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EXHIBIT 2.6
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ASSET PURCHASE AGREEMENT
by and among
XXXXX/XXXXXX, INC.
and
XXXXX/XXXXXX HOLDINGS, INC.
and
XXXXXXXXX & XXXXXXX COMPANY,
XXXXX XXXXXXXX and XXXXXX XXXXXXXX
November 16,1998
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TABLE OF CONTENTS
ARTICLE 1
PURCHASE AND SALE OF ASSETS ................................................ 1
1.1 Purchased Assets ................................................. 1
1.2 Excluded Assets .................................................. 4
1.3 Assumption of Liabilities ........................................ 4
1.4 Excluded Liabilities ............................................. 4
1.5 Payment of Commissions and Fees .................................. 4
ARTICLE 2
CONSIDERATION FOR THE PURCHASED ASSETS ..................................... 5
2.1 Purchase Price ................................................... 5
2.2 Required Cash Amount Adjustment .................................. 5
2.3 Procedures for Final Determination of Required Cash Amount ....... 5
2.4 Required Cash Amount Definition .................................. 6
2.5 Holdings Stock ................................................... 6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES SELLER AND SHAREHOLDERS ..................... 7
3.1 Organization and Power ........................................... 7
3.2 Subsidiaries ..................................................... 8
3.3 Authorization; No Breach ......................................... 8
3.4 Financial Statements ............................................. 8
3.5 Absence of Undisclosed Liabilities ............................... 8
3.6 No Material Adverse Changes ...................................... 9
3.7 Absence of Certain Developments .................................. 9
3.8 Title and Condition of Properties ................................ 10
3.9 Tax Matters ...................................................... 11
3.10 Contracts and Commitments ........................................ 13
3.11 Proprietary Rights ............................................... 15
3.12 Litigation; Proceedings .......................................... 15
3.13 Brokerage ........................................................ 15
3.14 Governmental Consent, etc ........................................ 15
3.15 Employees ........................................................ 15
3.16 Employee Benefit Plans ........................................... 16
3.17 Insurance ........................................................ 18
3.18 Affiliated Transactions .......................................... 18
3.19 Compliance with Laws; Permits; Certain Operations ................ 18
3.20 Environmental Health and Safety .................................. 18
3.21 Product and Warranty Claims; Warranties .......................... 19
3.22 Disclosure ....................................................... 20
3.23 Closing Date ..................................................... 20
3.24 Name Change ...................................................... 20
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASERS ............................... 20
4.1 Corporate Organization and Power ................................. 20
4.2 Authorization .................................................... 21
4.3 No Violation ..................................................... 21
4.4 Litigation ....................................................... 21
4.5 Closing Date ..................................................... 21
4.6 Brokerage ........................................................ 21
4.7 Capitalization ................................................... 21
4.8 Governmental Consent, etc ........................................ 22
4.9 Disclosure ....................................................... 22
ARTICLE 5
CONDITIONS TO PURCHASERS' OBLIGATION TO CLOSE .............................. 22
5.1 Conditions to Purchasers' Obligation ............................. 22
ARTICLE 6
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE ................................. 24
6.1 Conditions to the Seller's Obligations ........................... 24
ARTICLE 7
CLOSING TRANSACTIONS ....................................................... 24
7.1 The Closing ...................................................... 24
7.2 Action to Be Taken at the Closing ................................ 25
7.3 Closing Documents ................................................ 25
7.4 Nonassignable Contracts .......................................... 27
ARTICLE 8
INDEMNIFICATION ............................................................ 27
8.1 Indemnification by Seller and Shareholders ....................... 27
8.2 Indemnification by Purchasers .................................... 27
8.3 Method of Asserting Claims ....................................... 28
8.4 Survival; Limitations on Liability ............................... 29
ARTICLE 9
TERMINATION ................................................................ 29
9.1 Termination ...................................................... 29
9.2 Effect of Termination ............................................ 30
9.3 Effect of Closing ................................................ 30
ARTICLE 10
ADDITIONAL AGREEMENTS ...................................................... 30
10.1 Survival ......................................................... 30
10.2 Mutual Assistance ................................................ 30
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10.3 Press Release and Announcements .................................. 30
10.4 Expenses ......................................................... 31
10.5 Further Transfers ................................................ 31
10.6 Transition Assistance ............................................ 31
10.7 Confidentiality .................................................. 31
10.8 Non-Compete; Non-Solicitation .................................... 31
10.9 Remittances ...................................................... 32
10.10 Best Efforts To Consummate Closing Transactions .................. 32
10.11 Employees and Agents of Seller ................................... 32
10.12 Certain Understandings ........................................... 33
ARTICLE 11
MISCELLANEOUS .............................................................. 33
11.1 Amendment and Waiver ............................................. 33
11.2 Notices .......................................................... 33
11.3 Assignment ....................................................... 34
11.4 Severability ..................................................... 34
11.5 No Third Party Beneficiaries ..................................... 35
11.6 No Strict Construction ........................................... 35
11.7 Captions ......................................................... 35
11.8 Complete Agreement ............................................... 35
11.9 Counterparts ..................................................... 35
11.10 Governing Law .................................................... 35
11.11 Remedies Cumulative .............................................. 35
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EXHIBITS
Exhibit A -- Allocation of Purchase Price
Exhibit B -- Opinion of Seller's Counsel
Exhibit C -- Form of Non-Compete Agreement
Exhibit D -- Form of Investment Letter
Exhibit E -- Opinion of Purchasers' Counsel
Exhibit F -- Officer's Certificate of Seller
Exhibit G -- Officer's Certificate of Purchasers
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DISCLOSURE SCHEDULES
Schedule 1.1(a) -- Required Cash Amount Schedule
Schedule 1.1(b) -- Accounts Receivable Schedule
Schedule 1.1(e) -- Xxxxxxxxx Real Estate Schedule
Schedule 1.1(f) -- Tangible Property Schedule
Schedule 1.1(g) -- Assumed Insurance Schedule
Schedule 1.1(i) -- Intellectual Property Schedule
Schedule 1.1(k) -- Retained Commissions Schedule
Schedule 1.1(m) -- Customer List Schedule
Schedule 1.2 -- Excluded Asset Schedule
Schedule 3.1 -- Qualifications Schedule
Schedule 3.3 -- Breach of Agreements Schedule
Schedule 3.7 -- Developments Schedule
Schedule 3.8(b) -- Leases Schedule
Schedule 3.9 -- Tax Matters Schedule
Schedule 3.10(a) -- Contracts Schedule
Schedule 3.10(d) -- Customer Contracts Schedule
Schedule 3.11 -- Proprietary Rights Schedule
Schedule 3.12 -- Litigation Schedule
Schedule 3.14 -- Consents Schedule
Schedule 3.16 -- Employee Benefits Schedule
Schedule 3.17 -- Insurance Schedule
Schedule 3.18 -- Affiliated Transactions Schedule
Schedule 3.19(a) -- Compliance Schedule
Schedule 3.19(b) -- Permits Schedule
Schedule 3.21 -- Claims Schedule
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT is entered into as of November 16, 1998 (this
"Agreement") to be effective November 1, 1998 (the "Effective Date") by and
among XXXXX/XXXXXX, INC., a Delaware corporation ("CBI"), XXXXX/XXXXXX HOLDINGS,
INC., a Delaware corporation ("Holdings") (CBI and Holdings shall be
individually referred to as "Purchaser" and collectively be referred to as
"Purchasers"), XXXXXXXXX & XXXXXXX COMPANY, a Texas corporation ("Seller"),
XXXXX XXXXXXXX ("Xxxxx") and XXXXXX XXXXXXXX ("Xxxxxx") (Xxxxx and Xxxxxx are
collectively referred to as the "Shareholders").
WITNESSETH
WHEREAS, the Seller is engaged in the sale of life, disability or long-term
care insurance or administrative or consulting services made where a corporation
or other business organization is either the owner of the insurance policies or,
directly or indirectly, the payor of a majority of the premium or administrative
or consulting fees and the purpose or result of the sale is to fund, finance,
study or administer an executive or employee benefit plan (the "Business")
provided, Business does not include group term life insurance or sales to
qualified plans; and
WHEREAS, on the terms and subject to the conditions of this Agreement,
Purchasers desire to acquire from Seller and Seller desires to sell to
Purchasers, a substantial portion of the assets, properties and Business of the
Seller as a going concern.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchased Assets. On the terms and subject to the conditions of this
Agreement, on the Closing Date (as defined in Section 7.1), Purchasers shall
purchase from Seller, and Seller shall sell, convey, assign, transfer and
deliver to each Purchaser in proportion to the consideration paid by such
Purchaser for the Purchased Assets, all properties, assets, rights and interests
of every kind and nature, whether real or personal, tangible or intangible, and
wherever located and by whomever possessed, of Seller as of the Effective Date
related to or used in, or otherwise associated with, the Business, including,
without limitation, all of the following assets (but excluding all Excluded
Assets as defined in Section 1.2 hereof):
(a) cash, cash equivalents and marketable securities having the
aggregate value equal to the amounts provided for on Schedule 1.1(a) (the
"Required Cash Amount");
(b) all accounts and notes receivable (whether current or noncurrent),
a list, description and aging of which as of the date hereof is set forth on
Schedule 1.1 (b);
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(c) all prepayments, prepaid expenses (including, without limitation,
prepaid insurance premiums), deferred charges, advance payments and security
deposits as of the Effective Date and the Closing Date;
(d) all inventories and related supplies located at Seller's
facilities, in transit to or from Seller's facilities or which otherwise relate
to the Business (the "Inventory");
(e) all interests in real estate (including, without limitation, land,
buildings, improvements and that certain security deposit of Nine Thousand Seven
Hundred Ninety-Seven and 29/100 dollars ($9,797.29) pursuant to that certain
Lease Agreement dated as of February 13, 1997 between PL Properties Associates,
L.P. and Xxxxxxxxx & Xxxxxxx Company (the "Lease Agreement")), whether owned in
fee, leased or otherwise, including but not limited to, the interests listed on
Schedule 1.1(e) (collectively, the "Xxxxxxxxx Real Estate") and all licenses,
permits, approvals and qualifications relating to the Xxxxxxxxx Real Estate;
(f) all interests in machinery and equipment, fixtures, fittings,
furniture, tools, fixtures, spare parts and supplies and other tangible personal
property, whether owned, leased or otherwise (including, without limitation,
items which have been fully depreciated or expensed), including, without
limitation, such items as set forth on Schedule 1.1(f);
(g) all insurance, insurance reserves and deposits, including, without
limitation, such items as set forth on Schedule 1.1(g);
(h) all office furnishings and related assets;
(i) all intangible assets and intellectual property (including, without
limitation, registered and unregistered trademarks, service marks and trade
names, trade dress and other names, marks and slogans, including the right to
use the name "Xxxxxxxxx & Xxxxxxx Company" and all variations and permutations
thereof), all publishing and distribution rights, and all associated goodwill;
all statutory, common law and registered copyrights; all patents, inventions,
shop rights, know-how and trade secrets; all registration applications for any
of the foregoing; all interests in and to telephone numbers and all listings
pertaining to Seller in all telephone books and other directories; together with
all rights to use all of the foregoing forever and all other rights in, to, and
under the foregoing in all countries, including, without limitation, such items
as set forth on Schedule 1.1(i);
(j) all discoveries, improvements, processes, data, confidential
information, specifications and ideas, whether patentable or not, all licenses
and other similar agreements, and all drawings, records, books or other indicia,
however evidenced, of the foregoing; all rights in and to any products or other
intellectual property rights under research or development prior to or on the
Closing Date related to the Business;
(k) all rights existing under contracts, leases, licenses, permits,
supply and distribution arrangements, sales and purchase agreements and orders,
employee benefit plans, trusts and other arrangements, employment and consulting
agreements, consignment arrangements, warranties, consents, orders,
registrations, privileges, franchises, memberships, certificates,
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approvals or other similar rights and all other agreements, arrangements and
understandings, including, without limitation, all rights existing under the
contracts listed on the Contracts Schedule and Customer Contracts Schedule (as
defined in Section 3.10 hereto) except for a twenty-five percent (25%) interest
in the second and subsequent year commissions, asset management, client,
service, and any other fees and revenues paid or generated under those certain
contracts listed on Schedule 1.1(k) hereto, which interest will be retained by
Seller (the "Retained Commissions");
(1) the right to receive all mail and other communications addressed to
Xxxxxxxxx & Xxxxxxx (including, without limitation, mail and communications from
customers, suppliers, distributors, agents and others and accounts receivable
payments), provided that CBI agrees to forward any such mail and communications
and accounts receivable payments that are to Seller not related to the Business
or related to the Excluded Assets or of a personal nature to any officer or
employee of Seller to which it pertains promptly after receipt;
(m) all lists, records and files pertaining to present customers
referenced in Schedule 1 1(m) and all past customers;
(n) all lists, records, books, ledgers, files, documents,
correspondence, business analysis, illustrations, proposals and records of every
kind and nature pertaining to suppliers, distributors, personnel, customers and
agents related to the Business;
(o) all business and marketing plans and proposals and pricing and cost
information;
(p) all computer software and systems, including licenses related
thereto, proprietary or otherwise, including related source codes, data and
documentation;
(q) all creative materials (including, without limitation, photographs,
films, art work, color separations and the like) advertising and promotional
materials and all other printed or written materials;
(r) all goodwill associated with the Xxxxxxxxx & Xxxxxxx name and all
other intangible property except such goodwill or other intangible property as
described on Schedule 1.2 hereto; and
(s) all other property not referred to above which is either
represented on Seller's balance sheet dated November 1, 1998 or acquired by
Seller thereafter (except for Excluded Assets or such property which has been
sold or otherwise disposed of in the ordinary course of business) related to the
Business.
