Exhibit 10.34
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STOCK PURCHASE AGREEMENT
BY AND AMONG
FALCONITE, INC.,
THE STOCKHOLDERS OF FALCONITE, INC.,
AND
NATIONAL EQUIPMENT SERVICES, INC.
DATED AS OF APRIL 1, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS........................................................ 1
1.1 Definitions................................................ 1
1.2 Other Definitional Provisions.............................. 5
1.3 Cross Reference of Other Definitions....................... 5
ARTICLE II
PURCHASE AND SALE OF STOCK......................................... 6
2.1 Stock Purchase............................................. 6
2.2 Purchase Price for Company Stock........................... 6
2.3 Purchase Price Adjustments................................. 7
2.4 Distribution of Escrow Account............................. 9
2.5 Closing Transactions....................................... 9
ARTICLE III
CONDITIONS TO CLOSING.............................................. 10
3.1 Conditions to the Purchaser's Obligations.................. 10
3.2 Conditions to Each Sellers' Obligations.................... 13
ARTICLE IV
COVENANTS PRIOR TO CLOSING......................................... 15
4.1 Affirmative Covenants of the Company and Each Seller....... 15
4.2 Negative Covenants of the Company and Each Seller.......... 16
4.3 Covenants of Purchaser..................................... 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.............. 17
5.1 Organization and Corporate Power........................... 17
5.2 Authorization of Transactions.............................. 18
5.3 Capitalization............................................. 18
5.4 Subsidiaries; Investments.................................. 18
5.5 Absence of Conflicts....................................... 19
5.6 Financial Statements and Related Matters................... 19
5.7 Absence of Undisclosed Liabilities......................... 20
5.8 Absence of Certain Developments............................ 20
5.9 Title to Properties........................................ 21
5.10 Taxes...................................................... 23
5.11 Contracts and Commitments..............................24
5.12 Proprietary Rights.....................................26
5.13 Litigation; Proceedings................................26
5.14 Brokerage..............................................26
5.15 Governmental Licenses and Permits......................27
5.16 Employees..............................................27
5.17 Employee Benefit Plans.................................27
5.18 Insurance..............................................28
5.19 Officers and Directors; Bank Accounts..................28
5.20 Affiliate Transactions.................................28
5.21 Compliance with Laws...................................29
5.22 Environmental Matters..................................29
5.23 Disclosure.............................................30
5.24 Closing Date...........................................30
ARTICLE VI
REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLERS............30
6.1 Authorization of Transactions..........................30
6.2 Absence of Conflicts...................................31
6.3 Brokerage..............................................31
6.4 Shares.................................................31
6.5 Investment in Subordinated Notes.......................32
6.6 Closing Date...........................................32
ARTICLE VII
REPRESENTATIONS AND WARRANTIES CONCERNING THE PURCHASER..........32
7.1 Organization and Corporate Power.......................32
7.2 Authorization..........................................32
7.3 Absence of Conflicts...................................33
7.4 Litigation; Proceedings................................33
7.5 Brokerage..............................................33
7.6 NES Securities.........................................33
7.7 Disclosure.............................................33
7.8 Closing Date...........................................33
ARTICLE VIII
TERMINATION......................................................34
8.1 Termination............................................34
8.2 Effect of Termination..................................34
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ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS..............................35
9.1 Survival................................................35
9.2 Indemnification.........................................35
ARTICLE X
ADDITIONAL AGREEMENTS............................................39
10.1 Subordinated Notes......................................39
10.2 Continuing Assistance...................................40
10.3 Tax Matters.............................................40
10.4 Press Releases and Announcements........................42
10.5 Further Transfers.......................................42
10.6 Specific Performance....................................43
10.7 Transition Assistance...................................43
10.8 Expenses................................................43
10.9 Exclusivity.............................................43
10.10 Books and Records.......................................44
10.11 Appointment of Representative...........................44
10.12 Noncompetition, Nonsolicitation and Confidentiality.....46
10.13 Certain Financial Information...........................47
ARTICLE XI
MISCELLANEOUS....................................................48
11.1 Amendment and Waiver....................................48
11.2 Notices.................................................48
11.3 Binding Agreement; Assignment...........................48
11.4 Severability............................................49
11.5 No Strict Construction..................................49
11.6 Captions................................................49
11.7 Entire Agreement........................................49
11.8 Counterparts............................................49
11.9 Governing Law...........................................49
11.10 Parties in Interest.....................................49
11.11 Performance.............................................50
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INDEX OF EXHIBITS
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Exhibit A - Form of Subordinated Convertible Promissory Note
Exhibit B - Form of Escrow Agreement
Exhibit C - Form of Employment Agreement
Exhibit D - Form of Opinion of Counsel to the Company and the Sellers
Exhibit E - Form of Opinion of Counsel to the Purchaser
Exhibit F - The Company's Model Projections
INDEX OF SCHEDULES
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Schedule of Stockholders
EBITDA Schedule
Indebtedness Schedule
Negative Covenants Exception Schedule
Organization Schedule
Subsidiaries Schedule
Conflicts Schedule
Financial Statements Schedule
Developments Schedule
Real Property Schedule
Assets Schedule
Taxes Schedule
Contracts Schedule
Proprietary Rights Schedule
Litigation Schedule
Brokerage Schedule
Permits Schedule
Employees Schedule
Benefit Plans Schedule
Insurance Schedule
Officers, Directors and Bank Accounts Schedule
Affiliated Transactions Schedule
Environmental Schedule
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of April 1, 1998, by and
among FALCONITE, INC., an Illinois corporation (the "Company"), the stockholders
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of the Company listed on the "Schedule of Stockholders" attached hereto
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(collectively, the "Sellers" and individually, a "Seller"), and NATIONAL
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EQUIPMENT SERVICES, INC., a Delaware corporation (the "Purchaser"). The
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Company, the Sellers and the Purchaser are referred to herein collectively as
the "Parties" and individually as a "Party."
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WHEREAS, the authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, par value $.01 per share (the "Common
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Stock"), of which 8,330,000 shares are issued and outstanding, and 1,000,000
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shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
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which no shares are issued or outstanding;
WHEREAS, the Sellers own beneficially and of record 100% of the issued
and outstanding Common Stock; and
WHEREAS, the Purchaser desires to acquire from each Seller, and each
Seller desires to sell to the Purchaser, all of the Common Stock owned by such
Seller (collectively, the "Acquired Stock").
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes hereof, the following terms, when used
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herein with initial capital letters, shall have the respective meanings set
forth herein:
"Affiliate" of any Person means any other Person controlling,
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controlled by or under common control with such first Person, where "control"
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means the possession, directly or indirectly, of the power to direct the
management and policies of a Person whether through the ownership of voting
securities or otherwise.
"Affiliated Group" means an affiliated group as defined in Section
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1504 of the Code (or any similar combined, consolidated or unitary group defined
under state, local or foreign income Tax law).
"Agreement" means this Stock Purchase Agreement, including all
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Exhibits and Schedules hereto, as it may be amended from time to time in
accordance with its terms.
"CERCLA" means the Comprehensive Environmental Response, Compensation
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and Liability Act of 1980, as amended.
"Code" means the United States Internal Revenue Code of 1986, as
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amended.
"EBITDA" has the meaning given to such term in the "EBITDA Schedule"
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attached hereto.
"Environmental Affiliates" of any Person means, with respect to any
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particular matter, all other Persons whose liabilities or obligations with
respect to that particular matter have been assumed by, or are otherwise deemed
by law to be those of, such first Person.
"Environmental and Safety Requirements" means all federal, state,
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local and foreign statutes, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety and pollution or protection of the
environment, including all such standards of conduct and bases of obligations
relating to the presence, use, production, generation, handling, transport,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or by-products,
asbestos, polychlorinated biphenyls (or PCBs), noise or radiation.
"Environmental Lien" means any Lien, whether recorded or unrecorded,
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in favor of any governmental entity or any department, agency or political
subdivision thereof relating to any liability of the Company or any Seller or
any Environmental Affiliate of the Company or any Seller arising under any
Environmental and Safety Requirement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"GAAP" means, at a given time, United States generally accepted
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accounting principles, consistently applied.
"Indebtedness" of any Person means, without duplication: (a)
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indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor or otherwise (other than trade payables and other current
liabilities incurred in the ordinary course of business) and any commitment by
which such Person assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit; (b) indebtedness
guaranteed in any manner by such Person, including a guarantee in the form of an
agreement to repurchase or reimburse; (c) obligations under capitalized leases
in respect of which such Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
assures a creditor against loss; and (d) any unsatisfied obligation of such
Person for "withdrawal liability" to a "multiemployer plan," as such terms are
defined under ERISA.
"Insider" means, any officer, director, employee, stockholder, partner
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or Affiliate, as applicable, of the Company or any of its Affiliates or any
immediate family member (i.e., parent, child or sibling) of such Person
(including, without limitation, any Person related by marriage or adoption to
any such individual) or any entity in which any such Person owns a beneficial
interest
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in excess of ten percent (10%) of the aggregate voting control or equity
ownership interest of such entity.
"Licenses" means all permits, licenses, franchises, certificates,
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approvals and other authorizations of foreign, federal, state and local
governments or other similar rights.
"Lien" means any mortgage, pledge, security interest, encumbrance,
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easement, restriction, charge, or other lien.
"Loss" means, with respect to any Person, any damage, liability,
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demand, claim, action, cause of action, cost, damage, diminution in value,
deficiency, Tax, penalty, fine or other loss or expense, whether or not arising
out of a third party claim, including all interest, penalties, reasonable
attorneys' fees and expenses and all amounts paid or incurred in connection with
any action, demand, proceeding, investigation or claim by any third party
(including any governmental entity or any department, agency or political
subdivision thereof) against or affecting such Person or which, if determined
adversely to such Person, would give rise to, evidence the existence of, or
relate to, any other Loss and the investigation, defense or settlement of any of
the foregoing.
"Material Adverse Effect" means any material adverse effect on the
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business, financial condition, operations, results of operations, or future
prospects of the Company or any of its material Subsidiaries.
"Net Equity" means (i) the book value of the Company's assets minus
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(ii) the book value of the Company's liabilities (including, without limitation,
all Indebtedness of the Company and its Subsidiaries and all fees, expenses and
prepayment premiums and penalties (if any) which are or would be incurred by the
Company and its Subsidiaries in connection with the repayment of such
Indebtedness and the release of any guaranties related thereto), determined on a
consolidated basis in accordance with GAAP.
"Ordinary Course of Business" means the ordinary course of the
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Company's and its Subsidiaries' businesses consistent with past practice
(including, without limitation, with respect to collection of accounts
receivable, purchases of inventory and supplies, repairs and maintenance,
payment of accounts payable and accrued expenses, levels of capital expenditures
and operation of cash management practices generally).
"Permitted Encumbrances" means (A) statutory liens for current taxes
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or other governmental charges with respect to the Real Property not yet due and
payable or the amount or validity of which is being contested; (B) mechanics,
carriers, workers, repairers and similar statutory liens arising or incurred in
the ordinary course of business for amounts which are not delinquent and which
could not, individually or in the aggregate, have a Material Adverse Effect; (C)
zoning, entitlement, building and other land use regulations imposed by
governmental agencies having jurisdiction over the Real Property which are not
violated by the current use and operation of the Real Property; and (D)
covenants, conditions, restrictions, easements and other matters of record
affecting title to the Real Property which do not unreasonably interfere with
the current use, occupancy, or value, or the marketability of title, of the Real
Property.
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"Person" means an individual, a partnership, a corporation, an
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association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof and any other entity.
"Proprietary Rights" means any and all patents, patent applications,
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trademarks, service marks, trademark or service xxxx applications and
registrations, trade and corporate names, copyrights, copyright applications and
registrations, trade secrets, know-how, technology, computer software and
software systems, business and marketing plans, customer and supplier lists,
confidential information and all other proprietary property, rights and
interests.
"Release" shall have the meaning set forth in CERCLA.
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"Subsidiary" means, with respect to any Person, any corporation a
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majority of the total voting power of shares of stock of which is entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or any partnership, association or
other business entity a majority of the partnership or other similar ownership
interests of which are at the time owned or controlled, directly or indirectly,
by that Person or one or more Subsidiaries of that Person or a combination
thereof. For purposes of this definition, a Person is deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person is allocated a majority of the gains or losses of such partnership,
association or other business entity or is or controls a managing director or
general partner of such partnership, association or other business entity.
"Tax Returns" means returns, declarations, reports, claims for refund,
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information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Taxes" means any federal, state, local, or foreign income, gross
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receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, or other tax, fee, assessment or charge of any
kind whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Transaction Documents" means this Agreement, and all other
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agreements, instruments, certificates and other documents to be entered into or
delivered by any Party in connection with the transactions contemplated to be
consummated pursuant to this Agreement.
"Treasury Regulations" means the United States Treasury Regulations
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promulgated pursuant to the Code.
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1.2 OTHER DEFINITIONAL PROVISIONS.
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(a) Accounting Terms. Accounting terms which are not otherwise
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defined in this Agreement have the meanings given to them under GAAP. To the
extent that the definition of accounting term that is defined in this Agreement
is inconsistent with the meaning of such term under GAAP, the definition set
forth in this Agreement will control.
(b) "Hereof," etc. The terms "hereof," "herein" and "hereunder" and
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terms of similar import are references to this Agreement as a whole and not to
any particular provision of this Agreement. Section, clause, Schedule and
Exhibit references contained in this Agreement are references to Sections,
clauses, Schedules and Exhibits in or to this Agreement, unless otherwise
specified.
(c) Successor Laws. Any reference to any particular Code section or
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any other law or regulation will be interpreted to include any revision of or
successor to that section regardless of how it is numbered or classified.
1.3 CROSS REFERENCE OF OTHER DEFINITIONS. Each capitalized term
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listed below is defined in the corresponding Section of this Agreement:
Term Section
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Acquired Stock............................................. Recitals
Actual Net Equity.......................................... 2.3(a)
Applicable Limitation Date................................. 9.1
Authorized Action.......................................... 10.11(d)
Cap........................................................ 9.2(b)(iii)
Cash Portion............................................... 2.2
Closing.................................................... 2.5(a)
Closing Date............................................... 2.5(a)
Closing Net Accounts Receivable............................ 2.3(b)(i)
Closing Review............................................. 2.3(a)
Closing Transactions....................................... 2.5(b)
COBRA...................................................... 5.17(a)
Common Stock............................................... Recitals
Company.................................................... Preface
Company Multiemployer Plans................................ 5.17(a)
Confidential Information................................... 10.12(c)
Deductible................................................. 9.2(b)(ii)
Draft Computation.......................................... 2.3(a)
Employment Agreement....................................... 3.1(h)
ERISA...................................................... 5.17(a)
Escrow Account............................................. 2.2
Escrow Agreement........................................... 2.2
Financial Statements....................................... 5.6(a)
Firm....................................................... 2.3(a)
Indemnified Party.......................................... 9.2(e)
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Indemnifying Party......................................... 9.2(e)
HSR Act.................................................... 3.1(d)
HSR Filing................................................. 5.5
Latest Balance Sheet....................................... 5.6(a)
Leased Properties.......................................... 5.9(b)
NES Securities............................................. 6.5
Net Equity Shortfall....................................... 2.3(a)
Noncompete Period.......................................... 10.12(a)
Noncompete Payment......................................... 10.12(a)
Noncompeting Parties....................................... 10.12(a)
Objection Notice........................................... 2.3(a)
Owned Real Property........................................ 5.9(a)
Party...................................................... Preface
Pending Claim.............................................. 2.4
Preferred Stock............................................ Recitals
Purchase Price............................................. 2.2
Purchaser.................................................. Preface
Purchaser Parties.......................................... 9.2(a)
Real Property.............................................. 5.9(b)
Receivables Determination Date............................. 2.3(b)(i)
Remaining Escrow........................................... 2.4
Representative............................................. 10.11(a)
Reserve.................................................... 2.3(b)(i)
Seller..................................................... Preface
Seller Parties............................................. 9.2(c)
Subordinated Notes......................................... 2.2
Subsidiary Stock........................................... 5.4
Surveys.................................................... 3.1(k)
Title Company.............................................. 3.1(j)
Title Policies............................................. 3.1(j)
Transaction Expenses....................................... 10.8
Uncollected Receivables Amount............................. 2.3(b)(i)
Updated Financial Statement................................ 4.1(j)
ARTICLE II
PURCHASE AND SALE OF STOCK
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2.1 STOCK PURCHASE. On and subject to the terms and conditions
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set forth in this Agreement, on the Closing Date, the Purchaser shall purchase
from each Seller, and each Seller shall sell and transfer to the Purchaser, all
of the shares of Common Stock owned by such Seller as such ownership is set
forth on the Schedule of Stockholders attached hereto, free and clear of any
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Liens.
