EXHIBIT NO. 2.1
[EXECUTION COPY]
===============================================================================
STOCK PURCHASE AGREEMENT
BY AND AMONG
CAPITAL LAND SERVICES, INC.,
XXXXXXX X. XXXXX 1997 REVOCABLE TRUST,
XXXXXXX X. XXXXX,
XXXX.XXX, INC.
AND
CLS ACQUISITION CORP.
DATED AS OF OCTOBER 19, 1999
===============================================================================
TABLE OF CONTENTS
Page
ARTICLE I ..................................................................................1
PURCHASE AND SALE OF STOCK..........................................................................1
1.1 Stock Purchase..................................................1
1.2 Purchase Price for the Shares...................................1
1.3 Closing Transactions............................................2
1.4 Earn-Out Payments...............................................3
1.5 Closing Bonuses.................................................4
ARTICLE II ..................................................................................4
CONDITIONS TO CLOSING...............................................................................4
2.1 Conditions to Buyer's Obligations...............................4
2.2 Conditions to Seller's Obligations..............................7
ARTICLE III ..................................................................................9
ARTICLE IV ..................................................................................9
REPRESENTATIONS AND WARRANTIESCONCERNING THE COMPANY AND SELLER.....................................9
4.1 Organization and Corporate Power................................9
4.2 Authorization of Transactions...................................9
4.3 Capitalization.................................................10
4.4 Subsidiaries; Investments......................................10
4.5 Absence of Conflicts; Consents.................................10
4.6 Financial Statements...........................................11
4.7 Absence of Undisclosed Liabilities.............................11
4.8 Absence of Certain Developments................................11
4.9 Title to Properties; Sufficiency of Assets.....................13
4.10 Accounts Receivable............................................15
4.11 Taxes..........................................................15
4.12 Contracts and Commitments......................................16
4.13 Intellectual Property..........................................18
4.14 Litigation; Proceedings........................................19
4.15 Brokerage......................................................19
4.16 Governmental Licenses and Permits..............................19
4.17 Employees......................................................19
4.18 Employee Benefit Plans.........................................20
4.19 Insurance......................................................21
4.20 Officers and Directors; Bank Accounts..........................22
-i-
4.21 Insider Transactions...........................................22
4.22 Compliance with Laws...........................................22
4.23 Environmental Matters..........................................22
4.24 Year 2000 Compliance...........................................24
4.25 Service Warranties.............................................24
4.26 Disclosure.....................................................24
4.27 Knowledge......................................................24
ARTICLE V .................................................................................25
REPRESENTATIONS AND WARRANTIESCONCERNING SELLER AND XXXXX..........................................25
5.1 Authorization of Transactions..................................25
5.2 Absence of Conflicts...........................................25
5.3 Brokerage......................................................26
5.4 Shares.........................................................26
ARTICLE VI .................................................................................26
REPRESENTATIONS AND WARRANTIES OF BUYER............................................................26
6.1 Organization and Corporate Power...............................26
6.2 Authorization..................................................26
6.3 No Violation...................................................26
6.4 Governmental Authorities and Consents..........................27
6.5 Litigation.....................................................27
6.6 Brokerage......................................................27
ARTICLE VII .................................................................................27
[Intentionally Omitted]............................................................................27
ARTICLE VIII .................................................................................27
INDEMNIFICATION AND RELATED MATTERS................................................................27
8.1 Survival.......................................................27
8.2 Indemnification................................................28
ARTICLE IX .................................................................................32
ADDITIONAL AGREEMENTS..............................................................................32
9.1 Continuing Assistance..........................................32
9.2 Tax Matters. ..................................................32
9.3 Press Releases and Announcements...............................33
9.4 Further Assurances.............................................34
9.5 Specific Performance...........................................34
9.6 Transition Assistance..........................................34
9.7 Investigation..................................................34
-ii-
9.8 Expenses.......................................................35
9.9 Exclusivity....................................................35
9.10 Books and Records..............................................35
9.11 Non-Competition, Non-Solicitation and
Confidentiality...............................................36
9.12 Books and Records..............................................37
ARTICLE X .................................................................................38
MISCELLANEOUS......................................................................................38
10.1 Certain Defined Terms..........................................38
ARTICLE XI .................................................................................41
MISCELLANEOUS......................................................................................41
11.1 Amendment and Waiver...........................................41
11.2 Notices........................................................41
11.3 Binding Agreement; Assignment..................................42
11.4 Severability...................................................43
11.5 No Strict Construction.........................................43
11.6 Captions.......................................................43
11.7 Entire Agreement...............................................43
11.8 Counterparts...................................................43
11.9 Governing Law..................................................43
11.10 Parties in Interest............................................43
11.11 WAIVER OF JURY TRIAL...........................................44
11.12 CONSENT TO JURISDICTION........................................44
11.13 Xxxx.xxx Guarantee.............................................44
-iii-
INDEX OF EXHIBITS
Exhibit A - Escrow Agreement
Exhibit B - Closing Bonuses
Exhibit C - Employment Agreements (Forms A and B)
Exhibit D - Executive Purchase Agreement
Exhibit E - Stockholders Agreement
Exhibit F - Registration Agreement
Exhibit G - Opinion of Counsel to the Company and Seller
Exhibit H - Opinion of Counsel to Buyer
-iv-
INDEX OF SCHEDULES
Schedule 4.1 Organization and Corporate Power
Schedule 4.4 Subsidiaries; Investments
Schedule 4.5 Absence of Conflicts; Consents
Schedule 4.6 Financial Statements
Schedule 4.7 Absence of Undisclosed Liabilities
Schedule 4.8 Absence of Certain Developments
Schedule 4.9(b) Real Property Leases and Subleases
Schedule 4.9(d) Personal Property
Schedule 4.10 Accounts Receivable
Schedule 4.11 Taxes
Schedule 4.12 Contracts and Commitments
Schedule 4.13 Intellectual Property
Schedule 4.14 Litigation; Proceedings
Schedule 4.15 Brokerage (Company and Seller)
Schedule 4.16 Governmental Licenses and Permits
Schedule 4.17 Employees
Schedule 4.18 Employee Benefit Plans
Schedule 4.19 Insurance
Schedule 4.20 Officers and Directors; Bank Accounts
Schedule 4.21 Insider Transactions
Schedule 4.22 Compliance with Laws
Schedule 4.24 Year 2000 Compliance
Schedule 4.25 Service Warranties
Schedule 4.4 Subsidiaries and Investments
Schedule 5.2 Absence of Conflicts (Seller)
-v-
INDEX OF DEFINED TERMS
Page Page
--- ----
338(h)(10) Elections......................1-4, 33, 44 Tax................................................40
Affiliated Group...................................38 Tax Returns........................................41
Agreement...........................................1 Taxes..............................................40
Applicable Limitation Date.........................28 Threshold..........................................29
Bank...............................................38 Wholly-owned Subsidiaries..........................42
Buyer Parties......................................28
Closing.............................................2
Closing Bonuses.....................................4
Closing Date........................................2
Closing Purchase Price..............................2
COBRA..............................................20
Code...........................................20, 38
Confidential Information...........................36
Controlled Group...................................21
Convertible Notes...................................2
EBITDA.............................................38
Encumbrances........................................1
Environmental and Safety Requirements..............38
Environmental Lien.................................39
ERISA..............................................20
Escrow Agreement....................................2
Escrow Amount.......................................2
Financial Statements...............................11
GAAP...............................................39
HSR Act.............................................5
Indebtedness.......................................39
Indemnified Party..................................30
Indemnifying Party.................................30
Indirectly.........................................36
Insiders...........................................22
Intellectual Property..............................39
Leased Properties..................................13
Licenses...........................................19
Loss...............................................28
Losses.............................................28
MADSP..............................................33
Non-Compete Period.................................36
Person.............................................40
Subsidiary.........................................40
-vi-
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of
October 19, 1999, by and among Capital Land Services, Inc., an Oklahoma
corporation (the "COMPANY"), Xxxxxxx X. Xxxxx ("XXXXX"), the Xxxxxxx X. Xxxxx
1997 Revocable Trust u/t/a dated June 12, 1997, the sole stockholder of the
Company ("SELLER"), CLS Acquisition Corp., a Delaware corporation ("BUYER") and
Xxxx.xxx, Inc., a Delaware corporation and parent of Buyer ("XXXX.XXX"). The
Company, Xxxxx, Seller and Buyer are collectively referred to herein as the
"PARTIES" and individually as a "PARTY." Unless otherwise specified herein,
capitalized terms used in this Agreement have the meanings set forth in Article
X hereof.
The authorized capital stock of the Company consists of 25,000
shares of common stock, par value $1.00 per share (the "COMMON STOCK"), of which
500 shares are issued and outstanding and owned beneficially and of record by
Seller. Buyer desires to acquire from Seller, and Seller desires to sell to
Buyer, all of the shares of Common Stock owned by Seller (the "SHARES").
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 STOCK PURCHASE. On and subject to the terms and conditions
set forth in this Agreement, on the Closing Date, Buyer shall purchase from
Seller, and Seller shall sell, transfer and assign to Buyer, all of the Shares,
free and clear of all liens, charges, security interests, claims, pledges,
taxes, options, warrants, rights, contracts, calls, commitments, equities,
demands, proxies, voting agreements, restrictions on transfer and other
encumbrances (collectively, "ENCUMBRANCES").
1.2 PURCHASE PRICE FOR THE SHARES.
(a) The aggregate purchase price to be paid for the Shares
(the "PURCHASE PRICE") shall be an amount equal to (i) $15,662,946, MINUS (ii)
the aggregate amount of all outstanding principal, all accrued interest and
unpaid fees and any premium or penalty required with respect to the repayment at
or after the Closing of all Indebtedness (if any) of the Company and its
Subsidiaries existing as of the Closing (the "CLOSING INDEBTEDNESS"), MINUS
(iii) the aggregate amount of all foreign, federal, state and local Taxes of or
payable by the Company and its Subsidiaries with respect to any taxable year or
taxable period or portion thereof ended on or prior to the Closing Date the
("CLOSING TAX LIABILITY"); MINUS (iv) the aggregate amount of all Closing
Bonuses (as defined in Section 1.5 below), and PLUS (v) the amount of the
Earn-Out Payment (if any). The aggregate portion
of the Purchase Price identified and described under clauses (i) through (iv)
above shall hereinafter be referred to as the "CLOSING PURCHASE PRICE."
(b) In order to facilitate the payment of the Closing Purchase
Price, on the day before the Closing, Seller and the Company shall deliver to
Buyer a certificate indicating their good faith and best estimates of the
Closing Indebtedness and Closing Tax Liability and the resulting Closing
Purchase Price, which shall be acceptable to Buyer in its reasonable discretion.
1.3 CLOSING TRANSACTIONS.
(a) CLOSING. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Xxxxxxxx &
Xxxxx in Chicago, Illinois, commencing at 9:00 a.m. local time on October 19,
1999, or at such other time or place as mutually agreed to by Buyer and Seller.
The date and time of the Closing are herein referred to as the "CLOSING DATE."
(b) CLOSING TRANSACTIONS. Subject to the conditions set forth
in this Agreement, the Parties shall consummate the following transactions on
the Closing Date:
(i) Seller shall deliver to Buyer the certificate(s)
representing the Shares, duly endorsed for transfer or accompanied by
duly executed stock powers with all requisite federal, state and local
transfer stamps affixed thereto, if any;
(ii) Buyer shall deposit $500,000 of the Closing Purchase
Price (the "ESCROW AMOUNT") into escrow with Norwest Bank Minnesota,
N.A. (the "ESCROW AGENT") pursuant to the terms and provisions set
forth in the Escrow Agreement attached hereto as EXHIBIT A (the
"ESCROW AGREEMENT"), the normal term of which agreement shall expire
on the first anniversary of the date hereof;
(iii) Buyer shall deliver to Seller an amount equal to the
Closing Purchase Price LESS the Escrow Amount in immediately available
funds to an account designated by Seller to Buyer in writing at least
two days prior to the Closing Date;
(iv) The Company, Seller and Buyer, as applicable, shall
deliver the respective opinions, certificates and other instruments
required to be delivered by or on behalf of them under Article II
hereof; and
(v) Seller shall deliver to Buyer all corporate books and
records and other property of the Company in Seller's possession.