For purposes of the Agreement, the term "Purchased Assets" means all properties,
assets and rights which Seller shall convey to Purchasers or shall be obligated
to convey to Purchasers under this Agreement.
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1.2 Excluded Assets. Notwithstanding the foregoing, the following assets
(the "Excluded Assets") are expressly excluded from the purchase and sale
contemplated hereby and, as such, are not included in the Purchased Assets:
(a) cash and marketable securities other than the Required Cash Amount;
(b) those certain assets listed on Schedule 1.2 hereto,
(c) all tax returns and related workpapers and correspondence;
(d) all financial and accounting records and related workpapers and
correspondence; and
(e) the minute books, capital stock records, articles of incorporation,
by-laws and corporate seal of Seller, together with annual and other corporate
reports filed with the State of Texas and other states in which the Seller is
qualified to do business, other documents and correspondence that relate to
Seller's corporate organization and maintenance thereof.
1.3 Assumption of Liabilities. Subject to the conditions specified in this
Agreement, on the Closing Date, Purchasers shall assume and agree to pay,
defend, discharge and perform as and when due only the following liabilities and
obligations of Seller (the "Assumed Liabilities"):
(a) Seller's obligations and liabilities under the contracts listed on
the Contracts Schedule (Schedule 3.10(a)) and on the Customer Contract Schedule
(Schedule 3.10(d)) for any activity following the Closing Date;
(b) obligations of continued performance under executory vendor
purchase orders for the purchase of supplies, equipment or services entered into
in the ordinary course of business and under which the supplies, equipment or
services subject thereto have not been received by the Seller prior to the
Closing Date (the "Vender Orders"); and
(c) accrued payroll vacation and other benefits of employees of the
Seller generated in the ordinary course of business to the extent reflected on
the Required Cash Amount Schedule (Schedule 1.1(a)).
1.4 Excluded Liabilities. Notwithstanding anything to the contrary
contained in this Agreement, Purchasers shall not assume or be liable for any
liabilities or obligations of Seller other than the Assumed Liabilities and all
such other liabilities or obligations shall be the responsibility of the Seller
(the "Excluded Liabilities").
1.5 Payment of Commissions and Fees. Purchasers and Seller agree that the
parties shall direct each applicable insurance company to pay directly to the
Seller the Retained Commissions and pay all other fees and commissions related
to the Purchased Assets directly to CBI (the "CBI Commissions"). If for any
reason CBI receives the Retained Commissions, CBI shall pay the Seller its share
of the commissions within seven (7) days after CBI's receipt of the commissions
from the
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respective insurer. If for any reason Seller receives the CBI Commissions,
Seller shall pay CBI its share of the commissions within seven (7) days after
Seller's receipt of the commissions from the respective insurer.
ARTICLE 2
CONSIDERATION FOR THE PURCHASED ASSETS
2.1 Purchase Price. The aggregate purchase price for the Purchased Assets
shall be an amount equal to Six Million and no/100 Dollars ($6,000,000) (the
"Purchase Price") which shall be payable to Seller or its designees on the
Closing Date, subject to terms hereof, as follows:
(a) payable by CBI, by wire transfer of immediately available funds to
such account or accounts as shall have been designated in writing by Seller not
less than three (3) days prior to the Closing Date in an amount equal to Four
Million and no/100 Dollars ($4,000,000), as adjusted pursuant to Section 2.2
hereof; and
(b) payable by Holdings, One Hundred Forty-Two Thousand Eight Hundred
Fifty-Seven (142,857) shares of Holdings' common stock (the "Common Stock
Consideration") valued in the aggregate at Two Million and no/100 Dollars
($2,000,000), based upon the most current closing price of Holdings' common
stock as quoted on the NASDAQ national market (the "Holdings Stock"). At the
direction of the Seller, the Holdings Stock shall be issued one-half each in the
names of Xxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx. Xxxxx and Xxxxxx hereby agree to
hold the stock for one (1) year from the date hereof and thereafter comply with
Section 2.5 hereof. The parties hereto agree that the Common Stock Consideration
shall be delivered pursuant hereto on or before November 25, 1998.
The Purchase Price shall be allocated among the Purchased Assets as set
forth in Exhibit A attached hereto. The parties agree that the allocation set
forth in Exhibit A shall be used by them and respected for all purposes,
including income tax purposes if in conformance with the rules and regulations
of the Internal Revenue Code of 1986, as amended (the "Code"), and that the
parties shall follow such allocation for all reporting purposes, including,
without limitation, Internal Revenue Service ("IRS") Form 8594.
2.2 Required Cash Amount Adjustment. Within three (3) days prior to the
Closing, Seller shall notify Purchaser in writing of its good faith estimate of
the Required Cash Amount (as defined in Section 1.1 herein) as of the Effective
Date based on a schedule prepared by Seller as of the Effective Date (the
"Estimated Required Cash Amount"). Within three (3) business days after the
final determination of the Required Cash Amount pursuant to Section 2.3 below,
Seller shall pay Purchasers an amount equal to the excess of the Required Cash
Amount over the Estimated Required Cash Amount by wire transfer of immediately
available funds.
2.3 Procedures for Final Determination of Required Cash Amount. Within
thirty (30) days after the Closing Date, CBI shall prepare and deliver to Seller
at CBI's expense a statement setting forth CBI's determination of the Required
Cash Amount. Within thirty (30) days after
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receipt thereof, Seller shall deliver to CBI a detailed written statement
describing its objections, if any, to such balance sheet and determination of
the Required Cash Amount. If Seller does not raise any objections within the
thirty (30) day period, CBI's determination of the Required Cash Amount shall
become final and binding upon all parties. Upon request by Seller at any time
after receipt of the aforementioned statement, CBI shall make available to
Seller and its accountants and other representatives the work papers used in
determining CBI's calculation of the Required Cash Amount and such other
documents as Seller may reasonably request in connection with their review of
the Required Cash Amount. If Seller does raise any objections, CBI and Seller
shall use reasonable efforts to resolve any such disputes. If a final resolution
is not obtained within thirty (30) days after Seller shall have submitted their
objections to CBI, any remaining disputes shall be resolved by an accounting
firm mutually agreeable to CBI and Seller. If CBI and Seller are unable to
mutually agree on such an accounting firm within five (5) days after the
expiration of said thirty (30) day period, a "big-five" accounting firm shall be
selected by lot after elimination of one firm designated as objectionable by
each of CBI and Seller. The determination of the accounting firm so selected
shall be set forth in writing and shall be conclusive and binding upon the
parties, and the fees and expenses of such accounting firm shall be paid
one-half by CBI and one-half by Seller. The statement setting forth the final
determination of the Required Cash Amount shall be dated effective November 1,
1998.
2.4 Required Cash Amount Definition. For purposes hereof, "Required Cash
Amount" shall be determined as of the opening of business on the Effective Date
and shall be cash in an amount equal to the Seller's accrued liabilities
including, but not limited to, accrued payroll, accrued vacation, other benefits
of employees and other accrued expenses, as detailed on Schedule 1.1 (a) at such
time in excess of the sum of the accounts receivable and other tangible assets
included in the Purchased Assets, excluding any equipment or other furniture and
fixtures, as detailed on Schedule 1.1(a).
2.5 Holdings Stock. Holdings shall issue the Holdings Stock to Xxxxx and
Xxxxxx subject to the conditions and restrictions set forth in this Section 2.5.
(a) During the period (the "Restriction Period") beginning on the
Closing Date and ending on the one (1) year anniversary of the Closing Date,
Xxxxx and Xxxxxx shall not sell, assign, exchange, transfer, distribute or
otherwise dispose of (in each case, a "transfer") any shares of Holdings Stock
received by such parties hereunder. Following the Restriction Period, Xxxxx and
Xxxxxx may transfer their shares of Holdings Stock so long as such transfer is
in accordance with the Securities Act of 1933, as amended. The certificates
evidencing the Holdings Stock delivered to Xxxxx and Xxxxxx, pursuant to this
Agreement shall bear a legend substantially in the form set forth below:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
ASSIGNED (OTHER THAN IN CONNECTION WITH A PLEDGE), EXCHANGED,
TRANSFERRED, DISTRIBUTED, CHANGED OR OTHERWISE DISPOSED OF, AND THE
ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
ASSIGNMENT (OTHER
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THAN IN CONNECTION WITH A PLEDGE), EXCHANGE, TRANSFER,
DISTRIBUTION, OR OTHER DISPOSITION, OTHER THAN IN ACCORDANCE WITH
SECTION 2.5 OF THAT CERTAIN ASSET PURCHASE AGREEMENT DATED AS OF
NOVEMBER __, 1998, BY AND AMONG ISSUER, XXXXX/XXXXXX, INC.,
XXXXXXXXX & XXXXXXX COMPANY, XXXXX XXXXXXXX AND XXXXXX XXXXXXXX.