2.2 PURCHASE PRICE FOR COMPANY STOCK. The aggregate purchase price to
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be paid to Sellers for the Acquired Stock (the "Purchase Price") is $65,750,000,
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which amount shall be paid as follows: (a) the Purchaser shall deliver to the
Sellers $57,000,000 (as adjusted pursuant to Section 2.3 below) in cash (as
adjusted, the "Cash Portion"); (b) the Purchaser shall issue to the
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Sellers $3,750,000 aggregate principal amount of Subordinated Convertible
Promissory Notes in the form of Exhibit A attached hereto (the "Subordinated
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Notes"); and (c) the Purchaser shall deposit $5,000,000 in an escrow account
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(the "Escrow Account") governed by an Escrow Agreement substantially in form of
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Exhibit B attached hereto (the "Escrow Agreement"). The Escrow Account shall be
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available to satisfy any amounts owing to the Purchaser pursuant to Section 2.3
and/or Section 9.2. The Purchase Price will be allocated among the Sellers in
the manner set forth in Schedule of Stockholders attached hereto. The Cash
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Portion is subject to adjustment pursuant to Section 2.3.
2.3 PURCHASE PRICE ADJUSTMENTS.
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(a) Post-Closing Adjustment for Net Equity. Within 90 days after the
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Closing Date, the Purchaser and its auditors will conduct a review (the "Closing
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Review") of the Net Equity as of the close of business on the day before the
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Closing Date and will prepare and deliver to the Representative a computation of
the Net Equity as of the close of business on the day before the Closing Date
(the "Draft Computation"). The Purchaser and its auditors will give the
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Representative and its auditors an opportunity to observe the Closing Review and
will make available to such Persons all records and work papers used in
preparing the Draft Computation. If the Representative disagrees with the
computation of the Net Equity reflected on the Draft Computation, the
Representative may, within thirty (30) days after receipt of the Draft
Computation, deliver a notice (an "Objection Notice") to the Purchaser setting
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forth the Representative's calculation of the amount of the Net Equity as of the
close of business on the day before the Closing Date. The Purchaser and the
Representative will use reasonable efforts to resolve any disagreements as to
the computation of the Net Equity, but if they do not obtain a final resolution
within 30 days after the Purchaser has received the Objection Notice, the
Purchaser and the Representative will jointly retain an independent accounting
firm of recognized national or regional standing (the "Firm") to resolve any
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remaining disagreements. If the Purchaser and the Representative are unable to
agree on the choice of the Firm, the Firm will be a so-called "big-six"
accounting firm (or successor thereof) selected by lot (after excluding any firm
having a prior audit relationship with either the Purchaser or the Company, any
such firm which may decline to so serve, one firm designated by the Purchaser,
and one firm designated by the Representative). The Purchaser and the
Representative will direct the Firm to render a determination of Net Equity as
of the close of business on the day before the Closing Date within 30 days of
its retention and the Purchaser, the Representative and their respective agents
will cooperate with the Firm during its engagement. The Firm shall consider
only those items in the Draft Computation set forth in the Objection Notice
which the Purchaser and the Representative are unable to resolve, and the Firm
may utilize all records and work papers which the Firm shall determine necessary
or appropriate in the calculation of Net Equity. The Firm's determination will
be based on the definition of Net Equity included herein. Except as may be
mutually agreed in writing by the Purchaser and the Representative, the
determination of the Firm will be conclusive and binding upon the Purchaser and
the Sellers. The Purchaser and the Sellers shall bear the costs and expenses of
the Firm based on the percentage which the portion of the contested amount not
awarded to each Party bears to the amount actually contested by such Party. The
amount of the Net Equity, as finally determined pursuant to this Section 2.3(a),
is referred to herein as the "Actual Net Equity." If the Actual Net Equity is
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less than $34,129,000, the Purchaser shall be entitled to receive from the
Escrow Account, within two (2) business days after the determination thereof,
the amount of such shortfall (the "Net Equity Shortfall"); provided, however,
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that if the amount then left in the Escrow Account is less than the amount of
the Net Equity
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Shortfall, the Representative shall cause the Sellers to pay to the Purchaser,
within two (2) business days after the determination of the Actual Net Equity,
the amount by which the Escrow Account is less than Net Equity Shortfall by wire
transfer or delivery of other immediately available funds. Additionally, if the
Actual Net Equity is greater than $34,129,000, the Purchaser shall pay to the
Representative for the account of the Sellers, within two (2) business days
after the determination of the Actual Net Equity, the amount of such excess by
wire transfer or delivery of other immediately available funds. Notwithstanding
anything to the contrary set forth herein, in the event the Representative
delivers an Objection Notice to the Purchaser pursuant to this Section 2.3(a),
and in the event the Representative's determination of the amount of the Net
Equity as of the close of business on the day before the Closing Date set forth
in such Objection Notice is less than $34,129,000, the Purchaser shall be
entitled to receive from the Escrow Account, within two (2) business days after
receipt of the Objection Notice, the amount of such shortfall; provided,
however, that if the amount then left in the Escrow Account is less than the
amount of such shortfall, the Representative shall cause the Sellers to pay to
the Purchaser, within two (2) business days after receipt by the Purchaser of
the Objection Notice, the amount by which the Escrow Account is less than such
shortfall by wire transfer or delivery of other immediately available funds;
provided, further, that any amounts received by the Purchaser pursuant to this
sentence, shall be applied towards any amount otherwise due, or shall be added
to any amounts otherwise payable, pursuant to this Section 2.3(a).
(b) Accounts Receivable Adjustment.
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(i) Notwithstanding anything herein to the contrary, and in addition
to any other adjustments set forth in this Agreement, the Cash Portion will
be reduced dollar-for-dollar by the aggregate amount of the notes and
accounts receivable of the Company, reduced by the amount of any reserve or
provision in respect thereof (the "Reserve"), calculated on a consolidated
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basis, in existence as of the Closing and utilized in determining the
Actual Net Equity (the "Closing Net Accounts Receivable"), which are
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uncollected by the Company or its Subsidiaries (the "Uncollected
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Receivables Amount") as of the 120th day following the Closing Date (the
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"Receivables Determination Date").
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(ii) If there is an Uncollected Receivables Amount, the Purchaser
shall be entitled to receive the Uncollected Receivables Amount from the
Escrow Account within two (2) business days after the Receivables
Determination Date; provided, however, that if the amount then left in the
Escrow Account is less than the amount of the Uncollected Receivables
Amount, the Representative shall pay to the Purchaser, within two (2)
business days after the Receivables Determination Date, the amount by which
the Escrow Account is less than Uncollected Receivables Amount by wire
transfer or delivery of other immediately available funds. In addition, in
the event that as of the Receivables Determination Date, the Company's
collections with respect to the Closing Net Accounts Receivable have
exceeded the amount of Closing Net Accounts Receivable (i.e., the
uncollected amount is less than the Reserve), the Purchaser shall pay such
excess to the Representative within two (2) business days after the
Receivables Determination Date by wire transfer or delivery of other
immediately available funds.
(iii) The Company shall use commercially reasonable efforts to collect
the Closing Net Accounts Receivable and shall cooperate with the
Representative with respect to such
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collection efforts and shall not settle for or accept less than the full
amount of such Closing Net Accounts Receivable without the prior written
consent of the Representative (which consent shall not be unreasonably
withheld). Notwithstanding the foregoing, the Company shall not be required
to retain a collection agency, bring any suit, or take any other action out
of the Ordinary Course of Business to collect any of the Closing Net
Accounts Receivable.
(iv) To the extent that the Company has not collected the full amount
of the Closing Net Accounts Receivable and the Purchaser has been
compensated therefor in accordance with this Section, the Company shall
assign any such uncollected Closing Net Accounts Receivable to the Sellers
and shall cooperate in the Representative's attempts to collect thereon.
(v) In the event that the Company shall receive any remittance from or
on behalf of any account debtor with respect to any Closing Net Accounts
Receivable after such Closing Net Accounts Receivable has been assigned to
the Sellers, the Company shall endorse such remittance to the order of the
Representative for the account of the Sellers and forward the same to the
Representative promptly upon receipt thereof.
2.4 DISTRIBUTION OF ESCROW ACCOUNT. On the 180th day after the
------------------------------
Closing Date, the Purchaser shall direct the escrow agent under the Escrow
Agreement to pay to the Representative an amount equal to the amount of the
Escrow Account, if any, remaining after (i) all amounts owing to the Purchaser
pursuant to Section 2.3 have been satisfied and (ii) all claims of the Purchaser
under Section 9.2 which have theretofore been finally resolved have been
satisfied (the "Remaining Escrow") less any amount for which the Purchaser
----------------
claims, prior to such 180th day, that it is entitled to receive indemnification
pursuant to Section 9.2 (each, a "Pending Claim"). As soon as practicable
-------------
following final resolution of all Pending Claims, the Purchaser shall direct the
escrow agent under the Escrow Agreement to pay to the Representative an
aggregate amount equal to the portion, if any, of the Escrow Account which
remains after payment of the Remaining Escrow and final resolution of all
Pending Claims.
2.5 CLOSING TRANSACTIONS.
--------------------
(a) Closing. The closing of the transactions contemplated by this
-------
Agreement (the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxx,
-------
000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, commencing at 10:00 a.m. on
the business day on which the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) are accomplished or obtained, or at such other place or
on such other date as may be mutually agreeable to the Purchaser and the
Representative; provided, however, that in the event the Purchaser satisfies the
condition set forth in Section 3.1(m) without consummating an initial public
offering and sale of shares of its common stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended, the Closing
shall take place on the second business day following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself), or at such other place
or on such other date as may be mutually agreeable to the Purchaser and the
Representative. The date and time of the Closing are herein referred to as the
"Closing Date."
------------
-9-
(b) Closing Transactions. Subject to the conditions set forth in this
---------------------
Agreement, the Parties shall consummate the following transactions (the "Closing
-------
Transactions") on the Closing Date:
------------
(i) each Seller shall deliver to the Purchaser certificates
representing the Acquired Stock owned by such Seller, duly endorsed for
transfer or accompanied by duly executed stock powers with all requisite
state and federal transfer stamps affixed thereto;
(ii) The Purchaser shall deliver to Sellers the Cash Portion in the
manner set forth on the Schedule of Stockholders in immediately available
------------------------
funds;
(iii) The Purchaser shall deliver to the Sellers the Subordinated
Notes in the manner set forth on the Schedule of Stockholders;
------------------------
(iv) The Purchaser shall deliver to the Sellers the Noncompete
Payment in the manner set forth on the Schedule of Stockholders;
------------------------
(v) The Purchaser shall deposit $5,000,000 in the Escrow Account in
the manner contemplated by Section 2.2 and the Escrow Agreement; and
(vi) the Company, the Sellers and the Purchaser, as applicable, shall
deliver the opinions, certificates and other documents and instruments
required to be delivered by or on behalf of such Party under Article III.
ARTICLE III
CONDITIONS TO CLOSING
---------------------
3.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The obligation of the
-----------------------------------------
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following conditions as of the Closing Date:
(a) The representations and warranties set forth in Article V and
Article VI hereof shall be true and correct in all material respects at and as
of the Closing Date as though then made and as though the Closing Date were
substituted for the date of this Agreement throughout such representations and
warranties (without taking into account any disclosures made by the Company or
the Sellers to the Purchaser pursuant to Sections 4.1(g), 5.24 and 6.6 hereof);
(b) The Company and each Seller shall have performed and complied in
all material respects with all of the covenants and agreements required to be
performed by each of them under this Agreement on or prior to the Closing;
(c) All material consents by third parties that are required for the
transfer of the Acquired Stock to the Purchaser, and the consummation of the
other transactions contemplated hereby or that are required in order to prevent
a breach of, a default under, a termination or modification of, or any
acceleration of, any obligations under any material contract to which the
Company or any of its Subsidiaries is a party shall have been obtained, and
payoff letters with
-10-
respect to all of the Company's and its Subsidiaries' Indebtedness outstanding
as of the Closing and releases of any and all Liens held by third parties
against property of the Company or any of its Subsidiaries shall have been
obtained, all on terms reasonably satisfactory to the Purchaser;
(d) All governmental filings, authorizations and approvals that are
required for the transfer of the Acquired Stock to the Purchaser and the
consummation of the other transactions contemplated hereby shall have been duly
made and obtained on terms reasonably satisfactory to the Purchaser and the
applicable waiting periods, if any, under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), shall have expired or been
-------
terminated;
(e) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator wherein an
unfavorable judgment, decree, injunction, order or ruling would prevent the
performance of this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated by this Agreement, cause such
transactions to be rescinded or materially and adversely affect the right of the
Purchaser to own, operate or control the Company or any of its Subsidiaries, and
no judgment, decree, injunction, order or ruling shall have been entered which
has any of the foregoing effects;
(f) Except as otherwise specified in writing by the Purchaser to the
Representative, all of the Company's and each of its Subsidiaries' directors and
officers shall have resigned and such resignations shall be effective as of the
Closing Date;
(g) The Company shall have terminated any and all agreements,
arrangements or plans relating to its or to any of its Subsidiaries' equity
securities, and all such agreements, arrangements and plans shall be of no
further force and effect and there shall be no rights or obligations outstanding
under any such agreements, arrangements or plans;
(h) The Company and each of Xxxxxxx X. Xxxxxxxxx and Xxxxx X. XxXxxxx
shall have entered into an agreement relating to his employment with the Company
(the "Employment Agreements"), substantially in the form of Exhibit C attached
--------------------- ---------
hereto, and the Employment Agreements shall be in full force and effect;
(i) The Purchaser shall have received an opinion, dated the Closing
Date, of Xxxxxxxx Xxxxxx, counsel to the Company and the Sellers, substantially
in the form of Exhibit D attached hereto;
---------
(j) Title Insurance. The Purchaser shall have obtained, at the
---------------
Purchaser's cost and expense, with respect to each parcel of Owned Real Property
an ALTA owner's policy of title insurance Form B-1990 with deletion of
creditor's rights exception issued by a title insurer (the "Title Company")
-------------
reasonably satisfactory to the Purchaser, in such amount as the Purchaser
reasonably determines to be the fair market value of the Owned Real Property,
insuring title to the Owned Real Property in the Company subject only to the
Permitted Encumbrances ("Title Policies"). The Title Policies shall contain: (A)
--------------
an "Extended Coverage Endorsement" insuring over the general exceptions
contained in such policies; (B) an ALTA Zoning Endorsement 3.1 (or equivalent);
(C) an endorsement insuring that the Owned Real Property or Leased Property, as
the case may be, described in such Title Policy is the parcel shown on the
Survey (as defined below) with respect to
-11-
such Owned Real Property; (D) an endorsement insuring that each street adjacent
to such Owned Real Property is a public street and that there is direct and
unencumbered access, ingress and egress to such street from such Owned Real
Property; (E) if any parcel of Owned Real Property contains more than one record
parcel, a contiguity endorsement insuring that all such record parcels are
contiguous to one another; (F) an Owner's Comprehensive Endorsement; (G) a tax
parcel endorsement, and (H) such other endorsements as shall be reasonably
requested by the Purchaser or reasonably required by any lender to the
Purchaser.
(k) Surveys. The Purchaser shall have received, at the Sellers'
-------
cost and expense, a current ALTA/ACSM survey of each parcel of Owned Real
Property with respect to which a Title Policy is required (the "Surveys") made
-------
in accordance with the 1992 ALTA/ACSM standards including items 1 through 13 of
Table A thereof made by a surveyor licensed in the jurisdiction in which such
parcel of Owned Real Property is located and certified to the Purchaser, the
Purchaser's lender and the Title Company as having been so made, disclosing the
location of all improvements, easements, party-walls, sidewalks, roadways,
utility lines and other matters required to be shown on the surveys and showing
each such parcel of Owned Real Property to be free from encroachments of
improvements located thereon onto adjacent property and to be free from
encroachments of improvements located on property adjacent onto such parcel of
Owned Real Property.
(l) On or prior to the Closing Date, the Sellers shall have
delivered to Purchaser all of the following:
(i) a certificate from the Company and the Sellers in a form
reasonably satisfactory to the Purchaser, dated the Closing Date, stating
that the preconditions specified in Sections 3.1(a) through (k) have been
satisfied;
(ii) copies of all third party and governmental consents, approvals,
filings, releases and terminations required to be obtained by the Sellers,
the Company or any of the Company's Subsidiaries in connection with the
consummation of the transactions contemplated herein;
(iii) certified copies of the resolutions of the Company's board of
directors approving the transactions contemplated by this Agreement;
(iv) with respect to the Company and each of its Subsidiaries,
certificates of the secretary of state of such company's state of
incorporation and each state where such company is required to qualify to
do business providing that such company is in good standing in such
jurisdiction;
(v) copies of the resignations described in Section 3.1(f);
(vi) all documents and records relating to the business of the
Company or any of its Subsidiaries that are in any Seller's possession;
(vii) landlord consents and estoppel certificates from the Company's
and each of its Subsidiaries' landlords in form and substance reasonably
satisfactory to the Purchaser and its lenders; and
-12-
(viii) such other documents or instruments as the Purchaser may
reasonably request to effect the transactions contemplated hereby;
(m) The Purchaser shall have obtained on terms and conditions
reasonably satisfactory to it all of the debt and equity financing required in
order to consummate the transactions contemplated hereby, and to fund the
working capital requirements of the Company and its Subsidiaries after the
Closing; provided that the completion by the Purchaser of an initial public
offering of its common stock shall satisfy such condition; and
(n) All proceedings to be taken by the Company and each Seller in
connection with the consummation of the Closing Transactions and the other
transactions contemplated hereby and all certificates, opinions, instruments and
other documents required to be delivered by the Company and each Seller to
effect the transactions contemplated hereby reasonably requested by the
Purchaser shall be reasonably satisfactory in form and substance to the
Purchaser.
