1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
SYNAGRO TECHNOLOGIES, INC.,
AND
XXXXXXXXX CONSTRUCTION CO., INC.
OCTOBER 26, 1999
EXHIBIT 2.1
-----------
2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS..............................................................................................1
Section 1.1. Accounting Terms.................................................................1
Section 1.2. Defined Terms....................................................................1
ARTICLE II
PURCHASE, SALE AND DELIVERY..............................................................................2
Section 2.1. Acquisition Assets...............................................................2
Section 2.2. Excluded Assets..................................................................3
Section 2.3. Purchase Price...................................................................3
Section 2.4. Allocation Reporting.............................................................4
Section 2.5. Closing..........................................................................4
Section 2.6. Closing Deliveries...............................................................4
Section 2.7. Prorations.......................................................................6
Section 2.8. Non-Assignment of Certain Contracts..............................................6
ARTICLE III
LIABILITIES AND OBLIGATIONS..............................................................................7
Section 3.1. Liabilities Not Assumed By Purchaser.............................................7
Section 3.2. Assumed Liabilities..............................................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER..............................................................9
Section 4.1. Organization and Qualification...................................................9
Section 4.2. Authority; Binding Agreement.....................................................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER.................................................................9
Section 5.1. Organization and Qualification...................................................9
Section 5.2. Capitalization..................................................................10
Section 5.3. Authority; Non-Contravention; Approvals.........................................10
Section 5.4. Subsidiaries....................................................................11
Section 5.5. Financial Statements............................................................11
Section 5.6. Absence of Undisclosed Liabilities..............................................11
Section 5.7. Absence of Certain Changes or Events............................................11
Section 5.8. Litigation......................................................................12
Section 5.9. Accounts Receivable.............................................................12
Section 5.10. No Violation of Law; Compliance with Agreements.................................12
Section 5.11. Insurance.......................................................................12
Section 5.12. Taxes...........................................................................13
Section 5.13. Employee Benefit Plans..........................................................14
Section 5.14. Employee and Labor Matters......................................................15
Section 5.15. Environmental Matters...........................................................16
Section 5.16. Non-Competition Agreements......................................................18
Section 5.17. Title to Assets.................................................................18
Section 5.18. Contracts, Agreements, Plans and Commitments....................................19
Section 5.19. Supplies........................................................................20
EXHIBIT 2.1
-----------
i
3
Section 5.20. Brokers and Finders.............................................................20
Section 5.21. Intellectual Property...........................................................20
Section 5.22. Relationships...................................................................21
Section 5.23. Year 2000.......................................................................21
Section 5.24. Certain Payments................................................................21
Section 5.25. Books and Records...............................................................21
Section 5.26. Condition and Sufficiency of Assets.............................................21
ARTICLE VI
COVENANTS...............................................................................................22
Section 6.1. Conduct of Business by Seller Pending Closing...................................22
Section 6.2. Maintenance of Insurance........................................................22
Section 6.3. Other Offers....................................................................23
ARTICLE VII
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
Section 7.1. Confidentiality.................................................................23
Section 7.2. Access to Information...........................................................23
Section 7.3. Employees.......................................................................24
Section 7.4. Taxes...........................................................................25
Section 7.5. Further Assurances..............................................................26
Section 7.6. Expenses and Fees...............................................................26
Section 7.7. Agreement to Cooperate..........................................................26
Section 7.8. Public Statements...............................................................26
Section 7.9. Notification of Certain Matters.................................................26
Section 7.10. Records.........................................................................27
Section 7.11. Accounts Receivable.............................................................27
Section 7.12. Open Contracts..................................................................27
ARTICLE VIII
CONDITIONS TO CLOSING...................................................................................28
Section 8.1. Conditions to Each Party's Obligation to Close..................................28
Section 8.2. Conditions to Obligation of the Seller..........................................28
Section 8.3. Conditions to Obligations of Purchaser..........................................28
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER.......................................................................30
Section 9.1. Termination.....................................................................30
Section 9.2. Effect of Termination...........................................................31
Section 9.3. Extensions; Waiver..............................................................31
Section 9.4. Xxxxxxx Money...................................................................32
ARTICLE X
INDEMNIFICATION.........................................................................................32
Section 10.1. Seller and Shareholder's Indemnity Obligations..................................32
Section 10.2 Purchaser's Indemnity Obligations...............................................33
Section 10.3. Indemnification Procedures......................................................33
Section 10.4. Limitation of Liability.........................................................35
Section 10.5 Limitation of Purchaser's Liability.............................................35
EXHIBIT 2.1
-----------
ii
4
ARTICLE XI
GENERAL PROVISIONS......................................................................................35
Section 11.1. Survival.......................................................................35
Section 11.2. Notices........................................................................36
Section 11.3. Interpretation.................................................................36
Section 11.4. Miscellaneous..................................................................37
Section 11.5. Governing Law..................................................................37
Section 11.6. Binding Arbitration............................................................37
Section 11.7. Amendment......................................................................39
Section 11.8. Counterparts...................................................................39
Section 11.9. Parties in Interest............................................................39
Section 11.10. Validity.......................................................................39
Section 11.11. Vehicle Transfers..............................................................39
Exhibits
--------
Exhibit A Glossary
Exhibit B Intentionally Deleted
Exhibit C Documents Relating to Conveyance of Assets
Exhibit D Consulting Agreement
Exhibit E Leases
Exhibit F Transition Agreement
Exhibit G Covenant Not to Compete Agreement
Schedules
---------
Schedule 2.1(i) Equipment
Schedule 2.1(ii) Motor Vehicles
Schedule 2.1(iv) Contracts
Schedule 2.1(vi) Permits
Schedule 2.1(xi) Books and Records
Schedule 2.3 Assumed Indebtedness
Schedule 2.4 Allocations
Schedule 3.1(g) Excluded Liabilities
Schedule 5.3 Authority; Non-Contravention; Approvals
Schedule 5.5 Financial Statements
Schedule 5.6 Absence of Undisclosed Liabilities
Schedule 5.7 Absence of Certain Changes or Events
Schedule 5.8 Litigation
Schedule 5.9 Accounts Receivable
Schedule 5.11 Insurance Policies
Schedule 5.12 Taxes
Schedule 5.13 Employee Benefit Plans
Schedule 5.14 Employee and Labor Matters
Schedule 5.15 Environmental Matters
Schedule 5.17 Title to Assets
Schedule 5.18 Contracts, Agreements, Plans and Commitments
Schedule 5.22 Relationships
EXHIBIT 2.1
-----------
iii
5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of October 26, 1999 (this
"Agreement"), is by and between SYNAGRO TECHNOLOGIES, INC., a Delaware
corporation ("Purchaser"), and WHITEFORD CONSTRUCTION CO., INC., a Maryland
corporation ("Seller"). Purchaser and Seller are each referred to as a "Party"
and, collectively, they are sometimes referred to as the "Parties." XXXXXXX X.
XXXXXXXXX ("Shareholder") has joined this Agreement as a guarantor of Seller's
obligations under Article X of this Agreement as further set forth on the
signature page to this Agreement.
W I T N E S S E T H:
WHEREAS, Shareholder owns 1,600 shares of the issued and outstanding
shares of common stock, no par value per share, of Seller ("Seller Common
Stock"), which constitutes all of the issued and outstanding capital stock of
Seller; and
WHEREAS, Purchaser wishes to purchase from Seller and Seller wishes to
sell, transfer, assign and deliver to Purchaser substantially all of the assets
and contract rights (to the extent such contract rights are assignable) used by
Seller in connection with the operation of its biosolids management and division
(the "Business") on the terms and subject to the conditions set forth herein;
and
WHEREAS, Seller is making certain representations, warranties and
indemnities herein, and Shareholder has guaranteed the performance of such
indemnity obligations, as an inducement to Purchaser to enter into this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements stated herein, the receipt
and sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles ("GAAP") and on a basis not inconsistent with those
applied in the preparation of the financial statements referred to in Section
5.5 hereof.
SECTION 1.2. DEFINED TERMS. As used in this Agreement, certain words
and terms have the meanings ascribed to them in the Glossary attached hereto as
Exhibit A. Other capitalized terms have the meanings ascribed to them elsewhere
in this Agreement.
EXHIBIT 2.1
-----------
6
ARTICLE II
PURCHASE, SALE AND DELIVERY
SECTION 2.1. ACQUISITION ASSETS. Subject to the terms and conditions of
this Agreement, and on the basis of the representations and warranties
hereinafter set forth, at the Closing (as hereinafter defined), Seller shall
sell, transfer, convey, assign and deliver to Purchaser, and Purchaser shall
acquire and purchase from Seller, all of Seller's right, title and interest in
and to the following:
(i) all of the machinery, equipment, trade fixtures, tools,
furniture, computers, appliances, implements, spare parts, supplies, leasehold
improvements, construction in progress and all other tangible personal property
listed on Schedule 2.1(i) hereto (collectively, the "Equipment");
(ii) all motor vehicles and rolling stock listed on Schedule
2.1(ii) hereto (collectively, the "Motor Vehicles");
(iii) all supplies, inventory, spare parts, safety equipment,
maintenance supplies, other supplies used or consumed in the Business and other
similar items which exist on the Closing Date (collectively, the "Supplies");
(iv) all right, title and interest in, to and under all
contracts (including, without limitation, all of the fee-for-service, operating
and other contracts of Seller), leases (other than the lease with respect to the
real property owned by Shareholder and Xxxxx Xxxxxxxxx), agreements, equipment
or other lease licenses, government contract awards, management agreements and
building service agreements applicable to the Business and to which Seller is a
party on the Closing Date or by which any of the Acquisition Assets (as
hereinafter defined) are then bound including, without limitation, those listed
on Schedule 2.1(iv) hereto (collectively, the "Contracts");
(v) all goodwill and going concern value applicable to the
Business;
(vi) to the extent assignable, all right, title and interest
in all licenses, permits, applications, registrations, exemptions, notices of
intent, franchises, consents, waivers, variances, authorizations, approvals and
orders issued by any federal, state, municipal or other Governmental Authority
(collectively, the "Permits") relating to the Acquisition Assets or the
Business, and as listed on Schedule 2.1(vi) hereto;
(vii) all cash and receivables of Seller which have been
received as payment or billed in advance for services to be performed under the
Contracts or otherwise by Purchaser on or after Closing;
(viii) all software, patents, patent applications, processes,
shop rights, formulas, brand names, trade secrets, servicemarks, tradenames,
trademarks, copyrights, intellectual
EXHIBIT 2.1
-----------
2
7
property, drawings, and any similar items and related rights owned by or
licensed to Seller to the extent assignable and applicable to the Business,
together with any goodwill associated therewith and all rights of action on
account of past, present and future unauthorized use or infringement thereof;
(ix) the right to use the name "Xxxxxxxxx Environmental
Services" and all derivations thereof in connection with Purchaser's future
operation of the Business;
(x) all rights under express or implied warranties from the
suppliers of Seller with respect to the Acquisition Assets, to the extent they
are assignable;
(xi) all books, records, papers and instruments of Seller that
are listed on Schedule 2.1(xi) hereto and confidential information, if any,
relating to the Business;
(xii) all personnel files and other materials relating to
employees of Seller who are to be offered employment by Purchaser as
contemplated by Section 6.1 hereof;
(xiii) all records of compliance and noncompliance with the
laws, regulations, ordinances and orders applicable to the Acquisition Assets or
the Business;
(xiv) all right, title and interest in, to and under all
rights, privileges, claims, causes of action, and options relating or pertaining
to the Acquisition Assets or the Business;
(xv) subject to the specific listings of Equipment and Motor
Vehicles set forth in this Section 2.1 and the exclusions set forth in Section
2.2 hereof, all other or additional privileges, rights, interests, properties
and assets of every kind and description and wherever located that are used or
intended for use in connection with, or that are necessary to the continued
conduct of, the Business as presently conducted.
Subject to Section 2.2 hereof, all of the assets referenced in this
Section 2.1 are collectively referred to as the "Acquisition Assets".
SECTION 2.2. EXCLUDED ASSETS. Notwithstanding Section 2.1 hereof,
Seller is not selling and Purchaser is not purchasing pursuant to this Agreement
any of the following, all of which shall be retained by Seller (collectively,
the "Excluded Assets"):
(a) All employee benefit plans (as defined in ERISA) and all
other similar benefit plans, programs, arrangements or commitments (whether
written or oral) of Seller.
(b) all other assets of Seller not specifically described in
Section 2.1 above.
SECTION 2.3. PURCHASE PRICE. (a) The aggregate purchase price (the
"Purchase Price") for the purchase of the Acquisition Assets and the
representations, warranties, covenants and agreements referenced herein shall be
cash equal to FOUR MILLION SIX HUNDRED
EXHIBIT 2.1
-----------
3
8
THOUSAND DOLLARS ($4,600,000) less (1) Seller's Indebtedness as of Closing paid
by Purchaser and (2) a working capital allowance of Two Hundred Fifty-Nine
Thousand One Hundred Ninety-Three Dollars ($259,193.00). For purposes of this
Agreement, "Indebtedness" means the indebtedness and other long-term liabilities
of Seller (determined in accordance with GAAP) listed on Schedule 2.3.
