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Exhibit 10.10
STOCK PURCHASE AGREEMENT
AMONG
NORTH AMERICAN TEL-COM GROUP, INC.
AND
THE SHAREHOLDERS OF U.S. CABLE, INC.
June 30, 1998
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TABLE OF CONTENTS
PAGE
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1. Definitions................................................................................... 1
2. Purchase and Sale Transaction................................................................. 6
(a) Basic Transaction.................................................................... 6
(b) Consideration........................................................................ 6
(c) The Closing.......................................................................... 6
(d) Deliveries at Closing................................................................ 6
3. Representations and Warranties Concerning the Transaction..................................... 6
(a) Representations and Warranties of the Shareholders................................... 6
(b) Representations and Warranties of the North American................................. 8
4. Representations and Warranties Concerning Target.............................................. 10
(a) Organization, Qualification, and Corporate Power..................................... 10
(b) [INTENTIONALLY LEFT BLANK]
(c) Capitalization................................................................................ 10
(d) Noncontravention..................................................................... 11
(e) Brokers' Fees........................................................................ 11
(f) Title to Assets...................................................................... 11
(g) Subsidiaries......................................................................... 11
(h) Financial Statements................................................................. 12
(i) Events Subsequent to Most Recent Fiscal Year End..................................... 12
(j) Undisclosed Liabilities.............................................................. 14
(k) Legal Compliance..................................................................... 14
(l) Tax Matters.......................................................................... 14
(m) Real Property........................................................................ 16
(n) Intellectual Property................................................................ 17
(o) Tangible Assets...................................................................... 19
(p) Inventory............................................................................ 19
(q) Contracts............................................................................ 19
(r) Notes and Accounts Receivable........................................................ 19
(s) Powers of Attorney................................................................... 20
(t) Insurance............................................................................ 20
(u) Litigation........................................................................... 20
(v) Commitments and Warranties........................................................... 21
(w) Liability for Services Performed..................................................... 21
(x) Employees............................................................................ 21
(y) Employee Benefits.................................................................... 21
(z) Guaranties........................................................................... 23
(aa) Environmental, Health, and Safety Matters............................................ 23
(ab) Certain Business Relationships with Target........................................... 25
(ac) Customers and Suppliers.............................................................. 25
(ad) Disclosure........................................................................... 25
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5. Pre-Closing Covenants......................................................................... 25
(a) General.............................................................................. 25
(b) Notices and Consents................................................................. 25
(c) Operation of Business ............................................................... 26
(d) Preservation of Business ............................................................ 26
(e) Full Access ......................................................................... 26
(f) Notice of Developments............................................................... 26
(g) Exclusivity.......................................................................... 27
(h) No Termination of Shareholders's Obligation by Subsequent Incapacity................. 27
(i) Satisfaction of Shareholder Loans.................................................... 27
6. Post-Closing Covenants........................................................................ 27
(a) General.............................................................................. 27
(b) Litigation Support................................................................... 27
(c) Transition........................................................................... 28
(d) Independent Accountants.............................................................. 28
(e) Tax Matters.......................................................................... 28
(f) Stock Options........................................................................ 28
(g) Audited Financial Statements......................................................... 28
(h) Life Insurance....................................................................... 29
(i) Health Insurance..................................................................... 29
(j) Pro Forma Income Statements.......................................................... 29
(k) Adjustment of Shareholders' Equity................................................... 29
7. Conditions to Obligation to Close............................................................. 29
(a) Conditions to Obligation of North American........................................... 29
(b) Conditions to Obligation of the Shareholders......................................... 31
8. Remedies for Breaches of This Agreement....................................................... 32
(a) Survival of Representations and Warranties........................................... 32
(b) Indemnification Provisions for Benefit of the North American......................... 32
(c) Indemnification Provisions for Benefit of the Shareholders........................... 34
(d) Matters Involving Third Parties...................................................... 34
(e) Determination of Adverse Consequences................................................ 36
(f) Other Indemnification Provisions..................................................... 36
9. Post-Closing Adjustment of Consideration...................................................... 36
10. Tax Matters................................................................................... 37
(a) Tax Periods Ending on or Before the Closing Date..................................... 37
(b) Tax Periods Beginning Before and Ending After the Closing Date....................... 37
(c) Cooperation on Tax Matters........................................................... 38
(d) Tax Sharing Agreements............................................................... 39
(e) Certain Taxes........................................................................ 39
11. Termination................................................................................... 39
(a) Termination of Agreement............................................................. 39
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(b) Effect of Termination................................................................ 40
12. Miscellaneous................................................................................. 40
(a) Press Releases and Public Announcements.............................................. 40
(b) No Third-Party Beneficiaries......................................................... 40
(c) Entire Agreement..................................................................... 40
(d) Succession and Assignment............................................................ 40
(e) Counterparts......................................................................... 40
(f) Headings............................................................................. 40
(g) Notices.............................................................................. 41
(h) Governing Law........................................................................ 41
(i) Amendments and Waivers............................................................... 41
(j) Severability......................................................................... 41
(k) Expenses............................................................................. 42
(l) Construction......................................................................... 42
(m) Incorporation of Exhibits, Annexes, and Schedules.................................... 42
(n) Specific Performance................................................................. 42
(o) Submission to Jurisdiction........................................................... 42
(p) WAIVER OF JURY TRIAL................................................................. 43
Exhibit A--Financial Statements
Exhibit B--Opinion of Target's Counsel
Exhibit C--Real Property Lease
Exhibit D--Employment Agreements
Exhibit E--Opinion of North American's Counsel
Exhibit F--Stepped-up Assets
Exhibit G--Life Insurance Policies to be Cancelled
Annex I-- Accredited Investor Status
Disclosure Schedule
North American Disclosure Schedule
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STOCK PURCHASE AGREEMENT
Agreement entered into as of June 30, 1998, by and among North
American Tel-Com Group, Inc., a Florida corporation ("North American" or the
"Buyer"), and the shareholders of U.S. Cable, Inc., a Wisconsin corporation
(the "Target") listed on the signature page to this Agreement (the
"Shareholders"). The Buyer and the Shareholders are referred to collectively
herein as the "PARTIES."
The Shareholders in the aggregate own all of the outstanding capital
stock of the Target.
This Agreement contemplates the sale by the Shareholders of all of the
issued and outstanding capital stock of Target to Buyer. The Shareholders will
receive cash and capital stock in North American in exchange for their shares
of capital stock of Target.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"ACCREDITED INVESTOR" has the meaning set forth in Regulation
D promulgated under the Securities Act.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses, and any other cost of enforcing a party's rights under this
Agreement.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the
meaning of Code Section 1504(a) or any similar group defined under a similar
provision of state, local or foreign law.
"APPLICABLE RATE" means the corporate base rate of interest
publicly announced from time to time by PNC Bank, N.A.
"BASIS" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could form the
basis for any specified consequence.
"CLOSING" has the meaning set forth in Section 2(c) below.
"CLOSING DATE" has the meaning set forth in Section 2(c)
below.
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"CLOSING DATE BALANCE SHEET" has the meaning set forth in
Section 9(b) below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSIDERATION" has the meaning set forth in Section 2(b)
below.
"CONTROLLED GROUP OF CORPORATIONS" has the meaning set forth
in Code Section 1563.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 4
below.
"DRAFT CLOSING DATE BALANCE SHEET" has the meaning set forth
in Section 9(a) below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), (d) Employee Welfare Benefit Plan or (e)
bonus, incentive, stock purchase, stock ownership, stock option, stock
appreciation right, severance, salary continuation, termination, change of
control or other material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in
ERISA Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in
ERISA Section 3(1).
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean
all federal, state, local and foreign statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
Hazardous Materials (which, for purposes of this Agreement, shall xxxxx any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation), each as
amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" means (i) any corporation included with
Target in a controlled group of corporations within the meaning of Section
414(b) of the Code; (ii) any trade or business (whether or not incorporated)
which is under common control with Target within the meaning of Section 414(c)
of the Code; (iii) any member of an affiliated service group of which
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Target is a member within the meaning of Section 414(m) of the Code; or (iv)
any other person or entity treated as an affiliate of Target under Section
414(o) of the Code.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"FINANCIAL STATEMENT" has the meaning set forth in Section
4(h) below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"XXXX-XXXXX-XXXXXX ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8(d)
below.
"INDEMNIFYING PARTY" has the meaning set forth in Section
8(d) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"KNOWLEDGE" means that which is known by a person and that of
which a reasonable person should have knowledge as a result of the performance
of such person's duties. In the case of North American or Target, "Knowledge"
means the "Knowledge" of its respective directors and executive officers.
"LIABILITY" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"MATERIAL ADVERSE EFFECT" means, individually or together
with other adverse effects, any material adverse effect on the assets,
liabilities, results of operations, business
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condition (financial or otherwise) or prospects of Target or on Target's
ability to consummate the transactions contemplated hereby or the ability of
North American to operate the business of Target immediately after the Closing
in substantially the same manner as such business is conducted prior to
Closing.
"MOST RECENT BALANCE SHEET" means the balance sheet contained
within the Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth
in Section 4(h) below.
"MOST RECENT FISCAL PERIOD END" has the meaning set forth in
Section 4(h) below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in
Section 4(h) below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA
Section 3(37).
"NATIONAL SECURITIES EXCHANGE" shall have the meaning
ascribed to that term in the rules and regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
"NORTH AMERICAN" has the meaning set forth in the preface
above.
"NORTH AMERICAN CLASS A COMMON SHARES" means any share of the
Class A Common Stock, par value $.01 per share, of North American.
"NORTH AMERICAN CLASS B COMMON SHARES" means any share of the
Class B Common Stock, par value $.01 per share, of North American.