-2-
1.4 EARN-OUT PAYMENTS.
(a) Promptly following delivery by the Company's accountants
of the Company's final financial statements as of March 31, 2000 and for the
twelve months then ended (which financial statements may be audited at the
option of Buyer), Buyer shall deliver to Seller a statement (the "EARN-OUT
STATEMENT") setting forth in reasonable detail the Company's EBITDA for such
period and a computation of the product of (i) 2.5 and (ii) the amount (if any)
by which EBITDA for such period exceeds $2,500,000 LESS the Management Bonus
Amount (the "EARN-OUT PAYMENT"). The Earn-Out Statement shall be final and
binding upon Buyer and Seller for all purposes, and Buyer or its Affiliates
shall promptly deliver to an account designated by Seller by wire transfer of
immediately available funds an amount equal to the Earn-Out Payment, unless the
Earn-Out Statement or the calculation of the Earn-Out Payment is challenged by
Seller pursuant to Section 1.4(b) below. If no such challenge to the Earn-Out
Payment is made by Seller, then (x) the amount of the Earn-Out Payment set forth
on the Earn-Out Statement, if unpaid by Buyer or its Affiliates on or prior to
May 1, 2000, shall begin to accrue interest daily from such date at an annual
rate equal to the prime rate as published from time to time in the Midwest
Edition of the WALL STREET JOURNAL and (y) the amount of the Earn-Out Payment
shall be paid by Buyer or its Affiliates no later than July 1, 2000.
(b) Within 10 days after the delivery of the Earn-Out
Statement, Seller may challenge the Earn-Out Statement or the calculation of the
Earn-Out Payment by requesting in writing that a nationally recognized "Big
Five" accounting firm (other than Ernst & Young L.L.P.), mutually agreed upon by
Buyer and Seller (the "REVIEWING ACCOUNTING FIRM"), review the Earn-Out
Statement and all accounting records and reports relating thereto. The
determination of EBITDA by the Reviewing Accounting Firm shall be final,
conclusive and binding on Buyer and Seller, and all fees, expenses and
disbursements of the Reviewing Accounting Firm shall be borne by (i) Buyer (in
the case that EBITDA as determined by the Reviewing Accounting Firm is greater
than the EBITDA as set forth on such Earn-Out Statement) or (ii) Seller (in the
case that EBITDA as determined by the Reviewing Accounting Firm is less than or
equal to EBITDA as set forth on such Earn-Out Statement). Buyer or its
Affiliates shall deliver the relevant Earn-Out Payment (if any) as determined by
the Reviewing Accounting Firm to Seller by wire transfer of immediately
available funds to an account designated by Seller immediately upon the
resolution of any dispute pursuant to this Section 1.4(b). Notwithstanding the
foregoing, any amounts payable by Buyer payable pursuant to this Section 1.4 may
be reduced by any amounts owing to Buyer pursuant to Section 8.2 below.
(c) For purposes of this Section 1.4, if the Company acquires
any other business entity after the Closing Date, such other business and the
results of its operations shall be kept separate from (i.e. not combined with)
the business of the Company for purposes of calculating the amount of the
Earn-Out Payment, unless and until Buyer and Seller reach an agreement as to the
basis on which the results of operations and the EBITDA of the acquired business
entity are to be
-3-
included in the results of operations and EBITDA of the Company. In addition,
the extraordinary fees and expenses incurred by the Company in connection
with the negotiation and consummation of this Agreement and the transactions
contemplated hereby and the fees and expenses of the Escrow Agent under the
Escrow Agreement (except to the extent such fees and expenses are a direct or
indirect result of the Company's or Sellers' breach of this Agreement) shall
not be taken into account in determining EBITDA for purposes of calculating
the amount of the Earn-Out Payment.
1.5 CLOSING BONUSES. On the Closing Date, Buyer shall cause
the Company to pay bonuses to certain employees of the Company in the amounts
identified on EXHIBIT B attached hereto (the "CLOSING BONUSES"). The Purchase
Price shall be reduced by an amount equal to the aggregate amount of the Closing
Bonuses pursuant to Section 1.2(a).
ARTICLE II
CONDITIONS TO CLOSING
2.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer
to consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions as of the Closing:
(a) The representations and warranties set forth in Article IV
and Article V 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;
(b) Seller and the Company shall have performed and complied
in all material respects with all of the respective covenants and agreements
required to be performed by them under this Agreement on or prior to the
Closing;
(c) The following shall have been obtained, in each case on
terms reasonably satisfactory to Buyer: (i) all consents by third parties that
are required for the valid transfer of the Shares to Buyer or that are otherwise
required for the consummation of the transactions contemplated hereby or that
are required in order to prevent a breach of or a default under or a termination
or modification of or acceleration of any obligation under any material
contract, agreement, instrument or lease to which the Company is a party or to
which any material portion of the property of the Company is subject; (ii)
payoff letters with respect to all Indebtedness of the Company outstanding as of
the Closing and releases of all Encumbrances securing such indebtedness; and
(iii) releases of any and all Encumbrances with respect to the Shares and
releases of any and all guarantees by the Company;
-4-
(d) All governmental filings, authorizations and approvals
that are required for the valid transfer of the Shares and the consummation of
the transactions contemplated hereby shall have been duly made and obtained on
terms reasonably satisfactory to Buyer, and all applicable waiting periods (and
any extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR ACT"), shall have expired or otherwise terminated;
(e) No action or proceeding before any court or government
body shall be pending or threatened before any court, governmental agency or
arbitrator wherein an unfavorable judgment, decree, injunction or order would
prevent the performance of this Agreement or the consummation of 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 Buyer to own, operate or control the Company, and
no such judgment, decree, injunction or order shall have been entered unless
subsequently dismissed with prejudice;
(f) Except as otherwise approved in writing by Buyer, all of
the Company's directors shall have resigned their positions effective as of the
Closing;
(g) Seller shall have delivered to the Company (i) all
property owned by the Company that is currently in the possession of any
individual who is not a full-time employee of the Company and (ii) all credit
cards issued in the name of the Company and used by any individual who is not a
full-time employee of the Company;
(h) There shall have been no Material Adverse Change since the
date of this Agreement;
(i) With respect to each parcel of the Leased Properties, the
Company shall have delivered to Buyer, the following documents: (i) estoppel and
consent letters from the landlords listed on SCHEDULE 4.9(b), in form and
substance satisfactory to Buyer and its lenders and (ii) lien waivers from the
landlords listed on SCHEDULE 4.9(b), in form and substance reasonably
satisfactory to Buyer and its lenders;
(j) The employment agreement, as supplemented on June 10,
1999, between the Company and Xxxxxxx X. Xxxxxxx shall have been amended in a
form satisfactory to Buyer. In addition, the existing employment agreements
between the Company and each of Xxxxxxx Xxxxxx ("XXXXXX"), Xxxxxxx Xxxxxxx
("XXXXXXX"), Xxxxx Xxxxxx ("XXXXXX") and Xxxx Xxxx ("XXXX"), respectively, shall
have been terminated, and each of such individuals shall have entered into an
agreement for employment with the Company each in form substantially the same as
"Form A" (in the case of Xxxxx) or "Form B" (in the case of Baisey, Beckett,
Xxxxxx and Xxxx) attached hereto as EXHIBIT C (the "EMPLOYMENT AGREEMENTS"), and
all of the Employment Agreements shall be in full force and effect at the
Closing;
-5-
(k) Each of Adams, Baisey, Beckett, Parker and Xxxx shall
have entered into an executive stock purchase agreement with Xxxx.xxx, each in
form substantially the same as that attached hereto as EXHIBIT D (the "EXECUTIVE
PURCHASE AGREEMENT"), and all of the Executive Purchase Agreements shall be in
full force and effect at the Closing;
(l) Each of Adams, Baisey, Beckett, Parker and Xxxx shall
have entered into a stockholders agreement by and among Xxxx.xxx and the other
stockholders of Xxxx.xxx in form substantially the same as that attached hereto
as EXHIBIT E (the "STOCKHOLDERS AGREEMENT"), and shall be in full force and
effect at the Closing;
(m) Each of Adams, Baisey, Beckett, Parker and Xxxx shall
have entered into a registration agreement by and among Xxxx.xxx and the other
stockholders of Xxxx.xxx, in form substantially the same as that attached hereto
as EXHIBIT F (the "REGISTRATION AGREEMENT"), and the Registration Agreement
shall be in full force and effect at the Closing;
(n) Seller and the Escrow Agent shall have executed and
delivered to Buyer a counterpart of the Escrow Agreement, and the Escrow
Agreement shall be in full force and effect as of the Closing;
(o) Xxxx.xxx shall have obtained debt financing from the Bank
in an amount sufficient to provide Buyer with the funds necessary to consummate
the transactions contemplated herein;
(p) Buyer shall have received an opinion, addressed to Buyer
and the Bank in connection with the transactions contemplated hereby, dated the
Closing Date, of Linn & Neville, counsel to Seller, Xxxxx and the Company, with
respect to the matters set forth in EXHIBIT G attached hereto and in form and
substance satisfactory to Buyer and its counsel;
(q) All proceedings to be taken by Seller and the Company in
connection with the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to be delivered
by Seller or the Company to effect the transactions contemplated hereby
reasonably requested by Buyer shall be reasonably satisfactory in form and
substance to Buyer;
(r) At the Closing, Seller and the Company shall have
delivered to Buyer all of the following:
(i) a certificate from Seller, dated the Closing Date, stating
that the conditions specified in Sections 2.1(a) through (j),
inclusive, have been fully satisfied;
-6-
(ii) a certificate from Seller indicating its good faith and
best estimate of the Closing Indebtedness (including copies of payoff
letters or other documentation from the Company's lenders identifying
all amounts of principal and accrued interest as of the Closing Date
with respect to all the Company's Indebtedness for borrowed money
existing as of the Closing), the Closing Tax Liability and the
resulting Closing Purchase Price;
(iii) copies of all third party and governmental consents,
approvals, filings, releases (including releases from all agents) and
terminations and payoff letters required in connection with the
consummation of the transactions contemplated herein;
(iv) certified copies of the resolutions of the Company's
board of directors approving the execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated by this Agreement;
(v) a certificate of the Secretary of State of Oklahoma and
each state where the Company is qualified to do business (including as
set forth on Schedule 4.1) stating that the Company is in good standing
in each such jurisdiction;
(vi) copies of the resignations described in Section 2.1(f);
(vii) all documents and records relating to the business of
the Company that are in Seller's or Xxxxx' possession; and
(viii) such other documents or instruments as Buyer
reasonably requests to effect the transactions contemplated hereby.
Any condition specified in this Section 2.1 may be waived in
whole or in part by Buyer; PROVIDED that no such waiver shall be effective
unless it is set forth in a writing executed by Buyer.
