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AGREEMENT AND PLAN OF MERGER
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HOSPITALITY WORLDWIDE SERVICES, INC.
HWS ACQUISITION CORP.
BEKINS DISTRIBUTION SERVICES CO., INC.
AND THE
STOCKHOLDERS LISTED ON SCHEDULE I HERETO
As of January 1, 1998
TABLE OF CONTENTS
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Page
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ARTICLE I TRANSACTIONS AND TERMS OF THE MERGER; EXCHANGE OF
SHARES............................................................1
Section 1.1 Merger................................................1
Section 1.2 Time and Place of Closing.............................2
Section 1.3 Effective Time........................................2
Section 1.4 Charter...............................................2
Section 1.5 Bylaws................................................2
Section 1.6 Directors and Officers................................2
Section 1.7 Conversion of Shares..................................2
Section 1.8 Purchase Price Adjustment.............................4
Section 1.9 Make Whole Adjustment.................................5
Section 1.10 Exchange Procedures...................................7
Section 1.11 Rights of Former Stockholders of Bekins...............7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF BEKINS..........................8
Section 2.1 Corporate Existence...................................8
Section 2.2 Authorization; Validity...............................8
Section 2.3 No Breach of Statute or Contract......................9
Section 2.4 Subsidiaries.........................................10
Section 2.5 Capitalization.......................................10
Section 2.6 Financial Statements.................................10
Section 2.7 Absence of Certain Changes or Events.................11
Section 2.8 Liabilities..........................................12
Section 2.9 Taxes................................................12
Section 2.10 Proprietary Rights...................................13
Section 2.11 Insurance............................................14
Section 2.12 Litigation...........................................14
Section 2.13 Compliance with Laws.................................14
Section 2.14 Brokers..............................................15
Section 2.15 Employee Benefit Plans...............................15
Section 2.16 Labor Matters........................................19
Section 2.17 Environmental Matters................................19
Section 2.18 Illegal Payments.....................................20
Section 2.19 Business Relationships...............................20
Section 2.20 Suppliers and Customers..............................21
Section 2.21 Restrictive Documents or Laws........................21
Section 2.22 Properties...........................................21
Section 2.23 Contracts and Commitments............................22
Section 2.24 Accounts Receivable..................................23
Section 2.25 Officers, Employees and Compensation.................23
Section 2.26 Banks; Safe Deposit Boxes............................24
Section 2.27 Books of Account; Records............................24
Section 2.28 Credit Terms.........................................24
Section 2.29 Closing Date Effect..................................24
Section 2.30 Complete Disclosure..................................24
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TABLE OF CONTENTS (CONT'D)
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS........................25
Section 3.1 Shares...............................................25
Section 3.2 Authority Relative to and Validity of
this Agreement.......................................25
Section 3.3 Brokers..............................................25
Section 3.4 Seller's Addresses, Access to
Information, Experience, Etc.........................26
Section 3.5 Purchase Entirely for Own Account....................26
Section 3.6 Restricted Securities................................26
Section 3.7 Legends..............................................27
Section 3.8 Taxes................................................28
Section 3.9 Negative Assurance...................................28
Section 3.11 Complete Disclosure..................................29
Section 3.12 Capitalization.......................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND
ACQUISITION CORP..................................................29
Section 4.1 Corporate Existence..................................29
Section 4.2 Authorization; Validity..............................29
Section 4.3 Capitalization.......................................30
Section 4.4 Litigation...........................................30
Section 4.5 No Breach of Statute or Contract.....................31
Section 4.6 Investment...........................................31
Section 4.7 SEC Reports and Financial Statements.................31
Section 4.8 Absence of Undisclosed Liabilities...................32
Section 4.9 Brokers..............................................32
Section 4.10 Complete Disclosure..................................32
Section 4.11 No Transactions......................................33
Section 4.12 Formation and Authority of Acquisition
Corp.................................................33
Section 4.13 Filings..............................................33
ARTICLE V COVENANTS.........................................................34
Section 5.1 Covenant Against Disclosure..........................34
Section 5.2 Covenant Against Hiring..............................34
Section 5.3 Injunctive Relief....................................34
Section 5.4 Transition of Customers..............................35
Section 5.5 Severability.........................................35
Section 5.6 Further Assurances...................................35
Section 5.7 S Corporation Tax Returns............................35
Section 5.8 Announcements........................................35
Section 5.9 Consents.............................................36
Section 5.10 Certain Tax Deductions...............................36
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TABLE OF CONTENTS (CONT'D)
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ARTICLE VI CLOSING..........................................................36
Section 6.1 Deliveries by Sellers................................36
Section 6.2 Deliveries by Buyer and Acquisition
Corp.................................................37
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS..............................38
Section 7.1 Conditions to Obligations of Buyer and
Acquisition Corp.....................................38
Section 7.2 Conditions to Obligations of Sellers and
Bekins...............................................39
ARTICLE VIII INDEMNIFICATION................................................40
Section 8.1 Survival of Representations, Warranties
and Agreements.......................................40
Section 8.2 Indemnification......................................41
Section 8.3 Limitations on Indemnification.......................42
Section 8.4 Procedure for Indemnification with
Respect to Third-Party Claims........................43
Section 8.5 Procedure For Indemnification with
Respect to Non-Third-Party Claims....................44
ARTICLE IX MISCELLANEOUS PROVISIONS.........................................45
Section 9.1 Notices..............................................45
Section 9.2 Entire Agreement.....................................45
Section 9.3 Binding Effect; Assignment...........................45
Section 9.4 Captions.............................................46
Section 9.5 Expenses of Transaction..............................46
Section 9.6 Waiver; Consent......................................46
Section 9.7 No Third Party Beneficiaries.........................46
Section 9.8 Counterparts.........................................47
Section 9.9 Gender...............................................47
Section 9.10 Governing Law........................................47
Section 9.11 Arbitration..........................................47
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER dated as of January 1, 1998,
is by and among Bekins Distribution Services Co., Inc., a Delaware corporation
("Bekins"), each of the stockholders listed on Schedule I hereto (each a
"Seller" and collectively, "Sellers"), Hospitality Worldwide Services, Inc., a
New York corporation ("Buyer") and HWS Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Buyer ("Acquisition Corp.").
