EXHIBIT 10.10
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FORM OF
STOCK PURCHASE AGREEMENT
AMONG
XXXXXXX-XXXXX RESOURCES LLC, as Buyer,
AND
The persons and entities identified as Sellers on the
Signature pages hereof, as Sellers
FOR THE SHARES OF
ALLIANCE AGRONOMICS, INC.
Dated as of March 17, 2000
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Table of Contents
Page
EXHIBITS
Exhibit 1 Mutual Release
Exhibit 2 Noncompetition Agreement
Exhibit 3 Consulting Agreement
Exhibit 4 Escrow Agreement
Exhibit 5 Environmental Obligations Agreement
SCHEDULES
Schedule 1 List of Shareholders of the Company
Schedule 2.3 Adjustment Amount Accounting Principles
Schedule 2.4(b)(i) Closing Payment Allocation
Schedule 3.1.1 Foreign Qualification Jurisdictions of the Company
Schedule 3.1.2 Required Sellers' Consents
Schedule 3.1.5 Bank Accounts, Etc.
Schedule 3.1.6 Real Property Owned or Leased
Schedule 3.1.7 Subleases, etc.
Schedule 3.1.8 Accounts Receivable
Schedule 3.1.9 Other Material Liabilities
Schedule 3.1.10 Tax Return Audits
Schedule 3.1.12 Employee Benefit Plans
Schedule 3.1.13 Noncompliance with Legal Requirements; Government
Authorizations
Schedule 3.1.14 Legal Proceedings
Schedule 3.1.15 Material Changes or Events
Schedule 3.1.16 Material Contracts
Schedule 3.1.17(b) Alternative Insurance Arrangements
Schedule 3.1.17(c) Exceptions to Insurance Representations
Schedule 3.1.18 Employee Information
Schedule 3.1.20(b) Material Intellectual Property Rights Contracts
Schedule 3.1.23 Interests of Related Persons
Schedule 3.1.25 Exceptions to Environmental Representations
Schedule 3.1.27 Product Warranties, Terms and Conditions
Schedule 3.1.29(a)(i) Substantial Customers
Schedule 3.1.29(a)(ii) Track Promotions
Schedule 3.1.29(b) Changes in Customers
Schedule 3.1.29(c) Substantial Suppliers
Schedule 3.1.29(d) Changes in Suppliers
Schedule 3.1.31 Distributions
Schedule 4.2 Exceptions to Buyer's Representations
Schedule 5.6(a) Excluded Assets
Schedule 5.6(d) Severance payments
THIS STOCK PURCHASE AGREEMENT (together with all Schedules, Exhibits,
amendments and supplements thereto, the "Agreement") is made as of March 17,
2000, by and among Xxxxxxx-Xxxxx Resources LLC, a Delaware limited liability
company ("Buyer"), and the persons listed as Shareholders in Schedule 1
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(collectively, the "Sellers").
RECITALS
The Sellers desire to sell to Buyer, and Buyer desires to purchase
from Sellers, 100% of the issued and outstanding shares (the "Shares") of the
capital stock of Alliance Agronomics, Inc. (the "Company") for the consideration
and on the terms and conditions set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 1:
"Acquired Companies" -- the Company and its Subsidiaries,
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collectively.
"Agreement" -- as defined in the first paragraph hereof.
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"Applicable Contract" -- any Contract (a) under which any Acquired
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Company has or may acquire any rights, (b) under which any Acquired Company has
or may become subject to any obligation or liability, or (c) by which any asset
owned or used by any Acquired Company is or may become bound.
"Balance Sheet" -- the audited consolidated balance sheet of the
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Acquired Companies as at December 31, 1999 (including the notes thereto)
delivered to Buyer as provided in Section 3.1.4.
"Breach" -- a "Breach" of a representation, warranty, covenant,
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obligation, or other provision of this Agreement or any certificate delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been any breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision.
"Business Day" -- any day (other than a Saturday, Sunday or public
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holiday in the Borough of Manhattan, City of New York) on which banking
institutions in New York City are not required or permitted by law or executive
order to close.
"Buyer" -- as defined in the first paragraph of this Agreement.
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"Buyer's Closing Documents" - the documents to be executed and
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delivered to Sellers at the Closing by Buyer.
"Claim" -- as defined in Section 10.7.
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"Closing" -- as defined in Section 2.4.
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"Closing Balance Sheet" - means the closing balance sheet of the
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Company prepared pursuant to Section 3.1.4.
"Closing Date" -- the date and time as of which the Closing actually
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takes place.
"Common Stock" -- means the Class A shares, par value $1.00 per share
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and the Class B shares, par value $1.00 per share, of the Company.
"Company" -- as defined in the Recitals of this Agreement.
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"Competing Business" -- as defined in Section 3.1.23.
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"Consulting Agreement" -- as defined in Section 2.5(c)(ii).
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"Contemplated Transactions" -- all of the transactions contemplated by
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this Agreement, including, without limitation, the sale of the Shares by the
Sellers to Buyer; Buyer's acquisition and ownership of the Shares and exercise
of control over the Company; the execution, delivery and performance of the
Consulting Agreements, the Noncompetition Agreements, the Mutual Release, the
Environmental Obligations Agreement and the Indemnity Escrow Agreement; and the
performance by the parties hereto of their respective covenants, agreements and
obligations hereunder and thereunder.
"Contract" -- any agreement, contract, obligation, promise, or
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undertaking (whether written or oral and whether express or implied).
"Control Person" -- as to any entity, any Person who controls such
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entity within the meaning of the Securities Act of 1933, as amended, or the
Securities and Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
"Damages" -- as defined in Section 7.2.
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"Encumbrance" -- any mortgage, easement, servitude, right of way,
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charge, claim, equitable interest, lien, option, pledge, security interest,
right of first refusal, or restriction of any kind, including any restriction on
use, voting, transfer, or exercise of any other attribute of ownership.
"Environment" -- soil, land surface or subsurface strata, surface
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waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands),
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groundwaters, drinking water supply, stream sediments, ambient air (including
indoor air), plant and animal life, and any other environmental medium or
natural resource.
"Environmental Claim" -- means any actual or reasonably anticipated
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claim, action, cause of action, investigation or written notice, order,
direction or requirement by any Person alleging potential liability or remedy,
whether civil, administrative, criminal or quasi-criminal (including, without
limitation, potential liability for investigatory costs, cleanup, remediation or
preventive costs, governmental response costs, natural resources damages,
property damages, personal injuries, fines, penalties or monetary and non-
monetary sanctions) arising out of, based on or resulting from (a) the presence
or Release or Threat of Release of any Hazardous Materials at any location or
(b) circumstances forming the basis of any violation of any Environmental Laws.
"Environmental, Health, and Safety Liabilities" -- any cost, damages,
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expense, liability, obligation, or other responsibility arising from or under
Environmental Laws or Occupational Safety and Health Laws and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including, without limitation, on-site or off-site contamination, pollution
control, occupational safety and health, natural resources, and regulation of
chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Laws or Occupational Safety and Health Laws;
(c) financial responsibility under Environmental Laws or Occupational
Safety and Health Laws for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by or pursuant to applicable Environmental Laws or
Occupational Safety and Health Laws (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Laws or Occupational Safety and Health
Laws.
The terms "removal," "remedial," "response action," and "corrective
action" include the types of activities covered by the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. (S)9601 et
seq., as amended ("CERCLA"), and the Resource Conservation and Recovery Act, 42
U.S.C. (S)6901 et seq., as amended ("RCRA").
"Environmental Laws" -- means all United States federal, interstate,
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state, and local laws, common law, guidelines, permits, agreements, licenses,
Orders, by-laws, rules, regulations and restrictions of any kind by any
Governmental Body relating to pollution or protection of human health or the
environment, including, without limitation, laws relating to
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Releases or Threatened Releases of Hazardous Materials, pollution control, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, transport, handling, or disposal of Hazardous Materials or the clean-up
thereof and the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended, but not including the Occupational Safety and Health
Act of 1970, as amended.
"Environmental Obligations Agreement" -- as defined in Section 2.2(g).
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"ERISA" -- the Employee Retirement Income Security Act of 1974, as
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amended, or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"ERISA Affiliate" -- as defined in Section 3.1.12.
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"Escrow Agreement" -- as defined in Section 2.5(g).
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"Excluded Assets" - Those items listed as "Excluded Assets" on
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Schedule 2.1(b) and Schedule 3.1.31(a).
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"Facilities" -- any real property, leaseholds, or other interests
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currently or formerly owned or operated by any Acquired Company and any
buildings, plants or structures, currently or formerly owned or operated by any
Acquired Company.
"GAAP" -- generally accepted United States accounting principles
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consistently applied.
"Governmental Authorization" -- any approval, consent, license,
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permit, waiver, or other authorization issued, granted or given pursuant to any
Legal Requirement.
"Governmental Body" -- any nation, state, county, city, town, village,
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district, or other jurisdiction of any nature; federal, state, local, municipal,
foreign, or other government; governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal); multi-national organization or body; or
body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
"Hazardous Activity" -- the distribution, generation, handling,
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importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, disposal, or use
(including any withdrawal or other use of groundwater) of Hazardous Materials
in, on, under, about, or from the Facilities or any part thereof into or in the
Environment, and any other act, business, operation, or thing that increases the
damages, or risk of damages, or poses an unreasonable risk of harm to Persons or
property on or off the Facilities or that may affect the value of the Facilities
or the Acquired Companies or that may result in an Environmental, Health, and
Safety Liability.
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"Hazardous Materials" -- means (i) substances that are defined as,
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listed, regulated or otherwise classified as "Hazardous Substances," "Hazardous
Materials," "Hazardous Wastes," "Toxic Substances," "Pesticides," "Oils,"
"Pollutants" or "Contaminants" in the National Oil and Hazardous Substances
Pollution Contingency Plan, 40 C.F.R.300.5, or under any other Environmental
Law, or (ii) wastes, pollutants, contaminants and substances listed, classified
or regulated as such and that could form the basis for an Environmental Claim
under any Environmental Law or (iii) petroleum or petroleum-derived substances,
methane, natural gas, any flammable substances or explosives, radioactive
materials, asbestos or asbestos - containing material, polychlorinated biphenyls
("PCB") or PCB - containing materials, or (iv) nitrogen or phosphorus containing
substances.
"Indemnity Escrow" -- as defined in Section 2.5(g).
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"Intellectual Property Assets" -- as defined in Section 3.1.20.
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"IRC" -- the Internal Revenue Code of 1986, as amended to the date
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hereof and regulations issued by the IRS pursuant to the IRC.
"IRS" -- the United States Internal Revenue Service or any successor
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agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" -- an individual will be deemed to have "Knowledge" of a
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particular fact or other matter if such individual is actually aware of such
fact or other matter. An Acquired Company will be deemed to have "Knowledge" of
a particular fact or other matter if any individual listed on Schedule 1.1 has
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Knowledge of such fact or other matter.