(b) Upon execution of this Agreement, Purchaser has delivered
to Seller the sum of $100,000, which amount serves as xxxxxxx money (together
with any interest thereon, the "Xxxxxxx Money"). The Xxxxxxx Money shall be
applied against the Purchase Price at Closing. The refundability of the Xxxxxxx
Money shall be governed by the provisions of Section 9.4 of this Agreement.
SECTION 2.4. ALLOCATION REPORTING. Unless otherwise agreed in writing
by Purchaser and Seller, (i) Schedule 2.4 hereto sets forth the allocations
established by Purchaser and Seller of the Purchase Price (and any other items
constituting consideration paid by Purchaser or received by Seller in connection
with the disposition of the Acquisition Assets) among the Acquisition Assets;
(ii) the allocations set forth on Schedule 2.4 hereto will be used by Purchaser
and Seller as the basis for reporting asset values and other items for purposes
of all required Tax Returns (including any Tax Returns required to be filed
under Section 1060(b) of the Code and the Treasury regulations thereunder); and
(iii) Purchaser and Seller shall not assert, in connection with any audit or
other proceeding with respect to Taxes, any asset values or other items
inconsistent with the allocations set forth on Schedule 2.4 hereto.
SECTION 2.5. CLOSING. Subject to the terms and provisions of Articles
VIII and IX, and subject to Purchaser's right to extend the date of Closing as
provided herein, the closing of the purchase and sale (the "Closing") provided
for in this Agreement shall take place on October 29, 1999, or at such other
time and place as the Parties shall agree, at the law offices of Xxxx X. Xxxxxx;
provided, that Closing may take place prior to October 29, 1999 if at least two
days prior to the Closing Purchaser notifies the Seller of its desire to close;
provided, further, that if the Closing has not occurred on or before October 31,
1999, Purchaser may extend the date on which the Closing shall take place to be
any day on or before November 30, 1999, as selected by Purchaser upon three days
advance written notice (however, the Closing shall not take place during the
dates of November 4, 1999 through November 8, 1999), by providing written notice
of such extension to Seller by October 31, 1999 (the "Extension"). The date on
which the Closing occurs is referred to in this Agreement as the "Closing Date."
SECTION 2.6. CLOSING DELIVERIES.
(a) At the Closing, Shareholder or Seller, as appropriate,
shall deliver to Purchaser:
(i) the Acquisition Assets;
EXHIBIT 2.1
-----------
4
9
(ii) such bills of sale and other instruments of sale,
transfer, conveyance, assignment and delivery covering the Acquisition Assets or
any part thereof, each attached hereto as Exhibit C, executed by Seller or other
appropriate parties, as Purchaser may reasonably require to assure the full and
effective sale, transfer, conveyance, assignment and delivery to Purchaser of
the Acquisition Assets free and clear of any rights and claims of third parties
including, but not limited to, the following:
(1) a xxxx of sale, general assignment and conveyance
by Seller transferring to Purchaser good and
marketable title to all of the Acquisition
Assets, in the form attached hereto as Exhibit C;
(2) all documents in the form attached hereto as
Exhibit C, required for the assignment of
Seller's rights under all registrations, Permits
and licenses (to the extent permitted by law),
equipment or motor vehicle leasing agreements,
motor vehicle and rolling stock titles, rights
under sales and/or purchase orders and of
Seller's rights under all other Contracts
(including the operating contracts of Seller
listed on Schedule 2.1(iv) hereto) constituting a
part of the Acquisition Assets; and
(3) originals of all of the Assumed Leases,
contracts, agreements, commitments, books,
records, files and other data that are included
in the Acquisition Assets.
(iii) a legal opinion from Xxxx X. Xxxxxx, P.A., in form
satisfactory to Purchaser;
(iv) the Consulting Agreement between Purchaser and
Shareholder, attached as Exhibit D hereto;
(v) certified copies of resolutions duly adopted by the
board of directors of Seller and its shareholders, authorizing and approving the
execution and delivery of this Agreement, including the exhibits and schedules
hereto, and the consummation of the transactions contemplated herein;
(vi) new real property leases with respect to properties
owned by Shareholder, or any affiliates of Shareholder, in the form attached
hereto as Exhibit E;
(vii) a Transition Agreement in the form attached hereto
as Exhibit F; and
(viii) a Covenant Not to Compete Agreement between
Purchaser and Seller, in the form attached hereto as Exhibit G.
EXHIBIT 2.1
-----------
5
10
(b) At the Closing, Purchaser shall deliver to Seller or
Shareholder, as appropriate:
(i) the Purchase Price set forth in Section 2.3;
(ii) the Consulting Agreement between Purchaser and
Shareholder, attached as Exhibit D hereto;
(iii) a Transition Agreement in the form attached hereto
as Exhibit F; and
(iv) documents relating to the removal of Shareholder from
any and all personal guaranties and/or surety obligations in connection with
Seller's debts or obligations listed on Schedule 2.3.
SECTION 2.7. PRORATIONS. The operation of Seller's business and related
revenue and expenses up to the close of business on the day before the Closing
Date shall be for the account of Seller and thereafter for the account of
Purchaser, which shall be determined on the accrual basis of accounting.
Expenses, including, but not limited to, utilities, personal property taxes,
rents, real property taxes, and, as appropriate, wages, payroll taxes, and
fringe benefits of employees of Seller hired by Purchaser, shall be prorated
between Seller and Purchaser as of the close of business on the day before the
Closing Date, the proration to be made and paid, insofar as reasonably possible,
on the Closing Date, with settlement of any remaining items to be made within
sixty (60) days following the Closing Date.
SECTION 2.8. NON-ASSIGNMENT OF CERTAIN CONTRACTS. Notwithstanding
anything to the contrary in this Agreement, to the extent that the assignment
hereunder of any Contract shall require the consent of any third party which has
not been obtained at the time of Closing, neither this Agreement nor any action
taken pursuant to its provisions shall constitute an assignment if such
assignment or attempted assignment would constitute a breach thereof or result
in the loss or diminution thereof; provided, however, that in each such case,
Seller shall use commercially reasonable efforts to obtain the consent with
respect to such Contracts of such other party to such assignment to Purchaser.
If any Contract is not assigned, Seller shall hire Purchaser as a subcontractor
to perform the obligations under such Contracts. Pursuant to the sub-contractor
relationship, Purchaser shall be entitled to receive all payments due under such
Contracts with respect to work performed after Closing, and Purchaser shall bear
all expenses incurred after Closing. In the event that a Contract does not
permit a sub-contractor relationship, Purchaser and Seller shall execute such
documents as may be necessary to accomplish performance of the Contract while
retaining for Purchaser's account the financial, accounting and economic results
associated with such Contract.
EXHIBIT 2.1
-----------
6
11
ARTICLE III
LIABILITIES AND OBLIGATIONS
SECTION 3.1. LIABILITIES NOT ASSUMED BY PURCHASER. Subject to Section
3.2 hereof, Purchaser does not assume or agree to pay, perform or discharge, and
shall not be responsible for, any commitments, contracts, agreements or
obligations or claims against, or liabilities of, Seller or Shareholder
whatsoever (and Seller and Shareholder will at all times indemnify and hold
Purchaser harmless from and against any claim therefore or liability arising
therefrom), including without limitation, the following (collectively, the
"Excluded Liabilities"):
(a) except as set forth in Section 7.4(d), any income,
franchise or other similar tax or charge, if any, which may become payable by
reason of the sale and transfer of the Acquisition Assets under federal law or
under the laws of any state, or may be imposed upon Seller or Shareholder by
reason of receipt of the Purchase Price or relief from any liability pursuant to
this Agreement;
(b) any of the costs and expenses incurred in connection with
the future operations of Seller, and the costs and expenses of Seller and
Shareholder incurred in negotiating, entering into and carrying out their
obligations pursuant to this Agreement;
(c) any Indebtedness of Seller (except as listed on Schedule
2.3) incurred in the course of Seller's operations as of the Closing Date;
(d) any commitments and obligations required to have been
performed or complied with prior to the Closing Date pursuant to the Contracts,
except to the extent that such liability arises due to the defective (but not
delayed) performance after Closing by Purchaser (provided that nothing in this
provision or in this Agreement shall be interpreted to suggest that Purchaser
has agreed to assume any commitments or obligations under the Contracts required
to have been performed or complied with prior to the Closing Date);
(e) any Taxes for which Seller is liable;
(f) any prepayment penalties or other liabilities related to
retiring or extinguishing any Indebtedness of Seller;
(g) any liabilities arising out of or in connection with
periods or activity prior to the Closing Date related to OSHA, EEOC, EPA or any
other Governmental Authority, or any violation of law, and any unrecorded
liabilities or contingencies that are not expressly identified on Schedule
3.1(g);
(h) any liability or obligation (contingent or otherwise) of
Seller arising out of any claim, litigation, or proceeding threatened or pending
on or before the Closing Date or any claim, litigation, or proceeding threatened
or initiated after the Closing Date to the extent based on an act or omission of
Seller or any current or former officer, director, employee, agent or
EXHIBIT 2.1
-----------
7
12
representative of Seller, or the operation of the Business and/or Acquisition
Assets occurring before the Closing Date, whether or not set forth on Schedule
5.8;
(i) any Environmental Claim and any claims, violations or
alleged violations of Environmental Law, or conditions that could give rise to
or relate to liability under Environmental Laws or similar legal requirements
attributable or relating to the Acquisition Assets (including, without
limitation, the operation thereof), the Business, Sellers or Shareholder,
including any liability (including without limitation strict liability) or
obligation arising under or relating to Environmental Laws with respect to the
Business Facility arising after the Closing Date resulting from, caused by or
related to any act or omission of third party or Sellers or any current or
former officer, director, employee, agent, representative, tenant or invitee of
Sellers which occurred on or prior to the Closing Date, or the continuation of
practices or operations with respect to the Acquisition Assets or the Business
Facility, that were occurring or in effect on or prior to the Closing Date;
(j) any liability arising out of or in connection with
Seller's defective performance of any Contract or any express or implied
warranty with respect to performance of any Contract prior to the Closing Date;
(k) any liability or obligation arising out of any employee
benefit plan (as defined in ERISA) and all other similar benefit plans,
programs, arrangements or commitments (whether written or oral) of Seller;
(l) any contingent or unknown liability of Seller and/or
Shareholder; and
(m) any liability or obligation under or in connection with or
related to the Excluded Assets.
SECTION 3.2. ASSUMED LIABILITIES. Purchaser assumes and agrees to pay,
perform and discharge when due solely the following debts, liabilities,
obligations and contracts of Seller (collectively, the "Assumed Liabilities");
(a) the Indebtedness to the extent listed on Schedule 2.3 and
deducted from the Purchase Price at Closing; and
(b) all commitments and obligations first required to be
performed or complied with pursuant to the Contracts after Closing and any
liability directly caused by Purchaser after Closing as a result of Purchaser's
defective performance or compliance with such commitments and obligations,
regardless of whether the work had been required to be performed by Seller prior
to the Closing; provided that nothing in this provision or in this Agreement
shall be interpreted to suggest that Purchaser has agreed to assume any
commitments or obligations under the Contracts required to have been performed
or complied with prior to the Closing Date.
EXHIBIT 2.1
-----------
8
13
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and has the requisite corporate power and authority to own, lease and operate
its assets and properties and to carry on its business as it is now being
conducted. Purchaser is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the properties owned,
leased, or operated by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so qualified and in
good standing would not have, or could not reasonably be anticipated to have,
individually or in the aggregate, a material adverse effect on Purchaser and its
Subsidiaries, taken as a whole.
SECTION 4.2. AUTHORITY; BINDING AGREEMENT. Purchaser has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Purchaser and, assuming the due authorization, execution and
delivery hereof by Shareholder, constitutes a valid and legally binding
agreement of Purchaser and is enforceable against Purchaser in accordance with
its terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Purchaser as follows:
SECTION 5.1. ORGANIZATION AND QUALIFICATION. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and has the requisite corporate power and authority
to own, lease and operate the Acquisition Assets and to carry on the Business as
it is now being conducted. Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the properties
owned, leased, or operated by it or the nature of the business conducted by it
makes such qualification necessary. True, accurate and complete copies of
Seller's Articles of Incorporation and Bylaws, in each case as in effect on the
date hereof, including all amendments thereto, have heretofore been delivered to
Purchaser.
EXHIBIT 2.1
-----------
9
14
SECTION 5.2. CAPITALIZATION.
(a) The authorized capital stock of Seller consists of 5,000
shares of Seller Common Stock, of which 1,600 shares are issued and outstanding,
and no other shares of capital stock of Seller are issued and outstanding. All
of such issued and outstanding shares of Seller Common Stock were validly issued
and are fully paid, nonassessable and free of preemptive rights and are owned
beneficially and of record by Shareholder, free and clear of all restrictions,
liens, claims and encumbrances. No Subsidiary of Seller holds any shares of the
capital stock of Seller.
(b) There are no outstanding (i) subscriptions, options,
calls, contracts, commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, debenture, instrument or other agreement obligating Seller
or Shareholder to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock of Seller or obligating Seller or
Shareholder to grant, extend or enter into any such agreement or commitment or
(ii) obligations of Seller or Shareholder to repurchase, redeem or otherwise
acquire any securities referred to in clause (i) above. There are no voting
trusts, proxies or other agreements or understandings to which Seller or
Shareholder is a party or is bound with respect to the voting of any shares of
capital stock of Seller.