(b) Neither Xxxxx nor Xxxxxx shall transfer any shares of the Holdings
Stock at any time if such transfer would constitute a violation of any federal
or state securities or "blue sky" laws, rules or regulations (collectively,
"Securities Laws"), or a breach of the conditions to any exemption from
registration of the Holdings Stock under any such Securities Laws, or a breach
of any undertaking or agreement of either Xxxxx or Xxxxxx entered into with
Holdings pursuant to such Securities Laws or in connection with obtaining an
exemption thereunder.
(c) For purposes of this Agreement (and the restrictions set forth in
this Section 2.5), the term "Holdings Stock" shall mean and include (i) the
shares of Holdings issued, granted, conveyed and delivered to Xxxxx and Xxxxxx
pursuant to Section 2.1 hereof, and (ii) any and all other additional shares of
capital stock of Holdings issued or delivered by Holdings with respect to the
shares of Holdings Stock described in clause (i) hereof, including without
limitation any shares of capital stock of Holdings issued or delivered with
respect to such shares as a result of any stock split, stock dividend, stock
distribution, recapitalization or similar transaction.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
SELLER AND SHAREHOLDERS
As an inducement to Purchasers to enter into this Agreement, Seller and the
Shareholders hereby, jointly and severally, represent and warrant to Purchasers
as of the Effective Date and as of the Closing Date that:
3.1 Organization and Power. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Texas. Seller is qualified to do
business as a foreign corporation and is in good standing in the jurisdictions
specified on the "Qualifications Schedule" attached hereto as Schedule 3.1,
which are all jurisdictions in which ownership of its properties or the conduct
of its business requires it to be so qualified, except where the failure to do
so would not have a Material Adverse Effect. For purposes of this Agreement,
"Material Adverse Effect", as it relates to Seller, means any material adverse
effect on (a) the financial condition, credit, business, prospects, properties
or operations of the Seller, or (b) the ability of the Seller to perform its
obligations under this Agreement. Seller has all requisite power and authority
and all material licenses, permits and other authorizations necessary to own and
operate its properties and to carry on its business as now conducted as they
relate to the Business. The copies of the certificate of incorporation and
by-laws of Seller which have been previously furnished to Purchasers reflect all
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amendments made thereto at any time prior to the date of this Agreement and are
correct and complete in all material respects.
3.2 Subsidiaries. Seller owns no stock, partnership interest, joint venture
interest or other security or interest in any other corporation, organization or
entity related to the Business which is not listed as an Excluded Asset.
3.3 Authorization; No Breach. The execution, delivery and performance of
this Agreement and the other agreements contemplated hereby and the transactions
contemplated hereby and thereby have been duly and validly authorized by Seller.
No other corporate act or proceeding on the part of Seller, its Board of
Directors or its shareholders is necessary to authorize the execution, delivery
or performance of this Agreement, any other agreement contemplated hereby or the
consummation of the transactions contemplated hereby or thereby. This Agreement
has been duly executed and delivered by Seller and the Shareholders and this
Agreement constitutes and the other agreements contemplated hereby upon
execution and delivery by Seller and the Shareholders shall each constitute, a
valid and binding obligation of Seller, enforceable in accordance with their
terms. Except as disclosed on Schedule 3.3, the execution, delivery and
performance of this Agreement and the other agreements contemplated hereby by
Seller and the Shareholders and the consummation of the transactions
contemplated hereby and thereby do not and shall not (a) conflict with or result
in any breach of any of the provisions of, (b) constitute a default under,
result in a violation of, or cause the acceleration of any obligation under, (c)
result in the creation of any lien, security interest, charge or encumbrance
upon any of the Purchased Assets under, or (d) require any authorization,
consent, approval, exemption or other action by or notice to any court or other
governmental body under the provisions of Seller's certificate of incorporation,
by-laws, any indenture, mortgage, lease, loan agreement or other agreement or
instrument to which Seller or the Shareholders are bound or affected.
3.4 Financial Statements. Seller has furnished CBI with copies of its (a)
audited balance sheet as of December 31, 1997 (the "Latest Balance Sheet") and
the related audited financial statements for the twelve-month period then ended,
(b) audited balance sheets as of December 3 1, 1996, December 31, 1995 and
December 31, 1994 and the related audited financial statements for the fiscal
years then ended, (c) unaudited financial statements as at and for the
nine-month period ended September 30, 1998, and (d) unaudited income statement
and balance sheet through the Closing Date. Each of the foregoing financial
statements has been based upon the information contained in Seller's books and
records (which are accurate and complete in all material respects) and fairly
presents the financial condition and results of operations of Seller as of the
times and for the periods referred to therein, and such financial statements
contain proper accruals and adequate reserves and have been prepared in
accordance with the income tax method of accounting, consistently applied
throughout the periods indicated, except as otherwise noted therein.
3.5 Absence of Undisclosed Liabilities. As of the Closing, Seller shall
have no liabilities or obligations whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due, arising out of or
related to transactions entered into at or prior to the Closing, or out of any
action or inaction by Seller or any employee, agent, licensee or contractor of
any of them at or prior to the Closing, or out of any state of facts existing at
or prior to the Closing, regardless of
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when any such liability or obligation is asserted, including, without
limitation, taxes with respect to or based upon transactions or events occurring
on or before the Closing, except (a) liabilities and obligations under
agreements, contracts, leases or commitments described on the Leases Schedule
(as defined in Section 3.8(b) hereof) and the Contracts Schedule and the
Customer Contracts Schedule (as such terms are defined in Section 3. 10 hereof)
or under agreements, leases, contracts and commitments which are not required
pursuant to this Agreement to be disclosed thereon (but not liabilities for
breaches thereof), (b) liabilities and obligations reflected on Schedule 1.1(a),
and (c) liabilities and obligations which have arisen after the Effective Date
in the ordinary course of business (none of which is a liability for breach of
contract, breach of warranty, tort, infringement, claim or lawsuit).
3.6 No Material Adverse Changes. Since the date of the Latest Balance
Sheet, there has been no material adverse change in the financial condition,
operating results, assets, operations, employee relations, customer relations or
business prospects of Seller.
3.7 Absence of Certain Developments. Except as set forth in the
"Developments Schedule" attached hereto as Schedule 3.7 or as otherwise
contemplated hereby, since the date of the Latest Balance Sheet, Seller has not:
(a) borrowed or agreed to borrow any amount or incurred or become
subject to any material liabilities, except current liabilities incurred in the
ordinary course of business and liabilities under contracts entered into in the
ordinary course of business;
(b) discharged or satisfied, or agreed to discharge or satisfy, any
material lien or encumbrance or paid any material liability, other than current
liabilities paid in the ordinary course of business;
(c) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any portion of the Purchased Assets, except liens for current
property taxes not yet due and payable;
(d) sold, assigned or transferred, or agreed to do so, any of the
Purchased Assets, except in the ordinary course of business, or canceled without
fair consideration any material debts or claims owing to or held by it;
(e) sold, assigned, transferred, abandoned or permitted to lapse any
patents, trademarks, trade names, copyrights, trade secrets or other intangible
assets, or disclosed any material proprietary confidential information to any
person;
(f) made or granted, or agreed to make or grant, any bonus or any wage
or salary increase to any employee or group of employees or made or granted any
increase in any employee benefit plan or arrangement (except, in each case, in
accordance with past custom and practice), or amended or terminated, or agreed
to terminate or amend, any existing employee benefit plan or arrangement or
adopted any new employee benefit plan or arrangement; benefit plan or
arrangement;
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(g) made, or agreed to make, any capital expenditures or commitments
therefore that aggregate in excess of $1,000;
(h) made, or agreed to make, any loans or advances to, or guarantees
for the benefit of, any persons;
(i) suffered any extraordinary losses or waived any rights of material
value, whether or not in the ordinary course of business or consistent with past
practice;
(j) entered into, or agreed to enter into, any other material
transaction other than in the ordinary course of business;
(k) made, or agreed to make, any charitable contributions or pledges;
(1) failed to replenish the Seller's supplies in a normal and customary
manner consistent with its prior practice and prudent business practices
prevailing in the industry, or made any purchase commitment in excess of the
normal, ordinary and usual requirements of its business or at any price in
excess of the then current market price or upon terms and conditions more
onerous than those usual and customary in the industry, or made any change in
its selling, pricing, advertising or personnel practice inconsistent with its
prior practice and prudent business practices prevailing in the industry; or
(m) suffered any material damage, destruction or casualty loss to the
Purchased Assets, whether or not covered by insurance.
3.8 Title and Condition of Properties.
(a) The Seller owns no real estate.
(b) The lease described on the "Leases Schedule" attached hereto as
Schedule 3.8(b) (the "Lease") is in full force and effect, and Seller (as
indicated on such schedule) holds a valid and existing leasehold interest under
such lease for the term set forth on the Leases Schedule. The lease described on
the Leases Schedule constitutes the only lease under which Seller holds a
leasehold interest in real estate. Seller has delivered to CBI complete and
accurate copies of the lease described on the Leases Schedule, and such lease
has not been modified in any respect, except to the extent that such
modifications are disclosed by the copies delivered to CBI. Seller is not in
default under such lease, and no other party to such lease has the right to
terminate, accelerate performance under or otherwise modify such lease,
including upon the giving of notice or the passage of time. To the best of
Seller's knowledge, no third party to such lease is in default under such lease.
(c) The real estate demised by the lease described on the Leases
Schedule constitutes all of the real estate presently owned, used or occupied by
Seller in the conduct of the Business.
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(d) Seller owns good and marketable title, free and clear of all liens,
charges, security interests, encumbrances, encroachments and claims of others,
to all of the Purchased Assets, except for leased equipment, for liens of
current taxes not yet due and payable (which shall be prorated) and liens
disclosed on the Latest Balance Sheet ("Permitted Encumbrances"), and all of
such personal property is necessary or useful in the conduct of the Business as
presently conducted by Seller. At the Closing, Seller shall sell, assign,
transfer and convey to CBI by customary Xxxx of Sale good and marketable title
to all of the personal property included within the Purchased Assets, free and
clear of all liens, security interests, charges, encumbrances and claims of
others, other than Permitted Encumbrances.
(e) Seller's buildings, machinery, equipment and other tangible assets
are in good condition and repair in all material respects (other than normal
wear and tear), have been maintained in accordance with normal industry
standards and are usable in the ordinary course of business. Seller owns or
leases under valid leases all buildings, machinery, equipment and other tangible
assets necessary for the conduct of the Business as presently conducted.
