1
EXHIBIT 2.7
STOCK PURCHASE AGREEMENT
AMONG
BAG FLORIDA II, INC.
AND
XXXXXX X. (TIFF) XXXXXX, XX.
DECEMBER 23, 1997
2
TABLE OF CONTENTS
Page
1. DEFINITIONS .......................................................... 1
2. PURCHASE AND SALE OF TARGET SHARES ................................... 4
(a) Basic Transaction ............................................... 4
(b) Purchase Price .................................................. 4
(d) The Closing ..................................................... 5
(e) Deliveries at the Closing ....................................... 5
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION ............ 5
(a) Representations and Warranties of the Seller .................... 5
(i) Authorization of Transaction ............................. 5
(ii) Noncontravention ......................................... 5
(iii) Brokers' Fees ............................................ 5
(iv) Target Shares ............................................ 6
(b) Representations and Warranties of the Buyer ..................... 6
(i) Organization of the Buyer ................................ 6
(ii) Authorization of Transaction ............................. 6
(iii) Noncontravention ......................................... 6
(iv) Brokers' Fees ............................................ 6
(v) Investment ............................................... 7
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE TARGET ................. 7
(a) Organization, Qualification and Corporate Power ................. 7
(b) Capitalization .................................................. 7
(c) Noncontravention ................................................ 7
(d) Brokers' Fees ................................................... 8
(e) Title to Assets ................................................. 8
(f) Financial Statements ............................................ 8
(g) Events Subsequent to Most Recent Fiscal Year End ................ 8
(h) Undisclosed Liabilities ......................................... 10
(i) Legal Compliance ................................................ 10
(j) Tax Matters ..................................................... 11
(k) Real Property ................................................... 12
(l) Intellectual Property ........................................... 13
(m) Tangible Assets ................................................. 15
(n) Contracts ....................................................... 15
(o) Notes and Accounts Receivable ................................... 16
(p) Powers of Attorney .............................................. 17
-i-
3
(q) Insurance ....................................................... 17
(r) Litigation ...................................................... 18
(s) Employees ....................................................... 18
(t) Employee Benefits ............................................... 18
(u) Guaranties ...................................................... 20
(v) Environmental, Health, and Safety Matters ....................... 20
(w) Disclosure ...................................................... 21
5. PRE-CLOSING COVENANTS ................................................ 21
(a) General ......................................................... 21
(b) Notices and Consents ............................................ 21
(c) Operation of Business ........................................... 22
(d) Preservation of Business ........................................ 22
(e) Full Access ..................................................... 22
(f) Notice of Developments .......................................... 22
(g) Exclusivity ..................................................... 22
6. POST-CLOSING COVENANTS 22
(a) General ......................................................... 22
(b) Litigation Support .............................................. 23
(c) Transition ...................................................... 23
(d) Confidentiality ................................................. 23
7. CONDITIONS TO OBLIGATION TO CLOSE .................................... 23
(a) Conditions to Obligation of the Buyer ........................... 23
(b) Conditions to Obligation of the Seller .......................... 25
8. REMEDIES FOR BREACHES OF THIS AGREEMENT .............................. 26
(a) Survival of Representations and Warranties ...................... 26
(b) Indemnification Provisions for Benefit of the Buyer ............. 26
(c) Indemnification Provisions for Benefit of the Seller ............ 27
(d) Matters Involving Third Parties ................................. 27
(e) Exclusive Remedy ................................................ 29
9. TAX MATTERS .......................................................... 29
(a) Tax Periods Ending on or Before the Closing Date ................ 29
(b) Tax Periods Beginning Before and Ending After the Closing Date .. 29
(c) Cooperation on Tax Matters ...................................... 30
10. TERMINATION .......................................................... 30
(a) Termination of Agreement ........................................ 30
(b) Effect of Termination ........................................... 31
-ii-
4
11. MISCELLANEOUS ........................................................ 32
(a) Press Releases and Public Announcements ......................... 32
(b) No Third Party Beneficiaries .................................... 32
(c) Entire Agreement ................................................ 32
(d) Succession and Assignment ....................................... 32
(e) Counterparts .................................................... 32
(f) Headings ........................................................ 32
(g) Notices ......................................................... 32
(h) Governing Law ................................................... 33
(i) Amendments and Waivers .......................................... 33
(j) Severability .................................................... 33
(k) Expenses ........................................................ 33
(l) Construction .................................................... 33
(m) Incorporation of Exhibits, Annexes and Schedules ................ 34
(n) Specific Performance ............................................ 34
(o) Submission to Jurisdiction ...................................... 34
Exhibit A Escrow Agreement
Exhibit B Historical Financial Statements
Exhibit C Forms of Side Agreements
Exhibit D Form of Opinion of Counsel to the Seller
Exhibit E Form of Opinion of Counsel to the Buyer
Annex I Exceptions to the Seller's Representations and Warranties
Concerning the Transaction
Annex II Exceptions to the Buyer's Representations and Warranties
Concerning the Transaction
Disclosure Schedule Exceptions to Representations and Warranties Concerning
the Target and Its Subsidiaries
-iii-
5
STOCK PURCHASE AGREEMENT
Agreement entered into on December 23, 1997 by and among BAG FLORIDA II,
INC., a Georgia corporation (the "Buyer"), and XXXXXX X. (TIFF) XXXXXX, XX. (the
"Seller"). The Buyer and the Seller are referred to collectively herein as the
"Parties."
The Seller in the aggregate owns all of the outstanding capital stock of
SOUTH FINANCIAL CORPORATION, a Florida corporation (the "Target").
This Agreement contemplates a transaction in which the Buyer will
purchase from the Seller, and the Seller will sell to the Buyer, all of the
outstanding capital stock of the Target in return for cash.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
ss.1504(a) or any similar group defined under a similar provision of state,
local or foreign law.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in ss.2(c) below.
"Closing Date" has the meaning set forth in ss.2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Target that is not already generally available to
the public.
"Disclosure Schedule" has the meaning set forth in ss.4 below.
-1-
6
"Employee Benefit Plan" means any: (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan; (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan; (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan); or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Environmental, Health and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"Financial Statement" has the meaning set forth in ss.4(g) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in ss.8(d) below.
"Indemnifying Party" has the meaning set forth in ss.8(d) below.
"Intellectual Property" means: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith; (d) all mask works and all
applications, registrations, and renewals in connection therewith; (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas,
-2-
7
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals); (f) all
computer software (including data and related documentation); (g) all other
proprietary rights; and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
"Knowledge" means actual knowledge without independent investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in ss.4(g)
below.
"Most Recent Fiscal Month End" has the meaning set forth in ss.4(g)
below.
"Most Recent Fiscal Year End" has the meaning set forth in ss.4(g) below.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA ss.406 and
Code ss.4975.
"Purchase Price" has the meaning set forth in ss.2(b) below.
