Exhibit 2.1
XXXXX CONSTRUCTION STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") dated as of this 17th day of
September, 1997, by and among Xxxxxx X. Xxxxx, an individual, residing at 00
Xxxxxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the "Seller"), Compost America
Holding Company, Inc., a New Jersey corporation, with principal place of
business at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Purchaser")
and X. X. Xxxxx Construction Co., Inc., a New Jersey corporation, including
its EPIC division, with principal place of business at 000 Xxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxxxx 00000 (the "Corporation").
W I T N E S S E T H :
WHEREAS, the Seller is the beneficial and record owner of the issued and
outstanding shares of common stock, no par value identified on Schedule A
hereto (the "Stock") of the Corporation; and
WHEREAS, the Seller desires to sell and the Purchaser desires to purchase
the Stock upon the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement and intending to
be legally bound hereby, the parties hereto agree as follows:
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ARTICLE ONE
SALE AND PURCHASE OF STOCK
1.01 Sale and Purchase of the Stock. At the Closing (as hereafter
defined), the Seller shall sell, transfer, assign, convey and deliver to the
Purchaser the Stock, free and clear of Liens (as hereinafter defined) and the
Purchaser hereby agrees to purchase and acquire the Stock from the Seller,
for the Purchase Price (as hereinafter defined).
1.02 Deposit. (a) 100,000 shares of the authorized but unregistered
common stock, no par value of the Purchaser (the "CAHC Stock") have already
been delivered to the Seller in consideration of the Seller's execution and
delivery of that certain letter of intent (the "Letter of Intent") dated
April 30, 1997 by and between the Purchaser and the Seller. The Letter of
Intent expired by its terms on July 15, 1997. On August 19, 1997 the parties
agreed to revive, amend, extend and restate the Letter of Intent on the terms
and conditions contained therein (the "Restated Letter of Intent"). To secure
the Purchaser's obligations under this Agreement, the Purchaser has deposited
with Xxxx, Xxxxxxxxx & XxXxxx, L.L.P., the Seller's attorneys, as escrow
agent (the "Escrow Agent"), pursuant to that certain escrow agreement dated
May 5, 1997 (the "Escrow Agreement"), a copy of which is attached hereto as
Schedule 1.02, an additional 400,000 shares of CAHC Stock.
(b) If the Closing shall occur as hereinafter provided, the 400,000
shares of CAHC Stock held by the Escrow Agent shall be returned to the
Purchaser.
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(c) In the event the Closing as provided for herein does not occur as a
result of the Seller's failure or refusal to proceed to Closing, all the CAHC
Stock then held by the Escrow Agent shall be delivered by the Escrow Agent to
the Purchaser, all the CAHC Stock then held by the Seller shall be delivered
by the Seller to the Purchaser and the Seller shall pay to the Purchaser the
sum of Two Hundred Thousand ($200,000) Dollars, all of which shall be
liquidated damages hereunder and which shall be the Purchaser's sole and
exclusive remedy as against the Seller in connection with this Agreement.
For purposes of this paragraph, the 100,000 shares of CAHC Stock returned by
the Seller to the Purchaser shall be deemed to have a value of Three ($3.00)
Dollars per share.
(d) If the Closing as provided for herein does not occur as a result of
the Purchaser's failure or refusal to proceed to Closing, subject to any
conditions to the Purchaser's obligations hereunder, including, without
limitation, the execution and delivery of that certain long term Biosolids
Services Management Agreement by and between the Corporation and the New York
City Department of Environmental Protection (the "New York Contract"), all of
the shares of CAHC Stock then held by the Escrow Agent shall be delivered by
the Escrow Agent to the Seller as liquidated damages, which shall be the
Seller's sole and exclusive remedy as against the Purchaser in connection
with this Agreement; provided, however, that if the Closing does not occur as
herein provided as a result of the Purchaser's failure or refusal to proceed
to Closing, from and after the date hereof to and including September 15,
1998, the
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Seller shall have the option to require the Purchaser to repurchase all of
the CAHC Stock then owned by the Seller at a purchase price of Three ($3.00)
Dollars per share. The Seller shall exercise such option by providing written
notice to the Purchaser of his intent to exercise such option, whereupon
within five (5) days of the date of such notice, the Purchaser shall deliver
to the Seller the Purchaser's promissory note in the principal amount of One
Million Five Hundred Thousand ($1,500,000) Dollars which note shall be due
and payable on September 15, 1998, shall provide for the accrual and payment
of interest on the outstanding principal balance thereof at the floating rate
of Wall Street Prime plus two (2%) percent per annum and such promissory note
shall either: (i) be secured by such property of the Purchaser as is
reasonably satisfactory to the Seller; or (ii) the Purchaser and the Seller
shall enter into a mutually acceptable escrow agreement pursuant to which the
Purchaser shall be required to deposit in an escrow account the sum of
$100,000 per month as security for the payment of the note and the Seller
shall deliver in escrow stock certificates for the shares of CAHC Stock. Upon
payment by the Purchaser of $1,500,000 plus accrued interest, the escrow
agent shall deliver the stock certificates representing the CAHC Stock to the
Purchaser.
1.03 Purchase Price and Payment. The purchase price of Twenty Million
($20,000,000) Dollars (the "Purchase Price") to be paid by the Purchaser to the
Seller for the Stock shall be paid as follows: (i) by the Purchaser's
satisfaction or its confirmation on or
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before the Closing Date (as hereinafter defined) of its obligation to pay the
then outstanding principal balance of equipment debt (the "Equipment Debt")
of the Corporation, identified on Schedule 1.03 hereto, which as of the date
hereof is Seven Million Fifty Six Thousand Two Hundred Ninety Two Dollars and
46/00 ($7,056,292.46) Dollars; (ii) by the issuance to the Purchaser of
$6,000,000 of the Purchaser's Series A and Series C Preferred Stock, as more
fully described in Schedule 1.03(a) hereto (the "CAHC Preferred Stock"); and
(iii) the balance in immediately available funds at the Closing by wire
transfer to a bank account which shall have been designated by the Seller in
writing not less than seven days prior to the Closing Date; provided,
however, that if as of the Closing Date the sum of: (i) the outstanding
principal balance of the Equipment Debt; (ii) $6,000,000 of CAHC Preferred
Stock; and (iii) $7,000,000 in cash, exceeds the Purchase Price, the face
amount of the CAHC Preferred Stock shall be reduced so that the sum of (i),
(ii) and (iii) shall equal Twenty Million ($20,000,000) Dollars.
1.04 The Closing. Upon the terms and subject to the conditions contained
in this Agreement, the transfer of the Stock by the Seller to the Purchaser
and the payment by the Purchaser of the Purchase Price (the "Closing") shall
take place no later than September 30, 1997, at 10:00 a.m. at the offices of
Xxxx, Xxxxxxxxx & XxXxxx, L.L.P., One Xxxxxx Plaza, Fort Xxx, New Jersey, or
at such other date, time or place as the parties shall mutually agree in
writing (the "Closing Date"). No party hereto may declare time of the essence
in connection with the Closing except on prior
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written notice to the other party delivered at least ten days before the
requested Closing Date.
1.05 Certain Definitions. For purposes of this Agreement, "Material
Adverse Effect" shall mean any circumstance or event which has a material
adverse effect upon the business, operations, affairs, properties, assets,
condition (financial or otherwise), or results of operation of the
Corporation, taken as a whole; provided, however, that Material Adverse
Effect shall not include any cost, loss, damage or liability which, when
aggregated with all other such costs, losses, damages or liabilities, would
be less than $330,000.
ARTICLE TWO
REPRESENTATIONS AND WARRANTIES OF THE
SELLER AS TO HIMSELF
The Seller hereby represents and warrants to the Purchaser as follows:
2.01 Ownership of Stock; Title. The authorized capital stock of the
Corporation consists of 1,000 shares of common stock, no par value of which
the Seller is the owner of record and beneficially of 100 shares, including,
without limitation, the Stock. No other shares of capital stock of the
Corporation are issued and outstanding except as set forth on Schedule 2.01
hereto. The Stock is owned by the Seller free and clear of any claim, levy,
charge, pledge, hypothecation, trust, security interest, proxy, voting
arrangement, conditional sale or title retention contract, or other
encumbrance or restriction of any kind, including restrictions affecting
voting rights, transferability or incidents of record or
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beneficial ownership (each of the foregoing being hereinafter individually
referred to as a "Lien" and collectively, the "Liens"). The consummation of
the sale of the Stock hereunder will convey to the Purchaser good, valid and
marketable title to the Stock free and clear of all Liens. Except as set
forth on Schedule 2.01 hereto, there are no voting trusts, shareholder
agreements, proxies or other agreements or understandings in effect with
respect to the voting or transfer of the Stock to which the Seller is a party
or is bound. Except for this Agreement, there are no outstanding warrants,
options, rights or agreements of any kind to acquire the Stock, or any
portion of the Stock, from the Seller. All of the Stock is duly authorized,
validly issued and fully paid and non-assessable.
2.02 Authority. The Seller has full power, legal right and authority
to execute and deliver this Agreement, to sell the Stock in accordance with
the terms and subject to the conditions of this Agreement, and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all requisite action and no other
proceedings on the part of the Seller are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by the Seller and, assuming
this Agreement has been duly authorized, executed and delivered by the
Purchaser, constitutes a valid and binding agreement of the Seller
enforceable against the Seller in
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accordance with its terms. To the best of the Seller's knowledge: (i) except
for the filing of any notice subsequent to the Closing that may be required
under applicable federal and/or state securities laws (which, if required,
shall be filed on a timely basis as may be so required) or as set forth on
Schedule 2.02 hereto, no consent, approval or authorization of, or
declaration to, or filing with, any public body or governmental authority,
domestic or foreign, is required for the valid authorization, execution,
delivery and performance by the Seller of this Agreement or for the
consummation by the Seller of the transactions contemplated by this
Agreement; provided however, that no representation is made by the Seller
with respect to any filing, permit, authorization, consent or approval,
required by reason of the legal or regulatory status of the Purchaser or by
reason of facts specifically pertaining to the Purchaser. Except as set forth
on Schedule 2.02 hereto, the execution, delivery and performance by the
Seller of this Agreement and the consummation of the transactions
contemplated hereby will not: (i) result in a breach of, or constitute a
default (with or without notice or lapse of time, or both) under, any
provision of (a) any debt instrument, indenture, mortgage agreement or other
instrument or arrangement to which the Seller is a party or by which it is
bound, except for violations, breaches or defaults, which in the aggregate,
would not have a Material Adverse Effect; or (b) any judgment, order or
decree by which the Seller is bound or affected; or (ii) result in the
imposition of any Lien on the Stock.
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2.03 Acquisition for Investment. The Seller is acquiring the CAHC Stock
and the CAHC Preferred Stock for his own account for investment purposes only
and not with a view to the distribution thereof so as to cause a violation of
the Securities Act of 1933, as amended (the "Act"), or any rules or
regulations promulgated thereunder, and agrees that he will not sell,
transfer, distribute or otherwise dispose of any such stock except pursuant
to an effective registration statement under the Act or under an exemption
from the registration requirements of the Act. The Seller understands and
acknowledges that the CAHC Stock and the CAHC Preferred Stock have not been
registered under the Act. The Seller (a) has such knowledge, sophistication
and experience in business and financial matters that he is capable of
evaluating the merits and risks of the transactions hereunder and (b) can
bear the economic risk of his investment in the CAHC Stock and the CAHC
Preferred Stock and can afford a complete loss of such investment.
2.04 Survival of Representations and Warranties. The representations of
the Seller contained in this Article II shall be complete, correct and true
as of the date hereof and as of the date of Closing. Purchaser has entered
into this Agreement based upon its own investigation, evaluations and
forecasts and is not relying upon any representation or inducement which was
or may have been made or implied by Seller or anyone acting on his behalf,
except as expressly set forth in this Agreement. Of the Article II
representations and warranties, only the representations and warranties
contained in Section 2.03 shall survive the execution
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and delivery of this Agreement and the Closing Date; provided, however, that
any claim by the Purchaser with respect to any breach of any such
representation or warranty must be asserted on or before the first
anniversary of the Closing Date or shall be deemed waived.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF
THE SELLER AS TO THE CORPORATION
The Seller represents and warrants to the Purchaser as follows:
3.01 Organization. (a) The Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Jersey and has all requisite power and authority to own, lease and operate
its properties and to carry on the business conducted by it as now conducted.
(b) The Corporation is duly qualified or licensed and in good
standing to do business as a foreign corporation in all such jurisdictions,
if any, set forth on Schedule 3.01 (b)(i), in which the conduct of its
business or its ownership, leasing or operation of property requires such
qualification, except for those jurisdictions in which failure to so qualify
would not have a Material Adverse Effect. Complete and correct copies of the
Certificate of Incorporation and By-laws of the Corporation as in effect on
the date hereof, in the form attached hereto as Schedules 3.01 (b) (ii) and
(iii) respectively, have been made available or delivered to the Purchaser
prior to the date of this Agreement.