(f) Since the commencement of Seller's tenancy under the Lease
Agreement, Seller has received no notice of any violation of any applicable
zoning, building, fire or other ordinance or other law, regulation or
requirement relating to the operation of the leased real property that is the
subject of the Lease Agreement and Seller has not within three years prior to
the date of this Agreement received any such notice with respect to owned or
leased personal property included in the Purchased Assets, including, without
limitation, applicable environmental protection and occupational health and
safety laws and regulations or any condemnation proceeding with respect to any
properties owned, used or leased by Seller.
(g) The Purchased Assets and the Excluded Assets, together with the
services and arrangements described on the Contracts Schedule, comprise all
assets and services required for the continued conduct of the Business by the
Purchasers as now being conducted. The Purchased Assets and the Excluded Assets,
taken as a whole, constitute all the properties and assets relating to or used
or held for use in connection with the Business during the past twelve months
(except supplies utilized, cash disposed of, accounts receivable collected,
prepaid expenses realized, Contracts fully performed, properties or assets
replaced by equivalent or superior properties or assets, in each case in the
ordinary course of business). Except for the Excluded Assets, there are no
assets or properties used in the operation of the Business and owned by any
person other than the Seller that are not included in the Purchased Assets. The
Purchased Assets are in all material respects adequate for the purposes for
which such assets are currently used or are held for use, and are in reasonably
good repair and operating condition (subject to normal wear and tear) and there
are no facts or conditions affecting the Purchased Assets which could,
individually or in the aggregate, interfere in any material respect with the
use, occupancy or operation thereof as currently used, occupied or operated, or
their adequacy for such use.
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3.9 Tax Matters.
(a) Seller has duly filed all federal, foreign, state and local tax
information and tax returns of any and every nature and description (the
"Returns") required to be filed by it (all such returns being accurate and
complete in all respects) and has duly paid or made provision for the payment of
all taxes and other governmental charges (including without limitation any
interest, penalty or additions to tax thereto) which have been incurred or are
shown to be due on said Returns or are claimed in writing to be due from Seller
or imposed on Seller or its properties, assets, income, franchises, leases,
licenses, sales or use, by any federal, state, local or foreign taxing
authorities (collectively, the "Taxes") on or prior to the date hereof, other
than Taxes which are being contested in good faith and by appropriate
proceedings and as to which Seller has set aside on its books adequate reserves
or which may be attributable to the transactions contemplated hereby. The
amounts recorded as reserves for Taxes on a gross or net basis on Schedule 3.9
are sufficient in the aggregate for payment by Seller of all unpaid Taxes
(including any interest or penalties thereon) for the period ended as of the
Effective Date or for any year or period prior thereto. Except as provided for
on Schedule 3.9, neither the IRS nor any state, local or foreign taxing
authority has ever examined any income tax return of the Seller, whether singly
or as a member of an affiliated group. The "Tax Matters Schedule" attached
hereto as Schedule 3.9 sets forth the date or dates since the date of Seller's
incorporation or organization through which any foreign, state, local or other
taxing authority has examined or is in the process of examining any foreign,
state, local or other returns of Seller. Except as set forth on the "Tax Matters
Schedule", (i) neither the IRS nor any foreign, state, local or other taxing
authority is in the process of examining any federal, foreign, state, local or
other tax return of Seller, (ii) there are no disputes pending, or claims
asserted, for Taxes upon Seller, (iii) Seller has not been required to give any
currently effective waivers extending the statutory period of limitation
applicable to any foreign, federal, state or local return or for any period or
agreed to an extension of time with respect to a Tax assessment or deficiency,
(iv) Seller has in effect no power of attorney or authorization to anyone to
represent it with respect to any Taxes, and (v) no claim has ever been made by
an authority in a jurisdiction where the Seller does not file Returns that
Seller is or may be subject to taxation by that jurisdiction. Seller has not
filed any consolidated federal income tax return with an "affiliated group"
(within the meaning of Section 1504 of the Code), where Seller was not the
common parent of the group. Seller is not nor has it been, a party to any tax
allocation agreement or arrangement pursuant to which it has any contingent or
outstanding liability to anyone. Seller has no liability for Taxes as a
transferee of, or successor to, any other person. Seller has not filed a consent
under Section 341(f) of the Code. Seller and the Shareholders have provided to
Purchaser or its representatives complete and correct copies of their respective
federal, state and local income tax returns filed on or prior to the date hereof
and all examination reports, if any, relating to the audit of such returns by
the IRS or other tax authority for each taxable year beginning on or after
January 1, 1992. Except as disclosed in Schedule 3.9, there exists no proposed
assessment against Seller or the Shareholders or notice, whether formal or
informal, of any deficiency or claim for additional Tax (including, without
limitation, interest, additions to tax or penalties).
(b) All monies required to be withheld from employees, independent
contractors, shareholders, or creditors of Seller for Taxes, including, but not
limited to, income taxes, back-up withholding taxes, social security and
unemployment insurance taxes or collected from customers
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or others as Taxes, including, but not limited to, sales, use or other taxes,
have been withheld or collected and paid, when due, to the appropriate
governmental authority, or if such payment is not yet due, an adequate reserve
has been established for such Taxes.
(c) Seller has not made any payments, is obligated to make any
payments, nor is a party to any agreement that could obligate it to make any
payments that will not be deductible under Code Section 280G. Seller has not
been a United States real property holding corporation within the meaning of
Code Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). Seller has not acquired any United States real property
interest, as defined in Code Section 897(c), from a foreign person without
complying with the withholding requirements contained in Code Section 1445.
3.10 Contracts and Commitments.
(a) Except as set forth in Section 3.16 or in the "Contracts Schedule"
attached hereto as Schedule 3.10(a) or in the "Customer Contracts Schedule"
attached hereto as Schedule 3.10(d), Seller is not a party to any:
(i) bonus, pension, profit sharing, retirement or deferred
compensation plan or stock purchase, stock option, hospitalization
insurance or similar plan or practice, whether formal or informal, or
severance agreements or arrangements;
(ii) contract with any labor union or contract for the
employment of any officer, individual employee or other person on a
full-time, part-time or consulting basis;
(iii) mortgaging, pledging or otherwise placing a lien on any of
the Purchased Assets;
(iv) guarantee of any obligation for borrowed money or
otherwise, other than endorsements made for collection in the ordinary
course of business;
(v) agreement or commitment with respect to the lending or
investing of funds to or in other persons or entities;
(vi) license or royalty agreement related to the Business;
(vii) lease or agreement related to the Business under which it
is lessee of or holds or operates any personal property owned by any other
party;
(viii) lease or agreement related to the Business 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;
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(ix) contract or group of related contracts related to the
Business with the same party for the purchase or sale of products or
services other than the Customer Contracts (as defined in Section 3.10(d)
hereof);
(x) other contract related to the Business with any party
continuing over a period of more than six months from the date or dates
thereof, not terminable by it on thirty (30) days' or less notice without
penalties;
(xi) contract which prohibits it from freely engaging in
business anywhere in the world;
(xii) contract relating to the distribution of its products as it
relates to the Business; or
(xiii) other agreements related to the Business whether or not
entered into in the ordinary course of business.
(b) Except as specifically disclosed in the Contracts Schedule or the
Customer Contracts Schedule, (i) no contract or commitment related to the
Business has been breached in any respect by the Seller or to Seller's knowledge
no contract or commitment related to the Business has been breached in any
respect by the other party thereto or canceled by the other party, (ii) since
December 31, 1997, no supplier of the Business has notified Seller that it shall
stop or decrease in any material respect the rate of business done with Seller,
(iii) Seller has in all material respects performed all the obligations required
to be performed by it to the date of this Agreement and is not in receipt of any
claim of default under any material lease, contract, commitment or other
agreement related to the Business to which it is a party; (iv) no event has
occurred which with the passage of time or the giving of notice or both would
result in a breach or default under any lease, contract, instrument or other
agreement related to the Business to which Seller is a party and which is
related to the Business, except for any such event that would not have a
Material Adverse Effect; and (v) Seller is not a party to any contract which is
adverse to the Business's operations, financial condition, operating results or
business prospects.
(c) CBI has been supplied with a true and correct copy of all written
contracts which are referred to on the Contract Schedule and Customer Contracts
Schedule, together with all amendments, waivers or other changes thereto.
(d) Seller has no knowledge of any (i) pending or threatened
termination, cancellation, limitation, modification or change in any of Seller's
business relationship with any customer or group of customers related to the
Business or (ii) changes or pending changes in any business relationship or
other circumstance that could result in the loss of any customers related to the
Business after the date hereof. Each contract, agreement or lease with customers
of Seller relating to the Business ("Customer Contracts") are in one of the
forms attached to the "Customer Contract Schedule" attached hereto as Schedule
3.10(d), except for completion of blanks and have not been modified with respect
to the limitations on liability or service charge increase provisions, whether
in writing, orally, by course of dealings or otherwise, and Seller is not
providing or
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obligated to provide goods or services to others except pursuant to a written
contract in such form in each case. Except as indicated on the Customer Contract
Schedule, (A) each of the Customer Contracts is, valid, enforceable and in full
force and effect in accordance with the terms thereof, (B) there is no existing
default or event or condition which, with notice or lapse of time or both, would
constitute an event of default under any Customer Contract, (C) no Customer
Contract has been amended, modified, supplemented or otherwise altered orally,
in writing or by course of conduct, (D) no Customer Contract requires the
consent of the Customer or any other party to affect a valid assignment thereof
to CBI without causing a default or giving rise to a right of termination
thereunder and (E) to Seller's knowledge, each Customer Contract complies with
all applicable laws, rules and regulations.
3.11 Proprietary Rights. Set forth on the "Proprietary Rights Schedule"
attached hereto as Schedule 3.11 is a list and summary description of all
patents, patent applications, trademarks, service marks, trade names, corporate
names and copyrights owned by Seller which are related to the Business or used
by Seller in the conduct of the Business. Seller owns and possesses all right,
title and interest in and to the proprietary rights necessary to conduct the
Business as presently conducted by Seller. Seller has taken all necessary or
desirable action to protect the proprietary rights necessary or desirable to
conduct the Business as presently conducted by Seller. Seller has not received
any notices of infringement, misappropriation, invalidity or conflict from any
third party with respect to such proprietary rights. Seller has not infringed,
misappropriated or otherwise conflicted with any proprietary rights of any third
parties and, to the best of Seller's knowledge, Seller's proprietary rights have
not been infringed by any third parties.
3.12 Litigation; Proceedings. Except as disclosed on Schedule 3.12, there
are no actions, suits, proceedings, orders or investigations pending against or
affecting Seller or the Purchased Assets at law or in equity, or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, and Seller has no
knowledge of any such threatened actions and there is no basis known to Seller
for any of the foregoing. No officer, director, employee or agent of Seller has
been or is authorized to make or receive, and Seller knows of no such person
making or receiving, any bribe, kickback or other illegal payment at any time.
3.13 Brokerage. There are no claims for brokerage commissions, finders fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Seller.
3.14 Governmental Consent, etc.
(a) No permit, consent, approval or authorization of, or declaration
to or filing with, any governmental or regulatory authority is required in
connection with the execution, delivery or performance of this Agreement by
Seller, or the consummation by Seller of any of the transactions contemplated
hereby, except as disclosed on the "Consents Schedule" attached hereto as
Schedule 3.14.