Any condition specified in this Section 3.1 may be waived by the Purchaser;
provided that no such waiver shall be effective unless it is set forth in a
writing executed by the Purchaser.
3.2 CONDITIONS TO EACH SELLERS' OBLIGATIONS. The obligation of each
---------------------------------------
Seller to consummate the transactions contemplated by this Agreement is subject
to the satisfaction of the following conditions as of the Closing Date:
(a) The representations and warranties set forth in Article VII
shall be true and correct in all material respects at and as of the Closing Date
as though then made and as though the Closing Date were substituted for the date
of this Agreement throughout such representations and warranties (without taking
into account any disclosures made by the Purchaser to Sellers pursuant to
Sections 4.3(a) and 7.8 hereof);
(b) The Purchaser shall have performed and complied in all material
respects with all of the covenants and agreements required to be performed by it
under this Agreement on or prior to the Closing;
(c) All governmental filings, authorizations and approvals that are
required for the transfer of the Acquired Stock to the Purchaser and the
consummation of the other transactions contemplated hereby shall have been duly
made and obtained on terms reasonably satisfactory to the Representative and the
applicable waiting periods, if any, under the HSR Act shall have expired or been
terminated;
(d) No action, suit or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator wherein an unfavorable judgment,
decree, injunction, order or ruling would prevent the performance of this
Agreement or any of the transactions contemplated hereby, declare unlawful the
transactions contemplated by this Agreement, cause such transactions to be
rescinded or materially and adversely affect the right of the Purchaser to own,
operate or control the Company or any of its Subsidiaries, and no judgment,
decree, injunction, order or ruling shall have been entered which has any of the
foregoing effects;
-13-
(e) The Company and each of Xxxxxxx X. Xxxxxxxxx and Xxxxx X.
XxXxxxx shall have entered into an Employment Agreement, and the Employment
Agreements shall be in full force and effect;
(f) The Sellers shall have received an opinion, dated the Closing
Date, of Xxxxxxxx & Xxxxx, counsel to the Purchaser, substantially in the form
of Exhibit E attached hereto;
---------
(g) The Indebtedness described on the "Indebtedness Schedule"
---------------------
attached hereto shall have been paid and the related personal guaranties of
Xxxxxxx X. Xxxxxxxxx and Xxxxx X. XxXxxxx shall have been released;
(h) On or prior to the Closing Date, the Purchaser shall have
delivered to the Representative all of the following:
(i) a certificate from the Purchaser in a form reasonably
satisfactory to the Representative, dated the Closing Date, stating that
the preconditions specified in Sections 3.2(a) through (d), inclusive, have
been satisfied;
(ii) copies of all third party and governmental consents, approvals,
filings, releases and terminations required to be obtained by the Purchaser
in connection with the consummation of the transactions contemplated
herein;
(iii) certified copies of the resolutions of the Purchaser's board of
directors approving the transactions contemplated by this Agreement;
(iv) a certificate of the secretary of state of Delaware providing
that the Purchaser is in good standing in such jurisdiction; and
(v) such other documents or instruments as the Sellers may
reasonably request to effect the transactions contemplated hereby; and
(i) All proceedings to be taken by the Purchaser in connection with
the consummation of the Closing Transactions and the other transactions
contemplated hereby and all certificates, opinions, instruments and other
documents required to be delivered by the Purchaser to effect the transactions
contemplated hereby reasonably requested by the Representative shall be
reasonably satisfactory in form and substance to the Representative.
Any condition specified in this Section 3.2 may be waived by the Representative
on behalf of all of the Sellers; provided that no such waiver shall be effective
unless it is set forth in a writing executed by the Representative.
-14-
ARTICLE IV
COVENANTS PRIOR TO CLOSING
4.1 AFFIRMATIVE COVENANTS OF THE COMPANY AND EACH SELLER. Prior to
----------------------------------------------------
the Closing, unless the Purchaser otherwise agrees in writing, each Seller shall
cause the Company and each of its Subsidiaries to, and in the case of Sections
4.1(f), (g), (h) and (i) each Seller also shall:
(a) except as otherwise explicitly permitted by this Agreement,
conduct its business and operations only in the Ordinary Course of Business;
(b) keep in full force and effect its corporate existence and all
rights, franchises and intellectual property relating or pertaining to its
business and use its best efforts to cause its current insurance (or
reinsurance) policies not to be canceled or terminated or any of the coverage
thereunder to lapse;
(c) use its best efforts to carry on the business of the Company and
each of its Subsidiaries in the same manner as presently conducted and to keep
the Company's and each of its Subsidiaries' business organization and properties
intact, including its present business operations, physical facilities, working
conditions and employees and its present relationships with lessors, licensors,
suppliers and customers and others having business relations with it;
(d) maintain the material assets of the Company and each of its
Subsidiaries in good repair, order and condition (normal wear and tear excepted)
consistent with current needs, replace in accordance with prudent practices its
inoperable, worn out or obsolete assets with assets of good quality consistent
with prudent practices and current needs and, in the event of a casualty, loss
or damage to any material portion of such assets or properties prior to the
Closing Date, if the Company or such Subsidiary is insured, either repair or
replace such damaged property or use the proceeds of such insurance in such
other manner as mutually agreed upon by the Representative and the Purchaser;
(e) maintain the books, accounts and records of the Company and each
of its Subsidiaries in accordance with past custom and practice as reflected in
the Financial Statements;
(f) encourage those employees identified by the Purchaser as
employees who are expected to continue their employment with the Company after
the Closing to continue their employment with the Company and its Subsidiaries
after the Closing;
(g) promptly (once the Company, any of the Company's Subsidiaries or
any Seller obtains knowledge thereof) inform Purchaser in writing of any
variances from the representations and warranties contained in Article V or
Article VI hereof or any breach of any covenant hereunder by the Company, any of
the Company's Subsidiaries or any Seller;
(h) cooperate with the Purchaser and use commercially reasonable best
efforts to cause the conditions to the Purchaser's obligation to close to be
satisfied (including, without limitation, the execution and delivery of all
agreements contemplated hereunder to be so executed
-15-
and delivered and the making and obtaining of all third party and governmental
notices, filings, authorizations, approvals, consents, releases and
terminations);
(i) cooperate with the Purchaser in the Purchaser's investigation of
the business and properties of the Company and its Subsidiaries, to permit the
Purchaser and its employees, agents, accounting, legal and other authorized
representatives upon prior notice to the Company to (i) have reasonable access
to the premises, books and records of the Company and its Subsidiaries at
reasonable hours, (ii) visit and inspect any of the properties of the Company
and its Subsidiaries, and (iii) discuss the affairs, finances and accounts of
the Company and its Subsidiaries with the respective directors, officers,
partners, key employees, key customers, key sales representatives, key suppliers
and independent accountants of the Company and its Subsidiaries; and
(j) as soon as practicable after the end of each month (but in any
event within 20 days after the end of each month), deliver to the Purchaser a
copy of the Company's unaudited consolidated balance sheet as of the last day of
such month and the related statements of income and cash flows for the one month
and year-to-date periods then ended (each, an "Updated Financial Statement").
---------------------------
4.2 NEGATIVE COVENANTS OF THE COMPANY AND EACH SELLER. Except as set
-------------------------------------------------
forth on the "Negative Covenants Exception Schedule" attached hereto and except
-------------------------------------
as expressly contemplated by this Agreement, prior to the Closing, unless the
Purchaser otherwise agrees in writing, each Seller shall cause the Company and
each of its Subsidiaries to not:
(a) take any action that would require disclosure under Section 5.8;
(b) other than in the Ordinary Course of Business, make any loans,
enter into any transaction with any Insider or make or grant any increase in any
employee's, officer's or director's compensation or make or grant any increase
in any employee benefit plan, incentive arrangement or other benefit covering
any of the employees of the Company or any of its Subsidiaries;
(c) establish or, except in accordance with the terms of the Plans
disclosed herein or with past practice or as required by applicable law,
contribute to any pension, retirement, profit sharing or stock bonus plan or
multiemployer plan covering the employees of the Company or any of its
Subsidiaries;
(d) except as specifically contemplated by this Agreement, enter into
any contract, agreement or transaction, other than in the Ordinary Course of
Business and at arm's length with unaffiliated Persons;
(e) declare, pay, make or otherwise effectuate any dividends,
distributions, redemptions, equity repurchases or other transactions involving
the Company's or any of its Subsidiaries' capital stock or equity securities;
(f) except for (i) the sale of used equipment in an aggregate amount
not to exceed the amount identified on the "Company's Model Projections"
---------------------------
attached as Exhibit F hereto during the applicable period, or (ii) in the
---------
Ordinary Course of Business, sell, transfer, contribute, distribute, or
otherwise dispose of any securities or assets of the Company or any of its
Subsidiaries to any Person;
-16-
(g) except for capital expenditures in an aggregate amount not to
exceed the amount identified on the Company's Model Projections during the
---------------------------
applicable period, make any capital expenditures or commitments for capital
expenditures that aggregate in excess of $50,000;
(h) other than in the Ordinary Course of Business and except for
capital expenditures in an aggregate amount not to exceed the amount identified
on the Company's Model Projections during the applicable period, incur any
---------------------------
indebtedness for borrowed money other than indebtedness necessary to finance the
Company's or its Subsidiaries' working capital needs;
(i) agree to do any of the foregoing, or negotiate or have any
discussions with any Person with respect to any of the foregoing, other than in
the Ordinary Course of Business.
4.3 COVENANTS OF PURCHASER. Prior to the Closing, the Purchaser
----------------------
shall:
(a) promptly (once it obtains knowledge thereof) inform the
Representative in writing of any variances from the representations and
warranties contained in Article VII or any breach of any covenant hereunder by
Purchaser; and
(b) cooperate with Sellers and use its commercially reasonable best
efforts to cause the conditions to each Seller's obligation to close to be
satisfied (including, without limitation, the execution and delivery of all
agreements contemplated hereunder to be so executed and delivered and the making
and obtaining of all third party and governmental filings, authorizations,
approvals, consents, releases and terminations).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
----------------------
As a material inducement to Purchaser to enter into this Agreement,
each Seller hereby jointly and severally represents and warrants that:
5.1 ORGANIZATION AND CORPORATE POWER. The Company and each of its
--------------------------------
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and is qualified to do
business in every jurisdiction in which it is required to be qualified. The
jurisdictions of incorporation of the Company and each of its Subsidiaries and
all jurisdictions in which such company is qualified to do business are set
forth on the "Organization Schedule" attached hereto. The Company and each of
---------------------
its Subsidiaries has full power and authority and all licenses, permits and
authorizations necessary to own and operate its properties and to carry on its
business as now conducted. Correct and complete copies of the Company's and each
of its Subsidiaries' articles of incorporation and by-laws have been furnished
to the Purchaser, which documents reflect all amendments made thereto at any
time prior to the date of this Agreement. Correct and complete copies of the
minute books containing the records of meetings of the stockholders and board of
directors, the stock certificate books and the stock record books of the Company
and each of its Subsidiaries have been furnished to the Purchaser. Neither
-17-
the Company nor any of its Subsidiaries is in default under or in violation of
any provision of its articles of incorporation or by-laws.
5.2 AUTHORIZATION OF TRANSACTIONS. The Company has full corporate
-----------------------------
power and authority to execute and deliver the Transaction Documents and to
consummate the transactions contemplated hereby and thereby. The board of
directors of the Company has duly approved the Transaction Documents and has
duly authorized the execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby. No other corporate
proceedings on the part of the Company or any of its stockholders or
Subsidiaries are necessary to approve and authorize the execution and delivery
of the Transaction Documents and the consummation of the transactions
contemplated thereby. All of the Transaction Documents have been (or, with
respect to those Transaction Documents to be executed at Closing, upon Closing
will be) duly executed and delivered by the Company and constitute the valid and
binding agreements of the Company, enforceable against the Company in accordance
with their terms, except as enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and the discretionary nature of specific
performance and other equitable remedies.
5.3 CAPITALIZATION. The authorized, issued and outstanding stock of
--------------
the Company consists of 50,000,000 shares of Common Stock of which 8,330,000
shares are issued and outstanding, and 1,000,000 shares of Preferred Stock of
which no shares are issued and outstanding. All of the issued and outstanding
shares of the Company's capital stock have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held of record by the Sellers in
the amounts set forth on the Schedule of Stockholders and are not subject to,
------------------------
nor were they issued in violation of, any preemptive rights or rights of first
refusal. Except as set forth on the Schedule of Stockholders, there are no
------------------------
outstanding or authorized options, warrants, rights, contracts, calls, puts,
rights to subscribe, conversion rights or other agreements or commitments to
which the Company is a party or which are binding upon the Company providing for
the issuance, disposition or acquisition of any of its capital stock (other than
this Agreement). There are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company. There are no voting
trusts, proxies or any other agreements or understandings with respect to the
voting of the capital stock of the Company. The Company is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock.
5.4 SUBSIDIARIES; INVESTMENTS. Except as set forth on the
-------------------------
"Subsidiaries Schedule" attached hereto, the Company does not own or hold any
---------------------
shares of stock or any other security or interest in any other Person or any
rights to acquire any such stock or other security or interest. All of the
authorized, issued and outstanding shares of capital stock of each of the
Company's Subsidiaries (the "Subsidiary Stock") and the class and par value of
----------------
such Subsidiary Stock are set forth on the Subsidiaries Schedule. All of the
---------------------
issued and outstanding shares of Subsidiary Stock have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record and
beneficially by the Persons and in the amounts set forth on the Subsidiaries
------------
Schedule and are not subject to, nor were they issued in violation of, any
--------
preemptive rights or rights of first refusal, and are owned of record and
beneficially by the respective Persons as set forth on the Subsidiaries Schedule
---------------------
free and clear of all Liens (but subject to applicable laws concerning
unregistered securities). There are no outstanding or authorized options,
warrants, rights, contracts, calls, puts, rights to subscribe, conversion rights
or other agreements or commitments to which the
-18-
Company or any of its Subsidiaries is a party or which are binding upon the
Company or any of its Subsidiaries providing for the issuance, disposition or
acquisition of any capital stock of any of the Company's Subsidiaries. There are
no outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company's Subsidiaries. There are no voting trusts, proxies
or any other agreements or understandings with respect to the voting of the
Subsidiary Stock. Neither the Company nor any of its Subsidiaries is subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of Subsidiary Stock.
5.5 ABSENCE OF CONFLICTS. Except as set forth on the "Conflicts
-------------------- ---------
Schedule" attached hereto, and except for the filing requirements under the HSR
--------
Act (the "HSR Filing"), the execution, delivery and performance of the
----------
Transaction Documents and the consummation of the transactions contemplated
thereby by the Company and the Sellers do not and shall not (a) conflict with or
result in any breach of any of the terms, conditions or provisions of, (b)
constitute a default under, (c) result in a violation of, (d) give any third
party the right to modify, terminate or accelerate any obligation under, (e)
result in the creation of any Lien upon the Acquired Stock or the assets of the
Company or any of its Subsidiaries, or (f) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or other governmental body or agency, under
the provisions of the articles of incorporation or by-laws of the Company or any
of its Subsidiaries or any indenture, mortgage, lease, loan agreement or other
agreement or instrument to which the Company or any of the Company's
Subsidiaries is bound or affected, or any law, statute, rule or regulation to
which the Company or any of the Company's Subsidiaries is subject or any
judgment, order or decree to which the Company or any of the Company's
Subsidiaries is subject.
5.6 FINANCIAL STATEMENTS AND RELATED MATTERS.
----------------------------------------
(a) Financial Statements. Attached hereto as the "Financial
-------------------- ---------
Statements Schedule" are copies of (i) the Company's unaudited consolidated and
-------------------
consolidating balance sheet as of January 31, 1998 (the "Latest Balance Sheet")
--------------------
and the related statements of income and cash flows for the one-month period
then ended and (ii) the Company's and its predecessor's audited consolidated and
combined balance sheets and statements of income and cash flows for the fiscal
years ended December 31, 1997, 1996 and 1995. Each of the foregoing financial
statements and each of the Updated Financial Statements (including in all cases
the notes thereto, if any) (the "Financial Statements") is (and in the case of
--------------------
the Updated Financial Statements, will be) accurate and complete, is consistent
with the Company's and its Subsidiaries' books and records (which, in turn, are
accurate and complete), present fairly the Company's financial condition and
results of operations as of the times and for the periods referred to therein,
and has been prepared in accordance with GAAP, subject in the case of unaudited
financial statements to changes resulting from normal year-end adjustments for
recurring accruals (which shall not be material individually or in the
aggregate) and to the absence of footnote disclosure.