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3.02 Subsidiaries. Except as set forth on Schedule 3.02 hereto, the
Corporation has no subsidiaries, nor does it own any capital stock or other
proprietary (equity) interest, directly or indirectly, in any corporation,
association, trust, partnership, joint venture or other entity.
3.03 Capitalization. (a) The capitalization of the Corporation consists
of 1,000 authorized shares of common stock, no par value, of which 200 shares
are issued and outstanding and held by the Seller and the shareholders
identified on Schedule 2.01 hereto. All of such shares are duly authorized,
validly issued and outstanding, and are fully paid and non-assessable and
free of preemptive rights.
(b) The Stock represents fifty (50%) percent of the issued and
outstanding capital stock and equity interests in the Corporation and
together with the shares of issued and outstanding common stock described on
Schedule 2.01 hereto, constitutes one hundred (100%) percent of the issued
and outstanding capital stock and equity interests in the Corporation.
Except for this Agreement, there are no outstanding warrants, options, rights
or agreements of any kind to acquire the Stock or any portion of the Stock.
All of the outstanding shares were issued by the Corporation in compliance
with all applicable securities laws. Except as set forth on Schedule 3.03
hereto, there are no voting trusts, shareholder agreements, proxies or other
agreements or understandings in effect with respect to the voting or transfer
of the Stock to which the Corporation is a party. All of the Stock is
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duly authorized, validly issued and fully paid and non-assessable.
3.04. Affiliate Transactions. Schedule 3.04 sets forth a correct and
complete list of all material arrangements, contracts, understandings,
agreements or transactions (whether written or oral) in existence between the
Corporation on the one hand, and the Seller or any affiliate of the Seller or
any business or entity in which the Seller or any affiliate of the Seller has
any direct or indirect controlling interest, that are in effect on the date
hereof and do not pertain to Excluded Assets (as hereinafter defined).
"Affiliate" shall mean any person or entity that directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with another person or entity.
3.05 Consents and Approvals; No Violations. Except as set forth on
Schedule 3.05 hereto, the execution, delivery and performance by the
Corporation of this Agreement and the consummation of the transactions
contemplated hereby will not: (a) conflict with or result in a breach of any
provision of the Certificate of Incorporation or By-Laws of the Corporation;
(b) result in a breach of, or constitute a default (with or without notice or
lapse of time, or both) under, or require any consent under, any of the
terms, conditions or provisions of any indenture, license, contract,
agreement or other instrument or obligation to which the Corporation is a
party or by which it or any of its properties or assets are bound, including,
without limitation, the New York Contract, except for violations, breaches or
defaults
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which in the aggregate would not have a Material Adverse Effect; or (c) to
the best of the Seller's knowledge, after due investigation, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
the Corporation, except for violations of statutes, rules or regulations
which in the aggregate would not have a Material Adverse Effect.
3.06 No Brokers. Except with respect to fees payable by the Corporation
to Xxxxx Xxxxxx Peppet Inc., neither the Seller nor the Corporation or any of
its officers, directors, employees, or shareholders has employed any broker
or finder, nor incurred any liability for any investment banking fees,
brokerage fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement.
3.07 Employee Benefit Plans; ERISA.
(a) Schedule 3.07(a) hereto contains a true and complete list of each
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance or termination pay, hospitalization or other medical, life
or other insurance, supplemental unemployment benefits, profit-sharing,
pension, or retirement plan, program, agreement or arrangement in effect on
the Closing Date, and each other employee benefit plan, program, agreement or
arrangement in effect on the Closing Date, sponsored, maintained or
contributed to or required to be contributed to by the Corporation or by any
trade or business, whether or not incorporated (an "ERISA Affiliate"), that
together with the Corporation would be deemed a "single employer" within the
meaning
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of Section 4001(b) (1) of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA"), for the benefit of any employee or former employee of the
Corporation or any ERISA Affiliate, whether formal or informal and whether
legally binding or not, or with respect to which the Corporation could have
any liability (the "Employee Benefit Plans"). Schedule 3.07(a) identifies
each of the Employee Benefit Plans that is an "employee welfare benefit
plan," or "employee pension benefit plan" as such terms are defined in
Sections 3(1) and 3(2) of ERISA (such plans being hereinafter referred to
collectively as the "ERISA Plans").
(b) With respect to each of the Employee Benefit Plans, the Seller
has heretofore delivered to the Purchaser true and complete copies of each of
the following documents: (i) a copy of the Employee Benefit Plan (including
all amendments thereto) and any other material documents governing the
Employee Benefit Plan; (ii) a copy of the annual report, if required under
ERISA, with respect to each such Employee Benefit Plan for the last three
years; (iii) a copy of the actuarial report, if required under ERISA, with
respect to each such Employee Benefit Plan for the last three years; (iv) the
most recent determination letter or opinion letter received from the Internal
Revenue Service with respect to each Employee Benefit Plan that is intended
to be qualified under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code"), and each trust intended to be exempt from taxation
within Section 501(c)(9) of the Code; and (v) a copy of all the summary
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plan descriptions and any summary of material modifications with respect to
each Employee Benefit Plan. To the best of the Seller's knowledge, each
financial or other report delivered to the Purchaser pursuant hereto is
complete and accurate in all material respects and except as set forth on
Schedule 3.07 (b),the Seller has received no notice that there have been any
material adverse changes in the financial or other status of any Employee
Benefit Plan since the date of the most recent annual report provided with
respect thereto.
(c) No material liability under Title IV of ERISA has been incurred
by the Corporation or, to the Seller's knowledge, any ERISA Affiliate, since
the effective date of ERISA that has not been satisfied in full, and no
condition exists that presents a material risk to the Corporation or, to the
Seller's knowledge, an ERISA Affiliate, of incurring a material liability
under such Title, other than liability for premiums due the Pension Benefit
Guaranty Corporation ("PBGC"), which payments have been or will be made when
due. Neither the Corporation, nor to the Seller's knowledge, any ERISA
Affiliate, any of the ERISA Plans, any trust created thereunder nor any
trustee or administrator thereof has engaged in a transaction or has taken or
failed to take any action in connection with which the Corporation, any ERISA
Affiliate, any of the ERISA Plans, any such trust, any trustee or
administrator thereof, or any party dealing with the ERISA Plans or any such
trust could be subject to either individually or in the aggregate, material
liability or a civil penalty assessed pursuant to Section
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409, 502(l) or 502(i) of ERISA or a material tax imposed pursuant to any of
Section 4975 through 4980B of the Code. To the best of the Seller's
knowledge, each of the Employee Benefit Plans has been operated and
administered in all material respects in accordance with applicable laws,
including but not limited to ERISA and the Code and each of the ERISA Plans
that is intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified.
(d) To the best of the Seller's knowledge, except as set forth on
Schedule 3.07(a), no plans, agreements, understandings or arrangements exist
that could result in the payment to any employee of the Corporation or any
ERISA Affiliate of any money or other property rights or accelerate or
provide any other rights or benefits to any such employee as a result of (i)
the transactions contemplated by this Agreement (whether or not such payment,
acceleration, or provision would constitute a "parachute payment", within the
meaning of Section 280G of the Code, or whether or not some other subsequent
action or event would be required to cause such payment, acceleration or
provision to be triggered) or (ii) the severance, termination or resignation
of any such employee.
(e) Except as set forth on Schedule 3.07 (a) and except with respect to
"multiemployer plans" within the meaning of Section 3(37) of ERISA and with
respect to such plans, to the best of the Seller's knowledge, full payment
has been made of all amounts which the Corporation and any ERISA Affiliate is
required, under applicable law or under any Employee Benefit Plan or any
agreement related to any Employee Benefit Plan to which the Corporation or
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any ERISA Affiliate is a party, to have paid as contributions thereto as of
the last day of the most recent fiscal year of each Employee Benefit Plan
ended prior to the date hereof. Except with respect to multiemployer plans,
and with respect to such plans, to the best of the Seller's knowledge, the
Corporation and each ERISA Affiliate has made adequate provision for reserves
in accordance with generally accepted accounting principles consistently
applied ("GAAP"), to meet contributions that have not been made because they
are not yet due under the terms of any Employee Benefit Plan or related
agreements. Benefits under all Employee Benefit Plans are as represented and
have not been increased subsequent to the date as of which documents with
respect thereto have been provided to the Purchaser.
(f) There is no action, claim or demand of any kind (other than routine
claims for benefits) that has been brought or threatened against any Employee
Benefit Plan or the assets thereof, other than with respect to multiemployer
plans, and as to such plans, the Seller represents that he has not received
any notice of any such action, claim or demand of any kind, against any
fiduciary of such Employee Benefit Plan, or against the Corporation or any
ERISA Affiliate with respect to any Employee Benefit Plan, and neither the
Corporation nor the Seller has received any notice of any investigation or
administrative review that could result in the imposition on the Corporation
or any ERISA Affiliate of any penalty or assessment in connection with any
Employee Benefit Plan.
(g) Except as identified on Schedule 3.07 (a), the Corporation
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does not maintain or participate in, nor is it obligated to contribute to,
any "multiemployer plan" within the meaning of Section 3(37) of ERISA. To the
best of the Seller's knowledge, as of the Closing Date, no withdrawal
liability would be assessed against the Corporation in the event of a
withdrawal from any listed multiemployer plan. The Corporation has not been
notified by the sponsor or administrator of any listed multiemployer plan
that such plan is insolvent, is in reorganization or has been terminated
within the meaning of Title IV of ERISA. To the best of the Seller's
knowledge, all contributions to any listed multiemployer plan that were
required to be made by the Corporation have been made as of the Closing Date.
(h) Except as set forth in Schedule 3.07(a), no Employee Benefit Plan,
other than multiemployer plans, provides any health, life or other welfare
coverage to employees of the Corporation or any ERISA Affiliate beyond
termination of their employment with the Corporation or any ERISA Affiliate
by reason of retirement or otherwise, other than coverage as may be required
under Section 4980B of the Code or part 6 of ERISA or under the continuation
provisions of the laws of any state or locality.
(i) The Corporation has filed or caused to be filed on a timely basis,
all returns, material reports, statements, notices, declarations, and other
documents required by any federal, state, local or foreign governmental
agency (including without limitation, the Internal Revenue Service, the
Department of Labor, the Pension Benefit Guaranty Corporation and the
Securities and Exchange
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Commission) with respect to each Employee Benefit Plan sponsored or
maintained by the Corporation or with respect to which the Corporation or any
ERISA Affiliate has any filing obligation, except with respect to
multiemployer plans, and as to such plans, neither the Corporation nor the
Seller has received notice that it has not filed or caused to be filed on a
timely basis, any such material returns, reports, statements, notices,
declarations and other documents. The Corporation has delivered to or caused
to be delivered to every participant, beneficiary and every other party
entitled to such material, all material plan descriptions, returns, reports,
schedules, notices, statements and similar materials, including without
limitation, summary plan descriptions and reports as are required under Title
I of ERISA or the Code.
(j) Prior to the Closing Date, the Corporation shall take all action
necessary to have the Corporation cease to be a sponsor or participating
employer as of the Closing Date with respect to all of the Employee Benefit
Plans, other than those expressly identified on Schedule 3.07(a) which plans
are intended to continue to cover employees of the Corporation after the
Closing Date. The Corporation has not made any commitment regarding the
continuation of any Employee Benefit Plan, other than multiemployer plans,
after the Closing Date and the Purchaser may, without penalty, amend, cancel,
terminate or otherwise modify in any and all respects, on or after the
Closing Date, any Employee Benefit Plan, other than a multiemployer plan,
that it continues after the Closing Date for the benefit of its employees.
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3.08 Labor Relations; Employees. Except as set forth on Schedule 3.08: (i)
there is no labor strike, slowdown, lockout, work stoppage, arbitration, lawsuit
or administrative proceeding relating to labor or employment matters, or other
labor dispute pending against the Corporation (collectively, "Labor Disputes")
except such Labor Disputes which in the aggregate would not have a Material
Adverse Effect; (ii) there is no unfair labor practice charge or other
proceeding involving the Corporation pending before the National Labor Relations
Board or any similar state or foreign agency; (iii) there are no collective
bargaining agreements with any union to which the Corporation is a party; (iv)
there are no written personnel policies, rules or procedures applicable to
employees of the Corporation; and (v) the Seller has not received any written
notice that the Corporation is not in compliance, in all material respects, with
all applicable laws, regulations and orders relating to the employment of labor,
including all such laws, regulations and orders relating to wages and hours,
labor relations, civil rights, safety and health, and workers' compensation.