"Legal Requirement" -- any federal, state, local, municipal, foreign,
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international, multinational, or other administrative Order, constitution, law,
ordinance, principle of common law, rule, regulation, statute, or treaty, and
specifically including Environmental Laws and Occupational Safety and Health
Laws.
"Material Contract" -- any Applicable Contract which, if breached or
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terminated, will or is reasonably likely to result in a change or effect which
is or is likely to be materially adverse to the business, financial condition,
or results of operations of any of the Acquired Companies.
"Mutual Release" -- as defined in Section 2.2(a)(ii).
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"Noncompetition Agreements" -- as defined in Section 2.4(a)(iii).
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"Occupational Safety and Health Laws" -- any Legal Requirement
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designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards.
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"Order" -- any award, decision, injunction, judgment, order, ruling,
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subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- an action taken by any Acquired
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Company will be deemed to have been taken in the "Ordinary Course of Business"
only if (a) such action is consistent with the past practices of the Acquired
Company and is taken in the ordinary course of its normal day-to-day operations;
and (b) such action is not required to be authorized by the board of directors
or stockholders of the Acquired Company.
"Organizational Documents" -- (a) the articles or certificate of
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incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"Partnership" -- as defined in Section 6.8.
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"Partnership Interest" -- as defined in Section 6.8.
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"PBGC" -- as defined in Section 3.1.12(c).
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"Person" -- any individual, corporation (including any non-profit
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corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan" -- as defined in Section 3.1.12.
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"Proceeding" -- any action, arbitration, audit, hearing,
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investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"Proprietary Rights Agreement" -- as defined in Section 3.1.18.
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"Purchase Agreement" -- as defined in Section 6.8.
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"Purchase Price" -- as defined in Section 2.1.
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"Redemption Shares" -- the shares of Class A stock of the Company
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redeemed by the Company pursuant to Section 2.1(b).
"Related Person" -- with respect to an individual: (a) each other
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member of such individual's Family; (b) any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual's Family; (c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
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and (d) any Person with respect to which such individual or one or more members
of such individual's Family serves as a director, officer, partner, executor, or
trustee (or in a similar capacity).
With respect to a Person other than an individual: (a) any Person that
directly or indirectly controls, is directly or indirectly controlled by, or is
directly or indirectly under common control with such specified Person; (b) any
Person that holds a Material Interest in such specified Person; (c) each Person
that serves as a director, officer, partner, executor, or trustee of such
specified Person (or in a similar capacity); (d) any Person in which such
specified Person holds a Material Interest; (e) any Person with respect to which
such specified Person serves as a general partner or a trustee (or in a similar
capacity); and (f) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and former spouses,
(iii) any other natural person who is related to the individual or the
individual's spouse within the second degree, and (iv) any other natural person
who resides with such individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least 5% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 5% of the outstanding
equity securities or equity interests in a Person.
"Release" -- means any release, spill, emission, discharge, leaking,
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pumping, injection, deposit, disposal, dispersal, leaching or migration into the
environment (including, without limitation, ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater, environment or property.
"Representative" -- with respect to a particular Person, any director,
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officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Sellers" -- as defined in the first paragraph of this Agreement.
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"Seller's Closing Documents" -- means as to each Seller the documents
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to be executed and delivered at the Closing by such Seller.
"Separation Agreement" -- as defined in Section 3.1.31(d).
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"Shares" -- as defined in the Recitals of this Agreement.
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"Subsidiary" -- with respect to any Person (the "Owner"), any
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corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than
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securities or other interests having such power only upon the happening of a
contingency that has not occurred) are held by the Owner or one or more of its
Subsidiaries; when used without reference to a particular Person, "Subsidiary"
means a Subsidiary of the Company.
"Tax" -- any federal, state, local or foreign tax, including income,
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gross receipts, windfall profits, value added, ad valorum, profits, payroll,
stamp, occupational, premium, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes.
"Tax Return" -- any return (including any information return), report,
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statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threatened" -- a claim, Proceeding, dispute, action, or other matter
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will be deemed to have been "Threatened" if any demand, statement or notice has
been given (orally or in writing) or other overt indication has been made, that
would lead a reasonably prudent business Person to conclude that such a claim,
Proceeding, dispute, action, or other matter is reasonably likely to be
asserted, commenced, taken, or otherwise pursued in the future.
"Threat of Release" -- a substantial likelihood of a Release that may
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require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"Trade Secrets" -- as defined in Section 3.1.20(a)(iv).
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ARTICLE 2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SALE OF SHARES
(a) At the Closing, the Sellers shall sell and transfer the Shares to
Buyer, and Buyer shall purchase the Shares from the Sellers, upon the terms set
forth in this Agreement. The purchase price (the "Purchase Price") for the
Shares shall be $4,191,489.
(b) Immediately prior to the Closing, the Company shall have redeemed
the Redemption Shares as set forth on Schedule 2.1(b) and shall have distributed
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to the Sellers in exchange for the Redemption Shares the Excluded Assets set
forth on Schedule 2.1(b).
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2.2 CLOSING
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The Contemplated Transactions will be consummated at a closing (the
"Closing") to be held at the offices of McGuire, Woods, Battle & Xxxxxx LLP, One
Xxxxx Center, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, XX 00000 at 10:00 AM on March 17,
2000 or at such other time and place as the parties may agree. At the Closing:
(a) The Sellers will deliver to Buyer:
(i) certificates representing the Shares duly endorsed (or
accompanied by duly executed stock powers), for transfer to Buyer;
(ii) a mutual release in the form attached as Exhibit 1 hereto
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executed by each of the Sellers ("Mutual Release"); and
(iii) a noncompetition agreement in the form attached as Exhibit
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2 hereto executed by G. Xxxxx Xxxxxxx (the "Noncompetition Agreement").
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(b) Buyer will deliver to each of the Sellers:
(i) a bank cashier's or certified check payable to the order
of, or confirmation of wire transfer to any account which was specified in
writing to the Buyer by such Seller prior to the Closing, in the amount
appearing opposite such Seller's name on Schedule 2.4(b)(i) hereto; and
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(ii) the Mutual Release executed by the Buyer and the Company.
(c) The Company will enter into a consulting agreement with G. Xxxxx
Xxxxxxx, residing at 00 Xxx Xxxxxx Xxxx, Xxxxxxxx, XX 00000 ("Xxxxxxx") in the
form attached as Exhibit 3 hereto (the "Consulting Agreement").
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(d) Buyer and Sellers will enter into an escrow agreement in the
form attached as Exhibit 4 hereto (the "Escrow Agreement") with First Union
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National Bank as Escrow Agent and Buyer will deliver the sum of $500,000.00 (the
"Indemnity Escrow") to the Escrow Agent by bank cashier's check or wire transfer
to the account specified by such Escrow Agent by notice to Buyer in writing
prior to the Closing.
(e) Buyer shall pay or cause the Company to pay to G. Xxxxx Xxxxxxx
$10,000.00 in consideration of his obligations under the Noncompetition
Agreement.
(f) Buyer shall pay or cause the Company to pay G. Xxxxx Xxxxxxx
$711,864.00 and Xxxxxx X. XxXxxxxx $47,458.00 (less applicable withholding and
other payroll taxes) by wire transfer to the account(s) previously designated by
them in writing in full payment and satisfaction of all obligations of the
Company to them under their respective Deferred Compensation Agreements set
forth on Schedule 3.1.18.
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(g) Buyer and GWG Financial LLC shall enter into an Environmental
Obligations Agreement in the form attached as Exhibit 5 hereto (the
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"Environmental Obligations Agreement").
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.1 REPRESENTATIONS AND WARRANTIES AS TO THE COMPANY
The Sellers hereby jointly and severally represent and warrant to
Buyer as follows:
3.1.1 ORGANIZATION AND GOOD STANDING
(a) Schedule 3.1.1 contains a complete and accurate list for each
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Acquired Company of its name, its jurisdiction of incorporation, other
jurisdictions in which it is authorized to do business, and its capitalization
(including the identity of each stockholder and the number of shares held by
each). Each Acquired Company is a corporation duly organized, validly existing,
and in good standing under the laws of its jurisdiction of incorporation, with
full corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under Applicable Contracts. Each
Acquired Company is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction where the
failure so to qualify would have a material adverse effect on the financial
condition, business, assets or results of operations of such Acquired Company.
(b) Each Acquired Company has made available to Buyer copies of its
Organizational Documents, as currently in effect.
3.1.2 AUTHORITY; NO CONFLICT
(a) This Agreement has been duly executed and delivered by the
Sellers.
(b) Except as set forth or Schedule 3.1.2, neither the execution
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and delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time or both):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of any of the Acquired Companies,
or (B) any resolution adopted by the board of directors or the stockholders of
any of the Acquired Companies;
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(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which any Acquired Company, or any of the
assets owned or used by any Acquired Company, may be subject;
(iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify any Governmental
Authorization that relates to the business of any Acquired Company or that
otherwise relates to any assets owned or used by any Acquired Company;
(iv) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Material Contract; or
(v) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Shares or any of the assets owned or used by
any Acquired Company.
(c) Except as set forth in Schedule 3.1.2, no Seller or Acquired
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Company is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions which
has not been previously given or obtained.
3.1.3 CAPITALIZATION
The authorized equity securities of the Company consist of 20,000
Class A Shares of common stock, par value $1.00 per share, of which 7,638 shares
are issued and outstanding and 20,000 Class B shares of common stock, par value
$1.00 per share, of which no shares have been issued. Such issued and
outstanding Class A Shares constitute all of the Shares, and all such Shares
have been duly authorized, validly issued and are fully paid and non-assessable.
Sellers are and will be on the Closing Date the record and beneficial owners and
holders of the Shares, free and clear of all Encumbrances. Xxxxxxx owns 3,047
of the Shares constituting approximately 39.9% of the total outstanding. With
the exception of the Shares (all of which are owned by Sellers), all of the
outstanding equity securities and other securities of each Acquired Company are
owned of record and beneficially by one or more of the Acquired Companies, free
and clear of all Encumbrances. Except as set forth on Schedule 3.1.3, no legend
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or other reference to any purported Encumbrance appears upon any certificate
representing equity securities of any Acquired Company. All of the outstanding
equity securities of each Acquired Company have been duly authorized and validly
issued and are fully paid and nonassessable. There are no Contracts relating to
the issuance, sale, or transfer of any equity securities or other securities of
any Acquired Company. None of the outstanding equity securities or other
securities of any Acquired Company was issued in violation of the Securities Act
of 1933, as
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amended, or any other Legal Requirement. Except as set forth on Schedule 3.1.3,
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no Acquired Company owns, or has any Contract to acquire, any equity securities
or other securities of any Person (other than Acquired Companies) or any direct
or indirect equity or ownership interest in any other business.
