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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
BETWEEN
ALLEGIANCE TELECOM, INC.
AND
PENNCORP FINANCIAL SERVICES, INC.
DATED JUNE 11, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS...................................................1
SECTION 1.1. Definitions.............................................1
SECTION 1.2. Other Definitions.......................................3
ARTICLE II THE ACQUISITION...............................................4
SECTION 2.1. Purchase and Sale of Shares.............................4
SECTION 2.2. Consideration for the Shares............................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PENNCORP....................4
SECTION 3.1. Organization and Qualification..........................4
SECTION 3.2. Authorization...........................................5
SECTION 3.3. No Violation............................................5
SECTION 3.4. Capitalization..........................................5
SECTION 3.5. Subsidiaries............................................6
SECTION 3.6. Consents and Approvals..................................6
SECTION 3.7. Financial Statements....................................6
SECTION 3.8. Absence of Undisclosed Liabilities......................6
SECTION 3.9. Absence of Certain Changes..............................7
SECTION 3.10. Litigation..............................................7
SECTION 3.11. Property; Liens and Encumbrances........................8
SECTION 3.12. Certain Agreements......................................8
SECTION 3.13. Employees...............................................9
SECTION 3.14. Taxes..................................................10
SECTION 3.15. Compliance with Applicable Law; Permits; Policies......11
SECTION 3.16. Brokers' Fees and Commissions..........................12
SECTION 3.17. Proprietary Rights.....................................12
SECTION 3.18. Insurance..............................................12
SECTION 3.19. Environmental Matters..................................12
SECTION 3.20. Books and Records......................................13
SECTION 3.21. Bank Accounts..........................................13
SECTION 3.22. Labor Matters..........................................13
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 3.23. Intercompany Payables..................................14
SECTION 3.24. Year 2000..............................................14
SECTION 3.25. Disclosure.............................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER......................15
SECTION 4.1. Organization; Qualifications and Operations............15
SECTION 4.2. Authorization..........................................15
SECTION 4.3. No Violation...........................................15
SECTION 4.4. Consents and Approvals.................................15
SECTION 4.5. Brokers' Fees and Commissions..........................16
SECTION 4.6. Purchase for Investment................................16
SECTION 4.7. Financing..............................................16
ARTICLE V COVENANTS....................................................16
SECTION 5.1. Conduct of Business Prior to the Closing...............16
SECTION 5.2. Access to Information..................................18
SECTION 5.3. HSR Act Filings........................................18
SECTION 5.4. All Reasonable Efforts.................................18
SECTION 5.5. Public Announcements...................................19
SECTION 5.6. Disclosure Supplements.................................19
SECTION 5.7. No Implied Representations or Warranties...............19
SECTION 5.8. Employment and Employee Benefits.......................19
SECTION 5.9. Acquisition Proposals..................................22
ARTICLE VI CLOSING CONDITIONS...........................................22
SECTION 6.1. Conditions to the Obligations of Buyer
under this Agreement.............................................22
SECTION 6.2. Conditions to the Obligations of PennCorp
under this Agreement.............................................23
ARTICLE VII CLOSING......................................................24
SECTION 7.1. Closing................................................24
ARTICLE VIII SURVIVAL; INDEMNIFICATION....................................24
SECTION 8.1. Survival of Representations, Warranties and Covenants..24
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 8.2. Limitations on Indemnification........................25
ARTICLE IX TERMINATION AND ABANDONMENT..................................25
SECTION 9.1. Termination...........................................25
SECTION 9.2. Procedure and Effect of Termination...................26
ARTICLE X MISCELLANEOUS PROVISIONS.....................................27
SECTION 10.1. Preparation of Tax Returns; Payment of Taxes..........27
SECTION 10.2. Amendment and Modification............................28
SECTION 10.3. Waiver of Compliance; Consents........................28
SECTION 10.4. Validity..............................................28
SECTION 10.5. Expenses and Obligations..............................28
SECTION 10.6. Parties in Interest...................................28
SECTION 10.7. Notices...............................................28
SECTION 10.8. Governing Law.........................................29
SECTION 10.9. Counterparts..........................................29
SECTION 10.10. Headings..............................................30
SECTION 10.11. Entire Agreement......................................30
SECTION 10.12. Assignment............................................30
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated June 11,
1999, by and between Allegiance Telecom, Inc., a Delaware corporation ("Buyer"),
and PennCorp Financial Services, Inc. a Delaware corporation ("PennCorp").
RECITALS:
WHEREAS, PennCorp is the record and beneficial owner of 100 of
the issued and outstanding shares of common stock, par value $.01 per share, of
Kivex, Inc., a Delaware corporation ("Kivex"); and
WHEREAS, subject to the terms and conditions set forth herein,
PennCorp desires to sell to Buyer, and Buyer desires to purchase from PennCorp,
all of the issued and outstanding shares of common stock of Kivex owned by
PennCorp (the "Shares").
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" means as to a specified Person any other
Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
Person.
(b) "Affiliated Group" means an affiliated group as defined in
Section 1504 of the Code (or any analogous combined, consolidated or unitary
group defined under state, local or foreign income Tax law) of which Kivex is or
has been a member.
(c) "Business Day" means any day that is not a Saturday,
Sunday or other day on which banking institutions in the city of New York, New
York are authorized or required by law or executive order to be closed.
(d) "Code" means the Internal Revenue Code of 1986, as amended
(including any successor code), and the rules and regulations promulgated
thereunder.
(e) "Disclosure Schedule" means the Disclosure Schedule
attached hereto as Annex A.
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(f) "Environmental Laws" means all applicable federal, state
or local laws (including but not limited to federal and state common law),
statutes, codes, rules or regulations relating to the environment, natural
resources, and pollution including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq., as amended from time to time ("CERCLA"), the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., as amended from time to time
("HMTA"), the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., as amended from time to time ("RCRA"), the Federal Water Pollution Control
Act, 33 U.S.C. Section 1251 et seq., as amended from time to time ("FWPCA"), the
Clean Air Act, 42 U.S.C. Section 7401 et seq., as amended from time to time
("CAA"), and/or the Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq., as amended from time to time ("TSCA").
(g) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(h) "GAAP" means generally accepted accounting principles as
in effect in the United States of America at the time of the preparation of the
subject financial statement.
(i) "Governmental Authority" means any nation or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
(j) "Hazardous Materials" means (i) any wastes, substances, or
materials which are defined as "hazardous material," "hazardous waste,"
"hazardous substance," "toxic material" or other similar designations in, or
otherwise subject to regulation under, any applicable Environmental Laws; (ii)
petroleum or petroleum byproducts; (iii) friable asbestos and/or any material
which contains friable asbestos; and (iv) electrical equipment containing
polychlorinated biphenyls ("PCBs") in excess of 50 parts per million.
(k) "Liability" means any liability (whether known or unknown,
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
(l) "Material Adverse Effect" means a material adverse effect
(a) with respect to the business, operations, results of operations, prospects
or financial condition of Kivex or (b) on the validity or enforceability of this
Agreement.
(m) "Person" means an individual, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or, as applicable, any other entity.
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(n) "Release" means any emission, spill, seepage, leak,
escape, leaching, discharge, injection, pumping, pouring, emptying, dumping,
disposal, release, or threatened release of Hazardous Materials into the
environment.
(o) "Taxes" means (A) any and all federal, state, local,
foreign and other taxes, levies, fees, imposts, duties and similar governmental
charges (including any interest, penalties or additions to tax imposed in
connection therewith or with respect thereto) including, without limitation,
taxes imposed on, or with respect to, or measured by, income, franchise, profits
or gross receipts, ad valorem, value added, sales, use, service, real or
personal property, capital stock, license, payroll, withholding, employment,
estimated, social security, unemployment, compensation, utility, severance,
production, excise, stamp, occupation, premium, windfall profits, transfer and
gains taxes, and customs duties, (B) any and all liability for the payment of
any amounts of the type described in clause (A) arising as a result of being (or
ceasing to be) a member of any Affiliated Group (or being included (or required
to be included) in any Tax Return relating thereto); and (C) any and all
liability for the payment of any amounts of the type described in clause (A) as
a result of any express or implied obligation to indemnify or otherwise assume
or succeed to the liability of any other person.
(p) "Tax Returns" means any report, return or statement
required to be supplied to a taxing authority in connection with Taxes.