3.09 Litigation. Except as set forth on Schedule 3.09 hereto, there is
no action, suit, proceeding, claim, arbitration or investigation (each of the
forgoing being hereinafter referred to as an "Action" and collectively, the
"Actions") pending or, to the best of the Seller's knowledge after due
investigation, threatened, against the Corporation, its activities, properties
or assets which, if adversely determined, would in the aggregate have a
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Material Adverse Effect. Except as set forth on Schedule 3.09 hereto, the
Corporation is not a party to or, to the best of the Seller's knowledge after
due investigation, is not subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality and there is no Action by the Corporation currently pending
or, to the best of the Seller's knowledge, which the Corporation intends to
initiate.
3.10 Title to Assets. (a) All real property owned or leased by the
Corporation (respectively, the "Fee Properties" and the "Leased Properties", and
collectively, the "Real Property") is correctly identified on Schedule 3.10(a)
hereto. Except as set forth on Schedule 3.10(a), the Seller has not created or
permitted to exist any Lien on the Real Property, and, to the best of the
Seller's knowledge, there are no Liens on the Real Property except for Permitted
Encumbrances (as defined below). Except as set forth on Schedule 3.10(a), the
Corporation has (i) good, valid and marketable title to the Fee Properties, (ii)
a valid leasehold interest in the Leased Properties, and (iii) good and valid
title or a valid leasehold interest in (hereinafter, a "Capital Lease"), as the
case may be, to any and all Equipment (as defined below) except for Permitted
Encumbrances.
(b) Schedule 3.10(b) sets forth a correct and complete list of all
equipment, material to the conduct of the business of the Corporation, including
without limitation, machinery, computers, office furniture, motor vehicles,
leasehold improvements and fixtures, owned by the Corporation (each and all of
the foregoing
22
items being herein referred to as "Equipment"), other than those
certain assets identified on Schedule 3.10(c) hereto and Excess Cash and Excess
Working Capital, as such terms are defined in Schedule 3.10(c) (collectively,
the "Excluded Assets") being retained by the Seller. The Purchaser has had the
opportunity to examine the Equipment and understands that it is being
transferred "as is" as of the Closing Date. "Permitted Encumbrances" shall mean
Liens which (i) are reflected on the books and records of the Corporation, (ii)
relate to taxes, assessments or governmental charges or levies not yet due or
being contested in good faith by appropriate proceedings, (iii) are imposed by
law, such as landlord's, carriers', warehousemen's and mechanics' liens, with
respect to which the underlying obligations are not delinquent, (iv) identified
on Schedule 3.10 (c) hereto, or (v) easements, rights-of way, restrictions and
other similar encumbrances incurred in the ordinary course of business, do not
materially detract from the value or materially interfere with the present use
of any such property and do not secure obligations for borrowed money or the
deferred portions of the purchase price of acquired property other than as
reflected on the books and records of the Corporation.
3.11 Financial Statements. The Seller has previously delivered to the
Purchaser a complete copy of the audited balance sheets of the Corporation as of
December 31, 1994, December 31, 1995 and December 31, 1996, and the related
statements of operations and statements of cash flows for each fiscal year then
ended (together with the related notes and the related schedules thereto, the
23
"Audited Balance Sheet"). The Seller will deliver to the Purchaser on or before
the Closing Date, the unaudited balance sheet of the Corporation as of June 30,
1997 (the "Interim Balance Sheet").
To the best of the Seller's knowledge, the Audited Balance Sheet (i)
is true, correct and complete, (ii) is in accordance with the books and records
of the Corporation, (iii) fairly presents the financial condition of the
Corporation, taken as a whole, as of the dates indicated and the results of
operations and cash flows of the Corporation, taken as a whole, for the period
indicated and has been prepared in accordance with GAAP. The Interim Balance
Sheet is subject to prior reserves, allowances, adjustments and provisions of
any kind in the ordinary course of the Corporation's business, consistent with
past practice and in conformity with GAAP, all of which such reserves,
allowances, adjustments and provisions, in the aggregate, will not have a
Material Adverse Effect. Since December 31, 1996, there have been no material
changes in the Corporation's accounting policies.
3.12 Absence of Undisclosed Liabilities. Except as disclosed in the
Interim Balance Sheet or set forth on Schedule 3.12 hereto, as of the date of
this Agreement, the Corporation has no material liability of any nature (matured
or unmatured, fixed or contingent) which was not provided for therein, which
individually would have a Material Adverse Effect, other than liabilities
arising in the ordinary course of business since the date of the Interim Balance
Sheet.
24
3.13 Absence of Material Changes. Except as set forth on Schedule 3.13, or
otherwise contemplated by this Agreement, since the date of the Interim Balance
Sheet (subject to adjustment for the transfer of the Excluded Assets):
(i) to the best of the Seller's knowledge, the Corporation has operated its
business in the ordinary course, consistent with past practice;
(ii) to the best of the Seller's knowledge, the Corporation has not
suffered any material casualty loss to any of its properties not covered by
insurance (excluding deductibles or co-payments);
(iii) the Corporation has not declared, set aside or paid any dividends,
stock divisions, or distributions on the Stock (other than the transfer
to the Seller of the Excluded Assets, as set forth below);
(iv) the Corporation has not amended its Certificate of Incorporation or
By-Laws;
(v) whether or not in the ordinary course of business, the Corporation has
not acquired, transferred or disposed of any property or assets, which in
the aggregate would be deemed material, other than Excluded Assets;
(vi) the Corporation has not incurred any indebtedness for borrowed money
or issued any debt securities or assumed, guaranteed or endorsed the
obligations of any other persons or mortgaged or encumbered any of its
properties or assets which in the aggregate would be deemed material;
(vii) except as otherwise contemplated by this Agreement, the Corporation
has not issued or sold or acquired or redeemed any capital stock (or
securities convertible into capital stock) or granted any options,
warrants, calls or other rights with respect to such capital stock or
convertible securities;
(viii) the Corporation has not made any investment in any new business or
other entity, other than in the ordinary course of its business;
(ix) the Corporation has not made any acquisitions which in the aggregate
would be deemed material, other than in the ordinary course of its
business, consistent with past practice;
(x) the Corporation has not made any individual capital expenditure in
the amount of $100,000 or greater;
25
(xi) the Corporation has not written off as uncollectible any notes or
accounts receivable, other than in the ordinary course of business;
(xii) the Corporation has not disposed of, or to the best of the Seller's
knowledge, permitted to lapse, the material rights to use any patent,
trademark or other Intellectual Property (as hereinafter defined), or
disclosed trade secrets to a third party, except as contemplated by the
Letter of Intent, the Restated Letter of Intent, or this Agreement;
(xiii) except for any collective bargaining agreement which the Corporation
has executed and delivered or may be required to execute and deliver on or
before the Closing Date, the Corporation has not increased compensation to
any officer or director nor has the Corporation adopted, granted, extended
or increased the rate or terms of any Employee Benefit Plan;
(xiv) except as listed on Schedule 3.13 hereto, the Corporation has not
suffered any work interruptions, labor grievances or claims filed, or any
similar event or condition;
(xv) the Corporation has not materially changed or modified any accounting
practice or procedure; and
(xvi) to the best of the Seller's knowledge, the Corporation has not agreed
to take any of the foregoing actions.
3.14 Insurance;Payment, Performance and Bid Bonds.
(a) Schedule 3.14(a) sets forth a true and complete listing in all
material respects of each insurance policy (each individually, an "Insurance
Policy" and collectively, the "Insurance Policies") that is maintained by the
Corporation, the purpose of which is to insure against risk of loss to the
Corporation. Such Insurance Policies are of the type and in the amounts as are
maintained by businesses similar to that of the Corporation, and to the best of
the Seller's knowledge, are adequate to insure against reasonably foreseeable
risks of the business of the Corporation.
(b) With respect to each such Insurance Policy: (i) to
26
the best of the Seller's knowledge, except as set forth in Schedule 3.14(b)
hereto, the Insurance Policy is in full force and effect on the date hereof;
(ii) the Corporation is not in material breach or default, and no event has
occurred which, with notice or the lapse of time, would constitute such a
breach or default or would permit termination or modification, under the
Insurance Policy; and (iii) no party to the Insurance Policy has repudiated,
or given written notice to the Corporation of an intent to repudiate, any
material provision thereof. The Seller has not received any notice of any
threatened terminations of, or material premium increases with respect to,
any Insurance Policy.
(c) Schedule 3.14 (c) sets forth a true and complete listing in all
material respects of each payment, performance and bid bond (each individually,
a "Bond" and collectively, the "Bonds") that is maintained by the Corporation.
(d) With respect to each such Bond, to the best of the Seller's
knowledge, except as set forth in Schedule 3.14(d) hereto, (i) the Corporation
is not in material breach or default and no event has occurred which, with
notice or the lapse of time would constitute such a breach or default or would
permit termination or modification under the Bond; and (ii) no party to the Bond
has repudiated or given written notice to the Corporation of an intent to
repudiate any material provision thereof.
(e) The Purchaser will provide for the release and replacement of the
Bonds specified on Schedule 3.14 (c) as requiring replacement, prior to the
Closing Date and provide
27
evidence of such replacement to the Seller at the Closing.
3.15. Taxes.
(a) All reports, returns, statements, (including estimated reports,
returns, or statements), and other similar filings required to be filed on or
before the Closing Date by the Corporation (the "Tax Returns") with respect to
any Taxes (as defined below) have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns are
required to be filed, and to the best of the Seller's knowledge after due
investigation, all such Tax Returns correctly reflect the liability of the
Corporation for Taxes for the periods, properties, or events covered thereby;
(b) all Taxes payable, which if unpaid would have a Material Adverse
Effect, with respect to the Tax Returns referred to in the preceding clause, and
all Taxes accruable or otherwise attributable to events occurring prior to the
Closing Date, which if unpaid would have a Material Adverse Effect, whether
disputed or not, whether or not shown on any Tax Return, and whether or not
currently due or payable, will have been paid in full prior to the Closing Date,
or an adequate accrual in accordance with GAAP will be provided with respect
thereto by the Corporation on its Interim Balance Sheet;
(c) except as set forth on Schedule 3.15(c) hereto, the Corporation has no
knowledge of any unassessed Tax deficiencies or of any audits or investigations
pending or threatened against the Corporation with respect to any Taxes;
28
(d) all Tax Returns of the Corporation for fiscal years ending on or
before December 31, 1994 have been examined by the Internal Revenue Service, and
any assessments with respect to such returns have been fully paid;
(e) except as set forth on Schedule 3.15(e) hereto, there is not in
effect any extension for the filing of any Tax Return and the Corporation has
not extended or waived the application of any statute of limitations of any
jurisdiction regarding the assessment or collection of any Tax;
(f) neither the Seller nor the Corporation has received notice of any
claim which has ever been made by any Tax authority in a jurisdiction in which
the Corporation does not file Tax Returns that the Corporation is or may be
subject to taxation by that jurisdiction;
(g) there are no liens for Taxes upon any asset of the Corporation except
for liens for current Taxes not yet due;
(h) no issues have been raised in any examination by any Tax authority with
respect to the Corporation which, by application of similar principles,
reasonably could be expected to result in a proposed deficiency for any other
period not so examined;
(i) the Corporation is not a party to any Tax allocation or sharing
agreement or otherwise under any obligation to indemnify any person with respect
to any Taxes; and
(j) neither the Seller nor the Corporation has received any notice that
the Corporation has not timely made all deposits required by law to be made with
respect to employees' withholding
29
and other payroll, employment, or other withholding taxes, including the
portions of such taxes imposed upon the Corporation.
For purposes of this Agreement, "Taxes" means any taxes, duties,
assessments, fees, levies, or similar governmental charges, together with any
interest, penalties, and additions to tax, imposed by any taxing authority,
wherever located (i.e., whether federal, state, local, municipal, or foreign),
including, without limitation, all net income, gross income, gross receipts, net
receipts, sales, use, transfer, franchise, privilege, profits, social security,
disability, withholding, payroll, unemployment, employment, excise, severance,
property, windfall profits, value added, ad valorem, occupation, or any other
similar governmental charge or imposition.
3.16 Intellectual Property. Schedule 3.16 hereto sets forth all material
permits, licenses, patents, patent applications, trademarks, trademark
applications, trade names, service marks, service xxxx applications, copyrights
and copyright applications used by the Corporation or relating to its business
(the "Intellectual Property") and to the best of the Seller's knowledge, the
Corporation's right to such Intellectual Property will not cease to be valid
rights by reason of the execution, delivery and performance of this Agreement.
The Corporation has not received any notice of violation or infringement of any
rights of others with respect to the Intellectual Property. The Seller has not
received any notice that any of the Intellectual Property conflicts with,
infringes upon or otherwise violates the rights of any third party.
30
The parties hereto agree and acknowledge that as of the date hereof, an
Affiliate of the Seller is an inactive New Jersey corporation using the name
"EPIC". The Seller hereby represents and warrants that upon the request of
the Purchaser, at the Closing, the Seller will file an Amendment to the
Certificate of Incorporation of EPIC to change its name and will cooperate
with the Purchaser in changing the name of the Corporation to EPIC.