2.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of
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 VI
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;
-7-
(b) Buyer 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 to be obtained by Buyer for the purchase of the Shares and the
consummation of the transactions contemplated hereby shall have been duly made
and obtained, and all applicable waiting periods (and any extensions thereof)
under the HSR Act shall have expired or otherwise terminated;
(d) No action or proceeding before any court or governmental
body shall be pending before any court, governmental agency or arbitrator
wherein an unfavorable judgment, decree, injunction or order would prevent the
performance of this Agreement or any of the transactions contemplated hereby, or
declare unlawful the transactions contemplated by this Agreement or cause such
transactions to be rescinded, and no such judgment, decree, injunction or order
shall have been entered and not subsequently dismissed with prejudice;
(e) Seller shall have received an opinion, dated the Closing
Date, of Xxxxxxxx & Xxxxx, counsel to Buyer, with respect to the matters set
forth in EXHIBIT H attached hereto and in form and substance reasonably
satisfactory to Seller and its counsel;
(f) The Escrow Agent and Buyer shall have executed and
delivered to Seller a counterpart of the Escrow Agreement, and the Escrow
Agreement shall be in full force and effect;
(g) All proceedings to be taken by Buyer in connection with
the consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to be delivered by Buyer to
effect the transactions contemplated hereby reasonably requested by Seller shall
be reasonably satisfactory in form and substance to Seller; and
(h) On or prior to the Closing Date, Buyer shall have
delivered to Seller all of the following:
(i) a certificate from Buyer, dated the Closing Date, stating
that the conditions specified in Sections 2.2(a) through (d),
inclusive, have been satisfied;
(ii) certified copies of the resolutions of Buyer's board of
directors approving the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement; and
(iii) such other documents or instruments as Seller reasonably
requests to effect the transactions contemplated hereby.
-8-
Any condition specified in this Section 2.2 may be waived by
Seller; PROVIDED that no such waiver shall be effective against Seller unless it
is set forth in a writing executed by Seller.
ARTICLE III
[Intentionally Omitted]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY AND SELLER
As a material inducement to Buyer to enter into this Agreement
and consummate the transactions contemplated hereby, the Company and Seller
hereby represent and warrant (jointly and severally) that:
4.1 ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Oklahoma and is qualified to do business in every jurisdiction
in which the nature of its business or its ownership of property requires it to
be qualified. All such jurisdictions in which the Company is qualified are set
forth on SCHEDULE 4.1. The Company has full corporate power and authority and
all material licenses, permits and authorizations necessary to own and operate
its properties and to carry on its business as now conducted and presently
proposed to be conducted. All such licenses and authorizations are in full force
and effect and shall remain in full force and effect after the consummation of
the transactions contemplated hereby. The copies of the Company's articles of
incorporation and by-laws which have been furnished to Buyer reflect all
amendments made thereto at any time prior to the date of this Agreement and are
correct and complete. 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 which have been furnished to Buyer are correct and
complete. The Company is not in default under or in violation of any provision
of its articles of incorporation or by-laws.
4.2 AUTHORIZATION OF TRANSACTIONS. The Company has full
corporate power and authority to execute and deliver this Agreement and all
other agreements contemplated hereby to which the Company is a party and to
consummate the transactions contemplated hereby and thereby. The board of
directors of the Company has duly approved this Agreement and all other
agreements contemplated hereby to which the Company is a party and has duly
authorized the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and thereby. No other corporate proceedings
on the part of the Company are necessary to approve and
-9-
authorize the execution and delivery of this Agreement and all other
agreements contemplated hereby to which the Company is a party and the
consummation of the transactions contemplated hereby and thereby. This
Agreement and all other agreements contemplated hereby to which the Company
is a party have been 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.
4.3 CAPITALIZATION. The authorized, issued and outstanding
stock of the Company is as set forth in the recitals of this Agreement. All of
the issued and outstanding shares of the Common Stock have been duly authorized,
are validly issued, fully paid and nonassessable, are not subject to, nor were
they issued in violation of, any preemptive rights or rights of refusal, and are
owned of record and beneficially by Seller. 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
rights, phantom stock rights 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.
4.4 SUBSIDIARIES; INVESTMENTS. The Company does not have and
never has had any Subsidiaries. Except as set forth on SCHEDULE 4.4, the Company
does not own or hold the right to acquire any shares of stock or any other
security or interest in any other Person.
4.5 ABSENCE OF CONFLICTS; CONSENTS. Except as set forth in
SCHEDULE 4.5, the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by the Company and Seller
do not and shall not (a) conflict with or result in any breach of any of the
provisions of, (b) constitute a default under, (c) result in a violation of, (d)
give any third party the right to terminate or to accelerate any obligation
under, (e) result in the creation of any Encumbrance upon the Shares or any
Encumbrance on the assets of the Company under, or (f) require any permit,
authorization, consent, approval, exemption, declaration, filing or other action
by or notice to any court or other governmental or regulatory body under, the
provisions of the articles of incorporation or by-laws of the Company or any
indenture, mortgage, lease, loan agreement or other agreement or instrument to
which the Company is bound or affected, or any law, statute, rule or regulation
or any judgment, order or decree to which the Company is subject. No notice to,
filing with or authorization, consent or approval of any government or
governmental agency by the Company or Seller is necessary for the consummation
of the transactions contemplated by this Agreement and the other documents
contemplated hereby to which the Company or Seller is or shall be a party.
-10-
4.6 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 4.6 are
copies of (i) the Company's audited balance sheet (the "LATEST BALANCE SHEET")
and statements of income for the six month period ended June 30, 1999, and (ii)
the Company's audited balance sheet and statements of income and cash flows for
the fiscal year ended December 31, 1998. Each of the foregoing financial
statements (including in all cases the notes thereto, if any) (collectively, the
"FINANCIAL STATEMENTS") is accurate and complete in all material respects,
consistent with the Company's books and records (which, in turn, are accurate
and complete in all material respects), present fairly the financial condition
and results of operations of the Company and its Subsidiaries 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. The Closing Indebtedness and Closing Tax Liability of the Company as
of the Closing as set forth on the certificate to be delivered by the Company
and the Seller under Section 2.1(r)(ii) is accurate and complete and properly
taken into account in connection with the calculation of the Closing Purchase
Price.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
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, including Taxes with respect to or
based upon transactions or events occurring on or before the Closing, except (i)
obligations under contracts or commitments described in SCHEDULE 4.12 or under
contracts and commitments which are not required to be disclosed thereon (but
not liabilities for breaches thereof), (ii) liabilities to the extent 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) liabilities specifically disclosed on SCHEDULE 4.7.
4.8 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth in
SCHEDULE 4.8 and except as expressly contemplated, set forth in or disclosed by
this Agreement, since December 31, 1998, the Company has not:
(a) suffered a Material Adverse Effect (whether or not covered
by insurance);
(b) redeemed or repurchased, directly or indirectly, any
shares of its capital stock or other equity securities or declared, set aside or
paid any dividends or made any other distributions with respect to any shares of
its capital stock or other equity securities, including distributions to the
Company's stockholders to pay their income taxes;
-11-
(c) issued, sold or transferred any notes, bonds or other debt
securities, any shares of its capital stock or other equity securities, any
securities convertible, exchangeable or exercisable into shares of its capital
stock or other equity securities, or any warrants, options or other rights to
acquire shares of its capital stock or other equity securities;
(d) borrowed any amount or incurred or become subject to any
material liabilities, except liabilities incurred in the Ordinary Course of
Business;
(e) discharged or satisfied any Encumbrance or paid any
material obligation or liability, other than liabilities paid in the Ordinary
Course of Business, or prepaid any amount of indebtedness for borrowed money;
(f) mortgaged, pledged or subjected to any Encumbrance any of
its properties or assets having an aggregate value in excess of $50,000;
(g) sold, leased, assigned or transferred any portion of its
tangible assets, except in the Ordinary Course of Business, or canceled without
fair consideration any debts or claims owing to or held by it;
(h) sold, assigned, licensed or transferred any Intellectual
Property or disclosed any confidential information other than pursuant to
agreements preserving all material rights of the Company in such confidential
information or, to the Company's knowledge, received any confidential
information of any third party in violation of any obligation of
confidentiality;
(i) suffered any material extraordinary losses or waived any
material rights of any value, whether or not in the Ordinary Course of Business;
(j) suffered any material theft, damage, destruction or
casualty loss to its tangible assets, whether or not covered by insurance, or
suffered any substantial destruction of the Company's books and records;
(k) entered into, amended or terminated any material lease,
contract, agreement or commitment, or taken any other action or entered into any
other transaction, other than in the Ordinary Course of Business, or entered
into any transaction with any Insider;
(l) entered into any other transaction, whether or not in the
Ordinary Course of Business, contemplating payment of consideration in an amount
or having a value in excess of $100,000, or materially changed any business
practice or policy;
(m) other than in the Ordinary Course of Business, (i) made
or granted any bonus (other than the Closing Bonuses) or any wage, salary or
compensation increase to any of the directors
-12-
of the Company or any officer, employee, sales representative or consultant
of the Company who earns or has earned more than $50,000 annually in
aggregate compensation from the Company or (ii) 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;
(n) conducted its cash management customs and practices,
other than in the Ordinary Course of Business (including with respect to
maintenance of working capital balances, collection of accounts receivable and
payment of accounts payable);
(o) made any capital expenditures or commitments for capital
expenditures that aggregate in excess of $10,000;
(p) made any loans or advances to, or guarantees for the
benefit of, any Persons;
(q) entered into any lease of capital equipment or real
estate involving rental payments in excess of $10,000 per annum;
(r) made any charitable contributions or pledges or paid any
association fees or dues in excess of $5,000;
(s) changed or authorized any change in its articles of
incorporation or by-laws; or
(t) entered into any agreement to take any of the actions
described in Section 4.8(a) through (s), inclusive.
4.9 TITLE TO PROPERTIES; SUFFICIENCY OF ASSETS.
(a) The Company owns no real property.
(b) The real property leases and subleases described on
SCHEDULE 4.9(b) 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 Buyer), and the Company holds a valid and existing leasehold
interest under each of such leases or subleases for the term set forth in
SCHEDULE 4.9(b). The leases and subleases described in SCHEDULE 4.9(b) (the
"LEASED PROPERTIES") constitute all of the leases and subleases under which the
Company holds leasehold or subleasehold interests in real property. The Company
has delivered to Buyer complete and accurate copies each of the leases or
subleases described in SCHEDULE 4.9(b). With respect to each lease and sublease
listed on SCHEDULE 4.9(b):
-13-
(i) the lease or sublease shall continue to be legal, valid,
binding, enforceable and in full force and effect on substantially the
same terms following the Closing as those in effect immediately prior
to the Closing;
(ii) the Company is not, and, to the Company's knowledge, no
other party to the lease or sublease is in breach or default thereof,
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;
(iii) no party to the lease or sublease has repudiated any
provision thereof and, to the Company's knowledge, there are no
disputes, oral agreements, or forbearance programs in effect as to the
lease or sublease;
(iv) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold
or subleasehold;
(v) to the Company's actual knowledge, 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 in accordance with applicable laws, rules and regulations;
and
(vi) to the Company's actual knowledge, the owner of the
building, improvements or other property leased or subleased has good
and marketable title to the parcel of real property, free and clear of
all Encumbrances, 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 estate described in SCHEDULE 4.9(b) constitutes
all of the real estate used or occupied by the Company.
(d) Except as set forth on SCHEDULE 4.9(d) and as identified
on the Latest Balance Sheet, the Company owns good and marketable title to, or a
valid leasehold in, free and clear of all Encumbrances, all of the personal
property and assets which are shown on the Latest Balance Sheet or acquired
thereafter or located on the Leased Properties or used by the Company.
(e) To the Company's knowledge, the machinery, equipment,
personal properties, vehicles and other tangible assets of the Company located
upon or used in connection with the Leased Properties (other than assets that
are not necessary for the operation of the business of the Company) are operated
in conformity with all applicable laws and regulations, are in good condition
and repair, reasonable wear and tear excepted, and are usable in the Ordinary
Course of Business,
-14-
and to the Company's knowledge there are no latent defects with respect
thereto. The Company owns or leases under valid leases all buildings,
machinery, equipment and other tangible assets necessary for the conduct of
its business.
(f) The assets and properties owned or leased by the Company
constitutes all of the assets and properties necessary to operate the business
currently conducted by the Company.