(q) "WARN" means the Worker Adjustment and Retraining
Notification Act of 1988 and any similar state or local "plant closing" statute.
SECTION 1.2. Other Definitions. When used in this Agreement,
the following terms shall have the meanings ascribed to them in the Sections
noted below:
Term Defined in
---- ----------
Acquisition Section 6.1
Acquisition Proposal Section 5.9
Agreement Preamble
Benefit Plans Section 3.13(a)
Building Agreements Section 3.12
Buyer Preamble
Buyer Material Adverse Effect Section 4.1
Buyer Plans Section 5.8(b)
CERCLIS Section 3.19(c)
Closing Section 7.1
Closing Date Section 7.1
DOJ Section 3.6
ERISA Affiliate Section 3.13(d)
Financial Statements Section 3.7(a)
HSR Act Section 3.6
Kivex Recitals
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Intellectual Property Section 3.17
Interim Balance Sheet Date Section 3.7(a)(ii)
Interim Financial Statements Section 3.7(a)(ii)
Liens Section 3.11(b)
Litigation Section 3.10
Material Contract Section 3.12
Order Section 3.10
Owned Properties Section 3.11(b)
PennCorp Preamble
Purchase Price Section 2.2
SFSC Plan Section 5.8(c)
Shares Recitals
ARTICLE II
THE ACQUISITION
SECTION 2.1. Purchase and Sale of Shares. On the terms and
subject to the conditions hereof, and in reliance upon the respective
representations, warranties, covenants and agreements of each of the respective
parties to this Agreement, at the Closing PennCorp will sell, assign, transfer
and convey to Buyer, and Buyer will purchase and acquire from PennCorp, the
Shares, free and clear of all Liens.
SECTION 2.2. Consideration for the Shares. The aggregate
purchase price payable by Buyer for the Shares shall be $34,500,000 in cash (the
"Purchase Price"). On the Closing Date, Buyer will pay the Purchase Price by
wire transfer of immediately available funds to such accounts as PennCorp shall
have designated in writing at least two days prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PennCorp
PennCorp represents and warrants to Buyer as follows:
SECTION 3.1. Organization and Qualification.
(a) Each of PennCorp and Kivex is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with all requisite corporate power and authority
to own, operate and lease its properties and to carry on its business as it is
now being conducted. PennCorp has delivered to Buyer a true and complete copy of
the Certificate of Incorporation and Bylaws of Kivex.
(b) Kivex is qualified or licensed to do business as a foreign
corporation and is in good standing in every jurisdiction where the nature of
the business conducted by it or the properties owned or leased by it requires
such qualification or
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licensing, except where the failure to be so qualified, licensed or in good
standing would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.2. Authorization. PennCorp has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by PennCorp, the performance by PennCorp of its obligations hereunder, and the
consummation by PennCorp of the transactions contemplated hereby, have been duly
authorized by its Board of Directors. This Agreement has been duly and validly
executed and delivered by PennCorp and constitutes a valid and binding
obligation of PennCorp, enforceable against PennCorp in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
SECTION 3.3. No Violation. Except as set forth in Section 3.3
of the Disclosure Schedule, neither the execution and delivery of this Agreement
by PennCorp, the performance by PennCorp of its obligations hereunder nor the
consummation by PennCorp of the transactions contemplated hereby will (a)
violate, conflict with or result in any breach of any provision of the
Certificate of Incorporation or Bylaws of PennCorp or Kivex, (b) violate or
conflict with or result in a violation or breach of, or constitute a default or
give rise to any right of termination or acceleration (with or without due
notice or lapse of time or both) or result in the acceleration of any payments
under the terms, conditions or provisions of any note, bond, mortgage, indenture
or deed of trust, license, lease or agreement to which PennCorp or Kivex is a
party or by which any of their assets is bound, (c) violate any order, writ,
judgment, injunction, decree, statute, rule or regulation of any Governmental
Authority applicable to PennCorp or Kivex or any of their assets or (d) result
in the creation of any Lien upon any of the assets of PennCorp or Kivex.
SECTION 3.4. Capitalization.
(a) The authorized capital stock of Kivex consists of 1,000
shares of common stock, par value $.01 per share. As of the date hereof, Kivex
has 100 shares of common stock issued and outstanding, all of which have been
validly issued, are fully paid and non-assessable and were not issued in
violation of any preemptive rights. Except as set forth in Section 3.4(a) of the
Disclosure Schedule, there are no (i) options, warrants, calls, subscriptions,
conversion or other rights, agreements or commitments obligating Kivex to issue
any additional shares of capital stock or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any shares of capital
stock of Kivex, (ii) agreements or commitments obligating Kivex to repurchase,
redeem or otherwise acquire any shares of its capital stock, (iii) restrictions
on the transfer of any shares of capital stock of Kivex (other than pursuant to
this Agreement) or restrictions on registration of the transfer of any shares of
capital stock of Kivex on its
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stock register or (iv) voting or similar shareholder agreements or registration
rights or similar agreements relating to any shares of capital stock of Kivex.
(b) Except as set forth in Section 3.4(b) of the Disclosure
Schedule, the Shares are owned of record and beneficially by PennCorp free and
clear of all Liens.
SECTION 3.5. Subsidiaries. Kivex does not own, directly or
indirectly, any securities of, or otherwise possesses, directly or indirectly,
the power to direct or cause the direction of the management or policies of, any
Person, other than securities held for investment purposes only.
SECTION 3.6. Consents and Approvals. Except as set forth in
Section 3.6 of the Disclosure Schedule, no filing or registration with, no
notice to and no permit, authorization, consent or approval of any Governmental
Authority is necessary for the consummation by PennCorp of the transactions
contemplated by this Agreement other than consents and approvals of or filings
or registrations with the Antitrust Division of the United States Department of
Justice (the "DOJ") pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act").
SECTION 3.7. Financial Statements.
(a) PennCorp has previously delivered to Buyer true and
complete copies of the following (the "Financial Statements"):
(i) the audited balance sheets of Kivex as of December 31,
1996, 1997 and 1998, and the related audited statement of
operations, stockholders' equity and cash flows, together with
the notes related thereto; and
(ii) the unaudited balance sheet of Kivex as of April 30,
1999 (the "Interim Balance Sheet Date"), and the related
unaudited statement of operations (the "Interim Financial
Statements").
Each such statement was prepared in accordance with GAAP and
presents fairly in all material respects the financial position of Kivex as of
the respective dates thereof and the related results of operations and cash
flows of Kivex for and during the respective periods covered thereby,
stockholders' equity and subject (with respect to the Interim Financial
Statements) to year-end adjustments.
SECTION 3.8. Absence of Undisclosed Liabilities. As of the
date hereof, except for matters relating to the transactions contemplated by
this Agreement, there are no Liabilities of Kivex other than (a) liabilities and
obligations reflected in the Financial Statements, (b) liabilities and
obligations disclosed in Section 3.8 of the Disclosure Schedule, and (c)
liabilities and obligations arising in the ordinary course of business after the
Interim Balance Sheet Date (none of which results from, arises out of,
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relates to or was caused by any breach of contract, or breach of warranty, tort,
infringement or violation of law).
SECTION 3.9. Absence of Certain Changes. Except as disclosed
in Section 3.9 of the Disclosure Schedule or as contemplated or otherwise
permitted by this Agreement, since the Interim Balance Sheet Date, Kivex has not
(a) conducted its business in any material respect other than in the ordinary
course, (b) except in the ordinary course of business, incurred any indebtedness
for borrowed money or issued any debt securities or assumed, guaranteed or
endorsed the obligations of any other Person, (c) except in the ordinary course
of business, (i) sold, transferred or otherwise disposed of any of its property
or assets or (ii) mortgaged or encumbered any of its property or assets, (d)
suffered any material casualty losses not covered by insurance, (e) declared,
set aside or paid any dividend or other distribution in respect of its capital
stock, (f) amended its Certificate of Incorporation or Bylaws or merged with or
into or consolidated with any other Person, (g) split, combined or reclassified
its capital stock, (h) issued or sold (or agreed to issue or sell) any of its
equity securities or any options, warrants, conversion or other rights to
purchase any such securities or any securities convertible into or exchangeable
for such securities, or granted, or agreed to grant any such rights, (i)
increased the rates of compensation (including bonuses) payable or to become
payable to any of its officers, employees, agents, independent contractors or
consultants other than increases made in the ordinary course of business, (j)
entered into any new or amended any existing employment contracts, severance
agreements or consulting contracts or instituted or agreed to institute any
increase in benefits or altered its employment practices or the terms and
conditions of employment in each case other than in the ordinary course of
business, (k) entered into or amended or terminated any transaction or contract
that has or could reasonably be expected to have a Material Adverse Effect, (l)
entered into any joint ventures or partnerships or any kind, (m) made any
payments on or otherwise reduced the debts or obligations owed by Kivex to
PennCorp or its affiliates, (n) made any capital expenditure (or series of
related capital expenditures) either involving more than $250,000 or outside the
ordinary course of business, (o) delayed or postponed the payment of accounts
payable and other Liabilities outside the ordinary course of business, (p)
entered into or amended any other contract with its affiliates, (q) taken any
action that would be prohibited under Section 5.1 of this Agreement or (r)
entered into any contract or other agreements to do any of the foregoing.