W I T N E S S E T H:
PREAMBLE
The Boards of Directors of Bekins, Buyer and Acquisition Corp.
are of the opinion that the transactions described herein are in the best
interests of the parties and their respective stockholders. This Agreement
provides for the acquisition of Bekins by Buyer pursuant to a merger whereby
Acquisition Corp. merges with and into Bekins. At the effective time of the
Merger (as hereinafter defined), the outstanding shares of the capital stock of
Bekins, $1.00 par value per share (the "Bekins Common Stock") shall be converted
into the right to receive shares of Common Stock, $ .01 par value per share, of
Buyer (the "HWS Common Stock"). As a result, Sellers shall become shareholders
of Buyer and Bekins shall continue to conduct its business and operations as a
wholly-owned subsidiary of Buyer.
The transactions described in this Agreement have been
approved by Sellers, who constitute all of the stockholders of Bekins and are
subject to obtaining certain regulatory approvals, and the satisfaction of
certain other conditions described in this Agreement.
It is the intention of the parties to this Agreement that the
Merger shall qualify for federal income tax purposes as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code, as amended
(the "Code").
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE I
TRANSACTIONS AND TERMS OF THE MERGER; EXCHANGE OF SHARES
Section 1.1 MERGER. Subject to the terms and conditions
of this Agreement, at the Effective Time (as hereinafter defined),
Acquisition Corp. shall be merged with and into Bekins in
accordance with the provisions of Section 251 of the Delaware General
Corporation Law (the "DGCL") and with the effect provided in Sections 259 and
261 of the DGCL (the "Merger"). Bekins shall be the surviving corporation of the
Merger (the "Surviving Corporation"), shall become a wholly-owned subsidiary of
Buyer and shall continue to be governed by the laws of the State of Delaware.
The Merger shall be consummated pursuant to the terms of this Agreement, which
has been approved and adopted by the respective Boards of Directors of Bekins,
Buyer and Acquisition Corp. and approved by each Seller.
Section 1.2 TIME AND PLACE OF CLOSING. The closing of the
transactions contemplated hereby (the "Closing") will take place on the date
that the Effective Time occurs but in no event later than, or at such other time
as the parties, acting through their authorized officers, may mutually agree
(the date on which such closing occurs being hereinafter referred to as the
"Closing Date"). The Closing shall be held at the office of Buyer's counsel,
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000.
Section 1.3 EFFECTIVE TIME. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Certificate of Merger reflecting the Merger (the "Certificate of
Merger") shall become effective with the Secretary of State of the State of
Delaware (the "Effective Time").
Section 1.4 CHARTER. The Certificate of Incorporation of
Acquisition Corp. in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until otherwise
amended or repealed, except that the name shall be changed to "Bekins
Distribution Services Co., Inc."
Section 1.5 BYLAWS. The Bylaws of Acquisition Corp. in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation until otherwise amended or repealed.
Section 1.6 DIRECTORS AND OFFICERS. The directors and officers
of Acquisition Corp. in office immediately prior to the Effective Time, together
with such additional persons as may thereafter be elected, shall serve as the
respective directors and officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
Section 1.7 CONVERSION OF SHARES. Subject to the provisions of
this Section 1.7 through Section 1.9 hereof, at the Effective Time, by virtue of
the Merger and without any action on the part of Bekins, Buyer, Acquisition
Corp. or the stockholders of any of the foregoing, the shares of the constituent
corporations to the Merger shall be converted as follows:
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(a) Each share of HWS Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Each share of Common Stock of Acquisition Corp. issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(c) (i) All of the shares of Bekins Common Stock issued and
outstanding at the Effective Time (the "Shares") shall cease to be outstanding
and shall be converted into shares of HWS Common Stock (the "Payment Shares")
having an aggregate value of $6.171 million (the "Purchase Price"). The Payment
Shares shall be issued and delivered by Buyer to each Seller in such amount set
forth next to each such Seller's name on Schedule I hereto in accordance with
the procedure set forth in Section 1.10 hereof.
(ii) Of the Payment Shares, a number of shares having an
aggregate value of $6.071 million shall be delivered pro rata to each
Seller in accordance with the procedures set forth in Section 1.10
hereof.