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(b) The Consents Schedule attached hereto as Schedule 3.14 sets forth
all governmental approvals or consents required for the conduct of the Business
as presently conducted. All such governmental approvals and consents have been
duly obtained and are in full force and effect, and Seller is in compliance with
each of such governmental approvals and consents held by it with respect to the
Purchased Assets and the Business.
3.15 Employees. To Seller's knowledge, no key employee, nor group of
Seller's employees related to the Business, has any plans to terminate
employment with Seller other than to become employed by CBI on the Effective
Date. Seller has complied in all material respects with all applicable laws
relating to the employment of labor and independent contractors related to the
Business, including provisions thereof relating to wages, hours, equal
opportunity, immigration, collective bargaining, disabilities, family leave and
the payment of social security and other taxes. Seller has no existing
relationships with any union or employee representative or any labor relations
problems, and to Seller's knowledge, there has been no union organization
efforts with respect to the Business within the last five years. Except as to
the services provided by Xxxxx pursuant to the Sales Office Agreement (as
hereinafter defined), Seller has no reason to believe that the services of any
of the present employees of Seller related to the Business will not be available
for continued conduct of the Business after the Closing on substantially the
same terms as now conducted.
3.16 Employee Benefit Plans.
(a) The "Employee Benefits Schedule" attached hereto as Schedule 3.16,
contains a list and a true and correct copy, including all amendments thereto,
of any employee benefit plan, within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), which Seller
and/or any corporation, partnership or other trade or business which is or would
be a member of a controlled group of corporations, group of trades or business
under common control, or an affiliated service group including Seller, under the
provisions of Code Section 414(b),(c),(m) or (o) (each an "ERISA Affiliate")
maintains, to which Seller or any ERISA Affiliate contributes, or is obligated
to contribute, or under which any employee or former employee, officer or former
officer, director, or former director, shareholders or former shareholder of
Seller or any ERISA Affiliate (collectively, "Participants"), or any beneficiary
of any Participant, is covered or has benefit rights and pursuant to which any
liability of Seller or any ERISA Affiliate exists or is reasonably likely to
occur, and each other arrangement, program or plan pursuant to which any benefit
is or shall be provided to any Participant or any Participant's beneficiary,
whether formal or informal, including, without limitation, those providing any
form of medical, health or dental insurance, life, disability and accidental
death and dismemberment insurance, severance pay or benefits continuation,
nonqualified deferred compensation, relocation assistance, vacation pay, tuition
aid, apprenticeship benefits or matching gifts for charitable contributions to
educational or cultural institutions (collectively, the "Benefit Plans"). Except
as set forth on the "Employee Benefits Schedule", neither the Seller nor any
ERISA Affiliate maintains or has entered into any Benefit Plan or other
document, plan or agreement which contains any change in control provisions
which would cause an increase or acceleration of benefits or benefit
entitlements to Participants or their beneficiaries, or other provisions, which
would cause an increase in liability of Seller or to Purchasers as a result of
the transactions contemplated by this Agreement or any related action
thereafter. Each of such plans that is an employee pension benefit plan it plan
within the meaning of
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Section 3(2) of ERISA that is intended to be a qualified plan under Section 401
(a) of the Code has been amended to comply in all material respects with current
law as required and each such plan has obtained a favorable determination letter
with respect to such amendment. Neither the Seller nor Shareholders are aware of
any facts or circumstances that might jeopardize the qualified status of any
such Benefit Plan.
(b) Except as set forth in the "Employee Benefits Schedule", all
accrued contributions and other payments to be made by Seller or any ERISA
Affiliate to any Benefit Plan through the Effective Date have been made or
reserves adequate for such purposes have been set aside therefor as of the
Effective Date. Neither Seller nor any ERISA Affiliate is in default in
performing any of its material contractual obligations under any of the Benefit
Plans or any related trust agreement or insurance contract, and there are no
outstanding liabilities of any Benefit Plan other than liabilities for benefits
to be paid to Participants and beneficiaries in such Benefit Plan in the
ordinary course of business.
(c) There is no pending litigation or, to the best knowledge of
Seller, overtly threatened litigation or pending claim (other than benefit
claims made in the ordinary course) by or on behalf of or against any of the
Benefit Plans (or with respect to the administration of any of the Benefit
Plans) now or heretofore maintained by Seller or any ERISA Affiliate which
allege violations of applicable state or federal law.
(d) Each Benefit Plan is and has been in compliance in all material
respects with, and each such Plan is and has been operated in accordance in all
material respects with the applicable laws, rules and regulations governing such
Plan, including, without limitation, the rules and regulations promulgated by
the Department of Labor, the Pension Benefit Guaranty Corporation ("PBGC") and
the IRS under ERISA, the Code or any other applicable law.
(e) None of the Benefit Plans is or ever has been subject to Title IV
of ERISA, and neither Seller nor any ERISA Affiliate is or has been required to
contribute to an employee benefit plan that is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA nor has been so required during the five-year
period ending on the Closing Date.
(f) All reporting and disclosure requirements of ERISA and the Code
applicable to the Benefit Plans have been satisfied in all material respects.
(g) Neither Seller nor any ERISA Affiliate has any liability on
account of any accumulated funding deficiency (as defined in Section 412 of the
Code) or on account of any failure to make contributions to or pay benefits
under any Benefit Plan, nor is Seller aware of any claim pending or threatened
to be brought by any party regarding such matters. No prohibited transaction has
occurred with respect to any Benefit Plan that would result, directly or
indirectly, in the imposition of any excise tax under Section 4975 of the Code.
(h) None of the Benefit Plans provides for (or has ever provided for)
medical or health care or benefits for any former employee of Seller or any
ERISA Affiliate, except to the extent required by Section 4980B of the Code or
Part 6 of Title I of ERISA.
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(i) Neither Seller nor any ERISA Affiliate is in possession of any
facts which would indicate that any insurance company which has issued an
insurance policy or policies under any of the Benefit Plans is in danger of
becoming insolvent, within the meaning of applicable state law.
(j) The transactions contemplated by this Agreement will not entitle
any Participant or any Participant's beneficiary in any Benefit Plan to any
severance benefit under the terms of any Benefit Plan or any personnel or
employment policy of Seller or any ERISA Affiliate.
3.17 Insurance. The "Insurance Schedule" attached hereto as Schedule 3.17
lists and briefly describes each insurance policy maintained by Seller with
respect to the Purchased Assets. The Seller has delivered to the Purchaser
complete and correct copies of all such policies together with all riders and
amendments thereto. All of such insurance policies are in full force and effect,
and Seller is not and never has been in default with respect to its obligations
under any of such insurance policies. During the three-year period ending on the
date hereof, no Seller has ever been refused any insurance coverage for which it
has applied or had any insurance policy canceled. The Seller shall provide tail
coverage on its errors and omissions insurance policies for a period of three
(3) years from the date hereof to cover any claims following the Closing Date.
3.18 Affiliated Transactions. Except as set forth on the "Affiliated
Transaction Schedule" attached hereto as Schedule 3.18, no officer, director,
shareholder or affiliate of Seller or any person related by blood or marriage to
any such person or any entity in which any such person owns any beneficial
interest is a party to any agreement, contract, commitment or transaction or has
any interest in any property that in each case, is included in the Purchased
Assets.
3.19 Compliance with Laws, Permits, Certain Operations.
(a) Seller and its officers, directors, agents and employees have
complied in all material respects with all applicable laws and regulations of
foreign, federal, state and local governments and all agencies thereof which
affect the Business or the Purchased Assets or to which Seller may otherwise be
subject, and, to Seller's knowledge, no claims have been filed against Seller
alleging a violation of any such law or regulation, except as set forth on the
"Compliance Schedule" attached hereto as Schedule 3.19(a). In particular, but
without limiting the generality of the foregoing, Seller has complied in all
material respects with, and has not received a notice or charge asserting any
violation of, the Immigration Reform and Control Act of 1986, the Occupational
Safety and Health Act of 1970, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, the Toxic Substances Control Act of 1976, the Americans With
Disabilities Act, or any other state or federal act (including rules and
regulations thereunder) regulating or otherwise affecting the employment of
aliens, employee health and safety, the environment, zoning, building, fire or
other ordinances or any other aspect of the Business.
(b) Seller holds all of the permits, licenses, certificates and other
authorizations of foreign, federal, state and local governmental agencies
required for the conduct of the Business
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all of which are set forth in the "Permits Schedule" attached hereto as Schedule
3.12(b). Seller has not received any notice (and Seller has no reason to
believe) that revocation is being considered with respect to any of such
licenses, permits, certificates or authorizations, or that Seller is in
violation of any such license, permit, certificate or authorization.
3.20 Environmental Health and Safety.
(a) Seller has complied in all material respects with, and is
currently in compliance with all Environmental, Health and Safety Laws, and, to
Seller's knowledge, no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been threatened, filed or commenced
against it alleging any failure so to comply, alleging any liability under any
Environmental, Health and Safety Laws or requesting any investigation related
thereto. No condition exists or event has occurred which, with or without notice
or the passage of time, would constitute a violation of or give rise to a lien
under any Environmental, Health and Safety Laws, except for violations or liens
that would not have a Material Adverse Effect. Without limiting the generality
of the preceding sentences, Seller has obtained and been in compliance in all
material respects, and is currently in compliance in all material respects, with
all of the terms and conditions of all permits, licenses and other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables which are contained in, all Environmental Health and
Safety Laws. For purposes hereof, "Environmental, Health and Safety Laws" means
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Resource Conservation and Recovery Act of 1976 and the Occupational
Safety and Health Act of 1970, each as amended, together with all other laws
(including statutes, rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof) relating to fines, injunctions,
penalties, damages, liability, contribution, cost recovery, compensation losses
or injuries concerning pollution or protection of the environment, natural
resources, public health and safety, or employee health and safety, or the
protection of human, plant or animal welfare or health, including laws relating
to use, emissions, discharges, releases, or threatened releases of Hazardous
Materials, Extremely Hazardous Substances, pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into or onto
ambient air, surface water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of Hazardous Materials, Extremely Hazardous Substances,
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes. For purposes hereof, "Extremely Hazardous Substance" means such term
as set forth in Section 302 of the Emergency Planning and Community
Right-to-Know Act of 1986, as amended. For purposes hereof, "Hazardous
Materials" means any dangerous, toxic or hazardous pollutant, contaminant,
chemical, waste, material or substance as defined in, regulated by or governed
by any Environmental, Health, and Safety Laws, federal, state, local or foreign
law, statute, code, ordinance, regulation, rule or other requirement relating to
such substance or otherwise relating to the environment or human health or
safety, including without limitation any waste, material, substance, pollutant
or contaminant that might cause any injury to human health or safety or to the
environment or might subject the Seller to any imposition of penalties, fines,
orders,
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decrees, licenses, permits, judgments, costs or liability under any
Environmental, Health or Safety Laws.
(b) To Seller's knowledge, all properties and equipment used in the
Business of the Seller have been free of asbestos, PCB's, methylene chloride,
trichlorethylene, 1, 2 - transdichloroethylene, dioxins, dibenzofurans and other
hazardous substances.