SECTION 3.10. Litigation. Except as set forth in Section 3.10
of the Disclosure Schedule, as of the date hereof, there is no action, suit,
arbitration, investigation or proceeding ("Litigation") pending or, to the
knowledge of PennCorp, threatened against Kivex before any Governmental
Authority or arbitrator. Kivex is not in default under any judgment, decree,
injunction or order ("Order") of any Governmental Authority or arbitrator
outstanding against it.
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SECTION 3.11. Property; Liens and Encumbrances.
(a) Section 3.11(a) of the Disclosure Schedule contains a
complete and accurate list of all real property owned or leased by Kivex as of
the date hereof.
(b) Except as set forth in Section 3.11(b) of the Disclosure
Schedule, all properties and assets owned by Kivex (the "Owned Properties") are
free and clear of all liens, pledges, claims, security interests, mortgages,
assessments, easements, rights of way, covenants, restrictions, rights of first
refusal, defects in title, encroachments and other burdens (collectively,
"Liens") except (i) statutory Liens not yet delinquent or the validity of which
are being contested in good faith by appropriate actions, (ii) purchase money
Liens arising in the ordinary course, (iii) Liens for taxes not yet delinquent,
(iv) Liens reflected in the Financial Statements (which have not been
discharged) and (v) Liens which in the aggregate do not materially detract from
the value or, in the case of personal property, materially impair the use by
Kivex of the property subject thereto or, in the case of real property,
materially impair the present and continued use of such property in the usual
and normal conduct of the business of Kivex. Kivex has good and indefeasible
title to the Owned Properties and there are no pending or, to the knowledge of
PennCorp, threatened condemnation proceedings affecting any of the Owned
Properties.
SECTION 3.12. Certain Agreements. Except as disclosed in
Section 3.12 or 3.11(a) of the Disclosure Schedule or in the Financial
Statements, Kivex is not a party to any written or oral (a) agreement, contract,
indenture or other instrument relating to the borrowing of money or the
guarantee of any obligation for the borrowing of money; (b) employment,
consulting, compensation or severance agreement with any of its directors,
employees or consultants; (c) agreement, contract or commitment limiting or
restraining it from engaging or competing in any business; (d) lease for real
property; (e) distribution, dealer, representation or agency agreement; (f)
building access or agreement or contract relating to the sharing of revenues of
Kivex ("Building Agreement"); (g) any agreement (or group of related agreements)
for the purchase or sale of raw materials, commodities, supplies, products, or
other personal property, the performance of which will extend over a period of
more than one year, that if terminated would result in a material loss to Kivex,
or involve consideration in excess of $250,000; (h) any agreement concerning a
partnership or joint venture; (i) any other agreement (or group of related
agreements) the performance of which involves consideration in excess of
$250,000, or (j) contract or agreement with any of its affiliates that will
continue after Closing (each of the foregoing, other than Building Agreements,
are referred to herein as a "Material Contract"). Each of the Material Contracts
is legal, valid, binding, enforceable, in full force and effect and has been
complied with by Kivex and, to the knowledge of PennCorp, has been complied with
by all other parties thereto, except where such noncompliance would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. With respect to each of the Material Contracts, (a) the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby without the need to obtain any consent or
approval from any party thereto, (b) no
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event has occurred which with notice or lapse of time would constitute a breach
or default by Kivex or permit termination, modification or acceleration under
the contract by any other party thereto, and (c) no party has repudiated any
provision of the agreement.
SECTION 3.13. Employees.
(a) Schedule 3.13(a) of the Disclosure Schedule sets forth a
complete and correct list of: (i) all "employee benefit plans," as defined in
Section 3(3) of ERISA; (ii) all bonus and other incentive compensation, deferred
compensation, employee loan, salary continuation, severance, retention,
vacation, sick leave, disability, stock or other equity-related award, option or
purchase, educational assistance or leave of absence agreements, arrangements,
policies or plans; and (iii) all employment, consulting, termination, individual
compensation, employee leasing or collective bargaining agreements; in each
case, which Kivex maintains, or makes or has any obligation to make
contributions or with respect to which Kivex has any liability or potential
liability (collectively, the "Benefit Plans").
(b) All Benefit Plans comply in all material respects with and
are, and during the six year period preceding the Closing Date have been,
operated in all material respects in accordance with their terms, ERISA, the
Code and other applicable law. None of Kivex, PennCorp, any trustee or
administrator of any Benefit Plan, or any "party in interest" or "disqualified
person" with respect to the Benefit Plans has engaged in any "prohibited
transaction" with respect to any Benefit Plan within the meaning of Section 4975
of the Code and Section 406 of ERISA. Except as set forth in Section 3.13(b) of
the Disclosure Schedule, no actions, suits, claims, complaints, charges,
proceedings, hearings, investigations, or demands with respect to the Benefit
Plans (other than routine claims for benefits) are pending or, to the knowledge
of PennCorp, threatened, and neither PennCorp nor Kivex has knowledge of any
facts which could give rise to or be expected to give rise to any actions,
suits, claims, complaints, charges, proceedings, hearings, investigations, or
demands. No Benefit Plan that is subject to the funding requirements of Section
412 of the Code or Section 302 of ERISA has incurred any "accumulated funding
deficiency" as such term is defined in such Sections of ERISA and the Code,
whether or not waived. No Benefit Plan has any material unfunded liabilities.
(c) True and complete copies of each Benefit Plan, summary
plan descriptions, and the most recent annual report on Form 5500, the most
recent actuarial report, most recent IRS determination letter and the most
recent valuation (but in any case at least one that has been completed within
the last calendar year) of the present and future obligations under each Benefit
Plan that provides post-retirement or post-employment health, life insurance,
accident or other "welfare-type" benefits, if any, have been provided to Buyer.
(d) Neither Kivex nor any entity required to be aggregated
with Kivex pursuant to Section 414 of the Code or Section 4001(b) of ERISA (each
such entity an "ERISA Affiliate") has incurred any liability to the Pension
Benefit Guaranty
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Corporation. Neither Kivex nor any ERISA Affiliate has contributed to or been
obligated to contribute to a multiemployer plan, as defined in Section 3(37) of
ERISA, during the six year period preceding the Closing Date and neither Kivex
nor any ERISA Affiliate has any other liability or potential liability with
respect to any multiemployer plan.
(e) Except as set forth in Schedule 3.13(e) of the Disclosure
Schedule, no Benefit Plan is an (and Kivex does not contribute to, have any
obligation to contribute to or otherwise have any liability or potential
liability with respect to any) (i) "employee pension benefit plan," as defined
in Section 3(2) of ERISA, that is subject to Title IV of ERISA or to the minimum
funding requirements of Section 412 of the Code or Section 302 of ERISA, or that
is a "defined benefit plan," as defined in Section 3(35) of ERISA, (ii) employee
benefit plan of the type described in Sections 4063 and 4064 of ERISA or in
Section 413(c) of the Code (and regulations promulgated thereunder), or (iv)
employee benefit plan which provides health, life insurance, accident or other
"welfare-type" benefits to current or future retirees or current or future
former employees, their spouses or dependents, other than in accordance with
Section 4980B of the Code or applicable state continuation coverage law.
