Agreement and each Purchaser Document
have been duly authorized by all necessary corporate action on behalf of the
Purchaser. This Agreement has been, and each Purchaser Document will be at or
prior to the Closing, duly executed and delivered by the Purchaser and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each Purchaser Document
when so executed and delivered will constitute, legal, valid and binding
obligations of the Purchaser, enforceable against the Purchaser in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding at
law or in equity).
5.3 CONFLICTS; CONSENTS OF THIRD PARTIES.
(a) Except as set forth on SCHEDULE 5.3 hereto, neither of the
execution and delivery by the Purchaser of this Agreement and of the Purchaser
Documents, nor the compliance by the Purchaser with any of the provisions hereof
or thereof will (i) conflict with, or result in the breach of, any provision of
the certificate of incorporation or by-laws of the Purchaser, (ii) conflict
with, violate, result in the breach of, or constitute a default under any note,
bond, mortgage, indenture, license, agreement or other obligation to which the
Purchaser is a party or by which the Purchaser or its properties or assets are
bound or (iii) violate any statute, rule, regulation, order or decree of any
Governmental Body or authority by which the Purchaser is bound, except, in the
case of clauses (ii) and (iii), for such violations, breaches or defaults as
would not, individually or in the aggregate, have a material adverse effect on
the business, properties, results of operations, prospects, conditions
(financial or otherwise) of the Purchaser and its subsidiaries, taken as a
whole.
(b) No consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person
or GOVERNMENTAL BODY is required on the part of the Purchaser in connection with
the execution and delivery of this Agreement or the Purchaser Documents or the
compliance by Purchaser with any of the provisions hereof or thereof.
5.4 LITIGATION. There are no LEGAL PROCEEDINGS pending or, to
the best knowledge of the Purchaser, threatened that are reasonably likely to
prohibit or restrain the ability of the Purchaser to enter into this Agreement
or consummate the transactions contemplated hereby.
5.5 FINANCIAL ADVISORS. No Person has acted, directly or
indirectly, as a broker, finder or financial advisor for the Purchaser in
connection with the transactions contemplated by this Agreement for which the
Seller will be obligated any fee or commission or like payment in respect
thereof.
20
ARTICLE VI
COVENANTS
6.1 CONSENTS. The Seller shall use its best efforts, and
the Purchaser shall cooperate with the Seller, to obtain at the earliest
practicable date all consents and approvals required to consummate the
transactions contemplated by this Agreement, including, without limitation,
the consents and approvals referred to in Section 4.6(b) and Section 4.3
hereof; PROVIDED, HOWEVER, that neither the Seller nor the Purchaser shall be
obligated to pay any consideration or make any material concession therefor
to any third party from whom consent or approval is requested. Specifically,
to the extent licenses for the personal property equipment used in the
business of the Company as set forth in SCHEDULE 4.13(c) have not been fully
assigned at Closing, Purchaser will be entitled to require Seller to continue
to furnish use and service of such equipment for up to one year at Seller's
actual cost. Seller shall also provide services under the MCI agreement for
up to three months at Seller's actual cost. If Seller is not able to provide
Purchaser with access to the personal property equipment or provide the
telecommunication services Seller will fully indemnify Purchaser for any
costs or damages therewith. Purchaser will promptly reimburse Seller for such
equipment and use costs upon presentation of the actual costs.
6.2 OTHER ACTIONS. Each of the Seller and the Purchaser
shall use its best efforts to take all actions necessary or appropriate to
consummate the transactions contemplated by this Agreement including but not
limited to obtaining the necessary consents set forth on Section 6.1 above.
6.3 NO SOLICITATION. The Seller will not, and will not
cause or permit the Company or any of the Company's directors, officers,
employees, representatives or agents (collectively, the "Representatives")
to, directly or indirectly, (i) discuss, negotiate, undertake, authorize,
recommend, propose or enter into, either as the proposed surviving, merged,
acquiring or acquired corporation, any transaction involving a merger,
consolidation, business combination, purchase or disposition of any amount of
the assets or capital stock or other equity interest in the Company other
than the transactions contemplated by this Agreement (an "Acquisition
Transaction"), (ii) facilitate, encourage, solicit or initiate discussions,
negotiations or submissions of proposals or offers in respect of an
Acquisition Transaction, (iii) furnish or cause to be furnished, to any
Person, any information concerning the business, operations, properties or
assets of the Company in connection with an Acquisition Transaction, or (iv)
otherwise cooperate in any way with, or assist or participate in, facilitate
or encourage, any effort or attempt by any other Person to do or seek any of
the foregoing. The Seller will inform the Purchaser in writing immediately
following the receipt by the Seller, the Company or any Representative of any
proposal or inquiry in respect of any Acquisition Transaction.
6.4 PRESERVATION OF RECORDS. Subject to Section 8.4(e)
hereof (relating to the preservation of Tax records), the Seller and the
Purchaser agree that each of them shall preserve and keep the records held by
it relating to the business of the Company for
21
a period of three years from the CLOSING DATE and shall make such records and
personnel available to the other as may be reasonably required by such party
in connection with, among other things, any insurance claims by, legal
proceedings against or governmental investigations of the Seller or the
Purchaser or any of their AFFILIATES or in order to enable the Seller or the
Purchaser to comply with their respective obligations under this Agreement
and each other agreement, document or instrument contemplated hereby or
thereby. In the event the Seller or the Purchaser wishes to destroy such
records after that time, such party shall first give ninety (90) days prior
written notice to the other and such other party shall have the right at its
option and expense, upon prior written notice given to such party within that
ninety (90) day period, to take possession of the records within one hundred
and eighty (180) days after the date of such notice.
6.5 PUBLICITY. Neither the Seller nor the Purchaser shall
issue any press release or public announcement concerning this Agreement or
the transactions contemplated hereby without obtaining the approval of the
other party hereto, which approval will not be unreasonably withheld or
delayed, unless, in the sole judgment of the Purchaser or the Seller,
disclosure is otherwise required by applicable Law or by the applicable rules
of any stock exchange on which the Purchaser or the Seller lists securities,
provided that, to the extent required by applicable law, the party intending
to make such release shall use its reasonable efforts consistent with such
applicable law to consult with the other party with respect to the text
thereof.