3.1.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer: (a) audited consolidated balance
sheets of the Acquired Companies as at December 31 in each of the fiscal years
1996 through 1999, and the related audited consolidated statements of income,
changes in stockholders' equity, and cash flow for each of the fiscal years then
ended, together with the report thereon of Xxxxxxxx, Xxxxxxx & Company LLP,
independent certified public accountants; and (b) unaudited interim consolidated
balance sheets of the Acquired Companies as of February 29, 2000 (the "Closing
Balance Sheet") and related unaudited consolidated statements of income, changes
in stockholders' equity and cash flow for the two(2) months then ended. The
audited and unaudited financial statements and notes referred to in this Section
3.1.4 fairly present the financial condition and the results of operations,
changes in stockholders' equity, and cash flow of the Acquired Companies as of
the respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP (as to the audited statements only), and
reflect the consistent application of such accounting principles throughout the
periods involved. No financial statements of any Person other than the Acquired
Companies are required by GAAP to be included in the consolidated financial
statements of the Company.
3.1.5 BOOKS AND RECORDS; BANK AND BROKERAGE ACCOUNTS, ETC.; ACCESS
Except as set forth in Schedule 3.1.5, the books of account, minute
--------------
books, stock record books, and other records of the Acquired Companies, all of
which have been made available to Buyer, are complete and correct. The minute
books of the Acquired Companies contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders and the boards
of directors of the Acquired Companies, and no meeting of any such stockholders
or board of directors has been held for which minutes have not been prepared and
are not contained in such minute books. On the Closing Date, all of those books
and records will be in the possession of the Acquired Companies. Schedule 3.1.5
--------------
sets forth a complete list of all bank, brokerage, mutual fund, money market and
other financial services accounts maintained by each of the Acquired Companies
and the identity of all authorized signatories thereon. Sellers have and have
caused the Company and its Representatives to, (a) afford Buyer and its
Representatives full and free access to each Acquired Company's personnel,
properties, contracts, books and records, and other documents and data, (b)
furnish Buyer and Buyer's Representatives with copies of all such Contracts,
books and records, and other existing documents and data as Buyer may have
reasonably requested, and (c) furnished Buyer and Buyer's Representatives with
such additional financial, operating, and other data and information (including,
without limitation, accountants' work papers) as Buyer may reasonably request.
12
3.1.6 TITLE TO PROPERTIES; ENCUMBRANCES
Schedule 3.1.6 contains a complete and accurate list of all real
--------------
property, leaseholds, or other interests therein owned or operated by any
Acquired Company. Sellers have delivered or made available to Buyer copies of
the deeds, leases and other instruments (as recorded, where applicable) by which
the Acquired Companies acquired such real property, leaseholds and interests,
and copies of all title insurance policies, opinions, abstracts, and surveys in
the possession of Sellers or the Acquired Companies and relating to such
property, leaseholds or interests. The Acquired Companies own (with good and
marketable title in the case of real property , subject only to the matters
permitted by the following sentence) all the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) that they purport
to own located in the Facilities owned or operated by the Acquired Companies or
reflected as owned in the books and records of the Acquired Companies, including
all of the properties and assets reflected in the Balance Sheet (except for
assets held under capitalized leases disclosed or not required to be disclosed
in Schedule 3.1.6 and personal property acquired or sold since the date of the
--------------
Balance Sheet in the Ordinary Course of Business), and such properties,
leaseholds and assets constitute all of the properties, leaseholds and assets
owned or used by the Acquired Companies. All of the properties and assets
purchased or otherwise acquired by the Acquired Companies since the date of the
Balance Sheet (except for personal property acquired and sold since the date of
the Balance Sheet in the Ordinary Course of Business, inventory and short-term
investments) are listed in Schedule 3.1.6. All properties and assets reflected
--------------
in the Balance Sheet are free and clear of all Encumbrances and are not, in the
case of real property, subject to any rights of way, building use restrictions,
exceptions, variances, easements, Encumbrances, reservations, or limitations of
any nature except, with respect to all such properties and assets, (a) mortgages
or security interests shown on the Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or event that,
with notice or lapse of time or both, would constitute a default) exists, (b)
mortgages or security interests incurred in connection with the purchase of
property or assets after the date of the Balance Sheet (such mortgages and
security interests being limited to the property or assets so acquired), with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (c) liens for current taxes not yet
due, and (d) with respect to real property, (i) minor imperfections of title, if
any, none of which is substantial in amount, materially detracts from the value
or materially impairs the use of the property subject thereto, or materially
impairs the operations of any Acquired Company, (ii) zoning laws and other land
use restrictions that do not impair the present use of the property subject
thereto, (ii) mechanics', carriers', workers', repairers' and other similar
liens arising as a matter of law, which are not material in nature or amount,
(iv) encumbrances of record that are disclosed in title commitments and title
documents provided to Buyer, and (v) exceptions shown on surveys provided by
Sellers or the Acquired Companies to Buyer, or otherwise obtained by Buyer,
prior to the Closing Date; and (e) those items listed on Schedule 3.1.6. All
--------------
buildings, plants, and structures owned by the Acquired Companies lie wholly
within the boundaries of the real property owned by the Acquired Companies and
do not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person.
13
3.1.7 CONDITION AND SUFFICIENCY OF ASSETS
(a) The buildings, plants, structures, and equipment owned, leased
or otherwise used or operated by the Acquired Companies are structurally sound,
are in good operating condition and repair, and are adequate for the uses to
which they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The building,
plants, structures, and equipment owned, leased or otherwise used or operated by
the Acquired Companies are sufficient for the continued conduct of the Acquired
Companies' business after the Closing in substantially the same manner as
conducted prior to the Closing. Except as set forth in Schedule 3.1.7, there are
--------------
no subleases, space-sharing agreements or other similar arrangements giving or
purporting to give any Person other than the Acquired Companies any rights
relating to any of the Acquired Companies' real property, whether owned or
leased, that are not terminable by the Acquired Companies without cause on less
than 6 months notice.
(b) All inventory of the Acquired Companies, whether or not
reflected in the Balance Sheet is of merchantable quality, of the grade
specified and consists of a quality, quantity and age usable and salable in the
Ordinary Course of Business without discount, except for obsolete items and
items of below-standard quality, all of which have been written off or written
down to net realizable value in the Balance Sheet or on the accounting records
of the Acquired Companies as of the date of the Closing Balance Sheet, as the
case may be. All inventories not written off have been priced at the lower of
cost or market on a first in, first out basis. The quantities of each item of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable in the present circumstances of the Acquired
Companies.
3.1.8 ACCOUNTS RECEIVABLE
(a) The accounts receivable of the Acquired Companies that are
reflected on the Closing Balance Sheet or on the accounting records of the
Acquired Companies as of the date of the Closing Balance Sheet (collectively,
the "Accounts Receivable"), together with those other accounts receivable of the
Acquired Companies that are Excluded Assets, constitute all of the accounts
receivable of the Acquired Companies as of such date. The Accounts Receivable
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business.
(b) The parties agree that Sellers make no representation or
warranty with respect to the collectibility of the Accounts Receivable listed on
Schedule 3.1.8 under the heading "Accounts Receivable Not Collectible prior to
--------------
December 31, 2000," and that the collection and/or repurchase of such Accounts
Receivable shall be made pursuant to the provisions of Section 5.5 below. The
parties further agree that Sellers make no representation or warranty with
respect to the notes listed on Schedule 3.1.8 under the heading "Non-Collectible
--------------
Notes," and that such notes shall not be considered "Accounts Receivable"
hereunder.
14
3.1.9 NO UNDISCLOSED LIABILITIES
Except as set forth in Schedule 3.1.9, as of February 29, 2000 the
--------------
Acquired Companies had no liabilities or obligations in excess of $10,000, in
the aggregate, except for liabilities or obligations reflected or reserved
against in the Closing Balance Sheet and liabilities incurred in the Ordinary
Course of Business (taking into account ordinary seasonal fluctuations) since
the date thereof.
3.1.10 TAXES
(a) The Acquired Companies have filed or caused to be filed (on a
timely basis since January 1, 1996) all Tax Returns that are or were required to
be filed by or with respect to any of them, either separately or as a member of
a group of corporations, pursuant to applicable Legal Requirements. Sellers have
delivered or made available to Buyer copies of all such Tax Returns filed since
December 31, 1997. The Acquired Companies have paid, or made provision for the
payment of, all Taxes that have become due as shown in those Tax Returns, or
otherwise.
(b) The United States federal and state Tax Returns of each Acquired
Company have been audited by the IRS or relevant state tax authorities or are
closed by the applicable statute of limitations for all taxable years through
December 31, 1995. Schedule 3.1.10 contains a complete and accurate list of all
---------------
audits of all such Tax Returns, including a reasonably detailed description of
the nature and outcome of each audit since December 31, 1990. All deficiencies
proposed as a result of such audits have been paid, reserved against, settled,
or, as described in Schedule 3.1.10, are being contested in good faith by
---------------
appropriate proceedings. Except as described in Schedule 3.1.10, no Seller or
---------------
Acquired Company has given or been requested to give waivers or extensions (or
is or would be subject to a waiver or extension given by any other Person) of
any statute of limitations relating to the payment of Taxes of any Acquired
Company or for which any Acquired Company may be liable.
(c) The charges, accruals, reserves and receivables with respect to
Taxes on the books of each Acquired Company as of the date of the Closing
Balance Sheet are adequate and are at least equal to that Acquired Company's
liability for Taxes as of such date. There exists no proposed tax assessment
against any Acquired Company except as disclosed in the Balance Sheet, the
Closing Balance Sheet or Schedule 3.1.10 and Sellers have no Knowledge of any
---------------
basis for any such assessment. No consent to the application of Section
341(f)(2) of the IRC has been filed with respect to any material property or
assets held, acquired, or to be acquired by any Acquired Company. All Taxes that
any Acquired Company is or was required by Legal Requirements to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Body or other Person.
(d) All Tax Returns filed by ( or that include on a consolidated
basis) any Acquired Company are true, correct and complete. There is no tax
sharing agreement that will
15
require any payment by any Acquired Company after the date of this Agreement.
None of the Acquired Companies has given a power of attorney to any Person,
which is still in effect.
3.1.11 NO MATERIAL ADVERSE CHANGE
Since the date of the Closing Balance Sheet, there has not been any
material adverse change in the business, operations, properties, prospects,
assets, or condition of any Acquired Company and no event has occurred or
circumstance exists that is reasonably likely to result in such a material
adverse change or which may materially impair or impede the ability of the
Acquired Companies to conduct their business in the Ordinary Course of Business
after the Closing Date and no Seller has Knowledge of any basis for any such
material adverse change or event or circumstances.