(f) Except as disclosed in Section 3.13(f) of the Disclosure
Schedule, none of the Benefit Plans contains any provision which would result in
any additional, separation, severance or termination benefits, accelerated
vesting, and/or accelerated payments solely as a result of the consummation of
the transactions contemplated by this Agreement.
(g) To the knowledge of PennCorp, each Benefit Plan that is
intended to be qualified under Section 401(a) of the Code, is so qualified.
SECTION 3.14. Taxes. Except as set forth in Section 3.14 of
the Disclosure Schedule:
(a) all Tax Returns required to be filed by Kivex or any
Affiliated Group have been filed and all Taxes shown to be due on such Tax
Returns have been paid, and there are no material deficiencies for any Taxes of
Kivex or any Affiliated Group;
(b) Kivex has given or otherwise made available to Buyer all
Tax Returns for periods ending, or transactions consummated, after December 31,
1993;
(c) there are no outstanding agreements extending or waiving
the statutory period of limitation applicable to (i) the filing of any Tax
Returns of Kivex or any Affiliated Group nor (ii) any claim for, or the period
for the collection or assessment of, Taxes due from Kivex or any Affiliated
Group for any taxable period;
(d) no audit or other proceeding by any Governmental Authority
is pending or, to the knowledge of PennCorp, threatened with respect to any
Taxes due from or with respect to Kivex or any Affiliated Group;
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(e) there are no Liens for Taxes upon the assets or properties
of Kivex, except for statutory Liens for current Taxes not yet due;
(f) neither Kivex nor any Affiliated Group is a party to any
agreement relating to the sharing or allocation of, or indemnification agreement
with respect to Taxes, or similar contract or arrangement;
(g) Kivex has not been a member of an affiliated group filing
a consolidated federal Income Tax Return (other than a group the common parent
of which was PennCorp (the "PennCorp Group")) or has any liability for Taxes of
any Person (other than any member of the PennCorp Group) under Treas. Reg.
Section 1.1502-6 or Section 1.1502-78 (or similar provision of state, local or
foreign law), as a transferee or successor, by contract or otherwise;
(h) Except as set forth in Section 3.14(h) of the Disclosure
Schedule, Kivex and any Affiliated Group has withheld from its employees,
independent contractors and third parties and timely paid to the appropriate
taxing authority proper and accurate amounts through all periods in compliance
in all respects with all Tax withholding provisions of applicable laws;
(i) PennCorp is not a foreign person within the meaning of
Section 1445 of the Code; and
(j) Kivex will not be required (A) as a result of a change in
method of accounting for a taxable period ending on or prior to the Closing
Date, to include any adjustment in taxable income for any taxable period (or
portion thereof) ending after the Closing Date, (B) as a result of any "closing
agreement," as described in Section 7121 of the Code (or any corresponding
provision of state, local or foreign income Tax law), to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date or (C) as a result of
any deferred intercompany gain described in Treasury Regulation Sections
1.1502-13 or former Treasury Regulations Section 1.1502-14 or any excess loss
account described in Treasury Regulation Sections 1.1502-19 and 1.1502-32 (or
any corresponding or similar provision or administrative rule of federal, state,
local or foreign income Tax law), to include any item of income in taxable
income for any taxable period (or portion thereof) ending after the Closing
Date.
(k) Kivex and each Affiliated Group has not made any payments,
and is not and will not become obligated (under any contract entered into on or
before the Closing Date) to make any payments, that will be non-deductible under
Section 280G of the Code (or any corresponding provision of state, local or
foreign income Tax law).
SECTION 3.15. Compliance with Applicable Law; Permits;
Policies.
(a) Except as disclosed in Section 3.15(a) of the Disclosure
Schedule, the business of Kivex is being conducted in compliance with all
applicable provisions of
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any federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to it; and no notice,
claim, charge, complaint, action, suit, proceeding, investigation or hearing has
been received by PennCorp or Kivex or filed, commenced or threatened in writing
against Kivex alleging any such violation.
(b) Kivex owns or validly holds all licenses, franchises,
permits, approvals, authorizations, exemptions, classifications, certificates,
registrations, and similar documents or instruments that are required for its
business and operations All such licenses, franchises, permits, approvals,
authorizations, exemptions, classifications, certificates, registrations, and
similar documents or instruments are valid and in full force and effect.
SECTION 3.16. Brokers' Fees and Commissions. Except for ING
Baring Xxxxxx Xxxx LLC, none of PennCorp, Kivex or their respective directors,
officers, employees or agents has employed any investment banker, broker or
finder in connection with the transactions contemplated hereby. PennCorp shall
be responsible for the fees and expenses of ING Baring Xxxxxx Xxxx LLC in
connection with the sale and purchase of the Shares.
SECTION 3.17. Proprietary Rights. Except as disclosed in
Section 3.17 of the Disclosure Schedule, Kivex owns or possesses the right to
use all trademarks, service marks, patents, patent rights, assumed names, logos,
trade secrets, copyrights, trade names, domain names and confidential business
information, and all other proprietary rights ("Intellectual Property") and all
computer software, programs and similar systems that are used or required by it
in the conduct of its business and all such Intellectual Property and computer
software, programs and similar systems are in full force and effect in
accordance with their terms. Kivex is not in conflict with, or in violation or
infringement of, nor has any of them received any notice of any conflict with or
violation or infringement of or any claimed conflict with or violation or
infringement of, any asserted rights of any other Person with respect to any
such Intellectual Property or computer software, programs, or similar systems.
To the knowledge of PennCorp and Kivex, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of Kivex.
SECTION 3.18. Insurance. PennCorp or its affiliates maintains
for the benefit of Kivex policies or contracts of insurance that are sufficient
for compliance with all material requirements of law and of all agreements to
which Kivex is a party. All insurance policies pursuant to which any such
insurance is provided are in full force and effect. No notice of cancellation or
termination of any such insurance policy has been given to PennCorp or Kivex and
all premiums required to be paid in connection with such insurance policies have
been paid in full.
SECTION 3.19. Environmental Matters. Except as disclosed on
Section 3.19 of the Disclosure Schedule:
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(a) the operations of Kivex and the real property currently
owned, leased or operated by Kivex are in compliance and, during the period of
the ownership or tenancy of Kivex have been in compliance, with all applicable
Environmental Laws;
(b) no judicial or administrative proceedings or
investigations are pending or, to the knowledge of PennCorp, threatened against
Kivex pursuant to any applicable Environmental Laws;
(c) no real property currently (or to the knowledge of
PennCorp, formerly) owned, operated or leased by Kivex is listed or has been
proposed for listing on the National Priorities List, the Comprehensive
Environmental Response Compensation and Liability and Information System
("CERCLIS") or any analogous state lists; and
(d) PennCorp has made available to Buyer copies of all
environmental investigations, audits, assessments or other analyses conducted by
or on behalf of, or which are otherwise in the possession of, PennCorp or Kivex
relating to any real property currently or formerly owned or leased by Kivex.
SECTION 3.20. Books and Records. Copies of all the minute
books and stock record books of Kivex have been delivered to Buyer for
inspection and contain accurate records of all meetings of, and written consents
by, the board of directors (and any committees thereof) and stockholders of
Kivex since January 1, 1996 and, to PennCorp's knowledge, since its
incorporation.
SECTION 3.21. Bank Accounts. Section 3.21 of the Disclosure
Schedule contains (a) a true and complete list of the names and locations of all
banks, trust companies, securities brokers, and other financial institutions at
which Kivex has an account or safe deposit box or maintains a banking,
custodial, trading, trust, or other similar relationship and (b) a true and
complete list and description of each such account, box, and relationship,
including a list of all authorized signatories.
SECTION 3.22. Labor Matters.
(a) Kivex is not a party to any labor or collective bargaining
agreement.
(b) The employees of Kivex are not represented by any labor
organization that is certified to represent such employees under the National
Labor Relations Act. No labor organization or group of employees of Kivex has
made a pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or filed with the National Labor
Relations Board or any other labor relations tribunal or authority. To the
knowledge of PennCorp, there are no organizing activities involving Kivex
pending with any labor organization or group of employees of Kivex.
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(c) Except as set forth in Section 3.22(c) of the Disclosure
Schedule, to the knowledge of PennCorp, there are no strikes, work stoppages,
slowdowns, lockouts, material arbitrations or material grievances or other
material labor disputes pending or threatened against or involving Kivex.