(iii) The remaining Payment Shares (the "Escrow Shares") shall
be delivered to Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP as escrow agent
(the "Escrow Agent") to be held in escrow in accordance with the terms
of this Agreement and the escrow agreement to be entered into among the
Escrow Agent, Sellers and Buyer substantially in the form attached as
Annex A hereto (the "Escrow Agreement"). The Escrow Shares shall be
released no later than five days after the completion of an audit by
Xxxxxx Xxxxxxxx LLP, Buyer's independent auditors, of a balance Sheet
dated the Closing Date, which audit shall be completed no later than
sixty (60) days after the Closing Date, provided that on such audited
Closing Date balance sheet (the "Audited Balance Sheet"), Bekins has
Net Working Capital (as hereinafter defined) equal to or greater than
$1.5 million. Such audit shall be prepared as of the Closing Date on a
basis consistent with the policies and procedures set forth on Exhibit
B hereto. If on the Audited Balance Sheet Bekins does not have Net
Working Capital equal to or greater than $1.5 million, that number of
Escrow Shares as are required to reduce the Purchase Price pursuant to
Section 1.8 hereof shall be delivered to Buyer to be returned to
treasury and the remaining Escrow Shares, if any, shall be delivered
pro rata to each Seller who has surrendered his Shares in accordance
with the procedures set forth in Section 1.10 hereof no later than five
days after the completion of such audit. In no event shall Sellers be
entitled to receive shares of HWS Common Stock in excess of the number
of shares of HWS Common Stock delivered to the Escrow Agent. Each of
the parties hereto hereby agrees to provide notice to the Escrow
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Agent in the form attached hereto as Exhibit A instructing the Escrow
Agent to release such number of Escrow Shares to Buyer and Sellers as
determined in accordance with this Section 1.7(c)(iii). Such notice may
be provided on behalf of each Seller by Xxxxx X. Xxxxx XX as its
representative.
(iv) For purposes of this Section 1.7 and for determining the
number of Payment Shares issuable in payment of the Purchase Price on
the Closing Date, the value of each Payment Share shall be equal to the
average of the closing sale price of a share of HWS Common Stock on the
American Stock Exchange, or Buyer's then principal trading market, for
the 20 consecutive trading days ending two trading days prior to the
Closing Date (such average closing sale price, the "Closing Date
Average Price"). For purposes of determining the number of Escrow
Shares to be released to Buyer or Sellers, the value of each Escrow
Share shall be equal to the Closing Date Average Price. No fractional
Payment Shares shall be issued, but any Seller entitled thereto shall
receive a full Payment Share.
Section 1.8 PURCHASE PRICE ADJUSTMENT. In the event that Net
Working Capital on the Audited Balance Sheet is less than $1.5 million, the
Purchase Price will be reduced on a dollar-for-dollar basis by the amount by
which Net Working Capital on the Audited Balance Sheet is less than $1.5
million. For the purposes of this Section 1.8, "Net Working Capital" shall mean
(i) total current assets plus (ii) the net amount of all debt repayments made by
Bekins after September 30, 1997 to and including the Closing Date (excluding the
portion of such net repayments in excess of $.7 million) plus (iii) $50,000 less
(iv) current liabilities other than current debt (which shall include a reserve
of $100,000 in respect of the Las Vegas labor claim referenced in Schedule 2.12
hereto), as such current assets and liabilities are reflected on the Audited
Balance Sheet. The net amount of debt repayments is the total amount of debt
repayments during the specified period less the total amount of borrowings
during the period by Bekins under its revolving credit facility with NationsBank
N.A. ("NationsBank") as reflected on Bekins' books and records. In the event
Sellers disagree with the calculation of Net Working Capital on the Audited
Balance Sheet, Sellers shall, within thirty (30) days of receipt of the Escrow
Shares, so object to Buyer in writing, setting forth a specific description of
the nature of the objection and the number of Escrow Shares Sellers believe
should have been released to them. For purposes of the preceding sentence, Xxxxx
X. Xxxxx XX may give such notice on behalf of each Seller. If no objection is
received by Buyer on or before the last day of such thirty (30) day period, then
the number of Escrow Shares calculated by Buyer shall be final. If an objection
has been made and Buyer and Sellers are unable to resolve all of their
disagreements with respect thereto within fifteen (15) days following delivery
of Sellers' objection, the dispute shall be
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submitted to arbitration as provided in Section 9.11 hereof. The arbitrator
shall be instructed to deliver his or her determination of the dispute to the
parties no later than thirty (30) days after the arbitration hearing. Buyer
shall provide to Sellers and their accountants full access to all relevant
books, records and work papers (including working papers of Xxxxxx Xxxxxxxx LLP)
utilized in calculating the number of Escrow Shares to be delivered to Sellers
from escrow.
Section 1.9 MAKE WHOLE ADJUSTMENT. (a) In the event that the
average closing price of a share of HWS Common Stock during the 20 trading day
period ending two trading days prior to the one year anniversary of the Closing
Date (such average closing sale price, the "Anniversary Date Average Price") is
less than 85% of the Closing Date Average Price, Buyer shall issue pro rata to
Sellers a number of additional shares of HWS Common Stock (the "Make Whole
Shares") to each Seller that holds any Payment Shares on the one year
anniversary of the Closing Date. The number of Make Whole Shares to be issued to
Sellers shall be equal to (i) 85% of the Purchase Price less (x) the number of
Payment Shares delivered to Sellers multiplied by (y) the Anniversary Date
Average Price divided by (ii) the Anniversary Date Average Price. The Make Whole
Shares, if any, shall be delivered to Sellers ten days after the one year
anniversary of Closing Date.
(b) Buyer's obligation to issue the Make Whole Shares shall be
absolute, non-contingent and irrevocable, independent of all other legal
relationships among the parties to this Agreement and is not subject to any
right of set-off or other reduction of any kind, whether for any claim of any
kind whatsoever, liability, damage, loss, expense, cause of action or otherwise.