4.10 ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE
4.10, all of the notes and accounts receivable of the Company reflected on the
Latest Balance Sheet are, and all notes and accounts receivable of the Company
as of the Closing Date shall be, good and valid receivables (subject to no
counterclaims or offset) arising in the Ordinary Course of Business and shall be
collected (net of the allowance for doubtful accounts recorded on the applicable
balance sheet) within 120 days after the Closing Date at the aggregate amount
recorded therefor on the books and records of the Company as of the Closing
Date. There are no individual accounts receivable which are over 120 days past
due, except as set forth on SCHEDULE 4.10. As of the Closing Date, no Person
shall have any Encumbrance on such receivables or any part thereof, and no
agreement for deduction, free goods, discount or other deferred price or
quantity adjustment shall have been made with respect to any such receivables.
4.11 TAXES
(a) Except as set forth on SCHEDULE 4.11, (i) the Company has
timely filed with the appropriate federal, state, local and foreign taxing
authorities all Tax Returns which are required to be filed by or with respect to
the Company on or before the Closing Date, and all such Tax Returns are true,
complete and accurate in all material respects, (ii) all Taxes due and owing,
whether or not shown on a Tax Return, have been paid by the Company on or before
the Closing Date and all Taxes accrued but not yet due are recorded on the
Financial Statements, and no Taxes are delinquent, (iii) no deficiency for any
amount of Tax has been asserted or assessed by a taxing authority against the
Company and neither Seller nor the Company has knowledge that any such
assessment or asserted Tax liability shall be made, (iv) the Company has not
consented to extend the time in which any Tax may be assessed or collected by
any taxing authority, (v) the Company has never been a member of an Affiliated
Group, (vi) no claim has ever been made by a taxing authority in a jurisdiction
where the Company does not file Tax Returns that the Company is or may be
subject to Taxes assessed by such jurisdiction, (vii) the Company does not have
any liability for Taxes of any other Person under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign Tax law) as a
transferee, by contract, or otherwise, and (viii) the Company has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party. SCHEDULE 4.11 contains a list of states,
territories and jurisdictions (whether foreign or domestic) in which the Company
is required to file Tax Returns.
-15-
(b) The Company made a valid election under Section 1361 ET
SEQ. of the Code and any corresponding state and local provisions to be an "S
corporation" for tax purposes effective for all taxable years (or portions
thereof) since its inception, and such election has never been terminated
(whether voluntarily or involuntarily).
4.12 CONTRACTS AND COMMITMENTS
(a) Except as specifically contemplated by this Agreement and
except as set forth in SCHEDULE 4.12, the Company is not 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,
hospitalization insurance or similar plan or practice, whether formal
or informal;
(ii) consulting or management services agreement or contract
for the employment of any officer, individual employee or other Person
on a full-time or consulting basis or any severance agreement;
(iii) agreement or indenture relating to the borrowing of
money or to mortgaging, pledging or otherwise placing an Encumbrance
on any of its assets;
(iv) agreements with respect to the lending or investing of
its funds;
(v) license or royalty agreements or nondisclosure or
confidentiality agreements;
(vi) guaranty of any indebtedness or other obligation, other
than endorsements made for collection in the Ordinary Course of
Business;
(vii) lease or agreement under which it is lessee of, or
holds or operates, any personal property owned by any other party
requiring payments in excess of $10,000 annually;
(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;
(ix) contract or group of related contracts with the same
party for the purchase or sale of supplies, products or other personal
property or for the furnishing or receipt of services which (A) calls
for performance over a period of more than one year, (B) involves
consideration in an amount in excess of $10,000 or (C) is not
terminable by the Company on 30 days or less notice without penalties;
-16-
(x) contract containing terms having the effect of
prohibiting the Company from freely engaging in business anywhere in
the world;
(xi) franchise, dealership, vendor or service agreement or
contract relating to the distribution, marketing or sales of its
products or services;
(xii) warranty agreement with respect to products sold or
services rendered;
(xiii) agreements, contracts or understandings pursuant to
which the Company or any of its Subsidiaries subcontracts material
work to third parties; or
(xiv) other agreement material to it whether or not entered
into in the Ordinary Course of Business.
(b) Except as specifically contemplated by this Agreement or
disclosed in SCHEDULE 4.12, (i) to the Company's knowledge, no contract or
commitment required to be disclosed on SCHEDULE 4.12 has been breached or
canceled by the other party thereto, (ii) to the Company's knowledge, since
December 31, 1998, no customer or supplier has indicated in writing or orally to
the Company or Seller that it may or shall stop or decrease the rate of business
done with the Company or that it desires to renegotiate its contract with the
Company, (iii) the Company has performed all the obligations required to be
performed by it on or prior to the date hereof in connection with the contracts
or commitments required to be disclosed on SCHEDULE 4.12 and is not in receipt
of any claim of default under any contract or commitment required to be
disclosed on SCHEDULE 4.12, (iv) the Company does not have a present expectation
or intention of not fully performing any obligation pursuant to any contract set
forth on SCHEDULE 4.12, (v) the Company has no knowledge of any breach or
anticipated breach by any party to any contract set forth on SCHEDULE 4.12, (vi)
each agreement identified on SCHEDULE 4.12 is legal, valid, binding, enforceable
and in full force and effect in accordance with its terms and will continue as
such following the consummation of the transactions contemplated hereby, and
(vii) no unfilled customer order or commitment obligating the Company to
process, manufacture or deliver products or perform services shall result in a
Material Adverse Effect upon completion of performance.
(c) The Company has provided Buyer with a true and correct
copy of all written contracts which are referred to on SCHEDULE 4.12, in each
case together with all amendments, waivers or other changes thereto.
4.13 INTELLECTUAL PROPERTY.
(a) SCHEDULE 4.13 sets forth a complete and correct list of:
(i) all patented or registered Intellectual Property and all pending patent
applications or other applications for
-17
registration of Intellectual Property owned, filed or used by the Company,
(ii) all trade names and unregistered trademarks used by the Company, (iii)
all material unregistered copyrights, mask works, and computer software owned
or used by the Company and (iv) all licenses or similar agreements or
arrangements (other than those relating to commercial "off the shelf"
software with a value no greater than $2,000) to which the Company is a party
either as licensee or licensor for the Intellectual Property in each case
identifying the subject Intellectual Property (collectively, the "SCHEDULED
INTELLECTUAL PROPERTY").
(b) Except as set forth in SCHEDULE 4.13, (i) the Company owns
and possesses all right, title and interest in and to, or have a valid and
enforceable right to use, all Intellectual Property used by the Company in the
Ordinary Course of Business and necessary for the Company to conduct its
businesses as presently conducted (including the Scheduled Intellectual Property
and collectively, the "COMPANY INTELLECTUAL PROPERTY") free and clear of all
Encumbrances, and no claim by any third party contesting the validity,
enforceability, use or ownership of any of the Company Intellectual Property has
been made, is currently outstanding or to the Company's knowledge is threatened,
and, to the Company's knowledge, there are no grounds for same, (ii) the Company
Intellectual Property comprises all Intellectual Property necessary for the
operation of the businesses of the Company as currently conducted and as
currently proposed to be conducted, (iii) the loss or expiration of any Company
Intellectual Property or related group of Company Intellectual Property has not
and shall not have a Material Adverse Effect, and, to the Company's knowledge,
no such loss or expiration is threatened, pending or reasonably foreseeable,
(iv) the Company has not received any notices of, nor does the Company have
knowledge of any facts which indicate a likelihood of, any infringement or
misappropriation by, or conflict with, any third party with respect to any
Intellectual Property (including any demand or request that the Company license
rights from a third party), (v) the Company has not infringed, misappropriated
or otherwise conflicted with any rights of any third parties and the Company has
no knowledge of any infringement, misappropriation or conflict which could be
expected to occur as a result of the continued operation of the Company's
businesses as currently conducted or as currently proposed to be conducted, and
(vi) to the Company's knowledge, the Company Intellectual Property has not been
infringed, misappropriated or conflicted by any third party.
(c) All of the Company Intellectual Property is or shall be
owned by, or properly assigned or licensed to, the Company at the time of the
Closing. The transactions contemplated by this Agreement shall have no adverse
effect on the Company's right, title and interest in and to any of the Company
Intellectual Property. The Company has not disclosed any of its trade secrets or
confidential information to any third party other than pursuant to a written
confidentiality agreement. The Company has not taken any actions which would
adversely affect the validity or enforcement of the Company Intellectual
Property. To the Company's knowledge, the owners of any Intellectual Property
licensed to the Company have taken all necessary and desirable actions to
maintain and protect the Intellectual Property which are subject to such
licenses.
-18-
4.14 LITIGATION; PROCEEDINGS. Except as set forth in SCHEDULE
4.14, there are no (and during the past three years there have not been any)
actions, suits, proceedings, charges, grievances, orders, judgments, decrees or
investigations pending or, to the Company's knowledge, threatened against or
affecting the Company 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, or which could come before any arbitrator
and there is no basis known to the Company for any of the foregoing. Except as
set forth on SCHEDULE 4.14, the Company has not received any opinion or legal
advice in writing to the effect that the Company is exposed from a legal
standpoint to any liability or disadvantage which may be material to the
Company's business as previously or presently conducted or business prospects.
Except as set forth on SCHEDULE 4.14, the Company is not subject to any
outstanding order, judgment or decree of, or settlement enforceable in, any
court or other governmental agency.
4.15 BROKERAGE AND CLOSING BONUSES. Except for the fees
payable by the Company to Decision Point International, LLC ("DPI") for
consulting services rendered by DPI to the Company pursuant to the Business
Development Agreement between the Company and DPI dated January 25, 1999, which
fees are identified and summarized on SCHEDULE 4.15 (the "DPI FEES"), 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 Seller, Xxxxx or the Company.
Except for the Closing Bonuses, there are no special bonuses or other similar
compensation payable to any employee of the Company in connection with the
transactions contemplated hereby.
4.16 GOVERNMENTAL LICENSES AND PERMITS. SCHEDULE 4.16 contains
a complete listing and summary description of all permits, licenses, franchises,
certificates, approvals and other authorizations of foreign, federal, state and
local governments or other similar rights (collectively, the "LICENSES") owned
or possessed by the Company or used by the Company in the conduct of its
business. Except as indicated on SCHEDULE 4.16, the Company owns or possesses
all right, title and interest in and to all of the Licenses which are necessary
to conduct its business as presently conducted and shall use its best efforts to
maintain all such Licenses. No loss or expiration of any License is, to the
Company's knowledge, threatened, pending or reasonably foreseeable (including,
without limitation, as a result of the transactions contemplated hereby) other
than expiration in accordance with the terms thereof.
4.17 EMPLOYEES. Except as set forth on SCHEDULE 4.17, to the
Company's knowledge, no key executive employee and no group of employees of the
Company has any plans to terminate his, her or its employment with the Company.
The Company has complied with all applicable laws relating to the employment of
personnel and labor, including but not limited to provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and the payment of social
security and other taxes, the Worker Adjustment and Retraining Notification Act
(or any similar foreign, state or local laws), and the Immigration Reform and
Control Act of 1986. The
-19-
Company is not a party to or bound by any collective bargaining agreement,
nor has it experienced any strikes, grievances, unfair labor practices claims
or other material employee or labor disputes. The Company has not engaged in
any unfair labor practice. The Company has no 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.
4.18 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth on SCHEDULE 4.18, with respect to
current or former employees of the Company, the Company does not maintain or
contribute to or have any actual or potential liability with respect to any (i)
nonqualified deferred compensation, bonus or retirement plans or arrangements,
(ii) qualified defined contribution or defined benefit plans or arrangements
which are employee pension benefit plans (as defined in Section 3(b) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or (iii)
employee welfare benefit plans, (as defined in Section 3(a) 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. The Company has never
contributed to any multiemployer pension plan (as defined in Section 3(37) of
ERISA), and the Company has never maintained or contributed to any defined
benefit plan (as defined in Section 3(35) of ERISA). The Company does not
maintain or contribute 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 Internal
Revenue Code of 1986 (the "CODE") ("COBRA").