SECTION 5.3. AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Seller has full power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been approved by the Board of Directors of Seller and by
Shareholder, and no other corporate proceedings on the part of Seller or
Shareholder are necessary to authorize the execution and delivery of this
Agreement or the consummation by Seller and Shareholder of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Seller and Shareholder, and, assuming the due authorization, execution and
delivery hereof by Purchaser, constitutes a valid and legally binding agreement
of Seller and Shareholder, enforceable against Seller and Shareholder in
accordance with its terms.
(b) The execution and delivery of this Agreement by Seller and
Shareholder and the consummation by Seller and Shareholder of the transactions
contemplated hereby do not and will not violate or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Seller or Shareholder under any of the terms, conditions or provisions of (i)
the articles of incorporation or bylaws of Seller, (ii) any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any court or governmental authority applicable to Seller or
Shareholder, or any of the Acquisition Assets, or (iii) any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
EXHIBIT 2.1
-----------
10
15
contract, lease or other instrument, obligation or agreement of any kind to
which Seller or Shareholder is now a party or by which Seller or Shareholder or
any of the Acquisition Assets may be bound or affected.
(c) Except as set forth on Schedule 5.3, no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of, any governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by Seller and Shareholder or the
consummation by Seller and Shareholder of the transactions contemplated hereby.
SECTION 5.4. SUBSIDIARIES. Seller does not have any Subsidiaries, nor
does Seller hold any equity interest in or control (directly or indirectly,
through the ownership of securities, by contract, by proxy, alone or in
combination with others, or otherwise) any corporation, limited liability
company, partnership, business organization or other Person.
SECTION 5.5. FINANCIAL STATEMENTS. The financial statements of Seller
attached as Schedule 5.5 (the "Seller Financial Statements") have been prepared
in accordance with GAAP (except as may be indicated therein or in the notes
thereto) and fairly present in all material respects the financial position of
Seller with respect to the Acquisition Assets and the Business as of the dates
thereof and the results of its operations and cash flows for the periods then
ended, subject, in the case of the unaudited interim financial statements, to
normal year-end adjustments and any other adjustments described therein.
SECTION 5.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
Schedule 5.6, Seller has not incurred any material liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature with respect
to the Acquisition Assets and the Business, except liabilities, obligations or
contingencies (i) which are accrued or reserved against Seller Financial
Statements or reflected in the notes thereto or (ii) which were incurred after
December 31, 1998, and were incurred in the ordinary course of business and
consistent with past practices.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
on Schedule 5.7, since June 30, 1999 and with respect to the Acquisition Assets
or the Business, (i) Seller has not declared or set aside or paid any noncash
dividend or made any other noncash distribution with respect to its outstanding
securities, or, directly or indirectly, purchased, redeemed or otherwise
acquired any of its securities; (ii) Seller has not granted any general increase
in the compensation of its officers, directors or employees (including any
increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment) and has not paid any bonuses to any officers, directors or
employees; (iii) Seller has not adopted, entered into or amended any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, health care, employment or other employee benefit plan, agreement,
trust fund or arrangement for the benefit or welfare of any employee or retiree,
except as required to comply with changes in applicable law; (iv) Seller has not
made any amendment to its Articles of Incorporation or Bylaws or changed the
character of its business in any manner; (v) the Business has been
EXHIBIT 2.1
-----------
11
16
conducted in the ordinary course of business consistent with past practices; and
(vi) there has not been any event, occurrence, development or state of
circumstances or facts which has had, or could reasonably be anticipated to
have, individually or in the aggregate, a Material Adverse Effect.
SECTION 5.8. LITIGATION. Except as described in Schedule 5.8, there are
no claims, suits, actions, Environmental Claims, inspections, investigations or
proceedings pending or, to the knowledge of Seller, threatened against, relating
to or affecting Seller before any court, governmental department, commission,
agency, instrumentality, authority, or any mediator or arbitrator and there is
no basis for the same. Except as described in Schedule 5.8, Seller is not
subject to any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality, authority, or any
mediator or arbitrator.
SECTION 5.9. ACCOUNTS RECEIVABLE. All accounts receivable relating to
the Business reflected on Seller Financial Statements (net of related reserves)
represent sales actually made in the ordinary course of business from customers
who have not been more than 75 days in arrears in paying for prior bills, except
as set forth in Schedule 5.9.
SECTION 5.10. NO VIOLATION OF LAW; COMPLIANCE WITH AGREEMENTS.
(a) With respect to the Acquisition Assets and the Business,
(i) Seller is not in violation of and, to Seller's knowledge, has not been given
notice or been charged with any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation, any applicable
Environmental Law) of any governmental or regulatory body or authority; (ii) to
Seller's knowledge, no investigation or review by any governmental or regulatory
body or authority is pending or threatened, nor has any governmental or
regulatory body or authority indicated an intention to conduct the same; (iii)
Seller has all permits (including without limitation Environmental Permits),
licenses, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals required or necessary to conduct its
business as presently conducted (collectively, the "Seller Permits"); and (iv)
Seller is not in violation of the terms of any Seller Permit.
(b) Seller and Shareholder are not in breach or violation of
or in default in the performance or observance of any term or provision of, and
no event has occurred which, with lapse of time or action by a third party,
could result in a default under, (a) the charter, bylaws or similar
organizational instruments of Seller or (b) any contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which Seller is a party or by which it is bound or to which
any of its property is subject.
SECTION 5.11. INSURANCE. Schedule 5.11 hereto sets forth a list of all
insurance policies owned by Seller that relate in any manner to the Business or
by which Seller or any of the Acquisition Assets are covered against present
losses, all of which are now in full force and effect.
EXHIBIT 2.1
-----------
12
17
SECTION 5.12. TAXES.
(a) Except as set forth on Schedule 5.12, (i) Seller has (x)
duly filed (or there has been filed on its behalf) with the appropriate taxing
authorities all Tax Returns (as hereinafter defined) required to be filed by it
on or prior to the date hereof, and (y) duly paid in full or made adequate
provision therefor on Seller Financial Statements in accordance with GAAP (or
there has been paid or adequate provision has been made on its behalf) for the
payment of all Taxes (as hereinafter defined) for all periods ending through the
date hereof; (ii) all such Tax Returns filed by or on behalf of Seller are true,
correct and complete in all material respects; (iii) Seller is not the
beneficiary of any extension of time within which to file any Tax Return; (iv)
no claim has ever been made by any authority in a jurisdiction where Seller does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction; (v) the liabilities and reserves for Taxes reflected in the most
recent balance sheet included in Seller Financial Statements to cover all Taxes
for all periods ending at or prior to the date of such balance sheet have been
determined in accordance with GAAP, and there is no material liability for Taxes
for any period beginning after such date other than Taxes arising in the
ordinary course of business; (vi) there are no liens for Taxes upon any property
or assets of Seller, except for liens for Taxes not yet due; (vii) Seller has
not made any change in accounting methods since December 31, 1998; (viii) Seller
has not received a ruling from any taxing authority or signed an agreement with
any taxing authority; (ix) Seller has complied in all respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes (including, without limitation, withholding of Taxes pursuant to
Sections 1441 and 1442 of the Code, as amended or similar provisions under any
foreign laws) and has, within the time and the manner prescribed by law,
withheld and paid over to the appropriate taxing authority all amounts required
to be so withheld and paid over under all applicable laws in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party; (x) no federal, state, local or foreign audits
or other administrative proceedings or court proceedings are presently pending
with regard to any Taxes or Tax Returns of Seller, and as of the date of this
Agreement Seller has not received a written notice of any pending audits or
proceedings; (xi) no shareholder or director or officer (or employee responsible
for Tax matters) of Seller expects any authority to assess any additional Taxes
for any period for which Tax Returns have been filed; (xii) the federal income
Tax Returns of Seller have been examined by the Internal Revenue Service ("IRS")
(which examination has been completed) or the statute of limitations for the
assessment of federal income Taxes of Seller has expired, for all periods
through and including December 31, 1994, and no deficiencies were asserted as a
result of such examinations which have not been resolved and fully paid; (xiii)
no adjustments or deficiencies relating to Tax Returns of Seller have been
proposed, asserted or assessed by any taxing authority, except for such
adjustments or deficiencies which have been fully paid or finally settled; and
(xiv) Seller has delivered or made available to Purchaser true, correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by Seller since
December 31, 1993.
(b) There are no outstanding requests, agreements, consents or
waivers to extend the statute of limitations applicable to the assessment of any
Taxes or deficiencies against Seller, and no power of attorney granted by Seller
with respect to any Taxes is currently in force.
EXHIBIT 2.1
-----------
13
18
Seller has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Section 6662 of the Code. Seller is not a party to any
agreement providing for the allocation or sharing of Taxes with an entity that
is not directly or indirectly a wholly-owned Subsidiary of Seller. Seller has
not, with regard to any assets or property held, acquired or to be acquired by
it, filed a consent to the application of Section 341(f) of the Code, or agreed
to have Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as such term is defined in Section 341(f)(4) of the Code) owned by
Seller. Seller (i) has not been a member of an affiliate group filing a
consolidated federal income Tax Return (other than a group the common parent of
which was Seller) and (ii) has no liability for Taxes of any Person (other than
any of Seller and its Subsidiaries) under Section 1.1502-6 of the United States
Treasury Regulations (or any similar provision of state, local or foreign law),
as a transferee or successor, by contract, or otherwise.
SECTION 5.13. EMPLOYEE BENEFIT PLANS.
(a) Each Plan and each Benefit Program (as such terms are
defined below) is listed on Schedule 5.13 hereto. No Plan or Benefit Program is
or has been (i) covered by Title IV of the Employer Retirement Income Security
Act of 1974, as amended ("ERISA"), (ii) subject to the minimum funding
requirements of Section 412 of the Code or (iii) a "multi-employer plan" as
defined in Section 3(37) of ERISA, nor has Seller contributed to, or ever had
any obligation to contribute to, any multi-employer plan. Each Plan and Benefit
Program intended to be qualified under Section 401(a) of the Code is designated
as a tax-qualified plan on Schedule 5.13 and is so qualified. No Plan or Benefit
Program provides for any retiree health benefits for any employees or dependents
of Seller other than as required by COBRA (as hereinafter defined). There are no
claims pending with respect to, or under, any Plan or any Benefit Program, other
than routine claims for benefits, and there are no disputes or litigation
pending or, to the knowledge of Seller, threatened, with respect to any such
Plans or Benefit Programs.
(b) Seller has heretofore delivered to Purchaser true and
correct copies of the following, if any:
(i) each Plan and each Benefit Program listed on Schedule
5.13, all amendments thereto as of the date hereof and all current summary plan
descriptions provided to employees regarding the Plans and Benefit Programs; and
(ii) each management or employment contract or contract
for personal services and a complete description of any understanding or
commitment between Seller and any officer, consultant, director, employee or
independent contractor of Seller.
(c) Each Plan and Benefit Program has been maintained and
administered in compliance with its terms and in accordance with all applicable
laws, rules and regulations. Seller has no commitment or obligation to establish
or adopt any new or additional Plans or Benefit Programs or to increase the
benefits under any existing Plan or Benefit Program.
EXHIBIT 2.1
-----------
14
19
(d) Except as set forth in Schedule 5.13, neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby will (i) result in any payment to be made by
Seller, including, without limitation, severance, unemployment compensation,
golden parachute (defined in Section 280G of the Code) or otherwise, becoming
due to any employee of Seller, or (ii) increase any benefits otherwise payable
under any Plan or any Benefit Program.
(e) As of the date hereof, Seller does not sponsor any
simplified employee pension plans as described in Section 408(k) of the Code and
there are no claims against Seller for benefits relating to any such plans.
SECTION 5.14. EMPLOYEE AND LABOR MATTERS.
(a) Seller has provided Purchaser with a true and complete
list dated as of June 30, 1999 (the "Employee Schedule ") of all employees of
Seller employed in the Business listing the title or position held, base salary
or wage rate and any bonuses, commissions, profit sharing, Seller's vehicles,
club memberships or other compensation or perquisites payable, all employee
benefits received by such employees and any other material terms of any written
agreement with Seller. As of the date of this Agreement, the combined projected
annual payroll for the calendar year ending December 31, 1998 of Seller required
to operate the Business is not materially different from that as listed on the
Employee Schedule, and Seller has not entered into any agreement or agreements
pursuant to which the combined annual payroll of Seller relating to the
Business, including projected pay increases, overtime and fringe benefit costs,
required to operate its business (including all administrative and support
personnel) would be greater than as listed on the Employee Schedule.
(b) Except as set forth on Schedule 5.14, Seller is not a
party to or bound by any written employment agreements or commitments relating
to the Business, other than on an at-will basis. Seller is in compliance with
all applicable laws respecting the employment and employment practices, terms
and conditions of employment and wages and hours of its employees and is not
engaged in any unfair labor practice. To the knowledge of Seller, all employees
of Seller who work in the Business are lawfully authorized to work in the United
States according to federal immigration laws. There is no labor strike or labor
disturbance pending or, to the knowledge of Seller, threatened against Seller
with respect to the Business and, during the past five years, Seller has not
experienced a work stoppage relating to the Business.