(c) If Buyer shall at any time during the period from the
Closing Date to the one year anniversary of the Closing Date subdivide the
outstanding HWS Common Stock into a greater number of shares or consolidate the
outstanding HWS Common Stock into a smaller number of shares (any such event
being called a "HWS Stock Reorganization"), then the number of Make Whole Shares
to be issued shall be adjusted to a number determined by multiplying the number
of Make Whole Shares that would have been issued pursuant to the foregoing
formula by a fraction, the numerator of which shall be the number of shares of
HWS Common Stock outstanding after giving effect to such HWS Stock
Reorganization and the denominator of which shall be the number of shares of HWS
Common Stock outstanding immediately before such HWS Stock Reorganization.
(d) (A) If (i) Buyer agrees to merge or consolidate with
another entity and Buyer is not the surviving entity upon consummation
of the merger or consolidation (the date of such consummation being the
"Transaction Date"), (ii) the Transaction Date occurs on or before the
last day upon which the Make Whole Shares could by delivered under
Section 1.9(a)
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hereof and the Make Whole Shares have not been issued and delivered to
Sellers and (iii) the value two trading days before the Transaction
Date of the consideration per share of HWS Common Stock to be received
by shareholders of Buyer, determined by the Buyer's board of directors
acting in good faith (the "Consideration Value") in such merger or
consolidation is not equal to or greater then 85% of the Closing Date
Average Price, then on the Transaction Date immediately prior to the
consummation of the merger or consolidation, Buyer shall deliver to
each Seller for each share of HWS Common Stock originally issued at the
closing hereunder and held by such Seller on the Transaction Date
(before the consummation of the merger or consolidation) either (x) an
amount of cash equal to the difference between 85% of the Closing Date
Average Price and the Consideration Value or (y) shares of HWS Common
Stock having a value equal to the difference between 85% of the Closing
Date Average Price and the Consideration Value, with such value
determined based upon the average closing price of a share of HWS
Common Stock during the 20 trading days ending two trading days prior
to the Transaction Date.
(B) If (i) on or before the last date upon which the Make
Whole Shares could be delivered under Section 1.9(a) hereof (provided
that no Make Whole Shares have been issued and delivered to Sellers),
Buyer concludes a transaction required to be reported under Section
13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations promulgated thereunder (the "13(e)
Transaction") and as a result of such transaction Buyer has fewer than
750 holders (including persons whose shares are held in street name) of
HWS Common Stock at the conclusion of the 13(e) Transaction and (ii)
the average closing price of a share of HWS Common Stock on the 20
trading days ending two trading days prior to the last day upon which
shareholders of Buyer could tender shares of HWS Common Stock in the
13(e) Transaction (the "13(e) Transaction Date Average Price") is less
than 85% of the Closing Date Average Price, on the date Buyer
distributes the consideration for the shares of HWS Common Stock
tendered and accepted in the 13(e) Transaction, Buyer shall pay to each
Seller who tendered shares of HWS Common Stock originally issued on the
Closing Date that the Buyer accepted in the 13(e) Transaction an amount
of cash per tendered and accepted share equal to the difference between
85% of the Closing Date Average Price and the 13(e) Transaction Date
Average Price, provided that Buyer shall also pay to such Sellers the
consideration per tendered and accepted share of HWS Common Stock paid
in the 13(e) Transaction to tendering shareholders for shares of HWS
Common Stock accepted by the Buyer.
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(c) Upon payment of the amounts provided in Section 1.9(d)(A),
Buyer and its successors and assigns shall have no further obligation
to issue the Make Whole Shares under Section 1.9(a). Upon payment of
the amounts provided in Section 1.9(d)(B), Buyer shall have no further
obligation to issue the Make Whole Shares under Section 1.9(a) to
Sellers with respect to tendered shares that the Buyer accepted, but
Buyer shall remain obligated to issue the Make Whole Shares under
Section 1.9(a) with respect to all shares of HWS Common Stock that were
originally issued on the Closing Date and remain issued and outstanding
and owned by Sellers on the first anniversary date of the Closing Date.
(e) If, on or before the last date upon which the Make Whole
Shares could be delivered under Section 1.9(a) hereof, Buyer concludes a
recapitalization, capital reorganization or other similar transaction and as a
result shares of HWS Common Stock are exchanged, converted, reclassified or
otherwise changed, in whole or in part, into one or more classes of other shares
or equity securities of Buyer (or securities convertible into shares or other
equity securities of Buyer), such shares, other equity securities or convertible
securities received by Sellers shall be subject to the terms of this Section
1.9, and Buyer's board of directors, acting in good faith, shall take such
actions as may reasonably be necessary to assure that the Sellers receive, with
respect to such shares, other equity securities or convertible securities, the
full economic benefit intended by this Section 1.9 with respect to the HWS
Common Stock received by Sellers on the Closing Date.
(f) The Anniversary Date Average Price, the 13(e) Transaction
Date Average Price, and the value of HWS Common Stock for the purposes of clause
(y) of Section 1.9(d)(A) shall be determined in the same manner that the Closing
Date Average Price is determined under Section 1.7(c)(iv) hereof.
Section 1.10 EXCHANGE PROCEDURES. At the Closing, each holder
of shares of Bekins Common Stock issued and outstanding at the Effective Time
shall surrender the certificate or certificates representing such shares to
Buyer and shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 1.7(c) of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 1.11 of this Agreement. The certificate or
certificates of Bekins Common Stock so surrendered shall be duly endorsed in
blank for transfer or accompanied by separate stock powers duly executed in
blank.
