STOCK PURCHASE AGREEMENT BY AND BETWEEN Triumvirate Environmental, Inc. and Perma-Fix Environmental Services, Inc. June 13, 2011
EXECUTION VERSION
BY AND BETWEEN
Triumvirate Environmental, Inc.
and
Perma-Fix Environmental Services, Inc.
June 13, 2011
ARTICLE I
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2 | |||
1.1
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Definitions
|
2 | ||
1.2
|
Other Defined Terms
|
7 | ||
ARTICLE II
|
9 | |||
2.1
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Purchase of Stock
|
9 | ||
2.2
|
Purchase Price
|
9 | ||
2.3
|
Adjustment to Purchase Price
|
9 | ||
2.4
|
Collection of Accounts Receivable
|
11 | ||
2.5
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Vehicle Condition
|
11 | ||
ARTICLE III
|
11 | |||
ARTICLE IV
|
12 | |||
4.1
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Organization and Qualification
|
12 | ||
4.2
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Authority; No Violation
|
12 | ||
4.3
|
Authorized and Outstanding Stock
|
12 | ||
4.4
|
Subsidiaries
|
12 | ||
4.5
|
Financial Statements
|
13 | ||
4.6
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Absence of Undisclosed Liabilities
|
13 | ||
4.7
|
Absence of Certain Changes
|
13 | ||
4.8
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Title to Company Stock; Condition of Assets
|
15 | ||
4.9
|
Real Estate
|
15 | ||
4.1
|
Accounts Receivable
|
16 | ||
4.1
|
Inventories
|
16 | ||
4.1
|
Intellectual Property
|
16 | ||
4.1
|
Trade Secrets and Customer Lists
|
17 | ||
4.1
|
Contracts
|
17 | ||
4.2
|
Customers
|
18 | ||
4.2
|
Compliance with Laws
|
19 | ||
4.2
|
Taxes
|
19 | ||
4.2
|
Employee Benefit Plans
|
20 | ||
4.2
|
Environmental Matters
|
22 | ||
4.2
|
Employees
|
23 | ||
4.2
|
Litigation
|
23 | ||
4.2
|
Insurance
|
24 | ||
4.2
|
Brokers
|
24 | ||
4.2
|
Intentionally Omitted
|
24 | ||
4.3
|
Records and Books
|
24 | ||
4.3
|
Transactions with Interested Persons
|
24 | ||
4.3
|
No Corrupt Practices
|
24 | ||
4.3
|
Disclosure of Material Information
|
25 | ||
ARTICLE V
|
25 | |||
5.1
|
Organization and Qualification
|
25 | ||
5.2
|
Authority; No Violation
|
25 | ||
5.3
|
Required Filings and Consents
|
26 | ||
5.4
|
Litigation
|
26 | ||
5.5
|
Brokers
|
26 |
ARTICLE VI
|
26 | |||
6.1
|
Covenants of Parent
|
26 | ||
6.2
|
Covenants of the Buyer
|
31 | ||
6.3
|
Confidentiality
|
31 | ||
6.4
|
Regulatory Approvals
|
32 | ||
6.5
|
Payment of Company’s Debts, Liabilities and Obligations
|
32 | ||
ARTICLE VII
|
32 | |||
7.1
|
Conditions to Obligations of Buyer
|
32 | ||
7.2
|
Conditions to Obligations of Parent
|
35 | ||
ARTICLE VIII
|
36 | |||
8.1
|
Termination of Agreement
|
36 | ||
8.2
|
Effect of Termination
|
37 | ||
ARTICLE IX
|
37 | |||
9.1
|
Survival of Representations and Warranties
|
37 | ||
9.2
|
Indemnification by Parent
|
38 | ||
9.3
|
Indemnification by the Buyer
|
38 | ||
9.4
|
Notice and Opportunity to Defend
|
38 | ||
9.5
|
Limitations on Certain Indemnification Obligations
|
40 | ||
ARTICLE X
|
41 | |||
10.1
|
Tax Indemnity
|
41 | ||
10.2
|
Tax Returns
|
42 | ||
10.3
|
Cooperation, Audits Tax Claims
|
43 | ||
10.4
|
Tax Sharing Agreements
|
43 | ||
ARTICLE XI
|
43 | |||
11.1
|
Fees and Expenses
|
43 | ||
11.2
|
Publicity and Disclosures
|
43 | ||
11.3
|
Notices
|
44 | ||
11.4
|
Successors and Assigns
|
44 | ||
11.5
|
Counterparts; Descriptive Headings; Variations in Pronouns
|
45 | ||
11.6
|
Severability; Entire Agreement
|
45 | ||
11.7
|
Intentionally Omitted
|
45 | ||
11.8
|
Course of Dealing
|
45 | ||
11.9
|
GOVERNING LAW
|
45 | ||
11.10
|
WAIVER OF JURY TRIAL
|
46 |
ii
Stock Purchase Agreement (the “Agreement”), dated as of June 13, 2011, by and between Triumvirate Environmental, Inc., a Massachusetts corporation (the “Buyer”); and Perma-Fix Environmental Services, Inc., a Delaware corporation (“Parent”).
Parent owns one hundred percent (100%) of the capital stock of Perma-Fix of Fort Lauderdale, Inc., a Florida corporation (the “Company”). This Agreement sets forth the terms and conditions upon which the Buyer will purchase from Parent one hundred percent (100%) of the issued and outstanding capital stock of the Company, for the consideration provided herein.
In consideration of the foregoing, the mutual representations, warranties and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
ARTICLE I
“Affiliate” means (i) in the case of an individual, the members of the immediate family (including the individual’s spouse and the parents, siblings and children of the individual and/or the individual’s spouse) and any Business Entity that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, any of the foregoing individuals, or (ii) in the case of a Business Entity, another Business Entity or a person that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the Business Entity.
“Business” means the activities carried on by the Company including, without limitation, its commercial fuel operations and waste oil removal and remediation services.
“Business Day” means any day, excluding Saturday, Sunday and any other day on which commercial banks in New York City, New York, are authorized or required by law to close.
“Business Entity” means any corporation, partnership, limited liability company, trust or other domestic or foreign form of business association or organization.
“CERCLA” means the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, and the regulations thereunder, and court decisions in respect thereof, all as the same shall be in effect at the time.
2
“Charter” means the Certificate of Incorporation, Articles of Incorporation or Organization or other organizational document of a corporation or limited liability company or other Business Entity, as amended and restated through the date hereof.
“Claim” means an action, suit, proceeding, hearing, investigation, litigation, charge, complaint, claim or demand.
“Code” means the Internal Revenue Code of 1986, and the regulations thereunder, published Internal Revenue Service rulings, and court decisions in respect thereof, all as the same shall be in effect at the time.
“Compliance” or words of similar meaning shall mean the adherence to any and all applicable Legal Requirements.