6.6 REPAYMENT/FORGIVENESS OF LOANS.
(a) On or prior to the CLOSING DATE, all loans or other
advances to the COMPANY BY Seller or any of its AFFILIATES listed on Schedule
4.23, including any accrued and unpaid interest thereon, shall be forgiven by
Seller or its Affiliates, pursuant to Section 2.3(a).
(b) On or prior to Closing all liens on Company Shares and
assets resulting from the Agreement between Burhmann N.V., Burhmann U.S.,
Inc. and Deutsche Bank Securities Inc. shall be released.
6.7 USE OF NAME. The Seller hereby agrees that upon the
consummation of the transactions contemplated hereby, the Purchaser and the
Company shall have the sole right to the use of the name "Call Center
Services" and the Seller shall not, and shall not cause or permit any
AFFILIATE to, use such name or any variation or simulation thereof. Purchaser
will be allowed to use the Corporate Express CallCenter Services, Inc. for a
period not to exceed three months following the closing.
6.8 ENVIRONMENTAL MATTERS. Seller shall promptly file all
materials required under ENVIRONMENTAL LAWS (including, without limitation,
foreign or state property transfer laws), if any, and all requests required
for the issuance, transfer or reissuance to Purchaser of Permits necessary to
conduct the Seller's business prior to the CLOSING DATE.
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6.9 EMPLOYEES AND EMPLOYEE BENEFITS
(a) Except as provided in Section 6.9(d), prior to the Closing
Date, Seller shall cause the Company to cease to participate effective as of
11:59 p.m. June 30, 2000 in each Employee Benefit Plan. Seller shall satisfy or
cause ERISA Affiliates to satisfy all liabilities with respect to or pursuant to
all Employee Benefit Plans, including all liabilities to employees and former
employees of the Company pursuant to Employee Benefit Plans (including without
limitation all continuation requirements of Section 4980B of the Code or Part 6
of Title I of ERISA).
(b) Seller shall amend its 401(k) Plan so that all employees
of the Company who participate in the 401(k) Plan shall be 100% vested in their
accounts under the 401(k) Plan upon the Closing Date. Seller shall cause all
salary deferrals and matching and other contributions to the 401(k) Plan with
respect to compensation prior to the Closing Date to have been made prior to the
Closing Date.
(c) As of the Closing Date, Seller shall transfer to Purchaser
an amount equal to the account balances of employees of the Company in the
Section 125 Plan and Purchaser shall credit such employees with such account
balance under Purchaser's Section 125 Plan for the benefit of the Company's
employees until January 1, 2001.
(d) Seller shall continue benefit coverage provided under the
Corporate Express, a Burhmann Company, Health Plan for employees of the Company
and their enrolled dependents and those dependents who otherwise would have
become entitled to coverage had the transaction contemplated by this Agreement
not occurred, for claims incurred through July 31, 2000. Purchaser shall assume
the full cost of properly paid claims for such coverage provided under the
Corporate Express, a Burhmann Company, Health Plan with dates of services on or
after July 1, 2000 through July 31, 2000 regardless of the length of time of
runout needed to receive and process the claims for appropriate benefit.
Purchaser shall also pay the cost of the claims administration, managed care,
pre-certification/utilization review and network fees for coverage as outlined
on Schedule 6.9(d) and billed monthly by CIGNA.
(e) Seller or its ERISA Affiliates shall continue benefits
under its short-term and long-term disability plans with respect to employees or
former employees of the Company who are disabled or within the disability
elimination period immediately prior to the Closing Date to the extent that such
employees or former employees would have been entitled to such benefits had the
transaction contemplated by this Agreement not occurred.
(f) For a period of two years commencing on the Closing Date,
neither Seller nor any ERISA Affiliate shall take any actions which are
calculated to persuade any employee, consultant, representative or agent of the
Company to terminate their association with the Company.
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(g) Seller shall continue benefit coverage under the
Corporate Express, a Burhmann Company, Health Plan pursuant to COBRA for
former employees of the Company and their dependents to the extent that such
individuals were entitled to such coverage prior to the Closing Date.
6.10 BONUS PAYMENT CONSIDERATION. The Purchaser will
cooperate with the Seller to facilitate the payment of the stay pay and stock
option payments described on Schedule 4.10. Specifically, if requested by the
Seller, the Purchaser shall receive, or cause the Company to receive the
payments for such bonuses and pay the recipients through the Company's
payroll system. The Seller shall reimburse the Purchaser or the Company for
any actual FICA or other employment or payroll tax imposed on the Purchaser
or the Company as a result of the payments. The Purchaser or the Company
shall make any required withholdings on such payments and pay such
withholdings as required by applicable law. The bonuses or payments are to be
paid subject to the employees remaining through certain dates and the
Purchaser will cooperate with the Seller to determine whether the relevant
employees are employed as of the required payment dates.
6.11 GRANT REPAYMENT
(a) To the extent that Purchaser is required to make any
repayments or payments in connection with the provisions in the Xxxxxx-Xxxxx
Xxxxx Appendix C, Seller will be obligated to pay 50% of any such amount.
(b) To the extent any receivable relating to the Maryland
Grant is not collected within six months of Closing, Seller will reimburse
Purchaser on a dollar for dollar basis after reserve for bad debt on the
Closing Balance Sheet is exhausted. This provision is not subject to the
Deductible.
Article VII
DOCUMENTS TO BE DELIVERED
7.1 DOCUMENTS TO BE DELIVERED BY THE SELLER. At the Closing,
the Seller shall deliver, or cause to be delivered, to the Purchaser the
following:
(a) stock certificates representing the Shares, duly endorsed
in blank or accompanied by stock transfer powers attached and all UCC-3's or
Lender pay off letters satisfactory to Purchaser;
(b) all UCC-3's and Lender pay off letters satisfactory to
Purchaser for Salisbury, Maryland property.