3.21 Product and Warrants Claims, Warranties. Except as disclosed in the
"Claims Schedule" attached hereto as Schedule 3.2 1, Seller has no knowledge of
and has not received during the past five (5) years any claim or notice with
respect to any occurrences arising out of the use of, or related to, the
products designed, sold, implemented, monitored or serviced by or on behalf of
Seller related to the Business, which has resulted in any claim or notice that
any such products do not conform to any agreement, representation or warranty
made by Seller (or implied by law) with respect to such products. To Seller's
knowledge, Seller is covered against all damages, liability and expenses for any
claims based upon products designed, sold, implemented, monitored or serviced by
or on behalf of Seller (including, but not limited to, costs of investigation
and attorneys' fees and expenses) under policies of insurance described on the
Insurance Schedule, except as to claims for breach of any agreement,
representation or warranty made with respect to such products against which
Seller has established good and sufficient reserves therefor on their books and
records and except where such claims would not have a Material Adverse Effect.
3.22 Disclosure. No representation or warranty of Seller or the
Shareholders contained in this Agreement or any of the schedules, attachments or
exhibits hereto furnished by Seller contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained herein
or therein, in light of the circumstances in which they were made, not
misleading. There is no material fact which has not been disclosed in writing to
Purchaser of which the Seller or any officer, director or key employee of Seller
is aware and which materially adversely affects or could reasonably be
anticipated to affect materially adversely the Business or the Purchased Assets.
3.23 Closing Date. All of the representations and warranties of Seller and
the Shareholders in this Article 3 and elsewhere in this Agreement and all
information delivered by Seller in any schedule, attachment or exhibit hereto or
in any certificate delivered by Seller to Purchaser are true and correct in all
respects on the date of this Agreement and shall be true and correct in all
respects on the Closing Date.
3.24 Name Change. Seller agrees to change its name from "Xxxxxxxxx &
Xxxxxxx Company" to a different corporate name within sixty (60) days of the
Closing Date which is not similar to, or could not be confused with, the name
"Xxxxxxxxx & Xxxxxxx Company."
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Purchasers hereby represent and warrant, jointly and severally, to Seller
as of the date hereof and as of the Closing Date that:
4.1 Corporate Organization and Power. Each of CBI and Holdings is a
corporation duly organized, validly existing and in good standing under the laws
of the State of its incorporation and any state in which it conducts business,
except where the failure to do so would not have a Material Adverse Effect on
either CBI or Holdings. For purposes of this Agreement, "Material Adverse
Effect", as it relates to Purchasers, means any material adverse effect on (a)
the financial condition, credit, business, prospects, properties or operations
of the Purchasers or (b) the ability of the Purchasers to perform their
obligations under this Agreement. Each of CBI and Holdings has all requisite
power and authority and all material licenses, permits and other authorizations
necessary to own and operate its properties and to carry on its business as now
conducted as they relate to the business of Purchasers. The copies of the
certificate of incorporation and by-laws of each Purchaser which have been
previously furnished to Seller reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete in all material
respects.
4.2 Authorization. The execution, delivery and performance by each
Purchaser of this Agreement and the other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all requisite corporate action, and no other corporate
proceedings on the part of either Purchaser are necessary to authorize the
execution, delivery or performance of this Agreement or the other agreements
contemplated hereby. This Agreement constitutes and, upon execution and delivery
by each Purchaser, the other agreements contemplated hereby shall each
constitute a valid and binding obligation of each Purchaser enforceable against
such Purchaser in accordance with their respective terms.
4.3 No Violation. Neither Purchaser is subject to or obligated under its
respective articles of incorporation, any applicable law, 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 materially, adversely affect its ability to perform this Agreement or the
other agreements contemplated hereby.
4.4 Litigation. There are no actions, suits, proceedings, orders or
investigations pending or, to the best of each Purchaser's knowledge, threatened
against or affecting such Purchaser, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which would materially
adversely affect such Purchaser's performance under this Agreement or the
consummation of the transactions contemplated hereby.
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4.5 Closing Date. All of the representations and warranties of each
Purchaser contained in this Article 4 and elsewhere in this Agreement and all
information delivered by Purchasers in any schedule, attachment or exhibit
hereto or in any certificate delivered by Purchasers to Seller is true and
correct in all respects as of the date of this Agreement and shall be true and
correct in all respects as of the Closing Date.
4.6 Brokerage. There are no claims for brokerage commissions, finders fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of
Purchasers.
4.7 Capitalization. The authorized capital stock of Holdings consists of
20,000,000 shares of common stock. As of the date hereof, not including the
Common Stock Consideration, there were 8,059,677 shares of common stock of
Holdings issued and outstanding. The shares of Common Stock Consideration are
duly authorized, have been validly issued, are fully paid and nonassessable and
have not been issued in violation of, and are not subject to, any preemptive
rights. Upon consummation of the transactions contemplated hereby, the
recipients of the Common Stock Consideration will acquire title to the Common
Stock Consideration, free and clear of all liens, pledges and encumbrances.
4.8 Governmental Consent, etc. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental or
regulatory authority is required in connection with the execution, delivery or
performance of this Agreement by Holdings or CBI, or the consummation by
Holdings or CBI of any of the transactions contemplated hereby.
4.9 Disclosure. No representation or warranty of Holdings or CBI contained
in this Agreement (including the schedules or attachments furnished by Holdings
or CBI) contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading. There is no material
fact which has not been disclosed in writing to Seller of which Holdings or CBI
or any officer, director or key employee of Holdings or CBI is aware and which
materially adversely affects, or could reasonably be anticipated to materially
adverse affect, Holdings or CBI.
ARTICLE 5
CONDITIONS TO PURCHASERS' OBLIGATION TO CLOSE
5.1 Conditions to Purchasers' Obligation. The obligation of Purchasers to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article 3 hereof
shall be true and correct in all material respects at and as of the Closing as
though then made and as though the Closing Date was substituted for the date of
this Agreement;
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(b) Seller shall have performed in all material respects all of the
covenants and agreements required to be performed by it under this Agreement
prior to the Closing;
(c) there shall have been no material adverse change in the operations,
financial condition, operating results, assets or business prospects of the
Business, and there shall have been no material casualty loss or damage to the
Purchased Assets, taken as a whole, whether or not covered by insurance;
(d) all consents by third parties that are required for the transfer of
the Purchased Assets and the Business to Purchasers as contemplated hereby, that
are required for the consummation of the transactions contemplated hereby or
that are required to prevent a breach of, or a default under or a termination or
modification of any instrument, contract, license, lease or other agreement to
which Seller is a party or to which any of the Purchased Assets are subject, and
releases of all liens, charges, security interests, encumbrances and claims of
others on or with respect to the Purchased Assets shall have been obtained on
terms and conditions satisfactory to Purchasers in their sole discretion;
(e) no action or proceeding before any court or government body shall
be pending or threatened which, in the judgment of Purchasers, made in good
faith and upon the advice of counsel, makes it inadvisable or undesirable to
consummate the transactions contemplated hereby by reason of the probability
that the action or proceeding shall result in a judgment, decree or order which
would prevent the carrying out of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by this
Agreement, cause such transactions to be rescinded or affect the value or use of
the Purchased Assets or Business;
(f) Purchasers shall have received from Seller's counsel, Liddell,
Sapp, Zivley, Hill & XxXxxx, LLP, an opinion with respect to the matters set
forth in Exhibit B attached hereto, addressed to Purchasers and dated the
Closing Date, in form and substance reasonably satisfactory to Purchaser;
(g) not less than twenty (20) business days prior to the Closing Date,
Purchasers shall have obtained UCC search reports ("UCC Searches") of Seller
disclosing no liens or encumbrances against the Purchased Assets, other than the
Permitted Encumbrances. If the UCC Searches disclose any title encumbrances,
defects, liens, encumbrances or matters other than Permitted Encumbrances,
Seller shall have caused the same to be removed;
(h) all proceedings to be taken by Seller in connection with the
consummation of the Closing and the other transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby reasonably requested by Purchasers shall be
reasonably satisfactory in form and substance to Purchasers and its counsel;
(i) each Purchaser's Board of Directors shall have approved the
transaction contemplated hereby;
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(j) CBI and Xxxxx shall each have entered into that certain Non-Compete
Agreement in the form set forth in Exhibit C hereto (the "Non-Compete
Agreement");
(k) CBI and Xxxxx shall have entered into that certain Sales Office
Agreement in a form acceptable to Xxxxx and the Purchaser (the "Sales Office
Agreement"); and
(1) the Shareholders shall have entered into that certain Investment
Letter pursuant to which it shall make customary investment representations to
Holdings in the form set forth in Exhibit D (the "Investment Letter").
Any conditions specified in this Section 5.1 may be waived by Purchasers;
provided that no such waiver shall be effective unless it is set forth in a
writing executed by Purchasers, except as otherwise provided in Section 9.3.
ARTICLE 6
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
6.1 Conditions to the Seller's Obligations. The obligation of Seller to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article 4 hereof
shall be true and correct in all material respects at and as of the Closing as
though then made and as though the Closing Date was substituted for the date of
this Agreement throughout such representations and warranties;
(b) each Purchaser shall have performed in all material respects all
the covenants and agreements required to be performed by it under this Agreement
prior to the Closing;
(c) Seller shall have received from Purchasers' counsel, Vedder, Price,
Xxxxxxx & Kammholz, an opinion with respect to the matters set forth in Exhibit
E attached hereto, addressed to Seller and dated the Closing Date, in form and
substance reasonably satisfactory to Seller;
(d) all proceedings to be taken by Purchasers in connection with the
consummation of the Closing and the other transactions contemplated hereby and
all certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby reasonably requested by Seller shall be
reasonably satisfactory in form and substance to Seller and its counsel; and
(e) Purchaser and Xxxxx shall each have entered into the Sales Office
Agreement.
Any condition specified in this Section 6.1 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, except as otherwise provided in Section 9.3.
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ARTICLE 7
CLOSING TRANSACTIONS
7.1 The Closing. Subject to the conditions contained in this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of Liddell, Sapp, Zivley, Hill & XxXxxx, LLP at 10:00
a.m. local time on November 16, 1998, or at such other place or on such other
date as may be mutually agreeable to the parties. The date and time of the
Closing are referred to herein as the "Closing Date."
7.2 Action to Be Taken at the Closing. The sale, conveyance, assignment and
delivery of the Purchased Assets and the payment of the Purchase Price pursuant
to the terms of this Agreement shall take place at the Closing, and,
simultaneously, the other transactions contemplated by this Agreement shall take
place by the delivery of all of the closing documents set forth in Section 7.3.