“Current Assets” means the sum, as of the Closing Date, of the value of the Company’s cash and cash equivalents, prepaid expenses, inventory and other current assets as of the Closing Date (exclusive of restricted cash, prepaid insurance and Inter-Company Accounts), plus the amount of any outstanding trade or accounts receivable of the Company as of the Closing Date and for work performed as of the Closing Date but not yet billed as of the Closing Date collected by the Buyer or the Company during the one hundred twenty (120) day period following the Closing, provided that the amount of any outstanding accounts receivable of the Company as of the Closing for work performed as of the Closing Date but not yet billed as of the Closing Date collected by the Buyer or the Company after the expiration of the one hundred twenty (120) day period following the Closing will not be included for purposes of calculating the Current Assets.
“Current Liabilities” means, as of the Closing Date, the value of the Company’s accounts and trade payables, accrued expenses (exclusive of accrued income Taxes, Inter-Company Accounts and accrued reserves for environmental liabilities and all amounts in the PNC ZBA account), accrued compensation, and current and long term obligations under all of the Company’s equipment leases.
“Environmental Action” means any administrative, regulatory or judicial action, suit, demand, demand letter, claim, notice of non-compliance or violation, investigation, proceeding, Lien, notice of Lien, consent order or consent agreement pursuant to any Environmental Law or any Environmental Permit, including, without limitation, (a) any claim by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any Environmental Law and (b) any claim by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials, damage to the environment or alleged injury or threat of injury to human health or safety from pollution or other environmental degradation.
3
“Environmental Law” means any applicable federal, state and local laws, statutes, ordinances, rules and regulations relating to protection of human health or the environment, relating to Hazardous Substances, relating to liability for or costs of Remediation or prevention of Releases of Hazardous Substances or relating to liability for or costs of other actual or future danger to the environment. The term "Environmental Law" includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: Title XXVIII, Chapter 376, Fla. Stat.; Title XXIX, Chapter 403 Fla. Stat.; Chapter 62-761, F.A.C., Underground Storage Tank Systems; Chapter 62-762, F.A.C., Aboveground Storage Tank Systems; Chapter 62-730, F.A.C., Hazardous Waste; Chapter 62-710, F.A.C., Used Oil Management; Chapter 62-621 F.A.C., Wastewater; Chapter 62-25 F.A.C., Stormwater; the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground Storage Tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act and any similar state and local laws or by-laws, the rules, regulations and interpretations thereunder, all as the same shall be in effect from time to time.
“Environmental Permit” means any permit, approval, license or other authorization, regardless of form or terminology, required under any Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, and any similar or successor federal statute, and the rules, regulations and interpretations thereunder, all as the same shall be in effect at the time.
“ERISA Affiliate” means, for purposes of Title IV of ERISA, any trade or business, whether or not incorporated, that together with the Company, would be deemed to be a “single employer” within the meaning of Section 4001 of ERISA, and, for purposes of the Code, any member of any group that, together with the Company, is treated as a “single employer” for purposes of Section 414 of the Code.
“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.
“Governmental Authority” means any federal, state, regional or local government, or any political subdivision of any of the foregoing, or any court, agency or other entity, body, organization or group, exercising any executive, legislative, judicial, quasi-judicial, regulatory or administrative function of government.
“Hazardous Materials” includes but is not limited to any and all substances biological and etiologic agents or materials (whether solid, liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, or words of similar meaning or regulatory effect under any present or future Environmental Laws, including but not limited to petroleum and petroleum products, asbestos and asbestos-containing materials, chlorinated solvents; polychlorinated biphenyls, lead, lead-based paints, radon, radioactive materials, flammables and explosives, any biological organism or portion thereof (living or dead), including molds or other fungi, bacteria or other microorganisms, or any etiologic agents or materials, and any other substance or exposure.
4
“Indebtedness” means all obligations, contingent or otherwise, whether current or long-term, which in accordance with GAAP would be classified upon the obligor’s balance sheet as liabilities (other than deferred taxes) and shall also include capitalized leases, guaranties, endorsements (other than for collection in the ordinary course of business) or other arrangements whereby responsibility is assumed for the obligations of others, including any agreement to purchase or otherwise acquire the obligations of others or any agreement, contingent or otherwise, to furnish funds for the purchase of goods, supplies or services for the purpose of payment of the obligations of others.
“Inter-Company Accounts” means certain inter-company balances between Parent and the Company, or between the Company and an Affiliate of Parent, including, without limitation, inter-company loans, accounts receivables and accounts payable as of the Closing Date.
“IRS” means the Internal Revenue Service and any similar or successor agency of the federal government administering the Code.
“Knowledge” or words of similar meaning shall mean when referring to Parent, the actual knowledge of any officer, director or member of management of Parent, after (1) discussions with Xxxx X. Xxxxxx, Xx. and causing Xx. Xxxxxx to review Sections 4.5 through and including 4.16, 4.18 through and including 4.22, 4.25, 4.27 and 4.28 of this Agreement, and (ii) due inquiry and examination of the books and records of the Company or Parent.
“Lien” means, with respect to any asset, any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien, charge, restriction, adverse claim by a third party, title defect or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, any assignment or other conveyance of any right to receive income and any assignment of receivables with recourse against assignor), any filing of any financing statement as debtor under the Uniform Commercial Code or comparable law of any jurisdiction and any agreement to give or make any of the foregoing.
“Material Adverse Effect” means a material adverse impact or effect on the business, operations, assets, liabilities or condition (financial or otherwise) of the Company, or the occurrence of an event, circumstance or other matter that would reasonably be expected to have such material adverse impact or effect, provided, however, that any such impact or effect less than $25,000 individually or less than $50,000 in the aggregate for all such events, circumstances or other matters shall not be considered a Material Adverse Effect.
“Net Working Capital” means the difference between the Company’s Current Assets and Current Liabilities.
5
“Off-site Contamination” shall mean the following: any Release and/or threat of Release of Hazardous Materials occurring on or prior to the Closing (including, without limitation, any degradation byproducts) at, on, to, beneath, and/or under any property owned by a third-party, and any soil, groundwater, surface water, sediment, air on, under or above property owned by a third party which is impacted by any of the foregoing: a Release and/or threat of Release occurring on or prior to the Closing as a result of the Company’s Business including the operations of its Predecessors on any premises owned or leased by the Company or its Predecessors in connection with conducting the Company’s Business and/or as a result of the Company’s actions occurring on or prior to the Closing, including the operations of its Predecessors as a treatment storage and disposal facility pursuant to the Resource Conservation and Recovery Act (RCRA) of 1976; 42 U.S.C. s/s 321 et seq. (P.L. 94-580) and/or as a result of the Company’s disposing, arranging for disposal or transporting Hazardous Materials in the conduct of the Company’s Business.
“Officer’s Certificate” means a certificate signed in the name of a corporation, partnership, association, trust or limited liability company by its President, Chief Executive Officer, Treasurer, Chief Financial Officer, General Manager or, if so specified, the Clerk, Secretary or officer appointed to execute on behalf of the partnership, association, trust or limited liability company, acting in his or her official capacity.