"NORTH AMERICAN COMMON STOCK" means any share of the common
stock, par value $.01 par share, of North American.
"NORTH AMERICAN SERIES A PREFERRED SHARES" means any share of
the Series A Convertible Preferred Stock, par value $.01 per share, of North
American.
"NORTH AMERICAN PREFERRED STOCK" means any share of the
preferred stock, par value $.01 per share, of North American.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"PERSON" means an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA
Section 406 and Code Section 4975.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section
4043.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act
of 1934, as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens that could not reasonably be expected to have
a Material Adverse Effect, (b) liens for Taxes not yet due and payable or for
Taxes that the taxpayer is contesting in good faith through appropriate
proceedings disclosed on Section 4(l) of the Disclosure Schedule, (c) purchase
money liens and liens securing rental payments under capital lease arrangements
disclosed in the Most Recent Financial Statements, and (d) other liens arising
in the Ordinary Course of Business and not incurred in connection with the
borrowing of money, so long as such liens could not reasonably be expected to
have a Material Adverse Effect.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement of
North American dated as of March 31, 1998.
"SUBSIDIARY" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"TARGET" has the meaning set forth in the preface above.
"TARGET SHARE" means any share of the Common Stock, no par
value, of Target.
"TARGET SHAREHOLDER" means any Person who or which holds any
Target Shares.
"TAX" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition
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thereto, whether disputed or not, and any obligations under any agreements or
arrangements with respect to any of the foregoing.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 8(d)
below.
"SHAREHOLDERS" has the meaning set forth in the preface
above.
2. PURCHASE AND SALE TRANSACTION.
(a) BASIC TRANSACTION. On and subject to the terms and
conditions of this Agreement, North American agrees to purchase from the
Shareholders, and the shareholders agree to sell to North American, all of
their respective Target Shares for the consideration specified below in this
Section 2.
(b) CONSIDERATION. No American agrees to deliver to the
Shareholders at Closing (i) cash in the amount of $11,691,400.00 payable by
wire transfer or other immediately available funds and (ii) 2,433,720 North
American Class B Common Shares (collectively, the "Consideration"). The
Consideration shall be subject to adjustment pursuant to the provisions of
Section 9 hereof. The Consideration shall be allocated among the Shareholders
in proportion to their respective holdings of Target Shares as set forth in
Section 4(c) to the Disclosure Schedule.
(c) THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of Holland &
Knight LLP in Ft. Lauderdale, Florida, commencing at 9:00 a.m. local time on
June 30, 1998 or such other date, time and place as the Parties may mutually
determine (the "CLOSING DATE").
(d) DELIVERIES AT CLOSING. At the Closing, (i) the
Shareholders will deliver to North American the various certificates,
instruments, and documents referred to in Section 7(a) below, (ii) North
American will deliver to the Shareholders the various certificates,
instruments, and documents referred to in Section 7(b) below, and (iii) the
shareholders will deliver to North American stock certificates representing all
of their Target Shares, endorsed in blank or accompanied by duly executed
assignment documents, and (iv) North American will deliver to the Shareholders
the Consideration specified in Section 2(b) above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each
Shareholder represents and warrants to North American that the statements
contained in this Section 3(a) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
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Agreement throughout this Section 3(a)), except as set forth on Section 3(a) of
the Disclosure Schedule (as hereinafter defined).
(i) AUTHORIZATION OF TRANSACTION. Such Shareholder
has full power and authority to execute and deliver this Agreement and
to perform his obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of such Shareholder, enforceable
in accordance with its terms and conditions except to the extent
enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency or moratorium laws, or other laws affecting
the enforcement of creditors' rights or by the principles governing
the availability of equitable remedies. Such Shareholder need not give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency or any
other Person in order to consummate the transactions contemplated by
this Agreement.
(ii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which such Shareholder is subject or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which such Shareholder is
a party or by which he is bound or to which any of his assets is
subject.
(iii) BROKERS' FEES. Such Shareholder has, or prior
to Closing will have, paid any fees or commissions due from
Shareholders to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement. Such Shareholder agrees
that he will pay any additional amounts that may become due from him
or Target to any such broker, finder or agent in the future, including
as a result of any indemnification obligations.
(iv) INVESTMENT. Such Shareholder (A) understands
that, the North American Class B Common Shares that he will receive as
part of the Consideration have not been, and will not be, registered
under the Securities Act, or under any state securities laws, and are
being offered and sold in reliance upon federal and state exemptions
for transactions not involving any public offering, (B) is acquiring
such North American Class B Common Shares solely for his own account
for investment purposes, and not with a view to the distribution
thereof, (C) is a sophisticated investor with knowledge and experience
in business and financial matters, (D) has received certain
information concerning North American and has had the opportunity to
obtain additional information as desired in order to evaluate the
merits and the risks inherent in holding the North American Class B
Common Shares, (E) is able to bear the economic risk and lack of
liquidity inherent in holding the North American Class B Common
Shares, and (F) is an Accredited Investor for the reasons set forth on
Annex I.
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(v) TARGET SHARES. Such Shareholder holds of record
and owns beneficially the number of Target Shares set forth opposite
such Shareholder's name, in Section 4(c) of the Disclosure Schedule,
free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws),
Taxes, security interests liens or other encumbrances, options,
warrants, purchase rights, contracts, commitments, equities, claims,
and demands. Such Shareholder is not a party to any option, warrant,
purchase right, or other contract or commitment that could require
such Shareholder to sell, transfer, or otherwise dispose of any
capital stock of Target (other than this Agreement). Such Shareholder
is not a party to any voting trust, proxy, shareholders agreement, or
other agreement or understanding with respect to the voting of any
capital stock of Target.
(vi) DISCLOSURE. Neither this Agreement nor any of
the exhibits, attachments, written statements, documents, certificates
or other items prepared for or supplied to North American by such
Shareholder with respect to the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make each statement contained
herein or therein not misleading. There is no fact which such
Shareholder has not disclosed to North American herein and of which
the Shareholders is aware which could be anticipated to have a
Material Adverse Effect.
(b) REPRESENTATIONS AND WARRANTIES OF NORTH AMERICAN. North
American represents and warrants to the Shareholders that the statements
contained in this Section 3(b) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3(b)), except as set forth in the disclosure
schedule delivered by North American to the Shareholders on the date hereof
(the "North American Disclosure Schedule").
(i) ORGANIZATION OF THE NORTH AMERICAN. North
American is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Florida. Correct and
complete copies of the charter and bylaws of North American (as
amended to date) are included as part of the North American Disclosure
Schedule. The names and titles of each officer and director of North
American is set forth on the North American Disclosure Schedule.
(ii) CAPITALIZATION OF NORTH AMERICAN. The entire
authorized capital stock of North American consists of (i) 98,000,000
shares of North American Common Stock, par value $.01, including (i)
10,000,000 North American Class A Common Shares, 20,000,000 North
American Class B Common Shares, and 68,000,000 Shares of undesignated
North American Common Stock and (ii) 2,000,000 shares of North
American Preferred Stock, par value $.01, including 100,000 designated
as North American Series A Preferred Shares. The issued and
outstanding capital stock of North American, consists of 1,946,330
North American Class A Shares, 5,011,800 North
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American Class B Shares and 100,000 North American Series A Preferred
Shares, held of record as set forth on the North American Disclosure
Schedule. All of the issued and outstanding North American Class A
Common Shares, North American Class B Common Shares, and North
American Series A Preferred Shares have been, duly authorized, validly
issued, fully paid, and nonassessable. Except as disclosed in the
North American Disclosure Schedule, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments
that could require North American to issue, sell, or otherwise cause
to become outstanding any of its capital stock. Except as disclosed in
the North American Disclosure Schedule, there are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to North American. Except as disclosed in
North American Disclosure Schedule, there are no voting trusts,
proxies or other agreements or understandings with respect to the
voting of the capital stock of North American.
(iii) AUTHORIZATION OF TRANSACTION. North American
has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of North American, enforceable in
accordance with its terms and conditions except to the extent
enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency or moratorium laws, or other laws affecting
the enforcement of creditors' rights or by the principles governing
the availability of equitable remedies. North American need not give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency or any
other Person in order to consummate the transactions contemplated by
this Agreement.
(iv) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which either North American is subject or any provision of their
respective charter or bylaws or (B) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which North American is a party or
by which North American is bound or to which any of its assets is
subject.
(v) BROKERS' FEES. North American has, or prior to
the Closing will have, paid any fees or commissions due from North
American to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement. North American agrees
that they will pay any additional amounts that may become due from
North American to any such broker, finder or agent in the future,
including as a result of any indemnification obligations.
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(vi) DISCLOSURE. Neither this Agreement nor any of
the exhibits, attachments, written statements, documents, certificates
or other items prepared for or supplied to the Shareholders by North
American with respect to the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state any material
fact necessary in order to make each statement contained herein or
therein not misleading. There is no fact which North American has not
disclosed to the Shareholders herein and of which North American or
any of the its officers or directors is aware and which could be
anticipated to have a Material Adverse Effect on the operations of
North American after the Closing.