7.3 Closing Documents.
(a) Seller shall deliver or cause to be delivered to Purchasers at the
Closing the following documents, duly executed by Seller where necessary to make
them effective:
(i) an officer's certificate in the form set forth in Exhibit F
attached hereto, stating that the preconditions specified in Section 5.1(a)
through (n) have been satisfied;
(ii) copies of all necessary third party and governmental
consents, approvals, releases and filings required in order to effect the
transactions contemplated by this Agreement;
(iii) such stamped recordable warranty deeds, instruments of sale,
transfer, assignment, conveyance and delivery (including all vehicle
titles), as are required in order to transfer to Purchasers good and
marketable title to the Purchased Assets, free and clear of all liens,
charges, security interests and other encumbrances, except for Permitted
Encumbrances;
(iv) such estoppel certificates and assignment of Leases as
Purchasers may reasonably request;
(v) certified copies of the resolutions duly adopted by the
Board of Directors and Shareholders of Seller authorizing the execution,
delivery and performance of this Agreement and each of the other agreements
contemplated hereby, and the consummation of all other transactions
contemplated by this Agreement;
(vi) all of Seller's contracts and commitments, files, books,
records and other data relating to the Business and the Purchased Assets;
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(vii) copies of good standing certificates in all jurisdictions
where the Seller is qualified to do business in which ownership of the
Purchased Assets or the conduct of the Business requires Seller to be so
qualified;
(viii) a certificate of the Secretary of Seller, certifying as to
the correctness and completeness of the Articles of Incorporation and
Bylaws of Seller, as appropriate, and all amendments thereto;
(ix) that certain Assignment of Lease regarding the Lease
Agreement between the Seller and the landlord (the "Lease Assignment");
(x) the Non-Compete Agreement;
(xi) the Sales Office Agreement;
(xii) the Investment Letter;
(xiii) an income statement for the period from January 1, 1998
through the Closing Date; and
(xiv) such other documents or instruments as Purchasers may
reasonably request to effect the transactions contemplated hereby.
All of the foregoing documents in this Section 7.3 (a) shall be
reasonably satisfactory in form and substance to Purchasers and shall be dated
as of the Closing Date.
(b) Purchasers shall deliver or cause to be delivered to Seller and the
Shareholders at the Closing the following items, duly executed by Purchasers
where necessary to make them effective:
(i) the amount of the Purchase Price payable at Closing as
provided in Section 2.1;
(ii) the Common Stock Consideration to the Shareholders;
(iii) an officer's certificate in the form set forth as Exhibit G
attached hereto, stating that the preconditions specified in Section 6.1
(a) through (e) hereof have been satisfied;
(iv) copies of all necessary third party and governmental
consents, approvals, releases and filings required in order for Purchasers
to effect the transactions contemplated by this Agreement;
(v) the Lease Assignment;
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(vi) the Non-Compete Agreement;
(vii) the Sales Office Agreement; and
(viii) evidence satisfactory to Seller of approval of the listing
of the Common Stock by the NASDAQ National Market and consent of
underwriters of Holdings; and
(ix) such other documents or instruments as Seller reasonably may
request to effect the transactions contemplated hereby.
All of the foregoing documents in this Section 7.3(b) shall be
reasonably satisfactory in form and substance to Seller and shall be dated as of
the Closing Date.
7.4 Nonassignable Contracts. To the extent that the assignment hereunder by
Seller to Purchasers of the Contracts is not permitted or is not permitted
without the consent of any other party to the Contract, this Agreement shall not
be deemed to constitute an assignment of any such Contract if such consent is
not given or if such assignment otherwise would constitute a breach of, or cause
a loss of contractual benefits under, any such Contract, and Purchasers shall
assume no obligations or liabilities thereunder. Seller shall advise Purchasers
promptly in writing with respect to any Contract which it knows, should know or
has reason to know that it will not receive any required consent. Without in any
way limiting Seller's obligation to obtain all consents necessary for the sale,
transfer, assignment and delivery of the Contracts and the Purchased Assets to
Purchasers hereunder, if any such consent is not obtained or if such assignment
is not permitted irrespective of consent and the Closing hereunder is
consummated, Seller shall cooperate with Purchasers in any reasonable
arrangement designed by Purchasers to provide Purchasers with the rights and
benefits, subject to the obligations, under the Contract, including enforcement
for the benefit of Purchasers of any and all rights of Seller against any other
person arising out of breach or cancellation by such other person and, if
requested by Purchasers, Seller shall act as an agent on behalf of Purchasers or
as Purchasers shall otherwise reasonably require, in each case at Seller's cost.
Seller agrees to continue its existence for at least three (3) years from the
Closing Date.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by Seller and Shareholders. Seller and Shareholders,
jointly and severally, agree to and shall indemnify in full Purchasers and their
officers, directors, employees, agents, shareholders and partners (collectively,
the "Purchaser Indemnified Parties") and defend and hold them harmless against
any loss, liability, deficiency, damage, expense or cost (including reasonable
legal expenses), that Purchaser Indemnified Parties may suffer, sustain or
become subject to, as a result of (a) any misrepresentation in any of the
representations or breach of any of the warranties of Seller or the Shareholders
contained in this Agreement or in any exhibits, schedules, certificates or other
agreements or documents delivered or to be delivered pursuant to the terms of
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this Agreement or otherwise incorporated in this Agreement (collectively, the
"Related Documents"), (b) any breach of, or failure to perform, any agreement or
covenant of Seller or the Shareholders contained in this Agreement or any of the
Related Documents, or (c) any matters disclosed on any schedule hereto
(collectively, "Purchaser Losses").
8.2 Indemnification by Purchasers. Purchasers, jointly and severally, agree
to indemnify in full Seller and its officers, directors, employees, agents,
shareholders and partners (collectively, the "Seller Indemnified Parties") and
hold them harmless against any loss, liability, deficiency, damage, expense or
cost (including reasonable legal expenses), which the Seller Indemnified Parties
may suffer, sustain or become subject to as a result of (i) any
misrepresentation in any of the representations or breaches of any of the
warranties of Purchasers contained in this Agreement or in any of the Related
Documents or (ii) any breach of, or failure to perform, any agreement or
covenant of Purchasers contained in this Agreement or any of the Related
Documents (collectively, "Seller Losses") (Purchaser Losses and Seller Losses
shall collectively be referred to as the "Losses").
8.3 Method of Asserting Claims. As used herein, an "Indemnified Party"
shall refer to a "Purchaser Indemnified Party" or "Seller Indemnified Party," as
applicable, the "Notifying Party" shall refer to the party hereto whose
Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or administrative,
instituted by any third party for the liability or the costs or expenses of
which are Seller Losses or Purchaser Losses, as the case may be (any such third
party action or proceeding being referred to as a "Claim"), the Notifying Party
shall give the Indemnifying Party prompt notice thereof. The failure to give
such notice shall not affect any Indemnified Party's ability to seek
reimbursement unless such failure has materially and adversely affected the
Indemnifying Party's ability to defend successfully a Claim. The Indemnifying
Party shall be entitled to contest and defend such Claim; provided, that the
Indemnifying Party (i) has a reasonable basis for concluding that such defense
may be successful and (ii) diligently contests and defends such Claim. Notice of
the intention so to contest and defend shall be given by the Indemnifying Party
to the Notifying Party within twenty (20) business days after the Notifying
Party's notice of such Claim (but, in all events, at least five (5) business
days prior to the date that an answer to such Claim is due to be filed). Such
contest and defense shall be conducted by reputable attorneys employed by the
Indemnifying Party. The Notifying Party shall be entitled at any time, at its
own cost and expense (which expense shall not constitute a Loss unless the
Notifying Party reasonably determines that the Indemnifying Party is not
adequately representing or, because of a conflict of interest, may not
adequately represent, any interests of the Indemnified Parties), to participate
in such contest and defense and to be represented by attorneys of its or their
own choosing. If the Notifying Party elects to participate in such defense, the
Notifying Party shall cooperate with the Indemnifying Party in the conduct of
such defense. Neither the Notifying Party nor the Indemnifying Party may
concede, settle or compromise any Claim without the consent of the other party,
which consent shall not be unreasonably withheld or delayed. Notwithstanding the
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foregoing, in the event the Indemnifying Party fails or is not entitled to
contest and defend a claim, the Notifying Party shall be entitled to contest,
defend and settle such Claim.
(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party that does not involve a Claim, the Notifying Party shall
deliver a notice of such claim with reasonable promptness to the Indemnifying
Party. If the Indemnifying Party notifies the Notifying Party that it does not
dispute the claim described in such notice or fails to notify the Notifying
Party within thirty (30) days after delivery of such notice by the Notifying
Party whether the Indemnifying Party disputes the claim described in such
notice, the Loss in the amount specified in the Notifying Party's notice shall
be conclusively deemed a liability of the Indemnifying Party and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified Party on
demand. If the Indemnifying Party has timely disputed its liability with respect
to such claim, a representative of each of the Indemnifying Party and the
Notifying Party (or their respective designees) shall proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through the
negotiations of such representatives or designees within sixty (60) days after
the delivery of the Notifying Party's notice of such claim, such dispute (except
for any such dispute which gives rise or could give rise to equitable relief
under this Agreement) shall be resolved fully and finally in Dallas, Texas by an
arbitrator selected pursuant to, and an arbitration governed by, the Commercial
Arbitration Rules of the American Arbitration Association. The arbitrator shall
resolve the dispute within thirty (30) days after selection and judgment upon
the award rendered by such arbitrator may be entered in any court of competent
jurisdiction.
8.4 Survival; Limitations on Liability.
(a) Subject to the provisions of Section 8.4(b) and Section 10.1
hereof, the covenants, agreements, representations, and warranties contained in
or made pursuant to this Agreement shall survive the Closing.
(b) The liabilities and obligations of the parties (and the
Indemnifying Parties) under this Agreement shall be subject to the limitation
that no Indemnifying Parties shall be responsible for any Losses until the
cumulative aggregate amount thereof shall exceed Ten Thousand Dollars ($10,000.
00) (the "Minimum Amount") in which case such Indemnifying Parties shall then be
liable for all Losses; provided, however, that any provision of this Agreement
to the contrary notwithstanding, the dollar limitations set forth in this
Section 8.4 shall not apply to any Claim relating to breach of Seller's
obligations with respect to Taxes or any claim related to a breach of a
representation or warranty where Seller or Purchaser had knowledge of such
breach at Closing. Notwithstanding the foregoing, the maximum amount required to
be paid by Seller and the Shareholders in the aggregate for Losses under this
Agreement shall not exceed $6,000,000.
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ARTICLE 9
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent of Purchasers and Seller;
(b) by either Purchasers or Seller if there has been a material
misrepresentation or breach of warranty or breach of covenant on the part of the
other party in the representations and warranties or covenants set forth in this
Agreement and any such misrepresentation or breach, if capable of cure, is not
cured within fifteen (15) days after written notice thereof to such other party,
or if events have occurred which have made it impossible to satisfy a condition
precedent to the terminating party's obligations to consummate the transactions
contemplated hereby (other than as a result of any willful act or omission by
the terminating party); or
(c) by either Purchasers or Seller if the transactions contemplated
hereby have not been consummated by November 30, 1998; provided, that neither
Purchasers nor Seller shall be entitled to terminate this Agreement pursuant to
this subsection (c) if such party's willful breach of this Agreement,
respectively, has prevented the consummation of the transactions contemplated
hereby.
9.2 Effect of Termination. In the event of termination of this Agreement as
provided above, this Agreement shall forthwith become void, and there shall be
no liability on the part of Seller or Purchasers, except for willful breaches of
this Agreement prior to the time of such termination and except for the
provisions of Section 10.7.