“Person” means any individual, firm, partnership, association, trust, corporation, limited liability company, governmental body or other entity.
“PBGC” means the Pension Benefit Guaranty Corporation, and any successor thereto.
“Port Services Waste Oil Collection and Processing Business” means the collection, processing and sales in the State of Florida of on-specification and off-specification waste oils generated by commercial maritime customers, such as Royal Caribbean Cruise Lines, which waste oil is collected at the ports in the State of Florida, as those terms are defined in and as those materials are regulated by 40 CFR Part 279 Standards for the Management of Used Oil and Chapter 62-701 F.A.C. Used Oil Management.
“Predecessor” means any Person who operated the Company prior to Parent’s ownership of the Company, if any.
“Purchase Documents” means this Agreement, the Stock Assignment and any other certificate, document, instrument, stock power, or agreement executed in connection therewith.
“Release” means any release, issuance, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment or into or out of any property, including the movement of Hazardous Materials through or in the air, soil, surface water, ground water, or property other than in Compliance with all Environmental Laws and Permits.
“Subsidiary” means, with respect to any Person (a) any corporation, association or other entity of which at least a majority in interest of the outstanding capital stock or other equity securities having by the terms thereof voting power under ordinary circumstances to elect a majority of the directors, managers or trustees thereof, irrespective of whether or not at the time capital stock or other equity securities of any other class or classes of such corporation, association or other entity shall have or might have voting power by reason of the happening of any contingency, is at the time, directly or indirectly, owned or controlled by such Person, or (b) any entity (other than a corporation) in which such Person, one or more Subsidiaries of such Person, or such Person and one or more Subsidiaries of such Person, directly or indirectly at the date of determination thereof, has at least majority ownership interest. For purposes of this Agreement, a Subsidiary of the Company shall include the direct and indirect Subsidiaries of the Company.
6
“Tax” means any federal, state, or local income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.
“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including, without limitation, any consolidated tax returns of the Company and its Affiliates, including any schedule or attachment thereto, and including any amendment thereof.
“Waste Oil Collection and Processing Business” means the collection, processing and sales of on-specification and off-specification waste oils in the State of Florida not generated by commercial maritime customers, such as Royal Caribbean Cruise Lines as those terms are defined in and as those materials are regulated by 40 CFR Part 279 Standards for the Management of Used Oil and Chapter 62-701 F.A.C. Used Oil Management; except Waste Oil Collection and Processing Business shall not include the collection, processing, storage, or transportation and/or disposal of Hazardous Materials (except petroleum products and petroleum materials) or radioactive materials (“Waste Management Services”), or collection, processing, storage, sales or transportation and/or disposal of Used Oil collected by the Parent and its Affiliates while performing Waste Management Services.
Term
|
Section
|
338(h)(10) Election
|
6.3(b)
|
2010 Financial Statements
|
4.5
|
Agreed Amount
|
9.4(b)
|
Agreement
|
Preamble
|
Arbitrator
|
2.3(a)
|
Basket Amount
|
9.5(a)
|
Business Relationship
|
6.1(f)
|
Buyer
|
Preamble
|
Buyer Indemnitees
|
9.2
|
Buyer Losses
|
9.2
|
Cap Amounts
|
9.5(b)
|
Claim Notice
|
9.4(a)
|
Claimed Amount
|
9.4(a)
|
Closing
|
Article III
|
7
Closing Balance Sheet
|
2.3(a)
|
Closing Date
|
Article III
|
Closing Net Working Capital
|
2.3(a)
|
COBRA
|
6.1(l)
|
Company
|
Preamble
|
Company Intellectual Property
|
4.12
|
Company Stock
|
2.1
|
Contested Amount
|
9.4(c)
|
Default
|
4.14
|
Disclosure Schedules
|
Article IV (Preamble)
|
EPA
|
4.19
|
Estimated Net Working Capital
|
2.3(c)
|
Financial Statements
|
4.5
|
Indemnifying Party
|
9.4(a)
|
Indemnitees
|
9.3
|
Large Customers
|
4.15
|
Large Suppliers
|
4.15
|
Legal Requirement
|
4.16(b)
|
Losses
|
9.3
|
Most Recent Financial Statements
|
4.5
|
Necessary Permits
|
4.16
|
Non-Solicitation Period
|
6.1(e)
|
Notice of Disagreement
|
2.3(a)
|
Parent
|
Preamble
|
Parent Indemnitees
|
9.3
|
Parent Losses
|
9.3
|
PCBs
|
4.19
|
Plan
|
4.18(iv)
|
Port Everglades Franchises
|
4.2
|
Primary Business Address
|
6.1(e)
|
Pre-Closing Tax Period
|
10.1(a)
|
Purchase Price
|
2.2
|
Repair Vehicles
|
2.5
|
Response Notice
|
9.4(b)
|
Restricted Party
|
6.1(e)
|
Straddle Periods
|
10.1(b)
|
Stock Assignment
|
7.1
|
Superior Offer
|
6.1(h)(ii)
|
Tax Claim
|
10.3(b)
|
WARN Act
|
6.1(l)
|
8
ARTICLE II
9
At the end of the thirty (30)-day period referred to above, the parties shall submit to binding arbitration before Xxxxx Xxxxxxxx in Boston, Massachusetts (the “Arbitrator”); provided Xxxxx Xxxxxxxx does not perform in any manner, and it has never performed in any manner, any auditing, accounting or other financial or consulting work on behalf of any of the parties hereto or their Affiliates, for review and resolution of all matters (but only such matters) which remain in dispute and which were properly included in the Notice of Disagreement, and the Arbitrator shall make a final determination of the Closing Net Working Capital in accordance with the guidelines and procedures set forth in this Agreement. If Xxxxx Xxxxxxxx does not meet the above requirements, the Parent and the Buyer shall select in good faith another independent national accounting firm that has never performed any work for, or on behalf of, any of the parties hereto or their Affiliates, to act as the Arbitrator pursuant to the terms hereof. In resolving any matters in dispute, the Arbitrator may not assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or Parent, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or Parent, on the other hand. The Arbitrator’s determination will be based solely on presentations made by Buyer and Parent and in accordance with the guidelines and procedures set forth in this Agreement (i.e., not on the basis of an independent review). The Closing Balance Sheet and the determination of the Closing Net Working Capital shall become final and binding on the parties on the date the Arbitrator delivers his final resolution in writing to the parties (which final resolution shall be delivered not more than forty-five (45) days following submission of such disputed matters). The fees and expenses of the Arbitrator, in making the final determination of the Closing Net Working Capital, shall be shared equally by the Buyer and the Parent.