Section 1.11 RIGHTS OF FORMER STOCKHOLDERS OF BEKINS. At the
Effective Time, the stock transfer book of Bekins shall be closed as to holders
of Bekins Common Stock immediately prior to the Effective Time and no transfer
of Bekins Common Stock by any such holder shall thereafter be made or
recognized. Until
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surrendered for exchange in accordance with the provisions of Section 1.10 of
this Agreement, each certificate theretofore representing shares of Bekins
Common Stock shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 1.7(c) and 1.9
of this Agreement in exchange therefor, subject, however, to Bekins' obligation
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which have been declared or made by Bekins in respect of such
shares of Bekins Common Stock in accordance with the terms of this Agreement and
which remain unpaid at the Effective Time. Whenever a dividend or other
distribution is declared by Buyer on the HWS Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include dividends
or other distributions on all HWS Common Stock issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of HWS Common Stock as of any time subsequent to the Effective Time shall
be delivered to the holder of any certificate representing shares of Bekins
Common Stock issued and outstanding at the Effective Time until such holder
surrenders such certificate for exchange as provided in Section 1.10 of this
Agreement. However, upon surrender of such certificate, both the HWS Common
Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered dividends and cash payments
payable hereunder (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
ARTICLE II REPRESENTATIONS AND WARRANTIES OF BEKINS
Bekins represents and warrants to Buyer and Acquisition Corp.
that:
SECTION 2.1 CORPORATE EXISTENCE. Bekins is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to own, operate or
lease its properties and to carry on its businesses as now being conducted.
Complete and correct copies of the Certificate of Incorporation of Bekins and
all amendments thereto, certified by the Secretary of State of Delaware and of
the By-Laws of Bekins and all amendments thereto, certified by the Secretary of
Bekins, have been heretofore delivered to Buyer and Acquisition Corp. As a
result of the business conducted by Bekins or the character or location of its
properties, Bekins is duly qualified to do business and in good standing in
those jurisdictions listed on Schedule 2.1 hereto, which are the only
jurisdictions where the nature of the business conducted by it or the character
or location of its properties requires such qualification.
SECTION 2.2 AUTHORIZATION; VALIDITY. Bekins has all requisite
corporate power and authority to enter into this
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Agreement, the Employment Agreements to be entered into by and between Bekins
and each of Xxxxxxx X. Xxxxx, Xxxxxx X. Field, Xxxxxx X. Xxxxx and Xxxxxxx X.
Xxxxx substantially in the forms of Annex B, C, D and E hereto, respectively
(the "Employment Agreements"), perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby without the
approval of any third party except as listed on Schedule 2.2 hereto. All
necessary corporate action has been taken by Bekins with respect to the
execution, delivery and performance of this Agreement and the Employment
Agreements and the consummation of the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Employment
Agreements by Bekins and the performance by Bekins of its obligations hereunder
and thereunder has been duly authorized by its Board of Directors and no further
authorization on the part of Bekins is necessary to authorize the execution and
delivery by it of, and the performance of its obligations under, this Agreement
and the Employment Agreements. Except as set forth on Schedule 2.2 hereto, there
are no corporate, contractual, statutory or other restrictions of any kind upon
the power and authority of Bekins to execute and deliver this Agreement and the
Employment Agreements, and to consummate the transactions contemplated hereunder
and thereunder and no action, waiver or consent by any foreign, Federal, state,
municipal or other governmental department, commission or agency ("Governmental
Authority") is necessary to make each of this Agreement and the Employment
Agreements a valid instrument binding upon Bekins in accordance with its terms.
This Agreement has been duly executed and delivered by Bekins and constitutes,
and the Employment Agreements, when executed and delivered by Bekins in
accordance with their terms will constitute, legal, valid and binding
obligations of Bekins, enforceable in accordance with their terms, except (i) as
such enforceability may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, (ii) as such obligations are subject to general principles of equity
and (iii) as rights to indemnity may be limited by federal or state securities
laws or by public policy.
SECTION 2.3 NO BREACH OF STATUTE OR CONTRACT. Neither the
execution and delivery of any of this Agreement or the Employment Agreements nor
the consummation by Bekins or any Seller of the transactions contemplated hereby
and thereby, nor compliance by Bekins or any Seller with any of the provisions
hereof or thereof, will violate or cause a default under any statute (domestic
or foreign), judgment, order, writ, decree, rule or regulation of any court or
Governmental Authority applicable to Bekins or any of its properties; breach or
conflict with any of the terms, provisions or conditions of the Certificate of
Incorporation or By-Laws of Bekins; or, except as provided on Schedule 2.3
hereto, violate, conflict with or breach any agreement, contract, mortgage,
instrument, indenture or license to which Bekins or any
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Seller is a party or by which Bekins or any Seller is or may be bound, or
constitute a default (in and of itself or with the giving of notice, passage of
time or both) thereunder, or result in the creation or imposition of any
encumbrance upon, or give to any other party or parties any claim, interest or
right, including rights of termination or cancellation in, or with respect to,
any of Bekins' properties or the Shares.
SECTION 2.4 SUBSIDIARIES. Bekins has no subsidiaries or equity
investments in any other corporation, association, partnership, joint venture or
other entity except as listed on Schedule 2.4 hereto.