4. REPRESENTATIONS AND WARRANTIES CONCERNING TARGET. The Shareholders
jointly and severally represent and warrant to North American that the
statements contained in this Section 4 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date
of this Agreement throughout this Section 4), except as set forth in the
Disclosure Schedule delivered by the Shareholders to North American on the date
hereof and initialed by the Parties (the "DISCLOSURE SCHEDULE"). The Disclosure
Schedule shall be effective to modify only those representations and warranties
to which the Disclosure Schedule makes explicit reference. The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Target
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation. Target is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Target has full corporate power and
authority and all licenses, permits, and authorizations necessary to carry on
the businesses in which it is engaged and in which it presently proposes to
engage and to own and use the properties owned and used by it. Section 4(a) of
the Disclosure Schedule lists the directors and officers of Target. Correct and
complete copies of the charter and bylaws of Target (as amended to date) are
included as part of Section 4(a) of the Disclosure Schedule. The minute books
(containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors), the stock certificate
books, and the stock record books of Target are correct and complete and an
true and correct copy thereof has been provided to North American. Target is
not in default under or in violation of any provision of its charter or bylaws.
(b) [INTENTIONALLY LEFT BLANK]
(c) CAPITALIZATION. The entire authorized capital stock of
Target consists of 40,000 Target Shares, of which 27,356 Target Shares are
issued and outstanding and no Target Shares are held in treasury. All of the
issued and outstanding Target Shares have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record and owned
beneficially by the Shareholders in the amounts set forth in Section 4(c) of
the Disclosure Schedule. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, preemptive rights or other contracts or
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commitments that could require Target to issue, sell, or otherwise cause to
become outstanding any of its capital stock or securities convertible or
exchangeable for, or any options, warranties, or rights to purchase, any of
such capital stock. There are no outstanding obligations of Target to
repurchase, redeem or otherwise acquire any capital stock or any securities
convertible into or exchangeable for such capital stock or any options,
warrants or rights to purchase such capital stock or securities. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Target. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting, transfer, dividend or other rights (such as registration rights under
the Securities Act) of the capital stock of Target.
(d) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which Target is subject or any
provision of the charter or bylaws of Target or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Target is a party or by which it is bound or to which any
of its assets is subject (or result in the imposition of any Security Interest
upon any of its assets). Target need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any Person,
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(e) BROKERS' FEES. Target has, or prior to Closing will have,
paid any fees or commissions due from Target to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement. Shareholders
agrees that he will pay any additional amounts that may become due from Target
to any such broker, finder or agent in the future, including as a result of any
indemnification obligations.
(f) TITLE TO ASSETS. Target has good and marketable title to,
or a valid leasehold interest in, the properties and assets used by it, located
on its premises, or shown on the Most Recent Balance Sheet or acquired after
the date thereof, free and clear of all Security Interests (other than the
Security Interests disclosed on the face of the Most Recent Balance Sheet),
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet, none of which disposals are
expected to have a Material Adverse Effect. The consummation of the
transactions contemplated by this Agreement will not affect Target's good and
marketable title to, or valid leasehold interest in, the properties and assets
described in the preceding sentence.
(g) SUBSIDIARIES. Except as set forth in Section (g) of the
Disclosure Schedule, Target does not currently have, and has never had, any
Subsidiaries and does not own any securities of any other Person.
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(h) FINANCIAL STATEMENTS. Attached hereto as EXHIBIT A are
the following financial statements (collectively the "FINANCIAL STATEMENTS"):
(i) reviewed consolidated balance sheets and statements of income, including
the independent accountant's report thereon as of and for the fiscal year ended
September 30,1997 (the "MOST RECENT FISCAL YEAR END") for Target; (ii) reviewed
consolidated balance sheets and statements of income, including the independent
accountant's report thereon as of and for the fiscal years ended September 30,
1994 September 30, 1995 and September 30, 1996 and (iii) unaudited consolidated
balance sheets and statements of income, (the "MOST RECENT FINANCIAL
STATEMENTS") as of and for the period from October 1, 1997, through May 31,
1998 for Target. The Financial Statements (including the notes thereto) have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, present fairly the financial condition of Target
as of such dates and the results of operations of Target for such periods, are
correct and complete, and are consistent with the books and records of Target
(which books and records are correct and complete).
(i) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since
the Most Recent Fiscal Year End and except as disclosed in the Disclosure
Schedule, there has not occurred any Material Adverse Effect. Without limiting
the generality of the foregoing, since that date:
(i) Target has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) Target has not entered into any agreements,
contracts, leases, or licenses either involving more than $25,000 in
the aggregate, having a term greater than 12 months or outside the
Ordinary Course of Business;
(iii) no party (including any of Target) has
accelerated, terminated, modified, or cancelled any agreements,
contracts, leases, or licenses involving more than $25,000 in the
aggregate to which Target is a party or by which it is bound;
(iv) Target has not imposed or allowed to be imposed
any Security Interest upon any of its assets, tangible or intangible;
(v) Target has not made any capital expenditures
involving more than $25,000 in the aggregate or outside the Ordinary
Course of Business;
(vi) Target has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any
other Person;
(vii) Target has not issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation
involving more than $25,000 in the aggregate;
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(viii) Target has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) Target has not cancelled, compromised, waived,
or released any right or claim either involving more than $25,000 in
the aggregate and outside the Ordinary Course of Business;
(x) Target has not granted any license or sublicense
of any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in
the charter or bylaws of any of Target;
(xii) Target has not issued, sold, or otherwise
disposed of any of its capital stock or securities convertible into or
exchangeable for such stock, or granted any options, warrants, or
other rights to purchase or obtain any of such capital stock or
securities;
(xiii) Target has not declared, set aside, or paid
any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its capital stock or other securities;
(xiv) Target has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its
property involving more than $25,000 in the aggregate;
(xv) Target has not made any loan to, or entered
into any other transaction with, any of its directors, officers, and
employees or their "Associates" (as defined in Rule 12b-2 under the
Exchange Act);
(xvi) Target has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvii) Target has not granted any increase in any
compensation of any of its directors, officers, or other employees;
(xviii) Target has not adopted, amended, modified,
or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with
respect to any other Employee Benefit Plan);
(xix) Target has not made any other change in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;
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(xx) Target has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course
of Business;
(xxi) there has not been any other material
occurrence, event, incident, action, failure to act, or transaction
outside the Ordinary Course of Business involving Target; and
(xxii) Target has not increased, or experienced any
change in assumptions underlying or method of calculating, any bad
debt, contingency, tax or other reserves or changed its accounting
practices, methods or assumptions (including changes in estimates or
valuation methods); or written down the value of any assets; and
(xxiii) Target has not committed to any of the
foregoing.
(j) UNDISCLOSED LIABILITIES. Except as disclosed in Section
4(j) of the Disclosure Schedule, Target does not have any Liability, except for
(i) Liabilities set forth on the face of the Most Recent Balance Sheet (rather
than in any notes thereto) and (ii) Liabilities which have arisen after the
Most Recent Fiscal Year End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law and none of which could reasonably be expected to have a Material Adverse
Effect).
(k) LEGAL COMPLIANCE. Target and its predecessors and
Affiliates has complied, in all material respects, with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
(l) TAX MATTERS.
(i) Target has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in
all respects. All Taxes owed by Target (whether or not shown on any
Tax Return) have been paid or are fully and adequately accrued and
adequately disclosed on the Most Recent Balance Sheet. Target is not
currently the beneficiary of any extension of time within which to
file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where Target does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of Target that arose in connection with
any failure (or alleged failure) to pay any Tax.
(ii) Target has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder,
or other third party.
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(iii) Neither Shareholders nor Target has Knowledge
that any authority expects to assess any additional Taxes for any
period for which Tax Returns have been filed. There is no action, suit
or proceeding, investigation, dispute or claim now pending or
threatened concerning any Tax Liability of Target or proposed
adjustment to the taxable income of Target either (A) claimed or
raised by any authority in writing or (B) as to which any of the
Shareholders and Target has Knowledge based upon personal contact with
any agent of such authority. Section 4(l) of the Disclosure Schedule
contains a summary of all Tax Returns filed with respect to Target for
the last three completed tax years, indicates those Tax Returns that
have been audited, and indicates those Tax Returns that currently are
the subject of audit. The Shareholders have made available to North
American correct and complete copies of all Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to
by Target since January 1, 1994.
(iv) Target has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(v) Target has not filed a consent under Code
Section 341(f) concerning collapsible corporations. Target has not
made any payments, is not obligated to make any payments, or is not a
party to any agreement that under certain circumstances could obligate
it to make any payments that will not be deductible under Code Section
280G or that would give rise to any obligation to indemnify any Person
for any excise tax payable pursuant to Code Section 4999. The Target
has not been a United States real property holding corporation within
the meaning of Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii). Target has disclosed on
its federal income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income Tax within
the meaning of Code Section 6662. Neither Target nor any predecessor
or affiliate thereof is a party to any Tax allocation, sharing,
indemnification or similar agreement. Target (A) has not been a member
of an Affiliated Group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Target) and (B)
does not have any Liability for the Taxes of any Person (other than
any of Target and its Subsidiaries) under Reg. Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise. No indebtedness of
Target consists of "corporate acquisition indebtedness" within the
meaning of Code Section 279.
(vi) Section 4(l) of the Disclosure Schedule sets
forth as of the most recent practicable date the basis for Federal
income tax purposes of Target in its assets.
(vii) The unpaid Taxes of Target (A) did not, as of
the Most Recent Fiscal Period End, exceed the reserve for Tax
Liability set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) and (B) do not, and will not as of
the Closing Date, exceed that reserve as adjusted for the passage of
time through the Closing Date in accordance with the past custom and
practice of Target in filing its Tax Returns.
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(m) REAL PROPERTY. Target does not own any real property.