(b) Inventory. The Company's and its Subsidiaries' inventory (as set
---------
forth on the Latest Balance Sheet), net of the reserves applicable to such
inventory, consists of a quantity and quality which, except as reflected in such
reserve, is usable and saleable in the Ordinary Course of Business, and the
items of such inventory are not defective, slow-moving, obsolete or damaged and
are merchantable and fit for their particular use.
-19-
(c) Rental Equipment Fleet. The Company's and its Subsidiaries'
----------------------
rental equipment (as set forth on the Latest Balance Sheet), net of the reserves
and accumulated depreciation applicable to such rental equipment, consists of a
quantity and quality which, except as reflected in such reserve and accumulated
depreciation, is usable and rentable in the Ordinary Course of Business, and the
items of such rental equipment are not defective, obsolete or damaged and are
merchantable and fit for their particular use, subject in each case to
applicable reserves and depreciation.
5.7 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor any
----------------------------------
of its Subsidiaries has any obligations or liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise, whether or not known, whether
due or to become due and regardless of when asserted) arising out of
transactions entered into at or prior to the Closing, or any action or inaction
at or prior to the Closing, or any state of facts existing at or prior to the
Closing, except (i) obligations under contracts or commitments described on the
Contracts Schedule attached hereto or under contracts and commitments which are
------------------
not required to be disclosed thereon (but not liabilities for breaches thereof),
(ii) liabilities reflected on the liabilities side of the Latest Balance Sheet,
(iii) liabilities which have arisen after the date of the Latest Balance Sheet
in the Ordinary Course of Business or otherwise in accordance with the terms and
conditions of this Agreement (none of which is a liability for breach of
contract, breach of warranty, tort or infringement or a claim or lawsuit or an
environmental liability) and (iv) other liabilities described in the Schedules
to this Agreement.
5.8 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth on the
-------------------------------
"Developments Schedule" attached hereto and except as expressly contemplated by
---------------------
this Agreement, since December 31, 1997, neither the Company nor any of its
Subsidiaries has:
(a) suffered any change that has had or could reasonably be expected
to have a Material Adverse Effect or suffered any theft, damage, destruction or
casualty loss in excess of $100,000, to its assets, whether or not covered by
insurance or suffered any substantial destruction of its books and records;
(b) redeemed or repurchased, directly or indirectly, any shares of
capital stock or other equity security or declared, set aside or paid any
dividends or made any other distributions (whether in cash or in kind) with
respect to any shares of its capital stock or other equity security;
(c) issued, sold or transferred any equity securities, any securities
convertible, exchangeable or exercisable into shares of its capital stock or
other equity securities, or warrants, options or other rights to acquire shares
of its capital stock or other equity securities;
(d) incurred or become subject to any liabilities, except liabilities
disclosed in the Schedules to this Agreement or incurred in the Ordinary Course
of Business;
(e) subjected any portion of its properties or assets to any Lien;
(f) sold, leased, assigned or transferred (including, without
limitation, transfers to any Seller or any Insider) a portion of its tangible
assets, except for sales of inventory and used equipment in the Ordinary Course
of Business, or canceled without fair consideration any material debts or claims
owing to or held by it;
-20-
(g) sold, assigned, licensed or transferred (including, without
limitation, transfers to any Seller or any Insider) any Proprietary Rights owned
by, issued to or licensed to the Company or any of its Subsidiaries or disclosed
any confidential information (other than pursuant to agreements requiring the
disclosure to maintain the confidentiality of and preserving all rights of the
Company and its Subsidiaries in such confidential information) or received any
confidential information of any third party in violation of any obligation of
confidentiality;
(h) suffered any extraordinary losses or waived any rights of
material value outside the Ordinary Course of Business;
(i) incurred any indebtedness for borrowed money (other than
indebtedness to finance its working capital and capital expenditure needs);
(j) entered into, amended or terminated any material lease, contract,
agreement or commitment other than in the Ordinary Course of Business, or taken
any other action or entered into any other transaction other than in the
Ordinary Course of Business;
(k) entered into any other material transaction, or materially
changed any business practice;
(l) made or granted any bonus (except for bonuses paid to employees
and sales representatives in the Ordinary Course of Business and reflected on
the Financial Statements) or any wage, salary or compensation increase to any
director, officer, employee or sales representative, group of employees or
consultant or made or granted any increase in any employee benefit plan or
arrangement, or amended or terminated any existing employee benefit plan or
arrangement or adopted any new employee benefit plan or arrangement;
(m) made any other change in employment terms for any of its
directors, officers, and employees outside the Ordinary Course of Business;
(n) incurred intercompany charges or conducted its cash management
customs and practices other than in the Ordinary Course of Business (including,
without limitation, with respect to collection of accounts receivable, purchases
of inventory and supplies, repairs and maintenance, and payment of accounts
payable and accrued expenses);
(o) made any loans or advances to, or guarantees for the benefit of,
any Persons other than in the Ordinary Course of Business;
(p) changed (or authorized any change) in its articles of
incorporation or by-laws; or
(q) agreed or committed to do any of the foregoing.
5.9 TITLE TO PROPERTIES.
-------------------
(a) Owned Properties. The "Real Property Schedule" attached hereto
---------------- ----------------------
sets forth a list of all owned real property (collectively, the "Owned Real
----------
Property") used by the Company or
--------
-21-
any of its Subsidiaries. With respect to each such parcel of Owned Real
Property: (i) the Company has good and marketable title thereto and such parcel
is free and clear of all Liens, except Liens set forth on the Real Property
-------------
Schedule and Permitted Encumbrances; (ii) there are no leases, subleases,
--------
licenses, concessions, or other agreements, written or oral, granting to any
person the right of use or occupancy of any portion of such parcel; and (iii)
there are no outstanding actions or rights of first refusal to purchase such
parcel, or any portion thereof or interest therein.
(b) The leases and subleases described on the Real Property Schedule
----------------------
(the "Leased Properties," and together with the Owned Real Property referred to
-----------------
herein as the "Real Property") constitute all of the leases and subleases under
-------------
which the Company or any of its Subsidiaries holds leasehold or subleasehold
interests in real property. The real property leases and subleases described on
the Real Property Schedule are valid, binding, enforceable and in full force and
----------------------
effect and have not been modified (except to the extent disclosed in the
documents delivered to the Purchaser), and the Company or one or more of its
Subsidiaries holds a valid and existing leasehold interest under such leases or
subleases to which it is a party. The Company has delivered to the Purchaser
complete and accurate copies of each of the leases or subleases described on the
Real Property Schedule. With respect to each lease and sublease listed on the
----------------------
Real Property Schedule:
----------------------
(i) neither the Company, any of its Subsidiaries nor any other party
to the lease or sublease is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute such a breach or
default or permit termination, modification or acceleration under the lease
or sublease;
(ii) no party to the lease or sublease has repudiated any provision
thereof and there are no disputes, oral agreements or forbearance programs
in effect as to the lease or sublease;
(iii) neither the Company nor any of its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in the leasehold or subleasehold;
(iv) all buildings, improvements or other property leased or
subleased thereunder have received all approvals of governmental
authorities required in connection with the operation thereof and have been
operated and maintained by the Company in accordance with applicable laws,
rules and regulations; and
(v) to the Company's knowledge, the owner of the building,
improvements or other real property leased or subleased has good and
marketable title to the parcel of real property, free and clear of all
Liens, other than (A) installments of special assessments and taxes not yet
due and payable and (B) recorded easements, covenants and restrictions of
record which do not impair the current use, occupancy or value, or the
marketability of title, of the property subject thereto.
(c) The real property described on the Real Property Schedule
----------------------
constitutes all of the real property used or occupied by the Company or any of
its Subsidiaries.
-22-
(d) Except as set forth on the "Assets Schedule" attached hereto,
---------------
the Company or one or more of its Subsidiaries owns good and marketable title
to, or a valid leasehold interest in, free and clear of all Liens, all of the
personal property and assets which are shown on the Latest Balance Sheet or
acquired thereafter or located on the Real Property or used by the Company or
any of its Subsidiaries.
(e) The buildings, machinery, equipment, personal properties,
vehicles and other tangible assets of the Company or its Subsidiaries located
upon or used in connection with the Real Property are operated in conformity
with all applicable laws and regulations, are in good condition and repair, wear
and tear in the Ordinary Course of Business excepted, and are usable in the
Ordinary Course of Business. The Company or one or more of its Subsidiaries owns
or leases under valid leases all buildings, machinery, equipment and other
tangible assets necessary for the conduct of the business of the Company and its
Subsidiaries.
5.10 TAXES. In each case, except as set forth on the "Taxes
----- -----
Schedule" attached hereto:
--------
(a) The Company, each of its Subsidiaries and each Affiliated Group
have filed all Tax Returns which they are required to file under applicable laws
and regulations; all such Tax Returns are complete and correct in all material
respects and have been prepared in compliance with all applicable laws and
regulations in all material respects; the Company, each of its Subsidiaries and
each Affiliated Group in all material respects have paid all Taxes due and owing
by them (whether or not such Taxes are required to be shown on a Tax Return) and
have withheld and paid over to the appropriate taxing authority all Taxes which
they are required to withhold from amounts paid or owing to any employee,
equityholder, creditor or other third party; neither the Company, any of its
Subsidiaries nor any Affiliated Group has waived any statute of limitations with
respect to any Taxes or agreed to any extension of time with respect to any Tax
assessment or deficiency; the Company and its Subsidiaries have not incurred any
liability for Taxes other than in the Ordinary Course of Business; the
assessment of any additional Taxes for periods for which Tax Returns have been
filed by the Company, each of its Subsidiaries and each Affiliated Group shall
not exceed the recorded liability therefor on the Latest Balance Sheet
(excluding any amount recorded which is attributable solely to timing
differences between book and Tax income); no foreign, federal, state or local
tax audits or administrative or judicial proceedings are pending or being
conducted with respect to the Company, any Subsidiary or any Affiliated Group,
no written notice indicating an intent to open an audit or other review has been
received by the Company from any foreign, federal, state or local taxing
authority; and there are no material unresolved questions or claims concerning
the Company's or any of its Subsidiaries' Tax liability.
(b) Neither the Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code. With the exception of Taxes
collected by, withheld by or paid over to the Company or any of its Subsidiaries
and which are identified as such in the books and records of the Company or its
Subsidiaries, neither the Company nor any of its Subsidiaries is liable for the
Taxes of another Person that is not a Subsidiary of the Company under (a)
Treasury Regulation (S) 1.1502-6 (or comparable provisions of state, local or
foreign law), (b) as a transferee or successor, (c) by contract or indemnity or
(d) otherwise. Neither the Company nor any of its Subsidiaries is a party to
any tax sharing agreement. The Company, each of its Subsidiaries and each
Affiliated Group have disclosed on their federal income Tax Returns any position
taken for which substantial
-23-
authority (within he meaning of Section 6662(d)(2)(B)(i) of the Code) did not
exist at the time the return is filed. Neither the Company nor any of its
Subsidiaries has made any payments, is obligated to make payments or is a party
to an agreement that could obligate it to make any payments that would not be
deductible under Section 280G of the Code.
(c) No claim has ever been made by a taxing authority in a
jurisdiction where the Company or any Subsidiary does not file tax returns that
the Company or such Subsidiary is or may be subject to taxes assessed by such
jurisdiction.
(d) There are no Liens for Taxes (other than for current Taxes not
yet due and payable) upon the assets of the Company or any Subsidiary.
(e) Neither the Company nor any Subsidiary will be required (i) 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 any portion thereof) or (ii) 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.
(f) The Company has not been a member of an Affiliated Group other
than the one of which the Company was the common parent, or filed or been
included in a combined, consolidated or unitary income Tax Return, other than
one filed by the Sellers or the Company.
(g) The Purchaser will not be required to deduct and withhold any
amount pursuant to Section 1445(a) of the Code upon the transfer of the Acquired
Stock to the Purchaser.
(h) Neither the Company nor any Subsidiary owns any interest in real
property in the State of New York or in any other jurisdiction in which a tax
(other than a net income or franchise tax) is imposed on the gain on a transfer
of an interest in real property.
5.11 CONTRACTS AND COMMITMENTS.
-------------------------
(a) Except as specifically contemplated by this Agreement and except
as set forth on the "Contracts Schedule" attached hereto, neither the Company
------------------
nor any of its Subsidiaries is a party to or bound by, whether written or oral,
any:
(i) collective bargaining agreement or contract with any labor union
or any bonus, pension, profit sharing, retirement or any other form of
deferred compensation plan or any stock purchase, stock option, group
health insurance or similar plan or practice, whether formal or informal;
(ii) any contract for the employment of any officer, individual
employee or other person on a full-time or consulting basis or any
severance agreements;
(iii) agreement or indenture relating to the borrowing of money or to
mortgaging, pledging or otherwise placing a Lien on any of its assets;
-24-
(iv) agreements with respect to the lending or investing of funds;
(v) license or royalty agreements (other than license agreements
for mass marketed shrink wrap software);
(vi) guaranty of any obligation, other than endorsements made for
collection;
(vii) lease or agreement under which it is lessee of, or holds or
operates, any personal property owned by any other party calling for
payments in excess of $100,000 annually (other than leases of equipment in
the Ordinary Course of Business);
(viii) lease or agreement under which it is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by it (other than leases of equipment in the Ordinary Course of
Business);
(ix) contract or group of related contracts with the same party
continuing over a period of more than six months from the date or dates
thereof, involving more than $50,000;
(x) contract which prohibits it from freely engaging in business
anywhere in the world; or
(xi) other agreement material to it whether or not entered into in
the Ordinary Course of Business.
(b) Except as disclosed on the Contracts Schedule, (i) no contract
------------------
or commitment required to be disclosed on the Contracts Schedule has been
------------------
breached or cancelled by the other party and the Company, its Subsidiaries and
the Sellers have no knowledge of any anticipated breach by any other party to
any contract required to be set forth on the Contracts Schedule, (ii) no
------------------
customer or supplier has indicated in writing or orally to the Company, any of
its Subsidiaries or any Seller that it shall stop or decrease the rate of
business done with the Company or any of its Subsidiaries or that it desires to
renegotiate its contract or current arrangement with the Company of any of its
Subsidiaries, (iii) the Company and each of its Subsidiaries has performed all
the obligations required to be performed by it in connection with the contracts
or commitments required to be disclosed on the Contracts Schedule and is not in
------------------
default under or in breach of any contract or commitment required to be
disclosed on the Contracts Schedule, and no event has occurred which with the
------------------
passage of time or the giving of notice or both would result in a default or
breach thereunder, (iv) neither the Company nor any of its Subsidiaries has any
present expectation or intention of not fully performing any obligation pursuant
to any contract required to be set forth on the Contracts Schedule, and (vi)
------------------
each agreement required to be set forth on the Contracts Schedule is legal,
------------------
valid, binding, enforceable and in full force and effect and will continue as
such following the consummation of the transactions contemplated hereby, except
as enforceability may be limited by bankruptcy, fraudulent conveyance,
insolvency, moratorium, reorganization or similar laws affecting creditors'
rights generally and the discretionary nature of specific performance and other
equitable remedies.
(c) The Sellers have provided the Purchaser with a true and correct
copy of all written contracts which are required to be disclosed on the
Contracts Schedule, in each case together
------------------
-25-
with all amendments, waivers or other changes thereto (all of which are
disclosed on the Contracts Schedule). The Contracts Schedule contains an
------------------ ------------------
accurate and complete description of all material terms of all oral contracts
required to be set forth thereon.
5.12 PROPRIETARY RIGHTS.
------------------
(b) The "Proprietary Rights Schedule" attached hereto sets forth a
---------------------------
complete and correct list of: (i) all patented, registered or applied for
Proprietary Rights owned or used by the Company or any of its Subsidiaries; (ii)
all trade names, unregistered trademarks and material unregistered copyrights
owned or used by the Company or any of its Subsidiaries; (iii) all licenses or
other agreements to which the Company or any of its Subsidiaries is a party,
either as licensee or licensor, for any Proprietary Rights (other than license
agreements for mass marketed shrink wrap software).
(c) Except as set forth on the Proprietary Rights Schedule, (i) the
---------------------------
Company or one or more of its Subsidiaries owns and possesses without
restriction as to use, all right, title and interest in and to the Proprietary
Rights necessary for the operation of the Company's and each of its
Subsidiaries' businesses as currently conducted; (ii) neither the Company nor
any of its Subsidiaries has received any notices of invalidity, infringement or
misappropriation from any third party with respect to any such Proprietary
Rights; (iii) neither the Company nor any of its Subsidiaries has interfered
with, infringed upon, misappropriated or otherwise come into conflict with any
Proprietary Rights of any third parties; and (iv) to the Company's and each of
its Subsidiaries' knowledge, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Proprietary Rights of
the Company or any of its Subsidiaries.