(c) Except as set forth on Schedule 5.14, with respect to the
Business (i) Seller is not a party to or bound by the terms of any collective
bargaining agreement or other union contract applicable to any employee of
Seller and no such agreement or contract has been requested by any employee or
group of employees of Seller, nor has there been any discussion with respect
thereto by management of Seller with any employees of Seller, (ii) Seller is not
aware of any union organizing activities or proceedings involving, or any
pending petitions for recognition of, a labor union or association as the
exclusive bargaining agent for, or where the purpose is to organize, any group
or groups of employees of Seller, or (iii) there is not currently
EXHIBIT 2.1
-----------
15
20
pending, with regard to any of its facilities, any proceeding before the
National Labor Relations Board, wherein any labor organization is seeking
representation of any employees of Seller.
SECTION 5.15. ENVIRONMENTAL MATTERS. Without in any manner limiting any
other representations and warranties set forth in this Agreement and except as
disclosed on Schedule 5.15, with respect to the Business or the Acquisition
Assets.
(a) Neither Seller nor, to the knowledge of Shareholder, any
of its Business Facilities, is in violation of, or has violated, or has been or
is in non-compliance with, any Environmental Laws in connection with the
Business or the operation of the Acquisition Assets, including but not limited
to, the conduct of the Business or the ownership, use, maintenance or operation
of, or conduct of any of the Business Facilities by Seller.
(b) With respect to the Business and the operation of the
Acquisition Assets (and without in any manner limiting the generality of (a)
above):
(i) Except in compliance with Environmental Laws
(including, without limitation, by obtaining necessary Environmental Permits),
no Materials of Environmental Concern (as defined in Exhibit A) have been used,
generated, extracted, mined, beneficiated, manufactured, stored, treated, or
disposed of, or in any other way released (and no release is threatened), on,
under or about any Business Facility (as defined in Exhibit A) or transferred or
transported to or from any Business Facility, and no Materials of Environmental
Concern have been generated, manufactured, stored or treated or disposed of, or
in any other way released (and no release is threatened), on, under, about or
from any property adjacent to any current Business Facility;
(ii) Seller is not now, and (assuming the Environmental
Laws are not changed from those applicable on the date of Closing) will not be
in the future, as a result of the operation or condition of the business of
Seller on or prior to the date hereof, and as of the date of Closing, subject to
any: (a) contingent liability in connection with any release or threatened
release of any Materials of Environmental Concern into the environment whether
on or off any Business Facility; (b) reclamation, decontamination or Remediation
(as defined in Exhibit A) requirements under Environmental Laws, or any
reporting requirements related thereto; or (c) consent order, compliance order
or administrative order relating to or issued under any Environmental Law;
(iii) To the knowledge of Seller, there are no
Environmental Claims known, pending or threatened against Seller or any of its
Business Facilities, and there is no basis for same;
(iv) Seller and all of its Business Facilities have timely
filed applications for renewal of all Environmental Permits, Seller has all
environmental and pollution control equipment necessary to comply with all
Environmental Laws (including, without limitation, to comply with all applicable
Environmental Permits) applicable to the operation of
EXHIBIT 2.1
-----------
16
21
the business of Seller as presently conducted, and Seller and its Business
Facilities are in compliance with all terms and conditions of such Environmental
Permits;
(v) Regarding all Environmental Permits for which renewal,
amendment, or modification is sought or pending, no material expenditures,
capital improvements, or changes in operation will be necessary as a condition
or as a result of such renewal, amendment, or modification;
(vi) Seller has received no notice and has no knowledge
that any occupant or tenant of any current Business Facility (a) is in violation
of any Environmental Law; (b) is the subject of any Environmental Claims; or (c)
does not have or has not renewed any Environmental Permits applicable to its
assets or operations;
(vii) There are no, nor have there ever been any, storage
tanks or solid waste management units located on or under any Business Facility
of Seller, and, to the knowledge of Seller and Shareholder, there are no
Materials of Environmental Concern on any Business Facility of Seller exceeding
any standard or limitation established, published or promulgated pursuant to
Environmental Laws, or which would require reporting to any governmental
authority or Remediation to comply with Requirements of Environmental Laws (as
defined in Exhibit A);
(viii) To the knowledge of Seller and Shareholder, none of
the off-site locations where Materials of Environmental Concern generated from
any Business Facility of Seller or for which Seller has arranged for their
disposal, treatment or application has been nominated or identified as a
facility which is subject to an existing or potential claim under Environmental
Laws;
(ix) Seller has not been named as a potentially
responsible party under, and no Business Facility of Seller has been nominated
or identified as a facility which is subject to an existing or potential claim
under CERCLA or comparable Environmental Laws, and no Business Facility of
Seller is subject to any lien arising under Environmental Laws;
(x) Seller has not received any notice of any release or
threatened release of Materials of Environmental Concern, or of any violation
of, noncompliance with, or remedial obligation under, Environmental Laws or
Permits, relating to the ownership, use, maintenance, operation of any Business
Facility of Seller or in connection with the business of Seller, nor is there
any basis for any of the foregoing, nor has Seller voluntarily undertaken
Remediation or other decontamination or cleanup of any facility or site or
entered into any agreement for the payment of costs associated with such
activity;
(xi) There is no Environmental Law that will require
future compliance costs on the part of Seller in excess of $50,000 above costs
currently expended in the ordinary course of business;
EXHIBIT 2.1
-----------
17
22
(xii) There are no present or past events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent continued compliance by Seller with Environmental Laws
or which may give rise to any common law or statutory liability under
Environmental Laws or form the basis of an Environmental Claim against Seller
relating to the ownership, use, maintenance or operation of any Business
Facility by Seller or in connection with the conduct of the business of Seller;
(xiii) There are no obligations, undertakings or
liabilities arising out of or relating to Environmental Laws which Seller has
agreed to, assumed or retained, by contract or otherwise;
(xiv) Seller has filed all notices, notifications,
financial security, waste management plans, or applications which are required
to be obtained or filed by Seller for the operation of its business or the use
or operation of any Business Facility of Seller;
(xv) Seller and all Business Facilities are in compliance
with all other applicable limitations, restrictions, conditions, schedules and
timetables contained in Environmental Laws or contained in any plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder; and
(xvi) No current Business Facility (or equipment thereon)
of Seller contains any asbestos containing materials or polychlorinated
biphenyls in any form nor any wetland areas or other land subject to restricted
development under Environmental Laws.
For purposes of this Section, the "Seller" shall include any entity which is, in
whole or in part, a predecessor of Seller and all of its present and former
Subsidiaries and their predecessors.
SECTION 5.16. NON-COMPETITION AGREEMENTS. Neither Seller nor any
shareholder is a party to any agreement which purports to restrict or prohibit
any of them from, directly or indirectly, engaging in any business currently
engaged in by Seller. None of the Seller's shareholders, officers, directors, or
key employees is a party to any agreement which, by virtue of such person's
relationship with Seller, restricts Seller or any Subsidiary of Seller from,
directly or indirectly, engaging in any of the businesses as described above.
SECTION 5.17. TITLE TO ASSETS. Seller has good and marketable title to
all its assets relating to the Business and valid leasehold interests in its
leased assets and properties (other than any defect or encumbrances affecting
the landlord's or lessor's right, title and interest), as reflected in the most
recent balance sheet included in Seller Financial Statements, except for
properties and assets relating to the Business that have been disposed of in the
ordinary course of business since the date of the latest balance sheet included
therein, free and clear of all mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever, except (i) liens for current taxes,
payments of which are not yet delinquent, (ii) such imperfections in title and
easements and encumbrances, if any, as are not substantial in character, amount
or extent and do not detract from the value, or interfere with the present use
or marketability of the property
EXHIBIT 2.1
-----------
18
23
subject thereto or affected thereby, or otherwise impair Seller's business
operations (in the manner presently carried on by Seller), or (iii) any lien
securing any debt or obligation described on Schedule 5.17 which is expressly
referenced as being secured. All leases under which Seller leases any real
property relating to the Business have been delivered to Purchaser and are in
good standing, valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing default or event which
with notice or lapse of time or both would become a default by or on behalf of
Seller or its Subsidiaries, or by or on behalf of any third party.
SECTION 5.18. CONTRACTS, AGREEMENTS, PLANS AND COMMITMENTS. Schedule
5.18 hereto sets forth a complete list of the following contracts, agreements,
plans and commitments relating to the Business to which Seller is a party or by
which any of the Acquisition Assets are bound as of the date hereof:
(a) any contract, commitment or agreement that involves
aggregate expenditures by Seller of more than $10,000 per year;
(b) any contract or agreement (including any such contracts or
agreements entered into with any Governmental Authority) relating to the
maintenance or operation of the business that involves aggregate expenditures by
Seller of more than $10,000;
(c) any indenture, loan agreement or note under which Seller
has outstanding indebtedness, obligations or liabilities for borrowed money;
(d) any lease or sublease for the use or occupancy of real
property;
(e) any agreement that restricts the right of Seller to engage
in any type of business;
(f) any guarantee, direct or indirect, by any person of any
contract, lease or agreement entered into by Seller;
(g) any partnership, joint venture or construction and
operation agreement;
(h) any agreement of surety, guarantee or indemnification with
respect to which Seller is the obligor, outside of the ordinary course of
business;
(i) any contract that requires Seller to pay for goods or
services substantially in excess of its estimated needs for such items or the
fair market value of such items;
(j) any contract, agreement, agreed order or consent agreement
that requires Seller to take any actions or incur expenses to remedy
non-compliance with any Environmental Law; and
EXHIBIT 2.1
-----------
19
24
(k) any other contract material to Seller or its business.
True, correct and complete copies of each of such contracts, agreements, plans
and commitments have been delivered to or made available for inspection by
Purchaser. All such contracts, agreements, plans and commitments (i) were duly
and validly executed and delivered by Seller and the other parties thereto and
(ii) are valid and in full force and effect. Seller has fulfilled all material
obligations required of Seller under each such contract, agreement, plan or
commitment to have been performed by it prior to the date hereof, including
timely paying all interest on its debt as such interest has become due and
payable. Except as set forth on Schedule 5.18, there are no counterclaims or
offsets under any of such contracts, agreements, plans and commitments. The
assignment of the Contracts will vest in Purchaser all rights and benefits under
the Contracts and the right to operate the Business and Acquisition Assets under
the terms of the Contracts and to use the Acquisition Assets in the manner
currently operated and used by Seller.
SECTION 5.19. SUPPLIES. The Supplies of Seller are of a quantity and
quality that have been normal for Seller in the ordinary course of business of
Seller and are owned by Seller free and clear of any Liens.
SECTION 5.20. BROKERS AND FINDERS. Neither Seller nor Shareholder have
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of Seller to pay any finder's fees, brokerage
or agent commissions or other like payments in connection with the transactions
contemplated hereby, except for an agreement with The Summit Advisory which all
fees and commissions with respect thereto will be paid by Seller. Except for
such agreement with The Summit Advisory, there is no claim for payment by Seller
of any investment banking fees, finder's fees, brokerage or agent commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
SECTION 5.21. INTELLECTUAL PROPERTY. Seller has rights to use, whether
through ownership, licensing or otherwise, all patents, trademarks, service
marks, trade names, copyrights, software, trade secrets and other proprietary
rights and processes that are material to the Business or Acquisition Assets
(collectively the "Intellectual Property Rights"). Seller does not own any
patents. Seller has no knowledge of any infringement by any other person of any
of the Intellectual Property Rights. With respect to the Acquisition Assets or
its operation of the Business, Seller has not and does not violate or infringe
any intellectual property right of any other person, and Seller has not received
any communication alleging that it violates or infringes the intellectual
property right of any other person. With respect to the Acquisition Assets or
its operation of the Business, Seller has not been sued for infringing any
intellectual property right of another person. To the knowledge of Seller, there
is no claim or demand of any person pertaining to, or any proceeding which is
pending or threatened, that challenges the rights of Seller in respect of any
Intellectual Property Rights, or that claims that any default exists under any
Intellectual Property Rights. To the knowledge of Seller, none of the
Intellectual Property Rights is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, tribunal, arbitrator, or
other governmental authority.
EXHIBIT 2.1
-----------
20
25
SECTION 5.22. RELATIONSHIPS. Except as set forth on Schedule 5.22,
since December 31, 1998, Seller has not received notice from any customer or
supplier relating to the Business or any party to any Contract involving more
than $20,000 annually with Seller (each a "Contract Party") that such customer,
supplier or Contract Party intends to discontinue doing business with Seller,
and, since such date, no customer, supplier or Contract Party has indicated any
intention (a) to terminate its existing business relationship with Seller or (b)
not to continue its business relationship with Seller, whether as a result of
the transactions contemplated hereby or otherwise. Seller has not entered into
or participated in any related party transaction relating to the Business or the
Acquisition Assets during the past three years.
SECTION 5.23. YEAR 2000. "Year 2000 Compliant" means as to any person
or entity that all software, firmware, microprocessing chips and other data
processing devices utilized by, and material to the business operations of, that
person or entity will be able to accurately process date data from, into and
between the twentieth and twenty-first centuries when used in accordance with
the applicable documentation setting forth the requirements for the use of the
specific item. Seller is scheduled to be Year 2000 Compliant with respect to the
Business and Acquisition Assets no later than December 1, 1999 (the "Compliance
Date"). Seller knows of no matter which would prevent Seller from becoming Y2K
Compliant on or about the Compliance Date.