Section 4(m) of the Disclosure Schedule lists and describes briefly all real
property leased or subleased to Target. The Shareholders have delivered to
North American correct and complete copies of the leases and subleases listed
in Section 4(m) of the Disclosure Schedule (as amended to date). With respect
to each lease and sublease listed in Section 4(m) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid,
binding, enforceable, and in full force and effect;
(B) the lease or sublease will continue to
be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the
transactions contemplated hereby;
(C) no party to the lease or sublease is in
breach or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default
or permit termination, modification, or acceleration
thereunder;
(D) no party to the lease or sublease has
repudiated any provision thereof;
(E) there are no disputes, oral agreements,
or forbearance programs in effect as to the lease or
sublease;
(F) Target has not received a notice from
the lessor indicating that the lease will not be renewed at
the end of its current term for any additional terms provided
for in the lease;
(G) the term of the lease will continue for
a minimum of six months past the Closing Date;
(H) with respect to each sublease, the
representations and warranties set forth in subsections (A)
through (G) above are true and correct with respect to the
underlying lease;
(I) Target has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(J) all facilities leased or subleased
thereunder have received all approvals of governmental
authorities (including licenses and permits) required in
connection with the operation thereof and have been operated
and maintained in accordance with applicable laws, rules, and
regulations;
(K) all facilities leased or subleased
thereunder are supplied with utilities and other services
necessary for the operation of said facilities; and
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(L) the Shareholders are not aware of any
pending or threatened foreclosure or other enforcement
proceedings relating to the real property underlying the
leases or subleases set forth in Section 4(m) of the
Disclosure Schedule that could result in Target's loss of
possession of such real property.
(n) INTELLECTUAL PROPERTY.
(i) Target owns or has the right to use pursuant to
license, sublicense, agreement, or permission in writing all
Intellectual Property necessary for the operation of the businesses of
Target as presently conducted and as presently proposed to be
conducted. Each item of Intellectual Property owned or used by Target
immediately prior to the Closing hereunder will be owned or available
for use by Target on identical terms and conditions immediately
subsequent to the Closing hereunder. Target has taken all necessary
action to maintain and protect each item of Intellectual Property that
it owns or uses.
(ii) Target has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and none of the Shareholders and the
directors and officers (and employees with responsibility for
Intellectual Property matters) of Target has ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that
Target must license or refrain from using any Intellectual Property
rights of any third party). To the Knowledge of Shareholders and
Target, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of Target.
(iii) Section 4(n)(iii) of the Disclosure Schedule
identifies each patent or registration which has been issued to Target
with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which
Target has made with respect to any of its Intellectual Property, and
identifies each license, agreement, or other permission which Target
has granted to any third party with respect to any of its Intellectual
Property (together with any exceptions). The Shareholders have
delivered to North American correct and complete copies of all such
patents, registrations, applications, licenses, agreements, and
permissions (as amended to date) and have made available to North
American correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of
each such item. Section 4(n)(iii) of the Disclosure Schedule also
identifies each trade name or unregistered trademark used by Target in
connection with any of its businesses. With respect to each item of
Intellectual Property required to be identified in Section 4(n)(iii)
of the Disclosure Schedule:
(A) Target possesses all right, title, and
interest in and to the item, free and clear of any Security
Interest, license, or other restriction;
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(B) the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) Target has never agreed to indemnify
any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Section 4(n)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that any third party
owns and that Target uses pursuant to license, sublicense, agreement,
or permission. The Shareholders have delivered to North American
correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each
item of Intellectual Property required to be identified in Section
4(n)(iv) of the Disclosure Schedule:
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby;
(C) no party to the license, sublicense,
agreement, or permission is in breach or default, and no
event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any provision
thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A)
through (D) above are true and correct with respect to the
underlying license;
(F) the underlying item of Intellectual
Property is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual
Property; and
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(H) Target has never granted any sublicense
or similar right with respect to the license, sublicense,
agreement, or permission.
(v) To the Knowledge of Shareholders and Target,
Target will not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of
third parties as a result of the continued operation of its businesses
as presently conducted and as presently proposed to be conducted.
(vi) None of the Shareholders and Target has any
Knowledge of any new products, inventions, procedures, or methods of
manufacturing or processing that any competitors or other third
parties have developed which reasonably could be expected to supersede
or make obsolete any product or process of any of Target.
(o) TANGIBLE ASSETS. Target owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of
its business as presently conducted and as presently proposed to be conducted.
Each such tangible asset has been maintained in accordance with normal industry
practice, is in substantially the same operating condition and repair (subject
to normal wear and tear) as the condition and repair on the date of North
American's appraisal thereof, and is suitable for the purposes for which it
presently is used and presently is proposed to be used. Section 4(o) of the
Disclosure Schedule lists all tangible assets owned by Target.
(p) INVENTORY. The inventory of Target shown on the Most
Recent Balance Sheet consists of raw materials and supplies, manufactured and
purchased parts, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or manufactured,
and none of which is slow-moving, obsolete, damaged, or defective, subject only
to the reserve for inventory writedown set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice
of the Target.
(q) CONTRACTS. Section 4(q) of the Disclosure Schedule lists
all the contracts and other agreements to which Target is a party. The
Shareholders have delivered to North American a correct and complete copy of
each written agreement listed in Section 4(q) of the Disclosure Schedule (as
amended to date). With respect to each such agreement: (A) the agreement is
legal, valid, binding, enforceable, and in full force and effect; (B) the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
agreement; and (D) no party has repudiated any provision of the agreement.
Section 4(q) of the Disclosure Schedule lists each currently outstanding bid or
proposal for business submitted by Target in excess of $1,000,000.
(r) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of Target are reflected properly on the Most Recent Balance Sheet in
accordance with GAAP, are
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valid receivables subject to no setoffs or counterclaims, are current and
collectible, and, will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of Target.
(s) POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of Target.
(t) INSURANCE. Section 4(t) of the Disclosure Schedule
includes a true, correct and complete list of all policies of insurance
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which Target is a
party, a named insured, or otherwise the beneficiary of coverage. Genuine and
complete copies of each of the insurance policies listed in Section 4(t) of the
Disclosure Schedule have been provided to North American. With respect to each
such insurance policy: (A) the policy is legal, valid, binding, enforceable,
and in full force and effect; (B) the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) neither Target
nor any other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination, modification, or acceleration, under
the policy; (D) neither Target, any ERISA Affiliate nor North American shall be
subject to a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability and (E) to Shareholders' or Target's Knowledge,
no party to the policy has repudiated any provision thereof. Target has been
fully covered at all times during the past 5 years by insurance in scope and
amount customary and reasonable for the businesses in which it has engaged
during the aforementioned period. Section 4(t) of the Disclosure Schedule
describes any self-insurance arrangements affecting Target.
(u) LITIGATION. Section 4(u) of the Disclosure Schedule sets
forth each instance in which Target (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party, or
to the Knowledge of Shareholders or Target, is threatened to be made a party to
any claim, action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. Except as set
forth in Section 4(u) of the Disclosure Schedule, there is no other pending, or
to the knowledge of Shareholders or Target, threatened claim, arbitration
proceeding, action, suit, investigation or other proceeding against or
involving Target or any property or rights of Target or any officer or director
or Target. None of the actions, suits, proceedings, hearings, and
investigations set forth in Section 4(u) of the Disclosure Schedule could
result in any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of Target. Neither the
Shareholders nor the directors and officers (and employees with responsibility
for litigation matters) of Target has any reason to believe that any such
action, suit, proceeding, hearing, or investigation may be brought or
threatened against Target.
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(v) COMMITMENTS AND WARRANTIES. All services provided by the
Target have been performed in conformity with all applicable contractual
commitments (written or oral) and all express and implied warranties (written
or oral), and Target has no Liability and, to the Knowledge of the Shareholders
and Target, there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) in connection with any such services.
Section 4(v) of the Disclosure Schedule includes copies of the standard forms
of agreement entered into between Target and its customers. Target has not
entered into any written or oral agreements with any of its customers that
include guaranties, warranties, or indemnity provisions other than those
included in the agreements included as part of Section 4(v) of the Disclosure
Schedule.
Neither Target nor the Shareholders has received notice (written or
oral) from any of its customers stating that the customer intends to reduce the
volume of business that it currently conducts with Target or to cease doing
business with Target.
(w) LIABILITY FOR SERVICES PERFORMED. Target has no Liability
(and, to Shareholders' knowledge, there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability) arising out of any
injury to individuals or property as a result of or in connection with any
services provided by Target.
(x) EMPLOYEES. To the Knowledge of the Shareholders or
Target, no executive, key employee, or group of employees has any plans to
terminate employment with Target. Target is not currently, nor at any prior
time has been, a party to or bound by any collective bargaining agreement, nor
has Target experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. Target has not committed
any unfair labor practice. Other than as set forth in Section 4(x) of the
Disclosure Schedule, neither the Shareholders nor Target have any Knowledge of
any organizational effort presently being made or threatened by or on behalf of
any labor union with respect to employees of Target.
(y) EMPLOYEE BENEFITS.
(i) Section 4(y) of the Disclosure Schedule lists
each Employee Benefit Plan that Target or any ERISA Affiliate
maintains, contributes to, or is required to contribute to or under
which Target or any ERISA Affiliate has any liability.
(A) Each such Employee Benefit Plan (and
each related trust, insurance contract, or fund) complies in
form and in operation in all respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(B) All required reports and disclosures
(including Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1's, and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I
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of ERISA and of Code Section 4980B have been met with respect
to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(C) All contributions (including all
employer contributions and employee salary reduction
contributions) which are due have been paid to each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each
such Employee Pension Benefit Plan or accrued in accordance
with the past custom and practice of Target and in accordance
with GAAP. All premiums or other payments for all periods
ending on or before the Closing Date have been paid with
respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which
is an Employee Pension Benefit Plan now meets and at all
times since inception have met the requirements of a
"qualified plan" under Code Section 401(a) and has received,
within the last two years, a favorable determination letter
from the Internal Revenue Service.