10
ARTICLE III
The closing of the transactions described herein (the “Closing”) shall take place at the offices of Xxxxxxxxx Xxxxxxxxxx & Xxxx LLP, The Prudential Tower, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000 at 9:00 a.m. on the third Business Day after the satisfaction or waiver of the conditions set forth in Article VII hereof, in each case, other than conditions which by their nature are to be satisfied at Closing (but subject to fulfillment or waiver of each such condition), or at such other place or time as the parties hereto may mutually agree. The date and time at which the Closing actually occurs is herein referred to as the “Closing Date.” For purposes of this Agreement, the effective time of the Closing means 12:01 a.m. est. on the Closing Date.
11
ARTICLE IV
Parent hereby represents and warrants to the Buyer as of the date hereof, that the statements contained in this Article IV with respect to the Company are true and correct, except as set forth in the Disclosure Schedules attached hereto (the “Disclosure Schedules”). The Disclosure Schedules shall be arranged by Schedules corresponding to the numbered and lettered section and paragraphs contained in this Article IV, and the disclosures in any Schedule of the Disclosure Schedules shall qualify only the corresponding section or paragraph in this Article IV; provided, however, that a disclosure in a Schedule of the Disclosure Schedules shall be deemed to have been set forth in another Schedule of the Disclosure Schedules where such disclosure set forth in such other Schedule is specifically cross-referenced.
12
13
(a) any obligation or liability incurred by the Company, other than obligations and liabilities incurred in the ordinary course of business for an amount not more than $25,000 in each case or $50,000 in the aggregate;
(b) any Lien placed on any of the Company’s properties or assets which remains in existence on the date hereof;
(c) any contingent liabilities incurred by the Company with respect to the obligations of any other Person that would result in a Material Adverse Effect;
(d) any purchase, sale, lease, assignment, transfer or other disposition, or any agreement or other arrangement for the purchase, sale, lease, assignment, transfer or other disposition, of a material amount of the Company’s properties or assets, other than purchases for and sales from inventory in the ordinary course of business, except for fixed assets purchased or other capital expenditures made in amounts not exceeding $25,000 for any single item and $50,000 in the aggregate for all such items or replacement of obsolete properties or assets;
(e) any damage, destruction or loss, whether or not covered by insurance having a Material Adverse Effect;
(f) any labor trouble or claim of unfair labor practices involving the Company having a Material Adverse Effect; any material change in the employment contracts of or compensation payable or to become payable by the Company to any of its officers, directors, employees, consultants or agents, or any bonus payment or arrangement made to or with any of such officers, directors, employees, consultants or agents; or any material change in coverage or benefits available under any Plan described in Section 4.18;
(g) any material change with respect to the Company’s management or supervisory personnel;
(h) any material obligation or liability incurred by the Company with respect to any loan, advance or commitment to lend by any bank, financial institution or institutional lender to any of the officers, directors, employees, consultants, agents or stockholders of the Company or to any other Person; or any material loans or advances made by the Company to any officers, directors, employees, consultants, agents or stockholders of the Company, except for normal compensation, professional fees and expense allowances payable to officers, directors, employees, agents and stockholders;
(i) any material change in any contract, license, lease or agreement entered into by the Company which is outside the ordinary course of business or which obligates the Company for more than $25,000 in any one case or more than $50,000 in the aggregate;
(j) any recapitalization or reorganization;
(k) any amendment or other change (or any authorization to make such an amendment or change) to the Company’s Charter or by-laws, except as required by law or in connection with the consummation of the transactions contemplated hereby;
14
(l) any postponement or delay in payment of any accounts payable or other liability of the Company involving more than $25,000 in any one case or more than $50,000 in the aggregate except in the ordinary course of business consistent with prior practices;
(m) any cancellation, waiver, compromise or release of any right or claim either involving more than $50,000 or outside the ordinary course of business consistent with prior practices; or
(n) any cancellation, termination, modification, or acceleration by any party to any contract, license, lease or agreement involving more than $60,000 to which the Company is a party or by which it is bound.
(a) Schedule 4.9(a) attached hereto lists and describes briefly all real property owned by the Company. With respect to each such parcel of owned real property: (i) the Company has good and marketable title to the parcel of real property, free and clear of any Lien, easement, covenant, or other restriction, except for installments of special assessments not yet delinquent and recorded easements, covenants, and other restrictions which do not materially impair the current use, occupancy, or value, or the marketability of title, of the property subject thereto, except as disclosed on Schedule 4.9(a); (ii) there are no pending or, to the Knowledge of Parent, threatened condemnation proceedings, lawsuits, or administrative actions relating to the property; (iii) to the Knowledge of Parent the legal description for the parcel contained in the deed thereof describes such parcel fully and adequately; and (iv) except as disclosed on Schedule 4.9(a), the buildings and improvements thereon are located within the boundary lines of the described parcels of land are not in violation of applicable setback requirements, zoning and building laws, and ordinances the effect of which would have a Material Adverse Effect, and do not encroach on any easement which may burden the land; and (v) to the Knowledge of Parent, the land does not serve any adjoining property for any purpose inconsistent with the use of the land.
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(b) Schedule 4.9(b) lists and describes all real property leased or subleased to the Company. With respect to each such lease and sublease: (i) correct and complete copies thereof have been delivered to the Buyer; (ii) to the Knowledge of Parent, the lease or sublease is legal, valid binding, enforceable, and in full force and effect and will continue to be so on identical terms immediately following the consummation of the transactions contemplated hereby; and (iii) to the Knowledge of Parent, no party to the lease or sublease is in breach or default thereunder. The Company has good and marketable leasehold interests in, and enjoys peaceful and quiet possession of, all of the real property described in each lease and sublease set forth on Schedule 4.9(b) there are no disputes thereunder, and, to the Knowledge of Parent, there have been no threatened cancellations thereof. All necessary government approvals with respect to such leased property have been obtained, all necessary filings or registrations therefore have been made, and there have been, to the Knowledge of Parent, no threatened cancellations thereof and there are no outstanding disputes thereunder. The Company has performed all obligations required to be performed by it under such leases and all of such leased or subleased real property, where the failure to do so would have a Material Adverse Effect and all equipment and fixtures on or serving such leased or subleased real property, are in good operating condition and repair, ordinary wear and tear excepted.
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(a) any plan or contract regarding or providing for bonuses, pensions, options, stock purchases, deferred compensation, severance benefits retirement payments, profit sharing, stock appreciation, collective bargaining or the like, or any contract or agreement with any labor union;
(b) any employment or consulting contract or contract for personal services not terminable at will by the Company without penalty to the Company;
(c) any contract or agreement for the purchase of any commodity, product, material, supplies, equipment or other personal property, or for the receipt of any service, other than purchase orders entered into in the ordinary course of business for less than $25,000 each and which in the aggregate do not exceed $50,000;
(d) any contract or agreement for the purchase or lease of any fixed asset, whether or not such purchase or lease is in the ordinary course of business, for a price in excess of $25,000;
(e) any contract or agreement with any sales agent, distributor of products of the Company involving more than $25,000;
(f) any contract or agreement concerning a partnership or joint venture with one or more Persons;
(g) any confidentiality agreement or any non-competition agreement or other contract or agreement containing covenants limiting the Company’s freedom to compete in any line of business or in any location or with any Person;
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(h) any license agreement (as licensor or licensee) (other than shrink wrap licenses) involving more than $25,000;
(i) any contract or agreement with either a stockholder or any present or former officer, director, consultant, agent or stockholder of the Company or with any Affiliate of any of them, except Parent’s cash management policy or filing consolidated income Tax Returns or management fees payable to Parent consistent with past practices;
(j) any loan agreement, indenture, note, bond, debenture or any other document or agreement evidencing a capitalized lease obligation; or
(k) any agreement of guaranty, indemnification, or other similar commitment with respect to the obligations or liabilities of any other Person (other than lawful indemnification provisions contained in the Charters and by-laws of the Company in excess of $25,000.