9.3 Effect of Closing. Seller and Purchasers shall be deemed to have waived
their respective rights to terminate this Agreement upon the completion of the
Closing. No such waiver shall constitute a waiver of any other rights arising
from the non-fulfillment of any condition precedent set forth in Article 5 or 6
unless such waiver is made in writing.
ARTICLE 10
ADDITIONAL AGREEMENTS
10.1 Survival. The representations, warranties, covenants and agreements
set forth in this Agreement or in any writing delivered to Purchasers or Seller
in connection with this Agreement shall survive the Closing Date and the
consummation of the transactions contemplated hereby for a period of two (2)
years following the Effective Date and shall not be affected by any examination
made for or on behalf of Purchasers or Seller, the knowledge of any of
Purchasers' or Seller's officers, directors, shareholders, employees or agents,
or the acceptance by Purchasers or any Seller of any certificate or opinion;
provided, however, that the representations, warranties, covenants and
agreements made with respect to Sections 3.8, 3.9 and 3.16 hereof shall survive
until the applicable statute of limitations has expired.
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10.2 Mutual Assistance. Subsequent to the Closing, Seller on the one hand
and Purchasers on the other, at their own cost, shall assist each other
(including making records available) in the preparation of their respective tax
returns and the filing and execution of tax elections, if required, as well as
any audits or litigation that may ensue as a result of the filing thereof, to
the extent that such assistance is reasonably requested.
10.3 Press Release and Announcements. No press release related to this
Agreement or the transactions contemplated hereby, or other announcements to the
employees, customers or suppliers of Seller, shall be issued without the joint
approval of Purchasers and Seller. No other public announcement related to this
Agreement or the transactions contemplated hereby shall be made by either party,
except as required by law, in which event the parties shall consult as to the
form and substance of any such announcement required by law.
10.4 Expenses. Each party shall pay all of its expenses in connection with
the negotiation of this Agreement, the performance of its obligations hereunder
and the consummation of the transactions contemplated by this Agreement. Seller
shall pay the cost of recording all documents necessary to place record title to
the Purchased Assets in the condition warranted by or required of Seller by this
Agreement.
10.5 Further Transfers. After the Closing, Seller shall, and shall cause
its affiliates to, execute and deliver such further instruments of conveyance
and transfer and take such additional action as Purchasers may reasonably
request to effect, consummate, confirm or evidence the transfer to Purchasers of
the Purchased Assets. Seller shall execute such documents as may be necessary to
assist Purchasers (or their designees) in preserving or perfecting its rights in
the Purchased Assets.
10.6 Transition Assistance. From the date hereof and until five (5) years
after the Closing, Seller shall not in any manner take any action which is
designed, intended or might be reasonably anticipated to have the effect of
discouraging customers, suppliers, lessors, employees, sales agents and other
business associates from maintaining the same business relationships with
Purchasers after the date of this Agreement as were maintained with Seller prior
to the date of this Agreement.
10.7 Confidentiality. If the transactions contemplated by this Agreement
are not consummated, Purchasers shall maintain the confidentiality of all
information and materials received by it reasonably designated by Seller as
confidential, and Purchasers shall return to Seller or destroy any materials
(and copies thereof) obtained from Seller in connection with the transactions
contemplated hereby. Whether or not the transactions contemplated hereby are
consummated, Seller shall maintain the confidentiality of all information and
materials regarding Purchasers and their affiliates, reasonably designated as
confidential by Purchasers. If the transactions contemplated by this Agreement
are consummated, Seller shall maintain the confidentiality of all proprietary
and other non-public information regarding the Business and the Purchased Assets
and shall turn over to Purchasers all such materials in their possession.
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10.8 Non-Compete; Non-Solicitation.
(a) Although it is understood among the parties that Seller desires to
no longer engage in business operations similar to that of the Business, as an
additional inducement to Purchasers to enter into and to perform their
obligations under this Agreement, Seller and each officer and director of the
Seller agree that, for a period of five (5) years after the Closing Date (the
"Non-Competition Period"), Seller shall not in the United States or in any
foreign country in which Seller currently does business, directly or indirectly,
either for itself or any other person or entity, own, manage, control,
participate in, permit its name to be used by, consult with, render services for
or otherwise assist in any manner any entity that owns, invests in, manages,
controls or engages in the business of selling and distributing products similar
to those of the Business.
(b) Seller agrees that for a period of five (5) years after the
Closing, it shall not directly or indirectly offer employment to or hire any
current or future employee or sales agent of Seller without the prior written
consent of CBI.
(c) If, at the time of enforcement of this Section 10.8, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area.
(d) Seller recognizes and affirms that in the event of breach by it of
any of the provisions of this Section 10.8 money damages would be inadequate and
neither Purchasers nor Seller would have any adequate remedy at law.
Accordingly, Seller and Purchasers agree that the other party shall have the
right, in addition to any other rights and remedies existing in its favor, to
enforce its rights and the obligations under this Section 10.8 by an action or
actions for specific performance, injunction and/or other equitable relief
without posting any bond or security to enforce or prevent any violations,
whether anticipatory, continuing or future, of the provisions of this Section
10.8, including, without limitation, the extension of the Non-Competition Period
by a period equal to (i) the length of the violation of this Section 10.8 plus
(ii) the length of any court proceedings necessary to stop such violation. In
the event of a breach or violation by Seller of any of the provisions of this
Section 10.8, the running of the Non-Competition Period, but not of Seller's
obligations under this Section 10.8, shall be tolled during the period during
which the occurrence of any such breach or violation is investigated and during
the continuance of any such breach or violation.
10.9 Remittances. All remittances, mail and other communications relating
to the Purchased Assets or the Business received by Seller or the officers and
directors of Seller, at any time after the Closing Date shall be immediately
turned over to Purchasers by such parties. Seller shall cooperate with
Purchasers, and take such actions as Purchasers reasonably request, to assure
that customers of the Business send their remittances directly to Purchasers,
and to assure that remittances from customers of the Business which are
improperly sent to Seller are not commingled with Seller's assets and are turned
over to Purchasers.
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10.10 Best Efforts To Consummate Closing Transactions. On the terms and
subject to the conditions contained in this Agreement, Seller and Purchasers
agree to use their respective best efforts to take, or to cause to he taken, all
reasonable actions, and to do, or to cause to be done, all reasonable things,
necessary, proper or advisable under applicable laws and regulations to
consummate, as soon as reasonably practicable, the Closing, including the
satisfaction of all conditions thereto set forth herein.
10.11 Employees and Agents of Seller. Purchasers are under no legal
obligation to employ any personnel presently employed by Seller. Prior to the
Closing Date, CBI may, but shall not be required to, offer employment to such
persons currently employed by Seller as CBI in its sole discretion shall
determine. CBI shall have the absolute right to establish all terms and
conditions of employment, including wages, benefits and benefit plans, for any
employees of Seller to whom it chooses to make an offer of employment to be
employed by CBI. Further, it is expressly agreed that neither Purchaser is bound
to assume, implement or continue any wages, terms and conditions of employment,
benefits or benefit plans which may currently exist for any of Seller's
employees. All such offers of employment shall be on the terms and conditions
established by CBI and shall be contingent upon employment commencing with CBI
only following the Closing Date. Seller agrees not to discourage any individuals
who are offered employment or an agency relationship with CBI from accepting
such employment or agency relationship with CBI.
10.12 Certain Understandings. Holdings and CBI have received from Seller
certain projections and forecasts relating to Seller. Holdings and CBI
acknowledge that (i) there are uncertainties inherent in attempting to make such
projections and forecasts, (ii) Holdings and CBI are familiar with such
uncertainties and are taking full responsibility for making their own evaluation
of the adequacy and accuracy of all projections and forecasts so furnished to
them and (iii) neither Holdings nor CBI shall have any claim against Seller or
its agents with respect to such projections and forecasts. Accordingly, Seller
makes no representations or warranty with respect to such projections or
forecasts.
ARTICLE 11
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 on Seller and Shareholders only if such amendment or waiver is
set forth in a writing executed by Seller and Shareholders and that any such
amendment or waiver shall be binding upon Purchasers only if such amendment or
waiver is set forth in a writing executed by Purchasers. 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 person under or by reason of this Agreement.
11.2 Notices. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when personally delivered, mailed
by first class mail, return receipt requested or
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delivered by a nationally recognized courier service. Notices, demands and
communications to Seller or Purchasers shall, unless another address is
specified in writing in accordance herewith, be sent to the address indicated
below:
Notices to Seller
Xxxxxxxxx & Xxxxxxx Company
0000 XXX Xxxxxxx # 000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Liddell, Sapp, Zivley, Hill & XxXxxx, LLP
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: R. Xxxxx Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Notices to Purchasers
Xxxxx/Xxxxxx, Inc.
0000 Xxx Xxxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxx, President
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Block, Esq.
Lane X. Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
11.3 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, legatees, personal representatives, successors and permitted assigns
(including all successors and assignees in the event
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of Seller's liquidation) as the case may be, but neither this Agreement nor any
of the rights, interests or obligations hereunder of Seller and Shareholders
shall be assignable by Seller and Shareholders without the prior written consent
of Purchasers. Either Purchaser may assign its interest under this Agreement
without restriction to any of its affiliates, existing as of the date hereof or
in the future; provided each Purchaser unconditionally guarantees to Seller and
the Shareholders at the time of such assignment the prompt and complete
performance of all of such affiliates' obligations hereunder.
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 Third Party Beneficiaries. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any other persons other than the parties hereto and
the indemnified parties under Sections 8.1 and 8.2 hereof and their respective
successors, permitted assigns, heirs, legatees and personal representatives, as
the case may be, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party, nor
shall any provision give any third parties except the indemnified parties under
Sections 8.1 and 8.2 hereof, any right of subrogation or action over or against
any party. This Agreement is not intended to and does not create any third party
beneficiary rights whatsoever, except the indemnified parties under Sections 8.1
and 8.2 hereof.
11.6 No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any person.
11.7 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.
11.8 Complete Agreement. This document and the documents referred to herein
contain the complete 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.
11.9 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument.
11. 10 Governing Law. The internal law, not the law of conflicts, of the
State of Texas shall govern all questions concerning the construction, validity
and interpretation of this Agreement and the performance of the obligations
imposed by this Agreement.
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11.11 Remedies Cumulative. Except as set forth in Section 8.3(b), all
remedies of the parties provided herein shall, to the extent permitted by law,
be deemed cumulative and not exclusive of any thereof or of any other remedies
available to the parties, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained herein, and
every remedy given herein or by law to any party hereto may be exercised from
time to time, and as often as shall be deemed expedient, by such party.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
XXXXX/XXXXXX, INC.
By:
------------------------------------
Its:
------------------------------------
XXXXX/XXXXXX HOLDINGS, INC.
By:
------------------------------------
Its:
------------------------------------
XXXXXXXXX & XXXXXXX COMPANY
By:
------------------------------------
Its:
------------------------------------
----------------------------------------
Xxxxx Xxxxxxxx
----------------------------------------
Xxxxxx Xxxxxxxx
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