"Reportable Event" has the meaning set forth in ERISA ss.4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge
or other security interest, other than: (a) mechanic's, materialmen's and
similar liens; (b) liens for Taxes not yet due and payable; (c) purchase money
liens and liens securing rental payments under capital lease
-3-
8
arrangements; and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's Knowledge" shall mean actual knowledge of Seller without
independent investigation and without attribution of such knowledge to any other
employees, officers or directors of the Target.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Target" has the meaning set forth in the preface above.
"Target Share" means any share of the Common Stock, par value $.05 per
share, of the Target.
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in ss.8(d) below.
2. PURCHASE AND SALE OF TARGET SHARES.
(a) BASIC TRANSACTION. On and subject to the terms and conditions of
this Agreement, the Buyer shall purchase from the Seller, and the Seller shall
sell to the Buyer, all of his Target Shares for the consideration specified
below in this ss.2.
(b) PURCHASE PRICE. The Buyer agrees to pay to the Seller at the
Closing FOUR MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS ($4,650,000) (the
"Purchase Price") in cash payable by wire transfer or delivery of other
immediately available funds.
(c) ESCROW. Buyer agrees that it shall place the sum of One Hundred
Thousand Dollars ($100,000) into an escrow account with XXXXXX X. XXXXX pursuant
to the terms and conditions of an Escrow Agreement in the form of EXHIBIT B
attached hereto.
(d) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of XXXXXXXX XXXXXXXX
XXXXX & XXXXX LLP in Atlanta, Georgia, commencing at 9:00 a.m. local time on the
later of (i) December 15, 1997, or (ii) the
-4-
9
second business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) (the "Closing Date").
(e) DELIVERIES AT THE CLOSING. At the Closing: (i) the Seller will
deliver to the Buyer the various certificates, instruments and documents
referred to in ss.7(a) below; (ii) the Buyer will deliver to the Seller the
various certificates, instruments and documents referred to in ss.7(b) below;
(iii) the Seller will deliver to the Buyer stock certificates representing all
of his Target Shares, endorsed in blank or accompanied by duly executed
assignment documents; and (iv) the Buyer will deliver to the Seller the
consideration specified in ss.2(b) above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer that the statements contained in this
ss.3(a) are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
ss.3(a)) with respect to himself, except as set forth in Annex I attached
hereto.
(i) AUTHORIZATION OF TRANSACTION. The Seller has full power and
authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the
Seller, enforceable in accordance with its terms and
conditions. The Seller need not give any notice to, make
any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order
to consummate the transactions contemplated by this
Agreement.
(ii) NONCONTRAVENTION. To Seller's Knowledge, neither the
execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will:
(A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or
other restriction of any government, governmental agency,
or court to which the Seller is subject; or (B) conflict
with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which the
Seller is a party or by which he is bound or to which any
of his assets is subject.
(iii) BROKERS' FEES. The Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this
Agreement for which the Buyer could become liable or
obligated.
(iv) TARGET SHARES. The Seller holds of record and owns
beneficially the number of Target Shares set forth next to
his name in ss.4(b) of the Disclosure Schedule, free and
clear of any restrictions on transfer (other than any
-5-
10
restrictions under the Securities Act and state securities
laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims
and demands. The Seller is not a party to any option,
warrant, purchase right, or other contract or commitment
that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of the Target (other
than this Agreement). The Seller is not a party to any
voting trust, proxy, or other agreement or understanding
with respect to the voting of any capital stock of the
Target.
(b) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to the Seller that the statements contained in this ss.3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this ss.3(b)),
except as set forth in Annex II attached hereto.
(i) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(ii) AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of the Buyer, enforceable in
accordance with its terms and conditions. The Buyer need
not give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement.
(iii) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will: (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge or other restriction of any
government, governmental agency, or court to which the
Buyer is subject or any provision of its charter or bylaws;
or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement
to which the Buyer is a party or by which it is bound or to
which any of its assets is subject.
(iv) BROKERS' FEES. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this
Agreement for which the Seller could become liable or
obligated.
(v) INVESTMENT. The Buyer is not acquiring the Target Shares of
Seller with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities
Act.
-6-
11
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE TARGET. The Seller
represents and warrants to the Buyer that the statements contained in this ss.4
are true, correct and complete as of the date of this Agreement and will be
true, correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this ss.4) with respect to the Target, except as set forth in the
disclosure schedule delivered by the Seller to the Buyer as a part of this
Agreement and initialed by the Parties (the "Disclosure Schedule"). Nothing in
the Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this ss.4.
(a) ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Target is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Target is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. The Target has full corporate power and
authority and all licenses, permits and authorizations necessary to carry on the
businesses in which it is engaged and in which it presently proposes to engage
and to own and use the properties owned and used by it. ss.4(a) of the
Disclosure Schedule lists the directors and officers of the Target. The Seller
has delivered to the Buyer correct and complete copies of the charter and bylaws
of the Target (as amended to date). The minute book (containing the records of
meetings of the stockholders, the board of directors, and any committees of the
board of directors), the stock certificate books, and the stock record books of
the Target is substantially and materially correct and complete. The Target is
not in material default under or in violation of any provision of its charter or
bylaws.
(b) CAPITALIZATION. The entire authorized capital stock of the Target
is as set forth on ss.4(b) of the Disclosure Schedule. The Target Shares of the
Target are issued and outstanding. All of the issued and outstanding Target
Shares have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the Seller as set forth in ss.4(b) of
the Disclosure Schedule. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require the Target to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Target. There are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of the capital stock of the Target.
(c) NONCONTRAVENTION. To Seller's Knowledge, neither the execution and
the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will: (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge or other restriction
of any government, governmental agency, or court to which the Target is subject
or any provision of the charter or bylaws of the Target; or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate,
-7-
12
terminate, modify or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the Target
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets). To
Seller's Knowledge, the Target does not need to give any notice to, make any
filing with, or obtain any authorization, consent or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) BROKERS' FEES. The Target has no Liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
(e) TITLE TO ASSETS. The Target has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet.
(f) FINANCIAL STATEMENTS. Attached hereto as EXHIBIT B are the
following financial statements of the Target (collectively, the "Financial
Statements"): (i) audited balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal years ended
December 31, 1995 and December 31, 1996 (the "Most Recent Fiscal Year End") for
the Target, which financial statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the Target as
of such dates and the results of operations of the Target for such periods, and
are correct and complete; and (ii) unaudited balance sheet and statement of
income (the "Most Recent Fiscal Month End") as of and for the ten (10) months
ended October 31, 1997 for the Target, which financial statements have not been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby. The Financial Statements present fairly the financial
condition of the Target as of such dates and the results of operations of the
Target for such periods, are correct and complete, and are consistent with the
books and records of the Target (which books and records are correct and
complete) prepared on a basis other than GAAP.