24
(c) all UCC-3's and Lender pay off letters satisfactory to
Purchaser for leases for personal property set forth in Section 4.13
(d) all UCC-3's and Lender pay off letters satisfactory to
Purchaser for intangible property set forth on Section 4.14 (a).
(e) the opinion of the General Counsel to the Seller, in
substantially the form of EXHIBIT A hereto;
(f) copies of all consents and waivers referred to in
Section 4.13 and 4.15 hereof;
(g) written resignations of each of the directors of the
Company;
(h) certificates of good standing with respect to the Company
issued by the Secretary of State of the State of Delaware and for each state in
which the Company is qualified to do business as a foreign corporation;
(i) sublease in substantially the form of EXHIBIT B hereto;
and
(j) such other documents as the Purchaser shall reasonably
request.
7.2 DOCUMENTS TO BE DELIVERED BY THE PURCHASER. At the
Closing, the Purchaser shall deliver to the Seller the following:
(a) signed Promissory Note in the form of EXHIBIT C hereto;
(b) the opinion of Xxxxx Xxxxxxx Xxxxx, counsel to the
Purchaser, in substantially the form of EXHIBIT D hereto; and
(c) such other documents as the Sellers shall reasonably
request.
Article VIII
INDEMNIFICATION
8.1 Non-Tax Indemnification.
(a) Subject to Section 8.2 hereof, the Seller hereby agrees
to indemnify and hold the Purchaser, the Company, and their respective
directors, officers, employees, AFFILIATES, agents, successors and assigns
(collectively, the "Purchaser Indemnified Parties") harmless from and against:
(i) any and all liabilities of the Company of every kind,
nature and description, absolute or contingent, existing as against the
Company prior to and including the CLOSING DATE or thereafter coming
into being or arising by reason of
25
any state of facts existing, or any transaction entered into, on or
prior to the CLOSING DATE, except to the extent that the same have
been fully provided for in the INTERIM FINANCIAL STATEMENTS and the
CLOSING BALANCE SHEET or except as expressly stated in SCHEDULE 4.18;
(ii) subject to Section 9.2, any and all losses, liabilities,
obligations, damages, costs and expenses based upon, attributable to or
resulting from the failure of any representation or warranty of the
Seller set forth in Section 4 hereof, or any representation or warranty
contained in any certificate delivered by or on behalf of the Seller
pursuant to this Agreement, to be true and correct in all respects as
of the date made;
(iii) any and all losses, liabilities, obligations, damages,
costs and expenses based upon, attributable to or resulting from the
breach of any covenant or other agreement on the part of the Seller
under this Agreement;
(iv) any and all notices, actions, suits, proceedings, claims,
demands, assessments, judgments, costs, penalties and expenses,
including attorneys' and other professionals' fees and disbursements
(collectively, "EXPENSES") reasonably incident to any and all losses,
liabilities, obligations, damages, costs and expenses with respect to
which indemnification is provided hereunder, including costs of
investigation (collectively, "LOSSES").
(b) Subject to Section 8.2(b), Purchaser hereby agrees to
indemnify and hold the Seller and its AFFILIATES, agents, successors and assigns
(collectively, the "Seller Indemnified Parties") harmless from and against:
(i) subject to Section 9.2, any and all Losses based upon,
attributable to or resulting from the failure of any representation or
warranty of the Purchaser set forth in Section 5 hereof, or any
representation or warranty contained in any certificate delivered by or
on behalf of the Purchaser pursuant to this Agreement, to be true and
correct as of the date made;
(ii) any and all Losses based upon, attributable to or
resulting from the breach of any covenant or other agreement on the
part of the Purchaser under this Agreement; and
(iii) any and all EXPENSES reasonably incident to the
foregoing.
8.2 LIMITATIONS ON INDEMNIFICATION FOR BREACHES OF
REPRESENTATIONS AND WARRANTIES BY SELLER.
(a) Seller shall not have any liability except for changes
to the Closing Balance Sheet required to be made to conform to GAAP, and
conform to SCHEDULE 2.3(a), and except for Tax Liabilities under Section 9.1,
the Grant Liabilities under Section 4.6(c) and 6.11, the Lease liabilities of
Seller under 4.13(c) hereof, unless the aggregate
26
amount of LOSSES and EXPENSES to the indemnified parties arising thereunder
based upon, attributable to or resulting from the failure of any
representation or warranty to be true and correct, other than the
representations and warranties set forth in Sections 4.7 hereof, exceeds
$500,000 (the "DEDUCTIBLE") and, in such event, Seller shall be required to
pay the entire amount of such LOSSES and EXPENSES which exceed $500,000 (the
"MINIMUM"), (and once this Deductible is reached Seller shall be required to
pay 100% of all further Losses and Expenses).
(b) Purchaser shall have liability under Section 9.1(b) and
shall pay the entire amount of such LOSSES AND EXPENSES which exceed $100,000
("PURCHASERS DEDUCTIBLE"). Except there shall be no Purchasers Deductible in
connection with obligations under the Promissory Note or Purchasers payment
obligations as described in the Agreement.