SECTION 5.24. CERTAIN PAYMENTS. Neither Seller nor, to Seller's
knowledge, any shareholder, officer, director or employee of Seller has paid or
received or caused to be paid or received, directly or indirectly, in connection
with the Business or the Acquisition Assets (a) any bribe, kickback or other
similar payment to or from any domestic or foreign government or agency thereof
or any other person or (b) any contribution to any domestic or foreign political
party or candidate (other than from personal funds of such shareholder, officer,
director or employee not reimbursed by Seller or as permitted by applicable
law).
SECTION 5.25. BOOKS AND RECORDS. To the extent that they exist, all
personnel files, reports, accounting records, operational and maintenance
records, and all other records of every type and description that relate to the
Business and the Acquisition Assets have been prepared and maintained in
accordance with good business practices and, where applicable, in conformity
with applicable laws and regulations.
SECTION 5.26. CONDITION AND SUFFICIENCY OF ASSETS. To the knowledge of
Seller, all buildings, improvements and equipment included within the
Acquisition Assets have been maintained in the normal course of business. The
Acquisition Assets are sufficient for the continued conduct of the Business of
Seller after the Closing in substantially the same manner as conducted prior to
the Closing. Except as provided in Article V of this Agreement, (i) Seller makes
no representation or warranty with respect to the physical condition of the
improvements and equipment included in the Acquisition Assets, and (ii) should
the Closing occur, Purchaser will be accepting the improvements and equipment
included in the Acquisition Assets "AS IS WHERE IS".
EXHIBIT 2.1
-----------
21
26
ARTICLE VI
COVENANTS
SECTION 6.1. CONDUCT OF BUSINESS BY SELLER PENDING CLOSING. After the
date hereof and prior to the Closing Date, unless Purchaser shall otherwise
agree in writing, Seller shall:
(a) conduct the Business in the usual and ordinary course
thereof;
(b) shall keep Purchaser closely advised of any material
developments relating to the Business as determined in the reasonable judgment
of Seller;
(c) permit Purchaser to have access at reasonable times to the
Acquisition Assets and to review and copy the books and records of the Business;
(d) maintain and preserve the Acquisition Assets in customary
repair, order and condition (ordinary wear and tear excepted);
(e) use all commercially reasonable efforts to preserve the
Business intact, to retain the services of Seller's officers and employees and
to preserve Seller's relationships with its suppliers, customers, and others
having business dealings with it with respect to the Business, including but not
limited to, by paying suppliers and vendors and other third parties in
accordance with its usual business in a timely fashion, and all Governmental
Authorities with which Seller has engaged in business related to the Business;
(f) use its best efforts to cause all of the representations
and warranties in Article V hereof to continue to be true and correct;
(g) continue to purchase supplies and similar items in the
ordinary course through the Closing Date;
(h) not make any new commitments (excluding bids for new
business) with respect to the Business in an amount greater than $50,000;
(i) not issue any shares, warranties or convertible
securities, grant any options, repurchase or redeem any of its shares of capital
stock, reclassify any of its outstanding stock, make any distribution of or sell
or dispose of Acquisition Assets outside the ordinary course; or
(j) enter into any transaction with respect to the Business or
the Acquisition Assets not in the usual and ordinary course of business.
SECTION 6.2. MAINTENANCE OF INSURANCE. Seller will maintain or cause to
be maintained the insurance policies or risk retention programs (or policies or
programs of substantially the
EXHIBIT 2.1
-----------
22
27
same nature) relating to the Business or the Acquisition Assets in full force
and effect at all times until the Closing Date.
SECTION 6.3. OTHER OFFERS. Except in connection with the transactions
contemplated by this Agreement, from and after the date hereof, and continuing
through the earlier of Closing or the termination of this Agreement in
accordance with the terms hereof, Seller and Shareholder shall not, and shall
not permit any of Seller's officers, directors, employees, Affiliates,
representatives or agents to, directly or indirectly, (i) solicit, initiate or
knowingly encourage any offer or proposal for, or any indication of interest in,
a merger or business combination involving Seller or the acquisition of an
equity interest in, or any portion of the Acquisition Assets of, Seller or (ii)
engage in negotiations with or disclose any nonpublic information relating to
the Business or Acquisition Assets or Purchaser, or afford access to the
Acquisition Assets, to any Person. Seller shall promptly notify and provide
copies to Purchaser of any offer, proposal or indication of interest, or
communication with respect thereto, delivered to or received from any third
party.
ARTICLE VII
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
SECTION 7.1. CONFIDENTIALITY. Without the express written consent of
all of the Parties, each of the Parties agrees to maintain in confidence and not
disclose to any other Person the terms of the transactions contemplated hereby
or the information delivered in connection with the proposed due diligence
investigation, other than disclosures required to obtain the approvals for the
transactions contemplated hereby, disclosures to those professionals and
advisors who have a need to know, disclosures of information already available
to the public or any other disclosures required by applicable law. In the event
that Purchaser, Seller or Shareholder is at any time requested or required (by
oral questions, interrogatories, request for information or documents, subpoena
or other similar process) to disclose any information supplied to it in
connection with this transaction, such Party agrees to provide the other Parties
prompt notice of such request so that an appropriate protective order may be
sought and/or such other Party may waive the first Party's compliance with the
terms of this Section 7.1.
SECTION 7.2. ACCESS TO INFORMATION. Shareholder shall, and shall cause
Seller to, give Purchaser, its accountants, counsel, financial advisors, and
other representatives (the "Purchaser Representatives") full access (and shall
otherwise fully cooperate, including by making available copies of all of the
following documents if reasonably requested by Purchaser which are susceptible
to photostatic reproduction) during normal business hours throughout the period
prior to Closing to all of the Acquisition Assets and all books and records
(including, but not limited to, Tax Returns and any and all records or documents
which are within the possession of governmental or regulatory authorities,
agencies or bodies, and the disclosure of which Seller can facilitate or
control), Contracts, premises, permits, Environmental Permits, licenses,
Governmental Authorizations, commitments of any nature (whether written or oral)
and records relating thereto, and shall permit Purchaser and Purchaser
Representatives to make such inspections (including without limitation
environmental inspections, sampling, and analysis) as
EXHIBIT 2.1
-----------
23
28
they may require and furnish to Purchaser and Purchaser Representatives during
such period all such information concerning the Acquisition Assets and the
Business as they may reasonably request.
SECTION 7.3. EMPLOYEES.
(a) Purchaser may, but shall not be obligated to, offer
employment to any of the employees of Seller. Seller will not solicit, or
endeavor to solicit, after the Closing Date any employee or discourage any such
person from accepting such employment with Purchaser. Seller has not made any
representations or promises, oral or written, to employees of Seller concerning
employment by Purchaser.
(b) Purchaser shall not be responsible for any costs,
obligations or liabilities which may result from the termination of employment
by Seller of any employee of the Business not hired by Purchaser as of the first
payroll date after the Closing; provided, however, Purchaser shall be
responsible for and shall assume any and all costs, obligations or liabilities
directly related to the termination by Purchaser of any employee of the Business
who is hired by Purchaser on or after the Closing Date solely to the extent that
such costs, obligations or liabilities relate directly to the period beginning
with the hiring of such employee by Purchaser and ending with such termination
by Purchaser. Purchaser makes no representation with respect to the
comparability of Purchaser's employee benefits to those offered by Seller.
Purchaser specifically disclaims any obligation to remunerate employees of
Seller who, following the Closing Date, will be employed by Purchaser, at levels
comparable to the aggregate remuneration provided to such employees while
employed by Seller. Prior to the Closing Date, Seller shall have taken all
necessary actions to comply with the Worker Adjustment and Retraining
Notification Act (the "WARN Act") to the extent it is subject to the WARN Act,
and Purchaser shall not have any disclosure or announcement obligations or any
other responsibilities under the WARN Act as a result of the transactions
contemplated by this Agreement.
(c) Seller shall take such actions as it deems appropriate to
terminate, modify, alter or amend the existing Plans or Benefit Programs with
respect to employees of the Business due to the transactions contemplated by
this Agreement. Purchaser does not and shall not assume any of such Plans or
Benefit Programs, including, without limitation, any severance plans of Seller.
(d) Seller shall be solely responsible for and shall pay in
full to all of Seller's employees all compensation, bonuses and other payments,
and all sick pay, vacation pay, and any other benefits otherwise payable under
the Benefit Programs, accrued to the Closing for which Seller is obligated
thereunder, and Seller shall satisfy all such obligations to such employees.
(e) Seller will retain responsibility for, and continue to
pay, all hospital, medical, life insurance, disability, supplemental
unemployment and all other welfare plan expenses and benefits for each Seller
employee hired by Purchaser (and covered dependents) with respect to claims
incurred by such employee or their covered dependents prior to the
EXHIBIT 2.1
-----------
24
29
Closing. Seller will retain responsibility for, and continue to pay, any life,
health or other welfare benefits payable to each former employee of Seller who
terminated employment with Seller (and their dependents) on or prior to the
Closing in respect of claims incurred on their behalf prior to the Closing. For
purposes of this paragraph, a claim is deemed incurred when the event that first
gave rise to the claim occurred, notwithstanding the fact that such benefits may
be paid at a subsequent date.
(f) Seller is responsible for any liabilities that may arise
with respect to application of Section 4980B of the Internal Revenue Code of
1986 or Part 6 of Subtitle B of Title I of ERISA ("COBRA") with respect to any
of its employees or covered dependents as a result of the transactions
contemplated by this Agreement, as well as for any prior COBRA violations which
occurred prior to Closing. Purchaser is not a successor employer for COBRA
purposes.
(g) Purchaser is not, and shall not be deemed to be, a
successor employer to Seller with respect to any Plans or Benefit Programs; and
no plan or other program adopted or maintained by Purchaser after the Closing is
or shall be deemed to be a "successor plan", as such term is defined in ERISA or
the Code, of any such Plan or Benefit Program.
SECTION 7.4. TAXES.
(a) LIABILITY FOR TAXES. Seller shall be liable for, and shall
indemnify and hold Purchaser and its Affiliates harmless from, (i) all Taxes
that are imposed on or incurred by Seller, (ii) all Taxes that are imposed on or
incurred with respect to the Acquisition Assets or the Business for any taxable
period ending on or before the Closing Date, (iii) a portion, determined as
described below, of any Taxes that are imposed on or incurred with respect to
the Acquisition Assets or the Business for any taxable period beginning prior to
and ending after the Closing Date ("Straddle Period") which is allocable to the
period ending on or before the Closing Date, (iv) any Taxes payable as a result
of a breach by Seller of any of the representations set forth in Section 5.12
hereof, and (v) any attorneys' fees or other costs incurred by Purchaser or its
Affiliates in connection with any payment from Seller under this Section 7.4(a).
The determination of the portion of any Taxes imposed on or incurred with
respect to the Acquisition Assets or the Business for a Straddle Period which is
allocable to the period ending on or before the Closing Date shall be made, in
the case of ad valorem, property or similar Taxes, if any, which are not
measured by or based upon production, or franchise or capital Taxes which are
not measured by or based upon net income, by allocating such Taxes on a per diem
basis, and, in the case of all other Taxes, by assuming that the period ending
on or before the Closing Date constitutes a separate taxable period and by
taking into account the actual taxable events occurring during such period.
(b) TAX RETURNS. Seller shall be responsible for the
preparation and filing of any Tax Return relating to the Acquisition Assets or
the Business that is originally due on or before the Closing Date. Purchaser
shall be liable for the preparation and filing of all other Tax Returns that
relate to the Acquisition Assets or the Business.
EXHIBIT 2.1
-----------
25
30
(c) RIGHT TO REFUNDS. If Seller, on the one hand, or
Purchaser, on the other hand, receives a refund of any Taxes for which the other
is liable, then the Party receiving such refund shall, within 10 days after its
receipt, remit it to the other Party.
(d) TRANSFER AND SALES TAXES. Purchaser shall be liable for
and pay all transfer, sales, or similar Taxes imposed on or relating to the sale
or transfer of the Acquisition Assets. To the extent the Seller collects such
transfer, sales, or similar Taxes at or prior to the Closing Date, Seller shall
remit all such taxes to the appropriate taxing authorities.
SECTION 7.5. FURTHER ASSURANCES. Seller, Shareholder and Purchaser
shall execute and deliver to the other, at the Closing or thereafter, any other
instrument which may be requested by the other and which is reasonably
appropriate to perfect or evidence any of the sales, assignments, transfers or
conveyances contemplated by this Agreement or to transfer any Acquisition Assets
identified after the Closing or to obtain any consents or licenses necessary for
Purchaser to operate the Business in the manner operated by Seller prior to
Closing.
SECTION 7.6. EXPENSES AND FEES. Sellers shall pay all costs and
expenses incurred by Seller and Shareholder in connection with this Agreement
and the transactions contemplated hereby, including, without limitation, any and
all broker's commissions, employee bonuses and the fees and expenses of Seller's
and Shareholder's attorneys and accountants, and will make all necessary
arrangements so that Purchaser will not be charged with any such cost or
expense. Purchaser shall pay all costs and expenses incurred by Purchaser in
connection with this Agreement and the transactions contemplated hereby,
including without limitation, the fees and expenses of their attorneys and
accountants.