Copies of all such contracts, commitments, plans, leases, licenses and agreements have been provided or made available to the Buyer prior to the execution of this Agreement, and all such copies are true, correct and complete and have been subject to no amendment, extension or other modification as of the date hereof, except such as are described in any of Schedules 4.7, 4.14 or 4.18. Except as listed and described in Schedule 4.14, the Company, or, to the Knowledge of Parent, any other Person, is in Default under any such contract, commitment, plan, lease, license or agreement described in Schedule 4.14 (a “Default” being defined for purposes hereof as an actual material default or event of default or the existence of any fact or circumstance which would, upon receipt of notice or passage of time, constitute a material default).
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(a) Except as set forth in Schedule 4.16(a), the Company has all licenses, permits, Environmental Permits, franchises, orders, approvals, accreditations, written waivers and other authorizations as are necessary in order to enable it to own and conduct its business as currently conducted by the Company and to occupy and use its real and personal properties without incurring any material liability (“Necessary Permits”), and is in material Compliance with any and all recordkeeping, sampling, assessment, monitoring and document filing requirements of the same. With respect to each Necessary Permit, (i) the name of the holder of such Necessary Permit; (ii) the date of registration; (iii) the expiration date; and (iv) the registration number as applicable is set forth on Schedule 4.16(a) attached hereto. The Company is properly identified on each manifest, report and any other document that may be required to be on file with any federal, state or local governmental, regulatory or administrative agency or authority with respect to any Necessary Permit, the failure of which would have a Material Adverse Effect. No registration, filing, application, notice, transfer, consent, approval, order, qualification, waiver or other action of any kind is required by virtue of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby to effect the transfer to the Buyer of such Necessary Permits that are transferable under applicable law, except as otherwise required under any Environmental Law, the Port Everglades Franchises, or as set forth on Schedule 4.16(a). The Company is in Compliance with the terms and conditions of all Necessary Permits, the failure of which would have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.16(b), the Company has conducted and is conducting the Business in Compliance with applicable federal, state and local laws, statutes, ordinances, regulations, rules or orders or other requirements of any governmental, regulatory or administrative agency or authority or court or other tribunal relating to it (including, but not limited to, any law, statute, ordinance, regulation, rule, order or requirement relating to securities, properties, business, products, advertising, zoning, sales or employment practices, immigration, terms and conditions of employment, wages and hours, safety, occupational safety, health or welfare conditions relating to premises occupied, product safety and liability or civil rights) (“Legal Requirement”), the failure of which would have a Material Adverse Effect. The Company is not now charged with, and, to the Knowledge of Parent, is not now under investigation with respect to, any possible material violation of any applicable Legal Requirement by any Governmental Authority relating to any of the foregoing in connection with the Business, and the Company has filed all reports required to be filed with any federal, state or local governmental, regulatory or administrative agency or authority, the failure of which would have a Material Adverse Effect.
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(i) “Employee Pension Benefit Plan” (as such term is defined in Section 3(2) of ERISA), which is maintained or contributed to by the Company or under which the Company has any material liability or material contingent liability; which is not a Multiemployer Plan;
(ii) “Multiemployer Plan” (as such term is defined in Section 3(37) of 4001(a)(3) of ERISA), which is maintained or contributed to by the Company or under which the Company has any material liability or material contingent liability;
(iii) “Employee Welfare Benefit Plan” (as such term is defined in Section 3(3) of ERISA), which is maintained or contributed to by the Company or under which the Company has any material liability or material contingent liability; and
(iv) Stock purchase, option, or bonus plan, deferred compensation, severance pay, incentive, merit or performance bonus, vacation, sick pay or leave, fringe benefit plan, policy, or arrangement, or payroll practice, which is maintained or contributed to by the Company, or under which the Company has any material liability or material contingent liability (individually a “Plan” and collectively, the “Plans”).
Each Plan which is intended to be “qualified” under Section 401(a) of the Code is and, to Parent’s Knowledge, has been at all times so qualified or, in the case of a terminated plan, was so qualified throughout its existence, the failure of which would have a Material Adverse Effect; and each trust maintained thereunder is and has been at all times exempt from taxation under Section 501(a) of the Code, or in the case of a terminated trust, was so exempt throughout its existence, the failure of which would have a Material Adverse Effect. There have been no amendments to any such Plans which are not the subject of a determination letter issued with respect thereto by the Internal Revenue Service, except as set forth on Schedule 4.18 attached hereto. No event has occurred that will or could give rise to disqualification of any such Plan under the Code, except as set forth on Schedule 4.18 attached hereto. No event has occurred that will or could subject any such Plan to tax under Section 511 of the Code, except as set forth on Schedule 4.18 attached hereto, the effect of which would have a Material Adverse Effect. No Plan has incurred any “accumulated funding deficiency” (as described in Section 302 of ERISA or Section 412 of the Code), whether or not waived, nor has there been any failure to make by its due date a required installment under Section 302(e) of ERISA or Section 412(m) of the Code with respect to any Plan, the effect of which would have a Material Adverse Effect.