3.1.12 EMPLOYEE BENEFITS
(a) Schedule 3.1.12 contains a true and complete list of each
---------------
deferred compensation and each bonus or other incentive compensation, stock
purchase, stock option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other "welfare" plan, fund or program
(within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or other
"pension" plan, fund or program (within the meaning of Section 3(2) of ERISA);
each employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by any
Acquired Company or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with any Acquired Company would be deemed a
"single employer" within the meaning of Section 4001 (b) of ERISA, or to which
any Acquired Company or an ERISA Affiliate is party, whether written or oral,
for the benefit of any employee or former employee of any Acquired Company (the
"Plans"). No Plan is subject to Section 302 or Title IV of ERISA or Section 412
of the IRC. Neither any Acquired Company nor any ERISA Affiliate has any
commitment or formal plan, whether legally binding or not, to create any
additional employee benefit plans or modify or change any existing Plan that
would affect any employee or former employee of any Acquired Company. At no time
has any Acquired Company maintained or been a party to a multi-employer plan as
defined in (S) 4001(a)(3) of ERISA.
(b) With respect to each Plan, the Acquired Companies have heretofore
delivered or made available to Buyer true and complete copies of each of the
following documents:
(i) a copy of the Plan and any amendments thereto (or if the Plan
is not a written Plan, a description thereof);
16
(ii) a copy of the two most recent annual reports and actuarial
reports, if required under ERISA, and the most recent report prepared with
respect thereto in accordance with Statement of Financial Accounting Standards
No. 87; and
(iii) a copy of the most recent summary plan description required
under ERISA with respect thereto.
(iv) if the Plan is funded through a trust or any third party
funding vehicle, a copy of the trust or other funding agreement and the latest
financial statements thereof; and
(v) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan intended to qualify under
Section 401 of the IRC.
(c) No liability under Title IV or Section 302 of ERISA has been
incurred by any Acquired Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to any
Acquired Company or any ERISA Affiliate of incurring any such liability, other
than liability for premiums due the Pension Benefit Guaranty Corporation
("PBGC") (which premiums have been paid when due).
(d) All contributions required to be made with respect to any Plan on
or prior to the Closing Date have been timely made.
(e) Each Plan has been operated and administered in all material
respects in accordance with Plan terms and applicable law, including but not
limited to ERISA and the IRC.
(f) Each Plan intended to be "qualified" within the meaning of
Section 401(a) of the IRC has received a favorable determination letter from the
IRS that it is so qualified and each trust created thereunder has been
determined by the IRS to be exempt from tax under the provisions of Section
501(a) of the IRC, and nothing has occurred since the date of such letter that
could be reasonably be expected to cause any such Plan or trust to fail to
qualify under Sections 401(a) or 501(a) of the IRC. Each Plan intended to
satisfy the requirements of Section 501(c)(9) has satisfied such requirements.
(g) No Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
any Acquired Company for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "pension plan," or (iii) benefits the full cost of
which is borne by the current or former employee (or his beneficiary).
(h) No amounts payable under the Plans will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the IRC.
(i) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former
17
employee or officer of any Acquired Company or any ERISA Affiliate to severance
pay, unemployment compensation or any other payment, except as expressly
provided in this Agreement, or (ii) accelerate the time of payment or vesting,
or increase the amount of compensation due any such employee or officer.
(j) No prohibited transaction as defined in Section 406 of ERISA or
in Section 4975 of the IRC has occurred with respect to any Plan for which no
exemptions exists under Section 408 of ERISA or Sections 4975(c)(2) or (d) of
the IRC and no breach of fiduciary duty has occurred with respect to any Plan,
and there are no pending, threatened or anticipated claims by or on behalf of
any Plan, by any employee or beneficiary covered under any such Plan, or
otherwise involving any such Plan (other than routine claims for benefits).
3.1.13 COMPLIANCE WITH LEGAL REQUIREMENTS;
GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Schedule 3.1.13:
---------------
(i) each Acquired Company is, and at all times since December
31, 1993 has been, in material compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or the
ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time or both) (A) shall constitute or result in a
violation by any Acquired Company of, or a failure on the part of any Acquired
Company to comply with, any Legal Requirement in all material respects, or (B)
shall give rise to any obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature; and
(iii) none of the Acquired Companies has received any notice or
other communication from any Governmental Body or any other Person regarding (A)
any violation of, or failure to comply with, any Legal Requirement, or (B) any
obligation on the part of the Acquired Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.
(b) Schedule 3.1.13 contains a complete and accurate list of each
---------------
Governmental Authorization that is held by any Acquired Company or that
otherwise relates to the business of, or to any of the assets owned or used by,
any Acquired Company. Each Governmental Authorization listed or required to be
listed in Schedule 3.1.13 is valid and in full force and effect. Except as set
---------------
forth in Schedule 3.1.13:
---------------
(i) each of the Acquired Companies is, and at all times since
December 31, 1993 has been, in material compliance with the terms and
requirements of each Governmental Authorization identified or required to be
identified in Schedule 3.1.13.
----------------
18
(ii) no event has occurred or circumstance exists that shall (A)
constitute or is reasonably likely to result directly or indirectly in a
violation of, or a failure to comply with, any term or requirement of any
Governmental Authorization listed or required to be listed in Schedule 3.1.13 in
---------------
all material respects, or (B) result in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any Governmental
Authorization listed in Schedule 3.1.13;
---------------
(iii) no Acquired Company has received, at any time since
December 31, 1993, any notice or other communication from any Governmental Body
or any other Person regarding (A) any violation of, or failure to comply with,
any term or requirement of any Governmental Authorization in any material
respect, or (B) any revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization listed in
Schedule 3.1.13; and
---------------
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed in Schedule 3.1.13 have been
---------------
duly filed on a timely basis with the appropriate Governmental Bodies, and all
other filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Bodies.
(c) The Governmental Authorizations listed in Schedule 3.1.13
---------------
collectively constitute all of the Governmental Authorizations necessary to
permit the Acquired Companies to lawfully conduct and operate their businesses
in the manner they currently conduct and operate such businesses and to permit
the Acquired Companies to own and use their assets in the manner in which they
currently own and use such assets.
3.1.14 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Schedule 3.1.14, there is no pending
---------------
Proceeding:
(i) that has been commenced by or against any Acquired Company
or that otherwise relates to or may affect the business of, or any of the assets
owned or used by, any Acquired Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
To the Knowledge of the Sellers and the Acquired Companies, no such
Proceeding has been Threatened. Sellers have delivered to Buyer copies of all
pleadings, correspondence, and other documents, if any, relating to each
Proceeding listed in Schedule 3.1.14.
---------------
(b) Except as set forth in Schedule 3.1.14:
---------------
19
(i) there is no Order to which any Acquired Company, or any of
the assets owned or used by any Acquired Company, is subject;
(ii) none of the Sellers is subject to any Order that relates to
the business of, or any of the assets owned or used by, any Acquired Company;
and
(iii) to the Knowledge of Sellers and the Acquired Companies, no
officer, director, agent, or employee of any Acquired Company is subject to any
Order that prohibits such officer, director, agent, or employee from engaging in
or continuing any conduct, activity, or practice relating to the business of any
Acquired Company as it is presently being conducted.
(c) Except as set forth in Schedule 3.1.14:
---------------
(i) each Acquired Company is, and at all times since December
31, 1993 has been, in material compliance with all of the terms and requirements
of each Order to which it, or any of the assets owned or used by it, is or has
been subject;
(ii) no event has occurred or circumstance exists that shall
constitute or is reasonably likely to result in a violation of or failure to
comply with any term or requirement of any Order to which any Acquired Company,
or any of the assets owned or used by any Acquired Company, is subject; and
(iii) no Acquired Company has received, at any time since
December 31, 1993, any notice or other communication (whether oral or written)
from any Governmental Body or any other Person regarding any violation of, or
failure to comply with, any term or requirement of any Order to which any
Acquired Company, or any of the assets owned or used by any Acquired Company, is
or has been subject.
3.1.15 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Schedule 3.1.15 or pursuant to the Contemplated
---------------
Transactions, since December 31, 1999, the Acquired Companies have conducted
their businesses in the Ordinary Course of Business and there has not been any:
(a) change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Acquired Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock other than regular dividends paid
in accordance with prior practice;
(b) amendment to the Organizational Documents of any Acquired
Company;
20
(c) payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, employee benefit or other Plan for or with any employees of any
Acquired Company;
(e) damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
any Acquired Company;
(f) sale, lease, or other disposition of any material asset or
property of any Acquired Company or mortgage, pledge, or imposition of any
Encumbrance on any material asset or property of any Acquired Company, including
the sale, lease, or other disposition of any of the Intellectual Property
Assets;
(g) material change in the accounting methods used by any Acquired
Company;
(h) material change in any Acquired Company's policies or practices
concerning customer credit, collection of accounts , inventory amounts, shipping
or purchasing; or
(i) agreement, whether oral or written, by any Acquired Company to do
any of the foregoing.
3.1.16 CONTRACTS; NO DEFAULTS
(a) Schedule 3.1.16 contains a complete and accurate list, and
---------------
Sellers have delivered to Buyer true and complete copies, of
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by one or more Acquired Companies of
an amount or value in excess of $1,000;
(ii) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of one or
more Acquired Companies in excess of $1,000;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except
21
personal property leases and installment and conditional sales agreements having
a value per item or aggregate payments of less than $1,000 and with terms of
less than one year);
(iv) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual property,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(v) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees;
(vi) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by any Acquired Company with any other Person;
(vii) each Applicable Contract containing covenants that in any
way purport to restrict the business activity of any Acquired Company or any
Affiliate of an Acquired Company or limit the freedom of any Acquired Company or
any Affiliate of an Acquired Company to engage in any line of business or to
compete with any Person;
(viii) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct payments for
goods;
(ix) each power of attorney that is currently effective and
outstanding;
(x) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by any Acquired Company to be responsible for special, exemplary or
consequential damages;
(xi) each Applicable Contract for capital expenditures in
excess of $1,000;
(xii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by any Acquired
Company other than in the Ordinary Course of Business;
(xiii) each warehouse, safety deposit box and other storage
rental or lease agreement to which any Acquired Company is a party or pursuant
to which any assets of any Acquired Company are stored; and
(xiv) each amendment, supplement, and modification (whether oral
or written) in respect of any of the foregoing.
(b) Except as set forth in Schedule 3.1.16:
---------------
22
(i) none of the Sellers (and no Related Person of any Seller)
has or may acquire any rights under, and no Seller has or may become subject to
any obligation or liability under, any Contract that relates to the business of,
or any of the assets or rights owned, used or exercised by, any Acquired
Company; and
(ii) to the Knowledge of Sellers and the Acquired Companies, no
officer, director, agent, employee, consultant, or contractor of any Acquired
Company is bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to (A) engage in
or continue any conduct, activity, or practice relating to the business of any
Acquired Company, or (B) assign to any Acquired Company or to any other Person
any rights to any invention, improvement, or discovery.