(d) The transactions contemplated by this Agreement shall have no
adverse effect on the Company's or any of its Subsidiaries' right, title and
interest in and to any of their Proprietary Rights. The Company and each of its
Subsidiaries has taken all necessary and desirable actions to maintain and
protect its Proprietary Rights and shall continue to maintain and protect those
rights prior to the Closing so as to not adversely affect the validity or
enforcement of such Proprietary Rights.
5.13 LITIGATION; PROCEEDINGS. Except as set forth on the
-----------------------
"Litigation Schedule" attached hereto, there are no actions, suits, proceedings,
--------------------
orders, judgments, decrees or investigations pending or, to the Company's or any
of its Subsidiaries' knowledge, threatened against or affecting the Company or
any of its Subsidiaries at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and to the knowledge of the Company or any
of its Subsidiaries there is no basis for any of the foregoing. Neither the
Company nor any of its Subsidiaries is subject to any outstanding order,
judgment or decree issued by any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or any arbitrator.
5.14 BROKERAGE. Except as set forth on the "Brokerage Schedule"
--------- ------------------
attached hereto, there are no claims for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of the
Company or any of its Subsidiaries.
-26-
5.15 GOVERNMENTAL LICENSES AND PERMITS. Except as indicated on
---------------------------------
the Permits Schedule, the Company and each of its Subsidiaries owns or possesses
----------------
all right, title and interest in and to all Licenses which are necessary to
conduct its business as presently conducted and as proposed to be conducted and
shall use its reasonable efforts to maintain all such Licenses. No loss or
expiration of any License is pending or, to the Company's or any of its
Subsidiaries' knowledge, threatened or reasonably foreseeable (including,
without limitation, as a result of the transactions contemplated hereby) other
than expiration in accordance with the terms thereof.
5.16 EMPLOYEES. Except as set forth on the "Employees Schedule"
--------- ------------------
attached hereto, (i) to the knowledge of the Company or any of its Subsidiaries,
no key executive employee and no group of employees or independent contractors
of the Company or any of its Subsidiaries has any plans to terminate his, her or
its employment or relationship as an independent contractor with the Company or
such Subsidiary, (ii) the Company and each of its Subsidiaries have complied
with all applicable laws relating to the employment of personnel and labor, and
(iii) since January 1, 1987, neither the Company nor any of its Subsidiaries has
experienced any strikes, grievances, unfair labor practices claims or other
material employee or labor disputes. Neither the Company nor any of its
Subsidiaries has engaged in any unfair labor practice. Neither the Company nor
any of its Subsidiaries has any knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Company or any of its Subsidiaries.
5.17 EMPLOYEE BENEFIT PLANS.
----------------------
(a) Except as set forth on the "Benefit Plans Schedule" attached
----------------------
hereto, with respect to current or former employees of the Company and each of
its Subsidiaries, neither the Company nor any of its Subsidiaries maintains or
contributes to or has any actual or potential liability with respect to any (i)
deferred compensation or bonus or retirement plans or arrangements, (ii)
qualified or nonqualified defined contribution or defined benefit plans or
arrangements which are employee pension benefit plans (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA")), or (iii)
-----
employee welfare benefit plans, (as defined in Section 3(1) of ERISA), stock
option or stock purchase plans, or material fringe benefit plans or programs
whether in writing or oral and whether or not terminated. Except for payments
to multiemployer pension plans (as defined in Section 3(37) of ERISA) for the
benefit of employees who are members of labor unions (the "Company Multiemployer
---------------------
Plans"), neither the Company nor any of its Subsidiaries has ever contributed to
-----
any multiemployer pension plan (as defined in Section 3(37) of ERISA), and
neither the Company nor any of its Subsidiaries has ever maintained or
contributed to any defined benefit plan (as defined in Section 3(35) of ERISA).
Neither the Company nor any of its Subsidiaries maintains or contributes to any
employee welfare benefit plan which provides health, accident or life insurance
benefits to former employees, their spouses or dependents, other than in
accordance with Section 4980B of the Code ("COBRA").
-----
(b) The employee benefit plans (and related trusts and insurance
contracts) set forth on the Benefit Plans Schedule comply in form and in
----------------------
operation in all respects with the requirements of applicable laws and
regulations, including ERISA and the Code and the nondiscrimination rules
thereof; provided, however, that the foregoing representation is given to the
Company's best knowledge with respect to the Company Multiemployer Plans.
-27-
(c) All required reports and descriptions (including Form 5500 Annual
Reports, Summary Annual Reports and Summary Plan Descriptions) with respect to
the employee benefit plans set forth on the Benefit Plans Schedule (other than
----------------------
the Company Multiemployer Plans) have been properly and timely filed with the
appropriate government agency and distributed to participants as required. The
Company and each of its Subsidiaries have complied with the requirements of
COBRA.
(d) With respect to each employee benefit plan set forth on the
Benefit Plans Schedule (other than the Company Multiemployer Plans), (i) there
----------------------
have been no prohibited transactions as defined in Section 406 of ERISA or
Section 4975 of the Code for which no exemption is applicable, (ii) no fiduciary
(as defined in Section 3(21) of ERISA) has any liability for breach of fiduciary
duty or any other failure to act or comply in connection with the administration
or investment of the assets of such plans, and (iii) no actions, investigations,
suits or claims with respect to the assets thereof (other than routine claims
for benefits) are pending or threatened, and neither the Company nor any of its
Subsidiaries has any knowledge of any facts which would give rise to or could
reasonably be expected to give rise to any such actions, suits or claims.
(e) With respect to each of the employee benefit plans listed on the
Benefit Plans Schedule (other than the Company Multiemployer Plans), the Sellers
----------------------
have furnished to the Purchaser true and complete copies of (i) the plan
documents, summary plan descriptions and summaries of material modifications and
other material employee communications, (ii) the Form 5500 Annual Report
(including all schedules and other attachments for the most recent three years),
(iii) all related trust agreements, insurance contracts or other funding
agreements which implement such plans and (iv) all contracts relating to each
such plan, including, without limitation, service provider agreements, insurance
contracts, investment management agreements and recordkeeping agreements.
5.18 INSURANCE. The "Insurance Schedule" attached hereto lists and
--------- ------------------
briefly describes each insurance policy maintained by the Company and each
of its Subsidiaries with respect to its properties, assets and business,
together with a claims history for the past five years. All of such insurance
policies are in full force and effect, and neither the Company nor any of its
Subsidiaries is in default with respect to its obligations under any such
insurance policies and neither the Company nor any of its Subsidiaries has been
denied insurance coverage. Except as set forth on the Insurance Schedule,
------------------
neither the Company nor any of its Subsidiaries has any self-insurance or co-
insurance programs, and the reserves set forth on the Latest Balance Sheet are
adequate to cover all anticipated liabilities with respect to self-insurance or
coinsurance programs.
5.19 OFFICERS AND DIRECTORS; BANK ACCOUNTS. The "Officers,
------------------------------------- ---------
Directors and Bank Accounts Schedule" attached hereto lists all officers and
------------------------------------
directors of the Company and each of its Subsidiaries, and all bank accounts,
safety deposit boxes and lock boxes (designating each authorized signatory with
respect thereto) for the Company and each of its Subsidiaries.
5.20 AFFILIATE TRANSACTIONS. Except as disclosed on the
----------------------
"Affiliated Transactions Schedule" attached hereto, no Insider is a party to any
---------------------------------
agreement, contract, commitment or transaction with the Company or any of its
Subsidiaries or which is pertaining to the business of the Company or any of its
Subsidiaries (except by virtue of his or her employment) or has any interest
-28-
in any property, real or personal or mixed, tangible or intangible, used in or
pertaining to the business of the Company or any of its Subsidiaries.
5.21 COMPLIANCE WITH LAWS. Except as set forth on the Taxes
-------------------- -----
Schedule, the Company, each of its Subsidiaries and their respective officers,
--------
directors, partners, agents and employees have complied with and are in
compliance with all applicable laws, regulations and ordinances of foreign,
federal, state and local governments and all agencies thereof which are
applicable to the business, business practices (including, but not limited to,
the Company's and its Subsidiaries' marketing and sales of their respective
products and services) or any owned or leased properties of the Company or any
of its Subsidiaries and to which the Company or any of its Subsidiaries may be
subject, and no claims have been filed against the Company or any of its
Subsidiaries alleging a violation of any such laws or regulations, and neither
the Company nor any of its Subsidiaries has received notice of any such
violations.
5.22 ENVIRONMENTAL MATTERS. Except as set forth on the
---------------------
"Environmental Schedule" attached hereto:
-----------------------
(a) The Company and each of its Subsidiaries have complied with and
are currently in compliance with all Environmental and Safety Requirements, and
neither the Company nor any of its Subsidiaries has received any oral or written
notice, report or information regarding any liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) or any corrective,
investigatory or remedial obligations arising under Environmental and Safety
Requirements which relate to the Company or to any of its Subsidiaries or to any
of their respective properties or facilities.
(b) Without limiting the generality of the foregoing, the Company and
each of its Subsidiaries have obtained and complied with, and are currently in
compliance with, all permits, licenses and other authorizations that may be
required pursuant to any Environmental and Safety Requirements for the occupancy
of their respective properties or facilities or the operation of their
respective businesses. A list of all such permits, licenses and other
authorizations which are material to the Company and its Subsidiaries taken as a
whole is set forth on the Environmental Schedule.
----------------------
(c) Neither this Agreement or the other Transaction Documents nor the
consummation of the transactions contemplated hereby and thereby shall impose
any obligations on the Company or any of its Subsidiaries or otherwise for site
investigation or cleanup, or notification to or consent of any government
agencies or third parties under any Environmental and Safety Requirements
(including, without limitation, any so called "transaction-triggered" or
"responsible property transfer" laws and regulations).
(d) None of the following exists at any property or facility owned,
occupied or operated by the Company or any of its Subsidiaries: (i)
underground storage tanks or surface impoundments; (ii) asbestos-containing
material in any form or condition; (iii) materials or equipment containing
polychlorinated biphenyls; or (iv) landfills.
(e) Neither the Company nor any of its Subsidiaries have treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled or Released any substance (including, without limitation, any hazardous
substance) or owned, occupied or operated any facility
-29-
or property, so as to give rise to liabilities of the Company of any of its
Subsidiaries for response costs, natural resource damages or attorneys' fees
pursuant to CERCLA or any other Environmental and Safety Requirements.
(f) Without limiting the generality of the foregoing, no facts, events
or conditions relating to the past or present properties, facilities or
operations of the Company or any of its Subsidiaries shall prevent, hinder or
limit continued compliance with Environmental and Safety Requirements, give rise
to any corrective, investigatory or remedial obligations pursuant to
Environmental and Safety Requirements or give rise to any other liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental and Safety Requirements, including, without limitation, those
liabilities relating to onsite or offsite Releases or threatened Releases of
hazardous materials, substances or wastes, personal injury, property damage or
natural resources damage.
(g) Neither the Company nor any of its Subsidiaries have, either
expressly or by operation of law, assumed or undertaken any liability or
corrective investigatory or remedial obligation of any other Person relating to
any Environmental and Safety Requirements.
(h) No Environmental Lien has attached to any property owned, leased
or operated by the Company or any of its Subsidiaries.
5.23 DISCLOSURE. Neither this Agreement, the other Transaction
----------
Documents, nor any of the schedules, attachments or Exhibits hereto, contain any
untrue statement of a material fact or omit a material fact necessary to make
each statement contained herein or therein, not misleading; There is no fact
which has not been disclosed to the Purchaser of which the Company, any of its
Subsidiaries or any of the Sellers has knowledge which has a Material Adverse
Effect or could reasonably be anticipated to have a Material Adverse Effect.
5.24 CLOSING DATE. All of the representations and warranties of
------------
the Company contained in this Article V and elsewhere in this Agreement and all
information delivered in any schedule, attachment or Exhibit hereto are true and
correct on the date of this Agreement and shall be true and correct on the
Closing Date, except to the extent that the Representative has advised the
Purchaser otherwise in writing at or prior to the Closing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLERS
As a material inducement to the Purchaser to enter into this
Agreement, each Seller severally represents and warrants to the Purchaser that:
6.1 AUTHORIZATION OF TRANSACTIONS.
-----------------------------
(a) Each such Seller that is an individual has full power, authority
and legal capacity to execute and deliver the Transaction Documents to which he
is a party and to consummate the transactions contemplated thereby and hereby.
Each Seller that is an individual has
-30-
(or, with respect to those Transaction Documents to be executed at Closing, upon
Closing will have) duly executed and delivered all of the Transaction Documents
to which he is a party, and such Transaction Documents constitute the valid and
binding agreements of such Seller, enforceable against such Seller in accordance
with their terms, except as enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and the discretionary nature of specific
performance and other equitable remedies.
(b) Each such Seller that is a trust or a limited partnership has full
power and authority to execute and deliver the Transaction Documents to which it
is a party and to consummate the transactions contemplated hereby and thereby.
Each trustee of each Seller that is a trust and each general partner of each
Seller that is a limited partner has duly approved the Transaction Documents to
which such Seller is a party and has duly authorized the execution and delivery
of the Transaction Documents to which such Seller is a party and the
consummation of the transactions contemplated thereby. No other proceedings on
the part of such Seller are necessary to approve and authorize the execution and
delivery of the Transaction Documents to which such Seller is a party and the
consummation of the transactions contemplated thereby. Each such Seller has
(or, with respect to those Transaction Documents to be executed at Closing, upon
Closing will have) duly executed and delivered all of the Transaction Documents
to which it is a party and such Transaction Documents constitute the valid and
binding agreements of such Seller, enforceable against such Seller in accordance
with their terms, except as enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and the discretionary nature of specific
performance and other equitable remedies.
6.2 ABSENCE OF CONFLICTS. Except for the HSR Filing, neither the
--------------------
execution and the delivery of this Agreement and the other documents
contemplated hereby to which such Seller is a party, nor the consummation of the
transactions contemplated hereby and thereby, shall (a) conflict with, result in
a breach of any of the provisions of, (b) constitute a default under, (c) result
in the violation of, (d) give any third party the right to terminate or to
accelerate any obligation under, (e) result in the creation of any Lien upon the
Acquired Stock owned by such Seller, or (f) require any authorization, consent,
approval, execution or other action by or notice to any court or other
governmental body, under the provisions of any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which such Seller is bound or
affected, or any statute, regulation, rule, judgment, order, decree or other
restriction of any government, governmental agency or court to which such Seller
is subject. No notice to, filing with or authorization, consent or approval of
any government or governmental agency by such Seller is necessary for the
consummation of the transactions contemplated by this Agreement and the other
documents contemplated hereby to which such Seller is a party.
6.3 BROKERAGE. Except as set forth on the Brokerage Schedule, there
--------- ------------------
are no claims for brokerage commissions, finders' fees or similar compensation
in connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of such Seller.
6.4 SHARES. Such Seller holds of record and owns beneficially
------
the shares of Acquired Stock as indicated on the Schedule of Stockholders, free
------------------------
and clear of any Liens but subject to laws relating to unregistered securities.
Except as set forth on the Schedule of Stockholders, (i)
------------------------
-31-
such Seller is not a party to any option, warrant, right, contract, call, put or
other agreement or commitment providing for the disposition or acquisition of
any capital stock of the Company (other than this Agreement) and (ii) such
Seller is not a party to any voting trust, proxy or other agreement or
understanding with respect to the voting of any capital stock of the Company.
6.5 INVESTMENT IN SUBORDINATED NOTES. Such Seller (a) understands
--------------------------------
that the Subordinated Notes (and the capital stock issuable upon conversion
thereof) (the "NES Securities") have not been, and will not be, registered under
--------------
the Securities Act of 1933, as amended, or under any state securities laws, and
are being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (b) understands that the
transfer of the NES Securities is restricted, (c) is acquiring the NES
Securities solely for his or its own account for investment purposes, and not
with a view to the distribution thereof, (d) is a sophisticated investor with
knowledge and experience in business and financial matters, (e) has received
certain information concerning the Purchaser and has had the opportunity to
obtain additional information as desired in order to evaluate the merits and the
risks inherent in holding the NES Securities and (f) is able to bear the
economic risk and lack of liquidity inherent in holding the NES Securities.
6.6 CLOSING DATE. All of the representations and warranties
------------
concerning such Seller contained in this Article VI and elsewhere in this
Agreement and all information delivered in any schedule, attachment or Exhibit
hereto are true and correct on the date of this Agreement and shall be true and
correct on the Closing Date except to the extent that such Seller has advised
the Purchaser otherwise in writing at or prior to the Closing.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES CONCERNING THE PURCHASER
-------------------------------------------------------
As a material inducement to Sellers to enter into this Agreement, the
Purchaser hereby represents and warrants to Sellers that:
7.1 ORGANIZATION AND CORPORATE POWER. The Purchaser is a
--------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to enter into
this Agreement and the other agreements contemplated hereby to which the
Purchaser is a party and perform its obligations hereunder and thereunder.
Correct and complete copies of the Purchaser's articles of incorporation and by-
laws have been furnished to the Representative, which documents reflect all
amendments made thereto at any time prior to the date of this Agreement.