(E) As of the Closing Date, the market
value of assets under each such Employee Benefit Plan which
is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) will equal or exceed the present value of
all vested and nonvested Liabilities thereunder determined in
accordance with PBGC methods, factors, and assumptions
applicable to an Employee Pension Benefit Plan terminating on
such date.
(F) The Shareholders have delivered to
North American correct and complete copies of the plan
documents and summary plan descriptions including all
amendments thereto, the most recent determination letter
received from the Internal Revenue Service, the three most
recent Form 5500 Annual Reports (including all schedules
thereto), the three most recent annual premium payment forms
filed with the PBGC, and all related trust agreements,
insurance contracts, and other funding agreements which
implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that
Target or any ERISA Affiliate maintains, contributes to, or is
required to contribute to or under which Target or any ERISA Affiliate
has any liability:
(A) No such Employee Benefit Plan which is
an Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or partially
terminated or been the subject of a Reportable Event as to
which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been
instituted or threatened.
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(B) There have been no Prohibited
Transactions with respect to any such Employee Benefit Plan.
No Fiduciary has any Liability for breach of fiduciary duty
or any other failure to act or comply in connection with the
administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing,
or investigation with respect to any such Employee Benefit
Plan (other than routine claims for benefits) is pending or
threatened. Neither the Shareholders nor Target has any
Knowledge of any Basis for any such action, suit, proceeding,
hearing, or investigation.
(C) Neither Target nor any ERISA Affiliate
has incurred, and none of the Shareholders and the directors
and officers (and employees with responsibility for employee
benefits matters) of Target has any reason to expect that
Target or any ERISA Affiliate will incur, any Liability to
the PBGC (other than PBGC premium payments) or otherwise
under Title IV of ERISA (including any withdrawal Liability)
or under the Code with respect to any such Employee Benefit
Plan which is an Employee Pension Benefit Plan.
(iii) Neither Target nor any ERISA Affiliate
contributes to, ever has contributed to, or ever has been required to
contribute to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iv) Neither Target nor any ERISA Affiliate
maintains or contributes to, or has ever been required to contribute
to any Employee Welfare Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their dependents
(other than in accordance with Code Section 4980B).
(z) GUARANTIES. Target is not a guarantor or otherwise is
liable for any Liability or obligation (including indebtedness) of any other
Person.
(aa) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) Target and its predecessors and Affiliates have
complied and are in compliance with all Environmental, Health, and
Safety Requirements.
(ii) Without limiting the generality of the
foregoing, Target and its Affiliates have obtained and complied with,
and are in compliance with, all permits, licenses and other
authorizations that are required pursuant to Environmental, Health,
and Safety Requirements for the occupation of its facilities and the
operation of its business; a list of all such permits, licenses and
other authorizations is set forth on the attached "ENVIRONMENTAL AND
SAFETY PERMITS SCHEDULE."
(iii) Neither Target nor its predecessors or
Affiliates has received any written or oral notice, report or other
information regarding any actual or alleged
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violation of Environmental, Health, and Safety Requirements, or any
liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to any of them or its
facilities arising under Environmental, Health, and Safety
Requirements.
(iv) None of the following exists at any property or
facility owned or operated by Target: (1) underground storage tanks,
(2) asbestos-containing material in any form or condition, (3)
materials or equipment containing polychlorinated biphenyls, or (4)
landfills, surface impoundments, or disposal areas.
(v) None of Target or its predecessors or Affiliates
has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or
operated any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or
would give rise to liabilities, including any liability for response
costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as
amended ("SWDA") or any other Environmental, Health, and Safety
Requirements.
(vi) Neither this Agreement nor the consummation of
the transaction that is the subject of this Agreement will result in
any obligations for site investigation or cleanup, or notification to
or consent of government agencies or third parties, pursuant to any of
the so-called "transaction-triggered" or "responsible property
transfer" Environmental, Health, and Safety Requirements.
(vii) Neither Target nor its predecessors or
Affiliates has, either expressly or by operation of law, assumed or
undertaken any liability, including without limitation any obligation
for corrective or remedial action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(viii) No facts, events or conditions relating to
the past or present facilities, properties or operations of Target or
any of its predecessors or Affiliates will prevent, hinder or limit
continued compliance with Environmental, Health, and Safety
Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental, Health, and Safety Requirements
(whether on-site or off-site), or give rise to any other liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise)
pursuant to Environmental, Health, and Safety Requirements, including
without limitation any relating to onsite or offsite releases or
threatened releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources damage.
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(ab) CERTAIN BUSINESS RELATIONSHIPS WITH TARGET. Neither the
Shareholders, their respective Affiliates, any director or employee of Target,
or any relatives of the Shareholders, or any person living in the same
residence as such persons, has been involved in any business arrangement or
relationship with Target within the past 12 months, and neither the
Shareholders nor their respective Affiliates nor any of such other persons own
leases, licenses, or otherwise has any interest in any asset, tangible or
intangible, which is used in the business of Target or any contract, lease or
commitment to which Target is a party. Target is not indebted to any officer,
director or employee of Target for any liability or obligation. No officer,
director or employee of Target is indebted to Target for any liability or
obligation.
(ac) CUSTOMERS AND SUPPLIERS. No purchase order or commitment
of Target is in excess of normal requirements, nor are prices provided therein
in excess of current market prices for the products or services to be provided
thereunder. No material supplier of Target has advised Target in writing within
the past year that it will stop, or decrease the rate of, supplying materials,
products or services to Target and no material customer of Target has advised
Target in writing within the past year that it will stop, or decrease the rate
of buying materials, products or services from Target. Section 4(aa) of the
Disclosure Schedule sets forth a list of (a) each customer that accounted for
more that 5% of the consolidated revenues of Target during the last full fiscal
year or the interim period through the date of the Most Recent Financial
Statements and the amount of revenues accounted for by such customer during
each such period and (b) each supplier that is the sole supplier of any
significant product or component to Target. The consummation of the
transactions contemplate hereby will not have a material adverse effect on
Target's relationship with any customer or supplier listed in Section 4(aa) of
the Disclosure Schedule.
(ad) DISCLOSURE. Neither this Agreement nor any of the
exhibits, attachments, written statements, documents, certificates or other
items prepared for or supplied to North American by or on behalf of Target or
the Shareholders with respect to the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make each statement contained herein or therein not
misleading. There is no fact which Target or the Shareholders have not
disclosed to North American herein and of which the Shareholders, Target, or
any of Target's officers or directors is aware and which could be anticipated
to have a Material Adverse Effect.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his or its best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions
set forth in Section 7 below).
(b) NOTICES AND CONSENTS. The Shareholders will cause Target
to give any notices to third parties, and will cause Target to use its best
efforts to obtain any third party
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required in connection with the matters referred to in Section 4(d) above. Each
of the Parties will (and the Shareholders will cause Target to) give any
notices to, make any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 3(a)(ii),
Section 3(b)(v), and Section 4(d) above. Without limiting the generality of the
foregoing, each of the Parties will file (and the Shareholders will cause
Target to file) any Notification and Report Forms and related material that he
or it may be required to file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the
Xxxx-Xxxxx-Xxxxxx Act, will use his or its best efforts to obtain (and the
Shareholders will cause Target to use its best efforts to obtain) an early
termination of the applicable waiting period, and will make (and the
Shareholders will cause Target to make) any further filings pursuant thereto
that may be necessary, proper, or advisable in connection therewith.
(c) OPERATION OF BUSINESS. The Shareholders will not
cause or permit Target to engage in any practice, take any action, or enter
into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, the Shareholders will not cause or
permit Target to (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or
otherwise acquire any of its capital stock or (ii) otherwise engage in any
practice, take any action, or enter into any transaction of the sort described
in Section 4(i) above.
(d) PRESERVATION OF BUSINESS.
(i) IN GENERAL. The Shareholders will cause Target
to keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.
(ii) SALE OF CERTAIN ASSETS. Prior to the Closing,
the Shareholders have caused Target to sell the assets listed on Section
5(d)(ii) of the Disclosure Schedule to WMC Properties, L.L.C. for a total cash
consideration of $672,893.75, which amount is approximately equal to the sum of
the fair market values of each of such assets.
(e) FULL ACCESS. The Shareholders will permit, and will
cause Target to permit, representatives of North American to have full access
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of Target, to all premises, properties, personnel, books,
records (including Tax records), contracts, and documents of or pertaining to
Target. At the request of North American, Shareholders will permit, and will
cause Target to permit, North American's lenders, and their respective counsel,
to have the same access as permitted to North American in accordance with the
immediately preceding sentence.
(f) NOTICE OF DEVELOPMENTS. The Shareholders will give prompt
written notice to North American of any breach of any of the representations
and warranties in Section 4 above. Each Party will give prompt written notice
to the others of any breach of any of his or its own representations and
warranties in Section 3 above. No disclosure by any Party pursuant to this
Section 5(f),
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however, shall be deemed to amend or supplement the North American Disclosure
Schedule or the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. The Shareholders will not (and the
Shareholders will not cause or permit Target to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of Target (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate
in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing. The
Shareholders will notify North American immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
(h) NO TERMINATION OF SHAREHOLDERS'S OBLIGATION BY SUBSEQUENT
INCAPACITY. Shareholders specifically agrees that his obligations hereunder,
including, without limitation, the obligations pursuant to Section 8 hereof,
shall not be eliminated by his or her death or incapacity.
(i) SATISFACTION OF SHAREHOLDER LOANS. Prior to the Closing,
the amount due by Target to its former shareholders, in the approximate amount
of $706,500, was paid in full.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect
to the period following the Closing.