SECTION 7.7. AGREEMENT TO COOPERATE. Subject to the terms and
conditions herein provided, the Parties hereto shall use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including using its reasonable efforts to obtain all necessary, proper or
advisable waivers, consents and approvals under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including using its reasonable efforts to obtain all necessary or
appropriate waivers, consents or approvals of third parties required in order to
preserve material contractual relationships of Seller.
SECTION 7.8. PUBLIC STATEMENTS. Except as required by law or the NASD,
the Parties shall obtain the written consent of the other prior to issuing any
press release or any written public statement with respect to this Agreement or
the transactions contemplated hereby and shall not issue any such press release
or written public statement prior to such consent, which will not be
unreasonably withheld.
SECTION 7.9. NOTIFICATION OF CERTAIN MATTERS. Shareholder, Seller and
Purchaser agree to give prompt notice to each other of, and to use their
respective reasonable best efforts to
EXHIBIT 2.1
-----------
26
31
prevent or promptly remedy, (i) the occurrence or failure to occur or the
impending or threatened occurrence or failure to occur, of any event which
occurrence or failure to occur would be likely to cause any of its or another's
representations or warranties in this Agreement to be untrue or inaccurate in
any material respect (or in all respects in the case of any representation or
warranty containing any materiality qualification) at any time from the date
hereof to the Closing and (ii) any material failure (or any failure in the case
of any covenant, condition or agreement containing any materiality
qualification) on its or another's part to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
Party receiving such notice.
SECTION 7.10. RECORDS. Purchaser agrees to provide reasonable access to
Seller after Closing to the books and records relating to the Acquisition Assets
acquired pursuant to this Agreement to the extent required in connection with
any proceeding, inquiry or investigation relating to the period prior to
Closing, provided that Seller agrees to maintain the confidentiality of such
books and records. Seller agrees to provide reasonable access to Purchaser after
Closing to the tax, financial and other books and records relating to the
Business and Acquisition Assets and retained by Seller, in connection with
Purchaser's operation of the Business after Closing. Nothing in this Agreement
shall impose any duty on the Parties to maintain such books and records for more
than three (3) years after the Closing. In the event that Purchaser or Seller
desire to discard the books and records after such three (3) year period, then
it shall provide written notice to the other party. If the other party desires
to take possession of such books and records it shall do so at its sole cost and
expense within 30 days of receiving notice. The Parties agree to coordinate the
transfer of possession of such books and records.
SECTION 7.11. ACCOUNTS RECEIVABLE. From and after the Closing Date,
Seller and Purchaser each agree to transfer or deliver, promptly after the
receipt thereof, any cash received as payment of accounts receivable due to the
other party for services rendered and sales occurring prior to the Closing, in
the case of Seller, and subsequent to the Closing, in the case of Purchaser.
SECTION 7.12. OPEN CONTRACTS. The Seller has represented that it is not
in breach or violation of or in default in the performance or observance of any
term or provision of any Contract as further set forth in Section 5.10. If,
however, at the time of Closing the Seller is unable to perform under any term
or provision of any Contract because of weather or other events over which the
Seller has no control and the Closing still occurs, Purchaser shall use
commercially reasonable efforts to complete performance under such Contracts,
including the portion, if any, that should have been completed prior to Closing.
In no event shall Purchaser be required to complete performance under any
Contracts in which the Seller is in default for reasons other then as set forth
in the preceding sentence. Purchaser shall be entitled to receive all payments
due under such Contracts with respect to work performed after Closing, including
payments for the portion, if any, that was to have been completed prior to
Closing, and Purchaser shall bear the reasonable expenses incurred after Closing
in completing such performance, except for damages, penalties and other losses
incurred as a result of the Seller's inability to perform
EXHIBIT 2.1
-----------
27
32
under such Contracts. Nothing contained in this Section 7.12 shall be construed
as a waiver of Purchaser's conditions to close under Section 8.3 of the
Agreement.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO CLOSE. The
respective obligations of each Party to close the transactions contemplated
hereby shall be subject to the fulfillment or waiver, if permissible, of the
following conditions on or prior to the Closing Date:
(a) no preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the
transactions contemplated hereby shall have been issued and remain in effect
(each party agreeing to use its reasonable efforts to have any such injunction,
order or decree lifted); and
(b) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the consummation of
the transactions contemplated by this Agreement or make the consummation of the
transaction contemplated by this Agreement illegal.
SECTION 8.2. CONDITIONS TO OBLIGATION OF SELLER. Unless waived by
Seller, the obligation of Seller to close the transactions contemplated herein
shall be subject to the fulfillment of the following additional conditions on or
prior to the Closing Date:
(a) Purchaser shall have performed in all material respects
(or in all respects in the case of any agreement containing any materiality
qualification) its agreements contained in this Agreement required to be
performed on or prior to the Closing Date;
(b) the representations and warranties of Purchaser contained
in this Agreement shall be true and correct in all material respects (or in all
respects in the case of any representation or warranty containing any
materiality qualification) on and as of the date made and on and as of the
Closing Date as if made at and as of such date;
(c) Purchaser shall have removed Shareholder from any and all
personal guaranties and/or surety obligations in connection with Seller's debts
or obligations listed on Schedule 2.3; and
(d) Seller shall have received a certificate executed on
behalf of Purchaser by the President or a Vice President of Purchaser with
respect to (a) and (b) above.
SECTION 8.3. CONDITIONS TO OBLIGATIONS OF PURCHASER. Unless waived by
Purchaser, the obligation of Purchaser to close the transactions contemplated
herein shall be subject to the fulfillment of the following additional
conditions on or prior to the Closing Date:
EXHIBIT 2.1
-----------
28
33
(a) Seller shall have performed in all material respects (or
in all respects in the case of any agreement containing any materiality
qualification) its agreements contained in this Agreement required to be
performed on or prior to the Closing Date;
(b) the representations and warranties of Seller contained in
this Agreement shall be true and correct in all material respects (or in all
respects in the case of any representation or warranty containing any
materiality qualification) on and as of the date made and on and as of the
Closing Date as if made at and as of such date;
(c) since the date hereof, there shall have been no changes
that constitute, and no event or events shall have occurred which have resulted
in or constitute, a Material Adverse Effect directly caused by Seller's
affirmative act or omission;
(d) Purchaser shall have received from Seller a xxxx of sale,
general assignment and conveyance by Seller transferring to Purchaser good and
marketable title to all of the Acquisition Assets in the form attached hereto as
Exhibit C;
(e) Purchaser shall have received from Seller all documents,
in the form attached hereto as Exhibit C, required for the assignment of
Seller's rights under all registrations, Permits and licenses (to the extent
permitted by law), equipment or motor vehicle leasing agreements, motor vehicle
and rolling stock titles, rights under sales and/or purchase orders and of
Seller's rights under all other Contracts (including the operating contracts of
Seller listed on Schedule 2.1(iv) hereto) constituting a part of the Acquisition
Assets;
(f) Purchaser shall have received from Seller originals of all
of the Assumed Leases, contracts, agreements, commitments, books, records, files
and other data that are included in the Acquisition Assets;
(g) Purchaser shall have received from Seller all consents and
approvals set forth on Schedule required in connection with (i) the execution,
delivery and performance of this Agreement and (ii) the assignment of the
Contracts and all other agreements necessary for Purchaser to conduct the
Business as it is currently being conducted by Seller, including, without
limitation, those consents listed on Schedule 5.3 in form satisfactory to
Purchaser;
(h) Purchaser shall have obtained financing in the amount of
$4,200,000 and pursuant to terms satisfactory to Purchaser to consummate the
transactions contemplated in this Agreement or Purchaser using commercially
reasonable efforts could reasonably be expected to have obtained financing in an
amount not less than $4,200,000 on commercially reasonable terms;
(i) Purchaser shall have received a legal opinion from legal
counsel to Seller, dated the Closing Date, in a form reasonable satisfactory to
Purchaser;
EXHIBIT 2.1
-----------
29
34
(j) Shareholder shall have entered into a Consulting
Agreement, in the form attached hereto as Exhibit D;
(k) The Parties shall have entered into real property leases,
in the form attached hereto as Exhibit E; and
(l) Purchaser shall have received a certificate executed by
Seller with respect to (a) through (c) above.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing in
the following manner:
(a) Seller shall have the right to terminate this Agreement:
(i) if the representations and warranties of Purchaser
shall fail to be true and correct in all material respects (or in all respects
in the case of any representation or warranty containing any materiality
qualification) on and as of the date made or, except in the case of any such
representations and warranties made as of a specified date, on and as of any
subsequent date as if made at and as of such subsequent date and such failure
shall not have been cured in all material respects (or in all respects in the
case of any representation or warranty containing any materiality qualification)
within thirty (30) days after written notice of such failure is given to
Purchaser by Seller;
(ii) if the transactions completed hereby are not
completed by October 31, 1999, (provided that (a) the right to terminate this
Agreement under this Section 9.1(a)(ii) shall not be available to Seller if a
breach by Seller or the failure of Seller to fulfill any obligation to Purchaser
under or in connection with this Agreement has been the cause of or resulted in
the failure of the transactions contemplated hereby to occur on or before such
date and (b) Purchaser has not exercised the Extension pursuant to Section 2.6);
(iii) if the transactions contemplated hereby are enjoined
by a final, unappealable court order; or
(iv) if Purchaser (A) fails to perform in any material
respect (or in all respects in the case of any covenant containing any
materiality qualification) any of its covenants in this Agreement and (B) does
not cure such default in all material respects (or in all respects in the case
of any covenant containing any materiality qualification) within 30 days after
notice of such default is given to Purchaser by Seller.
EXHIBIT 2.1
-----------
30
35
(b) Purchaser shall have the right to terminate this
Agreement;
(i) if the representations and warranties of Seller shall
fail to be true and correct in all material respects (or in all respects in the
case of any representation or warranty containing any materiality qualification)
on and as of the date made or, except in the case of any such representations
and warranties made as of a specified date, on and as of any subsequent date as
if made at and as of such subsequent date and such failure shall not have been
cured in all material respects (or in all respects in the case of any
representation or warranty containing any materiality qualification) within 30
days after written notice of such failure is given to Seller by Purchaser;
(ii) if the transactions contemplated hereby are not
completed by October 31, 1999, as such date may be extended pursuant to Section
2.6 (provided that the right to terminate this Agreement under this Section
9.1(b)(ii) shall not be available to Purchaser if a breach by Purchaser or the
failure of Purchaser to fulfill any obligation to Seller under or in connection
with this Agreement has been the cause of or resulted in the failure of the
transactions contemplated hereby to occur on or before such date); or
(iii) if Seller (A) fails to perform in any material
respect (or in all respects in the case of any covenant containing any
materiality qualification) any of its covenants in this Agreement and (B) does
not cure such default in all material respects (or in all respects in the case
of any covenant containing any materiality qualification) within thirty (30)
days after notice of such default is given to Seller by Purchaser.
(c) Seller and Purchaser mutually agree in writing.
SECTION 9.2. EFFECT OF TERMINATION. The following provisions shall
apply in the event of a termination of the Agreement:
(a) If this Agreement is terminated by either Purchaser or
Seller pursuant to the provisions of Section 9.1, this Agreement shall forthwith
become void and there shall be no further obligations on the part of Seller, or
Purchaser or its stockholders, directors, officers, employees, agents or
representatives (except as set forth in Sections 11.5 and 11.6, each of which
shall survive termination in its entirety). Notwithstanding any other provision
set forth herein, nothing in this Section 9.2 shall relieve any party from
liability for any breach of this Agreement.
(b) The parties hereto acknowledge and agree that Purchaser,
as a result of the actual damages Purchaser would sustain by reason of such
negligent or willful failure of Seller or Shareholder to perform their
obligations hereunder, could not be made whole by monetary damages, and it is
accordingly agreed that Purchaser shall have the right to elect, in addition to
any and all other remedies at law or in equity, to enforce specific performance
under this Agreement and the Seller waives the defense in any such action for
specific performance that a remedy at law would be adequate.
SECTION 9.3. EXTENSIONS; WAIVER. At any time prior to the Closing Date,
the Parties may (a) extend the time for the performance of any of the
obligations or other acts of the other Parties,
EXHIBIT 2.1
-----------
31
36
(b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant thereto and
(c) waive compliance with any of the agreements or conditions herein. Any
agreement on the part of a Party to any such extension or waiver shall be valid
if set forth in an instrument in writing signed on behalf of such Party.
SECTION 9.4. XXXXXXX MONEY. If the transactions contemplated hereby
fail to close on or prior to October 31, 1999 due to a material breach by
Purchaser of its obligations under this Agreement, Seller shall retain the
Xxxxxxx Money as reimbursement for the costs and expenses incurred by Seller in
connection with the negotiation and execution of this Agreement. If the
transactions contemplated hereby fail to close for any reason other than due to
a material breach by Purchaser of its obligations under this Agreement, then
Seller shall promptly refund the Xxxxxxx Money to Purchaser. Notwithstanding
anything to contrary in this Agreement, if Purchaser exercises its right to the
Extension pursuant to Section 2.5 of this Agreement, Seller shall retain the
Xxxxxxx Money as an extension fee and as reimbursement for the costs and
expenses incurred by Seller in connection with the negotiation and execution of
this Agreement, unless a material breach by Seller or the failure of Seller to
fulfill any obligation under or in connection with this Agreement was the cause
of the Extension in which case the Xxxxxxx Money shall be reimbursed to
Purchaser or, if the Closing occurs, deducted from the Purchase Price.