(b) The employee pension benefit plans and employee welfare
benefit plans (and related trusts and insurance contracts) 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; and the employee pension benefit plans meet the requirements of
"qualified plans" under Section 401(a) of the Code, and each such employee
pension benefit plan, and each trust (if any) forming a part thereof, has
received a favorable determination letter from the Internal Revenue Service as
to the qualification under the Code of such plan and the tax-exempt status of
such related trust, or is a new plan which is made up of employee pension
benefit plans which previously received such a favorable determination letter,
and nothing has occurred since the date of such determination letter that could
adversely affect the qualification of such plan or the tax exempt status of such
related trust.
(c) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports and Summary Plan Descriptions) with
respect to the employee pension benefit plans and employee welfare benefit plans
have been properly and timely filed with the appropriate government agency and
distributed to participants as required. The Company has complied with the
requirements of COBRA.
-20-
(d) With respect to each employee pension benefit plan, all
contributions which are due (including all employer contributions and employee
salary reduction contributions) have been paid to such employee pension benefit
plan, all contributions for prior plan years which are not yet due and all
contributions that will become due with respect to the current plan year for the
period ending on the Closing Date have been made or accrued in accordance with
GAAP, and, with respect to the employee welfare benefit plans, all premiums or
other payments which are due have been paid.
(e) The Company has not incurred any liability to the Pension
Benefit Guarantee Corporation, the Internal Revenue Service, any multiemployer
plan or otherwise to any party with respect to any employee pension benefit plan
currently or previously maintained by members of the controlled group of
companies (as defined in Sections 414(b) and (c) of the Code) that includes or
included the Company (the "CONTROLLED GROUP") that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any member of the Controlled Group of incurring such a liability.
(f) With respect to each employee pension benefit plan and
each employee welfare benefit plan, (i) there have been no prohibited
transactions as defined in Section 406 of ERISA or Section 4975 of the Code,
(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 the
Company has no knowledge of any facts which would give rise to or could
reasonably be expected to give rise to any such actions, suits or claims.
(g) With respect to each of the employee pension benefit plans
and each employee welfare benefit plan, Seller has furnished to Buyer true and
complete copies of (i) the plan documents, summary plan descriptions and
summaries of material modifications and other material employee communications,
(ii) the most recent determination letter received from the Internal Revenue
Service, (iii) the Form 5500 Annual Report (including all schedules and other
attachments for the most recent three years), (iv) all related trust agreements,
insurance contracts or other funding agreements which implement such plans and
(v) all contracts relating to each such plan, including, without limitation,
service provider agreements, insurance contracts, investment management
agreements and record keeping agreements.
4.19 INSURANCE. SCHEDULE 4.19 lists and briefly describes each
insurance policy (true and correct copies of which have been furnished to Buyer)
maintained by the Company with respect to its properties, assets and businesses.
All of such insurance policies are in full force and effect, and the Company is
not and in the past three years has not been in default with respect to its
obligations under any such insurance policies. To the Company's knowledge, it
maintains insurance policies with coverage customary for entities engaged in
similar lines of business. Except as set forth on SCHEDULE 4.19, the Company
does not have any self-insurance or co-insurance programs,
-21-
and the reserves set forth on the Latest Balance Sheet are adequate to cover
all anticipated liabilities with respect to any such self-insurance or
co-insurance programs.
4.20 OFFICERS AND DIRECTORS; BANK ACCOUNTS. SCHEDULE 4.20
lists all officers and directors of the Company, and all of the bank accounts,
safety deposit boxes and lock boxes of the Company (indicating each authorized
signatory with respect thereto). Except as set forth on SCHEDULE 4.20, the
Company has not executed any power of attorney that is currently in effect.
4.21 INSIDER TRANSACTIONS. Except as disclosed on SCHEDULE
4.21, Seller is not, nor is any officer or director of the Company, or any
relative of any such Person, or any entity in which any such Person owns any
beneficial interest (collectively, the "INSIDERS"), a party to any agreement,
contract, commitment, transaction or understanding with the Company or that
pertains to the business of the Company. Except as disclosed on SCHEDULE 4.21,
none of the Insiders has any interest in any property, real or personal or
mixed, tangible or intangible, used in or pertaining to the business of the
Company.
4.22 COMPLIANCE WITH LAWS.
(a) The Company and its officers, directors, agents and
employees have complied 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 the Company's
production, marketing, sales and distribution of its products and services) or
any owned or leased properties of the Company and to which the Company may be
subject, and no claims have been filed against the Company alleging a violation
of any such laws or regulations.
(b) Except as disclosed on SCHEDULE 4.22, the Company is not
now subject (and has not been subject during the previous three years) to any
inspection, recall, investigation, penalty assessment, or audit by any U.S.
federal, state or local governmental agency or any such authority of any other
country or to any other allegation that the Company (including any agent,
representative or broker acting on behalf of the Company) violated the
regulations of any such authority or made a material false statement or omission
to any such governmental authority.
4.23 ENVIRONMENTAL MATTERS.
(a) The Company has complied with and is in compliance with
all Environmental and Safety Requirements.
(b) The Company has obtained and complied with, and is in
compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental and Safety Requirements for the occupation of
its facilities and the operation of its business, and such permits, licenses and
other authorizations may be relied upon for continued lawful operation of the
business
-22-
of the Company on and after the Closing Date without transfer, reissuance, or
other governmental approval or action.
(c) The Company has not received any claim, complaint,
citation, report or other written or oral notice regarding any liabilities or
potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective obligations,
arising under Environmental and Safety Requirements.
(d) The Company has not treated, stored, disposed of, arranged
for or permitted the disposal of, transported, handled or released any
substance, including without limitation any hazardous substance, or owned or
operated any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or would give
rise to liabilities, including any liability for response costs, corrective
action costs, personal injury, property damage, natural resource, damages or
attorney fees, or any investigative, corrective or remedial obligations,
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended or the Solid Waste Disposal Act, as amended or any other
Environmental and Safety Requirements.
(e) None of the following exists at any property occupied by
the Company: (i) underground storage tanks, surface impoundments or disposal
areas, (ii) asbestos-containing material in any form or condition, or (iii)
materials or equipment containing polychlorinated biphenyls.
(f) No facts, events or conditions relating to the past or
present facilities, properties or operations of the Company shall prevent,
hinder or limit continued compliance with Environmental and Safety Requirements,
give rise to any investigatory, remedial or corrective 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 any relating to onsite or
offsite releases or threatened releases of hazardous or otherwise regulated
materials, substances or wastes, personal injury, property damage or natural
resources damage).
(g) Neither this Agreement nor the transactions that are the
subject of this Agreement imposes any obligations for site investigation or
cleanup, or notification to or consent of government agencies or third parties,
pursuant to any so-called "transaction-triggered" Environmental and Safety
Requirement.
(h) The Company has not either expressly or by operation of
law, assumed or undertaken any liability or corrective or remedial obligation of
any other Person relating to Environmental and Safety Requirements.
-23-
(i) No Environmental Lien has attached to any property owned,
leased or operated by the Company.
(j) The Company has furnished to Buyer all environmental
audits, reports and other material environmental documents relating to the
Company which are in its possession or under its reasonable control.
4.24 YEAR 2000 COMPLIANCE. Except as set forth on SCHEDULE
4.24, none of the computer software, computer firmware, computer hardware
(whether general or special purpose) or other similar or related items of
automated, computerized or software systems that are used or relied on by the
Company in the conduct of its business will malfunction, will cease to function,
will generate incorrect data or will produce incorrect results when processing,
providing or receiving (a) date-related data from, into and between the
twentieth and twenty-first centuries or (b) date-related data in connection with
any valid date in the twentieth and twenty-first centuries.
4.25 SERVICE WARRANTIES. The Company has not made any
warranties or guarantees (express or implied) with respect to its services,
other than as contained in the contracts set forth in SCHEDULE 4.12 or as
implied by law.
4.26 DISCLOSURE. There is no fact which has not been disclosed
to Buyer of which Seller or any of the officers or directors of the Company is
aware and which has had or could reasonably be anticipated to have a Material
Adverse Effect.
4.27 KNOWLEDGE. Unless otherwise qualified by the term
"actual," the terms "knowledge" and "aware" shall mean and include (a) the
actual knowledge or awareness of the Company (which shall include the actual
knowledge and awareness of the officers, directors and key employees of the
Company and the general managers of each facility of the Company) and (b) the
knowledge or awareness which a prudent business person would have obtained in
the conduct of his business after making reasonable inquiry and reasonable
diligence with respect to the particular matter in question. In particular, the
knowledge or awareness of Xxxxx, Xxxx Xxxx and Xxxxx Xxxxxxx shall be imputed to
the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
CONCERNING SELLER AND XXXXX
As a material inducement to Buyer to enter into this
Agreement, each of Seller and Xxxxx represents and warrants to Buyer that:
-24-
5.1 AUTHORIZATION OF TRANSACTIONS. The execution, delivery and
performance of this Agreement and all of the other agreements and instruments
contemplated hereby to which Seller is a party have been duly authorized by the
Seller, and no other act or proceeding on the part of Seller is necessary to
authorize the execution, delivery or performance of this Agreement or the other
agreements contemplated hereby and the consummation of the transactions
contemplated hereby or thereby. This Agreement has been duly executed and
delivered by Seller and Xxxxx and constitutes a valid and binding obligation of
Seller and Xxxxx, enforceable in accordance with its terms, and each of the
other agreements and instruments contemplated hereby to which Seller or Xxxxx is
a party, when executed and delivered by Seller or Xxxxx, in accordance with the
terms hereof and thereof, shall each constitute a valid and binding obligation
of Seller or Xxxxx, as the case may be, enforceable in accordance with its
respective terms. Seller holds its interests in the Company subject to a trust
agreement that is valid, existing, and enforceable under the laws of the State
of Oklahoma, and that provides its trustees with all necessary power and
authority to execute, deliver, and perform its obligations under this Agreement
and the other agreements contemplated hereby to which it is a party. Each Person
executing this Agreement and such other agreements contemplated hereby on behalf
of Seller is a duly appointed, qualified, and acting trustee of Seller, with all
requisite power and authority to execute, deliver, and perform all obligations
of Seller under this Agreement and such other agreements contemplated hereby.
The copies of the trust instruments and other organizational documents relating
to Seller which have been furnished to Buyer reflect all amendments made thereto
prior to the date of this Agreement and are correct and complete.
5.2 ABSENCE OF CONFLICTS. Neither the execution and the
delivery of this Agreement and the other documents contemplated hereby to which
Seller or Xxxxx 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 Encumbrance upon the
Shares under, 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 (including the trust agreement) to which Seller or Xxxxx is bound
or by which Seller or Xxxxx is affected, or any statute, regulation, rule,
judgment, order, decree or other restriction of any government, governmental
agency or court to which Seller or Xxxxx is subject. Except as set forth on
SCHEDULE 5.2, no notice to, filing with or authorization, consent or approval of
any government or governmental agency by Seller or Xxxxx is necessary for the
consummation of the transactions contemplated by this Agreement and the other
documents contemplated hereby to which Seller or Xxxxx is a party.
5.3 BROKERAGE. Except for the DPI Fees, 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 Seller or Xxxxx.
-25-
5.4 SHARES. Seller owns beneficially and of record all of the
Shares, free and clear of any Encumbrances. Neither Seller nor Xxxxx is 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). Neither Seller nor Xxxxx is a party to
any voting trust, proxy or other agreement or understanding with respect to the
voting of any capital stock of the Company. At the Closing, Seller shall deliver
and convey to Buyer good and valid title to all of the Shares, free and clear of
all Encumbrances.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Seller and the Company to enter
into this Agreement, Buyer hereby represents and warrants to Seller and the
Company that:
6.1 ORGANIZATION AND CORPORATE POWER. Buyer 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 Buyer is a party
and perform its obligations hereunder and thereunder.