(g) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of the Target. Without limiting the generality of the foregoing, since
that date:
(i) the Target has not sold, leased, transferred or assigned
any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) the Target has not entered into any agreement, contract,
lease or license (or series of related agreements,
contracts, leases and licenses) either involving more than
$100,000 or outside the Ordinary Course of Business;
(iii) the Target has not accelerated, terminated, modified or
cancelled any agreement, contract, lease or license (or
series of related agreements,
-8-
13
contracts, leases and licenses) involving more than
$100,000 to which the Target is a party or by which it is
bound;
(iv) the Target has not imposed any Security Interest upon any
of its assets, tangible or intangible;
(v) the Target has not made any capital expenditure (or series
of related capital expenditures either involving more than
$100,000 or outside the Ordinary Course of Business;
(vi) the Target has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments,
loans and acquisitions) either involving more than $100,000
or outside the Ordinary Course of Business;
(vii) the Target has not issued any note, bond or other debt
security or created, incurred, assumed or guaranteed any
indebtedness for borrowed money or capitalized lease
obligation either involving more than $100,000 singly or
$100,000 in the aggregate;
(viii) the Target has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) the Target has not cancelled, compromised, waived or
released any right or claim (or series of related rights
and claims) either involving more than $100,000 or outside
the Ordinary Course of Business;
(x) the Target has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(xi) there has been no changes made or authorized in the charter
or bylaws of the Target;
(xii) the Target has not issued, sold or otherwise disposed of
any of its capital stock, or granted any options, warrants
or other rights to purchase or obtain (including upon
conversion, exchange or exercise) any of its capital stock;
(xiii) the Target has not declared, set aside or paid any dividend
or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased or
otherwise acquired any of its capital stock;
(xiv) the Target has not experienced any material damage,
destruction or loss (whether or not covered by insurance)
to its property;
(xv) the Target has not made any loan to, or entered into any
other transaction with, any of its directors, officers and
employees outside the Ordinary Course of Business;
-9-
14
(xvi) the Target has not entered into any employment contract
or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or
agreement;
(xvii) the Target has not granted any increase in the base
compensation of any of its directors, officers and
employees outside the Ordinary Course of Business;
(xviii) the Target has not adopted, amended, modified or
terminated any bonus, profit-sharing, incentive,
severance or other plan, contract or commitment for the
benefit of any of its directors, officers and employees
(or taken any such action with respect to any other
Employee Benefit Plan);
(xix) the Target has not made any other change in employment
terms for any of its directors, officers and employees
outside the Ordinary Course of Business;
(xx) the Target has not made or pledged to make any charitable
or other capital contribution outside the Ordinary Course
of Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside
the Ordinary Course of Business involving the Target; and
(xxii) the Target has not committed to any of the foregoing.
(h) UNDISCLOSED LIABILITIES. To Seller's Knowledge, the Target has no
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
it giving rise to any Liability), except for: (i) Liabilities set forth on the
face of the Most Recent Balance Sheet (rather than in any notes thereto); and
(ii) Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement or violation of law).
(i) LEGAL COMPLIANCE. To Seller's Knowledge, the Target and its
respective predecessors and Affiliates have materially complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings and charges thereunder) of federal, state,
local and foreign governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand or notice
has been filed or commenced against any of them alleging any failure so to
comply. To Seller's Knowledge, the Target holds and is in full compliance with
all permits and licenses required by applicable law. A list of all such permits
and licenses is set forth on the Disclosure Schedule.
(j) TAX MATTERS.
(i) The Target has filed all Tax Returns that it was required
to file. All such Tax Returns were correct and complete
in all respects. All Taxes owed by the Target (whether or
not shown on any Tax Return) have been paid. The Target
currently is not the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever
been made by an authority in a
-10-
15
jurisdiction where the Target does not file Tax Returns
that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of
the assets of any of the Target that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) The Target has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.
(iii) The Seller does not have any Knowledge of any authority
claiming or assessing any additional Taxes for any period
for which Tax Returns have been filed. There is no
dispute or claim concerning any Tax Liability of the
Target either: (A) claimed or raised by any authority in
writing; or (B) as to which the Seller has Knowledge
based upon personal contact with any agent of such
authority. ss.4(k) of the Disclosure Schedule lists all
federal, state, local and foreign income Tax Returns
filed with respect to the Target for taxable periods
ended on or after December 31, 1991, indicates those Tax
Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. The
Seller has delivered to the Buyer correct and complete
copies of all Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to
by the Target since January 1, 1991.
(iv) The Target has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(v) The Target is not subject to any private letter ruling of
the IRS or comparable rulings of other taxing
authorities.
(vi) The Target has properly and timely elected under Section
1362 of the Code, and under each analogous or similar
provision of state or local law in each jurisdiction
where the Target is required to file a Tax Return, to be
treated as an "S" corporation for all taxable periods
since the date of incorporation of the Target. Buyer has
received a copy of any such elections and there has not
been any voluntary or involuntary termination or
revocation of any such election.
(vii) The Target has never owned any subsidiaries nor ever been
a member of any consolidated, combined or Affiliated
Group of corporations for any Tax purposes.
(viii) The Target has no undistributed earnings and profits nor
had for any taxable years gross receipts more than
twenty-five percent (25%) of which are "passive
investment income" (as defined in Section 1375 of the
Code).
(ix) The Target has not filed a consent under Codess.341(f)
concerning collapsible corporations. The Target has not
made any payments, is obligated to make
-11-
16
any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any
payments that will not be deductible under Codess.280G.
The Target has not been a United States real property
holding corporation within the meaning of
Codess.897(c)(2) during the applicable period specified
in Code ss.897(c)(1)(A)(ii). The Target has disclosed on
its federal income Tax Returns all positions taken
therein that could give rise to a substantial
understatement of federal income Tax within the meaning
of Codess.6662.
(x) Neither the Target nor any other Person (including
Seller) on behalf of the Target has: (i) 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 Target, or has any knowledge that
the IRS 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 Target; (ii) 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 Target; or (iii) requested any extension of time
within which to file any Tax Return, which Tax Return has
since not been filed.
(k) REAL PROPERTY. ss.4(k) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to the Target. The
Seller has delivered to the Buyer correct and complete copies of the leases and
subleases listed in ss.4(k) of the Disclosure Schedule (as amended to date).
With respect to each lease and sublease listed in ss.4(k) of the Disclosure
Schedule, to Seller's Knowledge:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the
transactions contemplated hereby;
(iii) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or
permit termination, modification or acceleration
thereunder;
(iv) no party to the lease or sublease has repudiated any
provision thereof;
(v) there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v) above
are true and correct with respect to the underlying
lease;
-12-
17
(vii) the Target has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have
received all approvals of governmental authorities
(including licenses and permits) required in connection
with the operation thereof and have been operated and
maintained in accordance with applicable laws, rules and
regulations;
(ix) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for
the operation of said facilities; and
(x) the owner of the facility leased or subleased has good
and marketable title to the parcel of real property, free
and clear of any Security Interest, easement, covenant or
other restriction, except for installments of special
easements not yet delinquent and recorded easements,
covenants and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of
title, of the property subject thereto.
(l) INTELLECTUAL PROPERTY.