(c) None of the Sellers and no Acquired Company has taken any action
that could result in the termination, or could materially impair the validity or
enforceability of any Contract identified or required to be identified in
Schedule 3.1.16 and none of the Sellers and no Acquired Company has any
---------------
Knowledge or any such action having been taken by any other Person.
(d) Except as set forth in Schedule 3.1.16:
---------------
(i) each Acquired Company is, and at all times since December
31, 1999 has been, in compliance in all material respects with all applicable
terms and requirements of each Contract under which such Acquired Company has or
had any obligation or liability or by which such Acquired Company or any of the
assets owned or used by such Acquired Company is or was bound;
(ii) each other Person that has or had any obligation or
liability under any Contract under which an Acquired Company has or had any
rights is, and at all times since December 31, 1999 has been, in compliance in
all material respects with all applicable terms and requirements of such
Contract;
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time or both) may contravene, conflict with, or is
reasonably likely to result in a violation or breach of, or give any Acquired
Company or other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Applicable Contract; and
(iv) no Acquired Company has given to or received from any other
Person, at any time since December 31, 1999, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to any
Acquired Company under
23
current or completed Contracts with any Person and no such Person has made
written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Acquired Companies have been
entered into in the Ordinary Course of Business and have been entered into
without the commission of any act alone or in concert with any other
Person, or any consideration having been paid or promised, that is or would
be in violation of any Legal Requirement.
3.1.17 INSURANCE
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of insurance to
which any Acquired Company is a party or under which any Acquired Company, or
any director of any Acquired Company, is presently covered; and
(ii) true and complete copies of all pending applications for
policies of insurance.
(b) Schedule 3.1.17(b) lists:
------------------
(i) any self-insurance arrangement by or affecting any Acquired
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by any Acquired Company; and
(iii) all obligations of any Acquired Company to third parties
with respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.
(c) Except as noted on Schedule 3.1.17(c):
------------------
(i) All insurance policies to which any Acquired Company is a
party or that provide coverage to any Acquired Company, or any director or
officer of any Acquired Company:
(A) are valid and outstanding;
(B) are issued by an insurer that, to any Acquired
Company's Knowledge, is financially sound and reputable;
24
(C) are sufficient for compliance with all Legal
Requirements and Applicable Contracts to which any Acquired Company is a party
or by which it is bound; and
(D) will continue in full force and effect following the
consummation of the Contemplated Transactions.
(ii) No Seller or Acquired Company has received (A) any refusal
of coverage or any notice that a defense will be afforded with reservation of
rights, or (B) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to perform its obligations
thereunder.
(iii) The Acquired Companies have paid all premiums due, and have
otherwise performed all of their respective obligations, under each policy to
which any Acquired Company is a party or that provides coverage to any Acquired
Company or any director thereof.
(iv) The Acquired Companies have given timely notice to the
insurer of all existing and Threatened claims that may be insured thereby.
3.1.18 EMPLOYEES
(a) Schedule 3.1.18 contains a complete and accurate list of the
---------------
following information for each employee and director of the Acquired Companies,
including each employee on leave of absence or layoff status: employer; name;
job title; current compensation paid or payable and any change in compensation
since December 31, 1999; and vacation accrued. Sellers have previously furnished
Buyer with sufficient data to permit the calculation of service credited to
employees and directors of each Acquired Company for purposes of vesting and
eligibility to participate under any Acquired Company's pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock ownership (including investment credit or
payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit or other Plan or any Director Plan. All such
data as furnished to Buyer is complete and accurate in all material respects.
(b) No employee or director of any Acquired Company is a party to, or
is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of the Acquired Companies, or (ii) the ability of any
Acquired Company to conduct its business, or (iii) the ownership of its assets,
including any Proprietary Rights Agreement with Sellers or the Acquired
Companies by any such employee or director. Except as set forth on Schedule
--------
3.1.18 to Sellers' Knowledge, no
------
25
officer or other key employee of any Acquired Company intends to terminate his
employment with such Acquired Company.
(c) Schedule 3.1.18 also contains a complete and accurate list of the
---------------
following information for each retired employee or director of the Acquired
Companies, or his dependents, receiving benefits or scheduled to receive
benefits in the future: name, pension benefit, pension option election, retiree
medical insurance coverage, retiree life insurance coverage, and other benefits.
(d) The payment by Buyer or the Company of the amounts provided in
Section 2.2(f) to G. Xxxxx Xxxxxxx and Xxxxxx X. XxXxxxxx under their respective
Deferred Compensation Agreements as provided in Section 2.2(f) constitutes
satisfaction and payment in full of all obligations of the Company under such
Deferred Compensation Agreements.
3.1.19 LABOR RELATIONS; COMPLIANCE
No Acquired Company has been or is a party to any collective
bargaining or other labor Contract. There has not been, there is not presently
pending or existing, and to Sellers' Knowledge, there is not Threatened, (a) any
strike, slowdown, picketing, work stoppage, or employee grievance process, (b)
any Proceeding against or affecting any Acquired Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable Governmental Body, organizational activity, or other labor or
employment dispute against or affecting any of the Acquired Companies or their
premises, or (c) any application for certification of a collective bargaining
agent. To Sellers' Knowledge, no event has occurred or circumstance exists that
could provide the basis for any work stoppage or other labor dispute. There is
no lockout of any employees by any Acquired Company, and no such action is
contemplated by any Acquired Company. The Acquired Companies have complied in
all material respects with all Legal Requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closings. No Acquired Company is
liable for the payment of any material compensation, damages, Taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing Legal Requirements in all material respects.
3.1.20 INTELLECTUAL PROPERTY
(a) The term "Intellectual Property Assets", as to each Acquired
Company, includes:
(i) the name of each Acquired Company, all fictional business
names, trading names, registered and unregistered trademarks, service marks, and
applications;
26
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable;
(iii) all copyrights in both published works and unpublished
works; and
(iv) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints (collectively, "Trade Secrets"); owned, used,
or licensed by any Acquired Company as licensee or licensor.
(b) Schedule 3.1.20(b) contains a complete and accurate list and sets
------------------
forth any royalties paid or received by any Acquired Company, of all Material
Contracts relating to the Intellectual Property Assets to which any Acquired
Company is a party or by which any Acquired Company is bound. There are no
outstanding and, to the Sellers' Knowledge, no Threatened disputes or
disagreements with respect to any such agreement.
(c) The Intellectual Property Assets are all those necessary for the
operation of the Acquired Companies' businesses as they are currently conducted.
Except as set forth on Schedule 3.1.20(c), one or more of the Acquired Companies
------------------
is the owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all Encumbrances, or has the
right to use without payment to a third party all of the Intellectual Property
Assets. To the Sellers' Knowledge, no employee of any Acquired Company has
entered into any Contract with anyone other than the Acquired Company that
restricts or limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than the Acquired Company.
(d) The Acquired Companies have good and valid title and the Acquired
Companies have an absolute right to use the Trade Secrets. The Trade Secrets are
not in the public domain or part of the public literature, and, to the Sellers'
Knowledge, have not been used, divulged, or appropriated either for the benefit
of any Person (other than the Acquired Companies) or to the detriment of the
Acquired Companies. To the Sellers' Knowledge, no Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.
3.1.21 CERTAIN PAYMENTS
(a) No Acquired Company nor any director, officer, agent, or employee
of any Acquired Company, or any other Person associated with or acting for or on
behalf of any Acquired Company, has directly or indirectly (a) made in violation
of any Legal Requirement any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, or (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any Acquired Company, or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Acquired Company.
27
3.1.22 DISCLOSURE
No representation or warranty of the Sellers or of any Acquired
Company in this Agreement and no statement in any Schedule omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading. There does not exist
any item or matter involving the internal operations or conditions of any of the
Acquired Companies of a material nature that has either not been disclosed to
Buyer in this Agreement, the Schedules attached hereto or any other information
furnished to Buyer in connection with the Contemplated Transactions or has been
disclosed in a manner that is intended to or is likely to mislead Buyer, the
result of which could have a material adverse effect on the business,
operations, financial condition or prospects of the Acquired Companies.
3.1.23 RELATIONSHIPS WITH RELATED PERSONS
Except as set forth in Schedule 3.1.23, no Related Person of any
---------------
Seller or Acquired Company has any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining to
any Acquired Company's business. Except as set forth in Schedule 3.1.23, no
---------------
Related Person of any Seller or Acquired Company owns or has since December 31,
1997, owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (a) had business dealings or
a material financial interest in any transaction with any Acquired Company, or
(b) engaged in competition with any Acquired Company with respect to any line of
services of any Acquired Company (a "Competing Business") , other than for non-
material interests in a publicly traded company, in any market presently served
by any Acquired Company. Except as set forth in Schedule 3.1.23, no Related
---------------
Person of any Seller or Acquired Company is a party to any Material Contract
with, or has any claim or right against, any Seller or Acquired Company. Except
as set forth in Schedule 3.1.23, no Related Person of any Seller or Acquired
---------------
Company has any outstanding loans from any Acquired Company (other than travel
and expense advances which do not exceed $1,000 in the aggregate).
3.1.24 BROKERS OR FINDERS
None of the Acquired Companies or Sellers has incurred any obligation
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement, except
pursuant to an arrangement with Xxxxxx Xxxxxxxx & Co., for which Sellers shall
be solely responsible, and whose fees, expenses and other charges shall be paid
by Sellers.
28
3.1.25 ENVIRONMENTAL MATTERS
Except as set forth in Schedule 3.1.25:
---------------
(a) Each Acquired Company is, and at all times since January 1, 1995
has been, in full compliance with, and has not been and is not in violation of
or liable under, any Environmental Laws or any Occupational Safety and Health
Laws. No Seller or Acquired Company has any basis to expect, nor has any of them
or any other Person for whose conduct they are or may be held to be responsible
received, any actual or Threatened Order, notice, or other communication from
(i) any Governmental Body or private citizen acting in the public or a private
interest, or (ii) the current or prior owner or operator of any Facilities, of
any actual or potential violation or failure to comply with any Environmental
Laws or any Occupational Safety and Health Laws, or of any actual or Threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which Sellers or any Acquired
Company has had an interest, or with respect to any offsite property or facility
to which any of the Sellers or Acquired Companies sent or caused to be sent
Hazardous Materials for treatment, storage or disposal that could reasonably be
expected to cause any of the Sellers or Acquired Companies to have any
Environmental Health and Safety Liability.
(b) There are no pending or Threatened claims, Encumbrances, or other
restrictions of any nature, resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental Laws or
Occupational Safety and Health Laws, with respect to or affecting the Company,
any of the Facilities or any other properties and assets (whether real,
personal, or mixed) in which Sellers or any Acquired Company has or had an
interest, that could reasonably be expected to cause any of the Sellers or
Acquired Companies to have any Environmental Health and Safety Liability.