6.2 AUTHORIZATION OF TRANSACTION. The execution, delivery and
performance of this Agreement and the other agreements contemplated hereby to
which Buyer is a party have been duly and validly authorized by all requisite
corporate action on the part of Buyer, 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 Buyer is a party shall when executed constitute, a
valid and binding obligation of Buyer, enforceable in accordance with its terms.
6.3 NO VIOLATION. Buyer is not subject to or obligated under
its certificate of incorporation, its by-laws, any applicable law, or rule or
regulation of any governmental authority, or any agreement or instrument, or any
license, franchise or permit, or subject to any order, writ, injunction or
decree, which would be breached or violated by its execution, delivery or
performance of this Agreement and the other agreements contemplated hereby to
which Buyer is a party.
6.4 GOVERNMENTAL AUTHORITIES AND CONSENTS. Except for filings
required under the HSR, if any, Buyer is not required to submit any notice,
report or other filing with any governmental authority in connection with the
execution or delivery by it of this Agreement and the other agreements
contemplated hereby to which Buyer is a party or the consummation of the
transactions contemplated hereby or thereby. No consent, approval or
authorization of any
-26-
governmental or regulatory authority or any other party or Person is required
to be obtained by Buyer in connection with its execution, delivery and
performance of this Agreement and the other agreements contemplated hereby to
which Buyer is a party or the transactions contemplated hereby or thereby.
6.5 LITIGATION. There are no actions, suits, proceedings or
orders pending or, to Buyer's knowledge, threatened against or affecting Buyer
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, which would adversely affect Buyer's performance under this
Agreement and the other agreements contemplated hereby to which Buyer is a party
or the consummation of the transactions contemplated hereby or thereby.
6.6 BROKERAGE. Except for the fees payable to Gateway
Partners, Inc., 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 Buyer.
ARTICLE VII
[Intentionally Omitted]
ARTICLE VIII
INDEMNIFICATION AND RELATED MATTERS
8.1 SURVIVAL. All representations and warranties set forth in
this Agreement or in any writing or certificate delivered as a schedule or
exhibit to this Agreement shall survive the Closing Date and the consummation of
the transactions contemplated hereby and shall not be affected by any
examination made by or on behalf of Buyer, the knowledge of any of its officers,
directors, stockholders, employees or agents, or the acceptance of any
certificate or opinion hereunder. Notwithstanding the foregoing, no Party shall
be entitled to recover for any Loss pursuant to Section 8.2 unless written
notice of a claim thereof is delivered to the other Party prior to the
Applicable Survival Date. For purposes of this Agreement, the term "APPLICABLE
SURVIVAL DATE" shall be the first anniversary of the Closing Date; PROVIDED that
the Applicable Survival Date with respect to the following Losses shall be as
follows:
(a) with respect to any Loss arising from or related to a
breach of the representations and warranties of the Company and Seller set forth
in Section 4.11 (Taxes) or Section 4.23 (Environmental Matters), the Applicable
Survival Date shall be 30 days after the expiration of
-27-
the statute of limitations applicable to the Loss which is giving rise to the
claim for indemnification (including any extension thereto or waiver thereof
to the extent that such statute of limitations may be tolled); and
(b) with respect to any Loss arising from or related to a
breach of the representations and warranties of the Company and Seller set forth
in Section 4.1 (Organization and Corporate Power), Section 4.2 (Authorization of
Transactions), Section 4.3 (Capitalization), or Section 4.15 (Brokerage) and
Article V (Representations and Warranties with Respect to Seller), there shall
be no Applicable Survival Date (i.e., there shall be no limit on the survival of
such representations and warranties).
8.2 INDEMNIFICATION.
(a) Seller and Xxxxx shall indemnify Buyer, its officers,
directors, stockholders, employees, agents, representatives, affiliates
(including the Company after the Closing), successors and permitted assigns
(collectively, the "BUYER PARTIES") and hold each of them harmless from and
against and pay on behalf of or reimburse such Buyer Parties in respect of any
loss, liability, demand, claim, action, cause of action, cost, damage,
deficiency, Tax, penalty, fine or expense, whether or not arising out of third
party claims (including interest, penalties, reasonable attorneys' fees and
expenses, court costs and all amounts paid in investigation, defense or
settlement of any of the foregoing deficiency, damage or expense), but excluding
any punitive damages (collectively, "LOSSES" and individually, a "LOSS") which
any such Buyer Party may suffer, sustain or become subject to, as a result of,
in connection with, relating to, incidental to or by virtue of:
(i) the breach of any representation or warranty contained in
Article IV or any certificate delivered by the Company or Seller to
Buyer with respect thereto in connection with the Closing;
(ii) the breach of any representation or warranty contained in
Article V or any certificate delivered by Seller to Buyer with respect
thereto in connection with the Closing;
(iii) the breach by the Company or Seller of any
representation, warranty (other than representations or warranties set
forth in Articles IV and V), covenant or agreement made by the Company
or Seller contained in this Agreement or any Exhibit hereto;
(iv) any lawsuit, claim or proceeding of any nature against
the Company existing at or prior to the Closing Date or arising out
of any act, transaction, circumstance or fact occurring prior to the
Closing Date; and
(v) any foreign, federal, state or local income Taxes incurred
or payable by the Company in a taxable period, taxable year or portion
thereof ending on or before the Closing
-28-
Date or otherwise attributable to the conduct of the Company's business
on or prior to the Closing Date to the extent such Taxes are not taken
into account as a reduction of the Purchase Price pursuant to SECTION
1.2.
(b) The indemnification provided for in Section 8.2(a) above
shall be subject to the following limitations:
(i) Seller and Xxxxx will be liable to the Buyer Parties with
respect to claims for breaches of representations and warranties
referred to in Section 8.2(a) above only if Buyer provides Seller or
Xxxxx with written notice of a possible claim prior to or on the
Applicable Survival Date; and
(ii) Neither Seller nor Xxxxx shall be liable to the Buyer
Parties for any Loss arising under subsections (a)(i) or (a)(ii) or the
breach of a representation or warranty identified in (a)(iii) above,
(A) unless and until the aggregate amount of such Losses exceeds
$100,000 in the aggregate (the "THRESHOLD"), in which case Seller and
Xxxxx shall be jointly and severally liable for the full amount of such
Losses including the amount of the Threshold, and (B) to the extent the
aggregate amount of all such Losses exceeds the Purchase Price (the
"CAP"); PROVIDED that the foregoing limitations (i.e., the Threshold
and the Cap) shall not apply with respect to any Loss arising from or
related to a breach of any of the representations and warranties of the
Company or Seller set forth in Section 4.1 (Organization and Corporate
Power), Section 4.2 (Authorization of Transactions), Section 4.3
(Capitalization), the last sentence of Section 4.6 (Financial
Statements), Section 4.10 (Accounts Receivable), Section 4.11 (Taxes),
Section 4.15 (Brokerage) or Article V (Representations and Warranties
with Respect to Seller).
(c) Any amounts owing from Seller or Xxxxx pursuant to this
Section 8.2 shall first be paid to the extent possible from the Escrow Funds (as
defined in the Escrow Agreement) in the Escrow Account (as defined in the Escrow
Agreement) and thereafter shall be made directly by Seller or Xxxxx (A) in
accordance with the terms of this Section 8.2, or (B) at the option of Buyer in
the event (and only in the event) that Seller or Xxxxx does not deliver a cash
payment in respect of any indemnification within 30 days after the determination
thereof, by the delivery by Seller of a certificate or certificates representing
Executive Securities (as defined in and pursuant to the Executive Purchase
Agreement) having a Fair Market Value (as defined in the Executive Purchase
Agreement) equal to the amounts owing, duly endorsed in blank or accompanied by
duly executed stock powers. Seller, Xxxxx and Buyer hereby acknowledge and agree
that the payment of Escrow Funds to Buyer shall not limit or otherwise affect
any right of indemnification which Buyer may have pursuant to this Section 8.2
and that the Escrow Funds do not constitute an exclusive remedy for Losses
incurred by Buyer. Accordingly, in the event that the amounts distributed to
Buyer from the Escrow Funds are insufficient to fully indemnify Buyer for all
Losses (including Losses arising after distribution of all the Escrow Funds and
the termination of the Escrow Agreement), Seller and
-29-
Xxxxx shall be liable to Buyer for all such amounts in accordance with the
terms of this Section 8.2. In addition, Buyer shall be entitled to (but shall
not be required to) set-off any amounts due or payable to the Buyer Parties
pursuant to this Section 8.2 against any amounts otherwise due and payable by
Buyer or any of its Affiliates to Seller or Xxxxx (including any amounts
payable by Buyer in respect of the Earn-Out Payment).
(d) Buyer shall indemnify Seller and hold Seller harmless from
and against and pay on behalf of or reimburse Seller in respect of any Loss
which Seller may suffer, sustain or become subject to, as the result of, in
connection with, relating to, incidental to or by virtue of (i) the breach by
Buyer of any representation or warranty made by Buyer contained in Article VI or
any certificate delivered by Buyer to Seller with respect thereto in connection
with the Closing and (ii) the breach by Buyer of any representation, warranty
(other than representations or warranties set forth in Article VI), covenant, or
agreement by Buyer contained in this Agreement or any Exhibit hereto.
Notwithstanding the foregoing, in no event shall Buyer be liable to Seller by
reason of application of clause (i) of this Section 8.2(d) unless the aggregate
of the Losses thereunder exceeds the Threshold (in which case Buyer shall be
liable for the full amount of such Losses including the amount of the
Threshold); PROVIDED that the foregoing limitation shall not apply with respect
to any Loss arising from or related to a breach of the representations and
warranties of Buyer set forth in Section 6.1 (Organization and Corporate Power),
Section 6.2 (Authorization of the Transaction), and Section 6.6 (Brokerage).
(e) Any Party making a claim for indemnification under this
Article VIII (the "INDEMNIFIED PARTY") shall notify the indemnifying party (the
"INDEMNIFYING PARTY") of the claim in writing promptly 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), and the basis thereof; PROVIDED that the
failure to so notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder, except to the extent such failure shall have
prejudiced the Indemnifying Party. With respect to any third party claim, the
Indemnifying Party shall be entitled to participate in the defense of such
action, lawsuit, proceeding, investigation or other claim giving rise to the
Indemnified Party's claim for indemnification at its expense, and at its option
(subject to the limitations set forth below) shall be entitled to appoint lead
counsel of such defense with a nationally recognized reputable counsel
acceptable to the Indemnified Party; PROVIDED that prior to the Indemnifying
Party assuming control of such defense it shall first (i) verify to the
Indemnified Party in writing that such Indemnifying Party shall be fully
responsible (with no reservation of any rights) for all liabilities and
obligations relating to such claim for indemnification and that it shall provide
full indemnification (whether or not otherwise required hereunder) to the
Indemnified Party with respect to such action, lawsuit, proceeding,
investigation, or other claim giving rise to such claim for indemnification
hereunder, (ii) enter into an agreement with the Indemnified Party in form and
substance satisfactory to the Indemnified Party which agreement unconditionally
guarantees the payment and performance of any liability or obligation which may
-30-
arise with respect to such action, lawsuit, proceeding, investigation, or facts
giving rise to such claim for indemnification hereunder, and (iii) furnish the
Indemnified Party with evidence which, in the sole judgment of the Indemnified
Party, is and shall be sufficient to satisfy any such liability; PROVIDED
FURTHER that:
(i) the Indemnified Party shall be entitled to participate in
the defense of such claim and to employ counsel of its choice for such
purpose, and the fees and expenses of such separate counsel shall be
borne by the Indemnified Party (except that the fees and expenses of
such separate counsel incurred prior to the date the Indemnifying Party
effectively assumes control of such defense shall be borne by the
Indemnifying Party);
(ii) the Indemnifying Party shall not be entitled to assume
control of such defense and shall pay the fees and expenses of counsel
retained by the Indemnified Party if (A) the claim for indemnification
relates to or arises in connection with any criminal proceeding,
action, indictment, allegation or investigation, (B) the Indemnified
Party reasonably believes an adverse determination with respect to the
action, lawsuit, investigation, proceeding or other claim giving rise
to such claim for indemnification would be detrimental to or injure the
Indemnified Party's reputation or business prospects, (C) the claim
seeks an injunction or equitable relief against the Indemnified Party,
or (D) upon petition by the Indemnified Party, the appropriate court
rules that the Indemnifying Party failed or is failing to vigorously
prosecute or defend such claim; and
(iii) if the Indemnifying Party, with the consent of the
Indemnified 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 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 shall 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.