7.2 AUTHORIZATION OF TRANSACTION. The execution, delivery and
----------------------------
performance of this Agreement and the other agreements contemplated hereby to
which the Purchaser is a party have been duly and validly authorized by all
requisite corporate action on the part of the Purchaser, and no other corporate
proceedings on its part are necessary to authorize the execution, delivery or
performance of this Agreement. This Agreement constitutes, and each of the
other agreements contemplated hereby to which the Purchaser is a party shall
when executed constitute, a valid and binding obligation of the Purchaser,
enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency, moratorium,
-32-
reorganization or similar laws affecting creditors' rights generally and the
discretionary nature of specific performance and other equitable remedies.
7.3 Absence of Conflicts. Except for the HSR Filing, the execution,
--------------------
delivery and performance of the Transaction Documents and the consummation of
the transactions contemplated thereby by the Purchaser do not and shall not (a)
conflict with or result in any breach of any of the terms, conditions or
provisions of, (b) constitute a default under, (c) result in a violation of, (d)
give any third party the right to modify, terminate or accelerate any obligation
under, (e) result in the creation of any Lien upon the assets of the Purchaser
or any of its Subsidiaries, or (f) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any
court or administrative or other governmental body or agency, under the
provisions of the articles of incorporation or by-laws of the Purchaser or any
of its Subsidiaries or any indenture, mortgage, lease, loan agreement or other
agreement or instrument to which the Purchaser or any of its Subsidiaries is
bound or affected, or any law, statute, rule or regulation to which the
Purchaser or any of its Subsidiaries is subject or any judgment, order or decree
to which the Purchaser or any of its Subsidiaries is subject.
7.4 LITIGATION; PROCEEDINGS. There are no actions, suits,
-----------------------
proceedings, orders, judgments, decrees or investigations pending or, to the
Purchaser's knowledge, threatened against or affecting the Purchaser at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and to the knowledge of the Purchaser there is no basis for any of the
foregoing. The Company is not subject to any outstanding order, judgment or
decree issued by any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or any arbitrator.
7.5 BROKERAGE. There are no claims for brokerage commissions,
---------
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Purchaser.
7.6 NES SECURITIES. The NES Securities to be issued pursuant to the
--------------
terms of this Agreement have been duly authorized for issuance by all requisite
corporate action of the Purchaser, and the capital stock of the Purchaser
issuable upon conversion of the Subordinated Notes shall, when issued pursuant
to the terms of the Subordinated Notes, be duly and validly issued, fully paid
and non-assessable voting common stock of the Purchaser, without violation of
any preemptive or dissenters or similar rights.
7.7 DISCLOSURE. There is no fact which has not been disclosed to the
----------
Representative of which the Purchaser has knowledge which has a material adverse
effect, or could reasonably be anticipated to have a material adverse effect, on
the business, financial condition, operations, results of operations, or future
prospects of the Purchaser.
7.8 CLOSING DATE. All of the representations and warranties of the
------------
Purchaser contained in this Article VII and elsewhere in this Agreement and all
information delivered in any schedule, attachment or Exhibit hereto are true and
correct on the date of this Agreement and shall be true and correct on the
Closing Date, except to the extent that the Purchaser has advised Sellers
otherwise in writing at or prior to the Closing.
-33-
ARTICLE VII
TERMINATION
-----------
8.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing:
(a) by mutual written consent of the Representative and the
Purchaser;
(b) by the Representative if there has been a material
misrepresentation or breach on the part of the Purchaser of the representations,
warranties or covenants set forth in this Agreement or if events have occurred
which have made it impossible to satisfy a condition precedent to the Sellers'
obligations to consummate the transactions contemplated hereby unless the
Sellers' willful or knowing breach of this Agreement has caused the condition to
be unsatisfied;
(c) by the Purchaser if there has been a material misrepresentation
or breach on the part of any of the Sellers or the Company of the
representations, warranties or covenants set forth in this Agreement or if
events have occurred which have made it impossible to satisfy a condition
precedent to the Purchaser's obligations to consummate the transactions
contemplated hereby unless the Purchaser's willful or knowing breach of this
Agreement has caused the condition to be unsatisfied;
(d) by the Representative at any time after August 31, 1998 if (i)
the Closing has not occurred at or prior to such time as a result of the
Purchaser's failure to satisfy the condition set forth in Section 3.1(m)
(Financing), and (ii) the conditions set forth in Section 3.1(a) through 3.1(l),
inclusive, have been satisfied, and (iii) aggregate EBITDA for the period
beginning on April 1, 1998 and ending on August 31, 1998 is equal to, or greater
than, $14,518,080.
(e) by the Purchaser at any time prior to the first to occur of (i)
the time at which the Purchaser files a registration statement on Form S-1 with
the Securities and Exchange Commission which includes information concerning the
Company, and (ii) April 10, 1998, if the Purchaser is not satisfied with the
results of its business, accounting, insurance, legal, environmental or other
due diligence review of the Company; or
(f) by the Representative or the Purchaser at any time after
September 10, 1998 if the Closing has not occurred at or prior to such time;
provided, however, that neither the Purchaser nor the Representative shall be
entitled to terminate this Agreement pursuant to this Section 8.1(f) if such
Party's willful or knowing breach of this Agreement has prevented the
consummation of the transactions contemplated hereby at or prior to such time.
8.2 EFFECT OF TERMINATION. In the event of termination of this
---------------------
Agreement by either the Representative or the Purchaser as provided in Section
8.1, this Agreement shall forthwith become void and there shall be no liability
on the part of any Party to any other Party under this Agreement, except that
the provisions of Sections 10.4 and 10.8 and Article IX shall continue in full
force and effect and except that nothing herein shall relieve any Party from
liability for any breach of this Agreement prior to such termination; provided
that in the event of termination of this Agreement by the Representative
pursuant to Section 8.1(d), the Purchaser's sole obligation to the
-34-
Company and the Sellers shall be the payment to the Company of (i) the Company's
reasonable legal fees and accounting fees incurred in connection with the
negotiation of this Agreement and the preparation for the Closing and (ii)
$2,000,000 as liquidated damages.
ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS
-----------------------------------
9.1 SURVIVAL. All representations, warranties, covenants and
--------
agreements set forth in this Agreement or in any writing or certificate
delivered in connection with this Agreement shall survive the Closing Date and
the consummation of the transactions contemplated hereby and shall not be
affected by any examination made for or on behalf of any Party, the knowledge of
any of such Party's officers, directors, stockholders, employees or agents, or
the acceptance of any certificate or opinion. Notwithstanding the foregoing, no
Party shall be entitled to recover for any Loss pursuant to Section 9.2(a)(i) or
Section 9.2(c)(i) unless written notice of a claim thereof is delivered to the
other Party prior to the Applicable Limitation Date. For purposes of this
Agreement, the term "Applicable Limitation Date" shall mean the first
--------------------------
anniversary of the Closing Date; provided that the Applicable Limitation Date
with respect to the following Losses shall be as follows: (i) with respect to
any Loss arising from or related to a breach of the representations and
warranties set forth in Section 5.10 (Taxes) (or in Section 5.24 (Closing Date)
with respect to Section 5.10), the Applicable Limitation Date shall be the 30th
day after expiration of the statute of limitations (including any extensions
thereto to the extent that such statute of limitations may be tolled) applicable
to the Tax which gave rise to such Loss, (ii) with respect to any Loss arising
from or related to a breach of the representations and warranties set forth in
Section 5.22 (Environmental) (or in Section 5.24 (Closing Date) with respect to
Section 5.22), the Applicable Limitation Date shall be the third anniversary of
the Closing Date, and (iii) with respect to any Loss arising from or related to
a breach of the representations and warranties set forth in Section 5.1
(Organization and Corporate Power) (or in Section 5.24 (Closing Date) with
respect to Section 5.1), Section 5.2 (Authorization of Transactions) (or in
Section 5.24 (Closing Date) with respect to Section 5.2), Section 5.3
(Capitalization) (or in Section 5.24 (Closing Date) with respect to Section
5.3), Section 5.14 (Brokerage) (or in Section 5.24 (Closing Date) with respect
to Section 5.14) or Article VI (Representations and Warranties with Respect to
Sellers) and with respect to any Loss arising from or related to a breach of the
representations and warranties of Purchaser set forth in Section 7.1
(Organization an Corporate Power) (or in Section 7.8 (Closing Date) with respect
to Section 7.1), 7.2 (Authorization of Transactions) (or in Section 7.8 (Closing
Date) with respect to Section 7.2) or 7.5 (Brokerage) (or in Section 7.8
(Closing Date) with respect to Section 7.5), the Applicable Limitation Date
shall be on the 30th day after expiration of the statute of limitations
applicable to actions for breach of contract with respect to this Agreement.
9.2 INDEMNIFICATION.
---------------
(a) Each Seller shall jointly and severally indemnify the Purchaser,
and the Company and each of their respective officers, directors, stockholders,
employees, agents, representatives, affiliates, successors and assigns
(collectively, the "Purchaser Parties") and hold each of them harmless from and
-----------------
against and pay on behalf of or reimburse such Purchaser Parties
-35-
in respect of any Loss which any such Purchaser Party may suffer, sustain or
become subject to, as a result of or relating to:
(i) (A) the breach of any representation or warranty made by the
Company or any Seller contained in this Agreement (other than in Article VI
of this Agreement) or any certificate delivered to the Purchaser with
respect thereto in connection with the Closing, or (B) with respect to each
Company Multiemployer Plan, (1) any prohibited transaction (as defined in
Section 406 of ERISA or Section 4975 of the Code for which no exemption is
applicable) which took place at or prior to the Closing, (2) any breach of
fiduciary duty which took place at or prior to the Closing or any other
failure to act or comply at or prior to the Closing in connection with the
administration or investment of the assets of such plan, (3) any action,
investigation, suit or claim with respect to the assets thereof (other than
routine claims for benefits) which is pending or threatened prior to the
Closing, (4) such plan's failure to comply in form and in operation in all
respects with the requirements of applicable laws and regulations,
including ERISA and the Code and the nondiscrimination rules thereof, (5)
any liability which the Company would have if the Company were to withdraw
from such plan as of the Closing Date, or (6) any facts of which the
Company or any of its Subsidiaries has any knowledge at or prior to the
Closing and which would give rise to or could reasonably be expected to
give rise to any such actions, suits or claims; or
(ii) the breach of any representation or warranty made by such
Seller contained in Article VI of this Agreement or any certificate
delivered by such Seller to the Purchaser with respect thereto in
connection with the Closing; or
(iii) the breach of any covenant or agreement made by the Company (if
such covenant or agreement is to be performed at or prior to the Closing)
or any Seller contained in this Agreement, the other Transaction Documents
(other than the Employment Agreements), any Exhibit hereto or any
certificate delivered to the Purchaser with respect thereto in connection
with the Closing; or
(iv) all sales and use Taxes payable by the Company or any of its
Subsidiaries after the Closing with respect to transactions, operations,
activities and events occurring at or prior to the Closing to the extent
the amount of such sales and use Taxes exceeds the accrual for such sales
and use Taxes utilized in determining the amount of Actual Net Equity.
The Purchaser Party's remedy for any indemnification of Losses hereunder may be
satisfied by proceeding against one or more Sellers individually for all or any
portion of any such Loss; provided that no Seller shall be liable hereunder for
Losses in excess of such Seller's pro rata portion of the Cap based on such
Seller's proportionate ownership of the Acquired Stock as set forth on the
Schedule of Stockholders. Notwithstanding the foregoing (including, without
------------------------
limitation, the first sentence of Section 9.2(a)), if any such Loss arises from
a breach of such Seller's representation or warranty contained in Article VI,
the Purchaser Party shall proceed solely against such breaching Seller for the
entire amount of such Loss.
(b) The indemnification provided for in Section 9.2(a)(i) above is
subject to the following limitations:
-36-
(i) the Sellers will be liable to the Purchaser Parties with respect
to claims referred to in Section 9.2(a)(i) only if the Purchaser Party
gives the Representative written notice thereof within the Applicable
Limitation Date;
(ii) the Sellers will be liable to the Purchaser Parties with respect
to claims referred to in Section 9.2(a)(i) only if the aggregate amount of
all Losses relating to any and all claims referred to in Section 9.2(a)(i)
exceeds $750,000 (the "Deductible") and then only to the extent of such
----------
excess;
(iii) the aggregate amount of all payments made by the Sellers in
satisfaction of claims for indemnification pursuant to Section 9.2(a)(i)
shall not exceed $15,000,000 (the "Cap"); and
---
(iv) notwithstanding any implication to the contrary contained in
this Agreement, so long as the Purchaser Party delivers written notice of a
claim to the Representative no later than the Applicable Limitation Date,
the Sellers shall be required to indemnify the Purchaser Parties for all
Losses (in excess of the Deductible and up to the Cap) which the Purchaser
Parties may incur in respect of the matters which are the subject of such
claim, regardless of when incurred.
(c) The Purchaser shall indemnify the Sellers and hold each Seller
and its officers, directors, stockholders, employees, agents, representatives,
affiliates, successors and assigns (collectively, the "Seller Parties") harmless
--------------
from and against and pay on behalf of or reimburse such Seller Party in respect
of any Loss which any Seller Party may suffer, sustain or become subject to, as
a result of or relating to:
(i) the breach of any representation or warranty made by the
Purchaser contained in Article VII of this Agreement or any certificate
delivered by the Purchaser to the Sellers with respect thereto in
connection with the Closing; or
(ii) the breach of any representation, warranty (other than
representations or warranties set forth in Article VII), covenant or
agreement made by the Purchaser contained in this Agreement, the other
Transaction Documents, any Exhibit hereto or any certificate delivered by
the Purchaser to the Sellers with respect thereto in connection with the
Closing.
(d) The indemnification provided for in Section 9.2(c)(i) above is
subject to the following limitations:
(i) The Purchaser will be liable to the Seller Parties with respect
to claims referred to in Section 9.2(c)(i) only if the Representative gives
the Purchaser written notice thereof within the Applicable Limitation Date;
(ii) the Purchaser will be liable to the Seller Parties with respect
to claims referred to in Section 9.2(c)(i) only if the aggregate amount of
all Losses relating to any and all claims referred to in Section 9.2(c)(i)
exceeds the Deductible and then only to the extent of such excess;
-37-
(iii) The aggregate amount of all payments made by the Purchaser in
satisfaction of claims for indemnification pursuant to Section 9.2(c)(i)
shall not exceed the Cap; and
(iv) notwithstanding any implication to the contrary contained in
this Agreement, so long as the Representative delivers written notice of a
claim to the Purchaser no later than the Applicable Limitation Date, the
Purchaser shall be required to indemnify the Seller Parties for all Losses
(in excess of the Deductible and up to the Cap) which the Seller Parties
may incur in respect of the matters which are the subject of such claim,
regardless of when incurred.
(e) If a party hereto seeks indemnification under this Article IX,
such party (the "Indemnified Party") shall give written notice to the other
-----------------
party (the "Indemnifying Party") after receiving written notice of any action,
------------------
lawsuit, proceeding, investigation or other claim against it (if by a third
party) or discovering the liability, obligation or facts giving rise to such
claim for indemnification, describing the claim, the amount thereof (if known
and quantifiable), whether insurance may be available (if known), and the basis
thereof; provided that the failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its or his obligations hereunder except to the
extent such failure shall have harmed the Indemnifying Party. In that regard,
if any action, lawsuit, proceeding, investigation or other claim shall be
brought or asserted by any third party which, if adversely determined, would
entitle the Indemnified Party to indemnity pursuant to this Article IX, the
Indemnified Party shall promptly notify the Indemnifying Party of the same in
writing, specifying in detail the basis of such claim and the facts pertaining
thereto and the Indemnifying Party shall be entitled to notify any applicable
insurer and to control (subject to the rights of such insurer) the defense of
such action, lawsuit, proceeding, investigation or other claim giving rise to
the Indemnified Party's claim for indemnification at its expense with reputable
counsel reasonably acceptable to the Indemnified Party; provided that, as a
condition precedent to the Indemnifying Party's right to assume control of such
defense, it must first agree to be fully responsible for all Losses relating to
such claims and that it will provide full indemnification to the Indemnified
Party for all Losses (to the extent not reimbursed by insurance) relating to
such claim; and provided further that the Indemnifying Party shall not have the
right to assume control of such defense and shall pay the fees and expenses of
counsel retained by the Indemnified Party, if the claim over which the
Indemnifying Party seeks to assume control (i) seeks non-monetary relief, (ii)
involves criminal or quasi-criminal allegations, or (iii) involves a claim
which, upon petition by the Indemnified Party, the appropriate court rules that
the Indemnifying Party failed or is failing to vigorously prosecute or defend.
If the Indemnifying Party is permitted to assume and control the defense
and elects to do so, the Indemnified Party shall have the right to employ
counsel separate from counsel employed by the Indemnifying Party in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel employed by the Indemnified Party shall be at the expense of the
Indemnified Party unless (i) the employment thereof has been specifically
authorized by the Indemnifying Party in writing, or (ii) the Indemnifying Party
has been advised by counsel that a reasonable likelihood exists of a conflict of
interest between the Indemnifying Party and the Indemnified Party.