3.17 Environmental Compliance. To the best of the Seller's knowledge: (a)
Except as set forth on Schedule 3.17 hereto, the Corporation is in compliance,
in all material respects, with all applicable Environmental Laws (as hereinafter
defined); such compliance includes, without limitation, the holding of all
permits, licenses and approvals of government authorities required under such
laws and compliance with the material terms and conditions of such permits,
licenses and approvals. Except as set forth on Schedule 3.17, the Corporation
has not received any communication, whether from a governmental authority,
citizens group, employee or otherwise, that alleges that the Corporation is not
in such compliance and, to the best of the Seller's knowledge, there are no
circumstances that may prevent or interfere with such compliance in the future.
(b) Except as set forth on Schedule 3.17 hereto, the Seller has not
received any notice of any pending or threatened Environmental Claim (as
hereinafter defined) against the Corporation, or against any person or entity
whose liability for any Environmental Claim the Corporation has or may have
retained or
31
assumed either contractually or by operation of law.
(c) Except as set forth on Schedule 3.17 hereto, the Seller has not
received any notice that there are any locations not owned or operated by the
Corporation where Hazardous Substances subject to Transportation and Disposal
Contracts (as hereinafter defined) to which the Corporation is a party, have
been stored, treated, recycled or disposed of. The Corporation represents and
warrants that during its occupancy pursuant to that certain lease (the "Lease")
dated February 25, 1991, as amended, by and between Consolidated Rail
Corporation and X. X. Xxxxx Construction Co., Inc. of those certain premises
known as Xxxxx'x Yard in Newark, New Jersey as more fully described in the
Lease, it has not stored, treated, recycled or disposed of Hazardous Substances
on such premises nor has it taken any actions or failed to take any actions,
except in material compliance with all applicable Environmental Laws. For
purposes of this Section 3.17, "Transportation and Disposal Contracts" means
contracts pursuant to which the Corporation is obligated to both transport and
dispose of Hazardous Substances.
(d) The Seller has not received any notice of any Hazardous Substances
located on, contained in or which otherwise form a part of the assets of the
Corporation or properties currently owned or operated by the Corporation, except
for Hazardous Substances handled in the ordinary and normal course of operating
the business (all of which are handled in material compliance with all
applicable Environmental Laws).
32
(e) The Seller has not received any notice with respect to any order,
litigation, settlement or citation concerning the existence of Hazardous
Substances with respect to the Corporation or in connection with the operation
of its business.
(f) The Seller has not received any notice with respect to any
environmental investigation conducted by any governmental authority with respect
to the Corporation or in connection with the operation of the business nor, to
the best of the Seller's knowledge, is any such investigation pending.
(g) "Environmental Laws" means all federal, state, local and foreign
laws and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, laws
and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Substances or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances; "Environmental Claim" means any notice by any
person or entity alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from (i) the presence, or
release into the environment, of Hazardous Substances at any location, whether
or not owned by the Corporation or (ii) circumstances forming the
33
basis of any violation, or alleged violation, of any Environmental Law;
"Hazardous Substances" means any substance designated pursuant to section
311(b)(2)(A) of the Federal Water Pollution Control Act (33 USCS sec.
1321(b)(2)(A); any element, compound, mixture, solution, or substance
designated pursuant to section 102 of the Comprehensive Environmental
Response, Compensation and Liability Act (42 USCS sec. 9601 et. seq.); any
hazardous waste having the characteristics identified or listed pursuant to
section 3001 of the Solid Waste Disposal Act (42 USC sec. 6921); any toxic
pollutant listed under section 307(a) of the Federal Water Pollution Control
Act (33 USCS sec. 1317(a)(1); any hazardous air pollutant listed under
section 112 of the Clean Air Act (42 USCS sec. 7412); and any imminently
hazardous chemical substance or mixture with respect to which the
Administrator of the Environmental Protection Agency has taken action
pursuant to section 7 of the Toxic Substances Control Act (15 USCS sec. 2506).
3.18 No Defaults. The Corporation is not in default under its Certificate
of Incorporation or Bylaws, and the Seller has not received any notice that the
Corporation is in default, under any material note, indenture, mortgage, lease,
or any other material contract, agreement or instrument to which it is a party
or by which it or any of its property is bound or affected. The Seller has not
received any notice that the Corporation is in default, with respect to any
order, writ, injunction, judgment or decree of any court or any federal, state,
municipal or other domestic or foreign governmental department, commission,
board, bureau, agency
34
or instrumentality and to the best of the Seller's knowledge, there exists no
condition, event or act which constitutes, or which after notice, lapse of
time or both, would constitute, a default under any of the foregoing.
3.19 Compliance. To the best of the Seller's knowledge, the Corporation
(a) has complied in all material respects with all federal, state, local and
foreign laws, ordinances, regulations and orders applicable to its business or
the ownership of its assets; and (b) has or has applied for all material
federal, state, local and foreign governmental licenses and permits necessary or
required to enable it to carry on its business as now conducted and as presently
proposed to be conducted.
3.20 Disclosure. To the best of the Seller's knowledge, neither this
Agreement nor any other written document, certificate, instrument or written
statement furnished or made to the Purchaser by or on behalf of the Seller or
the Corporation in connection with the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein not misleading.
3.21 Survival of Representations and Warranties. The representations and
warranties of the Seller and the Corporation contained in this Article III shall
be complete, correct and true as of the date hereof and as of the date of the
Closing. Purchaser has entered into this Agreement based upon its own
investigation, evaluations and forecasts and is not relying upon any
representation or inducement which was or may have been made or
35
implied by the Seller or the Corporation or anyone acting on his or its
behalf, except as expressly set forth in this Agreement. Only the
representations and warranties contained in Sections 3.04, 3.05, 3.07, 3.08,
3.09, 3.10, 3.11, 3.12, 3.13, 3.15 (only with respect to income and sales
taxes), 3.16, 3.17 (to the extent that the Corporation continues to maintain
insurance coverage with respect to any environmental liability as required by
Section 5.11, in at least the same coverage amounts and of the same types as
the Corporation maintained prior to the Closing Date), 3.18, 3.19 and 3.20 of
this Agreement shall survive the execution and delivery of this Agreement and
the Closing Date; provided however, that any claim by the Purchaser with
respect to any breach of any such representation or warranty (except a breach
of the tax representations and warranties set forth in Section 3.15 and the
environmental warranties set forth in Section 3.17) must be asserted on or
before the first anniversary of the Closing Date or shall be deemed waived
and any breach of any representation or warranty set forth in (a) Section
3.15 with respect to income and sales taxes must be asserted within ninety
(90) days after the applicable statute of limitations has expired and (b) in
Section 3.17 with respect to environmental compliance must be asserted within
two years of the Closing Date.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
36
4.01 Organization. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey.
4.02 Authorization. The execution and delivery of this Agreement by the
Purchaser and the consummation of the transactions contemplated hereby, have
been duly and validly authorized by all requisite corporate action by the
Purchaser and no other proceedings on the part of the Purchaser are necessary
to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by the Purchaser and assuming this Agreement has been duly authorized,
executed and delivered by the Seller, constitutes a valid and binding
agreement of the Purchaser, enforceable against the Purchaser in accordance
with its terms. Except as set forth on Schedule 4.02 hereto, the execution,
delivery and performance by the Purchaser of this Agreement and the
consummation of the transactions contemplated hereby will not: result in a
material breach of, or constitute a default (with or without notice or lapse
of time, or both) under, any provision of (a) any debt instrument, indenture,
mortgage agreement or other instrument or arrangement to which the Purchaser
is a party or by which it is bound, except for violations, breaches or
defaults, which in the aggregate would not have a Material Adverse Effect; or
(b) any judgment, order or decree by which the Purchaser is bound or affected.
4.03 Capitalization. The Purchaser's authorized capital stock
consists of 50,000,000 shares of common stock, no par value,
37
and 25,000,000 shares of preferred stock, no par value, divided into Series A
and Series B Preferred Stock, of which not less than 15,000,000 shares of
common stock are now issued and outstanding and no shares of preferred stock
are issued and outstanding except as set forth on Schedule 4.03 hereto. The
CAHC Stock and the CAHC Preferred Stock are free and clear of any Liens and
the conveyance of any CAHC Stock or CAHC Preferred Stock to the Seller in
accordance with this Agreement will convey good and marketable title, free
and clear of all Liens. Except as set forth on Schedule 4.03 hereto, there
are no voting trusts, shareholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of the CAHC
Stock or the CAHC Preferred Stock to which the Purchaser is a party. Except
for this Agreement or as set forth on Schedule 4.03 hereto, there are no
outstanding warrants, options, rights or agreements of any kind to acquire
the CAHC Stock or the CAHC Preferred Stock or any portion of the CAHC Stock
or the Preferred Stock. All of the CAHC Stock and the CAHC Preferred Stock is
fully paid and non-assessable.
4.04 No Brokers. Except with respect to fees payable by the Purchaser
to Xxxxx Xxxxxx Peppet Inc., neither the Purchaser nor any of its officers,
directors, employees or shareholders has employed any investment banker,
broker or finder or incurred any liability for any investment banking fees,
brokerage fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement.
4.05 Consents or Approvals; No Violations. To the best of the
38
Purchaser's knowledge: (i) except for the filing of any notice during the
period subsequent to the date of this Agreement but before the Closing Date,
or from and after the Closing Date, that may be required under applicable
federal and/or state securities laws (which, if required, shall be filed on a
timely basis as may be required) or as set forth on Schedule 4.05 hereto, no
consent, approval or authorization of, or declaration to, or filing with, any
public body or governmental authority, domestic or foreign, is required for
the valid authorization, execution, delivery and performance by the Purchaser
of this Agreement or for the consummation by the Purchaser of the
transactions contemplated by this Agreement; provided, however; that no
representation is made by the Purchaser with respect to any filing, permit,
authorization, consent or approval, required by reason of the legal or
regulatory status of the Seller or the Corporation or by reason of facts
specifically pertaining to either of them.
4.06 Disclosure. Neither this Agreement nor any other written
document, certificate, instrument or written statement furnished or made to
the Seller or the Corporation by or on behalf of the Purchaser in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements contained herein and therein not misleading. The Purchaser
hereby represents and warrants that it has consulted with its legal counsel
and has determined that upon the execution of this Agreement by all parties
hereto, it is required to disclose to the
39
public, the Securities and Exchange Commission and any applicable state
securities regulatory authority, as part of its ongoing disclosure
obligations as a public company, the fact that the Purchaser has entered into
this Agreement. Consistent with that obligation, the Purchaser has drafted a
press release, attached hereto as Schedule 4.06 which meets the requirements
of such disclosure obligation and hereby represents and warrants that it will
not disseminate such press release to the public until the Seller has
reviewed and approved it; provided, however, that such review and approval
will not unreasonably delay the dissemination of such press release nor will
it cause the Purchaser to violate its disclosure obligation as a public
company.
4.07 Acquisition for Investment. The Purchaser is acquiring the Stock
for its own account for investment and not with a view to the distribution
thereof so as to cause a violation of the Act, or any rules or regulations
promulgated thereunder, and agrees that it will not sell, transfer,
distribute or otherwise dispose of any such Stock except pursuant to an
effective registration statement under the Act or under an exemption from the
registration requirements of the Act. The Purchaser understands and
acknowledges that the Stock has not been registered under the Act.
4.08 Survival of Representations and Warranties. The representations and
warranties of the Purchaser contained in this Article IV shall be complete,
correct and true as of the date hereof and/or the date of the Closing. The
Seller has entered into this Agreement based upon its own investigation,
evaluations and
40
forecasts and is not relying upon any representation or inducement which was
or may have been made or implied by the Purchaser or anyone acting on its
behalf, except as expressly set forth in this Agreement. The representations
and warranties of the Purchaser shall survive the execution and delivery of
this Agreement and the Closing Date; provided however, that any claim by the
Seller or the Corporation with respect to any breach of any such
representation must be asserted on or before the first anniversary of the
Closing Date or shall be deemed waived.
ARTICLE FIVE
COVENANTS OF THE PARTIES
5.01 Conduct of Business by the Corporation. From the date of this
Agreement until the Closing Date, the Seller will cause the Corporation to
conduct its business in the ordinary course consistent with past practice,
will maintain its properties and perform all agreements to which it is a
party consistent with past practice and will not incur any obligations for
borrowed money in any one case exceeding $100,000.
5.02 Corporate Existence. The Corporation will maintain its corporate
existence in good standing and comply in all material respects with all
applicable laws and regulations of the United States, of any state or states
thereof, any political subdivision thereof and of any governmental authority.
5.03 Exclusivity. From the date hereof until September 30, 1997 or the
earlier termination of this Agreement (the "Standstill Period"), neither the
Seller nor any employee of the Corporation
41
will solicit or negotiate in any way any offer from any other person or
entity to purchase all or any part of the Stock or any material assets of the
Corporation, other than sales of assets in the ordinary course of business.