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No Plan listed in Schedule 4.18 is subject to Title IV of ERISA, except as set forth on Schedule 4.18 attached hereto. No Plan listed in Schedule 4.18 is a Multiemployer Plan, except as set forth on Schedule 4.18 attached hereto. Except as listed in Schedule 4.18, each Welfare Benefit Plan has been funded through the purchase of insurance contracts (other than deductibles) under which there are no retroactive rate adjustments or loss sharing arrangements. To the Knowledge of Parent, each Plan complies and has been administered in form and operation with all requirements of law and regulation applicable thereto, the failure of which would have a Material Adverse Effect. The Company has performed all of their obligations under all such Plans, the failure of which would have a Material Adverse Effect. To the Knowledge of the Parent, there have been no acts or omissions which have given rise to, or which could give rise to, any penalty, tax, or fine under Sections 409, 502(c), or 502(i) of ERISA, or Sections 4975 or 4976 of the Code, for which the Company may be liable, except as listed on Schedule 4.18. None of the assets of any Plan are invested in any employer securities, employer real property, or any annuity contracts, except as set forth on Schedule 4.18 attached hereto. All contributions required with respect to any Plan for all periods ending prior to the Closing (including periods from the first day of the current plan year to the Closing) will be timely made prior to the Closing by the Company. To the Knowledge of the Parent, the Company does not have any material liability arising directly or indirectly in connection with any failure of the Company to comply with Section 4980B of the Code or Part 6 of Title I of ERISA or any applicable state law ("COBRA"). All required reports and descriptions of each Plan (including IRS Form 5500 Annual Reports, Summary Annual Reports, and Summary Plan Descriptions) have been timely filed and distributed, except as set forth on Schedule 4.18 attached hereto. No Plan provides benefits relating to death, medical, or severance benefits, with respect to current or former employees, officers, or directors (or their beneficiaries) beyond their retirement or other termination of service other than (i) coverage for benefits mandated by applicable law, (ii) death benefits or retirement benefits under an Employee Pension Benefit Plan, (iii) deferred compensation benefits properly accrued as liabilities on the Financial Statements, or (iv) benefits the full cost of which is borne by the current or former employee, officer, or director or his beneficiaries, except as set forth on Schedule 4.18 attached hereto. There are no actions, suits, or claims (other than routine claims for benefits made in the ordinary course of plan administration for which plan administrative review procedures have not been exhausted) pending or, to the Knowledge of Parent, threatened involving any Plans or the assets of such Plans, and, to the Knowledge of the Parent, no facts exist which could give rise to any such action, suit, or claim. For each Plan, a true and complete copy of each of the following documents have been delivered to the Buyer: (i) Plan document and all amendments thereto; (ii) most recent Summary Plan Description (together with each Summary of Material Modifications required under ERISA); (iii) IRS Form 5500 Annual Report, if required under ERISA, for the two most recent plan years, together with all schedules, financial statements, and opinions of independent accountants; (iv) the actuarial report, if required under ERISA, for the two most recent plan years; (v) Form PBGC-1, if required under ERISA, for the two most recent plan years; (vi) if the Plan is funded through a trust or any third-party funding vehicle (including a voluntary employee benefit association under Section 501(c)(9) of the Code, or a “multiple employer welfare arrangement” described in Section 3(40) of ERISA), the trust or other funding agreement, all amendments thereto, and the latest financial statements thereof for the two most recent plan years; and (vii) the most recent determination letter received from the Internal Revenue Service with respect to each Plan that is intended to be qualified under Section 401 of the Code. No event has occurred on or prior to the date of this Agreement that has caused the Company to have any type of liability or obligation, or has resulted in the Company incurring any fine. Tax or penalty arising from, or with respect to, any Plan administered by or contributed to by Parent or any ERISA Affiliate of the Parent and, to the Knowledge of Parent, no fact exists as of the date of this Agreement, that would give rise to a claim against the Company or the Buyer arising from, or with respect to, any Plan administered by or contributed to by Parent or any ERISA Affiliate of the Parent.
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4.20 Employees. Schedule 4.20 attached hereto sets forth a true and complete list of all employees of the Company including each such employee’s job title, remuneration and duration of employment period. The Company is not a party to, and none of its employees is subject to, any collective bargaining agreement or other union contract, other than as disclosed in Schedule 4.20. Except as disclosed on Schedule 4.20, the Company is in Compliance with applicable federal, state and local laws affecting labor, employment and employment practices, including terms and conditions of employment and wages and hours, the failure of which would have a Material Adverse Effect and there are, and have been no outstanding complaints against the Company pending or, to the Knowledge of Parent, threatened before the National Labor Relations Board or any similar state or local agency, except as set forth on Schedule 4.20. Except as disclosed on Schedule 4.20, the Company enjoys good relations with its employees and there is no pending or, to the Knowledge of Parent, threatened labor trouble with or effort to organize any of its employees, and there has been no such labor trouble. Except as disclosed on Schedule 4.20, the Company is not obligated to pay any employees any severance, restriction, change of control or similar payments on or as a result of Closing of the transactions contemplated by this Agreement, or upon termination of their employment at any time on or after the Closing.
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ARTICLE V
The Buyer hereby represents and warrants to Parent as of the date hereof as follows:
5.1 Organization and Qualification. Buyer is a Massachusetts corporation duly organized, validly existing and in good standing under the laws of The Commonwealth of Massachusetts, with full power and authority to own, use or lease its properties and to conduct its business as such properties are owned, used or leased and as such business is currently conducted.
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ARTICLE VI
(i) enter into or amend any employment, bonus, severance, or retirement contract or arrangement (including any Plan as described in Section 5.18), or materially increase any salary or other form of compensation payable or to become payable to any current employee of the Company, other than in the ordinary course of business consistent with prior practice;
(ii) purchase any assets or real estate or any interest therein other than in the ordinary course of business or to replace any damaged or obsolete assets;
(iii) merge or consolidate with or agree to merge or consolidate with, or purchase or agree to purchase all or substantially all of the assets of, acquire securities of or otherwise acquire any Person;
(iv) sell, lease, transfer or otherwise dispose of or agree to sell, transfer, lease or otherwise dispose of any of its assets, properties, rights or claims, whether tangible or intangible having an aggregate book value in excess of $75,000, except in the ordinary course of business consistent with prior practice;
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(v) incur any liability, guaranty or obligation (fixed or contingent) other than in the ordinary course of business consistent with prior practice;
(vi) place or permit to be placed any Lien on any of the Company Stock or any other Company property, other than statutory Liens arising in the ordinary course of business;
(vii) change its accounting practices and/or procedures;
(viii) accelerate receivables or delay or postpone payment of any accounts payable or other liability, except in the ordinary course of business consistent with prior practice;
(ix) transfer any assets having a total cumulative book value in excess of $50,000 to Parent or any Affiliate or Subsidiary of Parent other than cash transferred to Affiliates in the normal and ordinary course of business consistent with past practices, or inventory of waste transferred to Affiliates for treatment, storage or disposal or activity in the ordinary course of business consistent with past practices or transfer cash to Parent consistent with Parent’s cash management policy or to pay Taxes as a result of filing consolidated income tax returns or payment of management fees to Parent consistent with past practices; or
(x) agree to a material change or materially add to the terms and conditions of any Necessary Permit without the prior written approval of the Buyer, which will not be unreasonably withheld;
(xi) materially increase the Company’s disposal inventory by an amount not to exceed $25,000, except in the ordinary course of business;
(xii) transfer any customer account to any of its Affiliate or any third party; or
(xiii abandon any part of the Business that would result in a Material Adverse Effect.