(a) GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Section 8 below). The Shareholders acknowledge and agree that
from and after the Closing North American will be entitled to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort relating to Target.
(b) LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Target, each of the other Parties will cooperate
with him or it and his or its counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 8 below).
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(c) TRANSITION. The Shareholders will not take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of Target from
maintaining the same business relationships with Target after the Closing as it
maintained with Target prior to the Closing. The Shareholders will refer all
customer inquiries relating to the businesses of Target to North American from
and after the Closing.
(d) INDEPENDENT ACCOUNTANTS. After the Closing, Shareholders
shall (i) use reasonable efforts to cause Target's past and present independent
auditors and accounting personnel to make available to North American and its
representatives all financial information, including the right to examine all
working papers pertaining to audits or reviews previously or hereafter made by
such auditors, and (ii) provide such cooperation as North American and its
representatives may request in connection with any audit or review of Target
that North American may direct its representatives to make. Without limiting
the generality of the foregoing, Shareholders agrees that they will cooperate
with, and cause Target's past and present independent auditors, accounting
personnel and other necessary persons to cooperate with North American in the
preparation of any documents filed by North American with the U.S. Securities
and Exchange Commission in connection with an offering of securities, to the
extent information about Target is required therein.
(e) TAX MATTERS. The Shareholders covenant and agree not to
take any action, or fail to take any action, with respect to Taxes, that would
have an adverse effect on North American on or after the Closing Date,
including, without limitation, amending or otherwise supplementing any Tax
Return or report of Target with respect to any period prior to the Closing Date
without the consent of North American. If any taxing authority conducts any
audit or investigation relating to Target prior to the Closing Date, North
American may, in its sole election, have the right to supervise such audit or
investigation and provide any response required in connection therewith.
(f) STOCK OPTIONS. North American has adopted a stock
incentive plan (the "Stock Incentive Plan") pursuant to which stock options and
other forms of stock-based compensation may be awarded to the officers,
directors and employees of North American and its subsidiaries. The key
employees of Target shall be eligible to receive awards under the Stock
Incentive Plan of options to acquire 50,000 shares of North American stock.
Within 60 days of the Closing, the officers of the Target shall recommend to
the Stock Option Committee under the Stock Incentive Plan the terms, conditions
and amounts of awards to be granted and the identity of the key employees of
Target to receive such awards, however, all such awards, and the terms and
conditions thereof, shall be finally determined by the Stock Option Committee.
(g) AUDITED FINANCIAL STATEMENTS. Shareholders shall cause
Target's auditors to cooperate with North American's auditors in the
preparation of audited consolidated balance sheets and statements of income,
changes in stockholders' equity, and cash flow including the audit report
thereon as of and for the 12-month period ended December 31, 1997 for the
Target.
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All costs associated with the preparation and audit of Target's December 31,
1997 financial statements shall be paid by North American.
(h) LIFE INSURANCE. Within 30 days after the Closing, Target
will cancel all life insurance policies owned by Target on the lives of the
Shareholders listed on Exhibit G.
(i) HEALTH INSURANCE. For the period ending December 31,
1998, Target will continue to pay the health insurance costs of those
individuals listed on Section 4(y) of the Disclosure Schedule, at the same
levels as are in effect on the date hereof.
(j) PRO FORMA INCOME STATEMENTS. Within ten (10) days of the
Closing Date, the Shareholders shall deliver to North American, projected,
pro-forma income statements for Target for the calendar years 1998, 1999 and
2000.
(k) ADJUSTMENT OF SHAREHOLDERS' EQUITY. On or before July 31,
1998, Xxxxxxx Childress, as Chief Financial Officer of Target, shall be
entitled to adjust the accruals to be used in preparing the Closing Date
Balance Sheet in order to insure that the Shareholders' Equity on the Closing
Date Balance Sheet not exceed $7,953,333. It is anticipated that there will be
post-closing bonuses paid to certain present and former employees of Target to
insure that the Shareholders' Equity on the Closing Date Balance Sheet not
exceed $7,953,333. Such bonuses shall be paid at a time mutually agreed to by
Xxxxxxx Childress and North American.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF NORTH AMERICAN. The
obligation of North American to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in
Section 3(a) and Section 4 above shall be true and correct in all
material respects at and as of the Closing Date and there shall not
have occurred any Material Adverse Effect;
(ii) the Shareholders and Target shall have
performed and complied with all of his covenants hereunder in all
material respects through the Closing;
(iii) Target shall have procured all of the third
party consents specified in Section 5(b) above;
(iv) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction, or
before any arbitrator, wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of
the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect
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adversely the right of Target to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(v) the Shareholders shall have delivered to North
American a certificate, to the effect that each of the conditions
specified above in Section 7(a)(i)-(iv) is satisfied in all respects;
(vi) all applicable waiting periods (and any
extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired
or otherwise been terminated and the Parties shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(a)(ii), Section
3(b)(v), and Section 4(d) above;
(vii) North American shall have received from
counsel to the Shareholders an opinion in form and substance as set
forth in EXHIBIT B attached hereto, addressed to North American and
dated as of the Closing Date;
(viii) all actions to be taken by the Shareholders
in connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to North American.
(ix) at least five business days prior to the
Closing, North American shall have received a balance sheet prepared
by Target, estimating the assets, liabilities and shareholders' equity
of Target as of the Closing Date (" Estimated Closing Balance Sheet").
The Estimated Closing Balance Sheet shall be prepared in accordance
with the method set forth in Section 9(a), including the valuation of
the assets listed on Schedule G, for the preparation of the Draft
Closing Balance Sheet and will reflect (A) Shareholders' Equity of at
least $7,953,333.00, (B) no notes payable or other debt and (C) cash
of not less than $750,000. North American shall not have objected to,
challenged or otherwise repudiated any of the amounts included in the
Estimated Closing Balance Sheet.
(x) North American shall have received an appraisal,
from an appraiser selected by North American, that states that the
fair market value of Target's tangible assets listed in Section 4(o)
of the Disclosure Schedule is at least equal to the book value of such
assets reflected in the Closing Balance Sheet.
(xi) Target and Shareholders shall have entered into
the real property lease agreements attached hereto as EXHIBIT C;
(xii) INTENTIONALLY LEFT BLANK;
(xiii) Target shall have delivered evidence of its
qualification to do business in each jurisdiction where it is so
qualified and a certificate of good standing
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issued by the Secretary of State of each such jurisdiction
demonstrating that Target is in good standing in that jurisdiction;
(xiv) Xxxxxxx Xxxxxx shall have entered into an
Employment Agreement with Target in the form attached hereto as
EXHIBIT D;
(xv) all actions to be taken by the Shareholders in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to North American.
North American may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SHAREHOLDERS. The
obligation of the Shareholders to consummate the transactions to be performed
by them in connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in
Section 3(b) above shall be true and correct in all material respects
at and as of the Closing Date;
(ii) North American shall have performed and
complied with all of its covenants hereunder in all material respects
through the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction, or before any arbitrator, wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) North American shall have delivered to the
Shareholders a certificate to the effect that each of the conditions
specified above in Section 7(b)(i)-(iii) is satisfied in all respects;
(v) all applicable waiting periods (and any
extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired
or otherwise been terminated and the Parties shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3(a)(ii), Section
3(b)(v), and Section 4(d) above;
(vi) Shareholders shall have received from counsel
to North American an opinion in form and substance as set forth in
EXHIBIT E attached hereto, addressed to the Shareholders, and dated as
of the Closing Date;
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(vii) [INTENTIONALLY LEFT BLANK];
(viii) This Agreement and the transactions
contemplated hereby shall have been approved by the Board of Directors
and Shareholders of North American;
(ix) all actions to be taken by North American in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Shareholders.
The Shareholders may waive any condition specified in this Section 7(b) if they
execute a writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties, covenants and agreements of the Parties contained
in this Agreement or in any certificate, document, instrument or agreement
delivered pursuant to this Agreement shall survive the Closing hereunder
(notwithstanding any due diligence investigations that may have been undertaken
by the damaged Party) and continue in full force and effect through all
statutes of limitations. Notwithstanding the foregoing, no claim for
indemnification in respect of a breach of a representation or warranty shall be
made after the date three years from and after the Closing Date, except that a
claim for indemnification in respect of a breach of the representations set
forth in Section 3(a), 3(b), 4(a)-(f), 4(l), 4(y) and 4(aa) may be made at
anytime following the Closing Date and are not subject to the foregoing three
year limitation.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF NORTH AMERICAN.
(i) In the event the Shareholders breach any of
their representations, warranties (or any of such representations or
warranties is untrue or inaccurate), covenants and agreements
contained herein or in any certificate, document, instrument or
agreement delivered pursuant to this Agreement, and, provided that the
Indemnified Buyers (as hereafter defined) make a written claim for
indemnification against the Shareholders pursuant to Section 12(g)
below within the applicable claim period provided in 8(a) above, then
the Shareholders agree to indemnify North American and each of its
officers, directors, employees, representatives and shareholders (the
"Indemnified Buyers") from and against the entirety of any Adverse
Consequences the Indemnified Buyers may suffer through and after the
date of the claim for indemnification (including any Adverse
Consequences the Indemnified Buyers may suffer after the end of any
applicable claim period) resulting from, arising out of, relating to,
in the nature of, or caused by the breach (or the alleged breach).