8.3 NON-TAX INDEMNIFICATION PROCEDURES.
(a) In the event that any LEGAL PROCEEDINGS shall be
instituted or that any claim or demand ("Claim") shall be asserted by any
Person in respect of which payment may be sought under Section 9.1 hereof
(regardless of the DEDUCTIBLE referred to above), the indemnified party shall
reasonably and promptly cause written notice of the assertion of any Claim of
which it has knowledge which is covered by this indemnity to be forwarded to
the indemnifying party. The indemnifying party shall have the right, at its
sole option and expense, to be represented by counsel of its choice, which
must be reasonably satisfactory to the indemnified party, and to defend
against, negotiate, settle or otherwise deal with any Claim which relates to
any Losses OR EXPENSES indemnified against hereunder. If the indemnifying
party elects to defend against, negotiate, settle or otherwise deal with any
Claim which relates to any Losses indemnified against hereunder, it shall
within five (5) business days (or sooner, if the nature of the Claim so
requires) notify the indemnified party of its intent to do so. If the
indemnifying party elects not to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Losses OR EXPENSES
indemnified against hereunder, fails to notify the indemnified party of its
election as herein provided or contests its obligation to indemnify the
indemnified party for such Losses under this Agreement, the indemnified party
may defend against, negotiate, settle or otherwise deal with such Claim. If
the indemnified party defends any Claim, then the indemnifying party shall
reimburse the indemnified party for the EXPENSES of defending such Claim upon
submission of periodic bills. If the indemnifying party shall assume the
defense of any Claim, the indemnified party may participate, at his or its
own expense, in the defense of such Claim; PROVIDED, HOWEVER, that such
indemnified party shall be entitled to participate in any such defense with
separate counsel at the expense of the indemnifying party if so requested by
the indemnifying party to participate, or in the reasonable opinion of
counsel to the indemnified party, a conflict or potential conflict exists
between the indemnified party and the indemnifying party that would make such
separate representation advisable; and PROVIDED, FURTHER, that the
indemnifying party shall not be required to pay for more than one such
counsel for all indemnified parties in connection with any Claim. The parties
27
hereto agree to cooperate fully with each other in connection with the
defense, negotiation or settlement of any such Claim.
(b) After any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent jurisdiction
and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or the indemnified party and the indemnifying party
shall have arrived at a mutually binding agreement with respect to a Claim
hereunder, the indemnified party shall forward to the indemnifying party notice
of any sums due and owing by the indemnifying party pursuant to this Agreement
with respect to such matter and the indemnifying party shall be required to pay
all of the sums so due and owing to the indemnified party by wire transfer of
immediately available funds within 10 business days after the date of such
notice. The indemnifying party shall not enter into any settlement, the impact
of which could be harmful to the ongoing Business of the Company.
8.4 TAX MATTERS.
(a) TAX INDEMNIFICATION. (i) The Seller agrees to be
responsible for and to indemnify and hold the Purchaser Indemnified Parties
harmless from and against any and all TAXES that may be imposed upon or assessed
against the Company or the assets thereof:
(1) with respect to all taxable periods ending on or prior to
the CLOSING DATE;
(2) with respect to any and all TAXES of the Company for the
period allocated to the Seller pursuant to Section 8.4(c)(iv);
(3) arising by reason of any breach by the Seller of the
representations of any of the representations contained in Section 4.11
hereof;
(4) with respect to any and all TAXES arising as a result of
the Section 338(h)(10) Election (including but not limited to an
election under Section 338(g) of the CODE or similar provision under
state, local or foreign law));
(5) by reason of being a successor-in-interest or transferee
of another entity; and
(6) with respect to any and all TAXES of any member of a
consolidated, combined or unitary group of which the Company (or any
predecessor) is or was a member on or prior to the CLOSING DATE, by
reason of the liability of the Company pursuant to Treasury Regulation
Section 1.1502-6(a) or any analogous or similar state, local or foreign
law or regulation.
28
The Seller shall also pay and shall indemnify and hold harmless the Purchaser
Indemnified Parties from and against any losses, damages, liabilities,
obligations, deficiencies, costs and expenses (including, without limitation,
reasonable expenses and fees for attorneys and accountants) ("Related Costs")
incurred in connection with the TAXES for which the Seller is responsible to
indemnify the Purchaser Indemnified Parties pursuant to this Section 8.4(a)
(or any asserted deficiency, claim, demand, action, suit, proceeding,
judgment or assessment, including the defense or settlement thereof, relating
to such TAXES) or the enforcement of this Section 9.4(a).
(ii) Purchaser agrees to indemnify and hold harmless the
Seller from and against any and all TAXES (A) of the Company with
respect to any taxable period of the Company beginning after the
CLOSING DATE and (B) attributable to the period allocated to Purchaser
pursuant to Section 8.4(c)(iv).
(iii) If any indemnification payment under Article 8
(including, without limitation, this Section 8.4(a)(iii) is determined
to be taxable to the party receiving such payment by any taxing
authority, the paying party shall also indemnify the party receiving
such payment for any TAXES incurred by reason of the receipt of such
payment (taking into account any actual reduction in tax liability to
the receiving party) and any Related Costs incurred by the party
receiving such payment in connection with such TAXES (or any asserted
deficiency, claim, demand, action, suit, proceeding, judgment or
assessment, including the defense or settlement thereof, relating to
such TAXES). Note for greater clarity that the Deductible in Section
9.2 does not apply to Tax Liability.
(b) 338(H)(10) ELECTION.
(i) an election shall be made under section 338(g) and Section
338(h)(10) of the Code with respect to the purchase of the Shares of
the Company hereunder by the Purchaser. The Purchase Price will be
allocated to the assets transferred using the residual method required
by Code section 1060. Both parties will abide by this allocation.
(ii) federal form 8023 will be filed within the period
prescribed by law.
(iii) Seller shall be responsible for any TAXES resulting from
built-in gains on the Sale.
(iv) The Seller shall, or shall cause its AFFILIATES to, join
with Purchaser in making an election under Section 338(h)(10) of the
CODE and the Treasury Regulations and any corresponding or similar
elections under state, local or foreign tax law (collectively, the
"Section 338(h)(10) Election") with respect to the purchase and sale of
the Shares hereunder. Such election shall be made by Purchaser in
writing no later than 180 days after the CLOSING DATE. In the event
Purchaser does not request that the Seller join in making the Section
338(h)(10) Election, the remainder of the provisions of this Section
8.4(b) shall not apply.