During the Standstill Period, the Seller will deal exclusively with the
Purchaser with respect to the sale of the Stock and shall not enter into any
written or oral agreement or understanding with respect to acquisition of the
Stock or the Corporation.
5.04 Confidentiality. Except as required by law or as the parties
otherwise agree in writing, this Agreement will be kept strictly
confidential, and neither the Purchaser nor the Seller nor any person on
behalf of the Purchaser or the Seller shall disclose either the Purchaser's
or the Seller's interest in this Agreement, or any of the terms and
conditions thereof.
5.05 Purchaser Due Diligence. Prior to the date of this Agreement, the
Seller has made available to the Purchaser, copies of such documents and
financial statements as shall be reasonably required by the Purchaser in
connection with its execution of this Agreement. All information and
documentation delivered to the Purchaser or its representatives shall be kept
confidential by the Purchaser as required by this Agreement and may be
disclosed by the Purchaser only to its legal, investment banking or
accounting representatives for the sole purpose of its consideration of the
transactions contemplated herein. Any legal, investment banking, accounting
or other representatives to whom information is disclosed will be required to
execute a confidentiality agreement,
42
in the form of Schedule 5.05 hereto, before such information is disclosed to
the Purchaser or any of its representatives.
5.06 Seller Due Diligence. Any and all transactions hereunder and the
effectiveness of this Agreement, is contingent upon and subject to the review
and approval by the Seller and his representatives of the securities
representing the CAHC Preferred Stock and the documents authorizing and
relating to the issuance of the CAHC Preferred Stock, which securities shall
be in material compliance with all the terms and conditions with respect to
the CAHC Preferred Stock contained in the Restated Letter of Intent.
Purchaser shall promptly provide to Seller draft copies of all of the
documents representing or in any way relating to the CAHC Preferred Stock,
together with draft copies of all of the documents representing or in any way
relating to the CAHC Preferred Stock to be acquired by Wafra Investment
Advisory Group, Inc. ("Wafra") pursuant to that certain agreement by and
between the Purchaser and Wafra dated August 15, 1997 (collectively, the
"Transactional Documents") and Wafra's comments on its Transactional
Documents. The Transactional Documents to be executed by the Seller shall be
identical in all respects to the Transactional Documents to be executed by
Wafra, except with respect to representation on the Board of Directors of the
Purchaser and the number of shares to be purchased, as provided in the
Restated Letter of Intent. Upon receipt of the Transactional Documents and
Wafra's comments on its Transactional Documents, the Seller shall have a
period of five (5) business days to provide the Purchaser with his comments
on the
43
Transactional Documents to be signed by him and advise it as to whether or
not the Transactional Documents are acceptable to him in his sole and
absolute discretion. If the Purchaser fails or refuses to make the changes to
the Transactional Documents requested by the Seller and such changes are in
material compliance with the terms and conditions relating to the CAHC
Preferred Stock contained in the Restated Letter of Intent, such failure or
refusal to make changes shall be deemed a failure or refusal by Purchaser to
proceed to Closing and Seller shall be entitled to liquidated damages as
provided in Section 1.03(d) hereto. Prior to the Closing, the Purchaser will
at all reasonable times, permit full review and investigation by the Seller
and his representatives, accountants, lawyers, appraisers and other advisors,
of such documents as Seller shall reasonably require to satisfy himself that
the CAHC Preferred Stock is in material compliance with all the terms and
conditions of the Restated Letter of Intent and is at least as advantageous
to the Seller as the CAHC Preferred Stock which will be delivered to Wafra is
to Wafra. The Purchaser shall furnish to the Seller and his representatives
access to its officers and employees and such information applicable to the
Purchaser, its facilities or business as the Seller shall reasonably request
and copies of such documents and other materials as the Seller shall
reasonably request, and shall afford such access as the Seller and his
representatives may reasonably require for the purposes of such investigation.
5.07 Rights and Franchises. The Corporation will keep in
44
full force and effect all Intellectual Property rights and all franchises,
rights and licenses, with respect to the foregoing or otherwise, now held by
it and that are useful or valuable to the business of the Corporation.
5.08 Reasonable Best Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use reasonable best efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable to fulfill the conditions to the
parties' obligations hereunder and to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
making all required filings and applications and complying with or responding
to any requests by governmental agencies and obtaining all consents,
approvals, orders, waivers, licenses, permits and authorizations required in
connection with the transactions contemplated hereby. If at any time after
the Closing Date any further action is necessary or desirable to carry out
the purposes of this Agreement, the parties hereto shall take or cause to be
taken all such necessary action, including, without limitation, the execution
and delivery of such further instruments and documents as may be reasonably
requested by the other party for such purposes or otherwise to consummate and
make effective the transactions contemplated hereby.
5.09 Public Announcements. The Seller and the Purchaser will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the
45
transactions contemplated by this Agreement, and shall not issue any such
press release or make any such public statement without the prior approval of
the Purchaser or Seller, as the case may be, except as may be required by
law.
5.10 Additional Consideration. The Seller and the Purchaser have
negotiated, executed and delivered an agreement (the "Earn Out Agreement", in
the form set forth as Schedule 5.10 hereto, pursuant to which the Seller will
be entitled to receive, as additional consideration, certain monies earned by
the Corporation in connection with contracts entered into by the Corporation,
or its Affiliates, successors or assigns, as more specifically provided
therein. The Earn Out Agreement will be held in escrow by the Escrow Agent in
accordance with an escrow agreement until the Closing.
5.11 Employment Agreements. The Purchaser has negotiated, executed and
delivered, employment agreements (each individually, an "Employment
Agreement" and collectively, the "Employment Agreements") with Xxxxxx X.
Xxxxx, Xxx Xxxxxxxxx and Xxxxx Xxxxx, current officers of the Corporation, on
terms and conditions and for an employment period satisfactory to the parties
thereto. All Employment Agreements shall be held in escrow by the Escrow
Agent in accordance with an escrow agreement.
5.12 Insurance. The Purchaser covenants to maintain from and after the date
of the Closing, insurance with insurers reasonably satisfactory to the Seller,
in amounts and with the type of protection comparable to the Insurance Policies
currently
46
maintained by the Corporation, naming the Seller, the Corporation and the
Corporation's current officers, directors and shareholders additional
insureds, to protect against hazard, environmental and general liability
claims. In the event that the Purchaser fails to maintain such coverage and a
claim is made against the Corporation, the Seller or any of the Corporation's
former officers, directors or shareholders, which claim would otherwise have
been covered by insurance, the Purchaser agrees to indemnify and hold
harmless any such person in connection with such claim.
5.13 Breaches. If any party is aware prior to Closing, that another party
has breached any provisions of this Agreement, the non-breaching party shall
give prompt written notice of such breach and an opportunity to cure such
breach to the breaching party, or such breach shall be deemed waived. If the
Purchaser is aware of a breach by the Seller or the Corporation prior to the
Closing, but nevertheless proceeds to Closing, such breach is deemed waived.
5.14 Release from Bonds. On or before the Closing Date, the Purchaser
will arrange for the Seller to be released from all indemnity agreements,
personal guarantees, performance payments or bid bonds relating to the
Corporation listed on Schedule 5.14 hereto.
5.15 Tax Matters. (a)The Seller and the Purchaser will, to the extent
permitted by applicable law, elect with the relevant taxing authority to
close the taxable period of the Corporation on the Closing Date. In any case
where applicable law does not permit a corporation to close its taxable year
on the Closing Date, then the
47
obligation to pay Taxes, if any, attributable to the taxable period of the
Corporation beginning before and ending after the Closing Date shall be
allocated (i) to the Seller for the period up to and including the Closing
Date, and (ii) to the Purchaser for the period subsequent to the Closing
Date. For purposes of this Section 5.15, Taxes for the period up to and
including the Closing Date and for the period subsequent to the Closing Date
shall be determined on the basis of an interim closing of the books of the
Corporation as of the Closing Date, or to the extent not susceptible to such
allocation, by apportionment on the basis of elapsed days.
(b) The Seller shall be responsible for preparing and filing or causing
to be filed all Tax Returns required to be filed by or on behalf of the
Corporation and/or its operations and assets with respect to periods ending
on or before the Closing Date (taking into account applicable extensions) and
the Seller shall pay or cause to be paid any Taxes shown to be due thereon
(except to the extent properly accrued for on the Corporation's Interim
Balance Sheet). The Seller shall prepare all such Tax Returns in a manner
consistent with past practices and shall provide copies of such Tax Returns
to the Purchaser for the Purchaser's review and comment at least twenty (20)
business days prior to filing. The Purchaser shall be responsible for
preparing and filing or causing to be filed all Tax Returns required to be
filed by or on behalf of the Corporation and/or its operations and assets
with respect to periods which include any day after the Closing Date (taking
into
48
account applicable extensions) and shall pay or cause to be paid any Taxes
shown to be due thereon subject to the amount of any Taxes that are the
responsibility of the Seller pursuant to this Section 5.15(b).
(c) With respect to any Tax Return of the Corporation required to be
filed by the Purchaser for a taxable period of the Corporation beginning
before and ending on or after the Closing Date, the Purchaser shall provide
the Seller with a statement setting forth the amount of Tax shown on such Tax
Return for which the Seller is responsible pursuant to Section 5.15(b) (the
"Statement") at least twenty (20) business days prior to the due date for
filing of such Tax Return (including extensions). Not later than five (5)
business days before the due date for payment of Taxes with respect to such
Tax Return, the Seller shall pay to the Purchaser an amount equal to the
Taxes shown on the Statement as being the responsibility of the Seller
pursuant to Section 5.15(b) hereof; provided, however, that if the Purchaser
and the Seller disagree with respect to any item on any such Tax Return, such
disagreement shall be conclusively resolved by an independent accounting firm
agreed upon by the Seller and the Purchaser or designated in accordance with
the Commercial Rules of the American Arbitration Association, with the cost
of such firm to be paid one-half by the Purchaser and one-half by the Seller.
No payment pursuant to this Section 5.15(c) shall excuse the Seller from his
indemnification obligations pursuant to Article VIII hereof should the amount
of Taxes as ultimately determined (on audit or
49
otherwise), for the periods covered by such Tax Returns and which are the
responsibility of the Seller, exceed the amount of the Seller's payment
under this Section 5.15(c).
(d) The Seller may not file amended Tax Returns or refund claims in
respect of any taxable period of the Corporation ending on or prior to the
Closing Date without the prior written consent of the Purchaser, which
consent will not be unreasonably withheld.
(e) No loss, or any other tax attribute, occurring after the Closing
Date shall be carried back to a prior period, except if required by
applicable law, in which case any refund relating to such carryback shall be
the property of the Purchaser, and if paid to the Seller, the Seller shall
immediately pay such refund over to the Purchaser.
(f) The Seller shall indemnify and hold harmless the Purchaser and the
Corporation from the net amount of any tax liability arising out of a
determination that the basis of any of the Corporation's assets are less than
reflected on its books for tax purposes at the Closing Date.
(g) The Purchaser and the Seller agree to furnish or cause to be
furnished to each other, and each at their own expense, as promptly as
practicable, such information (including access to books and records) and
assistance, including making employees available on a mutually convenient
basis to provide additional information and explanations of any material
provided, relating to the Corporation as is reasonably necessary for the
filing of any Tax Return, for the preparation for any audit and for the
50
prosecution or defense of any claim, suit or proceeding relating to any
adjustment or proposed adjustment with respect to Taxes. The Purchaser and
the Seller shall retain all information, records or documents in their
possession relating to the Corporation that might be relevant to computations
or payments required after the Closing Date with respect to Tax matters
relating to any taxable period ending on, prior to or including the Closing
Date until the expiration of the relevant statute of limitations or
extensions thereof or, if a proceeding has been instituted for which the
information, records or documents is required, until there is a final
determination with respect to such proceeding.
(h) The Seller and the Purchaser hereby agree that:
(i) The Purchaser shall promptly notify the Seller upon receipt by
the Purchaser of written notice of any Tax audits of or proposed assessments
against the Corporation or other proceeding which may affect the Seller's tax
liability for taxable periods ending on or prior to the Closing Date;
provided, however, that the failure of the Purchaser to give the Seller
prompt notice as required herein shall not relieve the Seller of any of his
obligations to pay such Taxes except and to the extent that Seller is
actually and materially prejudiced thereby. The Seller shall have the right
to represent the Corporation's interests in any such Tax audit or
administrative or court proceeding and to employ counsel of his choice;
provided that (i) the Seller shall keep the Purchaser apprised of the status
of any Tax audits or administrative or court proceedings and the Purchaser
shall have
51
the right to consult with the Seller and his counsel, at the Purchaser's cost
and expense, in connection therewith and (ii) in the event that a settlement
or compromise thereof would obligate either the Corporation or the Purchaser
to make any monetary payment or would otherwise adversely affect either the
Corporation, the Purchaser or any of their respective Affiliates, the Seller
may not agree to such settlement or compromise without the prior consent of
the Purchaser, which consent will not be unreasonably withheld or delayed.