(c) No Seller or Acquired Company has any basis to expect, nor has
any of them or any other Person for whose conduct they are or may be held
responsible, received, any citation, directive, inquiry, notice, Order, summons,
warning, or other communication that relates to Hazardous Activity, Hazardous
Materials, or any alleged, actual, or potential violation or failure to comply
with any Environmental Laws or Occupational Safety and Health Laws, or of any
alleged, actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which Sellers or any Acquired Company had an interest, or with respect to any
off-site property or facility to which any of the Sellers or Acquired Companies
sent or caused to be sent Hazardous Materials for treatment, storage, or
disposal.
(d) No Seller or Acquired Company, or any other Person for whose
conduct they are or may be held responsible, has any Environmental, Health, and
Safety Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which Sellers or any
Acquired Company (or any predecessor), has or had an
29
interest, or at any property hydrologically adjoining the Facilities or any such
other property or assets.
(e) There are no Hazardous Materials present on or in the Environment
at the Facilities or any adjoining property, including any Hazardous Materials
contained in barrels, above or underground storage tanks, landfills, land
deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, or deposited or located in land, water, sumps, or
any other part of the Facilities or such adjoining property, or incorporated
into any structure therein or thereon. No Seller, Acquired Company, any other
Person for whose conduct they are or may be held responsible, or any other
Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to the Facilities or any other properties or assets
(whether real, personal, or mixed) in which Sellers or any Acquired Company has
or had an interest, that could reasonably be expected to cause any of the
Sellers or Acquired Companies to have any Environmental Health and Safety
Liability.
(f) There has been no Release or Threatened Release, of any Hazardous
Materials at, from or to the Facilities or at any other locations where any
Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed from or by the Facilities, or from or by
any other properties and assets (whether real, personal, or mixed) in which
Sellers or any Acquired Company has or had an interest, or any adjoining
property, whether by Sellers, any Acquired Company, or any other Person.
(g) Sellers have made available to Buyer true and complete copies and
results of any written communications, reports, studies, analyses, tests, or
monitoring possessed or initiated by Sellers or any Acquired Company pertaining
to Hazardous Materials or Hazardous Activities in, on, or under the Facilities,
or concerning compliance by Sellers, any Acquired Company, or any other Person
for whose conduct they are or may be held responsible, with Environmental Laws
or Occupational Safety and Health Laws.
3.1.26 PRODUCT COMPLIANCE
(a) To the Knowledge of Sellers, the labeling of all products
currently being sold by the Acquired Companies (the "Products") is in full
compliance with all Legal Requirements with respect to product labeling.
(b) No promotional or advertising materials relating to any of the
Products make claims inconsistent with the label of any of the Products.
(c) The Acquired Companies have complied in all material respects
with all Legal Requirements applicable to the manufactured, advertising, sale
and delivery of the Products.
(d) No inventory is subject to any stop sale, use or removal order
under any Legal Requirement.
30
(e) All manufacturing processes used by the Acquired Companies to
produce the Products are in material compliance with all Legal Requirements
applicable to the Products. If applicable, all requisite Governmental Bodies
have been notified of any change in any such manufacturing process and have
cleared any such change in accordance with their rules and regulations.
(f) Seller has in its possession all raw data supporting the
registration of the Products required to be maintained by all applicable Legal
Requirements.
(g) All relevant representations and warranties which the Acquired
Companies have made to any Governmental Body with respect to the Products and
which are in effect as of the date hereof are herein adopted in all material
respects as part of this Agreement and Sellers hereby confirm to the Buyer that
such representations and warranties are true and correct in all material
respects as of the date hereof.
3.1.27 PRODUCT WARRANTIES
Except as set forth in Schedule 3.1.27 and for warranties under
---------------
applicable Legal Requirements, (a) there are no warranties express or implied,
written or oral, with respect to the Products and (b) there are no pending or,
to the Knowledge of any Seller, Threatened claims with respect to any such
warranty, except for any such pending or Threatened claims which would not
result in a material adverse change in the business, financial condition,
operations or prospects of any Acquired Company. Schedule 3.1.27 contains a
---------------
complete and accurate description of each Acquired Company's standard terms and
conditions of sale.
3.1.28 TERRITORIAL RESTRICTIONS
Except as set forth on Schedule 3.1.28, no Acquired Company is
---------------
restricted by any written agreement or understanding with any other Person from
carrying on its business anywhere in the world. Buyer, solely as a result of its
purchase of the Shares from Sellers pursuant hereto, will not thereby become
restricted in carrying on the business of the Acquired Companies anywhere in
the world.
3.1.29 SUBSTANTIAL CUSTOMERS AND SUPPLIERS
(a) Schedule 3.1.29(a)(i) lists the top fifteen (15) customers of the
---------------------
Acquired Companies, by dollar volume and shows dollar volumes and percentage of
total dollar volumes during the twelve-month periods ending December 31, 1998
and December 31, 1999. Schedule 3.1.29(a)(ii) sets for the total amount of trade
----------------------
promotion spending for all customers, in the aggregate, (including all customer
allowances and performance-based promotion spending).
(b) Except as disclosed in Schedule 3.1.29(b), since December 31,
------------------
1999 no duly authorized representative of any customer listed in Schedule
--------
3.1.29(a)(i):
------------
31
(i) has cancelled or otherwise terminated, or to the Knowledge
of any Seller or Acquired Company, Threatened to cancel or otherwise terminate,
in any material respect, its relationship with any Acquired Company; or
(ii) has decreased materially, or to the Knowledge of any Seller
or any Acquired Company, Threatened to decrease or limit materially, its volume
of business with any Acquired Company, or materially adversely modified any
other terms or conditions of sale.
(c) Schedule 3.1.29(c) lists the ten (10) suppliers of the Acquired
------------------
Companies that were paid the greatest amount for Products and services supplied
to the Acquired Company during the twelve-month period ending December 31, 1999,
and the approximate aggregate amount the Acquired Companies paid to each such
supplier during each such period and the Product(s) or service(s) purchased from
each supplier during each such period.
(d) Except as disclosed on Schedule 3.1.29(d), since December 31,
------------------
1999 no duly authorized representative of any supplier listed on Schedule
--------
3.1.29(c):
---------
(i) has increased materially, or to the Knowledge of any Seller
or any Acquired Company, Threatened to increase materially, the prices charged
to any Acquired Company for such Products and services; or
(ii) has decreased materially, or to the Knowledge of any Seller
or any Acquired Company has Threatened to decrease materially, its volume or
business with any Acquired Company, or materially adversely modified any other
terms or conditions of sale.
3.1.30 TRADE INVENTORIES
During the twelve months preceding the Closing Date, the Acquired
Companies have operated their businesses in the Ordinary Course of Business with
respect to trade inventories and have not taken any action designed to or which
would have the effect of (i) causing trade inventories to exceed historical
levels, in any material respect, or (ii) inducing customers to defer making
product returns or claims for refunds after the Closing Date.
3.1.31 EXCLUDED ASSETS; PAYMENT OF CERTAIN INDEBTEDNESS;
ACQUISITION OF MINORITY INTERESTS
(a) The Acquired Companies have distributed the Excluded Assets to
the Sellers, including any and all Encumbrances associated therewith and have
redeemed the Redemption Shares as contemplated in Section 2.1(b).
(b) All indebtedness owed to any Acquired Company as of the Closing
Date by any Seller or any Related Person of any Seller shall have been paid in
full or distributed to Sellers as an Excluded Asset at or prior to the Closing.
32
(c) All shares of the outstanding capital stock of Plant Food
Products, Incorporated, a Virginia corporation, owned beneficially or of record
by any Person other than the Company have been redeemed by Plant Foods Products,
Incorporated for an aggregate redemption price of $641,847.00.
(d) The Company has made payments ("Separation Payments") to the
employees listed on Schedule 3.1.31(d), in the respective amounts set forth
------------------
therein, aggregating $521,058.00, pursuant to separation and waiver agreements
between the Company and such employees in the form attached as Annex A to
-------
Schedule 3.31.(d) ("Separation Agreements"), such payments having been made in
-----------------
lieu of severance and all other obligations of any Acquired Company to such
employees relating to their employment.
3.2 SELLERS' SEPARATE REPRESENTATIONS AND WARRANTIES
3.2.1 SELLERS' REPRESENTATIONS AND WARRANTIES
Each of the Sellers hereby severally, and not jointly, represents and
warrants to Buyer as to himself and the Shares owned by him:
(a) that (i) he has the absolute and unrestricted power, authority
and capacity to execute, deliver, and perform this Agreement and the Seller's
Closing Documents and to endorse and deliver the certificates representing the
Shares owned by him (the "Individual Shares"); (ii) this Agreement has, and the
certificates representing the Individual Shares (or stock powers) have been,
duly executed or endorsed and delivered by him; (iii) this Agreement
constitutes, and each of such Seller's Closing Documents, upon execution and
delivery by such Seller at the Closing, will constitute his valid and binding
obligation enforceable against him in accordance with its terms, except as such
enforcement may be limited by (A) bankruptcy, insolvency or any other laws
affecting creditor's rights generally, or (B) limitations on the availability of
equitable remedies; and (iv) upon the payment for the Individual Shares pursuant
to this Agreement, Buyer will acquire good and marketable title to and become
the legal and beneficial owner of the Individual Shares, free and clear of all
Encumbrances; and
(b) that the execution, delivery, and performance of this Agreement
and of the Seller's Closing Documents, the endorsement and delivery of the
certificates representing the Individual Shares, and the consummation of the
Contemplated Transactions by him will not, with or without the giving of notice
or the passage of time or both (i) violate any Legal Requirement, currently in
effect, applicable to him; (ii) violate any Order applicable to him; or (iii)
result in a breach or default under any Contract to which he is a party or by
which he is bound.
33
3.3 EXCLUSIVITY OF REPRESENTATIONS
3.3.1 NO OTHER REPRESENTATIONS.
Except for the representations and warranties contained in this
Article III (including the Schedules and disclosures made thereon), no Seller
makes any express or implied representation or warranty, and Sellers disclaim
any such express or implied representation or warranty, whether by the Company
or any of its Representatives or any other Person, with respect to the execution
and delivery of this Agreement or the consummation of the Contemplated
Transactions or the Shares or the business or assets of the Acquired Companies,
notwithstanding the delivery or disclosure to Buyer or any of its
Representatives or any other Person of any documentation or other information
with respect to the foregoing.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a limited liability company duly organized, validly existing,
and in good standing under the laws of the State of Delaware.
4.2 AUTHORITY; NO CONFLICT; COMPETING BUSINESS
(a) This Agreement has been duly executed and delivered by Buyer.
This Agreement constitutes a legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms. Buyer has the absolute
and unrestricted right, power, and authority to execute and deliver this
Agreement and the Buyer Closing Documents and to perform its obligations
hereunder and thereunder and to consummate the Contemplated Transactions. The
entry into this Agreement and the consummation of the Contemplated Transactions
have been duly authorized by all necessary action on the part of Buyer.