29
(v) Purchaser shall be responsible for the preparation and
filing of all forms and documents required in connection with the
Section 338(h)(10) Election. For the purpose of making the Section
338(h)(10) Election, on or after the CLOSING DATE, Purchaser and the
Seller each shall execute two copies of Internal Revenue Service Form
8023 (or successor form). The Seller shall complete the Seller's
Statement (Sections F & C of Form 8023) and shall execute (or cause to
be executed) and deliver to Purchaser such additional documents or
forms as are reasonably requested to complete properly the Section
338(h)(10) Election at least 30 days prior to the date such Section
338(h)(10) Election is required to be filed.
(vi) Purchaser and the Seller shall file, and shall cause
their AFFILIATES to file, all TAX RETURNS and statements, forms and
schedules in connection therewith in a manner consistent with the
Section 338(h)(10) Election and such valuations and shall take no
position contrary thereto unless required to do so by applicable tax
laws.
(vii) To the extent permitted by state, local or foreign tax
laws, the principles and procedures of this Section 8.4(b) shall also
apply with respect to a Section 338(h)(10) Election or equivalent or
comparable provision under state, local or foreign law, including but
not limited to an election under Section 338(g) of the CODE or
equivalent or comparable provision under state, local or foreign law.
The Seller shall make or cause to be made any election similar to a
Section 338(h)(10) Election that is optional under any state, local or
foreign law, and shall cooperate and join in any election made by the
Company or Purchaser or its AFFILIATES to effect such an election so as
to treat the sale of the Shares contemplated herein as a sale of assets
for state, local and foreign income tax purposes.
(c) Preparation of Tax Returns; Payment of TAXES.
(i) The Seller shall include the Company, or cause the Company
to be included in, and shall file or cause to be filed, (A) the United States
consolidated federal income TAX RETURNS of the Seller or its AFFILIATES for the
taxable periods of the Company ending on or prior to the CLOSING DATE and (B)
where applicable, all other consolidated, combined or unitary TAX RETURNS of
Seller or its AFFILIATES for the taxable periods of the Company ending (or the
portion of any taxable period ending) on or prior to the CLOSING DATE, and shall
pay any and all TAXES due with respect to the returns referred to in clause (A)
or (B) of this Section 9.4(c)(i), including but not limited to any liability due
with respect to any Section 338(h)(10) Election made pursuant to Section 8.4(b)
hereof. Seller also shall file or shall cause the Company to file all other TAX
RETURNS of or which include the Company required to be filed (taking into
account any extensions) on or prior to the CLOSING DATE and shall pay any and
all TAXES due with respect to such TAX RETURNS. All TAX RETURNs described in
this Section 8.4(c)(i) shall be prepared in a manner consistent with prior
practice unless a past practice has been finally determined to be incorrect by
the applicable taxing authority or a contrary
30
treatment is required by applicable tax laws (or the judicial or
administrative interpretations thereof). Seller shall provide the Company
with copies of such TAX RETURNS (or, in the case of TAX RETURNS filed for an
AFFILIATED Group, the portion of such consolidated TAX RETURNS relating to
the Company) after they have been filed.
(ii) Following the Closing Purchaser shall be responsible
for preparing or causing to be prepared all Federal, Foreign, State and Local
Tax Returns required to be filed by the Company on a separate return basis
after the Closing Date. Purchaser shall file or cause to be filed all such
TAX RETURNs and shall, subject to receiving the payments from Seller referred
to in Section 8.4(c)(iii), pay the TAXES shown due thereon; PROVIDED,
HOWEVER, that nothing contained in the foregoing shall in any manner
terminate, limit or adversely affect any right of Purchaser Indemnified
Parties, Seller or the Company to receive indemnification pursuant to any
provision in this Agreement.
(iii) Not later than 5 days before the due date for payment
of TAXES with respect to any TAX RETURNS which Purchaser has the
responsibility to file, Seller shall pay to Purchaser an amount equal to that
portion of the TAXES shown on such return for which Seller has an obligation
to indemnify Purchaser and its AFFILIATES pursuant to the provisions of
Section 8.4(a).
(iv) For federal income tax purposes, the taxable year of
the Company shall end as of the close of the CLOSING DATE and, with respect
to all other TAXES, Seller and Purchaser will, unless prohibited by
applicable law, close the taxable period of the Company as of the close of
the CLOSING DATE. Neither Seller nor Purchaser shall take any position
inconsistent with the preceding sentence on any TAX RETURN. In any case where
applicable law does not permit the Company to close its taxable year on the
CLOSING DATE or in any case in which a Tax is assessed with respect to a
taxable period which includes the CLOSING DATE (but does not begin or end on
that day), then TAXES, if any, attributable to the taxable period of the
Company beginning before and ending after the CLOSING DATE shall be allocated
(i) to Seller for the period up to and including the CLOSING DATE, and (ii)
to Purchaser for the period subsequent to the CLOSING DATE. Any allocation of
income or deductions required to determine any TAXES attributable to any
period beginning before and ending after the CLOSING DATE shall be made by
means of a closing of the books and records of the Company as of the close of
the CLOSING DATE, provided that exemptions, allowances or deductions that are
calculated on an annual basis (including, but not limited to, depreciation
and amortization deductions) shall be allocated between the period ending on
the CLOSING DATE and the period after the CLOSING DATE in proportion to the
number of days in each such period. Purchaser shall provide Seller with a
schedule showing the computation of the allocation at least 30 days prior to
the due date for filing a TAX RETURN which includes the CLOSING DATE. Seller
shall have the right to review such schedule, and Purchaser and Seller shall
attempt in good faith mutually to resolve any disagreements regarding the
determination of such allocation. Any disagreements regarding such
determination shall be resolved pursuant to Section 9.4(i). Any amount owing
from Seller under this Section 8.4(c)(iv) shall be paid no later than five
(5) days prior to the filing of the underlying TAX RETURN.