(ii) The Seller shall promptly notify Purchaser upon receipt by the
Seller of written notice of any Tax audit or proposed assessment or other
proposed change or adjustment which may affect either the Corporation or its
Tax attributes. The Seller shall keep Purchaser duly informed of the
progress thereof and, if the results of such Tax audit or proceeding may have
a Material Adverse Effect on the Corporation, Purchaser or any of their
Affiliates for any taxable period, including or ending after the Closing
Date, then the Seller may not agree to a settlement or compromise thereof
without the Purchaser's consent, which consent will not be unreasonably
withheld or delayed.
(i) The Seller shall be liable for and shall pay all sales, use, stamp,
documentary, filing, recording, transfer or similar fees or taxes or
governmental charges (including, without limitation, FCC, FAA, ICC, DOT,
real estate or motor vehicle registration, title recording or filing fees and
other amounts payable in respect of transfer filings) as levied by any taxing
52
authority or governmental agency in connection with the transactions
contemplated by this Agreement (other than taxes measured by or with respect
to income imposed on the Seller or its Affiliates). The Seller hereby agrees
to file all necessary documents (including, but not limited to, all Tax
Returns) with respect to all such amounts in a timely manner.
(j) The Seller shall not take or omit to take any action out of the
ordinary course of business consistent with past practice if such action or
omission would have the effect of increasing the Tax liability relating to
the Corporation, the Purchaser, or any of the Purchaser's Affiliates.
ARTICLE SIX
CONDITIONS TO CLOSING
6.01 Conditions to Each Party's Obligations to Consummate the Agreement.
The respective obligations of each party to consummate this Agreement are
subject to the satisfaction or waiver of the following conditions on or
before the Closing Date:
(a) no statute, rule, regulation, executive order, decree, or
injunction shall have been enacted, entered, promulgated, enforced or
threatened by any court or governmental entity which prohibits or restricts
the consummation of this Agreement;
(b) all authorizations, approvals, consents and waivers required to
be obtained from and notices and filings required to be given to or made with
any governmental agency or third party shall have been obtained, given or
made;
53
(c) the Employment Agreements shall have been executed and delivered
by the parties thereto and shall be held in escrow by the Escrow Agent until
the Closing; and
(d) the Earn Out Agreement shall have been executed and delivered
by the parties thereto and shall be held in escrow by the Escrow Agent until
the Closing.
6.02 Further Conditions to the Seller's Obligations. The obligation of
the Seller to consummate the transactions contemplated hereby at the Closing
is further subject to satisfaction or waiver by the Seller of the following
conditions on or before the Closing Date:
(a) the representations and warranties of the Purchaser contained
herein shall be true and correct in all material respects as of the date of
this Agreement and at and as of the Closing Date as though such
representations and warranties were made at and as of the date of this
Agreement;
(b) the Purchaser shall have entered into that certain Stock
Purchase Agreement (the "Stock Purchase Agreement") by and between the
Purchaser and The Xxxxxx X. and Xxxxxx Xxxxx Charitable Trust (the "Trust")
pursuant to which the Purchaser shall have agreed to acquire all of the
issued and outstanding common stock of the Corporation owned by the Trust, on
the terms and conditions contained in the Stock Purchase Agreement, and the
closing of such transaction shall take place simultaneously with the Closing
under this Agreement, it being the intention of the parties hereto that the
Purchaser shall acquire all of the issued and outstanding
54
common stock of the Corporation;
(c) the Purchaser shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required
by this Agreement to be performed or complied with by it on or prior to the
Closing;
(d) the Seller shall have received a duly executed certificate of
an authorized officer of the Purchaser to the effect that the conditions in
paragraphs (a) and (c) have been satisfied;
(e) the Purchaser shall have delivered to the Seller an opinion of
Greenberg, Traurig, et. al., counsel to the Purchaser, substantially in the
form of Schedule 6.02(e) hereto;
(f) all corporate actions, proceedings, instruments and documents
of the Purchaser required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall be
reasonably satisfactory to counsel for the Seller, and such counsel shall
have been furnished with such certified copies of such corporate actions and
proceedings and such other instruments, documents and opinions as it shall
have reasonably requested;
(g) the Seller shall have received evidence satisfactory to him that
he has been released from all indemnity agreements, personal guarantees,
performance, payment or bid bonds relating to the Corporation and identified
on Schedule 5.14 hereto;
(h) the Purchaser shall have tendered to the Seller the Purchase
Price, which shall include the Seller's satisfaction that the Purchaser has
provided for the payment of the Equipment Debt
55
and other accrued liabilities identified on the Audited Balance Sheet as of
December 31, 1996 and certificates representing the CAHC Preferred Stock, in
form and substance satisfactory to the Seller in his sole and absolute
discretion;
(i) The Purchaser shall have provided to the Seller draft copies of
all of the Transactional Documents and Wafra's comments on its Transactional
Documents, Seller shall have provided the Purchaser with his comments on the
Transactional Documents within five (5) business days thereafter and shall
have advised Purchaser as to whether or not the Transactional Documents are
acceptable to him in his sole and absolute discretion and Purchaser shall
have made the changes to the Transactional Documents requested by the Seller,
so long as such changes are in material compliance with the terms and
conditions relating to the CAHC Preferred Stock contained in the Restated
Letter of Intent and the Transactional Documents to be executed by the Seller
are identical in all respects to the Transactional Documents to be executed
by Wafra, except with respect to representation on the Board of Directors of
the purchaser and the number of shares to be purchased, as provided in the
Restated Letter of Intent; and
(j) The Seller shall confirm that concurrent with the Closing he has been
elected as a member of the Board of Directors of CAHC and a member of the
Board of Directors of the Corporation as of the Closing Date and binding
written arrangements have been made so that the Seller will have the option
to serve on each of such Boards of Directors until the later of September 30,
2004 or the
56
date on which the Seller no longer owns any CAHC Preferred Stock or the
common stock arising from the exercise of warrants or the conversion of the
CAHC Preferred Stock, to the extent permitted by applicable law, all as
required by the Restated Letter of Intent.
6.03 Deliveries by the Seller. At the Closing, the Seller will
deliver the following to the Purchaser:
(a) One or more certificates representing the Stock, accompanied by
stock powers duly endorsed in blank or accompanied by duly executed
instruments of transfer, and any other documents that are necessary to
transfer to the Purchaser good title to all the Stock free and clear of all
Liens;
(b) The stock books, stock ledgers, minute books, other corporate
records and corporate seals of the Corporation;
(c) Certified copies of the resolutions duly adopted by the Board
of Directors of the Corporation, authorizing the execution, delivery and
performance of this Agreement;
(d) An opinion of Xxxx, Xxxxxxxxx & XxXxxx, L.L.P., counsel to the
Seller, substantially in the form attached hereto as Schedule 6.03(d);
(e) Any third party consents required in connection with the
transactions contemplated by this Agreement;
(f) All other documents, instruments and writings required to be
delivered by the Seller at/or prior to the Closing Date pursuant to this
Agreement; and
(g) A fully executed original of the New York Contract.
6.04 Further Conditions to the Purchaser's Obligations. The
57
obligation of the Purchaser to consummate the transactions contemplated
hereby at the Closing is further subject to the satisfaction or waiver by the
Purchaser of the following conditions on or before the Closing Date:
(a) the representations and warranties of the Seller contained
herein shall be true and correct in all material respects as of the date of
this Agreement and at and as of the Closing Date as though such
representations and warranties were made at and as of the date of this
Agreement;
(b) the Purchaser shall have entered into the Stock Purchase
Agreement and the closing of the Purchaser's acquisition of all of the issued
and outstanding common stock of the Corporation owned by the Trust shall take
place simultaneously with the Closing under this Agreement;
(c) the Seller shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required
by this Agreement to be performed or complied with by him on or prior to the
Closing;
(d) the Purchaser shall have received a duly executed certificate
from the Seller to the effect that the conditions in paragraphs (a) and (c)
have been satisfied;
(e) the Seller shall have delivered to the Purchaser an opinion of
Xxxx, Xxxxxxxxx & XxXxxx, L.L.P. substantially in the form of Schedule
6.03(d) hereto;
(f) the Seller shall have delivered to the Purchaser evidence
satisfactory to the Purchaser that the transaction
58
contemplated hereby is not subject to ISRA, or in lieu thereof, evidence
satisfactory to the Purchaser that the requirements of ISRA have been met;
(g) the Seller shall have delivered to the Purchaser certificates
representing all of the Stock, accompanied by stock powers duly endorsed in
blank or accompanied by duly executed instruments of transfer, in each case,
endorsed or executed by the Seller;
(h) all corporate actions, proceedings, instruments and documents
of the Seller required to carry out the transactions contemplated by this
Agreement or incidental thereto, and all other related legal matters shall be
reasonably satisfactory to counsel for the Purchaser, and such counsel shall
have been furnished with such certified copies of such corporate actions and
proceedings and such other instruments, documents and opinions as it shall
have reasonably requested,and the Purchaser shall be satisfied that it has
acquired one hundred (100%) percent of the issued and outstanding stock of
the Corporation together with all the assets and liabilities in connection
therewith; and
(i) the Seller shall have delivered to the Purchaser evidence
satisfactory to the Purchaser that the New York Contract has been executed
and delivered by the parties thereto, is in full force and effect, the
Corporation is not in default thereunder and there are no material defaults
therein on the part of any other party thereto.
6.05 Deliveries by the Purchaser. At the Closing,
59
the Purchaser will deliver the following to the Seller:
(a) The Purchase Price including one or more certificates
representing the CAHC Preferred Stock, which certificates are satisfactory to
the Seller in his sole and absolute discretion, and any other documents that
are necessary to transfer to the Seller good title to the CAHC Preferred
Stock, free and clear of all liens;
(b) Certified copies of the resolutions, duly adopted by the Board
of Directors of the Purchaser, authorizing the execution, delivery and
performance of this Agreement;
(c) An opinion of Greenberg, Traurig, et. al., counsel to the
Purchaser, substantially in the form attached hereto as Exhibit 6.02(e);
(d) All other documents, instruments and writings required to be
delivered by the Purchaser at or prior to the Closing Date pursuant to this
Agreement;
(e) Fully executed Employment Agreements; and
(f) The fully executed Earn Out Agreement.
ARTICLE SEVEN
TERMINATION AND ABANDONMENT
7.01 Termination. This Agreement may be terminated at any time prior to
the Closing by the mutual written consent of each of the Purchaser and the
Seller.
7.02 Effect of Termination. In the event of termination of this
Agreement and abandonment of the transactions contemplated
60
hereby by the parties hereto pursuant to Section 7.01 hereto, this Agreement
shall forthwith become null and void and of no further effect, without any
liability on the part of any party or its directors, officers, partners,
Affiliates, employees, agents or security holders, other than as provided in
Section 5.04 and Article VIII hereof, and the obligation of the parties
hereto to return to the other parties any documents received in connection
with the transactions contemplated herein. Nothing in this Section 7.02
shall relieve any party from any liability for any willful breach of this
Agreement or any intentional tort.
ARTICLE EIGHT
INDEMNIFICATION
8.01. Indemnification. From and after the Closing, the Purchaser shall
indemnify and hold harmless the Seller and the Corporation (for the period
prior to the Closing Date) and their respective members, partners, officers,
directors, Affiliates, shareholders and agents (the "Seller Indemnified
Parties") from and against any costs or expenses (including without
limitation, reasonable attorneys' fees and the reasonable out-of-pocket
expenses of testifying and preparing for testimony and responding to document
and other information requests, and in connection with the enforcement of any
rights hereunder, whether or not a party to such litigation), judgments,
liabilities, fines, amounts paid in settlement, losses, claims and damages,
net of any tax benefits or insurance recoveries actually received by the
Seller Indemnified Party, (collectively, "Damages"), as incurred, to the
extent they
61
relate to, arise out of or are the result of:
(i) the breach of or any inaccuracy in any of the representations
and warranties of the Purchaser contained in or made pursuant to the Letter
of Intent, the Restated Letter of Intent or this Agreement;
(ii) the breach or nonperformance of any covenant or agreement of
the Purchaser contained in this Agreement;
(iii) any claim or assertion by any lender under the Equipment Debt
that the Seller is indebted to it for any amount as a result of any
transaction, event or occurrence taking place after the Closing Date; and
(iv) any and all Damages arising out of or resulting from any claims
made by any parties in connection with any Action identified on Schedule 3.09
hereto.