ARTICLE X
INDEMNIFICATION
SECTION 10.1. SELLER AND SHAREHOLDER'S INDEMNITY OBLIGATIONS. Seller
and Shareholder shall, jointly and severally, indemnify and hold harmless
Purchaser and its respective officers, directors, stockholders, employees,
agents, representatives and Affiliates (each a "Purchaser Indemnified Party")
from and against any and all claims (including without limitation, Environmental
Claims), actions, causes of action, arbitrations, proceedings, losses, damages,
remediations, liabilities, strict liabilities, judgments, fines, penalties and
expenses (including, without limitation, reasonable attorneys' fees)
(collectively, the "Indemnified Amounts") paid, imposed on or incurred by a
Purchaser Indemnified Party, (i) relating to, resulting from or arising out of
(a) any breach or misrepresentation in any of the representations and warranties
made by or on behalf of Seller in this Agreement, including without limitation
with respect to environmental matters, or any certificate or instrument
delivered in connection with this Agreement, (b) any violation or breach by
Seller and Shareholder of or default by Seller and Shareholder under the terms
of this Agreement or any certificate or instrument delivered in connection with
this Agreement, (c) any liability of Seller or Shareholder not assumed by
Purchaser, including without limitation the Excluded Liabilities; or (ii)
relating to, resulting from or arising out of any allegation of a third party of
the events described in Sections 10.1(a), (b) or (c) above. For purposes of this
Section 10.1, Indemnified Amounts shall include without limitation those
Indemnified Amounts ARISING OUT OF THE STRICT LIABILITY (INCLUDING BUT NOT
LIMITED TO STRICT LIABILITY ARISING PURSUANT TO ENVIRONMENTAL LAWS) OF ANY
PARTY, INCLUDING ANY PURCHASER INDEMNIFIED PARTY.
EXHIBIT 2.1
-----------
32
37
SECTION 10.2. PURCHASER'S INDEMNITY OBLIGATIONS. Purchaser shall
indemnify and hold harmless Shareholder and Shareholder's agents,
representatives and Affiliates (each a "Shareholder's Indemnified Party") from
and against any and all Indemnified Amounts incurred by a Shareholder's
Indemnified Party (i) as a result of (a) any breach or misrepresentation in any
of the representations and warranties made by or on behalf of Purchaser in this
Agreement or any certificate or instrument delivered in connection with this
Agreement, (b) any violation or breach by Purchaser of or default by Purchaser
under the terms of this Agreement or any certificate or instrument delivered in
connection with this Agreement, or (c) any liability of Purchaser, including
without limitation the Assumed Liabilities, or (ii) as a result of any
allegation of a third party of the events described in Section 10.2(a), (b) or
(c) above..
SECTION 10.3. INDEMNIFICATION PROCEDURES. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
(a) Any of the Parties claiming indemnification under this
Agreement (an "Indemnified Party") shall with reasonable promptness (i) notify
the Party from whom indemnification is sought (the "Indemnifying Party") of any
third-party claim or claims asserted against the Indemnified Party ("Third Party
Claim") for which indemnification is sought and (ii) transmit to the
Indemnifying Party a copy of all papers served with respect to such claim (if
any) and a written notice ("Claim Notice") containing a description in
reasonable detail of the nature of the Third Party Claim, an estimate of the
amount of damages attributable to the Third Party Claim to the extent feasible
(which estimate shall not be conclusive of the final amount of such claim) and
the basis of the Indemnified Party's request for indemnification under this
Agreement.
Within 15 days after receipt of any Claim Notice (the "Election
Period"), the Indemnifying Party shall notify the Indemnified Party (i) whether
the Indemnifying Party disputes its potential liability to the Indemnified Party
with respect to such Third Party Claim and (ii) whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such Third Party Claim.
If the Indemnifying Party notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, such Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 10.3(a). The Indemnifying
Party shall have full control of such defense and proceedings. The Indemnified
Party is hereby authorized, at the sole cost and expense of the Indemnifying
Party, to file, during the Election Period, any motion, answer or other
pleadings that the Indemnified Party shall reasonably deem necessary or
appropriate to protect its interests. If requested by the Indemnifying Party,
the Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim that the Indemnifying Party elects
to contest, including, without limitation, the making of any related
counterclaim against the person asserting the Third Party Claim or any
cross-complaint against any person. Except as otherwise provided herein, the
Indemnified Party may participate in, but
EXHIBIT 2.1
-----------
33
38
not control, any defense or settlement of any Third Party Claim controlled by
the Indemnifying Party pursuant to this Section 10.3 and shall bear its own
costs and expenses with respect to such participation.
If the Indemnifying Party fails to notify the Indemnified Party within
the Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to the preceding paragraph, or if the Indemnifying Party elects
to defend the Indemnified Party but fails to prosecute or settle the Third Party
Claim as herein provided or if the Indemnified Party reasonably objects to such
election on the grounds that counsel for such Indemnifying Party cannot
represent both the Indemnified Party and the Indemnifying Parties because such
representation would be reasonably likely to result in a conflict of interest,
then the Indemnified Party shall have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. In such a situation, the
Indemnified Party shall have full control of such defense and proceedings and
the Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 10.3,
and the Indemnifying Party shall bear its own costs and expenses with respect to
such participation.
The Indemnifying Party shall not settle or compromise any Third Party
Claim unless (i) the terms of such compromise or settlement require no more than
the payment of money (i.e., such compromise or settlement does not require the
Indemnified Party to admit any wrongdoing or take or refrain from taking any
action), (ii) the full amount of such monetary compromise or settlement will be
paid by the Indemnifying Party, and (iii) the Indemnified Party receives as part
of such settlement a legal, binding and enforceable unconditional satisfaction
and/or release, in form and substance reasonably satisfactory to it, providing
that such Third Party Claim and any claimed liability of the Indemnified Party
with respect thereto is being fully satisfied by reason of such compromise or
settlement and that the Indemnified Party is being released from any and all
obligations or liabilities it may have with respect thereto. The Indemnified
Party shall not settle or admit liability to any Third Party Claim without the
prior written consent of the Indemnifying Party unless (x) the Indemnifying
Party has disputed its potential liability to the Indemnified Party, and such
dispute either has not been resolved or has been resolved in favor of the
Indemnifying Party or (y) the Indemnifying Party has failed to respond to the
Indemnified Party's Claim Notice.
(b) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of damages attributable to such claim to
the extent feasible (which estimate shall not be conclusive of the final amount
of such claim) and the basis of the Indemnified Party's request for
indemnification under this Agreement.
EXHIBIT 2.1
-----------
34
39
SECTION 10.4. LIMITATION OF LIABILITY.
(a) Notwithstanding anything to the contrary contained in
Article X, the aggregate liability of Seller for any event or occurrence giving
rise to Seller being required to indemnify Purchaser Indemnified Parties
pursuant to Section 10.1 of this Agreement shall be limited to $2,000,000.
(b) Purchaser Indemnified Parties are entitled to
indemnification pursuant to Section 10.1 only to the extent that the amount of
any Indemnified Amount, individually or in the aggregate, exceeds $50,000 and
then to the full amount of such Indemnified Amount not to exceed the limitations
described in Section 10.4(a).
SECTION 10.5. LIMITATION OF PURCHASER'S LIABILITY.
(a) Notwithstanding anything to the contrary contained in
Article X, the aggregate liability of Purchaser for any event or occurrence
giving rise to Purchaser being required to indemnify Shareholder's Indemnified
Parties pursuant to Section 10.2 shall be limited to $1,000,000.
(b) Seller Indemnified Parties are entitled to indemnification
pursuant to Section 10.2 only to the extent that the amount of any Indemnified
Amount, individually or in the aggregate, exceeds $50,000 and then to the full
amount of such Indemnified Amount, not to exceed the limitations described in
Section 10.5(a).
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1. SURVIVAL. The representations, warranties, covenants and
agreements (including, but not limited to, indemnification obligations) set
forth in this Agreement and in any certificate or instrument delivered in
connection herewith shall be continuing and shall survive the Closing for a
period of two (2) years following the Closing Date; provided, however, that in
the case of all representations, warranties, covenants and agreements
(including, but not limited to, indemnification obligations), there shall be no
such termination with respect to any such representation, warranty, covenant or
agreement as to which a bona fide claim has been asserted by written notice of
such claim delivered to the Party or Parties making such representation,
warranty, covenant or agreement prior to the expiration of the survival period;
provided, further, that (i) the representations and warranties set forth in
Sections 5.2, 5.6 and 5.24 hereof shall survive the Closing indefinitely, (ii)
Sections 5.8, 5.10, 5.12 and 5.13 shall survive the Closing for the greater of
two (2) years or the statutory survival period, (iii) the indemnification
obligations of Seller set forth in Section 10.1(a) shall survive the Closing
with respect to the particular representations and warranties referenced in
provisos (i) and (ii) in this sentence for the periods set forth in provisos (i)
and (ii) as applicable, and (iv) the indemnification obligations of Seller and
Shareholder set forth in Sections 10.1(c) shall survive the Closing
indefinitely.
EXHIBIT 2.1
-----------
35
40
SECTION 11.2. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via facsimile to
the Parties at the following addresses (or at such other address for a Party as
shall be specified by like notice):
(a) If to Purchaser to:
Synagro Technologies, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Rome
Telecopy: 713/369-1760
with a copy to:
Xxxxx Liddell & Xxxx LLP
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: 713/223-3717
(b) if to Seller (prior to Closing) or Shareholder, to:
Whiteford Construction Co., Inc.
0000 Xxxxxx Xxxx
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy: 410/836-5604
Attention: Xxxxxxx X. Xxxxxxxxx
with a copy to:
Xxxx X. Xxxxxx, P.A.
Suite 311 Foxleigh Building
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Telecopy: 410/823-8860
SECTION 11.3. INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
interpretation of this Agreement. In this Agreement, unless a contrary intention
is specifically set forth, (i) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be
EXHIBIT 2.1
-----------
36
41
interpreted or construed against any Party solely because such Party or its
legal representative drafted such provision.
SECTION 11.4. MISCELLANEOUS. This Agreement (including the documents
and instruments referred to herein and the Schedules and Exhibits attached
hereto) (a) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the Parties, or any
of them, with respect to the subject matter hereof, and (b) shall not be
assigned by operation of law or otherwise except that Purchaser may assign this
Agreement to any other wholly-owned Subsidiary of Purchaser, but no such
assignment shall relieve Purchaser of its obligations hereunder.
SECTION 11.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE
STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY
WITHIN SUCH STATE.
SECTION 11.6. BINDING ARBITRATION.
(a) General. Notwithstanding any provision of this Agreement
to the contrary, upon the request of any Party (defined for the purpose of this
provision to include Affiliates, principles and agents of any such Party), any
dispute, controversy or claim arising out of, relating to, or in connection
with, this Agreement or any agreement executed in connection herewith or
contemplated hereby, or the breach, termination, interpretation, or validity
hereof or thereof (hereinafter referred to as a "Dispute"), shall be finally
resolved by mandatory and binding arbitration in accordance with the terms
hereof. Any Party may bring an action in court to compel arbitration of any
Dispute. Any Party who fails or refuses to submit any Dispute to binding
arbitration following a lawful demand by the opposing Party shall bear all costs
and expenses incurred by the opposing Party in compelling arbitration of such
Dispute.
(b) Governing Rules. The arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time of the arbitration, except as they may be
modified herein or by mutual agreement of the Parties. The seat of the
arbitration shall be Baltimore, Maryland. Notwithstanding Section 11.6, the
arbitration and this clause shall be governed by the Federal Arbitration Act, 9
U.S.C. Sections 1 et seq. (the "Federal Arbitration Act"). The arbitrator shall
award all reasonable and necessary costs (including the reasonable fees and
expenses of counsel) incurred in conducting the arbitration to the prevailing
Party in any such Dispute. The Parties expressly waive all rights whatsoever to
file an appeal against or otherwise to challenge any award by the arbitrators
hereunder; provided, that the foregoing shall not limit the rights of any Party
to bring a proceeding in any applicable jurisdiction to confirm, enforce or
enter judgment upon such award (and the rights of the other Party, if such
proceeding is brought to contest such confirmation, enforcement or entry of
judgment, but only to the extent permitted by the Federal Arbitration Act).
EXHIBIT 2.1
-----------
37
42
(c) No Waiver; Preservation of Remedies. No provision of, nor
the exercise of any rights under this Agreement shall limit the right of any
Party to apply for injunctive relief or similar equitable relief with respect to
the enforcement of this Agreement or any agreement executed in connection
herewith or contemplated hereby, and any such action shall not be deemed an
election of remedies. Such rights can be exercised at any time except to the
extent such action is contrary to a final award or decision in any arbitration
proceeding. The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof. The institution and maintenance of an action for injunctive relief or
similar equitable relief shall not constitute a waiver of the right of any
Party, including without limitation the plaintiff, to submit any Dispute to
arbitration nor render inapplicable the compulsory arbitration provisions of
this Agreement.