(f) The Indemnifying Party shall pay the Indemnified Party in
immediately available funds promptly after the Indemnified Party provides the
Indemnifying Party with written notice of a claim hereunder and the Parties
reasonably agree that there is a reasonable basis for such claim.
(g) Amounts paid to or on behalf of Seller or Buyer as
indemnification shall be treated as adjustments to the Purchase Price.
(h) Effective upon the Closing, Seller and Xxxxx hereby
irrevocably waive, release and discharge the Company from any and all
liabilities and obligations to each of Seller and
-31-
Xxxxx of any kind or nature whatsoever, whether in the capacity as Seller
hereunder, as a stockholder, officer or director of the Company or otherwise
(including in respect of rights of contribution or indemnification), 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 neither Seller nor Xxxxx shall seek to recover any
amounts in connection therewith or thereunder from the Company.
ARTICLE IX
ADDITIONAL AGREEMENTS
9.1 CONTINUING ASSISTANCE. Subsequent to the Closing, Seller
and Buyer (at their own respective 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.
9.2 TAX MATTERS.
(a) LIABILITY OF SELLER FOR TAXABLE PERIODS ENDING ON OR
BEFORE CLOSING DATE. Seller shall be liable for, and shall indemnify and hold
Buyer and the Company harmless against, without duplication (including without
duplication for any Taxes taken into account as a reduction of the Purchase
Price pursuant to Section 1.2), (i) all Taxes of, or payable by, the Company for
any taxable year or taxable period or portion thereof ending on or before the
Closing Date, (ii) all liability of the Company for Taxes of any other Person
under Treasury Regulations Section 1.1502-6 (or any similar provision of state,
local or foreign Tax law), as a transferee, by contract, or otherwise, but only
to the extent that such liability arises with respect to affiliations,
transfers, contracts or the like existing or effective on or before the Closing
Date, (iii) all Taxes due by reason of the 338(h)(10) Elections (including all
transfer taxes arising out of the deemed asset sale effected thereby), and (iv)
all Taxes attributable to or arising out of the failure of the Company to be
qualified as an "S corporation" at any time. For purposes of this Section
9.2(a), in the case of any Taxes that are imposed on a periodic basis and are
payable for a Taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Taxable
period ending on the Closing Date shall (A) in the case of any Tax other than
Taxes based upon or related to income or receipts, be deemed to be the amount of
such Tax for the entire Taxable period multiplied by a fraction, the numerator
of which is the number of days in the Taxable period ending on the Closing Date
and the denominator of which is the number of days in the entire Taxable period,
and (B) in the case of any Tax based upon or related to income or receipts, be
deemed equal to the amount which would be payable if the relevant Taxable period
ended on the Closing Date. Seller may, upon giving prior written notice to
Buyer, elect to undertake the preparation and filing (at
-32-
Seller's sole expense), of any or all Tax Returns of the Company and its
Subsidiaries under which Seller reasonably expects to incur all or
substantially all of the Tax liability.
(b) TRANSFER 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 Seller
when due, and Seller shall, at its own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and if required by applicable
law, Buyer shall, and shall cause its Affiliates to, join in the execution of
any such Tax Returns and other documentation.
(c) 338(h)(10) ELECTIONS. Seller covenants and agrees to join
Buyer in making an election under Section 338(h)(10) of the Code, and any
applicable corresponding or similar provision of state or local law, including
specifically any election corresponding to Section 338(g) of the Code
(collectively, the "338(h)(10) ELECTIONS"), with respect to the acquisition of
the Shares. Seller and Buyer shall join in preparing Internal Revenue Service
Form 8023 or such other forms and schedules as are necessary or required to make
the 338(h)(10) Elections, and each covenants and agrees with the other that it
shall execute such Form 8023 or other forms and schedules and shall take all
such other acts as are necessary to make or perfect such 338(h)(10) Elections.
Buyer and Seller agree that the computation of the Modified Aggregate Deemed
Sale Price ("MADSP") and the Aggregate Deemed Sale Price ("ADSP") (both as
defined under Treasury Regulations) and the allocation of the MADSP and ADSP
among the assets as of the Closing Date shall be as determined by Buyer with the
consent of the Seller (which consent shall not be unreasonably withheld).
(d) For tax purposes, all items of income, gain, loss,
deduction or credit for the Closing Date shall be for the account of the Seller.
9.3 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 shall be issued without the mutual approval of all
Parties, except for any public disclosure which any Party in good faith
reasonably believes is required by law or regulation (in which case the
disclosure shall be prepared jointly by the Company and Buyer). 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 shall be issued without Buyer's consent (which shall
not be unreasonably withheld).
9.4 FURTHER ASSURANCES. After the Closing, each of Seller and
Xxxxx shall execute and deliver such further instruments of conveyance and
transfer and take such additional action as Buyer may reasonably request to
effect, consummate, confirm or evidence the transfer to Buyer of the Shares and
any other transactions contemplated hereby.
-33-
9.5 SPECIFIC PERFORMANCE. Each of Seller and Xxxxx
acknowledges that the Company's business is unique and recognizes and affirms
that in the event of a breach of this Agreement by Seller or Xxxxx, money
damages may be inadequate and Buyer may have no adequate remedy at law.
Accordingly, each of Seller and Xxxxx agrees that Buyer shall have the right, in
addition to any other rights and remedies existing in its favor, to enforce its
rights and the Company's, Seller's and Xxxxx' 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.
9.6 TRANSITION ASSISTANCE. Neither Seller nor Xxxxx shall in
any manner take any action which is designed, intended, or would 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 after the date of this Agreement as were
maintained with the Company prior to the date of this Agreement.
9.7 INVESTIGATION.
(a) Prior to the Closing Date, Buyer may make or cause to be
made such investigation of the business and properties of the Company as it
deems necessary or advisable to familiarize itself therewith. Seller shall, and
shall cause the Company and its officers, directors, employees and agents to,
permit Buyer and its employees, agents, accounting, legal and other authorized
representatives and representatives of the financial institutions which are
considering participation in the financing of this transaction to (i) have full
access to the premises, books and records of the Company at reasonable hours,
(ii) visit and inspect any of the properties of the Company, (iii) perform any
and all environmental assessments with respect to any of the real property owned
or leased by the Company and (iv) discuss the affairs, finances and accounts of
the Company with the directors, officers, key employees, key customers, key
sales representatives, key suppliers and independent accountants of the Company.
(b) Prior to the Closing Date, Seller and Buyer shall mutually
agree upon all communications with customers and suppliers of the Company
relating to this Agreement and the transactions contemplated hereunder (it being
understood that Buyer shall have the right to contact such customers and
suppliers in connection with its investigation of the business of the Company).
9.8 EXPENSES. Except as otherwise provided herein, Seller, the
Company, Xxxxx and Buyer shall pay all of their own respective fees, costs and
expenses (including 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 this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby; PROVIDED that upon the Closing the Company
shall pay the fees and expenses of Buyer hereunder; PROVIDED FURTHER that at the
Closing Buyer shall pay or shall cause the Company to pay to DPI the DPI Fees
identified on SCHEDULE 4.15; and PROVIDED FURTHER that Seller's, Xxxxx' and the
-34-
Company's fees and expenses incurred in connection with the negotiation of,
performance of their obligations under, and consummation of the transactions
contemplated by, this Agreement which are to be paid by the Company shall not
exceed $75,000 in the aggregate.
9.9 EXCLUSIVITY. Until this Agreement is terminated in
accordance with its terms, each of the Company, Seller and Xxxxx agrees not to
(and will not permit any of its affiliates, or any employee, officer, director,
partner, agent, trustee, representative or other Person acting on its behalf or
any entity under his or her control to), directly or indirectly, sell or agree
to sell to any other Person, discuss or negotiate with any other Person a
possible sale of, or solicit or accept any offer to purchase from any other
Person, all or any part of the Company's securities or assets, whether such
transaction takes the form of an issuance or sale of common stock or other
securities, merger, consolidation, sale of assets, liquidation, dissolution,
refinancing, recapitalization, reorganization or otherwise), or provide any
information to any other Person concerning the Company. Seller, Xxxxx and the
Company represent and warrant that Seller, Xxxxx and the Company have ceased all
discussions with all Persons (other than Buyer) regarding all of the foregoing
and that neither Seller nor the Company nor any of the Company's officers,
directors, Affiliates, partners, trustees, agents or representatives is a party
to or bound by any agreement relating to any of the foregoing, other than
agreements with Buyer. Each of Seller and Xxxxx hereby agrees to notify Buyer
immediately upon the receipt of any proposal, offer, inquiry or contact with
respect to any of the foregoing and will promptly provide Buyer with copies of
and disclose to Buyer the details concerning any such proposal, inquiry or
contact.
9.10 BOOKS AND RECORDS. Unless otherwise consented to in
writing by Seller or Buyer (as the case may be), Buyer and Seller shall not, for
a period of seven years following the date hereof, destroy, alter or otherwise
dispose of any of the books and records of any Company acquired by Buyer
hereunder or retained by Seller without first offering to surrender to Seller or
Buyer such books and records or any portion thereof of which Seller or Buyer may
intend to destroy, alter or dispose. Buyer and Seller shall allow the other
party's representatives, attorneys and accountants access to such books and
records, upon reasonable request for such access 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.
9.11 NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY.
(a) NON-COMPETITION. In consideration of the payment of the
Purchase Price and as a condition precedent to Buyer's willingness to enter into
this Agreement and consummate the transactions contemplated hereby, during the
period beginning on the Closing Date and ending on the five-year anniversary of
the Closing Date (the "NON-COMPETE PERIOD"), Xxxxx hereby agrees that he shall
not engage (whether as an owner, operator, manager, employee, officer, director,
consultant, advisor, representative or otherwise) directly or indirectly (and
shall not permit any of
-35-
his Affiliates to so engage directly or indirectly) in any business that the
Company conducts or proposes to conduct as of the Closing Date anywhere in
the United States; PROVIDED that ownership of less than 2% of the outstanding
stock of any publicly-traded corporation shall not be deemed to be engaging
in any of the Company's businesses solely by reason thereof. Xxxxx
acknowledges that the business of the Company is national in scope and that
the Company currently sells, or proposes to sell its products and services on
a nationwide basis. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 9.11(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.
For all purposes under this Section 9.11, all references to Xxxxx shall be
deemed to also be references to Seller.
(b) NON-SOLICITATION. Xxxxx agrees that, during the
Non-Compete Period, he (i) shall not, and shall cause his Affiliates not 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 employed by the Company at
any time prior to the Closing Date or during the Non-Compete Period, without the
prior written consent of the Company, and (ii) shall not induce or attempt to
induce any customer or other business relation of the Company into any business
relationship which would materially harm the Company. The term "indirectly" as
used in this Section 9.11 is intended to mean any acts authorized or directed by
or on behalf of Xxxxx or any Affiliate of Xxxxx.