SECTION 2.5 CAPITALIZATION. Bekins authorized capital stock
consists of 2,000 shares of Bekins Common Stock of which 988.72 shares are
issued and outstanding. No shares of Bekins capital stock are owned directly or
indirectly by Bekins. All issued and outstanding shares of Bekins capital stock
are duly authorized and issued, fully paid and non-assessable. There are no
subscriptions, options, warrants, calls, rights, contracts, commitments,
understandings, restrictions or arrangements of any kind relating to the
issuance, sale or transfer of any shares of Bekins capital stock including,
without limitation, any rights of conversion or exchange under any outstanding
securities or other instruments. There are no voting trusts or other agreements
or understandings of any kind with respect to Bekins outstanding capital stock.
SECTION 2.6 FINANCIAL STATEMENTS. The following financial
statements, together with the notes thereto, reviewed by Deloitte & Touche LLP,
independent public accountants, have been previously delivered to Buyer and
Acquisition Corp. (collectively the "Financial Statements"):
(i) balance sheets of Bekins as of September 30, 1997, 1996
and 1995 (the "Balance Sheets");
(ii) statements of income and retained earnings of Bekins for
the 12 month periods ended September 30, 1997, 1996 and 1995
(the "Income Statements"); and
(iii) statements of cash flows of Bekins for the 12 month
periods ended September 30, 1997, 1996 and 1995 (the "Cash
Flow Statements").
The Financial Statements and notes thereto fairly present in
all material respects the financial condition, results of operations and cash
flows of Bekins as of the dates thereof with respect to the Balance Sheets and
as to the periods then ended with respect to the Income Statements and Cash Flow
Statements and have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied. Except as disclosed on
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Schedule 2.6 hereto, Bekins had at September 30, 1997 no liability or obligation
of any kind or manner, either liquidated, unliquidated, direct, accrued,
absolute, contingent or otherwise, whether due or to become due, except as
incurred in the ordinary course of business, which were required to be reflected
by GAAP in the Financial Statements and which were not accurately reflected in
the Financial Statements. Bekins' EBITDA (as hereinafter defined) for the 12
months ended September 30, 1997 was at least $1.7 million (after adding back
consulting fees paid to Xxxx-X'Xxxxxxx and Xxxxx X. Xxxxx XX totalling an
aggregate of $180,000). For purposes of this Agreement, "EBITDA" shall mean
earnings before interest, income taxes, depreciation and amortization.
SECTION 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
set forth on Schedule 2.7 hereto, since September 30, 1997 there has not been
with respect to Bekins:
(a) Any change in its business operations (as now conducted or
as presently proposed to be conducted), assets, properties or rights,
prospects or condition (financial or otherwise), or combination thereof
(collectively, the "Business") which reasonably could be expected to
have a material adverse effect on the Business as presently conducted,
properties, assets, liabilities, financial condition or operations of
Bekins (a "Material Adverse Effect").
(b) Other than in the usual and ordinary course of business,
any increase in amounts payable by Bekins to or for the benefit of or
committed to be paid by Bekins to or for the benefit of any officer,
director, stockholder, consultant, agent or employee of Bekins, in any
capacity, or in any benefits granted under any bonus, stock option,
profit sharing, pension, retirement, deferred compensation, insurance,
or other direct or indirect benefit plan with respect to any such
person;
(c) Any transaction entered into or carried out other than in
the ordinary and usual course of its business including, without
limitation, any transaction resulting in the incurrence of liabilities
or obligations;
(d) Any material change made in the methods of doing business
or in the accounting principles or practices or the method of
application of such principles or practices;
(e) Any mortgage, pledge, lien, security interest,
hypothecation, charge or other encumbrance imposed or agreed to be
imposed on or with respect to any of its properties which will not be
discharged prior to the Closing Date except for financing statements
filed by personal property lessors as a matter of notification only or
liens for taxes, assessments,
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governmental charges or levies that are not yet due and payable, liens
with respect to the non-material claims of landlords, carriers,
contractors, materialmen, repairmen, mechanics and similar persons, any
liens or imperfections of title which are matters of record and that
individually or in the aggregate do not prevent the occupancy and use
of the property owned by Bekins in Orlando, Florida, any encroachments
or other facts or conditions that would be revealed by an accurate
survey of the Orlando, Florida property, any existing applicable
building and zoning ordinances, liens held by Bekins' bank lenders and
liens held by Aetna Casualty and Surety Company ("Aetna") to secure
bonds issued on behalf of Bekins (collectively, "Permitted Liens");
(f) Any sale, lease or other disposition of, or any agreement
to sell, lease or otherwise dispose of any of its properties, assets,
individually or in the aggregate, in excess of $15,000 or any
agreements to provide services for consideration greater than $50,000.
(g) Any purchase of or any agreement to purchase capital
assets or any lease or any agreement to lease, as lessee, any capital
assets, individually or in the aggregate, in excess of $50,000.
(h) Any modification, waiver, change, amendment, release,
rescission or termination of, or accord and satisfaction with respect
to any material term, condition or provision of any contract,
agreement, license or other instrument to which Bekins is a party,
other than any satisfaction by performance in accordance with the terms
thereof in the usual and ordinary course of its business;
(i) Any declaration of, or dividend or other distribution to
Bekins' stockholders, purchase, redemption or reclassification of any
of Bekins' capital stock or stock split, stock dividend, exchange or
recapitalization or execution of any agreement in respect of the
foregoing; or
(j) Any damage, destruction or similar loss, whether or not
covered by insurance, adversely affecting the Business.
SECTION 2.8 LIABILITIES. Except as reflected on the balance
sheet of Bekins as of September 30, 1997 or set forth on Schedule 2.8 hereto,
Bekins has no material liability or obligation of any nature (whether
liquidated, unliquidated, accrued, absolute, contingent or otherwise and whether
due or to become due).