(d) Arbitration Proceeding. In addition to the authority
conferred on the arbitration tribunal by the rules specified above, the
arbitration tribunal shall have the authority to order reasonable discovery,
including the deposition of party witnesses and production of documents. The
arbitral award shall be in writing, state the reasons for the award, and be
final and binding on the Parties with no right of appeal. All statutes of
limitations that would otherwise be applicable shall apply to any arbitration
proceeding. Any attorney-client privilege and other protection against
disclosure of confidential information, including without limitation any
protection afforded the work-product of any attorney, that could otherwise be
claimed by any Party shall be available to and may be claimed by any such Party
in any arbitration proceeding. No Party waives any attorney-client privilege or
any other protection against disclosure of confidential information by reason of
anything contained in or done pursuant to or in connection with this Agreement.
Each Party agrees to keep all Disputes and arbitration proceedings strictly
confidential, except for disclosures of information to the Parties' legal
counsel or auditors or those required by applicable law. The arbitrators shall
determine the matters in dispute in accordance with the substantive law of
Delaware, without regard to conflict of law rules.
(e) Appointment of Arbitrators. The arbitration shall be
conducted by three (3) arbitrators. The Party initiating arbitration (the
"Claimant") shall appoint its arbitrator in its request for arbitration (the
"Request"). The other Party (the "Respondent") shall appoint its arbitrator
within thirty (30) days after receipt of the Request and shall notify the
Claimant of such appointment in writing. If the Respondent fails to appoint an
arbitrator within such thirty (30) day period, the arbitrator named in the
Request shall decide the controversy or claim as sole arbitrator. Otherwise, the
two (2) arbitrators appointed by the Parties shall appoint a third (3rd)
arbitrator within thirty (30) days after the Respondent has notified Claimant of
the appointment of the Respondent's arbitrator. When the third (3rd) arbitrator
has accepted the appointment, the two (2) Party-appointed arbitrators shall
promptly notify the Parties of the appointment. If the two (2) arbitrators
appointed by the parties fail to appoint a third (3rd) arbitrator or so to
notify the Parties within the time period prescribed above, then the appointment
of the third (3rd)
EXHIBIT 2.1
-----------
38
43
arbitrator shall be made by the American Arbitration Association, which shall
promptly notify the Parties of the appointment. The third (3rd) arbitrator shall
act as Chair of the panel.
(f) Other Matters. This arbitration provision constitutes the
entire agreement of the Parties with respect to its subject matter and
supersedes all prior discussions, arrangements, negotiations and other
communications on dispute resolution. This arbitration provision shall survive
any termination, amendment, renewal, extension or expiration of this Agreement
or any agreement executed in connection herewith or contemplated hereby unless
the Parties otherwise expressly agree in writing. The obligation to arbitrate
any dispute shall be binding upon the successors and assigns of each of the
Parties.
SECTION 11.7. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the Parties.
SECTION 11.8. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 11.9. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each Party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 11.10. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 11.11. VEHICLE TRANSFERS. Seller shall retain the legal title
to the Motor Vehicles until the Motor Vehicles have passed inspection and can be
titled in the name of Purchaser, but such period shall not exceed 120 days from
the Closing Date. Seller and Purchaser shall use commercially reasonable efforts
(at no cost and expense to Seller) in cooperation to transfer title to the Motor
Vehicles to the Purchaser within 60 days from the Closing Date. During such
period that Seller retains title (up to a maximum of 120 days) (i) Seller shall
maintain insurance on such Motor Vehicles (and the premium amounts of such
insurance shall be reimbursed by Purchaser), and (ii) Purchaser shall maintain
insurance on such Motor Vehicles which will provide primary coverage for
liability in an amount consistent with Synagro's current coverages (but not less
than $1,000,000 per occurrence). Seller, if requested by Purchaser, shall
deliver the title certificates to Purchaser or Purchaser's counsel to be held in
escrow. After title to the Motor Vehicles has been transferred to Purchaser (but
in any event at the end of the 120 day period set forth above) Purchaser shall
immediately return to Seller all Seller's license plates on any such Motor
Vehicles. At such time as any license plate for any Motor Vehicle is returned by
Purchaser to Seller, Seller shall have no obligation to continue to insure such
Motor Vehicle.
[SIGNATURE PAGE FOLLOWS]
EXHIBIT 2.1
-----------
39
44
IN WITNESS WHEREOF, Purchaser, Seller and Shareholder have executed and
delivered this Agreement effective as of the date first written above.
PURCHASER:
SYNAGRO TECHNOLOGIES, INC.
By: /s/ Xxxx X. Rome
-----------------------------------------
Xxxx X. Rome, Executive Vice President
SELLER:
WHITEFORD CONSTRUCTION CO., INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
---------------------------------------
Title: President
--------------------------------------
Xxxxxxx X. Xxxxxxxxx hereby executes this Asset Purchase Agreement
solely to evidence his agreement to guarantee the performance of all of Seller's
obligations under Article X of this Asset Purchase Agreement.
/s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
XXXXXXX X. XXXXXXXXX
EXHIBIT 2.1
-----------
40
45
EXHIBIT A
GLOSSARY
For purposes of this Agreement, the following terms shall have the
meaning specified or referred to below when capitalized (or if not capitalized,
unless the context clearly requires otherwise) when used in this Agreement.
"Affiliate(s)" with respect to any Person, means any Person directly or
indirectly controlling, controlled by or under common control with such Person,
and any natural Person who is an officer, director or partner of such Person and
any members of their immediate families living within the same household. A
Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise.
"Benefit Program" means each plan, policy, contract, program,
commitment or arrangement providing for bonuses, deferred compensation,
retirement payments, profit sharing, incentive pay, commissions, hospitalization
or medical expenses or insurance or any other benefits for any officer,
consultant, director, annuitant, employee or independent contractor of Seller
involved in the Business.
"Business Facility" or "Business Facilities" includes any property
(whether real or personal) which Seller or any of their Subsidiaries currently
lease, operate, or own or manage in any manner or which Seller or any of their
Subsidiaries or any of their respective organizational predecessors formerly
leased, operated, owned or managed in any manner.
"Code" means the Internal Revenue Code of 1986, as amended, or any
amending or superseding tax laws of the United States of America.
"Environmental Claim(s)" means any claim; litigation; demand; action;
cause of action; suit; loss; cost, including, but not limited to, attorneys'
fees, diminution in value, and expert's fees; damage; punitive damage; fine,
penalty, expense, liability, criminal liability, strict liability, judgment,
governmental or private investigation and testing; notification of status of
being potentially responsible for clean-up of any facility or for being in
violation or in potential violation of any Requirement of Environmental Law;
proceeding; consent or administrative orders, agreements or decrees; lien;
personal injury or death of any person; or property damage, whether threatened,
sought, brought or imposed, that is related to or that seeks to recover losses,
damages, costs, expenses and/or liabilities related to, or seeks to impose
liability for: (i) improper use or treatment of wetlands, pinelands or other
protected land or wildlife; (ii) noise; (iii) radioactive materials (including
naturally occurring radioactive materials ["NORM"]; (iv) explosives; (v)
pollution, contamination, preservation, protection, decontamination, remediation
or clean-up of the air, surface water, groundwater, soil or protected lands;
(vi) solid, gaseous or liquid waste generation, handling, discharge, release,
threatened release, treatment, storage,
EXHIBIT 2.1
-----------
Exhibit A - Page 1
46
disposal or transportation; (vii) exposure of persons or property to Materials
or Environmental Concern and the effects thereof; (viii) the release or
threatened release (into the indoor or outdoor environment), generation,
extraction, mining, beneficiating, manufacture, processing, distribution in
commerce, use, transfer, transportation, treatment, storage, disposal of
Remediation of Materials of Environmental Concern; (ix) injury to, death of or
threat to the health or safety of any person or persons caused directly or
indirectly by Materials of Environmental Concern; (x) destruction caused
directly or indirectly by Materials of Environmental Concern or the release or
threatened release of any Materials of Environmental Concern or any property
(whether real or personal); (xi) the implementation of spill prevention and/or
disaster plans relating to Material of Environmental Concern; (xii) community
right-to-know and other disclosure laws; or (xiii) maintaining, disclosing or
reporting information to Governmental Authorities of any other third person
under any Environmental Law. The term, "Environmental Claim," also includes,
without limitation, any losses, damages, costs, expenses and/or liabilities
incurred in testing.
"Environmental Law(s)" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, guidance document, order, consent agreement,
order or consent judgment, decree, injunction, requirement or agreement with any
governmental entity or any judicial or administrative decision relating to (x)
the protection, preservation or restoration of the environment (including,
without limitation, air, water, vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety, (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling, application, production, release or disposal of Materials of
Environmental Concern, in each case as amended from time to time, or (z) health,
worker protection or community's right to know. The term "Environmental Law"
includes, without limitation, (i) the Federal Comprehensive Environmental
Response Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal Act and the Federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
and the Federal Occupational Safety and Health Act of 1970, each as amended from
time to time, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of,
effects of or exposure to any Materials of Environmental Concern.
"Environmental Permit(s)" means all permits, licenses, certificates,
registrations, identification numbers, applications, consents, approvals,
variances, notices of intent, and exemptions necessary for the ownership, use
and/or operation of any current Business Facility or to conduct Seller's
business as currently conducted in compliance with Requirements of Environmental
Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
EXHIBIT 2.1
-----------
Exhibit A - Page 2
47
"GAAP" means generally accepted accounting principals applied on a
consistent basis.
"Governmental Authority" or "Governmental Authorities" means any nation
or government, any state or political subdivision thereof and any agency or
entity exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government.
"Knowledge" means, when applicable to Seller, the actual current
knowledge of Xxxxxxx X. Xxxxxxxxx, Xxxx Xxxxxx and Xxxxx Xxxxxxxxx.
"Lien(s)" means any mortgage, pledge, hypothecation, security interest,
encumbrance, right of first refusal, option, lien, charge, condition,
restriction or burden of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any lease in
the nature thereof and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code of any jurisdiction).
"Material Adverse Effect" means any event, occurrence, fact, condition,
change, development or effect that is or could reasonably be anticipated to be
materially adverse to the Business, the Acquisition Assets, or the liabilities,
financial condition, results of operations, (including intangible properties) or
business prospects of Seller and all of its Subsidiaries with respect thereto,
taken as a whole.
"Materials of Environmental Concern" means: (i) those substances
included within the statutory and/or regulatory definitions or listings of
"hazardous substance," "medical waste," "special waste," "hazardous waste,"
"extremely hazardous substance," "regulated substance," "solid waste,"
"hazardous materials," or "toxic substances," under any Environmental Law; (ii)
any material, waste or substance which is or contains: (A) petroleum, oil or a
fraction thereof, (B) explosives or (C) radioactive materials (including
naturally occurring radioactive materials); and (iii) such other substances,
materials, or wastes that are or become classified or regulated as hazardous or
toxic under any applicable federal, state or local law or regulation. To the
extent that the laws or regulations of any applicable state or local
jurisdiction establish a meaning for any term defined herein through reference
to federal Environmental Laws which is broader than the meaning under such
federal Environmental Laws, such broader meaning shall apply.
"Person" means any individual, partnership, joint venture, corporation,
limited liability company, association, trust, unincorporated organization,
government or agency or subdivision thereof or any other entity.
"Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) which is or has been established or maintained, or to which contributions
are or have been made, by Seller or by any trade or business, whether or not
incorporated, which, together with Seller, is under common control, as described
in Section 414(b) or (c) of the Code.
EXHIBIT 2.1
-----------
Exhibit A - Page 3
48
"Remediation" means any action necessary to: (i) comply with and ensure
compliance with the Requirements of Environmental Laws and (ii) the taking of
all reasonably necessary precautions to protect against and/or respond to,
remove or remediate or monitor the release or threatened release of Materials of
Environmental Concern at, on, in, about, under, within or near the air, soil,
surface water, groundwater or soil vapor at any Business Facility of Seller or
any of its Subsidiaries or of any property affected by the business, operations,
acts omissions, or Materials of Environmental Concern of Seller or any of its
Subsidiaries.
"Requirement(s) of Environmental Law(s)"means all requirements,
conditions, restrictions or stipulations of Environmental Laws imposed upon or
related to Seller or any of its Subsidiaries or the assets, Business Facilities
and/or the business of Seller or any of its Subsidiaries.
"Subsidiary" shall mean, when used with reference to an entity, any
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions, or a majority of the outstanding voting securities
of which, are owned directly or indirectly by such entity.
"Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise, real
or personal property, sales, withholding, social security, occupation, use,
severance, environmental, license, net worth, payroll, employment, franchise,
transfer and recording taxes, fees and charges, imposed by the IRS or any other
taxing authority (whether domestic or foreign including, without limitation, any
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies or other assessments.
"Tax Return(s)" shall mean any report, return, document, declaration or
other information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, information returns and documents (i) with respect to or
accompanying payments of estimated Taxes or (ii) with respect to or accompanying
requests for the extension of time in which to file any such report, return,
document, declaration or other information, including any schedule or attachment
thereto and any amendment thereof.
EXHIBIT 2.1
-----------
Exhibit A - Page 4