(c) CONFIDENTIALITY. Xxxxx agrees to (and shall cause each of
his Affiliates to) treat and hold as confidential any information concerning the
business and affairs of the Company 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 Buyer or destroy, at the request and option of Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in his
possession or under his control. In the event that Xxxxx 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, Xxxxx shall notify Buyer
promptly of the request or requirement so that Buyer may seek an appropriate
protective order or waive compliance with the provisions of this Section
9.11(c). If, in the absence of a protective order or the receipt of a waiver
hereunder, Xxxxx is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt,
Xxxxx may disclose the Confidential Information to the tribunal; PROVIDED that
Xxxxx shall use his best efforts to obtain, at the request of Buyer, an order or
other assurance that confidential treatment shall be accorded to such portion of
the Confidential Information required to be disclosed as Buyer shall designate.
-36-
(d) TRADE NAME. Xxxxx agrees not to use, or permit any of his
affiliates to use the "Capital Land Services" name, the "CLS" name, the "CLS
Group" name, or any name confusingly similar to any such names in any manner
anywhere in the United States after Closing.
(e) REMEDY FOR BREACH. Xxxxx acknowledges and agrees that in
the event of a breach by Xxxxx of any of the provisions of this Section 9.11,
monetary damages shall not constitute a sufficient remedy. Consequently, in the
event of any such breach, the Company, Buyer and/or their respective successors
or assigns shall, in addition to other rights and remedies existing in their
favor, be entitled to specific performance and/or injunctive or other relief
from any court of law or equity of competent jurisdiction 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.
9.12 DISPUTE RESOLUTION.
(a) The Parties agree to use their good faith efforts to
attempt to resolve any disputes, controversies, claims or issues arising out of
or relating to this Agreement through discussions and face-to-face negotiations
between each other.
(b) In the event that, after good faith discussions, such
disputes, controversies, claims or issues cannot be resolved among the disputing
Parties, then such Parties shall, within 10 days after any of such Parties gives
notice to the other disputing Parties, jointly submit their dispute to
nonbinding mediation in the City of Chicago, Illinois. Such nonbinding mediation
shall be administered by a reputable mediator mutually agreed upon by the
disputing Parties.
(c) In the event that a dispute, controversy, claim or issue
relating to this Agreement submitted to nonbinding mediation is not resolved on
or prior to the date 60 days following the commencement of such mediation
proceedings, then such mediation proceedings shall be terminated by the Parties
and the Parties may pursue legal action or other remedy(ies) in accordance with
this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 CERTAIN DEFINED TERMS. For purposes of this Agreement,
the following terms shall have the meanings set forth below:
-37-
"AFFILIATED GROUP" means an affiliated group as defined in
Section 1504 of the Code (or any similar combined, consolidated or unitary group
defined under state, local or foreign income Tax law).
"AFFILIATE" means with respect to any particular Person, any
other Person controlling, controlled by or under common control with such
particular Person, where "control" 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, contracts or otherwise.
"BANK" means PNC Bank, National Association or such other
financial institution as may be designated from time to time by Buyer.
"CODE" means the Internal Revenue Code of 1986, as amended.
"EBITDA" means, for any period, the Company's consolidated net
income for such period, PLUS, to the extent (but only to the extent) deducted in
determining such consolidated net income (A) income tax expense, (B) interest
expense for indebtedness for borrowed money, (C) depreciation expense and (D)
amortization expense, MINUS to the extent (but only to the extent) added in
determining such consolidated net income (Y) interest income and (Z)
extraordinary or nonrecurring items of income or gain. EBITDA shall be
determined first, in accordance with GAAP and second, in a manner consistent
with the accounting methods and practices used by the Company in preparing the
Financial Statements.
"ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all federal,
state, 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 without limitation all those 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 or otherwise
regulated materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation as in effect
prior to or on the Closing Date.
"ENVIRONMENTAL LIEN" means a lien, either recorded or
unrecorded, in favor of any governmental entity, relating to any liability of
the Company arising under Environmental and Safety Requirements.
"GAAP" means United States generally accepted accounting
principles, in effect from time to time.
-38-
"INDEBTEDNESS" means at a particular time, without
duplication, (i) any indebtedness for borrowed money or issued in substitution
for or exchange of indebtedness for borrowed money, (ii) any indebtedness
evidenced by any note, bond, debenture or other debt security, (iii) any
indebtedness for the deferred purchase price of properties or services with
respect to which a 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 which are not more than six months past due),
(iv) any commitment by which a Person assures a creditor against loss (including
contingent reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including guarantees in the
form of an agreement to repurchase or reimburse), (vi) any obligations under
capitalized leases with respect to which a Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or with respect to which
obligations a Person assures a creditor against loss, (vii) any indebtedness
secured by a lien on a Person's assets and (viii) any unsatisfied obligation for
"withdrawal liability" to a "multiemployer plan" as such terms are defined under
ERISA.
"INTELLECTUAL PROPERTY" means all of the following items owned
by, issued to or licensed to, the Company, along with all income, royalties,
damages and payments due or payable at the Closing or thereafter, including,
without limitation, damages and payments for past, present or future
infringements or misappropriations thereof, the right to xxx and recover for
past infringements or misappropriations thereof and any and all corresponding
rights that, now or hereafter, may be secured throughout the world: patents,
patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice) and any reissue,
continuation, continuation-in-part, division, revision, extension or
reexamination thereof; trademarks, service marks, trade dress, logos, Internet
domain names, trade names and corporate names together with all goodwill
associated therewith; registered or unregistered copyrights and copyrightable
works and mask works; all registrations, applications and renewals for any of
the foregoing; trade secrets and confidential information (including, without
limitation, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data, financial,
business and marketing plans, and customer and supplier lists and related
information); computer software and software systems (including, without
limitation, data, databases and related documentation); licenses or other
agreements to or from third parties regarding the foregoing; and all copies and
tangible embodiments of the foregoing (in whatever form or medium), in each case
including, without limitation, the items set forth on SCHEDULE 4.13.
"MANAGEMENT BONUS AMOUNT" means the aggregate amount of
bonuses paid to the Management Employees for the period from Closing through
March 31, 2000 pursuant to employment agreements between the Company and each
Management Employee, excluding the amount of the Closing Bonuses.
-39-
"MANAGEMENT EMPLOYEES" means Adams, Baisey, Beckett, Parker,
Xxxx and Xxxxxxx Xxxxxxx.
"MATERIAL ADVERSE CHANGE" means a material adverse change in
the business, assets, operations, financial condition, operating results,
earnings, customer or supplier relations, employee or sales representative
relations or business prospects of the Company.
"MATERIAL ADVERSE EFFECT" means an adverse effect upon the
business, assets, operations, financial condition, operating results, earnings,
customer or supplier relations, employee or sales representative relations or
business prospects of the Company that has a reasonable likelihood of resulting
in a Loss to the Company of at least $750,000.
"ORDINARY COURSE OF BUSINESS" means in the ordinary course of
business consistent with past custom and practice.
"PERSON" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, limited liability company, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock 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 (ii) if a partnership, limited liability company, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is 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 hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association or
other business entity if such Person or Persons shall be allocated a majority of
the partnership, association or other business entity gains or losses or shall
be or control the general partner, managing member or similar person with
management control of such partnership, limited liability company, association
or other business entity.
"TAX" or "TAXES" means any federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property, capital stock,
social security, unemployment, disability, payroll, license, employee or other
withholding and other tax, of any kind whatsoever, including any interest,
penalties or additions to tax or additional amounts in respect of the foregoing.
40
"TAX RETURNS" means returns, declarations, reports, claims for
refund, 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.
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 Buyer and Seller. 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, three days after mailed by first
class mail, return receipt requested, or one day after being delivered by
express courier service or when telecopied (with hard copy to follow). Notices,
demands and communications to the Company, Seller and Buyer shall, unless
another address is specified in writing, be sent to the address or telecopy
number indicated below:
-41-
NOTICES TO THE SELLER: WITH A COPY TO:
(which shall not constitute notice to the Company):
Xx. Xxxxxxx X. Xxxxx
2708 Jeannes Trail Xxxx Xxxxxxxxx, Esq.
Xxxxxx, XX 00000 Linn & Neville
Telecopy: (405) 348-2684 000 Xxxxxx X. Xxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Telecopy: (000) 000-0000
NOTICES TO BUYER OR COMPANY: WITH A COPY TO:
(which will not constitute notice to Buyer)
First Chicago Equity Capital
Three First National Plaza Xxxxxxxx & Xxxxx
Suite 1210 000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxxxxxxx Attn: Xxx X. Xxxx
Xxxx X. Xxxxxxx, Xx. E. Xxxx Xxxxx
Telecopy: (000) 000-0000 Telecopy: (000)000-0000
11.3 BINDING AGREEMENT; ASSIGNMENT.
(a) 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 the Company
or Seller without the prior written consent of Buyer, or by Buyer (except as
provided below) without the prior written consent of Seller. Notwithstanding the
foregoing:
(i) Buyer may (at any time prior to the Closing), at its sole
discretion, assign, in whole or in part, its rights and obligations
pursuant to this Agreement to one or more of its wholly-owned
Subsidiaries (Buyer's "wholly-owned Subsidiaries" include Subsidiaries
which may be organized or acquired subsequent to the date hereof);
PROVIDED THAT Buyer shall continue to be obligated to perform its
obligations under this Agreement if the wholly-owned Subsidiary is
unable to perform;
(ii) Buyer may assign its rights under this Agreement for
collateral security purposes to any lenders providing financing to
Buyer, the Company or any of their Affiliates, and any such lender may
exercise all of the rights and remedies of the Buyer hereunder; and
-42-
(iii) Buyer may assign its rights under this Agreement, in
whole or in part, to any subsequent purchaser of the Company or any
of its divisions 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. The term "including" is used herein to introduce one or more
examples and shall not be deemed to constitute a limitation of any term or
provision hereof.
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 caption 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 substantive and procedural 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.
-43-
11.11 WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (EACH PARTY
HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), AND SUBJECT TO SECTION 9.12 ABOVE,
EACH PARTY EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR
PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREIN.
11.12 CONSENT TO JURISDICTION. THE PARTIES AGREE THAT
JURISDICTION AND VENUE IN ANY ACTION BROUGHT BY ANY PARTY PURSUANT TO THIS
AGREEMENT SHALL PROPERLY (BUT NOT EXCLUSIVELY) LIE IN ANY FEDERAL COURT LOCATED
IN XXXX COUNTY, ILLINOIS OR OKLAHOMA COUNTY, OKLAHOMA. BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH
COURTS FOR HIMSELF OR ITSELF AND IN RESPECT OF HIS OR ITS PROPERTY WITH RESPECT
TO SUCH ACTION. THE PARTIES IRREVOCABLY AGREE THAT VENUE WOULD BE PROPER IN SUCH
COURT, AND HEREBY WAIVE ANY OBJECTION THAT SUCH COURTS ARE AN IMPROPER OR
INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH ACTION. THE PARTIES FURTHER AGREE
THAT THE MAILING BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, OF
ANY PROCESS REQUIRED BY ANY SUCH COURTS SHALL CONSTITUTE VALID AND LAWFUL
SERVICE OF PROCESS AGAINST THEM, WITHOUT NECESSITY FOR SERVICE BY ANY OTHER
MEANS PROVIDED BY STATUTE OR RULE OF COURT.
11.13 XXXX.XXX GUARANTEE. Xxxx.xxx guarantees the prompt
payment and performance of all of the obligations of Buyer hereunder.
* * * * *
-44-
IN WITNESS WHEREOF, the Parties have executed this Stock
Purchase Agreement as of the date first written above.
CLS ACQUISITION CORP.
By: _______________________________
Its: ______________________________
CAPITAL LAND SERVICES, INC.
By: _______________________________
Its:_______________________________
XXXXXXX X. XXXXX 1997 REVOCABLE TRUST
U/T/A DATED JUNE 12, 1997
By: ________________________________
Xxxxxxx X. Xxxxx, Trustee
By:_________________________________
Xxxxxxx X. Xxxxx, Trustee
____________________________________
Xxxxxxx X. Xxxxx, individually
XXXX.XXX, INC.
(with respect to Section 11.13 only)
By:_________________________________
Its:________________________________
-45-