SECTION 2.9 TAXES. Except as set forth on Schedule 2.9 hereto:
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(a) Bekins has duly filed all federal, state, local and
foreign tax returns and tax reports required to be filed by it as of
the Closing Date, all such returns and reports are true, correct and
complete, none of such returns and reports has been amended, and all
taxes, assessments, fees and other governmental charges arising under
such returns and reports have been fully paid for all periods prior to
December 31, 1997 or will be timely paid;
(b) Schedule 2.9 hereto sets forth the dates and results of
any and all audits of federal, state, local and foreign tax returns of
Bekins performed by federal, state, local or foreign taxing
authorities. No waivers of any applicable statutes of limitations are
outstanding. All deficiencies proposed as a result of any audits have
been paid or settled. There is no pending or threatened federal, state,
local or foreign tax audit of Bekins and no agreement with any federal,
state, local or foreign tax authority that may affect the subsequent
tax liabilities of Bekins;
(c) Bekins has no liabilities for state or federal taxes based
on income other than as reflected on the Financial Statements or
arising in the ordinary course of business since September 30, 1997 and
no federal, state, local or foreign tax authority is now asserting or
threatening to assert any deficiency or assessment for additional taxes
with respect to Bekins; and
(d) Without limiting the foregoing, (i) the books and records
of Bekins include adequate provision (in accordance with GAAP) for all
taxes, assessments, fees, penalties and governmental charges that have
been or may, in the future, be assessed against Bekins for all periods
ending on or prior to the Closing Date (without giving effect to the
termination of Bekins' status as an S corporation on the Closing Date),
and (ii) Bekins is not as of the Closing Date, and will not be as of
the Closing Date, liable for taxes, assessments, fees or governmental
charges for which Bekins has not made adequate provision on its books
and records (without giving effect to the termination of Bekins' status
as an S corporation on the Closing Date).
Section 2.10 PROPRIETARY RIGHTS. Schedule 2.10 hereto sets
forth all patents, inventions, trade secrets, processes, proprietary rights,
proprietary knowledge, know-how, computer software, trademarks, names, service
marks, trade names, copyrights, symbols, logos, franchises and permits of Bekins
and all applications therefor, registrations thereof and licenses, sublicenses
or agreements in respect thereof which Bekins owns or has the right to use or to
which Bekins is a party and all filings, registrations or issuances of any of
the foregoing with or by any federal, state, local or foreign regulatory,
administrative or
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governmental office or offices (collectively, the "Proprietary Rights"). Except
as set forth on Schedule 2.10 hereto, Bekins is the sole and exclusive owner of
all right, title and interest in and to all Proprietary Rights free and clear of
all liens, claims, charges, equities, rights of use, encumbrances and
restrictions whatsoever. The Business as conducted prior to the Closing Date was
not, is not and will not be in contravention of any patent, trademark, copyright
or other Proprietary Right of any third party.
Except as set forth on Schedule 2.10 hereto, none of the Proprietary Rights has
been hypothecated, sold, assigned or licensed by Bekins or any other person,
corporation, firm or other legal entity and none of the Proprietary Rights
infringe upon or violate the rights of any person, firm, corporation, or other
legal entity. Bekins has not given any indemnification against patent, trademark
or copyright infringement as to any equipment, materials, products, services or
supplies that Bekins uses, licenses or sells; there is not pending or threatened
any claim to sell, engage in or employ any such product, process, method or
operation.
SECTION 2.11 INSURANCE. Schedule 2.11 hereto lists all
policies of life, casualty, liability and other forms hereto of insurance owned
or held by Bekins, true and complete copies of which have been heretofore
delivered to Buyer, and all such policies are currently in full force and
effect. Bekins has not received any notice from any insurer thereunder with
respect to the cancellation of any such insurance. All premiums due and payable
on such policies have been paid. Other than with respect to customary deductible
amounts, Bekins is not a co-insurer under any term of any insurance policy.
Bekins will use its best efforts to keep such policies duly in force with all
premiums paid through a date not less than 10 days after the Closing Date.
SECTION 2.12 LITIGATION. Except as set forth on Schedule 2.12
hereto, there are no claims, actions, suits or proceedings pending or threatened
against or affecting Bekins (or any officer or director of Bekins) or any of
Bekins' properties, before any federal, state, local or foreign court or other
governmental body. Bekins is not subject to or in default with respect to any
judgment, order, writ, injunction or decree or any governmental restriction.
SECTION 2.13 COMPLIANCE WITH LAWS.
(a) Bekins is in compliance in all material respects with all
laws, ordinances, regulations and orders applicable to it and has no
notice or knowledge of any violations, whether actual, claimed or
alleged, thereof.
(b) Schedule 2.13(b) hereto lists all franchises, licenses,
permits, consents, authorizations, approvals and certificates of any
Governmental Authority or body used in
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conducting the Business (collectively, the "Permits"). Each of the
Permits is currently valid and in full force and effect and the Permits
constitute all franchises, licenses, permits, consents, authorizations,
approvals and certificates of any regulatory, administrative or other
governmental agency or body necessary to the conduct of the Business.
Bekins is not in violation of any of the Permits and there is no
pending or threatened proceeding which could result in the revocation
or cancellation of, or inability of Bekins to renew, any Permit.
SECTION 2.14 BROKERS. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by or on
behalf of Sellers and Bekins in such a manner as not to give rise to any claim
against Buyer, Acquisition Corp., Sellers or Bekins for a finder's fee,
brokerage commission, advisory fee or other similar payment.