(i) To Seller's Knowledge, the Target owns or has the right
to use pursuant to license, sublicense, agreement or
permission all Intellectual Property necessary for the
operation of the businesses of the Target as presently
conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by the Target
immediately prior to the Closing hereunder will be owned
or available for use by the Target on identical terms and
conditions immediately subsequent to the Closing
hereunder. No item of Intellectual Property is subject to
cancellation as a result of the transaction as set forth
herein being consummated by the Parties. The Target has
taken all necessary action to maintain and protect each
item of Intellectual Property that it owns or uses.
(ii) To Seller's Knowledge, the Target has not interfered
with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property rights of
third parties, and the Seller has not ever received any
charge, complaint, claim, demand or notice alleging any
such interference, infringement, misappropriation or
violation (including any claim that the Target must
license or refrain from using any Intellectual Property
rights of any third party). To the Seller's Knowledge, no
third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any
Intellectual Property rights of the Target.
(iii) To Seller's Knowledge,ss.4(l)(iii) of the Disclosure
Schedule identifies each patent or registration which has
been issued to the Target with respect to any of its
Intellectual Property, identifies each pending patent
application or application for registration which the
Target has made with respect to any of its Intellectual
Property, and identifies each license, agreement or other
-13-
18
permission which the Target has granted to any third
party with respect to any of its Intellectual Property
(together with any exceptions). The Seller has delivered
to the Buyer correct and complete copies of all such
patents, registrations, applications, licenses,
agreements and permissions (as amended to date) and has
made available to the Buyer correct and complete copies
of all other written documentation evidencing ownership
and prosecution (if applicable) of each such
item.ss.4(l)(iii) of the Disclosure Schedule also
identifies each trade name or unregistered trademark used
by the Target in connection with any of its businesses.
With respect to each item of Intellectual Property
required to be identified inss.4(l)(iii) of the
Disclosure Schedule, to Seller's Knowledge, :
(A) the Target possess all right, title and interest
in and to the item, free and clear of any Security
Interest, license or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling or
charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand
is pending or, to Seller's Knowledge, is
threatened which challenges the legality,
validity, enforceability, use or ownership of the
item; and
(D) the Target has never agreed to indemnify any
Person for or against any interference,
infringement, misappropriation or other conflict
with respect to the item.
(iv) To Seller's Knowledge, ss.(l)(iv) of the Disclosure
Schedule identifies each item of Intellectual Property
that any third party owns and that the Target uses
pursuant to license, sublicense, agreement or permission.
The Seller has delivered to the Buyer correct and
complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to
be identified in ss.4(l)(iv) of the Disclosure Schedule,
to Seller's Knowledge, :
(A) the license, sublicense, agreement or permission
covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) the license, sublicense, agreement or permission
will continue to be legal, valid, binding,
enforceable, and in full force and effect on
identical terms following the consummation of the
transactions contemplated hereby (including the
assignments and assumptions referred to in ss.2
above);
(C) no party to the license, sublicense, agreement or
permission is in breach or default, and no event
has occurred which with notice or lapse of time
would constitute a breach or default or permit
termination, modification or acceleration
thereunder;
-14-
19
(D) no party to the license, sublicense, agreement or
permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in
subsections (A) through (D) above are true and
correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is
not subject to any outstanding injunction,
judgment, order, decree, ruling or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand
is pending or, to Seller's Knowledge, is
threatened which challenges the legality, validity
or enforceability of the underlying item of
Intellectual Property; and
(H) the Target has not granted any sublicense or
similar right with respect to the license,
sublicense, agreement or permission.
(v) To Seller's Knowledge, the Target does not interfere
with, infringe upon, misappropriate or otherwise come
into conflict with, any Intellectual Property rights of
third parties as a result of the continued operation of
its businesses as presently conducted.
(m) TANGIBLE ASSETS. The Target owns or leases all buildings,
machinery, equipment and other tangible assets necessary for the conduct of its
businesses as presently conducted.
(n) CONTRACTS. ss.4(n) of the Disclosure Schedule lists the following
contracts and other agreements to which the Target is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person
providing for lease payments in excess of $100,000 per
annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of supplies, products or other personal
property, or for the furnishing or receipt of services,
the performance of which will extend over a period of
more than one year, result in a material loss to the
Target, or involve consideration in excess of $100,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized
lease obligation, in excess of $100,000 or under which
the Target has imposed a Security Interest on any of its
assets, tangible or intangible;
-15-
20
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement with the Seller with the Target;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance or other
material plan or arrangement for the benefit of its
current or former directors, officers and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting or other basis providing
annual compensation in excess of $100,000 or providing
severance benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers and employees
outside the Ordinary Course of Business;
(xi) any agreement under which the consequences of a default
or termination could have a material adverse effect on
the business, financial condition, operations, results of
operations or future prospects of the Target; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of
$100,000.
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement listed in ss.4(n) of the Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and conditions of each oral
agreement referred to in ss.4(n) of the Disclosure Schedule. With respect to
each such agreement, to Seller's Knowledge: (A) the agreement is legal, valid,
binding, enforceable, and in full force and effect; (B) the agreement will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby; (C) no party is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification or acceleration, under the agreement; and (D) no party
has repudiated any provision of the agreement.
(o) NOTES AND ACCOUNTS RECEIVABLE. To Seller's Knowledge, all notes
and accounts receivable of the Target are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims. To
Seller's Knowledge, (a) each of the notes and accounts receivable is secured by
title to, security interests in, or liens on, a motor vehicle under applicable
provisions of the motor vehicle or other similar laws of the jurisdiction in
which the motor vehicle is titled and registered, (b) Seller has a first
priority and perfected security interest in each note and account receivable
being sold to Buyer under all applicable laws in the jurisdiction in which any
motor vehicle subject to notes and accounts receivable is titled and registered,
or (c) all filings with the registrar of motor vehicles or any other appropriate
authority, and all notations on any certificates of title necessary to perfect a
first priority security interest in the motor vehicles subject to the notes and
accounts receivable have been duly filed, recorded, registered and made. To
Seller's Knowledge, (a) none of the notes or accounts receivable is subject to
any material offset, discount, counterclaim, dispute or any other defense,
including without limitation, usury, unrecorded credits,
-16-
21
lack of consideration, fraud, violations of truth-in-lending, or any other
Federal or state laws pertaining to the notes or accounts receivable, or contain
any forgery, alterations, or undisclosed agreements with persons named therein
as debtors or any other third parties and (b) all payments recorded or being
credited under the notes or accounts receivable have been paid by the Buyer.
(p) POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Target.
(q) INSURANCE. ss.4(q) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability and Workers' Compensation coverage and
bond and surety arrangements) to which the Target has been a party, a named
insured, or otherwise the beneficiary of coverage at any time within the past
five (5) years:
(i) the name, address and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other
basis) and amount (including a description of how
deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) to Seller's Knowledge,
the policy will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither the Target nor any other party to
the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification or acceleration, under the policy; and (D) no party to
the policy has repudiated any provision thereof. The Target has been covered
during the past five (5) years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. ss.4(q) of the Disclosure Schedule describes any self-insurance
arrangements affecting the Target.