If the Indemnifying Party shall control the defense of any such claim, the
Indemnifying Party shall obtain the prior written consent of the Indemnified
Party (which shall not be unreasonably
-38-
withheld) before entering into any settlement of a claim or ceasing to defend
such claim, if pursuant to or as a result of such settlement or cessation,
injunction or other equitable relief will be imposed against the Indemnified
Party or if such settlement does not expressly unconditionally release the
Indemnified Party from all liabilities and obligations with respect to such
claim, without prejudice. If the Indemnified Party shall control the defense of
any such claim, the Indemnified Party shall obtain the prior written consent of
the Indemnifying Party (which shall not be unreasonably withheld) before
entering into any settlement of a claim or ceasing to defend such claim, if the
Indemnifying Party is a named defendant in such claim and pursuant to or as a
result of such settlement or cessation, injunction or other equitable relief
will be imposed against the Indemnifying Party or if such settlement does not
expressly unconditionally release the Indemnifying Party from all liabilities
and obligations with respect to such claim, without prejudice.
(f) Amounts paid to or on behalf of Sellers or Purchaser as
indemnification shall be treated as adjustments to the Purchase Price.
(g) Effective upon the Closing, each Seller hereby irrevocably
waives, releases and discharges the Company from any and all liabilities and
obligations to such Seller of any kind or nature whatsoever, whether in his
capacity as Seller hereunder, as a stockholder, officer or director of the
Company or otherwise (including, without limitation, in respect of rights of
contribution or indemnification other than compensation as an employee of the
Company), in each case whether absolute or contingent, liquidated or
unliquidated, and whether arising hereunder or under any other agreement or
understanding or otherwise at law or equity, and each Seller shall not seek to
recover any amounts in connection therewith or thereunder from the Company;
provided that from and after the Closing Date the Purchaser shall cause the
Company to maintain directors and officers insurance coverage substantially
similar to such coverage maintained by the Purchaser with respect to its other
operating Subsidiaries. In no event shall the Company or its Subsidiaries have
any liability whatsoever for any breaches of the representations, warranties,
agreements or covenants of the Company, and the Sellers shall in no event seek
contribution from the Company or any Subsidiary for any such breaches or in
respect of any other payments required to be made by Sellers pursuant to this
Agreement.
(h) The parties hereto acknowledge and agree that, except with
respect to (i) any claim for indemnification based upon actual fraud or
intentional misrepresentation, or (ii) any equitable remedies for injunction or
specific performance which the Purchaser may be able to pursue with respect to
any of the obligations of the Sellers or the Company, the provisions of this
Article IX shall be the sole and exclusive remedy of the parties hereto against
each other for any Loss or other claim arising out of this Agreement and the
transactions contemplated herein.
ARTICLE X
ADDITIONAL AGREEMENTS
---------------------
10.1 SUBORDINATED NOTES. Each Subordinated Note will be imprinted
------------------
with a legend substantially in the following form:
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THIS NOTE WAS ORIGINALLY ISSUED ON _______ __, 1998, AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF
THIS NOTE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE PURCHASE
AGREEMENT. THE ISSUER OF THIS NOTE WILL FURNISH A COPY OF THESE PROVISIONS
TO THE HOLDER HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST.
The transfer of any Subordinated Note is subject to the following condition:
In connection with the transfer of any Subordinated Note, the holder thereof
shall deliver written notice to the Company describing in reasonable detail the
transfer or proposed transfer, together with an opinion of Xxxxxxxx Xxxxxx or
other counsel which (to the Company's reasonable satisfaction) is knowledgeable
in securities law matters, or other evidence satisfactory to the Company to the
effect that such transfer of a Subordinated Note may be effected without
registration of such Subordinated Note under the Securities Act of 1933, as
amended. In addition, if the holder of the Subordinated Note delivers to the
Company an opinion of Xxxxxxxx Xxxxxx or such other counsel that no subsequent
transfer of such Subordinated Note shall require registration under the
Securities Act of 1933, as amended, the Company shall promptly upon such
contemplated transfer deliver a new copy of such Subordinated Note which does
not bear the Securities Act portion of the legend set forth in this Section
10.1. Notwithstanding the foregoing, the Sellers shall be entitled to transfer
Subordinated Notes among themselves and the beneficiaries and partners of
Sellers which are trusts or limited partnerships without furnishing an opinion
of counsel. If the Company is not required to deliver a new copy of such
Subordinated Note not bearing such portion of the legend, the holder thereof
shall not transfer the same until the prospective transferee has confirmed to
the Company in writing its agreement to be bound by the conditions contained in
this paragraph.
10.2 CONTINUING ASSISTANCE. Subsequent to the Closing, each Seller
---------------------
and the Purchaser (at their own cost) shall assist each other (including making
records available) in the preparation of their respective Tax Returns and the
filing and execution of Tax elections, if required, as well as any audits or
litigation that ensue as a result of the filing thereof, to the extent that such
assistance is reasonably requested.
10.3 TAX MATTERS. The following provisions shall govern the
-----------
allocation of responsibility as between the Purchaser and the Sellers for
certain tax matters following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. The Purchaser
------------------------------------------------
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for the Company for all periods ending on or prior to the Closing Date
which are filed after the Closing Date (other than income Tax Returns with
respect to periods for which the consolidated, unitary and combined income Tax
Returns of the Sellers will include the operations of the Company). The Company
shall permit the Sellers to review and comment on each such Tax Return described
in the preceding sentence prior to filing, and, to the extent consistent with
applicable laws, each such Tax Return shall be prepared on a basis consistent
with the past practices of the Company and each of its Subsidiaries. The
Sellers shall reimburse the Purchaser for Taxes of the Company with respect to
such periods within fifteen (15) days of payment by the Purchaser or the Company
of such Taxes to the extent the amounts of such Taxes are not utilized in
determining the Actual Net Equity. The Purchaser shall cause the Company and
each of its Subsidiaries to join in the Purchaser's federal
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income Tax Return for the Taxable period beginning the day after the Closing
Date, and, to the extent possible, shall cause the Company and each of its
Subsidiaries to join in the Purchaser's other consolidated, combined and unitary
Tax Returns for the Taxable periods beginning the day after the Closing Date.
(b) Tax Periods Beginning Before and Ending After the Closing Date.
--------------------------------------------------------------
The Purchaser shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of the Company for Tax periods which begin before the
Closing Date and end after the Closing Date. The Sellers shall pay to the
Purchaser within fifteen (15) days of the date on which Taxes are paid with
respect to such periods an amount equal to the portion of such Taxes which
relates to the portion of such Taxable period ending on the Closing Date to the
extent the amounts of such Taxes are not utilized in determining the Actual Net
Equity. 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 Taxes 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 receipts or income, 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 receipts or income be deemed equal to the amount which would be payable if
the relevant Taxable period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practice of the Company and each of its Subsidiaries
jointly by the Purchaser and the Representative.
(c) Cooperation on Tax Matters.
--------------------------
(i) The Purchaser, the Company and the Sellers shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. The
Company and the Sellers agree (A) to retain all books and records with respect
to Tax matters and pertinent to the Company relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by the Purchaser or the Sellers, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (B) to
give the other party reasonable written notice prior to transferring ,
destroying or discarding any such books and records and, if the other party so
requests, the Company or the Sellers, as the case may be, shall allow the other
party to take possession of such books and records.
(ii) The Purchaser and the Sellers further agree, upon request,
to use their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
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(d) Tax Sharing Agreements. All tax-sharing agreements or similar
----------------------
agreements with respect to or involving the Company shall be terminated as of
the Closing Date and, after the Closing Date, the Company shall not be bound
thereby or have any liability thereunder.
(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
-------------
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by the
Sellers when due, and the Sellers will, at their own expense, file all necessary
Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, the Purchaser will, and will cause its Affiliates
to, join in the execution of any such Tax Returns and other documentation.
(f) Real Property Holding Corporation Status. The Sellers will
----------------------------------------
furnish the Purchaser prior to the Closing a certification pursuant to Treasury
Regulation (S) 1.897-2 to the effect that the Company is not a "United States
real property holding corporation" as defined in Section 897 of the Code.
(g) Sales and Use Taxes. Within 15 days after (i) the expiration of
-------------------
all statutes of limitations (including any extensions thereof to the extent that
any such statute of limitations may be tolled) or (ii) the settlement of such
sale and use Tax dispute, with respect to any sales and use Taxes payable by the
Company or any of its Subsidiaries with respect to transactions, operations,
activities and events occurring at or prior to the Closing, to the extent the
amount paid by the Company and its Subsidiaries after the Closing is less than
the accrual for such sales and use Taxes utilized in determining the amount of
Actual Net Equity, the Company shall pay the difference to the Representative in
cash for the benefit of the Sellers.
10.4 PRESS RELEASES AND ANNOUNCEMENTS. Prior to the Closing Date, no
--------------------------------
press releases related to this Agreement and the transactions contemplated
herein, or other announcements to the employees, customers or suppliers of the
Company or any of its Subsidiaries shall be issued without the mutual approval
of all Parties, except for any public disclosure which any Party in good faith
believes is required by law or regulation (in which case the disclosure shall be
prepared jointly by the Sellers and the Purchaser); provided that in the event
the Purchaser files a registration statement with the Securities and Exchange
Commission, the Purchaser shall be entitled to (i) disclose the transactions
contemplated hereby in such registration statement, (ii) include a detailed
description of the Company and its Subsidiaries in such registration statement,
and (iii) include copies of the Company's and its predecessor's consolidated
financial statements in such registration statement; provided that prior to
filing any such registration statement, the Purchaser shall deliver a copy of a
substantially final draft of such registration statement to the Representative
and provide the Representative with a reasonable opportunity to comment on such
draft. After the Closing Date, no press releases related to this Agreement and
the transactions contemplated herein, or other announcements to the employees,
customers or suppliers of the Company or any of its Subsidiaries shall be issued
without the Purchaser's consent (which shall not be unreasonably withheld).
10.5 FURTHER TRANSFERS. Each Seller shall execute and deliver such
-----------------
further instruments of conveyance and transfer and take such additional action
as the Purchaser may reasonably request to effect, consummate, confirm or
evidence the transfer to the Purchaser of the Acquired Stock and any other
transactions contemplated hereby.
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10.6 SPECIFIC PERFORMANCE. Each Seller acknowledges that the Company's
--------------------
and each of its Subsidiaries' businesses is unique and recognizes and affirms
that in the event of a breach of this Agreement by such Seller, money damages
may be inadequate and Purchaser may have no adequate remedy at law. Accordingly,
each Seller agrees that Purchaser shall have the right, in addition to any other
rights and remedies existing in its favor, to enforce its rights and such
Seller's obligations hereunder not only by an action or actions for damages but
also by an action or actions for specific performance, injunctive and/or other
equitable relief.
10.7 TRANSITION ASSISTANCE. Each Seller shall not in any manner take
---------------------
any action which is designed, intended, or might be reasonably anticipated to
have the effect of discouraging customers, suppliers, lessors, licensors and
other business associates from maintaining the same business relationships with
the Company and/or any of its Subsidiaries after the date of this Agreement as
were maintained with the Company and/or any of its Subsidiaries prior to the
date of this Agreement.
10.8 EXPENSES. Except as otherwise provided herein, each Seller and
--------
the Purchaser shall pay all of their own fees, costs and expenses (including,
without limitation, fees, costs and expenses of legal counsel, investment
bankers, brokers or other representatives and consultants and appraisal fees,
costs and expenses) incurred in connection with the negotiation of the this
Agreement and the other agreements contemplated hereby, the performance of its
obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby (collectively, the "Transaction Expenses"); it
--------------------
being understood that the Sellers shall pay the fees, costs and expenses of the
Company and its Subsidiaries and that the Company shall pay any of the Sellers'
fees, costs and expenses (including, without limitation, legal and accounting
fees, costs and expenses) arising in connection with the transactions
contemplated hereby if the transactions are not consummated. At the request of
the Sellers, the fees, costs and expenses for which they are liable pursuant to
this Section 10.8 may be deducted from the Cash Purchase Price and paid directly
to the Sellers' legal counsel, investment bankers and other agents and
representatives. To the extent that the Company pays or becomes liable with
respect to any Transaction Expenses of the Company, any of its Subsidiaries or
the Sellers, the Cash Purchase Price shall be reduced dollar-for-dollar.
10.9 EXCLUSIVITY. Until this Agreement is terminated by its terms,
-----------
neither the Company, any of its Subsidiaries nor the Sellers (and neither the
Company nor the Sellers shall cause or permit any Insider or agent or any other
Person acting on behalf of any Seller, the Company, or its Affiliates to), (a)
solicit, initiate or encourage the submission of any proposal or offer from any
Person (including any of them) relating to any (i) liquidation, dissolution or
recapitalization of, (ii) merger or consolidation with or into, (iii)
acquisition or purchase of assets (other than in the Ordinary Course of
Business) of or any equity interest in or (iv) similar transaction or business
combination involving the Company or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
other Person to do or seek any of the foregoing. The Company and each Seller
agrees that it will discontinue immediately (and will cause any Insider or agent
or any other Person acting on behalf of any Seller, the Company, or its
Affiliates to discontinue immediately) any negotiations or discussion with
respect to any of the foregoing. Until this Agreement is terminated by its
terms, the Sellers and the Company shall notify the Purchaser
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immediately if any Person makes any proposal, offer, inquiry or contact with
respect to any of the foregoing.
10.10 BOOKS AND RECORDS. Unless otherwise consented to in writing by
-----------------
the Representative and the Purchaser, the Purchaser and the Sellers will not,
for a period of seven years following the date hereof, destroy, alter or
otherwise dispose of any of the books and records of the Company acquired by the
Purchaser hereunder or retained by any Seller without first offering to
surrender to the other Party such books and records or any portion thereof of
which the Sellers or the Purchaser may intend to destroy, alter or dispose. The
Purchaser and the Sellers will allow the other party's representatives,
attorneys and accountants access to such books and records, upon reasonable
request during such party's normal business hours, for the purpose of examining
and copying the same in connection with any matter whether or not related to or
arising out of this Agreement or the transactions contemplated hereby.
10.11 APPOINTMENT OF REPRESENTATIVE.
-----------------------------
(a) Powers of Attorney. Each Seller irrevocably constitutes and
------------------
appoints Xxxxxxx X. Xxxxxxxxx (the "Representative") as such Seller's true and
--------------
lawful agent, proxy and attorney-in-fact and agent and authorizes the
Representative acting for such Seller and in such Seller's name, place and
stead, in any and all capacities to do and perform every act and thing required
or permitted to be done in connection with the transactions contemplated by this
Agreement, as fully to all intents and purposes as such Person might or could do
in person, including, without limitation:
(i) determine the presence (or absence) of claims for
indemnification against the Purchaser pursuant to Section 9.2 above;
(ii) deliver all notices required to be delivered by such Seller
under this Agreement, including, without limitation, any notice of a claim
for which indemnification is sought under Section 9.2 above;
(iii) receive all notices required to be delivered to such Seller
under this Agreement, including, without limitation, any notice of a claim
for which indemnification is sought under Section 9.2 above;
(iv) take any and all action on behalf of such Seller from time to
time as the Representative may deem necessary or desirable to defend,
pursue, resolve and/or settle claims under this Agreement, including,
without limitation, indemnification under Section 9.2; and
(v) to engage and employ agents and representatives for such Seller
(including accountants, legal counsel and other professionals) and to incur
such other expenses as he deems necessary or prudent in connection with the
administration of the foregoing.
Each Seller grants unto said attorney-in-fact and agent full power and authority
to do and perform each and every act and thing necessary or desirable to be done
in connection with the transactions contemplated by this Agreement, as fully to
all intents and purposes as the undersigned might or
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could do in person, hereby ratifying and confirming all that the Representative
may lawfully do or cause to be done by virtue hereof. Each Seller will, by
executing this Agreement agree that such agency, proxy and power of attorney are
coupled with an interest, and are therefore irrevocable without the consent of
the Representative and shall survive the death, incapacity, or bankruptcy of
such Seller. Each Seller acknowledges and agrees that upon execution of this
Agreement, any delivery by the Representative of any waiver, amendment,
agreement, opinion, certificate or other documents executed by the
Representative or any decisions made by the Representative pursuant to this
Section 10.11, such Seller shall be bound by such documents or decision as fully
as if such Seller had executed and delivered such documents or made such
decisions.
(b) The Representative shall not have by reason of this Agreement a
fiduciary relationship in respect of any Seller, except in respect of amounts
received on behalf of such Seller. The Representative shall not be liable to any
Seller for any action taken or omitted by him or any agent employed by him
hereunder or under any other Transaction Document, or in connection therewith,
except that the Representative shall not be relieved of any liability imposed by
law for gross negligence or willful misconduct. The Representative shall not be
liable to Sellers for any apportionment or distribution of payments made by him
in good faith, and if any such apportionment or distribution is subsequently
determined to have been made in error the sole recourse of any Seller to whom
payment was due, but not made, shall be to recover from other Sellers any
payment in excess of the amount to which they are determined to have been
entitled. The Representative shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement.