(d) Kivex is in compliance with all laws, regulations and
orders relating to the employment of labor, including all such laws, regulations
and orders relating to wages, hours, WARN, collective bargaining,
discrimination, civil rights, safety and health, workers' compensation and the
collection and payment of withholding and/or social security taxes and any
similar tax, other than such noncompliance that would not reasonably be expected
to have a Material Adverse Effect.
(e) Schedule 3.22(e) of the Disclosure Schedule provides a
true, complete and accurate list as of June 10, 1999, of each employee of Kivex
and the following information as of the dates specified in Schedule 3.22(e) with
respect to each such employee: (i) whether such employee is salaried or hourly
and whether such employee is exempt or non-exempt, (ii) such employee's
position/title, date of hire, and salary or rate of compensation (including
bonuses and other incentive compensation), (iii) such employee's accrued unused
vacation entitlement, and (iv) whether such employee is absent from active
employment and, if so, the reason, the date as of which such employee became
inactive, and the anticipated date of return to active employment.
SECTION 3.23. Intercompany Payables. All debts or obligations
owed by Kivex to PennCorp or any of its affiliates are listed on Section 3.23 of
the Disclosure Schedule.
SECTION 3.24. Year 2000. Kivex is using reasonable procedures
to verify that the software used in its operations and products and services
will recognize and process date fields after the turn of the century, and
perform date-dependent calculations and operations (including sorting, comparing
and reporting) after the turn of the century correctly, and is using reasonable
efforts to ensure that its software products and services will not produce
invalid and/or incorrect results as a result of the change of the century,
provided that the software receives correct and properly formatted data inputs
from all software and hardware that exchanges data with or provides data to the
software.
SECTION 3.25. Disclosure. The representations and warranties
contained in this Article III do not contain any untrue statements of a material
fact or omit or state any material fact necessary in order to make the
statements and information contained in this Article III not misleading.
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ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF BUYER
Buyer hereby represents and warrants to PennCorp as follows:
SECTION 4.1. Organization; Qualifications and Operations.
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, with all requisite
corporate power and authority to own the Shares. Buyer is qualified or licensed
to do business and is in good standing in each jurisdiction in which the
ownership or leasing of property by it or the conduct of its business requires
such licensing or qualification, except where the failure to be so qualified or
licensed will not affect Buyer's ability to consummate the transactions
contemplated by this Agreement (a "Buyer Material Adverse Effect").
SECTION 4.2. Authorization. Buyer has full corporate power and
authority to execute and deliver this Agreement and each other document to be
delivered by Buyer in connection herewith and to consummate the transactions
contemplated hereby and thereby. No other corporate proceeding on the part of
Buyer is necessary to authorize the execution and delivery of this Agreement and
each other document to be delivered by Buyer in connection herewith or to
consummate the transactions contemplated hereby and thereby. This Agreement has
been duly and validly executed and delivered by Buyer and constitutes a valid
and binding obligation of Buyer, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
SECTION 4.3. No Violation. Neither the execution and delivery
of this Agreement by Buyer, the performance by Buyer of its obligations
hereunder nor the consummation by Buyer of the transactions contemplated hereby
will (a) violate, conflict with or result in any breach of any provision of the
Certificate of Incorporation or Bylaws of Buyer (or similar organizational
documents), (b) violate or conflict with or result in a violation or breach of,
or constitute a default (with or without due notice or lapse of time or both)
under the terms, conditions or provisions of any note, bond, mortgage, indenture
or deed of trust, or any license, lease or agreement to which Buyer or any of
Buyer's subsidiaries is a party or by which any of their assets is bound or (c)
violate any order, writ, judgment, injunction, decree, statute, rule or
regulation of any Governmental Authority applicable to Buyer or any of Buyer's
subsidiaries or any of their assets, except in each case as would not have a
Buyer Material Adverse Effect.
SECTION 4.4. Consents and Approvals. No filing or registration
with, no notice to and no permit, authorization, consent or approval of any
third party or any
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Governmental Authority is necessary for the consummation by Buyer of the
transactions contemplated by this Agreement other than consents and approvals of
or filings or registrations with the DOJ pursuant to the HSR Act.
SECTION 4.5. Brokers' Fees and Commissions. Neither Buyer nor
any of its directors, officers, employees or agents has employed any investment
banker, broker or finder in connection with the transactions contemplated
hereby.
SECTION 4.6. Purchase for Investment. Buyer is acquiring the
Shares for its own account for investment purposes and not with a view to the
distribution of the Shares. Buyer has such knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
its investment in the Shares. Buyer is an "accredited investor" as defined in
Rule 501 of the Securities Act of 1933, as amended. Buyer is aware and
understands that the Shares have not been registered under the Securities Act of
1933 or under the securities laws of any state, that any transfer of the Shares
will be restricted by such act and such state laws, and that the certificates
representing the Shares will bear legends to such effect. Buyer will not,
directly or indirectly, dispose of the Shares except in compliance with
applicable federal and state securities laws.
SECTION 4.7. Financing. Buyer has sufficient funds available
necessary to consummate the acquisition by Buyer of the Shares.
ARTICLE V
COVENANTS
SECTION 5.1. Conduct of Business Prior to the Closing. Except
as expressly contemplated by this Agreement, as set forth in Section 5.1 of the
Disclosure Schedule or with the prior written consent of Buyer during the period
from the date of this Agreement to the Closing, PennCorp will cause Kivex to
conduct its business and operations according to its ordinary and usual course
of business and will use all reasonable efforts consistent therewith to preserve
intact and, as applicable, maintain in good repair its properties, assets and
business organizations and to keep available the services of its officers and
employees, in each case in the ordinary course of business. Without limiting the
generality of the foregoing, and except as otherwise provided in this Agreement
and as set forth in Section 5.1 of the Disclosure Schedule, prior to the
Closing, PennCorp will not permit Kivex to, without the prior written consent of
Buyer:
(a) issue, sell or pledge, or authorize or propose the
issuance, sale or pledge of additional shares of capital stock of any class, or
securities convertible into any such shares, or any rights, warrants or options
to acquire any such shares or other convertible securities;
(b) redeem, purchase or otherwise acquire any outstanding
shares of its capital stock;
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(c) propose or adopt any amendment to its Certificate of
Incorporation or Bylaws;
(d) except in the ordinary course of business, impose any Lien
upon any of its assets, tangible or intangible, incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or endorse the
obligations of any other Person;
(e) increase in any manner the rate or terms of compensation
of any of its directors, officers or other employees, except such increases as
are granted in the ordinary course of business consistent with past practice, or
enter into any employment, severance or collective bargaining agreement or
modify any existing employment agreement;
(f) except in the ordinary course of business, (i) sell,
transfer or otherwise dispose of any of its property or assets or (ii) mortgage
or encumber any of its property or assets;
(g) enter into any other material agreements, commitments or
contracts, except agreements, commitments or contracts made in the ordinary
course of business;
(h) declare, set aside or pay any dividend or other
distribution in respect of its capital stock;
(i) except in the ordinary course of business or with respect
to capital projects approved prior to the date hereof, enter into any agreement
or commitment involving an aggregate capital expenditure or commitment exceeding
$100,000;
(j) amend, adopt or terminate any of its Benefit Plans, except
as required by law or establish, adopt or assume any liability with respect to
any new employee benefit plan;
(k) take any action that would intentionally result in a
breach of the representations and warranties contained in Article III of this
Agreement; or
(l) accelerate, terminate, modify, or cancel any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) to which Kivex is a party or by which it is bound;
(m) make any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions) either involving more than
$100,000 or outside the ordinary course of business;
(n) delay or postpone the payment of accounts payable or other
Liabilities outside the ordinary course of business consistent with past
practices;
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(o) make any loan to, or enter into any other transaction with
any of its affiliates;
(p) make any payments on or modify any of the items listed on
Section 3.23 of the Disclosure Schedule, except as contemplated by this
Agreement; or
(q) agree in writing to take any of the foregoing actions.