(r) LITIGATION. ss.4(r) of the Disclosure Schedule sets forth each
instance in which the Target: (i) is subject to any outstanding injunction,
judgment, order, decree, ruling or charge; or (ii) is a party or, to Seller's
Knowledge, is threatened to be made a party to any action, suit, proceeding,
hearing or investigation of, in or before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction or
before any arbitrator. None of the actions, suits, proceedings, hearings and
investigations set forth in ss.4(r) of the Disclosure Schedule could result in
any material adverse change in the business, financial condition, operations,
results
-17-
22
of operations, or future prospects of the Target. The Seller has no reason to
believe that any such action, suit, proceeding, hearing or investigation may be
brought or threatened against the Target.
(s) EMPLOYEES. To Seller's Knowledge, no executive, key employee or
group of employees has any plans to terminate employment with the Target. The
Target is not a party to or bound by any collective bargaining agreement, nor
has it experienced any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. The Target has not committed any unfair
labor practice. The Seller has no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Target.
(t) EMPLOYEE BENEFITS.
(i) ss.4(t) of the Disclosure Schedule lists each Employee
Benefit Plan that the Target maintains or to which the
Target contributes.
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in
form and in operation in all respects with the
applicable requirements of ERISA, the Code, and
other applicable laws.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1s, and Summary Plan Descriptions) have been
filed or distributed appropriately with respect to
each such Employee Benefit Plan. The requirements
of Part 6 of Subtitle B of Title I of ERISA and of
Code ss.4980B have been met with respect to each
such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(C) All contributions (including all employer
contributions and employee salary reduction
contributions) which are due have been paid to
each such Employee Benefit Plan which is an
Employee Pension Benefit Plan and all
contributions for any period ending on or before
the Closing Date which are not yet due have been
paid to each such Employee Pension Benefit Plan or
accrued in accordance with the past custom and
practice of the Target. All premiums or other
payments for all periods ending on or before the
Closing Date have been paid with respect to each
such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the
requirements of a "qualified plan" under Code
ss.401(a) and has received, within the last two
years, a favorable determination letter from the
Internal Revenue Service.
(E) The market value of assets under each such
Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan)
equals or exceeds the present value of all vested
and nonvested Liabilities thereunder determined in
accordance with
-18-
23
PBGC methods, factors, and assumptions applicable
to an Employee Pension Benefit Plan terminating on
the date for determination.
(F) The Seller has delivered to the Buyer correct and
complete copies of the plan documents and summary
plan descriptions, the most recent determination
letter received from the Internal Revenue Service,
the most recent Form 5500 Annual Report, and all
related trust agreements, insurance contracts and
other funding agreements which implement each such
Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the
Target maintains or ever has maintained or to which it
contributes, ever has contributed, or ever has been
required to contribute:
(A) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer
Plan) has been completely or partially terminated
or been the subject of a Reportable Event as to
which notices would be required to be filed with
the PBGC. No proceeding by the PBGC to terminate
any such Employee Pension Benefit Plan (other than
any Multiemployer Plan) has been instituted or, to
Seller's Knowledge, threatened.
(B) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No
Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or
comply in connection with the administration or
investment of the assets of any such Employee
Benefit Plan. No action, suit, proceeding, hearing
or investigation with respect to the
administration or the investment of the assets of
any such Employee Benefit Plan (other than routine
claims for benefits) is pending or, to Seller's
Knowledge, threatened. The Seller has no Knowledge
of any Basis for any such action, suit,
proceeding, hearing or investigation.
(C) The Target has not incurred, and the Seller has no
reason to expect that the Target will incur, any
Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA
(including any withdrawal Liability) or under the
Code with respect to any such Employee Benefit
Plan which is an Employee Pension Benefit Plan.
(iii) The Target does not contribute to, ever has contributed
to, or ever has been required to contribute to any
Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iv) The Target does not maintain or ever has maintained or
contributes, ever has contributed, or ever has been
required to contribute to any Employee Welfare Benefit
Plan providing medical, health, or life insurance or
other welfare-type
-19-
24
benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than
in accordance with Code ss.4980B).
(u) GUARANTIES. The Target is not a guarantor or otherwise is liable
for any Liability or obligation (including indebtedness) of any other Person.
(v) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) To Seller's Knowledge, the Target has complied and is in
compliance with all Environmental, Health and Safety
Requirements.
(ii) Without limiting the generality of the foregoing, to
Seller's Knowledge, the Target has obtained and complied
with, and is in compliance with, all permits, licenses
and other authorizations that are required pursuant to
Environmental, Health and Safety Requirements for the
occupation of its facilities and the operation of its
business; a list of all such permits, licenses and other
authorizations is set forth on the attached
"Environmental and Safety Permits Schedule."
(iii) To Seller's Knowledge, the Target has not received any
written or oral notice, report or other information
regarding any actual or alleged violation of
Environmental, Health and Safety Requirements, or any
liabilities or potential liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective
obligations, relating to it or its facilities arising
under Environmental, Health and Safety Requirements.
(iv) To Seller's Knowledge, none of the following exists at
any property or facility owned or operated by the Target:
(A) underground storage tanks; (B) asbestos- containing
material in any form or condition; (C) materials or
equipment containing polychlorinated biphenyls; or (D)
landfills, surface impoundments or disposal areas.
(v) To Seller's Knowledge, the Target has not treated,
stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any
substance, including without limitation any hazardous
substance, or owned or operated any property or facility
(and no such property or facility is contaminated by any
such substance) in a manner that has given or would give
rise to liabilities, including any liability for response
costs, corrective action costs, personal injury, property
damage, natural resources damages or attorney fees,
pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended
("CERCLA"), the Solid Waste Disposal Act, as amended
("SWDA"), or any other Environmental, Health and Safety
Requirements.
(vi) To Seller's Knowledge, neither this Agreement nor the
consummation of the transaction that is the subject of
this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent
of government
-20-
25
agencies or third parties, pursuant to any of the
so-called "transaction-triggered" or "responsible
property transfer" Environmental, Health and Safety
Requirements.
(vii) To Seller's Knowledge, the Target has not, either
expressly or by operation of law, assumed or undertaken
any liability, including without limitation any
obligation for corrective or remedial action, of any
other Person relating to Environmental, Health and Safety
Requirements.
(viii) To Seller's Knowledge, no facts, events or conditions
relating to the past or present facilities, properties or
operations of the Target will prevent, hinder or limit
continued compliance with Environmental, Health and
Safety Requirements, give rise to any investigatory,
remedial or corrective obligations pursuant to
Environmental, Health and Safety Requirements, or give
rise to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to
Environmental, Health and Safety Requirements, including
without limitation any relating to onsite or offsite
releases or threatened releases of hazardous materials,
substances or wastes, personal injury, property damage or
natural resources damage.