(b) Except as set forth on Schedule 4.2, neither the execution and
------------
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will directly or indirectly, with or
without notice or lapse of time or both, contravene, conflict with or result in
a violation of or give any Person or Governmental Body the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:
(i) any provision of Buyer's Organizational Documents;
34
(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which Buyer
may be bound.
(c) Except as set forth in Schedule 4.2, Buyer is not and will not
------------
be required to give any notice or to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS
There is no Order and no pending Proceeding has been commenced against
Buyer, that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions.
To Buyer's knowledge, no such Proceeding has been Threatened.
4.4 BROKERS OR FINDERS
Buyer and its officers, directors or shareholders have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
4.5 INVESTMENT REPRESENTATION
Buyer is acquiring the Shares for investment and not with a view to
their sale or distribution other than in a sale or distribution which is
registered under applicable securities laws or is exempt from such registration,
and will accept certificates for the Shares with a legend thereon indicating
this fact.
ARTICLE 5. ADDITIONAL AGREEMENTS
5.1 BOOKS AND RECORDS
Buyer shall, and shall cause the Acquired Companies to, retain all of
the books and records of the Acquired Companies existing as of the Closing Date
that relate to Taxes for a period of seven (7) years after the Closing Date or
such longer time as may be required by law
35
and shall make such books and records (or copies thereof) available to Sellers
or their Representatives, at reasonable times and upon reasonable notice, after
the Closing Date to the extent reasonably required by Sellers.
5.2 EMPLOYEE MATTERS
Buyer will permit each Acquired Company employee who remains employed
by an Acquired Company after the Closing to participate, on the same basis that
Buyer's employees participate, in the employee benefit plans and programs
regularly made available to the employees of Buyer and its Subsidiaries who hold
similar positions. Buyer will treat service with an Acquired Company by any
Acquired Company employee prior to the Closing as service with a Subsidiary of
Buyer for purposes of eligibility and vesting (but not for purposes of accrual
of benefits under) such plans and programs. The accrual of benefits by Acquired
Company employees under plans and programs covering employees of Buyer and its
Subsidiaries shall be based solely on their service with the Acquired Company
after the Closing.
5.3 COBRA OBLIGATIONS
After the Closing each Acquired Company shall continue to be liable
(to the same extent as they were liable on the Closing Date) for all of such
Acquired Company's group health plan continuations of coverage obligations under
Section 4980B of the IRC and Sections 601 through 609 of ERISA for all persons
receiving or entitled to receive such coverage under such Acquired Company's
group health plans prior to the Closing or as a result of the Contemplated
Transactions, including those persons who are "M&A qualified beneficiaries"
(within the meaning of Proposed Treasury Regulation Section 54.4980B-9, Q&A-
4(b)).
5.4 CERTAIN OBLIGATIONS OF SELLERS
(a) The parties intend that the Sellers' transfer of the Redemption
Shares to the Company in exchange for the Excluded Assets as set forth on
Schedule 2.1(b) qualify as a transaction described in IRC Section 302(b)(3), and
---------------
the parties agree to report such transaction for federal and state income tax
purposes in accordance with Schedule 2.1(b) and in a manner wholly consistent
with the parties' intent. In the event that the Company shall incur any Tax in
excess of $30,000.00 in the aggregate as a result of its acquisition of the
Redemption Shares or distribution of the Excluded Assets, Sellers shall pay the
Company the full amount of such excess Tax, plus any penalties and interest
levied in connection therewith.
(b) In the event that pursuant to the Separation Agreements
executed by the Company and certain employees as described in Section 3.1.31(d),
any of such employees elects to revoke such Separation Agreement within the
revocation period provided for therein, G. Xxxxx Xxxxxxx shall reimburse the
Company for the amount of the Separation Payment made to such revoking employee
to the extent not recovered by the Company directly from such employee upon
receipt of such employee's notice of revocation.
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5.5 REPURCHASE OF UNCOLLECTED ACCOUNTS RECEIVABLE
G. Xxxxx Xxxxxxx shall repurchase from Buyer all Accounts Receivable
listed on Schedule 3.1.8 as "Accounts Receivable Not Collectible on or prior to
--------------
December 31, 2000" that shall remain uncollected as of December 31, 2000 for the
full face amount thereof, such amount to be paid to Buyer by wire transfer of
immediately available funds within three (3) Business Days after G. Xxxxx
Xxxxxxx'x receipt at any time on or after January 6, 2001 of a written notice
from Buyer listing such uncollected Accounts Receivable and demanding payment of
the aggregate face value thereof pursuant to this Section 5.5; provided that
Buyer shall, during the period from the Closing Date through December 31, 2000,
use its best commercial efforts to collect such Accounts Receivable consistent
with its own collection and credit practices and that all partial payments
received on any such Accounts Receivable shall be applied first against the
amounts thereof that have been past due for the longest time.
5.6 KNOWLEDGE OF BREACH
Each party hereto, in entering into this Agreement and performing at
the Closing, agrees and acknowledges that it shall not be entitled to rely on
the accuracy and completeness of any representation or warranty of any other
party, including any matter set forth in any Schedule hereto, and shall not be
entitled under Article 8 to assert a Claim for Damages for Breach thereof, if
and to the extent that it shall have discovered any fact contrary to such
representation or warranty during its due diligence investigation or otherwise
and shall not have given to the parties (or in the case of Sellers, to G. Xxxxx
Xxxxxxx) notice thereof prior to the Closing Date.
ARTICLE 6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
6.1 ACQUISITION OF PARTNERSHIP INTEREST
Buyer shall have acquired and shall be the record and beneficial
owner, free and clear of any and all Encumbrances, of the partnership interest
owned by G. Xxxxx Xxxxxxx in Petersburg Agri-Terminal Associates, a Virginia
general partnership (the "Partnership Interest") owned approximately 91% by G.
Xxxxx Xxxxxxx and approximately 9% by the Company or another of the Acquired
Companies (the "Partnership"), pursuant to a Purchase Agreement between Buyer
and Xxxxxxx of even date herewith (the "Purchase Agreement").
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ARTICLE 7. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
7.1 ACQUISITION OF PARTNERSHIP INTEREST
Buyer shall have acquired and shall be the record and beneficial
owner, free and clear of any and all Encumbrances, of the Partnership Interest
pursuant to the Purchase Agreement.
ARTICLE 8. INDEMNIFICATION; REMEDIES
8.1 SURVIVAL
All representations, warranties, covenants, and obligations in this
Agreement, the Schedules and any other certificate delivered pursuant to this
Agreement will survive the Closing in accordance with the provisions of Section
8.4.
8.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE SELLERS
Subject to the provisions of Section 8.5 below, the Sellers, jointly
and severally, up to the amount of the Indemnity Escrow, will indemnify and hold
harmless Buyer, and its stockholders, Control Persons, and affiliates and their
respective permitted assigns (collectively, the "Buyer Indemnified Persons")
for, and will pay to Buyer Indemnified Persons the amount of, any loss,
liability, claim, damage (excluding incidental or consequential damages or
damages for lost profits), expense (including reasonable costs of investigation
and defense and reasonable attorneys' fees), whether or not involving a third-
party claim (collectively, "Damages"), actually suffered or incurred by such
Buyer Indemnified Person arising from or in connection with:
(a) any Breach of any representation or warranty made by any Seller
in this Agreement or the Schedules hereto delivered by any Seller pursuant to
this Agreement;
(b) any Breach by any Seller of any covenant or obligation of any
Seller in this Agreement;
(c) any product sold or shipped by, or any services provided, by any
Acquired Company prior to the Closing Date;
(d) the Breach by Sellers of any of their respective obligations
under Section 5.4;
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(e) (i) any Taxes (accrued or unaccrued) as of February 29, 2000
(other than those described in Section 5.4(a)) in excess of the reserves for
Taxes set forth on the Closing Balance Sheet owed by any Acquired Company or any
of the Sellers in respect of any Acquired Company's operations prior to the date
of the Closing Balance Sheet; and (ii) any Breach of any of the representations
made in Sections 3.1.3 or 3.2.1(a)(iv) hereof (but only to the extent related to
the Company's ownership of its Subsidiaries or Sellers' title to the Shares); or
(f) any breach by GWG Financial LLC or by G. Xxxxx Xxxxxxx, as
guarantor, of their respective obligations under the Environmental Obligations
Agreement; and any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with any Seller or any Acquired
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions;
8.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless the Sellers and their
respective heirs, executors, successors, legal representatives and permitted
assigns (collectively, the "Company Indemnified Persons") for, and will pay to
the Company Indemnified Persons the amount of any Damages arising from or in
connection with (a) any Breach of any representation or warranty made by Buyer
in this Agreement or in any certificate delivered by Buyer pursuant to this
Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer in
this Agreement, (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions; or (d) Buyer
and/or the Acquired Companies conducting the Acquired Companies' business after
the Closing except that (i) such Damages arise from or in connection with any
actions taken by G. Xxxxx Xxxxxxx after the Closing Date in the name or
purportedly on behalf of any of the Acquired Companies outside the scope of his
authority or duties under the Consulting Agreement; and (ii) such Damages shall
be reduced to the extent that they are directly attributable to the operation of
such business prior to Closing.
8.4 TIME LIMITATIONS
The Sellers will have no liability for indemnification with respect to
any representation or warranty made by it herein (other than those in Sections
3.2.1(a)(iv) or 3.1.3 relating to Sellers' title to the Shares or the Company's
ownership of its Subsidiaries, respectively, and in Section 3.1.10, subject in
each case to the provisions of Section 8.5), unless on or before the last day of
the eighteenth (18/th/) month following the Closing Date, the Buyer Indemnified
Person notifies the Sellers in writing of a Claim (as hereinafter defined)
specifying the factual basis of that Claim in reasonable detail to the extent
then known by such Buyer Indemnified Person. Buyer will have no liability (for
indemnification or otherwise) with respect to any such representation or
warranty made by it herein unless on or before the last day of the
39
eighteenth (18/th/) month following the Closing Date, the Company Indemnified
Person notifies Buyer in writing of a Claim specifying the factual basis of that
Claim in reasonable detail to the extent then known by such Company Indemnified
Person. A Claim with respect to Section 3.2.1(a)(iv) (relating only to Seller's
title to the Shares) or Section 3.1.3 (relating only to the Company's ownership
of its Subsidiaries) or Section 3.1.10 may be made at any time prior to the
expiration of any statute of limitations applicable to the actions or causes of
action which are attributable to the matters discussed in such Sections.