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(o) 338(h)(10) Election. At the Buyer’s option, Parent shall join with the Buyer in making an election under Code §338(h)(10) (and any corresponding election under state, local, and foreign tax law) with respect to the purchase and sale of the Company Stock contemplated by this Agreement (collectively, a “§338(h)(10) Election”). Parent shall include any income, gain, loss, deduction, or other tax item resulting from the §338(h)(10) Election on its Tax Return to the extent required by applicable law. Parent shall pay any Tax imposed on Parent or the Company attributable to the making of the §338(h)(10) Election, including (i) any Tax imposed under Code §1374, (ii) any Tax imposed under Reg. §1.338(h)(10)-1(e)(5), or (iii) any state, local or foreign Tax imposed on Parent’s gain. Parent shall indemnify the Buyer and the Company against any adverse consequences arising out of any failure to pay such Taxes in accordance with the procedures set forth in Article IX. Upon the request of the Buyer, Parent shall execute and deliver to the Buyer, within twenty (20) days of the Buyer’s written request, any and all forms necessary to effectuate the §338(h)(10) Election (including, without limitation, IRS Form 8023 and any similar forms under applicable state and local income tax laws).
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ARTICLE VII
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(i) an Officer’s Certificate of the Secretary of Parent certifying (x) the incumbency and genuineness of signatures of all officers of Parent executing this Agreement, any document delivered by Parent at the Closing and any other document, instrument or agreement executed in connection herewith, (y) the truth and correctness of resolutions of Parent authorizing the entry by Parent into this Agreement and the transactions contemplated hereby and (z) the truth, correctness and completeness of its by-laws;
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(ii) the Charter of each of Parent and the Company certified as of a recent date by the state of its incorporation; and
(iii) certificates of corporate and tax good standing and legal existence of Parent and the Company as of a recent date from the state of its incorporation and the state(s) in which it is qualified to do business.
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(i) an Officer’s Certificate of the Secretary of Buyer certifying (a) the incumbency and genuineness of signatures of all officers of Buyer executing this Agreement, any document delivered by Buyer at the Closing and any other document, instrument or agreement executed in connection herewith, (b) the truth and correctness of resolutions of Buyer authorizing the entry by Buyer into this Agreement and the transaction contemplated hereby and (c) the truth, correctness and completeness of its by-laws;
(ii) a certificate of corporate good standing and legal existence of Buyer as of a recent date from the state of its incorporation.
ARTICLE VIII
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ARTICLE IX
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(a) If an Indemnitee has incurred or suffered Losses for which it may be entitled to indemnification under this Article IX, such Indemnitee shall, prior to the expiration of the representation, warranty, covenant or agreement to which such claim relates, give written notice of such claim (a “Claim Notice”) to Parent or the Buyer (as the case may be) (the “Indemnifying Party”). Each Claim Notice shall state the amount of claimed Losses (the “Claimed Amount”), if known, and the factual background and basis for such claim in reasonably sufficient detail so as to enable the Indemnifying Party to understand and respond to the Claim Notice as provided in Section 9.4(b) below.
(b) Except as set forth in clause (iv) herein, within twenty (20) Business Days after delivery of a Claim Notice, the Indemnifying Party shall provide to the Indemnitee a written response (the “Response Notice”) in which the Indemnifying Party shall: (i) agree that all of the Claimed Amount is owed to the Indemnitee, (ii) agree that part, but not all, of the Claimed Amount (the “Agreed Amount”) is owed to the Indemnitee, (iii) contest that any of the Claimed Amount is owed to the Indemnitee, or (iv) request additional information that the Indemnifying Party believes in good faith it needs to respond to the Claim Notice, which request must be made within ten (10) Business Days after the Indemnifying Party’s receipt of the Claim Notice. In the event the Indemnifying Party requests further information pursuant to the foregoing clause (iv), the Indemnitee shall provide the additional information, if any, within ten (10) Business Days, and the Indemnifying Party shall then respond as provided in the foregoing clauses (i), (ii) or (iii) within ten (10) Business Days after receipt of such additional information or notice from the Indemnitee that no further information exists. The Indemnifying Party may contest the payment of all or a portion of the Claimed Amount only based upon a good faith belief that all or such portion of the Claimed Amount does not constitute Losses for which the Indemnitee is entitled to indemnification under this Article IX. If no Response Notice is delivered by the Indemnifying Party within such twenty (20) Business Day period, the Indemnifying Party shall be deemed to have agreed that all of the Claimed Amount is owed to the Indemnitee; provided, however, that the failure to adhere strictly to the timing provided herein shall not be a waiver of any indemnification claim or defense, except to the extent such failure causes prejudice to the other party.
(c) If the Indemnifying Party in the Response Notice agrees (or is deemed to have agreed) that all of the Claimed Amount is owed to the Indemnitee, the Indemnifying Party shall, subject to the terms and limitations contained in this Article IX, promptly (and in any event within five (5) Business Days) pay the Claimed Amount to the Indemnitee. If the Indemnifying Party in the Response Notice agrees that part, but not all, of the Claimed Amount is owed to the Indemnitee, the Indemnifying Party shall, subject to the terms and limitations contained in this Article IX, promptly (and in any event within five (5) Business Days) pay to the Indemnitee, directly, an amount equal to the Agreed Amount set forth in such Response Notice. Acceptance by the Indemnitee of part payment of any Claimed Amount shall be without waiver to that Indemnitee’s right to claim and the Indemnifying Party’s obligation to pay the balance of any such Claimed Amount that is due the Indemnitee. If the Indemnifying Party in the Response Notice contests all or part of the Claimed Amount (the “Contested Amount”), the Indemnifying Party and the Indemnitee shall proceed in good faith to negotiate a resolution of such dispute and, if not resolved through negotiations within twenty (20) days, either may commence a lawsuit or other appropriate proceeding in a court of competent jurisdiction.
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(d) The Indemnitee shall give prompt written notification to the Indemnifying Party of the commencement of any action, suit or proceeding relating to a third party claim for which indemnification pursuant to this Article IX may be sought; provided, however, that no delay on the part of the Indemnitee in notifying the Indemnifying Party shall relieve the Indemnifying Party of any liability for Losses hereunder except to the extent of any Loss or material prejudice caused by or arising out of such delay. Within five (5) Business Days after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnitee, assume control of the defense of such action, suit or proceeding with counsel reasonably satisfactory to the Indemnitee. If the Indemnifying Party does not so assume control of such defense, the Indemnitee shall control such defense. If the Indemnifying Party assumes the defense notwithstanding the satisfaction of the foregoing conditions, the Indemnitee may object in writing within three (3) Business Days, and in the event of such objection the parties shall negotiate in good faith which party will control the defense. In the absence of agreement as to which party controls the defense within three (3) Business Days from the Indemnifying Party’s receipt of an objection, the Indemnifying Party shall assume control of the defense. The party not controlling such defense may participate therein at its own expense; provided that if the Indemnifying Party assumes control of such defense and counsel selected by the Indemnifying Party to defend such action reasonably concludes that the Indemnifying Party and the Indemnitee have conflicting interests or different defenses available with respect to such action, suit or proceeding, the reasonable fees and expenses of one counsel for all of the Indemnitees shall be considered “Losses” for purposes of this Agreement, whether or not the Indemnitee prevails in such action, suit or proceeding. The party controlling such defense shall keep the other party advised of the status of such action, suit or proceeding and the defense thereof and shall consider in good faith recommendations made by the other party with respect thereto. Except as provided in Section 9.4(e) below, the Indemnitee shall not agree to any settlement of such action, suit or proceeding without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, conditioned or delayed. The Indemnifying Party shall not agree to any settlement of or the entry of a judgment in any action, suit or proceeding without the prior written consent of the Indemnitee, which shall not be unreasonably withheld, conditioned or delayed (it being understood that it is reasonable to withhold, condition or delay such consent if, among other things, the settlement or the entry of a judgment (A) lacks a complete release of the Indemnitee for all liability with respect thereto or (B) imposes any liability or obligation on the Indemnitee).