(w) DISCLOSURE. To Seller's Knowledge, the representations and
warranties contained in this ss.4 do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained in this ss.4 not misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his or its reasonable best
efforts to take all action and to do all things necessary, proper or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in ss.7 below).
(b) NOTICES AND CONSENTS. The Seller will cause the Target to give any
notices to third parties, and will cause the Target to use its reasonable best
efforts to obtain any third party consents, that the Buyer reasonably may
request in connection with the matters referred to in ss.4(c) above. Each of the
Parties will (and the Seller will cause the Target to) give any notices to, make
any filings with, and use its reasonable best efforts to obtain any
authorizations, consents and approvals of governments and governmental agencies
in connection with the matters referred to in ss.3(a)(i), ss.3(b)(ii), and
ss.4(c) above.
(c) OPERATION OF BUSINESS. The Seller will not cause or permit the
Target to engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the generality of the
foregoing, the Seller will not cause or permit the Target to: (i) declare, set
aside, or pay any dividend or make any distribution with respect to its capital
stock or redeem, purchase, or otherwise acquire any of its capital stock; or
(ii) otherwise engage in any practice, take any action, or enter into any
transaction of the sort described in ss.4(g) above.
-21-
26
(d) PRESERVATION OF BUSINESS. The Seller will cause the Target to keep
its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers and employees.
(e) FULL ACCESS. The Seller will permit, and the Seller will cause the
Target to permit, representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Target, to all premises, properties, personnel,
books, records (including Tax records), contracts and documents of or pertaining
to the Target.
(f) NOTICE OF DEVELOPMENTS. The Seller will give prompt written notice
to the Buyer of any material adverse development causing a breach of any of the
representations and warranties in ss.4 above. Each Party will give prompt
written notice to the others of any material adverse development causing a
breach of any of his or its own representations and warranties in ss.3 above. No
disclosure by any Party pursuant to this ss.5(f), however, shall be deemed to
amend or supplement Annex I, Annex II, or the Disclosure Schedule or to prevent
or cure any misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. The Seller will not (and the Seller will not cause or
permit the Target to): (i) solicit, initiate or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of
the Target (including any acquisition structured as a merger, consolidation or
share exchange); or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. The Seller will not vote any of his Target Shares in favor
of any such acquisition structured as a merger, consolidation or share exchange.
The Seller will notify the Buyer immediately if any Person makes any proposal,
offer, inquiry or contact with respect to any of the foregoing.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
period following the Closing.
(a) GENERAL. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under ss.8 below). The
Seller acknowledges and agrees that from and after the Closing, the Buyer will
be entitled to possession of all documents, books, records (including Tax
records), agreements and financial data of any sort relating to the Target.
(b) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with:
(i) any transaction contemplated under this Agreement; or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction, on or prior
to the Closing Date involving the Target, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall
-22-
27
be necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefor under ss.8 below).
(c) TRANSITION. The Seller will not take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Target from maintaining the same
business relationships with the Target after the Closing as it maintained with
the Target prior to the Closing. The Seller will refer all customer inquiries
relating to the businesses of the Target to the Buyer from and after the
Closing.
(d) CONFIDENTIALITY. The Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in his possession. In the
event that the Seller is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information, the Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this ss.6(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, the Seller is, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, the Seller may disclose the
Confidential Information to the tribunal; provided, however, that the Seller
shall use his best efforts to obtain, at the request of the Buyer, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Buyer shall
designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3(a)
and ss.4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Seller shall have performed and complied with all of
its covenants hereunder in all material respects through
the Closing;
(iii) the Target shall have procured all of the third party
consents specified in ss.5(b) above;
(iv) no action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling
or charge would: (A) prevent consummation of any of the
transactions contemplated by this Agreement;
-23-
28
(B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation; (C)
affect adversely the right of the Buyer to own the Target
Shares of the Seller of the Target and to control the
Target; or (D) affect adversely the right of the Target
to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling or
charge shall be in effect);
(v) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in ss.7(a)(i)-(iv) is satisfied in all
respects;
(vi) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have
expired or otherwise been terminated and the Parties, the
Target shall have received all other authorizations,
consents and approvals of governments and governmental
agencies referred to in ss.3(a)(i), ss.3(b)(ii), and
ss.4(c) above;
(vii) the relevant parties shall have entered into side
agreements and the real estate lease in form and
substance as set forth in EXHIBITS C-1 THROUGH C-__
attached hereto and the same shall be in full force and
effect;
(viii) the Buyer shall have received from counsel to the Seller
an opinion in form and substance as set forth in EXHIBIT
D attached hereto, addressed to the Buyer, and dated as
of the Closing Date;
(ix) the Buyer shall have received the resignations, effective
as of the Closing, of each director and officer of the
Target other than those whom the Buyer shall have
specified in writing at least five business days prior to
the Closing;
(x) The Buyer shall have completed its due diligence of the
Target and be satisfied with the results of such due
diligence in its sole discretion;
(xi) The Buyer shall have obtained adequate financing from
GENERAL ELECTRIC CAPITAL CORPORATION or some similar
financial institution on no less favorable terms and
conditions as is presently in place at SOUTH FINANCIAL
CORPORATION;
(xii) The Seller must have caused all receivables from
affiliated companies due to SOUTH FINANCIAL CORPORATION
be paid in full as of the Closing Date;
(xiii) The Buyer, the Seller and SOUTHERN LIFE REINSURANCE
COMPANY, LTD., a Turks and Caicos Islands corporation,
shall have entered into an Asset Purchase Agreement, in
form and substance as set forth in EXHIBIT F attached
hereto, which agreement shall obligate the Buyer to
purchase, and shall obligate the Seller and SOUTHERN LIFE
REINSURANCE COMPANY, LTD. to sell to the Buyer, certain
assets of SOUTHERN LIFE REINSURANCE COMPANY, LTD. in
accordance with the terms and conditions set forth in
said Asset Purchase Agreement; the closing for such asset
sale shall occur on the same date as the Closing of the
transactions contemplated by this Agreement;
-24-
29
(xiv) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other
documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in
form and substance to the Buyer and its counsel.
The Buyer may waive any condition specified in this ss.7(a) if it executes a
writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the
Seller to consummate the transactions to be performed by him in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3(b)
above shall be true and correct in all material respects
at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through
the Closing;
(iii) no action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling
or charge would: (A) prevent consummation of any of the
transactions contemplated by this Agreement; or (B) cause
any of the transactions contemplated by this Agreement to
be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling or charge
shall be in effect);
(iv) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions
specified above in ss.7(b)(i)-(iii) is satisfied in all
respects;
(v) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have
expired or otherwise been terminated and the Parties, the
Target shall have received all other authorizations,
consents and approvals of governments and governmental
agencies referred to in ss.3(a)(i), ss.3(b)(ii), and
ss.4(c) above;
(vi) the relevant parties shall have entered into side
agreements in form and substance as set forth in EXHIBITS
C-__ through C-__ and the same shall be in full force and
effect;
(vii) the Seller shall have received from counsel to the Buyer
an opinion in form and substance as set forth in EXHIBIT
E attached hereto, addressed to the Seller, and dated as
of the Closing Date; and
(viii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and
all certificates, opinions, instruments
-25-
30
and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in
form and substance to the Seller and his counsel.