(ii) The Shareholders agrees to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences the Indemnified Buyers may suffer
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resulting from, arising out of, relating to, in the nature of, or
caused by any Liability of Target (x) for any Taxes of Target with
respect to any Tax year or portion thereof ending on or before the
Closing Date or for any Tax year beginning before and ending after the
Closing Date to the extent allocable (determined in a manner
consistent with Section 9(b)) to the portion of such period beginning
before and ending on the Closing Date), to the extent such Taxes are
not reflected on the Disclosure Schedule or in the reserve for Tax
Liability shown on the face of the Most Recent Balance Sheet, and (y)
for the unpaid Taxes of any Person (other than Target) under Reg.
Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(iii) Shareholders agree to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences they may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the activities of any entity which
at any time has been owned, in whole or in part, by Target and not
otherwise listed on the Disclosure Schedule.
(iv) Shareholders agree to indemnify the Indemnified
Buyers from and against the entirety of any Adverse Consequences they
may suffer resulting from, arising out of, relating to, in the nature
of, or caused by any Retained Liabilities (as hereafter defined). As
used herein, the term Retained Liabilities means all liabilities,
claims, commitments, demands or obligations of Target (or any
subsidiary of Target) existing or arising out of any facts or set of
operative facts existing on or prior to the Closing Date and not
listed on Most Recent Balance Sheet or the Disclosure Schedule.
(v) Shareholders agree to indemnify the Indemnified
Buyers from and against the entirety of any Adverse Consequences they
may suffer resulting from, or arising out of, relating to, or in the
nature of or caused by any claim by a stockholder or former
stockholder of Target or any other Person seeking to assert: (i)
ownership or rights to ownership of any shares of capital stock of
Target or any Subsidiary, (ii) any rights of a stockholder (other than
the right to receive the Consideration) including any option,
preemptive rights or rights to receive notice or to vote, (iii) any
rights under Target's charter, bylaws or other constituent documents,
or (iv) any claim that his shares of capital stock were to be
repurchased by Target.
(vi) Shareholders agrees to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences they may suffer resulting from, or arising out of,
relating to, or in the nature of or caused by any claim by a
dissenting shareholder that the Consideration is less than the fair
value of his shares.
(vii) Without limiting any other indemnification
provided in this Section 8, Shareholders agrees to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences they may suffer as a result of a taxing authority taking
the position that any former or current subcontractor of Target should
have been, at any time prior to the Closing Date, treated as an
employee of Target.
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(viii) Without limiting any other indemnification
provided in this Section 8, Shareholders agrees to indemnify the
Indemnified Buyers from and against the entirety of any Adverse
Consequences they may suffer as a result of Target's failure to be
duly authorized to conduct business and in good standing under the
laws of any jurisdiction where such qualification is or has been
required as of or prior to the Closing Date.
(ix) All of the indemnification obligations of
Shareholders under this Section 8 shall be joint and several.
(x) In addition to any other indemnification
obligation of Shareholders hereunder, WMC Properties, L.L.C. ("WMC")
agrees to indemnify and hold the Indemnified Buyers harmless from and
against the entirety of any Adverse Consequences the Indemnified
Buyers may suffer beginning on the Closing Date and thereafter
(including any Adverse Consequences the Indemnified Buyers may suffer
after the end of any applicable survival period) as a result of,
arising out of, or relating to the breach of any of the
representations or warranties contained in Section 4(aa) hereof with
respect to that certain real property located at 0000 Xxxxxxx 00,
X'Xxxxxx, Xxxxxxxx 00000. The inclusion of information relating to any
of the foregoing matters on the Disclosure Schedule shall not limit in
any manner the indemnification obligations of WMC pursuant to this
Section 8(b)(x).
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE
SHAREHOLDERS.
In the event North American breaches (or in the
event any third party alleges facts that, if true, would mean North
American had breached) any of their representations, warranties (or
any of such representations or warranties is untrue or inaccurate),
covenants and agreements contained herein or in any certificate,
document, instrument or agreement delivered pursuant to this
Agreement, and, provided that the Shareholders makes a written claim
for indemnification against North American pursuant to Section 12(g)
below within the applicable claim period provided in 8(a) above, then
North American agrees to indemnify the Shareholders and each of his
representatives (the "Indemnified Shareholders") from and against the
entirety of any Adverse Consequences the Indemnified Shareholders may
suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Indemnified Shareholders may
suffer after the end of any applicable claim period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach
(or the alleged breach).
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any party
entitled to indemnification hereunder (the "INDEMNIFIED PARTY") with
respect to any matter (a "THIRD PARTY CLAIM") which may give rise to a
claim for indemnification against any other Party (the "INDEMNIFYING
PARTY") under this Section 8, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing; PROVIDED,
HOWEVER, that no delay on the part
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of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is
materially prejudiced.
(ii) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party
so long as (A) the Indemnifying Party notifies the Indemnified Party
in writing within 15 days after the Indemnified Party has given notice
of the Third Party Claim that the Indemnifying Party will indemnify
the Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, (E) the named
parties to the Third Party Claim do not include both the Indemnified
Party and the Indemnifying Party, and (F) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with
Section 8(d)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense
of the Third Party Claim, (B) the Indemnified Party will not consent
to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the
Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (not to be
withheld unreasonably).
(iv) In the event any of the conditions in
Section 8(d)(ii) above is or becomes unsatisfied, however, (A) the
Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party
Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith), (B) the Indemnifying
Parties will reimburse the Indemnified Party promptly and periodically
for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (C) the Indemnifying
Parties will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 8.
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(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
take into account the time cost of money (using the Applicable Rate as the
discount rate) in determining Adverse Consequences for purposes of this Section
8. All indemnification payments under this Section 8 shall be deemed
adjustments to the Consideration.
(f) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy (including without limitation any
such remedy arising under Environmental, Health, and Safety Requirements) any
Party may have with respect to Target, or the transactions contemplated by this
Agreement. Each Shareholder hereby agrees that he will not make any claim for
indemnification against Target by reason of the fact that he was a director,
officer, employee, or agent of Target or was serving at the request of Target
as a partner, trustee, director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs, amounts
paid in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise) with
respect to any action, suit, proceeding, complaint, claim, or demand brought by
the Buyer against such Shareholder (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this Agreement, applicable law, or
otherwise).
9. POST-CLOSING ADJUSTMENT OF CONSIDERATION.
(a) Within 90 days after the Closing Date, North American
will prepare and deliver to Shareholders a draft balance sheet (the "DRAFT
CLOSING DATE BALANCE SHEET") for Target as of the close of business on the
Closing Date, which Draft Closing Date Balance Sheet will include a valuation
of the assets listed on Exhibit F hereto at the amounts set forth thereon,
which amounts the parties hereby agree is the fair market value thereof, and
will reflect the accruals provided for in Section 6(k) hereof. North American
will otherwise prepare the Draft Closing Date Balance Sheet in accordance with
GAAP applied on a basis consistent with the preparation of the Financial
Statements; except that the Draft Closing Date Balance Sheet shall include all
of the same types of adjustments as were made in connection with the
preparation of the Most Recent Fiscal Year End Financial Statements.
(b) If the Shareholders have any objections to the Draft
Closing Date Balance Sheet, they will deliver a detailed statement describing
their objections to North American within 30 days after receiving the Draft
Closing Date Balance Sheet. North American and the Shareholders will use
reasonable efforts to resolve any such objections themselves. If the Parties do
not obtain a final resolution within 30 days after North American has received
the statement of objections, however, North American and Shareholders will
select an accounting firm mutually acceptable to them to resolve any remaining
objections. If North American and the Shareholders are unable to agree on the
choice of an accounting firm, they will select a nationally-recognized
accounting firm by lot (after excluding their respective regular outside
accounting firms). The determination of any accounting firm so selected will be
set forth in writing and will be conclusive and binding upon the Parties. North
American will revise the Draft Closing Date Balance Sheet as appropriate to
reflect the resolution of any objections
36
41
thereto pursuant to this Section 9(b). ThE "CLOSING DATE BALANCE SHEET" shall
mean the Draft Closing Date Balance Sheet together with any revisions thereto
pursuant to this Section 9(b).
(c) In the event the Parties submit any unresolved objections
to an accounting firm for resolution as provided in Section 9(b) above, any
expenses relating to the engagement of the accounting firm shall be allocated
between the Shareholders and North American by the accounting firm in
proportion to the amount in dispute which is decided in favor of the
challenging party.
(d) North American will make the work papers and back-up
materials used in preparing the Draft Closing Date Balance Sheet available to
the Shareholders and their accountants and other representatives at reasonable
times and upon reasonable notice during (A) the preparation by North American
of the Draft Closing Date Balance Sheet, (B) review by the Shareholders of the
Draft Closing Date Balance Sheet, and (C) the resolution by the Parties of any
objections thereto.
(e) If the Shareholder's Equity set forth in the Closing Date
Balance Sheet is less than $7,953,333.00, the Shareholders will pay to North
American an amount equal to such deficiency (plus interest thereon at the
Applicable Rate from the Closing Date) within three business days after the
date on which the Closing Date Balance Sheet finally is determined pursuant to
Section 9(b).
10. TAX MATTERS. The following provisions shall govern the allocation
of responsibility as between North American and Shareholders for certain tax
matters following the Closing Date:
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE.
Shareholders shall prepare or cause to be prepared and timely file or cause to
be timely filed all Tax Returns for Target for all periods ending on or prior
to the Closing Date which are filed after the Closing Date (the "Pre-Closing
Period"). Such Tax Returns shall be prepared by treating items on such Tax
Return in a manner consistent with the past practices with respect to such
items, unless otherwise required by law. Shareholders shall permit North
American to review and comment on each such Tax Return described in the
preceding sentence prior to filing. North American shall pay the amounts due
for Taxes of Target with respect to the Pre-Closing Periods, up to the amount
reflected in the reserve for Tax Liability shown on the face of the Most Recent
Balance Sheet. Shareholders jointly and severally agree that they will pay,
when due, all amounts due for Taxes of Target with respect to Pre-Closing
Periods, that exceed the reserve for Tax Liability.