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ARTICLE X
(a) Subject to the limitations contained in Section 9.5, Parent shall pay and indemnify and hold harmless the Buyer, and each Affiliate of Buyer, from and against: (i) all income Taxes (or the nonpayment thereof) of the Company for any period ending on or before the Closing Date (a “Pre-Closing Tax Period”) and any pre-Closing Straddle Period; (ii) any and all Taxes of Parent or any Affiliate of Parent or any other Business Entity or other Person imposed on the Company or on Buyer, as a transferee or successor, by contract or pursuant to any law, rule or regulation, which Taxes relate to their conduct of business or any other event or transaction occurring on or before the Closing Date or as a result of the closing of the transactions contemplated by this Agreement; and (iii) all Claims arising out of or incident to the imposition, assessment or assertion of any Tax described in clauses (i) and (ii) above. Notwithstanding anything in this Agreement to the contrary, all matters relating to Taxes will be governed by this Article X and no provision of Article X will limit, modify or offset the rights or obligations of the parties hereunder.
(b) For purposes of this Agreement, the portion of any income Tax, with respect to the income, property or operations of the Company that is attributable to any Tax period that begins on or before the Closing Date and ends after the Closing Date (a “Straddle Period”) will be apportioned between the period of the Straddle Period that extends before the Closing Date through the Closing Date and the period of the Straddle Period that extends from the day after the Closing Date to the end of the Straddle Period in accordance with this Section 10.1(b). The portion of such Tax attributable to the pre-Closing Straddle Period will be deemed equal to the amount that would be payable if the Straddle Period ended on and included the Closing Date. The portion of Tax attributable to a Post-Closing Straddle Period will be calculated in a corresponding manner.
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(c) Any amount paid pursuant to this Section 10.1 will be treated as an adjustment to the Purchase Price, unless otherwise required by law.
(d) Any indemnity payment to be made pursuant to this Section 10.1 must be paid by wire transfer of immediately available funds no later than ten (10) days after the Buyer makes written demand upon Parent therefore, except as otherwise provided in Article IX.
(e) The indemnification provisions in this Section 10.1 will survive the Closing until the expiration of the applicable statute of limitations.
(a) Parent shall prepare, or caused to be prepared, and timely file, all original Tax Returns of the Company and Parent that are due with respect to any Pre-Closing Tax Period that have not yet been filed, on a basis consistent with past practice, except to the extent required by applicable law, and shall timely pay, or cause to be timely paid, all Taxes shown as due and owing on such Tax Returns. Parent shall make available to Buyer any Tax Return that could reasonably be likely to affect the Company’s Pre-Closing Tax liability with respect to any Pre-Closing Tax Period. Such Tax Return will be made available to Buyer no less than thirty (30) days prior to the extended due date for filing of such tax Return. Parent shall allow the Buyer at least twenty (20) days in which to review any portion relating to the Company in such Pre-Closing Tax Period Tax Returns, prior to their filing and shall provide to the Buyer such information that is reasonably requested by the Buyer to confirm Parent’s adherence to past practice. If the Buyer, within twenty (20) days after delivery of such Tax Return, notifies Parent in writing that it objects to any items relating to the Company in such Tax Return, the disputed items shall be resolved pursuant to Section 10.2(c). If the Buyer does not respond within twenty (20) days, the Buyer shall not be entitled to object to any item in such Tax Return, and Parent shall file such Tax Return. The cost of preparing such Tax Returns shall be borne by Parent.
(b) If Parent on the one hand, and the Buyer, on the other, disagree as to the treatment of any item on any Tax Return described in Section 10.2(a) hereof, Parent and the Buyer shall promptly consult each other in an effort to resolve such dispute in good faith. If any such point of disagreement cannot be resolved in ten (10) days of the date of consultation, the Arbitrator shall resolve any remaining disagreements. The determination of the Arbitrator shall be final, conclusive and binding on the parties. The costs, fees and expenses of the Arbitrator shall be borne equally by the Buyer, on the one hand, and Parent, on the other. Nothing in this Agreement shall prevent the timely filing of a Tax Return by the preparing party. However, the preparing party shall file an amended Tax Return to reflect resolution of the items in dispute by the parties or the Independent Accountant, as the case may be.
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(c) All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) imposed in connection with this Agreement will be borne equally by Parent and Buyer.
(a) In connection with the preparation of Tax Returns, audit examinations, and any administrative or judicial proceedings relating to the Tax liabilities imposed on the Company, the Buyer, on the one hand, and Parent, on the other hand, shall cooperate fully with each other, including, without limitation, the furnishing or making available during normal business hours of records, personnel (as reasonably required), books of account, powers of attorney or other materials necessary or helpful for the preparation of such Tax Returns, the conduct of audit examinations or the defense of claims by any Governmental Authority as to the imposition of Taxes.
ARTICLE XI
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if to the Buyer:
Triumvirate Environmental, Inc.
00 Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. XxXxxxxxx, President
Facsimile Transmission Number: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxxxxx & Xxxx LLP
The Prudential Tower
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, P.C./Xxxxx X. Xxxxxxx, Esq.
Facsimile Transmission Number: (000) 000-0000
if to Parent and the Company:
Perma-Fix Environmental Services, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxxx, Chairman,
President, and Chief Executive Officer
Facsimile Transmission Number: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx, LLP
1700 One Leadership Square
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile Transmission Number: 405-232-2695
All such notices, requests, demands, consents and other communications shall be deemed to have been duly given or sent two (2) days following the date on which mailed, or on the date on which delivered by hand or by facsimile transmission (receipt confirmed), as the case may be, and addressed as aforesaid.
44
11.9 GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE CHOICE OF LAW RULES THEREOF).
45
46
ATTEST: | BUYER: |
TRIUMVIRATE ENVIRONMENTAL, INC. |
/s/Xxxxx Xxxxxxx
|
By:
|
/s/ Xxxxxxx Xxxxxxx
|
|
Chief Operating Officer
|
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ATTEST: | PARENT: |
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
|
/s/ Xxxxx Xxxxxx
|
By:
|
/s/ Xxx Xxxxxxxxx
|
|
Xxxxx X. Xxxxxx |
Name: Chief Operating Officer
|
||
Corporate Controller | Title: Chief Financial Officer |