The Seller may waive any condition specified in this ss.7(b) if they execute a
writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Seller contained in ss.4(a)-(i) and
ss.4(k)-(v) above shall survive the Closing hereunder and continue in full force
and effect for a period of two (2) years thereafter. All of the other
representations and warranties of the Parties contained in this Agreement
(including the representations and warranties of the Seller contained in ss.4(j)
and ss.4(w) above) shall survive the Closing and continue in full force and
effect forever thereafter (subject to any applicable statutes of limitations).
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(i) Subject strictly to the limitations set forth
inss.8(b)(v) below, in the event the Seller breaches any
of his representations, warranties and covenants
contained herein, and, if there is an applicable survival
period pursuant toss.8(a) above, provided that the Buyer
makes a written claim for indemnification against the
Seller pursuant toss.8(d) below within such survival
period, then the Seller agrees to indemnify the Buyer
from and against the entirety of any Adverse Consequences
the Buyer may suffer through and after the date of the
claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end of any
applicable survival period) resulting from, arising out
of, relating to, in the nature of, or caused by the
breach.
(ii) Subject strictly to the limitations set forth in
ss.8(b)(v) below, the Seller agrees to indemnify the
Buyer from and against the entirety of any Adverse
Consequences the Buyer may suffer resulting from, arising
out of, relating to, in the nature of, or caused by any
Liability of the Target for any Taxes of the Target with
respect to any Tax year or portion thereof ending on or
before the Closing Date (or for any Tax year beginning
before and ending after the Closing Date to the extent
allocable (determined in a manner consistent with
ss.9(c)) to the portion of such period beginning before
and ending on the Closing Date).
(iii) The Seller's indemnification obligations set forth in
ss.8(b)(i) through ss.8(b)(iv) above shall be strictly
limited by the following limitations and conditions:
(A) The Seller shall not be obligated to indemnify the
Buyer from and against any Adverse Consequences
resulting from, arising out of, relating to, in
the nature of, or caused by the breach of any
representation and warranty by the Seller until
the Buyer has suffered
-26-
31
Adverse Consequences by reason of any single
breach in excess of a Seven Thousand Five Hundred
Dollar ($7,500.00) threshold, at which point the
Seller will be obligated to indemnify the Buyer
from and against all Adverse Consequences the
Buyer may suffer as a result of such single breach
back to the first dollar (the "Basket").
(B) The Seller's maximum aggregate liability to the
Buyer for any and all Adverse Consequences
resulting from, arising out of, relating to, in
the nature of, or cause by the breach of any
representation and warranty by the Seller shall
not exceed Three Hundred Fifty Thousand Dollars
($350,000.00) (the "Cap").
(C) Notwithstanding anything to the contrary contained
in ss.8(b)(iii)(A) and ss.8(b)(iii)(B) hereof,
neither the Basket nor the Cap shall apply to, and
the Seller shall be obligated to fully indemnify
the Buyer from and against, any Adverse
Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the
fraud of the Seller.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER. In the event
the Buyer breaches any of its representations, warranties and covenants
contained herein, and, if there is an applicable survival period pursuant to
ss.8(a) above, provided that the Seller makes a written claim for
indemnification against the Buyer pursuant to ss.8(d) below within such survival
period, then the Buyer agrees to indemnify the Seller from and against the
entirety of any Adverse Consequences the Seller may suffer through and after the
date of the claim for indemnification (including any Adverse Consequences the
Seller may suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by the breach.
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for
indemnification against any other Party (the
"Indemnifying Party") under this ss.8, then the
Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying
any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is
prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the
Indemnified Party so long as: (A) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party will indemnify
the Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim; (B) the
Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party
that the Indemnifying
-27-
32
Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification
obligations hereunder; (C) the Third Party Claim involves
only money damages and does not seek an injunction or
other equitable relief; (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not,
in the good faith judgment of the Indemnified Party,
likely to establish a precedential custom or practice
materially adverse to the continuing business interests
of the Indemnified Party; and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively
and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance
withss.8(d)(ii) above: (A) the Indemnified Party may
retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim;
(B) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld
unreasonably); and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not
to be withheld unreasonably).
(iv) In the event any of the conditions inss.8(d)(ii) above is
or becomes unsatisfied, however: (A) the Indemnified
Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to,
the Third Party Claim in any manner it reasonably may
deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any
Indemnifying Party in connection therewith); (B) the
Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable
attorneys' fees and expenses); and (C) the Indemnifying
Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent
provided in thisss.8.
(e) EXCLUSIVE REMEDY. The Buyer and the Seller acknowledge and agree
that the foregoing indemnification provisions in this ss.8 shall be the
exclusive remedy of the Buyer and the Seller with respect to the Target, the
representations and warranties of the parties, and the transactions contemplated
by this Agreement, except where fraud is involved in a breach of the terms,
conditions, covenants, representations and warranties set forth in this
Agreement. The Seller hereby agrees that he will not make any claim for
indemnification against the Target by reason of the fact that he was a director,
officer, employee or agent of any such entity or was serving at the request of
any such entity as a partner, trustee, director, officer, employee or agent of
another entity (whether such claim is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses or otherwise and whether
such claim is pursuant to any statute, charter document, bylaw, agreement or
otherwise) with respect to any action, suit, proceeding, complaint, claim or
demand brought by the Buyer against the Seller (whether such action, suit,
proceeding, complaint, claim or demand is pursuant to this Agreement, applicable
law, or otherwise).
-28-
33
9. TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between Buyer and Seller for certain tax matters
following the Closing Date:
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. Buyer shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the Target for all periods ending on or prior to the Closing Date which are
filed after the Closing Date. Seller shall reimburse Buyer for Taxes of the
Target with respect to such periods within fifteen (15) days after payment by
Buyer or the Target of such Taxes to the extent such Taxes are not reflected in
the reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) shown on
the face of the Closing Balance Sheet of the Target.
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE.
Buyer shall prepare or cause to be prepared and file or cause to be filed any
Tax Returns of the Target for Tax periods which begin before the Closing Date
and end after the Closing Date. Seller shall pay to Buyer within fifteen (15)
days after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion of such
Taxable period ending on the Closing Date to the extent such Taxes are not
reflected in the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income)
shown on the face of the Closing Balance Sheet. For purposes of this Section, in
the case of any Taxes that are imposed on a periodic basis and are payable for a
Taxable period that includes (but does not end on) the Closing Date, the portion
of such Tax which relates to the portion of such Taxable period ending on the
Closing Date shall: (A) in the case of any Taxes other than Taxes based upon or
related to income or receipts, be deemed to be the amount of such Tax for the
entire Taxable period multiplied by a fraction the numerator of which is the
number of days in the Taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire Taxable period; and (B)
in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date. Any credits relating to a Taxable period that begins before
and ends after the Closing Date shall be taken into account as though the
relevant Taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of the Target.