31
(d) COOPERATION WITH RESPECT TO TAX RETURNS. Purchaser and
Seller agree to furnish or cause to be furnished to each other, and each at
their own expense, as promptly as practicable, such information (including
access to books and records) and assistance, including making employees
available on a mutually convenient basis to provide additional information
and explanations of any material provided, relating to the Company as is
reasonably necessary for the filing of any TAX RETURN, for the preparation
for any audit, and for the prosecution or defense of any claim, suit or
proceeding relating to any adjustment or proposed adjustment with respect to
TAXES. Purchaser or the Company shall retain in its possession, and shall
provide Seller reasonable access to (including the right to make copies of),
such supporting books and records and any other materials that Seller may
specify with respect to Tax matters relating to any taxable period ending on
or prior to the CLOSING DATE until the relevant statute of limitations has
expired. After such time, Purchaser may dispose of such material, provided
that prior to such disposition Purchaser shall give Seller a reasonable
opportunity to take possession of such materials.
(e) TAX AUDITS.
(i) Company in any Tax audit or administrative or court
proceeding relating to taxable periods of the Company which end on or before
the CLOSING DATE and to employ counsel of its choice at its expense; PROVIDED
that if the results of such Tax audit or proceeding could reasonably be
expected to have a material adverse effect on the assets, business,
operations, or financial condition of Purchaser for taxable periods ending
after the CLOSING DATE, then there shall be no settlement or closing or other
agreement with respect thereto without prior discussion with Purchaser .
Purchaser agrees that it will cooperate fully with Seller and its counsel in
the defense against or compromise of any claim in any said proceeding.
(ii) assessment or otherwise disputes or affects the Tax
reporting position of the Company for taxable periods ending on or prior to
the CLOSING DATE, Purchaser shall, promptly upon receipt by Purchaser or the
Company of written notice thereof, inform Seller thereof. The failure of
Purchaser or the Company or their AFFILIATES timely to forward such
notification in accordance with the immediately preceding sentence shall not
relieve Seller of its obligation to pay such liability for TAXES except and
to the extent that the failure timely to forward such notification actually
prejudices the ability of Seller to contest such liability for TAXES or
increases the amount of such TAXES.
(iii) Seller and Purchaser jointly shall represent the
interests of the Company in any Tax audit or administrative or court
proceeding relating to any taxable period of the Company which includes (but
does not begin or end on) the CLOSING DATE. Any disputes regarding the
conduct or resolution of any such audit or proceeding shall be resolved
pursuant to Section 8.4(i). Each of the parties shall be bound by the
decision rendered pursuant to Section 8.4(i). All costs, fees and expenses
paid to third parties in the course of such proceeding shall be borne by
Seller and Purchaser in the same ratio as the ratio in which, pursuant to the
terms of this Agreement, Seller and Purchaser would
32
share the responsibility for payment of the TAXES asserted by the taxing
authority in such claim or assessment if such claim or assessment were
sustained in its entirety.
(iv) Purchaser shall have the sole right to represent the
interests of the Company in all other Tax audits or administrative or court
proceedings.
(f) REFUND CLAIMS. Except as otherwise provided in Section
8.4(g), to the extent any determination of Tax liability of the Company,
whether as the result of an audit or examination, a claim for refund, the
filing of an amended return or otherwise, results in any refund of TAXES paid
attributable to (i) any period which ends on or before the CLOSING DATE, (ii)
the Section 338(h)(10) Election or (iii) any period which includes the
CLOSING DATE but does not begin or end on that day, any such refund shall
belong to Seller, provided that in the case of any Tax refund described in
clause (iii) of this Section 8.4(f), the portion of such Tax refund which
shall belong to Seller shall be that portion that is attributable to the
portion of that period which ends on the CLOSING DATE (determined on the
basis of an interim closing of the books as of the CLOSING DATE), and
Purchaser shall promptly pay any such refund, and the interest actually
received thereon, to Seller upon receipt thereof by Purchaser. Any and all
other refunds shall belong to Purchaser. Any payments made under this Section
8.4(f) shall be net of any TAXES payable with respect to such refund, credit
or interest thereon (taking into account any actual reduction in Tax
liability realized upon the payment pursuant to this Section 8.4(f)).
(g) CARRYBACKS. If the Carryback of a tax loss deduction or
credit is mutually agreed then Seller shall pay to Purchaser the amount of
any Tax benefit (including interest thereon) realized by Seller or any
AFFILIATE thereof as a result of the carryback of any Tax loss, deduction or
credit of the Company from any taxable period beginning after the CLOSING
DATE to a taxable period ending on or before the CLOSING DATE. Seller shall
pay such amount to Purchaser within 10 business days after such Tax benefit
is realized by Seller or any AFFILIATE of it as a refund or otherwise,
provided that Purchaser shall return to Seller the amount, if any, by which
the amount of such Tax benefit is thereafter reduced pursuant to a final
determination.
(h) TRANSFER TAXES. Purchaser shall be liable for and shall
pay (and shall indemnify and hold harmless Seller against) all sales, use,
stamp, documentary, filing, recording, transfer or similar fees or taxes or
governmental charges (including, without limitation, real property transfer
gains taxes, UCC-3 filing fees, FAA, ICC, DOT, real estate and motor vehicle
registration, title recording or filing fees and other amounts payable in
respect of transfer filings) as levied by any taxing authority or
governmental agency in connection with the transactions contemplated by this
Agreement (other than taxes measured by or with respect to income imposed on
Seller or on Purchaser or its AFFILIATES). Purchaser hereby agrees to file
all necessary Documents (including, but not limited to, all TAX RETURNS) with
respect to all such amounts in a timely manner.
(i) Any dispute as to any matter covered hereby shall be
resolved by an independent accounting firm mutually acceptable to the Seller
and the Purchaser. The
33
fees and expenses of such accounting firm shall be borne equally by the
Seller and the Purchaser.
(j) The indemnification provided for in this Section 8.4
shall be the sole remedy for any claim in respect of TAXES.
(k) Any claim for indemnity under This Section 8.4 may be
made at any time prior to 60 days after the expiration of the applicable Tax
statute of limitations with respect to the relevant taxable period (including
all periods of extension, whether automatic of permissive).