8.5 LIMITATIONS ON AMOUNT - AND THE SELLERS
(a) The Sellers will not have any liability for indemnification with
respect to the matters described in clause (a), clause (b) or clause (c) of
Section 8.2 (other than matters that are also described in other clauses of
Section 8.2 ) unless the aggregate of all Damages with respect thereto for which
Sellers would, but for this Section 8.5 (a), be liable, exceeds on a cumulative
basis the sum of Seventy-Five Thousand Dollars ($75,000) (the "Cumulative
Basket"), and then only to the extent of such excess; and no such matter
individually which involves Damages in an amount less than Five Thousand Dollars
($5,000) (the "Individual Basket") shall be included in determining whether the
Cumulative Basket amount has been reached. The Sellers will not have any
liability for indemnification with respect to the matters described in clause
(e)(i) of Section 8.2 unless the aggregate of all Damages for which any Acquired
Company would but for this Section 8.5(a) be liable, exceeds on a cumulative
basis the sum of Ten Thousand Dollars ($10,000.00), and only to the extent of
such excess. For purposes of this Section 8.5(a), Damages shall be calculated
after taking into account any tax benefits and tax costs (including tax costs
resulting from reduction in basis, and resulting reduction in depreciation and
amortization, and increase in taxable gain recognized on a sale) realized by,
and insurance proceeds paid to, Buyer (net of any related cost incurred by it
due to retrospective premium adjustments, experience based premium adjustments
and indemnification obligations), the Buyer Indemnified Persons or the Acquired
Companies.
(b) The sole source of payment of any indemnification obligations of
Sellers with respect to Section 8.2(a), (b) and (c) of this Agreement shall be
the Indemnity Escrow, and Buyer agrees that the payment of any claim made by any
Buyer Indemnified Person with respect to such clauses, for whatever reason,
shall be limited to, and shall only be made from, the Indemnity Escrow. If any
indemnification obligation arises as a result of Damages resulting from a Breach
of Section 3.1.3 (to the extent relating to ownership by the Company of its
Subsidiaries), Section 3.1.10 or Section 5.4 hereof and if the amount of such
Damages exceeds the balance (if any) available in the Indemnity Escrow therefor,
G. Xxxxx Xxxxxxx shall be solely liable for the amount of Damages resulting from
such Breach in excess of such Indemnity Escrow balance, but in no event shall
such liability for indemnification exceed the portion of the Purchase Price
hereunder actually received by G. Xxxxx Xxxxxxx (net of his prorated share in
the Indemnity Escrow) and no other Seller shall have any liability whatsoever
for any such excess Damages. If any indemnification obligation arises as a
result of Damages resulting from a Breach of Section 3.2.1 (a)(iv) hereof and if
the amount of such Damages exceeds the balance (if any) available in the
Indemnity Escrow therefor, the Breaching Seller shall be solely liable for
40
the amount of Damages resulting from such Breach in excess of such Indemnity
Escrow balance, but in no event shall such liability for indemnification exceed
the portion of the Purchase Price hereunder actually received by such Seller
(net of his prorated share in the Indemnity Escrow) and no other Seller shall
have any liability whatsoever for any such excess Damages.
(c) The limitations of this Section 8.5 will not apply to the extent
any liability for Damages arises due to fraud on the part of any Seller, in
which case the Seller or Sellers committing such fraud shall be solely liable
for all Damages with respect to such Breaches.
8.6 LIMITATIONS ON AMOUNT - BUYER
Buyer will have no liability for indemnification with respect to the
matters described in clause (a) clause (b) or clause (d) of Section 8.3 (other
than matters that are also described in other clauses of Section 8.3) unless
the aggregate of all Damages for which Buyer would, but for this Section 8.6, be
liable exceeds on a cumulative basis the Cumulative Basket amount, and then only
to the extent of such excess; and no such matter individually which involves
Damages in an amount less than the Individual Basket amount shall be included
in determining whether the Cumulative Basket amount has been reached. However,
the limitations set forth in this Section 8.6 will not apply to the extent any
liability for Damages arises due to fraud on the part of Buyer, and Buyer will
be liable for all Damages with respect to such Breaches. For purposes of this
Section 8.6, Damages shall be calculated after taking into account any tax
benefits and tax costs (including tax costs resulting from reduction in basis,
and resulting reduction in depreciation and amortization, and increase in
taxable gain recognized on a sale) realized by, and insurance proceeds paid to,
Seller (net of any related cost incurred by it due to retrospective premium
adjustments, experience based premium adjustments and indemnification
obligations), the Seller Indemnified Persons.
8.7 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section 8.2
or 8.3 of notice of the assertion of a claim or of the commencement of any
Proceeding against it (a "Claim"), such indemnified party will, if a Claim is to
be made against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such Claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the indemnified party's failure to give such notice. The indemnified party shall
deliver to the indemnifying party, within five Business Days after the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the
Claim.
(b) If any Claim referred to in Section 8.7(a) is asserted or brought
against an indemnified party and it gives notice to the indemnifying party of
the Claim, the indemnifying
41
party will be entitled to participate in the defense of the Claim and, to the
extent that it wishes, exercisable by written notice to the indemnified party
within 10 Business Days of receipt of notice from the indemnified party of a
Claim (unless (i) the indemnifying party is also a party to a Proceeding
involving a Claim and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Claim and provide indemnification with respect to such Claim), to
assume the defense of such Claim with counsel reasonably satisfactory to the
indemnified party and, after such notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Claim, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Article 8 for any fees of other
counsel or any other expenses with respect to the defense of such Claim, in each
case subsequently incurred by the indemnified party in connection with the
defense of such Claim, other than reasonable costs of investigation or if the
indemnified party has assumed the defense as provided in Section 8.7(c). In any
event, the indemnifying party shall have the right to participate in the defense
of the Claim. If the indemnifying party assumes the defense of a Claim, (i) it
will be conclusively established for purposes of this Agreement that the claims
made in that Claim are within the scope of and subject to indemnification; (ii)
no compromise or settlement of such Claims may be effected by the indemnifying
party without the indemnified party's consent (which shall not be unreasonably
withheld) unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its consent (which
shall not be unreasonably withheld). If notice is given to an indemnifying party
of the assertion of or commencement of any Proceeding involving a Claim and the
indemnifying party does not, within ten Business Days after the indemnified
party's notice is given, give notice to the indemnified party of its election to
assume the defense of such Claim, the indemnified party shall have the right to
undertake the defense of such claim on behalf of the indemnifying party. The
indemnifying party will not be bound by any determination made in such
Proceeding or any compromise or settlement effected without the consent of the
indemnifying party (which shall not be unreasonably withheld).
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Claim may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Claim but the indemnifying party will not be
bound by any determination of a Claim so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).
8.8 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
42
A Claim for indemnification for any matter not based upon a claim
asserted or Proceeding commenced by a third-party may be asserted by notice to
the party from whom indemnification is sought in accordance with the provisions
of Section 8.4, and by following the procedures set forth in this Agreement and
the Indemnity Escrow Agreement.
8.9 CLAIM AGAINST ESCROW; EXCLUSIVE REMEDY
(a) Any Buyer Indemnified Person may make a Claim against the
Indemnity Escrow in any amount to which it may be entitled under this Article 8.
The indemnification provided in this Article 8 shall constitute the exclusive
remedy for Breach of the representations and warranties in this Agreement,
regardless of whether any claims or causes of action asserted with respect to
such matters are brought in contract, tort or any other legal theory whatsoever;
provided, however, that only in the case of fraud, the indemnification
provisions in this Article 8 are in addition to, and not in derogation of, any
statutory, equitable or common law remedy any party may have for a Breach of
representation or warranty. All indemnification payments under this Article 8
shall be treated by the parties as adjustments to the Purchase Price hereunder.
(b) Notwithstanding any other provision of this Agreement, neither
Sellers nor Buyer shall be liable under this Article 8 for an amount to the
extent, if any, that any Breach giving rise to such Damages results from a
failure on the part of any Seller Indemnified Person or Buyer Indemnified
Person, as the case may be, to exercise good faith in not jeopardizing or
prejudicing the interest of Buyer or Sellers.
ARTICLE 9. GENERAL PROVISIONS
9.1 EXPENSES
Each of the parties hereto will bear the expenses incurred by them in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. Buyer shall pay all sales, transfer,
use, documentary stamp and other similar Taxes with respect to the Contemplated
Transactions.
9.2 PUBLIC ANNOUNCEMENTS
No public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions shall include any of the pricing or
other substantive terms hereof unless otherwise required by Legal Requirements.
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9.3 CONFIDENTIALITY
Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Company to
maintain in confidence, and not use to the detriment of another party or the
Company any written, oral, or other information obtained in confidence from
another party or the Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by
legal proceedings.
9.4 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
The Sellers: G. Xxxxx Xxxxxxx
00 Xxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
with a copy to: McGuire, Woods, Battle & Booth LLP
One Xxxxx Center
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Buyer: Xxxxxxx-Xxxxx Resources LLC.
000 Xxxxx Xxxxxx, 00/xx/ Xxx.
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
44
with a copy to: Xxxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000 ) 000-0000
9.5 FURTHER ASSURANCES
Each of the parties agrees (a) to furnish upon request to each other
party such further information, (b) to execute and deliver to each other party
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
9.6 WAIVER
Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
9.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.
9.8 SCHEDULES
In the event of any inconsistency between the statements in the body
of this Agreement and those in the Schedules (other than an exception set forth
in the Schedules), the statements in the body of this Agreement will control.
45
9.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
None of the parties may assign any of their rights under this
Agreement without the prior written consent of the other parties, which shall
not be unreasonably withheld. This Agreement will apply to, be binding in all
respects upon the parties hereto and their permitted assigns and inure to the
benefit of the successors and permitted assigns of the parties hereto. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and permitted assigns.
9.10 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
9.11 SECTION HEADINGS; CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" shall mean "including, without
limitation" and does not limit the preceding words or terms.
9.12 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
9.13 GOVERNING LAW
This Agreement will be governed by the laws of the Commonwealth of
Virginia without regard to conflicts of laws principles.
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9.14 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the Commonwealth of Virginia, or, if it has or can
acquire jurisdiction, in the United States District Court for the Eastern
District of Virginia, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any
action or proceeding referred to in the preceding sentence may be served on any
party anywhere in the world.
9.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
47
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER: THE SELLERS
XXXXXXX-XXXXX RESOURCES LLC ____________________________________
G. Xxxxx Xxxxxxx
By: ___________________________ ____________________________________
Xxxxxxxx X. Xxxxxxx
Title: ________________________
____________________________________
Xxxxxxxx X. Xxxxxxx
____________________________________
Xxxxx X. Xxxxxxxx
THE XXXXXXXXXXX XXXXXXX XXXXXXX
REVOCABLE TRUST
By: ________________________________
, Trustee
THE XXXXX XXXXXX XXXXXXX REVOCABLE
TRUST
By: ________________________________
, Trustee
THE XXXXXXXX XXXXX XXXXXXX REVOCABLE
TRUST
By: ________________________________
, Trustee
48