(c) COOPERATION ON TAX MATTERS.
(i) Buyer, the Target and Seller shall cooperate fully, as
and to the extent reasonably requested by the other
party, in connection with the filing of Tax Returns
pursuant to this Section and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's
request) the provision of records and information which
are reasonably relevant to any such audit, litigation or
other proceeding and making employees available on a
mutually convenient basis to provide additional
information and explanation of any material provided
hereunder. The Target and Seller agree: (A) to retain all
books and records with respect to Tax matters pertinent
to the Target relating to any taxable period beginning
before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by
Buyer or Seller, any extensions thereof) of the
respective taxable periods, and to abide by all record
retention agreements entered into with any taxing
authority; and (B) to give the other
-29-
34
party reasonable written notice prior to transferring,
destroying or discarding any such books and records and,
if the other party so requests, the Target or Seller, as
the case may be, shall allow the other party to take
possession of such books and records.
(ii) Buyer and Seller further agree, upon request, to use
their best efforts to obtain any certificate or other
document from any governmental authority or any other
Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions
contemplated hereby).
(iii) Buyer and Seller further agree, upon request, to provide
the other party with all information that either party
may be required to report pursuant to Section 6043 of the
Code and all Treasury Department Regulations promulgated
thereunder.
10. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(i) The Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) The Buyer may terminate this Agreement by giving written
notice to the Seller on or before December 31, 1997 if
the Buyer is not reasonably satisfied with the results of
its continuing business, legal, environmental and
accounting due diligence regarding the Target;
(iii) The Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing:
(A) in the event the Seller has breached any material
representation, warranty or covenant contained in this
Agreement in any material respect, the Buyer has notified
the Seller of the breach, and the breach has continued
without cure for a period of 30 days after the notice of
breach; or (B) if the Closing shall not have occurred on
or before December 31,1997, by reason of the failure of
any condition precedent underss.7(a) hereof (unless the
failure results primarily from the Buyer itself breaching
any representation, warranty or covenant contained in
this Agreement), except as set forth in Section 10(a)(v)
hereof; and
(iv) The Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing: (A)
in the event the Buyer has breached any material
representation, warranty or covenant contained in this
Agreement in any material respect, the Seller has
notified the Buyer of the breach, and the breach has
continued without cure for a period of 30 days after the
notice of breach; or (B) if the Closing shall not have
occurred on or before December 31, 1997, by reason of the
failure of any condition
-30-
35
precedent underss.7(b) hereof (unless the failure results
primarily from the Seller himself breaching any
representation, warranty or covenant contained in this
Agreement), except as set forth in Section 10(a)(v)
hereof.
(v) Notwithstanding Sections 10(a)(iii)(B) and 10(a)(iv)(B)
hereof, neither Buyer nor Seller may terminate this
Agreement if the Closing shall not have occurred on or
before December 31, 1997 by reason of the failure of the
conditions contained in Sections 7(a)(vi) (Governmental
Consent), 7(b)(v) (Governmental Consent) or 7(a)(xi) (GE
Capital Consent).
(vi) Notwithstanding anything contained in this ss.10 to the
contrary, either Buyer or Seller may terminate this
Agreement by written notice to the other party if the
Closing shall not have taken place on or prior to 11:59
p.m. EST on March 31, 1998, or such other date as shall
have been approved by Buyer and Seller in writing
(provided that the terminating party is not otherwise in
material breach of its representations, warranties,
covenants or agreements under this Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to ss.10(a) above, all rights and obligations of the Parties hereunder
shall terminate without any Liability of any Party to any other Party (except
for any Liability of any Party then in material breach).
11. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
Buyer and the Seller; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Parties prior to making the disclosure).
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests or obligations hereunder without the prior
written approval of the Buyer and the Seller; provided, however, that the Buyer
may: (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates; and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which
-31-
36
cases the Buyer nonetheless shall remain responsible for the performance of all
of its obligations hereunder).
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Seller: Xx. Xxxxxx X. (Tiff) Xxxxxx, Xx.
0000 X.X. 00xx Xxxx.
Xxxxxxxxxxx, XX 00000
Copy to: Xxxxxx X. Xxxxx, Esq.
XXXXXX X. XXXXX, P.A.
000 X.X. Xxxxx Xxxxxx, Xxxxx 0
Xxxxxxxxxxx, XX 00000
If to Buyer: Xxxxxxx X. Xxxxxxx, Esq.
THE XXXXXXX LAW FIRM
0000 Xxxxxxxxx Xxxxxxxx Xx.
Xxxxx 000 / Building D
Xxxxxxx, XX 00000
Copy to: Xxxxx X. Xxxxxx, Esq.
XXXXXXXX XXXXXXXX XXXXX & XXXXX XXX
XxxXxxxx Xxxxx / Xxxxx 0000
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000-0000
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Georgia without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Georgia.
-32-
37
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) EXPENSES. Each of the Parties and the Target will bear his or its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. The
Seller agrees that the Target has not borne and will not bear any of the
Seller's costs and expenses (including any of its legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty and covenant contained herein shall have
independent significance. If any Party has breached any representation, warranty
or covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty or covenant.
(m) INCORPORATION OF EXHIBITS, ANNEXES AND SCHEDULES. The Exhibits,
Annexes and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in ss.10(o) below),
in addition to any other remedy to which they may be entitled, at law or in
equity.
(o) SUBMISSION TO JURISDICTION. Each of the Parties submits to the
jurisdiction of any state court sitting in Xxxx County, Georgia, or federal
court sitting in the Northern District of the State of Georgia in any action or
proceeding arising out of or relating to this Agreement and agrees
-33-
38
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other Party with respect thereto. For
purposes of service of process, Seller designates Xxxxxx X. Xxxxx, Esq. as his
agent for service of process to acknowledge receipt of any service of process
intended to be served on Seller, provided, however, that Seller may designate
another person as his agent for service of process by providing the name and
address of such person to Buyer in the manner provided for giving notices in
ss.10(g) above, and further provided that all service of process served on such
agent shall be served as it would otherwise be served on Seller pursuant to
applicable law. Nothing in this ss.10(o), however, shall affect the right of any
Party to bring any action or proceeding arising out of or relating to this
Agreement in any other court or to serve legal process in any other manner
permitted by law or at equity. Each Party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or at equity.
-34-
39
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
BUYER: BAG FLORIDA II, INC.
BY: /s/ XXXXX X. XXXXX
-------------------------------------
Title: President
SELLER: XXXXXX X. (TIFF) XXXXXX, XX.
/s/ XXXXXX X. XXXXXX, XX.
----------------------------------------
XXXXXX X. (TIFF) XXXXXX, XX.
-35-