8.5 TAX TREATMENT OF INDEMNITY PAYMENTS. The Seller and the
Purchaser agree to treat any indemnity payment made pursuant to this Article
8 as an adjustment to the Purchase Price for federal, state, local and
foreign income tax purposes.
ARTICLE IX
MISCELLANEOUS
9.1 PAYMENT OF SALES, USE OR SIMILAR TAXES. All sales, use,
transfer, intangible, recordation, documentary stamp or similar TAXES or
charges, of any nature whatsoever, applicable to, or resulting from, the
transactions contemplated by this Agreement shall be borne by the Purchaser.
9.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties
hereto hereby agree that the representations and warranties contained in this
Agreement or in any certificate, document or instrument delivered in
connection herewith, shall survive the execution and delivery of this
Agreement, and the Closing hereunder, regardless of any investigation made by
the parties hereto; provided, however, that any claims or actions with
respect thereto (other than claims for indemnifications with respect to the
representation and warranties contained in Sections 4.7, 4.11, 4.16, 4.20 and
4.27 which shall survive for periods coterminous with any applicable statutes
of limitation) and Sections 6.8, 6.11 which shall survive for a period of 6
years, shall terminate unless, within twenty-four (24) months after the
CLOSING DATE, written notice of such claims is given to the Seller or such
actions are commenced.
9.3 EXPENSES. Except as otherwise provided in this
Agreement, the Seller and the Purchaser shall each bear its own expenses
incurred in connection with the negotiation and execution of this Agreement
and each other agreement, document and instrument contemplated by this
Agreement and the consummation of the transactions contemplated hereby and
thereby, it being understood that in no event shall the Company bear any of
such costs and expenses.
9.4 DISPUTE RESOLUTION. In the event a dispute arises under
this Agreement which has not been successfully resolved by provisions set
forth in this
34
Agreement, the parties agree to a face-to-face meeting of Senior Executives
of each of the Purchaser and Seller to be held within ten (10) business days
of a written request by a party for such a meeting. Both the Purchaser and
Seller will attempt, in good faith, to resolve the matter. If that effort has
failed after a period of five (5) business days, then either party is free to
pursue other means of resolution.
9.5 SPECIFIC PERFORMANCE. The Seller acknowledges and
agrees that the breach of this Agreement would cause irreparable damage to
the Purchaser and that the Purchaser will not have an adequate remedy at law.
Therefore, the obligations of the Seller under this Agreement, including,
without limitation, the Seller's obligation to sell the Shares to the
Purchaser, shall be enforceable by a decree of specific performance issued by
any court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. Such remedies shall,
however, be cumulative and not exclusive and shall be in addition to any
other remedies which any party may have under this Agreement or otherwise.
9.6 FURTHER ASSURANCES. The Seller and the Purchaser each
agrees to execute and deliver such other documents or agreements and to take
such other action as may be reasonably necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
9.7 SUBMISSION TO JURISDICTION; CONSENT TO SERVICE OF
PROCESS.
(a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of any federal or state court located within the
State of New York over any dispute arising out of or relating to this
Agreement or any of the transactions contemplated hereby and each party
hereby irrevocably agrees that all claims in respect of such dispute or any
suit, action proceeding related thereto may be heard and determined in such
courts. The parties hereby irrevocably waive, to the fullest extent permitted
by applicable law, any objection which they may now or hereafter have to the
laying of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process
being served by any party to this Agreement in any suit, action or proceeding
by the mailing of a copy thereof in accordance with the provisions of Section
9.11.
9.8 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This
Agreement (including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of
any such amendment, supplement, modification or waiver is sought. No action
taken pursuant to this Agreement, including without limitation, any
35
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a further or continuing waiver of such breach or as a waiver of
any other or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
of such right, power or remedy by such party preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies
provided by law.
9.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
9.10 TABLE OF CONTENTS AND HEADINGS. The table of contents
and section headings of this Agreement are for reference purposes only and
are to be given no effect in the construction or interpretation of this
Agreement.
9.11 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by certified mail, return receipt requested, to the
parties (and shall also be transmitted by facsimile to the Persons receiving
copies thereof) at the following addresses (or to such other address as a
party may have specified by notice given to the other party pursuant to this
provision):
If to any Seller, to: Xxxxxxx X. Xxxxx
Corporate Express Specialty Businesses
0000 Xxxxxxx Xxxxxxxxx Xxxxx 000
Xx. Xxxxx, XX 00000
FAX 000-000-0000
With a copy to: Xxxxxx Xxxxxx, General Counsel
Corporate Express
Xxx Xxxxxxxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
FAX 000 000-0000
36
If to Purchaser, to: President and Chief Executive Officer
United Stationers Supply Co.
0000 X. Xxxx Xxxx, Xxx Xxxxxxx, XX
00000
With a copy to: Vice President, General Counsel and
Secretary
United Stationers Supply Co.
0000 X. Xxxx Xxxx, Xxx Xxxxxxx, XX
00000
9.12 SEVERABILITY. If any provision of this Agreement is
invalid or unenforceable, the balance of this Agreement shall remain in effect.
9.13 BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. Nothing in this Agreement shall create or be
deemed to create any third party beneficiary rights in any person or entity not
a party to this Agreement except as provided below. No assignment of this
Agreement or of any rights or obligations hereunder may be made by either the
Seller or the Purchaser (by operation of law or otherwise) without the prior
written consent of the other parties hereto and any attempted assignment without
the required consents shall be void; PROVIDED, HOWEVER, that the Purchaser may
assign this Agreement and any or all rights or obligations hereunder (including,
without limitation, the Purchaser's rights to purchase the Shares and the
Purchaser's rights to seek indemnification hereunder) to any AFFILIATE of the
Purchaser. Upon any such permitted assignment, the references in this Agreement
to the Purchaser shall also apply to any such assignee unless the context
otherwise requires.
9.14 CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have
the meanings specified in this Section 9.14:
"ARBITRATOR" shall have the meaning ascribed to such term in
Section 2.3(d).