(B) From and after the Closing, the Seller shall indemnify and hold
harmless the Purchaser and its members, partners, officers, directors,
Affiliates, shareholders and agents (the "Purchaser Indemnified Parties")
from and against any costs or expenses (including without limitation,
reasonable attorneys' fees and the reasonable out-of-pocket expenses of
testifying and preparing for testimony and responding to document and other
information requests, and in connection with the enforcement of any rights
hereunder, whether or not a party to such litigation, judgment, liabilities,
fines, amounts paid in settlement, losses, claims and damages, net of any tax
benefits or insurance recoveries actually received by the Purchaser
Indemnified Party (collectively,
62
the "Damages"), as incurred, to the extent they relate to, arise out of or
are the result of:
(i) the breach of or any inaccuracy in any of the representations and
warranties of the Seller contained in or made pursuant to this Agreement;
(ii) the breach or nonperformance of any covenant or agreement of the
Purchaser contained in this Agreement;
(iii) any claim or assertion by any lender under the Equipment Debt that
the Seller is indebted to it for any amount as a result of any transaction,
event or occurrence taking place prior to the Closing Date;
(iv) any claim or assertion by any federal, state or local taxing
authority that the Corporation is indebted to it for any sales or income
taxes for the period prior to the Closing Date; and
(v) any claim or assertion by any beneficiary under any Employee Benefit
Plan described on Schedule 3.07 (a) that was in effect prior to the Closing
Date but was replaced by the Purchaser at the Closing, that the Employee
Benefit Plan or its sponsor is liable to him with respect to obligations
arising prior to the Closing Date.
(c) Notwithstanding the foregoing, in the absence of fraud or
intentional misrepresentation by the Seller, the indemnification provided for
in Section 8.01 shall be limited as follows:
(i) The Seller shall not be liable with respect to any claim for
indemnification hereunder unless the aggregate amount of all such claims for
indemnification asserted by the Purchaser
63
Indemnified Parties exceeds the sum of $330,000 (excluding claims for income
and sales taxes), and the rights of the Purchaser Indemnified Parties to seek
indemnification hereunder shall be limited to the amounts of such claims in
excess of $330,000; and
(ii) the total liability hereunder of Seller for indemnification
shall in no event exceed the aggregate amount of $500,000 (excluding claims
for income and sales taxes).
8.02. Claims. (a) If an Indemnified Party intends to seek
indemnification pursuant to this Article VIII, such Indemnified Party shall
promptly notify the Indemnifying Party, in writing, of such claim describing
such claim in reasonable detail, provided, that the failure to provide such
notice shall not affect the obligations of the Indemnifying Party unless and
only to the extent it is actually prejudiced thereby. In the event that
such claim involves a claim by a third party against the Indemnified Party
which seeks Damages in respect of which indemnification pursuant to this
Article VIII would be available, the Indemnifying Party shall have thirty
(30) days after receipt of such notice to decide whether it will undertake,
conduct and control, through counsel of its own choosing and at its own
expense, the settlement or defense thereof, and if it so decides, the
Indemnified Party shall cooperate with it in connection therewith, provided,
that the Indemnified Party may participate in such settlement or defense
through counsel chosen by it, and provided further, that the fees and
expenses of such counsel shall be borne by the Indemnified Party. The
Indemnifying Party shall not, without the written
64
consent of the Indemnified Party (which consent shall not be unreasonably
withheld), settle or compromise any action. The Indemnified Party shall have
the right to settle any claim or action without the consent of the
Indemnifying Party; provided, that if the Indemnifying Party does not notify
the Indemnified Party within thirty (30) days after the receipt of the
Indemnified Party's notice of a claim of indemnity hereunder that it elects
to undertake the defense thereof, the Indemnified Party shall have the right
to contest, settle or compromise the claim but shall not thereby waive any
right to indemnity therefor pursuant to this Agreement; provided, further as
long as the Indemnifying Party is contesting any such claim in good faith,
the Indemnified Party shall not pay or settle any such claim without the
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld).
(b) The Indemnifying Party and the Indemnified Party shall
cooperate fully in all aspects of any investigation, defense, pre-trial
activities, trial, compromise, settlement or discharge of any claim in
respect of which indemnity is sought pursuant to Article VIII, including, but
not limited to, by providing the other party with reasonable access to
employees and officers (including as witnesses) and other information.
ARTICLE NINE
MISCELLANEOUS PROVISIONS
9.01 Amendment and Modification. This Agreement may be amended or
modified at any time by the parties hereto, pursuant to
65
an instrument in writing signed by the Purchaser and the Seller.
9.02 Extension; Waiver. At any time prior to the Closing Date, the
party entitled to the benefit of any respective term or provision hereof may
(a) extend the time for the performance of any of the obligations or other
acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document,
certificate or writing delivered pursuant hereto, or (c) waive compliance
with any obligation, covenant, agreement or condition contained herein. Any
agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party
entitled to the benefits of such extended or waived term or provision.
9.03 Entire Agreement; Assignment. This Agreement and the Schedules
attached hereto and made a part hereof (a) constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersede all other prior agreements and understandings, including the Letter
of Intent and Restated Letter of Intent (except those provisions entitled
"Confidentiality", Indemnification" and "Expenses"), but excluding the Escrow
Agreement, both written and oral, between the parties hereto with respect to
the subject matter hereof and (b) shall not be assigned, by operation of law
or otherwise by a party hereto, without the prior written consent of the
other parties.
9.04 Validity. The invalidity or unenforceability of any term or
provision of this Agreement in any situation or
66
jurisdiction shall not effect the validity or enforceability of the other
terms or provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
9.05 Expenses. Whether or not this Agreement and the transactions
contemplated hereby are consummated, and except as otherwise expressly set
forth herein, all costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
9.06 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
9.07 Successors, Assigns, etc. This Agreement is binding upon the
parties and their heirs, personal representatives, successors and assigns, as
the case may be.
9.08 Governing Law; Jurisdiction. This Agreement shall be construed in
accordance with and governed by the laws of the State of New Jersey without
regard to principles of conflict of laws. The parties agree that any disputes
and matters arising from this agreement shall be brought before the Superior
Court of New Jersey or, if federal jurisdiction exists, before the United
States Court for the District of New Jersey, and each party agrees to submit
to the jurisdiction of said courts, and to waive any defenses based upon
grounds of lack of jurisdiction, improper venue or
67
convenience.
9.09 Severability. If any part of this Agreement is declared to be
invalid or unenforceable, then such invalidity or unenforceability shall not
affect the remainder of this Agreement which shall continue in full force and
effect.
9.10 Notices. Unless otherwise provided herein, all notices, demands,
requests, consents or other communications required or permitted to be given
or made under this Agreement shall be made in writing and signed by the party
giving the same and shall be deemed to have been given or made when hand
delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, to the following addresses or to any other
addresses of which all parties are notified in writing:
If to the Seller (or the Corporation prior to the Closing Date):
Xx. Xxxxxx X. Xxxxx
X.X. Xxxxx Construction Co., Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
copy to:
Xxxx Xxxxxxxxx, Esq.
Xxxx, Xxxxxxxxx & XxXxxx, L.L.P.
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
If to the Purchaser:
Xx. Xxxxx Xxxxxx, President
Compost America Holding Company, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
copy to:
Xxxxxxxx Xxxxx, Esq.
68
Xxxxxxxxx Traurig
0000 Xxx Xxxxxxxx Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
9.11 Headings. The subject headings of the sections and subsections of
this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.
9.12 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its Affiliates and
nothing in this Agreement, express or implied, is intended by or shall confer
upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
9.13 No Waivers. Except as otherwise expressly provided herein, no
failure to exercise, delay in exercising, or single or partial exercise of
any right, power or remedy by any party, and no course of dealing between the
parties, shall constitute a waiver of any such right, power or remedy.
9.14 Mutual Releases. The Purchaser and the Seller shall have executed
and delivered to each other, general releases, substantially in the form of
Schedule 9.14 hereto, for contractual claims occurring prior to the Closing
Date, in favor of each other and their respective past or present employees,
officers, shareholders, and Affiliates, except for obligations arising under
this Agreement.
9.15. Independent Counsel. The parties hereto have each been represented
by and consulted with their own respective independent
69
counsel and have resolved with such counsel any questions they may have had
as to the meaning, effect or interpretation of this Agreement and the
Schedules thereto. The decision of the parties to enter into this Agreement
is a fully informed decision, and the parties are aware of all legal and
other ramifications of such decision.
9.16 Construction. In all events, relative words in the singular shall
include the plural and the masculine gender shall include the feminine and
neuter (and vice versa) whenever the context so requires. The parties hereto
agree that the terms and language of this Agreement were the result of
negotiations between the parties and, as a result, there shall be no
presumption that any ambiguities in this Agreement shall be resolved against
any party. Any controversy over the construction of this Agreement shall be
decided neutrally, in light of its purposes, and without regard to events of
authorship or negotiation.
9.17 Further Assurances. The parties hereto agree to execute and deliver
such further instruments and to perform any acts that may be necessary or
reasonably requested in order to give full effect to this Agreement. Each
party, in order to carry out this Agreement, shall use all reasonable efforts
to provide such information, execute such further instruments and documents
and take such actions as maybe reasonably requested by the other and not
inconsistent with the provisions of this Agreement and not involving the
assumption of obligations or liabilities different from or in excess or in
addition to those expressly provided for
70
herein. From and after the date of this Agreement until the Closing, the
Seller will cooperate with the Purchaser in providing such information to
Wafra in connection with the transactions contemplated herein as Wafra may
reasonably require.
9.18 Waiver of Trial by Jury. The Purchaser, the Seller and the
Corporation in any litigation (whether or not arising out of or relating to
this Agreement or any other obligation owed by them) in which any of the
parties shall be adverse to any of the other parties hereto, hereby
voluntarily, knowingly and irrevocably waive any constitutional or other
right each may have to a trial by jury.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date and year first above written.
WITNESS:
------------------------ ----------------------------
Xxxxxx X. Xxxxx
ATTEST: X.X. Xxxxx Construction Co., Inc.
By:
------------------------ -------------------------
Xxxxxx X. Xxxxx, President
ATTEST: Compost America Holding Company, Inc.
By:
------------------------ -------------------------
Xxxxx X. Xxxxxx, President
71
GENERAL RELEASE
This Release, dated _______, __, 1997, is given by Compost America Holding
Company, Inc. and X.X. Xxxxx Construction Co., Inc., jointly and severally on
behalf of themselves and their directors, officers and employees (hereinafter
referred to collectively as the "Releasor"), having an address at 000 Xxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 to Xxxxx X. Xxxxxx, Xxxxxxxx XxXxx, Xxxxxx
Xxxxxxx, Xxxxxx Xxxxxxx and Compost America Holding Company, Inc. (all of the
preceding being hereinafter referred to collectively as the "Releasee"), having
an address at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx, 00000.
Background
This Release is being executed and delivered pursuant to the terms and
conditions of a Stock Purchase Agreement (the "Stock Purchase Agreement") dated
September 17, 1997 between Xxxxxx X. Xxxxx, ("Seller"), X.X. Xxxxx Construction
Co., Inc. (the "Corporation") and Compost America Holding Company, Inc., (the
"Purchaser") the terms of which are incorporated herein by reference. Terms
used herein which are defined in the Stock Purchase Agreement shall have the
respective meanings set forth in the Stock Purchase Agreement, unless otherwise
defined herein.
In consideration of the mutual covenants and agreements contained in the
Stock Purchase Agreement and herein, the parties hereto agree as follows:
1. Release. Subject to the terms set forth in Paragraph 8 hereof,
Releasor hereby releases and forever discharges Releasee,
and where applicable their respective directors, officers, employees,
partners, joint venturers, agents, attorneys, heirs or legal representatives
and all who succeed to their rights and responsibilities, such as their
successors and/or assigns, of and from any and all claims, demands,
obligations, contracts, agreements, damages, controversies, suits,
liabilities, actions or causes of action of any kind whatsoever in law or in
equity which the Releasor, its respective administrators, successors or
assigns ever had, now have, or hereinafter can, shall or may have, whether
known or unknown, suspected or unsuspected, relating to, arising out of or in
connection with any matter, event or circumstance which refers, relates to or
arises with respect to the Corporation which has occurred from the beginning
of the world to the date hereof (collectively the "Claims"). The Releasor
does hereby covenant and agree never to institute or cause to be instituted
or to continue prosecution of any suit or other form of action or proceeding
of any kind or nature whatsoever against Releasee and where applicable any of
their respective directors, officers, employees, partners, joint venturers,
agents, attorneys, heirs or legal representatives and all who succeed to
their rights and responsibilities, such as their successors and/or assigns,
based on any Claims. Notwithstanding any contrary term or provision of this
Release, to the extent this Release encompasses a release in favor of a
director, officer, employee, agent or attorney of any corporation referred to
herein, such release shall only extend to the acts of such director, officer,
employee, agent or attorney
2
performed in the ordinary course of business which were (i) duly authorized
or otherwise ratified by the respective corporation or by Xxxxxx X. Xxxxx
individually or on his behalf and (ii) were within the scope of their
respective employment, representation or retention by such corporation or by
Xxxxxx X. Xxxxx individually or on his behalf.
2. Consideration. The Releasor has received good, valuable and
sufficient consideration for making this Release. The Releasor agrees that it
will not seek anything further, directly or indirectly, for themselves or any
person, corporation, partnership or other entity including any other payment
from the Releasee with respect to the Claims released pursuant to this Release.