SECTION 5.2. Access to Information. Between the date hereof
and the Closing Date, PennCorp shall cause Kivex to give to Buyer and its
counsel, accountants, and other authorized representatives and agents, full
access, during regular business hours and upon reasonable advance notice, to any
and all of its premises, properties, contracts, books and records, and will
cause its officers and employees to furnish to Buyer and its representatives any
and all data and information pertaining, directly or indirectly, to Kivex that
Buyer shall from time to time reasonably request, and shall permit Buyer and its
representatives to make extracts and copies thereof. If the acquisition
contemplated herein is consummated, Buyer covenants and agrees that it shall
preserve and keep the records of Kivex delivered to it hereunder for a period of
ten years from the Closing Date, and shall make such records available to
PennCorp and its affiliates, as reasonably required by PennCorp or its
affiliates in connection with any legal proceedings by or against, or
governmental investigations of, PennCorp or any of its affiliates, or in
connection with any tax examination of PennCorp or any consolidated group of
which it was a part or for any other proper business purpose of PennCorp or its
affiliates.
SECTION 5.3. HSR Act Filings. As soon as practicable, but in
any event not later than 10 days after the date hereof, PennCorp and Buyer shall
make appropriate filings with the DOJ under the HSR Act, with respect to the
transactions contemplated by this Agreement. In connection with such filings,
the parties hereto shall, in cooperation with each other, and as promptly as
reasonably practicable from time to time hereafter, make all such further
filings and submissions, and take such further action, as may be required in
connection therewith. Each party shall furnish the others all information in its
possession necessary for compliance by the others with the provisions of this
Section 5.3. No party shall withdraw any such filing or submission prior to the
termination of this Agreement without the written consent of the other parties.
SECTION 5.4. All Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done as promptly as practicable, all things necessary, proper and
advisable under applicable laws and regulations to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement. If
at any time after the Closing any further action is necessary or desirable to
carry out the purposes of this Agreement, including, without limitation, the
execution of additional instruments, the proper officers and directors of each
party to this Agreement shall take all such necessary action.
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SECTION 5.5. Public Announcements. The parties hereto will
consult with each other and will mutually agree (the agreement of each party not
to be unreasonably withheld or delayed) upon the content and timing of any press
release or other public statements with respect to the transactions contemplated
by this Agreement and shall not issue any such press release or make any such
public statement prior to such consultation and agreement, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any securities exchange or any stock exchange regulations; provided,
however, that each party will give prior notice to the other parties of the
content and timing of any such press release or other public statement required
by applicable law or by obligations pursuant to any listing agreement with any
securities exchange or any stock exchange regulations.
SECTION 5.6. Disclosure Supplements. From time to time prior
to the Closing PennCorp may supplement or amend the Disclosure Schedule
delivered in connection herewith with respect to any matter which, if existing
or occurring at or prior to the date of this Agreement, would have been required
to be set forth or described in such Disclosure Schedule or which is necessary
to correct any information in such Disclosure Schedule which has been rendered
inaccurate thereby. Such supplements and amendments shall not be given effect
for purposes of Section 6.1(d); however, if the Closing occurs, Buyer shall be
deemed to have waived any right or claim it may otherwise have or have had on
account of any matter so disclosed in such supplement or amendment.
SECTION 5.7. No Implied Representations or Warranties. Buyer
hereby acknowledges and agrees that PennCorp is not making any representation or
warranty whatsoever, express or implied, except those representations and
warranties of PennCorp explicitly set forth in this Agreement or in the
Disclosure Schedule or in any certificate contemplated hereby and delivered by
PennCorp in connection herewith. Except as explicitly set forth herein, neither
PennCorp nor its subsidiaries nor any of their respective officers, directors,
shareholders, employees, affiliates or representatives has made or is making any
representation, express or implied, as to the value of any asset or business
being so acquired, or any warranty of merchantability, suitability or fitness
for a particular purpose.
SECTION 5.8. Employment and Employee Benefits.
(a) On the Closing Date, all employees of Kivex shall remain
employees of Kivex. Buyer shall be liable, and shall indemnify and hold PennCorp
harmless, from any and all obligations or liabilities, contingent or otherwise,
relating to or arising from the employment or termination of employment of
employees of Kivex, including, except as set forth below, all obligations
arising from or related to the employment agreement of Xxxxxxxx Xxxx included in
Section 5.8 of the Disclosure Schedule; provided, however, that PennCorp shall
assume, pay and be liable for, and shall indemnify and hold Buyer and its
affiliates harmless from, all obligations and other liabilities under the Kivex
Incentive Compensation Plan included in Section 5.8(a) of the
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Disclosure Schedule and Sections 4B and 4C of the Employment Agreement dated as
of January 1, 1999, between Kivex and Xxxxxxxx Xxxx.
(b) At and following the Closing Date, Buyer shall assume,
administer and pay the liabilities and expenses, and shall indemnify and hold
PennCorp and its affiliates harmless, with respect to the Benefit Plans that are
not pension plans (within the meaning of Section 3(2) of ERISA) qualified under
Section 401(a) of the Code solely to the extent such Benefit Plans are
maintained, as of the Closing Date, by Kivex as stand-alone plans covering only
employees of Kivex, such Benefit Plans referred to hereinafter as "Buyer Plans"
for purposes of this Section 5.8.
(c) At or prior to Closing, (i) PennCorp shall cause the
Southwestern Financial Services Corporation Salaried Employees Severance Plan
(the "SFSC Plan") to be terminated with respect to the participation by
employees of Kivex and (ii) Buyer shall cause Kivex to adopt a severance plan
that is identical to the SFSC Plan. At and following the Closing Date, Buyer
shall indemnify and hold PennCorp and its affiliates harmless from any and all
claims of any present participant to the SFSC Plan arising out of or related to
the termination of the SFSC Plan by PennCorp or the adoption, the failure to
adopt, the amendment or termination of a similar plan by Kivex at the direction
of Buyer.
(d) At and following the Closing Date, PennCorp shall
administer and pay all other liabilities and expenses, and shall indemnify and
hold Buyer and Kivex harmless, with respect to the Benefit Plans (or portions
thereof) that are not Buyer Plans, prior to the Closing Date.
(e) At and following the Closing Date, PennCorp shall
indemnify and hold Buyer harmless with respect to all employee benefit plan
liabilities and expenses of present and former ERISA Affiliates solely to the
extent such liabilities and expenses do not relate to or arise from present and
former employees of Kivex.
(f) Buyer shall, and shall cause its subsidiaries (including
Kivex), to provide employee benefits and compensation for employees of Kivex
that are at least substantially comparable in the aggregate to the employee
benefits and compensation provided by PennCorp or its affiliates under the
Benefit Plans and compensation arrangements in effect as of the Closing Date.
(g) If employees of Kivex are included in any benefit plan
(including without limitation, provision for vacation) of Buyer or its
subsidiaries, such employees shall receive credit for service prior to the
Closing Date with Kivex or any of its subsidiaries or affiliates to the same
extent such service was counted under similar Benefit Plans for purposes of
eligibility, vesting and benefit accrual with respect to vacation, disability
and severance. Buyer shall make available medical, dental and health plan
coverage to employees of Kivex as of the Closing Date that shall not include
pre-existing condition exclusions, except to the extent such exclusions were
applicable under the similar Benefit Plan as of the Closing Date, and such plans
shall provide credit for
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any deductibles and co-payments applied or made with respect to each employee of
Kivex in the calendar year of the Closing.
(h) Effective as of the Closing Date, PennCorp shall cause
each employee of Kivex to be fully vested in his or her benefits under the
PennCorp Financial, Inc. Retirement and Savings Plan maintained for the benefit
of employees of Kivex. With respect to each employee of Kivex who, as of the
Closing Date, has one or more loans outstanding under any employee benefit plan
of PennCorp and its affiliates, PennCorp shall cause such plan(s) to permit such
employee to continue repayment of such loans after the Closing Date in
accordance with the loan terms until the earliest of (i) the date as of which
such loan (principal and interest) has been fully repaid, (ii) the date as of
which such employee's employment with Kivex, Buyer or any of Buyer's
subsidiaries or affiliates (or any successor thereto) terminates, (iii) the date
as of which such employee fails to make any loan repayment properly and timely
or there is otherwise a default with respect to such loan, or (iv) the date as
of which such plan of PennCorp and/or its affiliates terminates. PennCorp shall
cause to be prepared and executed any plan amendments and shall take all other
actions necessary to provide for the foregoing vesting and loan repayment.