"AFFILIATE" means, with respect to any Person, any other
Person controlling, controlled by or under common control with such Person.
"BUSINESS DAY" means any day of the year on which national
banking institutions in New York are open to the public for conducting business
and are not required or authorized to close.
37
"BUSINESS LOSSES" definition to be provided by Xxx Xxxxxx
"CLOSING DATE" shall have the meaning ascribed to such term
in Section 3.1 hereof.
"CLOSING BALANCE SHEET" shall have the meaning ascribed to
such term in Section 2.3(a).
"CODE" shall mean the Internal Revenue CODE of 1986, as
amended.
"COMPANY PROPERTY" shall have the meaning ascribed to such
term in Section 4.12(a) hereof.
"CONTRACTS" shall have the meaning ascribed to such terms
in Section 4.05.
"EFFECTIVE TIME" shall have the meaning ascribed to such
term in Section 1.1 hereof.
"ENVIRONMENTAL LAW" means any foreign, federal, state or
local statute, regulation, ordinance, or rule of common law as now or
hereafter in effect in any way relating to the protection of human health and
safety or the environment including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. SECTION
9601 ET SEQ.), the HAZARDOUS MATERIALS Transportation Act (49 U.S.C. App.
SECTION 1801 ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C.
SECTION 6901 ET SEQ.), the Clean Water Act (33 U.S.C. SECTION 1251 ET SEQ.),
the Clean Air Act (42 U.S.C. SECTION 7401 ET SEQ.) the Toxic Substances
Control Act (15 U.S.C. SECTION 2601 ET SEQ.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. SECTION 136 ET SEQ.), and the
Occupational Safety and Health Act (29 U.S.C. SECTION 651 ET SEQ.), and the
regulations promulgated pursuant thereto.
"INTERIM FINANCIAL STATEMENTS" shall have the meaning
ascribed to such term in Section 4.8.
"GAAP" means generally accepted United States accounting
principles as of the date hereof.
"GOVERNMENTAL BODY" means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority thereof,
or any court or ARBITRATOR (public or private).
"HAZARDOUS MATERIAL" means any substance, material or waste
which is regulated by the United States, or any state or local governmental
authority including, without limitation, petroleum and its by-products,
asbestos, and any material or substance which is defined as a "hazardous
waste," "hazardous substance," "hazardous material," "restricted hazardous
waste," "industrial waste," "solid waste," "contaminant,"
38
"pollutant," "toxic waste" or "toxic substance" under any provision of
ENVIRONMENTAL LAW;
"LAW" means any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule, regulation or other
requirement.
"LEGAL PROCEEDING" means any judicial, administrative or
arbitral actions, suits, proceedings (public or private), claims or
governmental proceedings.
"LIEN" means any lien, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation whatsoever.
"MATERIAL ADVERSE CHANGE" means any material adverse change
in the business, properties, results of operations, , condition (financial or
otherwise) of the Company.
"MATERIAL ADVERSE EFFECT" means any effect which has
resulted in, or is reasonably likely to result in, a MATERIAL ADVERSE CHANGE.
"ORDER" means any order, injunction, judgment, decree,
ruling, writ, assessment or arbitration award.
"OWNED PROPERTIES" shall have the meaning ascribed to such
term in Section 4.12.
"PERMITS" means any approvals, authorizations, consents,
licenses, permits or certificates.
"PERMITTED EXCEPTIONS" means (i) all defects, exceptions,
restrictions, easements, rights of way and encumbrances disclosed in policies
of title insurance which have been made available to Purchaser; (ii)
statutory LIENS for current taxes, assessments or other governmental charges
not yet delinquent or the amount or validity of which is being contested in
good faith by appropriate proceedings, provided an appropriate reserve is
established therefor; (iii) mechanics', carriers', workers', repairers' and
similar LIENS arising or incurred in the ordinary course of business that are
not material to the business, operations and financial condition of the
property so encumbered or the Company; (iv) zoning, entitlement and other
land use and environmental regulations by any GOVERNMENTAL BODY, provided
that such regulations have not been violated; and (v) such other
imperfections in title, charges, easements, restrictions and encumbrances
which do not materially detract from the value of or materially interfere
with the present use of any COMPANY PROPERTY subject thereto or affected
thereby.
39
"PERSON" means any individual, corporation, partnership,
firm, joint venture, association, joint-stock company, trust, unincorporated
organization, GOVERNMENTAL BODY or other entity.
"PERSONAL PROPERTY LEASE" shall have the meaning ascribed to
such term in Section 4.13.
"PRIME RATE" means the prime lending rate charged by The Chase
Manhattan Bank for demand loans in U.S. dollars to its most creditworthy
customers.
"PROPERTY LEASE" shall have the meaning ascribed to such term
in Section 4.12.
"PURCHASE PRICE ADJUSTMENT" shall have the meaning ascribed to
such term in Section 2.3(b).
"RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, or leaching into
the indoor or outdoor environment, or into or out of any property;
"REMEDIAL ACTION" means all actions to (x) clean up, remove,
treat or in any other way address any HAZARDOUS MATERIAL; (y) prevent the
Release of any HAZARDOUS MATERIAL so it does not endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; or (z)
perform pre-remedial studies and investigations or post-remedial monitoring and
care.
"SUBSIDIARY" means any Person of which a majority of the
outstanding voting securities or other voting equity interests are owned,
directly or indirectly, by the Company.
"TANGIBLE BOOK VALUE" consists of assets less liabilities
excluding intercompany debt DETERMINED IN ACCORDANCE WITH GAAP, EXCEPT AS
DESCRIBED ON SCHEDULE 2.3(A).
"TAXES" means (i) all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority in connection with any item described in clause (i) and (iii) any
transferee liability in respect of any items described in clauses (i) and/or
(ii).
"TAX RETURN" means all returns, declarations, reports,
estimates, information returns and statements required to be filed in respect of
any TAXES.
40
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written above.
PURCHASER
By:
-------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
SELLER:
By:
--------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
41