(c) Replacement of the Representative. Upon the death, disability or
---------------------------------
incapacity of the initial Representative appointed pursuant to Section 10.11(a)
above, each Seller acknowledges and agrees that such Representative's executor,
guardian or legal representative, as the case may be, shall (in consultation
with Sellers) appoint a replacement reasonably believed by such person as
capable of carrying out the duties and performing the obligations of the
Representative hereunder within thirty (30) days. In the event that the
Representative resigns for any reason, the Representative shall (in consultation
with Sellers) select another representative to fill such vacancy. Any
substituted representative shall be deemed the Representative for all purposes
of this Agreement and the other Transaction Documents.
(d) Actions of the Representative; Liability of the Representative.
--------------------------------------------------------------
Each Seller agrees that Purchaser shall be entitled to rely on any action taken
by the Representative, on behalf of the Sellers, pursuant to Section 10.11(a)
above (each, an "Authorized Action"), and that each Authorized Action shall be
-----------------
binding on each Seller as fully as if such Seller had taken such Authorized
Action. The Purchaser agrees that the Representative shall have no liability to
the Purchaser for any Authorized Action, except to the extent that such
Authorized Action is found by a final order of a court of competent jurisdiction
to have constituted fraud or willful misconduct. The Sellers jointly and
severally agree to pay, and to indemnify and hold harmless the Purchaser from
and against any losses which it may suffer, sustain, or become subject to, as
the result of any claim by any Person that an Authorized Action is not binding
on, or enforceable against, the Sellers. In addition, the Sellers hereby release
and discharge the Purchaser from and against any liability arising out of or in
connection with the Representative's failure to distribute any amounts received
by the Representative on the Sellers' behalf to the Sellers.
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(e) Allocation of Payments. Subject to Section 9.2, whenever the
----------------------
Sellers are entitled to receive any payments hereunder or are obligated to make
any payments hereunder (including those specified in Section 9.2), each Seller
shall be entitled to receive from the Purchaser or shall be obligated to pay to
the Purchaser such portion of any such payment as set forth on the Schedule of
-----------
Stockholders.
------------
10.12 NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY.
---------------------------------------------------
(a) Noncompetition. In consideration of the mutual covenants
--------------
provided for herein to the Sellers at the Closing, during the period beginning
on the Closing Date and ending on the fourth anniversary of the Closing Date
(the "Noncompete Period"), none of the Sellers (and none of the beneficiaries of
-----------------
any Seller that is a trust) (collectively, the "Noncompeting Parties") shall
--------------------
engage, and each of the Sellers shall cause the Noncompeting Parties that are
not themselves Sellers to not engage, (whether as an owner, operator, manager,
employee, officer, director, consultant, advisor, representative or otherwise)
directly or indirectly in any business that the Company or any of its
Subsidiaries conducts or proposes to conduct as of the Closing Date in any
geographic area in which the Company or any of its Subsidiaries conducts its
business as of the Closing Date, except as expressly permitted under any
employment agreement with the Company executed at the Closing as contemplated
hereunder; provided that ownership of less than 2% of the outstanding stock of
any publicly-traded corporation shall not be deemed to be engaging solely by
reason thereof in any of its businesses. The parties hereto agree that the
covenant set forth in this Section 10.12 is reasonable with respect to its
duration, geographical area and scope. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section
10.12(a) is invalid or unenforceable, the Parties agree that the court making
the determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed. As further consideration for the
obligations of the Sellers pursuant to this Section 10.12, the Purchaser shall
pay to the Sellers $500,000 in cash on the Closing Date, allocated among the
Sellers in accordance with the Schedule of Stockholders (the "Noncompete
------------------------ ----------
Payment").
-------
(b) Nonsolicitation. Each Seller agrees that, during the Noncompete
---------------
Period, such Seller (i) shall not, shall cause the other Noncompeting Parties to
not, and shall use his best efforts not to permit such Seller's affiliates to,
directly or indirectly contact, approach or solicit for the purpose of offering
employment to or hiring (whether as an employee, consultant, agent, independent
contractor or otherwise) or actually hire any person (other than Xxxxxx X.
Xxxxxxxxx, Xxxxxx Xxxxxx Xxxxxxxxx or Xxxxxx X. Xxxxx) employed by the Company
or any of its Subsidiaries at any time prior to the Closing Date or during the
Noncompete Period, without the prior written consent of the Company and (ii)
shall not induce or attempt to induce, and shall cause the other Noncompeting
Parties to not induce or attempt to induce, any customer or other business
relation of the Company or any of its Subsidiaries into any business
relationship which might materially harm the Company or any of its Subsidiaries.
The term "indirectly" as used in this Section 10.12 is intended to mean any acts
----------
authorized or directed by or on behalf of any Seller or any Person controlled by
such Seller.
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(c) Confidentiality. Each Seller shall, and shall cause the other
---------------
Noncompeting Parties to, treat and hold as confidential any information
concerning the business and affairs of the Company or any of its Subsidiaries
that is not already generally available to the public (the "Confidential
------------
Information"), refrain from using any of the Confidential Information except in
-----------
connection with this Agreement, and deliver promptly to the Purchaser or
destroy, at the request and option of the Purchaser, all tangible embodiments
(and all copies) of the Confidential Information which are in his possession or
under his control. In the event that any Noncompeting Party is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, the Sellers shall cause such
Noncompeting Party to notify the Purchaser promptly of the request or
requirement so that the Purchaser may seek an appropriate protective order or
waive compliance with the provisions of this Section 10.12(c). If, in the
absence of a protective order or the receipt of a waiver hereunder, any
Noncompeting Party is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, such
Noncompeting Party may disclose the Confidential Information to the tribunal;
provided that the Sellers shall cause such disclosing Noncompeting Party shall
use his best efforts to obtain, at the request of the Purchaser, an order or
other assurance that confidential treatment shall be accorded to such portion of
the Confidential Information required to be disclosed as the Purchaser shall
designate.
(d) Trade Names. No Seller shall use or permit any of his Affiliates
-----------
to use the "Falconite Equipment," "M&M Equipment," "M&M Properties" and
"Xxxxxxxx" names or any names confusingly similar thereto in any manner anywhere
in the world after Closing.
(e) Remedy for Breach. Each Seller acknowledges and agrees that in
-----------------
the event of a breach by any Seller of any of the provisions of this Section
10.12, monetary damages shall not constitute a sufficient remedy. Consequently,
in the event of any such breach, the Company, the Purchaser and/or their
respective Subsidiaries, successors or assigns may, in addition to other rights
and remedies existing in their favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violations of the provisions hereof,
in each case without the requirement of posting a bond or proving actual
damages.
10.13 CERTAIN FINANCIAL INFORMATION. In the event the Purchaser files
-----------------------------
a registration statement with the Securities and Exchange Commission prior to
the Closing Date, the Company shall use commercially reasonable best efforts to
furnish to the Purchaser within five business days following a request therefor
by the Purchaser (a) audited financial statements for the Company (on a
consolidated basis) for the years ended December 31, 1997, 1996 and 1995 and
unaudited interim financial statements for the Company (on a consolidated basis)
for any interim financial period ending on or prior to the Closing, each of
which shall be prepared in accordance with the requirements of GAAP and meet the
requirements of Regulation S-X of the Securities Act of 1933, as amended
(including Article 11, as applicable), (b) the consent of the Company's
independent accountants to the use of their reports therein, and (c) appropriate
"comfort letters" from the Company's independent accountants addressed to the
Purchaser's underwriters or agents. The actual out-of-pocket expenses incurred
by the Company in connection with furnishing such information to the Purchaser
shall be borne by the Purchaser and shall not be an obligation of the Sellers.
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ARTICLE XI
MISCELLANEOUS
-------------
11.1 AMENDMENT AND WAIVER. This Agreement may be amended and any
--------------------
provision of this Agreement may be waived, provided that any such amendment or
waiver shall be binding upon a Party only if such amendment or waiver is set
forth in a writing executed by the Purchaser and the Representative. No course
of dealing between or among any Persons having any interest in this Agreement
shall be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any Party under or by reason of this
Agreement.
11.2 NOTICES. All notices, demands and other communications given or
-------
delivered under this Agreement shall be in writing and shall be deemed to have
been given when personally delivered, mailed by first class mail, return receipt
requested, or delivered by express courier service or telecopied (with hard copy
to follow). Notices, demands and communications to each Seller shall, unless
another address is specified in writing, or unless receipt of notice has been
specifically delegated to the Representatives under this Agreement, be sent to
the address or telecopy number indicated on the signature page attached hereto,
and notices, demands and communications to the Representative, the Company and
the Purchaser shall, unless another address is specified in writing, be sent to
the address or telecopy number indicated below:
NOTICE TO THE REPRESENTATIVE: WITH A COPY TO:
---------------------------- --------------
Xxxxxxx X. Xxxxxxxxx Xxxxxxxx Xxxxxx
Falconite, Inc. One Mercantile Center
0000 Xxxxx Xxxxxxxx Xx. Xx. Xxxxx, XX 00000
Xxxxxxx, XX 00000 Telecopy: (000) 000-0000
Telecopy: (000) 000-0000 Attn.: Xxxxxx X. Xxxx, Esq.
NOTICES TO THE COMPANY: WITH A COPY TO:
---------------------- --------------
Falconite, Inc. Xxxxxxxx Xxxxxx
2525 Xxxxx Xxxxxxxx Dr. Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xx. Xxxxx, XX 00000
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
Attn.: Chief Executive Officer Attn.: Xxxxxx X. Xxxx, Esq.
NOTICES TO PURCHASER: WITH A COPY TO:
-------------------- --------------
National Equipment Services, Inc. Xxxxxxxx & Xxxxx
0000 Xxxxxxx Xxx., Xxxxx 000 200 East Xxxxxxxx Drive
Evanston, IL 60201 Xxxxxxx, XX 00000
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
Attn.: Chief Executive Officer Attn.: Xxxxxxx X. Perl, Esq.
11.3 BINDING AGREEMENT; ASSIGNMENT. This Agreement and all of the
-----------------------------
provisions hereof shall be binding upon and inure to the benefit of the Parties
and their respective successors and permitted assigns; provided that neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any Seller without the prior written consent of Purchaser
-48-
or by Purchaser (except as otherwise provided in this Agreement) without the
prior written consent of each Seller. Without limiting the generality of the
foregoing:
(a) the Purchaser may assign its rights under this Agreement for
collateral security purposes to any lender providing financing to the Purchaser,
the Company, or any of their Affiliates and any such lender may exercise all of
the rights and remedies of the Purchaser hereunder; and
(b) the Purchaser may assign its rights under this Agreement, in
whole or in part, to any subsequent purchaser of the Company or any material
portion of its assets (whether such sale is structured as a sale of stock, a
sale of assets, a merger or otherwise).
11.4 SEVERABILITY. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
11.5 NO STRICT CONSTRUCTION. The language used in this Agreement
----------------------
shall be deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any Person.
11.6 CAPTIONS. The captions used in this Agreement are for
--------
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no captions had been used in this Agreement.
11.7 ENTIRE AGREEMENT. This Agreement and the documents referred to
----------------
herein contain the entire agreement between the Parties and supersede any prior
understandings, agreements or representations by or between the Parties, written
or oral, which may have related to the subject matter hereof in any way.
11.8 COUNTERPARTS. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.
11.9 GOVERNING LAW. All questions concerning the construction,
-------------
validity and interpretation of this Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision (whether of the State
of Illinois or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Illinois.
11.10 PARTIES IN INTEREST. Nothing in this Agreement, express or
-------------------
implied, is intended to confer on any person other than the Parties and their
respective successors and assigns any rights or remedies under or by virtue of
this Agreement.
-49-
11.11 PERFORMANCE. The beneficiaries of each Seller that is a trust,
-----------
and the limited partners of each Seller that is a limited partnership, shall,
and hereby agree to, (i) personally guaranty the obligations of such Seller
pursuant to the Transaction Documents to which such Seller is a party and (ii)
indemnify and hold harmless the Purchaser Parties with respect to the
obligations of such Seller pursuant to the Transaction Document to which such
Seller is a party.
* * * * *
-50-
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase
Agreement as of the date first written above.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------
Its: Vice President
FALCONITE, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Its: President
FALCONITE INVESTMENTS, L.P.
By: Xxxxxxx X. Xxxxxxxxx Revocable Trust U/A/D 12/17/96
Its: Managing General Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Trustee
XXXXXX X. XXXXXXXXX REVOCABLE TRUST U/A/D 12/17/96
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Trustee
XXXXX X. XXXXXXX CHILDREN'S TRUST U/A/D 12/30/96
By: /s/ Xxxxx Xxxx XxXxxxx
----------------------------
Name: Xxxxx Xxxx XxXxxxx
Title: Trustee
XXXXXXX X. XXXXXXXXX REVOCABLE TRUST U/A/D 12/17/96
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Trustee
/s/ Xxxxx X. XxXxxxx /s/ Xxxxx Xxxxxx
---------------------------- ------------------------
XXXXX X. XXXXXXX XXXXX XXXXXX
/s/ Xxxxxx X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxx
---------------------------- ------------------------
XXXXXX X. XXXXXXXXX XXXXXX X. XXXXX
SOLELY WITH RESPECT TO
SECTION 11.11:
/s/ Xxxxxx X. Xxxxxxxxx XXXXXX X. XXXXXXXXX REVOCABLE
----------------------------------
Xxxxxx X. Xxxxxxxxx TRUST U/A/D 12/17/96
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Trustee
/s/ Xxxxx X. Xxxxxxxxx XXXXXXX X. XXXXXXXXX REVOCABLE
----------------------------------
Xxxxx X. Xxxxxxxxx TRUST U/A/D 12/17/96
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Trustee
/s/ Xxxxxxx X. Xxxxxxxxx XXXXX X. XXXXXXXXX REVOCABLE
----------------------------------
Xxxxxxx X. Xxxxxxxxx TRUST U/A/D 12/17/96
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Trustee
/s/ Emilie Xxxxxx Xxxxxxxxx XXX AND XXXXX XXXXXXXXX EXEMPT
----------------------------------
Emilie Xxxxxx Xxxxxxxxx FAMILY TRUST U/A/D 12/17/96
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Trustee
/s/ Xxxxxx Xxxxxxx Falconite XXXXX XXXXXXXXX RETAINED
----------------------------------
Xxxxxx Xxxxxxx Falconite ANNUITY TRUST U/A/D 12/23/96
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Trustee
/s/ Xxxxx Xxxxxx XxXxxxx, Xx. XXX XXXXXXXXX RETAINED ANNUITY
----------------------------------
Xxxxx Xxxxxx XxXxxxx, Xx. TRUST U/A/D 12/23/96
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Trustee
/s/ Xxxxxxx Xxxxxxx XxXxxxx
----------------------------------
Xxxxxxx Xxxxxxx XxXxxxx
/s/ Xxxxxxx Xxxxxxxx XxXxxxx
----------------------------------
Xxxxxxx Xxxxxxxx XxXxxxx
EBITDA SCHEDULE
---------------
"EBITDA" means, with respect to the Company for any period (provided
------
that all calculations for periods of less than a full quarter shall be prorated
based on the actual number of days in the applicable period), the net income of
the Company for such period prior to the provisions for (i) interest expense and
interest income for such period, (ii) federal, state, local income taxes
(including franchise taxes based on income) for such period, (iii) gains or
losses with respect to the sale of capital assets not in the Ordinary Course of
Business for such period and (iv) depreciation expense and amortization expense
for such period, determined on a consolidated basis in accordance with GAAP
consistently applied through all periods involved, but modified as follows
(without duplication):
(a) if the Company or any of its Subsidiaries sells, exchanges or
otherwise disposes of any material portion of its assets or liabilities
other than in the Ordinary Course of Business (a "Material Disposition"),
--------------------
EBITDA will be adjusted to what it would have been had such Material
Disposition not occurred (assuming, for purposes of such adjustment, that
the assets or liabilities so disposed of would have contributed to, or
reduced, EBITDA following the date of such Material Disposition at the same
average per diem rate as such assets or liabilities contributed to, or
reduced, EBITDA during the twelve-month period ending on the last day of
the month immediately preceding the date of such Material Disposition);
(b) if the Company or any of its Subsidiaries purchases,
exchanges or otherwise acquires any material assets or liabilities other
than in the Ordinary Course of Business (a "Material Acquisition"), EBITDA
--------------------
will be adjusted to what it would have been had such Material Acquisition
not occurred; and
(d) EBITDA will be adjusted to exclude the effect of the
following items:
(i) any gain or loss resulting from any Material
Disposition at a price different than book value;
(ii) any specific out-of-pocket expenses incurred by the
Company or any of its Subsidiaries in connection with this Agreement
and the transactions contemplated hereby and the consummation of any
Material Disposition or Material Acquisition (e.g., investment banking
and legal fees); and
(iii) any other adjustments agreed to by the Purchaser and
the Representative.
* * * * *