The Releasor further acknowledges and warrants that this Release shall not be
voidable for any reason including, but not limited to, any claim of mistake of
fact or the adequacy or inadequacy of consideration.
3. Binding. The Releasor is bound by this Release. Any person or
corporation, partnership or other entity which succeeds to the Releasor's rights
and responsibilities is also bound. This Release is made for the benefit of the
Releasee, their heirs, legal representatives, agents, employees, consultants and
representatives and their affiliates and all who succeed to their rights and
responsibilities, such as their successors and/or assigns.
4. Effect. This Release is intended to be in the broadest form with
respect to the matters covered hereby. It is understood and agreed that the
Releasor hereby expressly waives any and all
3
laws or statutes, of any jurisdiction whatsoever, which may provide that a
general release does not extend to claims not known or suspected to exist at
the time of executing a release which if known would have materially affected
the decision to give such release. It is expressly intended and agreed that
this Release is intended to be final and that although Releasor may hereafter
discover facts in addition to or different from those which it now knows or
believes to be true with respect to the matters covered by this Release, it
is the intent of the Releasor to fully, finally and forever release and
discharge the matters described herein notwithstanding the discovery or
existence of such additional or different facts. This Release is not and
shall not be construed as a release of any person or entity not mentioned
herein.
5. Independent Legal Counsel. The Releasor acknowledges that it has had
the opportunity to consult with independent legal counsel regarding the legal
effect of this Release and that it enters into it freely and voluntarily and
under no constraint or coercion.
6. Governing Law. This Release shall be governed by and construed in
accordance with the laws of the State of New Jersey.
7. Entire Agreement. This Release, the Stock Purchase Agreement and the
exhibits annexed thereto or referred to therein shall constitute the entire
agreement of the parties relating to the subject matter of this Release.
8. Survival of Stock Purchase Agreement. Notwithstanding any other
provision contained herein, nothing contained in this
4
Release shall release or discharge Seller, the Corporation or the Purchaser
with respect to their respective undertakings, warranties or representations
made pursuant to the terms and conditions of the Stock Purchase Agreement
which shall survive the execution and delivery hereof.
9. Captions. Any article, title, paragraph heading or caption contained
in this Release is for convenience only and shall not in any way be construed to
define, describe or limit the terms
hereof.
IN WITNESS WHEREOF, the Releasor has duly executed this Release the day and
year first above written.
ATTEST: COMPOST AMERICA HOLDING
COMPANY, INC.
_______________________ By:____________________________
Xxxxx X. Xxxxxx, President
ATTEST: X.X. XXXXX CONSTRUCTION CO., INC.
_______________________ By:____________________________
Xxxxxx X. Xxxxx, President
5
STATE OF NEW JERSEY }
COUNTY OF }ss.:
BE IT REMEMBERED, that on this ____ day of ________, 1997, before me the
subscriber personally appeared _______________ who, I am satisfied, is the
person who signed the within instrument as the President of
_______________________, the corporation named therein and he thereupon
acknowledged that the said instrument made by the corporation and sealed with
its corporate seal, was signed, sealed with the corporate seal and delivered by
him as such officer and is the voluntary act and deed of the corporation, made
by virtue of authority from its Board of Directors.
______________________________________
6
SCHEDULE A
SCHEDULE 1.02
ESCROW AGREEMENT
SCHEDULE 1.03
EQUIPMENT DEBT
1) U.S. Bancorp dated May 31, 1996
Original Principal Amount of $5,500,000
Note # 7152897443-18
As of 9/30/97 Principal Amount outstanding $5,054,257.87
2) TFC Textron/Assigned to Charter Financial, Inc.
Dated March 28, 1996
Original Principal Amount of $1,091,839.80
Note # Schedule 00003
As of 9/30/97 Principal Amount Outstanding $643,318.66
3) TFC Textron/Assigned to Charter Financial, Inc.
Dated May 3, 1996
Original Principal Amount of $1,489,789.20
Note # Schedule 00004
As of 9/30/97 Principal Amount Outstanding $913,066.06
4) TFC Textron/Assigned to Charter Financial, Inc.
Dated May 14, 1996
Original Principal Amount of $327,981.00
Note # Schedule 00005
As of 9/30/97 Principal Amount Outstanding $197,205.88
5) The CIT Group Dated March 6, 1996
Original Principal Amount of $335,439.44
Note # _______________
As of 9/30.97 Principal Amount Outstanding $248,443.99
Total original principal amount of Equipment Debt $8,745,049.44
Total principal amount outstanding as of 9/30/97 $7,056,292.46
SCHEDULE 1.03(a)
CAHC Series A and B Preferred Stock
SCHEDULE 2.01
ADDITIONAL STOCK OWNERSHIP; VOTING ARRANGEMENTS
Additional Stock Ownership
The Xxxxxx X. and Xxxxxx Xxxxx Charitable Trust
100 Shares of Common Stock, no par value
Voting Arrangements
None
SCHEDULE 2.02
CONSENTS, APPRAISALS, BREACHES, DEFAULTS
None
SCHEDULE 3.01(b)(i)
Jurisdictions in which Corporation is
Authorized to do Business as of 9/17/97
Delaware
Illinois
Maryland
Massachusetts
New Jersey
New York
Tennessee
Texas
The Corporation is currently in the process of qualifying
to do business in Virginia.
SCHEDULE 3.01(b)(iii)
BYLAWS
SCHEDULE 3.02
SUBSIDIARIES
None
SCHEDULE 3.03
VOTING ARRANGEMENTS
None
Page 1 of 2
SCHEDULE 3.04
AFFILIATE TRANSACTIONS
Agreements of Indemnification and Guaranty
* SAFECO: Cross Indemnification By And Between:
- X.X. XXXXX CONSTRUCTION CO., INC.
- STANDARD ENGINEERS AND CONSTRUCTORS, INC.
- ARJAY - STANDARD CORP.
- XXXXX - PUERTO RICO, INC.
- ARJAY ASPHALT, INC.
- WEST ESSEX BLASTING CORP.
- DEWATERING UNLIMITED, INC.
- ARJAY AVIATION SERVICES, LTD.
- XXXXXX X. XXXXX - INDIVIDUALLY
- XXXXXXX XXXXX - INDIVIDUALLY
* FIRST UNION BANK:
Xxxxxx X. Xxxxx'x Individual Guaranty And Suretyship Agreement
of Borrowings of X.X. Xxxxx Construction Co., Inc., Xxxxxx X.
Xxxxx'x Guaranty and Suretyship Agreement of Borrowings of
Xxxxx-Puerto Rico, Inc., Grid Note dated June 30, 1995 in the
original principal amount of $6,000,000 by X.X. Xxxxx
Construction Co., Inc. and Xxxxx-Puerto Rico, Inc.
X.X. Xxxxx Construction Co., Inc.'s Agreement of Guaranty and
Suretyship of Borrowings of Xxxxx-Puerto Rico, Inc. and Xxxxx
Puerto Rico, Inc.'s Agreement of Guaranty and Suretyship of
Borrowings of X.X. Xxxxx Construction Co., Inc.
THE CIT GROUP:
* - X.X. Xxxxx Construction Co., Inc. - Corporate Guaranty
of Borrowings By Xxxxx Puerto Rico, Inc.
* GENERAL ELECTRIC CAPITAL CORP. OF P.R.:
- X.X. Xxxxx Construction Co., Inc. Corporate Guaranty
dated 7/16/96 of Borrowings By Xxxxx Puerto Rico, Inc.
Promissory Note dated 12/19/96 in the original principal
amount of $123,356.50
Promissory Note dated 7/16/96 in the original principal
amount of $934,626.50
Promissory Note dated 8/14/96 in the original principal
amount of $704,265,000.
There are also several additional promissory notes to General
Electric Capital Corp. of P.R. which are subject to cross-corporate
guaranties by and between Xxxxx-Puerto Rico, Inc.
and Xxxxx-de Puerto Rico, Inc., all of which will be removed
from this Schedule 3.04 prior to Closing.
Page 2 of 2
SCHEDULE 3.04
AFFILIATE TRANSACTIONS
* METLIFE CAPITAL:
- X.X. Xxxxx Construction Co., Inc. Corporate Guaranty of
Borrowings by Xxxxx Puerto Rico, Inc.
* will be removed from this Schedule 3.04 prior to Closing
Lease Agreement:
X.X. Xxxxx Construction Co., Inc. leases its offices at
000 Xxxxxx Xxxx, Xxxxxxxx, X.X. from a Trust, the
beneficiaries of which are the children of Xxxxxx X. Xxxxx,
Xx.
Other Agreements:
Penske-Ryder - DeWatering Unlimited, Inc. Arrangement
SCHEDULE 3.04
General Electric Capital Corporation
SCHEDULE 3.04
METLIFE CAPITAL
Page 1
of 2
SCHEDULE 3.04
AFFILIATE TRANSACTIONS
* Officer Loan: $768,207.56 Due to X.X. Xxxxx Construction
Co., Inc. from Xxxxxx X. Xxxxx (No note)
Agreements of Indemnification and Guaranty
SAFECO: Cross Indemnification By And Between:
- X.X. XXXXX CONSTRUCTION CO., INC.
- STANDARD ENGINEERS AND CONSTRUCTORS, INC.
- ARJAY - STANDARD CORP.
- XXXXX - PUERTO RICO, INC.
- ARJAY ASPHALT, INC.
- WEST ESSEX BLASTING CORP.
- DEWATERING UNLIMITED, INC.
- ARJAY AVIATION SERVICES, LTD.
- XXXXXX X. XXXXX - INDIVIDUALLY
- XXXXXXX XXXXX - INDIVIDUALLY
FIRST UNION BANK:
Xxxxxx X. Xxxxx'x Individual Guaranty And Suretyship Agreement
of Borrowings of X.X. Xxxxx Construction Co., Inc., Xxxxxx X.
Xxxxx'x Guaranty and Suretyship Agreement of Borrowings of
Xxxxx-Puerto Rico, Inc., Grid Note dated June 30, 1995 in the
original principal amount of $6,000,000 by X.X. Xxxxx
Construction Co., Inc. and Xxxxx-Puerto Rico, Inc.
X.X. Xxxxx Construction Co., Inc.'s Agreement of Guaranty and
Suretyship of Borrowings of Xxxxx-Puerto Rico, Inc. and Xxxxx
Puerto Rico, Inc.'s Agreement of Guaranty and Suretyship of
Borrowings of X.X. Xxxxx Construction Co., Inc.
THE CIT GROUP:
- X.X. Xxxxx Construction Co., Inc. - Corporate Guaranty
of Borrowings By Xxxxx Puerto Rico, Inc.
GENERAL ELECTRIC CAPITAL CORP. OF P.R.:
- X.X. Xxxxx Construction Co., Inc. Corporate Guaranty
dated 7/16/96 of Borrowings By Xxxxx Puerto Rico, Inc.
Promissory Note dated 12/19/96 in the original
principal amount of $123,356.50
Promissory Note dated 7/16/96 in the original principal
amount of $934,626.50
Promissory Note dated 8/14/96 in the original principal
amount of $704,265,000.
METLIFE CAPITAL:
- X.X. Xxxxx Construction Co., Inc. Corporate
Guaranty of Borrowings by Xxxxx Puerto Rico, Inc.
Page 2 of 2
SCHEDULE 3.04
AFFILIATE TRANSACTIONS
AFFILIATE LOANS:
* Loans Receivable From Affiliates to X.X. Xxxxx
Construction Co., Inc. (No Notes):
Xxxxx Puerto Rico, Inc. $2,594,558.41
DeWatering Unlimited, Inc. 64,892.75
Totowa Constructors, Inc. 39,750.00
Arjay Aviation Services, Inc. 625.00
-------------
Total $2,699.826.16
=============
* Loans Payable from X.X. Xxxxx Construction Co. Inc. to Affiliates
(No Note):
Arjay Asphalt, Inc. $ 37,296.68
-------------
Total $ 37,296.68
=============
Lease Agreement:
X.X. Xxxxx Construction Co., Inc. leases its offices at
000 Xxxxxx Xxxx, Xxxxxxxx, X.X. from a Trust, the
beneficiaries of which are the children of Xxxxxx X. Xxxxx,
Xx.
Employee Benefit Plans:
See Schedule 3.07(a)
Management Arrangement with Xxxxx Puerto Rico, Inc. [To
Come]
Penske-Ryder - DeWatering Unlimited, Inc. [To Come]
* Excluded Asset
SCHEDULE 3.04
AGREEMENT OF INDEMNIFICATION/
CROSS INDEMNIFICATION AND GUARANTIES
SAFECO
SCHEDULE 3.04
FIRST UNION (f/k/a FIRST FIDELITY BANK, N.A.)
LOAN DOCUMENTS
SCHEDULE 3.05
BREACHES, DEFAULTS
None