(i) As soon as practicable after the Closing Date, Buyer shall
cause a 401(k) plan maintained by Buyer or Kivex to accept "eligible rollover
contributions," within the meaning of Section 402(f)(2)(A) of the Code, from any
401(k) plan maintained by PennCorp or its subsidiaries prior to the Closing
Date, for the benefit of employees of Kivex.
(j) With respect to each employee and former employee of Kivex
covered under any long-term disability plan or policy maintained by PennCorp and
its affiliates who, as of the Closing Date, is either receiving long-term
disability benefits under such plan or policy or is in a waiting or elimination
period and would qualify for long-term disability benefits under such plan or
policy upon the expiration of such waiting or elimination period but for the
occurrence of the transactions contemplated by this Agreement, PennCorp shall
continue to cover (or cause to be covered) such employee or former employee
under such long-term disability plan or policy and to provide (or cause to be
provided) long-term disability benefits to such employee or former employee
after the Closing Date to the extent provided for under such plan or policy and
by the relevant underlying insurance contract as if the transactions
contemplated by this Agreement had not occurred. PennCorp shall retain, bear and
discharge (and shall cause each of its affiliates to retain, bear and discharge,
as the case may be) all liabilities with respect to the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA") (including the timely
provision of notices and election forms and benefit payments), with respect to
each employee and former employee of Kivex (and his or her spouse and
dependents) who, prior to the Closing Date, is entitled to receive or entitled
to elect to receive COBRA benefits under any group health plan of PennCorp and
its affiliates by reason of a qualifying event that occurred on or prior to the
Closing Date.
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SECTION 5.9. Acquisition Proposals. PennCorp shall not, nor
shall it authorize or permit any of its officers, directors or employees, or any
investment banker, attorney or other advisor or representative acting on its
behalf to, directly or indirectly, (a) solicit or initiate the submission of any
Acquisition Proposal (as hereinafter defined) or (b) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal. For purposes of this Agreement, "Acquisition
Proposal" means any proposal with respect to a merger, consolidation, share
exchange or similar transaction involving Kivex, or any purchase of all or any
significant portion of the assets of Kivex, or any equity interest in Kivex,
other than the transactions contemplated hereby and except for the transactions
set forth on Section 5.9 of the Disclosure Schedule.
ARTICLE VI
CLOSING CONDITIONS
SECTION 6.1. Conditions to the Obligations of Buyer under this
Agreement. The obligation of Buyer under this Agreement to consummate the
acquisition of the Shares (the "Acquisition") shall be subject to the
satisfaction, at or prior to the Closing, of the following conditions:
(a) All authorizations, consents and approvals contemplated by
Sections 3.6 and 4.4 shall have been obtained and shall be in full force and
effect;
(b) Any waiting period applicable to the consummation of the
Acquisition under the HSR Act shall have expired or been terminated;
(c) No injunction, restraining order or other ruling or order
issued by any Governmental Authority or other legal restraint or prohibition
preventing the consummation of the Acquisition shall be in effect;
(d) All debts and obligations set forth in Section 3.23 of the
Disclosure Schedule (or required to be so set forth) shall be have been
satisfied by PennCorp, which shall be satisfied from the Purchase Price to be
received from Buyer;
(e) PennCorp's payment obligations described in the proviso to
Section 5.8(a) shall have been satisfied, which shall be satisfied from the
Purchase Price to be received from Buyer; and
(f) Each of the obligations of PennCorp required to be
performed by it at or prior to the Closing pursuant to this Agreement shall have
been duly performed and complied with in all material respects, and the
representations and warranties of PennCorp contained in this Agreement shall be
true and correct, except where the failure to be true and correct would not
reasonably be expected to have a Material Adverse Effect, as of the date of this
Agreement and as of the Closing as though made at and as of
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the Closing (except as to any representation or warranty which specifically
relates to an earlier date), and Buyer shall have received a certificate to that
effect signed by a senior officer of PennCorp.
SECTION 6.2. Conditions to the Obligations of PennCorp under
this Agreement. The obligation of PennCorp under this Agreement to consummate
the Acquisition shall be subject to the satisfaction, at or prior to the
Closing, of the following conditions:
(a) All authorizations, consents and approvals contemplated by
Sections 3.6 and 4.4 shall have been obtained and shall be in full force and
effect;
(b) Any waiting period applicable to the consummation of the
Acquisition under the HSR Act shall have expired or been terminated;
(c) No injunction, restraining order or other ruling or order
issued by any Governmental Authority or other legal restraint or prohibition
preventing the consummation of the Acquisition shall be in effect;
(d) PennCorp shall have obtained the consent of the lenders
under the Credit Agreement dated March 12, 1997, by and among PennCorp Financial
Group, Inc., The Chase Manhattan Bank, The First National Bank of Chicago and
Nations Bank, N.A., as Managing Agents, and the other lenders parties thereto,
as amended, to the consummation of the Acquisition;
(e) PennCorp Financial Group, Inc. shall have been fully and
unconditionally released from its obligations under the Lease Guaranty dated
July 27, 1998, relating to the guaranty of Kivex's obligations under the Master
Lease Agreement dated July 27, 1998, between Kivex and Sunrise Leasing
Corporation and the lease agreement between Kivex and Realty Management Company
relating to Kivex's lease of office space at 3 Bethesda Metro Center; and
(f) Each of the obligations of Buyer required to be performed
by it at or prior to the Closing pursuant to the terms of this Agreement shall
have been duly performed and complied with in all material respects, and the
representations and warranties of Buyer contained in this Agreement shall be
true and correct, except where the failure to be true and correct would not
reasonably be expected to have a material adverse effect on Buyer's ability to
consummate the transactions contemplated by this Agreement or the validity or
enforceability of this Agreement, as of the date of this Agreement and as of the
Closing Date as though made at and as of the Closing Date (except as to any
representation or warranty which specifically relates to an earlier date), and
PennCorp shall have received a certificate to that effect signed by an officer
of Buyer.
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ARTICLE VII
CLOSING
SECTION 7.1. Closing. The closing of the Acquisition (the
"Closing") shall take place at the offices of Weil, Gotshal & Xxxxxx LLP, 000
0xx Xxxxxx, Xxx Xxxx, XX 00000, subject to the satisfaction or waiver of the
conditions set forth in Sections 6.1 and 6.2, as soon as practicable after the
date hereof and in any event not later than June 30, 1999, or at such other time
and PennCorp and on such other date as Buyer and PennCorp shall agree (the
"Closing Date"). As a further condition to Closing, at the Closing:
(a) PennCorp shall deliver or cause to be delivered to Buyer
the following:
(i) the certificate described in Section 6.1(f); and
(ii) certificates representing all of the Shares in
appropriate form for transfer to Buyer duly endorsed in blank
or accompanied by stock powers duly executed in blank.
(b) Buyer shall deliver or cause to be delivered to PennCorp
the certificate described in Section 6.2(f).
(c) Buyer shall cause Kivex to execute the previously
unexecuted Employment Agreement dated as of January 1, 1999, between Kivex and
Xxxxxxxx Xxxx, a copy of which is included in Section 5.8 of the Disclosure
Schedule.
(d) Buyer shall pay the Purchase Price to PennCorp, by wire
transfer of immediately available funds.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
SECTION 8.1. Survival of Representations, Warranties and
Covenants. The representations and warranties and pre-Closing covenants of
PennCorp and Buyer contained in this Agreement shall not survive the Closing,
except that the representations and warranties set forth in Sections 3.1, 3.2,
3.3 (except Section 3.3(b) shall not survive the Closing with respect to
representations and warranties relating to Kivex), 3.4 and 3.6 and the covenants
set forth in Section 5.1 shall survive the Closing and continue in full force
and effect until the expiration of the applicable statute of limitations (giving
effect to any extensions or waivers). Unless a specified period is set forth in
this Agreement (in which event such specified period will control), the
covenants in this Agreement to be performed after the Closing will survive the
Closing and remain in effect indefinitely.
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SECTION 8.2. Limitations on Indemnification. Notwithstanding
any provision hereof, neither Buyer nor its affiliates will be entitled to make
a claim for damages for breaches of any representation or warranty set forth in
Section 3.1, 3.2, 3.3, 3.4 or 3.6 or covenant set forth in Section 5.1 in excess
of the Purchase Price.
ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.1. Termination. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual consent of each of PennCorp and Buyer;
(b) by PennCorp or Buyer:
(i) if a Governmental Authority shall have issued an
order, decree or ruling or taken any other action (which
order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining,
enjoining or otherwise prohibiting the Acquisition, and such
order, decree, ruling or other action shall have become final
and nonappealable; or
(ii) if the Closing shall not have occurred on or before
June 30, 1999; provided, however, that the right to terminate
this Agreement shall not be available to any party whose
breach of this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such
date;
(c) by Buyer if a material default or breach shall be made by
PennCorp with respect to the due and timely performance of any of its covenants
or agreements contained herein, or (subject to the proviso set forth below) in
any of its representations or warranties contained in the Agreement, if such
default or breach has not been cured or waived within 30 days after written
notice to PennCorp specifying, in reasonable detail, such claimed material
default or breach and demanding its cure or satisfaction; provided, however, in
no event shall Buyer be entitled to terminate this Agreement in the event of a
breach by PennCorp of a representation or warranty unless the failure of such
representation or warranty to be true and complete would have a Material Adverse
Effect; or
(d) by PennCorp if a material default or breach shall be made
by Buyer with respect to the due and timely performance of any of its covenants
or agreements contained herein, or in any of its representations or warranties
contained in the Agreement, if such default or breach has not been cured or
waived within 30 days after written notice to Buyer specifying, in reasonable
detail, such claimed material default or breach and demanding its cure or
satisfaction.
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SECTION 9.2. Procedure and Effect of Termination. In the event
of termination and abandonment of the transactions contemplated hereby pursuant
to Section 9.1, written notice thereof shall forthwith be given to the other
parties to this Agreement and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned, without further action by
any of the parties hereto. If this Agreement is terminated as provided herein:
(a) upon request therefor, each party will redeliver all
documents, work papers and other material of any other party relating to the
transactions contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same; and
(b) no party hereto shall have any liability or further
obligation to any other party to this Agreement resulting from such termination
except (i) that the provisions of Section 5.5, this Section 9.2 and the proviso
of Section 9.1(b)(ii) shall remain in full force and effect and (ii) no party
waives any claim or right against a breaching party to the extent that such
termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Preparation of Tax Returns; Payment of Taxes.
(a) PennCorp shall include Kivex, or cause Kivex to be
included in, and shall file or cause to be filed, (i) the United States
consolidated federal income Tax Returns of PennCorp for all taxable periods of
Kivex prior to the Closing Date and for any portion of a taxable period ending
on the Closing Date; (ii) where applicable, all other consolidated, combined or
unitary Tax Returns of PennCorp for the taxable periods of Kivex prior to the
Closing Date and for any portion of a taxable period ending on the Closing Date;
and (iii) shall pay all Taxes due with respect to the returns referred to in
clause (i) or (ii) of this Section 10.1(a). PennCorp also shall file, or shall
cause Kivex to file, all other Tax Returns of or which include Kivex and are
required to be filed (taking into account any extensions) for all taxable
periods ending prior to the Closing Date and for any portion of the taxable
period ending on the Closing Date and shall pay any and all Taxes due with
respect to all such taxable periods, except as required by applicable tax laws
(or the judicial or administrative interpretations thereof). All Tax Returns
described in this Section 10.1(a) shall be prepared in a manner consistent with
past practice unless a past practice has been finally determined to be incorrect
by the applicable taxing authority or a contrary treatment is required by
applicable tax laws (or the judicial or administrative interpretations thereof).
Following the Closing Date, Buyer shall be responsible for preparing, or causing
to be prepared, all other Tax Returns required to be filed by Kivex after the
Closing Date.
(b) For federal income tax purposes, the taxable year of Kivex
shall end as of the close of the Closing Date and, with respect to all other
Taxes, PennCorp and Buyer will, unless prohibited by applicable law, close the
taxable period of Kivex as of the close of the Closing Date. Neither PennCorp
nor Buyer shall take any position inconsistent with the preceding sentence on
any Tax Return (whether or not shown to be due on any Tax Returns). For purposes
of this Section, in the case of any Taxes that are imposed on a periodic basis
and are payable for a Taxable period that includes (but does not end on) the
Closing Date, the portion of such Tax which relates to the portion of such
Taxable period ending on the Closing Date shall (x) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be deemed to be
the amount of such Tax for the entire Taxable period multiplied by a fraction
the numerator of which is the number of days in the Taxable period ending on the
Closing Date and the denominator of which is the number of days in the entire
Taxable period, and (y) in the case of any Tax based upon or related to income
or receipts be deemed equal to the amount which would be payable if the relevant
Taxable period ended on the Closing Date.
(c) Buyer and PennCorp agree to furnish or cause to be
furnished to each other, and each at their own expense, as promptly as
practicable, such information (including access to books and records) and
assistance, including making employees available on a mutually convenient basis
to provide additional information and
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explanations of any material provided, relating to Kivex as is reasonably
necessary for the filing of any Tax Returns, for the preparation for any audit,
and for the prosecution or defense of any claim, suit or proceeding relating to
any adjustment or proposed adjustment with respect to Taxes. Buyer or Kivex
shall retain in its possession, and shall provide PennCorp reasonable access to
(including the right to make copies of), such supporting books and records and
any other materials that PennCorp may specify with respect to matters relating
to Taxes for any taxable period ending on or prior to the Closing Date until the
relevant statute of limitations has expired. After such time, Buyer may dispose
of such material, provided that prior to such disposition Buyer shall give
PennCorp a reasonable opportunity to take possession of such materials.
SECTION 10.2. Amendment and Modification. This Agreement may
only be amended, modified or supplemented by a written instrument signed by all
the parties hereto.
SECTION 10.3. Waiver of Compliance; Consents. Any failure of
Buyer to comply with any obligation, covenant, agreement or condition contained
herein may be waived in writing by PennCorp, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
other failure. Any failure of PennCorp to comply with any obligation, covenant,
agreement or condition contained herein may be waived in writing by Buyer, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any other failure.
SECTION 10.4. Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 10.5. Expenses and Obligations. Each party shall be
responsible for paying all costs and expenses incurred by it in connection with
the consummation of the transactions contemplated by this Agreement.
SECTION 10.6. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies of any nature whatsoever under or by reason of
this Agreement; provided, however, that affiliates of PennCorp shall have the
right to assert and recover with respect to claims made in connection with
Buyer's obligations under Sections 5.2 and 5.8.
SECTION 10.7. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon the earlier of
delivery thereof if by hand or upon receipt if sent by mail (registered or
certified, postage prepaid, return receipt requested) or on the second next
Business Day after deposit if sent by a recognized overnight delivery service or
upon transmission if sent by telecopy or
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facsimile transmission (with electronic acknowledgement of transmission
confirmed) as follows:
(a) If to Buyer, to:
Allegiance Telecom, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Allegiance Telecom, Inc.
0 Xxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx
Facsimile No.: (000) 000-0000
(b) If to PennCorp, to:
PennCorp Financial Services, Inc.
c/o Southwestern Financial Services Corporation
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile No.: (000) 000-0000
SECTION 10.8. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to the conflicts-of-laws rules thereof.
SECTION 10.9. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
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SECTION 10.10. Headings. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not affect in any way the meaning
or interpretation of this Agreement.
SECTION 10.11. Entire Agreement. This Agreement, the
Disclosure Schedule and the Annexes hereto embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein or therein. There are no agreements, representations, warranties or
covenants other than those expressly set forth herein or therein. This
Agreement, the Disclosure Schedule and the Annexes hereto supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
SECTION 10.12. Assignment. This Agreement shall not be
assigned by operation of law or otherwise; provided, however, that Buyer may
assign any or all of its rights under this Agreement to a direct or indirect
subsidiary of Buyer without the consent of PennCorp so long as Buyer retains all
obligations and liabilities under this Agreement.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed on its behalf by its duly authorized officers, all as of
the day and year first above written.
ALLEGIANCE TELECOM, INC.
By: /s/ XXXX X. XXXXXXXXXX
-------------------------------------
Name: Xxxx X. Xxxxxxxxxx
-----------------------------------
Title: Senior Vice President, General
----------------------------------
Counsel and Secretary
----------------------------------
PENNCORP FINANCIAL SERVICES, INC.
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
-----------------------------------
Title: Vice President and Secretary
----------------------------------
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