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. North American shall prepare or cause to be prepared and file or cause to
be filed any Tax Returns of Target for Tax periods which begin before the
Closing Date and end after the Closing Date. North American shall permit
Shareholders to review and comment on each such Tax return described in the
preceding sentence prior to filing. Shareholders shall pay to North American
37
42
within fifteen (15) days after the date on which Taxes are paid with respect to
such periods an amount equal to the portion of such Taxes which relates to the
portion of such Taxable period ending on the Closing Date to the extent such
Taxes are not reflected in the reserve for Tax Liability shown on the face of
the Most Recent Balance Sheet. For purposes of this Section, in the case of any
Taxes that are imposed on a periodic basis and are payable for a Taxable period
that includes (but does not end on) the Closing Date, the portion of such Tax
which relates to the portion of such Taxable period ending on the Closing Date
shall (x) in the case of any real and personal property Taxes, be deemed to be
the amount of such Tax for the entire Taxable period multiplied by a fraction
the numerator of which is the number of days in the Taxable period ending on
the Closing Date and the denominator of which is the number of days in the
entire Taxable period, and (y) in the case of any other Tax be deemed equal to
the amount which would be payable if the relevant Taxable period ended on the
Closing Date. Any credits relating to a Taxable period that begins before and
ends after the Closing Date shall be taken into account as though the relevant
Taxable period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
prior practice of Target.
(c) COOPERATION ON TAX MATTERS.
(i) North American, Target and Shareholders shall
cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns pursuant to
this Section and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and
(upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Target and
Shareholders agree (A) to retain all books and records with respect to
Tax matters pertinent to Target relating to any taxable period
beginning before the Closing Date until the expiration of the statute
of limitations (and, to the extent notified by North American or
Shareholders, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into
with any taxing authority, and (B) to give the other party reasonable
written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, Target or
Shareholders, as the case may be, shall allow the other party to take
possession of such books and records.
(ii) North American and Shareholders further agree,
upon request, to use their best efforts to obtain any certificate or
other document from any governmental authority or any other Person as
may be necessary to mitigate, reduce or eliminate any Tax that could
be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(iii) North American and Shareholders further agree,
upon request, to provide the other party with all information that
either party may be required to report
38
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pursuant to Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder.
(d) TAX SHARING AGREEMENTS. All tax sharing agreements or
similar agreements with respect to or involving Target shall be terminated as
of the Closing Date and, after the Closing Date, Target shall not be bound
thereby or have any liability thereunder.
(e) CERTAIN TAXES. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by
Shareholders when due, and Shareholders will, at its own expense, file all
necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees, and, if required by applicable law, North American will, and will cause
its affiliates to, join in the execution of any such Tax Returns and other
documentation.
11. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement as provided below:
(i) North American and the Shareholders may
terminate this Agreement by mutual written consent at any time prior
to the Closing;
(ii) North American may terminate this Agreement by
giving written notice to the Shareholders at any time prior to the
Closing (A) in the event the Shareholders has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect, North American has notified the Shareholders of
the breach, and the breach has continued without cure for a period of
30 days after the notice of breach or (B) if the Closing shall not
have occurred on or before July 31, 1998, by reason of the failure of
any condition precedent under Section 7(a) hereof (unless the failure
results primarily from North American itself breaching any
representation, warranty, or covenant contained in this Agreement);
and
(iii) the Shareholders may terminate this Agreement
by giving written notice to North American at any time prior to the
Closing (A) in the event North American has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect, the Shareholders has notified North American of
the breach, and the breach has continued without cure for a period of
30 days after the notice of breach or (B) if the Closing shall not
have occurred on or before July 31, 1998, by reason of the failure of
any condition precedent under Section 7(b) hereof (unless the failure
results primarily from the Shareholders himself breaching any
representation, warranty, or covenant contained in this Agreement).
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44
(b) EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 11(a) above, all rights and obligations of the
Parties hereunder shall terminate without any Liability of any Party to any
other Party (except for any Liability of any Party then in breach).
12. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of North American and the Shareholders; PROVIDED, HOWEVER, that any
Party may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
best efforts to advise the other Parties prior to making the disclosure).
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns and the Indemnified Parties
referred to in Section 8 hereof.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the Parties
named herein and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of his or its rights, interests, or
obligations hereunder without the prior written approval of North American and
the Shareholders; PROVIDED, HOWEVER, that North American may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates,
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases North American nonetheless shall remain
responsible for the performance of all of its obligations hereunder) and (iii)
without the approval of the Shareholders assign its rights and interests
hereunder to its lenders (and any agent for the lenders), and the Parties
consent to any exercise by such lenders (and such agents) of their rights and
remedies with respect to such collateral.
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
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(g) NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
IF TO THE SHAREHOLDERS: COPY TO:
----------------------- --------
c/o Xxxxxxx Xxxxxx Xxxxxx Xxxxxxxx, Esq.
0 Xxxxxx Xxxxx Xxxxxxxx, Xxxxxxxx, Xxxxx, Xxxxx & Xxxxxx
Xxxx Xx. Xxxxx, XX 00000 000 Xxxxx Xxxxxx
Xx. Xxxxxxx, XX 00000-0000
IF TO NORTH AMERICAN: COPY TO:
--------------------- --------
North American Tel-Com Group, Inc. Holland & Knight LLP
0000 Xxxxx Xxx, Xxxxx 000 One Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxx Xxxxx, XX 00000 Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx Attn: Xxxx Xxxxxx, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Florida without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Florida.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
North American and the Shareholders. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
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(k) EXPENSES. Each of the Parties will bear his or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby. The Shareholders
agrees Target has not borne or will bear any of the Shareholders's costs and
expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in
the negotiation of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The
Exhibits, Annexes, Schedules and Certificates identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) SPECIFIC PERFORMANCE. Each of the Parties acknowledges
and agrees that the other Parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 10(o) below), in addition to any other remedy to which they
may be entitled, at law or in equity.
(o) SUBMISSION TO JURISDICTION. Each of the Parties submits
to the exclusive jurisdiction of any state or federal court sitting in Palm
Beach County, Florida, in any action or proceeding arising out of or relating
to this Agreement and agrees that all claims in respect of the action or
proceeding shall be heard and determined in any such court. Each of the Parties
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety, or other security that might
be required of any other Party with respect thereto. Any Party may make service
on any other Party by sending or delivering a copy of the process to the Party
to be served at the address and in the manner provided for the giving of
notices in Section 12(o) above. Each Party agrees that a final judgment in any
action or
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47
proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law or at equity.
In any action or proceeding arising out of or relating to this
Agreement, the prevailing party shall be entitled to recover reasonable
attorney's fees and costs from the other party to the action or proceeding.
(p) WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND TO
THE FULLEST EXTENT PERMITTED BY LAW WAIVE ANY RIGHTS THAT THEY MAY HAVE TO
CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
*****
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
NORTH AMERICAN TEL-COM GROUP, INC.
By:
------------------------------------
Xxxxxxx X. Xxxxxxxx
President
SHAREHOLDERS:
Xxxxx Xxxx and Xxxxx Xxxx, Trustees
of the Xxxxx X. Xxxx and Xxxxx X. Xxxx
Loving Trust
By:
------------------------------------
Xxxxx X. Xxxx, Trustee
0000 Xxxxx Xxxxxx
X'Xxxxxx, XX 00000
By: /s/ XXXXX XXXX*
------------------------------------
Xxxxx Xxxx, Trustee
0000 Xxxxx Xxxxxx
X'Xxxxxx, XX 00000
/s/ XXXXX X. XXXXXX*
------------------------------------
Xxxxx X. Xxxxxx
000 Xxxxxxxxxx Xx.
Xxxxxx, XX 00000
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49
------------------------------------
Xxxxxxx Xxxxxx
0 Xxxxxx Xxxxx
Xxxx Xx. Xxxxx, XX 00000
/s/ XXXXXX XXXXXX*
------------------------------------
Xxxxxx Xxxxxx
000 00xx Xxxxxx
Xxxxxx, XX 00000
/s/ XXXXXXX XXXXXXX*
------------------------------------
Xxxxxxx Xxxxxxx
000 XxXxxxx Xxxxxx
Xxxxxx Xxx, XX 00000
------------------------------------
Xxxxxxx Childress
000 Xxxxxxxx Xxxx
Xxxxx Xxxxx, XX 00000
/s/ XXXXX XXXXXXX*
------------------------------------
Xxxxx Xxxxxxx
0000 Xxxxx Xxxxx
Xx. Xxxxxx, XX 00000
/s/ XXXXXXX LIGHT*
------------------------------------
Xxxxxxx Light
0000 Xxxx Xxxx.
Xx. Xxxxxxx, XX 00000
/s/ XXXXXX XXXXXX*
------------------------------------
Xxxxxx Xxxxxx
000 Xxx Xxxxxxx Xxxx
Xx. Xxxxx, XX 00000
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50
/s/ XXXXXX XXXXX*
------------------------------------
Xxxxxx Xxxxx
Xx. 0 Xxx 00
Xxxxx, XX 00000
/s/ XXXXXX XXXXX*
------------------------------------
Xxxxxx Xxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
*By
------------------------------------
Xxxxxxx Xxxxxx
Attorney-in-Fact
With respect to Section 8(b)(x) hereof:
WMC PROPERTIES, L.L.C.
By
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Name:
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Title:
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46