SECTION 2.15 EMPLOYEE BENEFIT PLANS. Schedule 2.15 hereto
comprises a listing of each bonus, stock option, stock purchase, benefit, profit
sharing, savings, retirement, liability, insurance, incentive, deferred
compensation, and other similar fringe or employee benefit plans, programs or
arrangements for the benefit of or relating to, any employee of, or independent
contractor or consultant to, and all other compensation practices, policies,
terms or conditions, whether written or unwritten (the "Employee Plans") which
Bekins presently maintains, to which Bekins presently contributes or under which
Bekins has any liability and which relate to employees or independent
contractors of Bekins. The Employee Plans administered by Bekins have been
administered in all material respects in accordance with all requirements of
applicable law and terms of each such plan. Each Employee Plan that is required
or intended to be qualified under applicable law or registered or approved by a
governmental agency or authority, has been so qualified, registered or approved
by the appropriate governmental agency or authority and, to the best of Bekins'
or Sellers' knowledge, nothing has occurred since the date of the last
qualification, registration or approval to adversely affect, or cause, the
appropriate governmental agency or authority to revoke such qualification,
registration or approval. All contributions (including premiums) in material
amounts required by law or contract to have been made or accrued by Bekins under
or with respect to any Employee Plan have been paid or accrued by Bekins, as the
case may be. Without limiting the foregoing, there are no material unfunded
liabilities under any Employee Plan. Bekins has not received notice of any
investigation, litigation or other enforcement action against Bekins with
respect to any of the Employee Plans. There are no pending actions, suits or
claims by former or present employees of Bekins (or their beneficiaries) with
respect to Employee Plans or the assets or fiduciaries thereof (other than
routine claims for benefits).
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(a) Each "employee pension benefit plan," as defined in
section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained by Bekins or any trade or business (whether or not
incorporated) which is under common control, or which is treated as a single
employer, with Bekins ("ERISA Affiliate") under section 414(b), (c), (m) or (o)
of the Internal Revenue Code of 1986, as amended (the "Code") or to which Bekins
or any ERISA Affiliate contributed or is obligated to contribute thereunder (the
"Pension Plans"), is listed on Schedule 2.15(a). All such plans that are
intended to qualify under section 401 ET SEQ. of the Code do so qualify, the
trusts maintained pursuant thereto (the "Pension Trusts") that are intended to
be exempt from federal income taxation under section 501 of the Code are so
exempt, and Bekins has received a determination letter from the Internal Revenue
Service (the "IRS") with respect to each such Pension Plan and each such Pension
Trust to the effect that such Pension Plan is qualified and such Pension Trust
is exempt. No such determination letter has been revoked, no revocation has been
threatened and nothing has occurred with respect to the operation of any Pension
Plan that could reasonably be expected to cause such revocation. Except as
described on Schedule 2.15(a), none of the Pension Plans or Pension Trusts have
been amended since the effective date of each respective determination letter.
(b) Each "employee welfare benefit plan," as defined in
section 3(1) of ERISA, each other employee benefit arrangement or payroll
practice, including, without limitation, all severance pay, sick leave, vacation
pay, salary continuation for disability, retirement, deferred compensation,
bonus, long-term incentive, stock option, stock purchase, hospitalization,
medical insurance, life insurance, and scholarship plans or programs maintained
by Bekins or to which Bekins contributed or is obligated to contribute
thereunder (all such plans being hereinafter referred to as the "Employee
Benefit Plans") and each trust maintained pursuant to an Employee Benefit Plan
(the "Benefit Trusts") is listed on Schedule 2.15(b). Bekins has received a
determination letter from the IRS with respect to each Employee Benefit Trust
that is intended to be exempt from federal taxation under section 501 of the
Code. No such determination letter has been revoked, no revocation has been
threatened, and nothing has occurred with respect to the operation of any
Employee Benefit Trust that could reasonably be expected to cause such
revocation. Except as described on Schedule 2.15(b), none of the Employee
Benefit Trusts have been amended since the effective date of each respective
determination letter.
(c) Bekins has delivered to Buyer (i) a true, correct, and
complete copy of each Pension Plan, including copies of all amendments made
since the most recent favorable determination letter, or Employee Benefit Plan,
or, in the case of any unwritten Employee Benefit Plan, descriptions thereof;
(ii) copies of the three most recent annual reports (Form 5500 series) filed
with the IRS with respect to each Pension Plan or Employee Benefit Plan for
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which such report is required by applicable law, including, without limitation,
all schedules thereto and all financial statements with attached opinions of
independent accountants; (iii) the most recent summary plan description for each
Pension Plan or Employee Benefit Plan for which such a summary plan description
is required by applicable Law; (iv) each trust agreement and insurance or
annuity contract relating to any Pension Plan or Employee Benefit Plan; and (v)
each service agreement and other administrative contract relating to any Pension
Plan or Employee Benefit Plan.
(d) Except as described on Schedule 2.15(d), neither Bekins
nor any ERISA Affiliate has ever contributed to any multi-employer pension plan
subject to section 413 of the Code, or multiple welfare arrangement, as defined
in section 3(40) of ERISA.
(e) There is no violation of ERISA, the Code or other
applicable law with respect to the filing of reports, returns, and other similar
documents required to be filed with any governmental agency with respect to any
Pension Plan or Employee Benefit Plan. All reports, returns or similar documents
required to be distributed to any Pension Plan or Employee Benefit Plan
participant have been timely distributed.
(f) The Pension Plans and Employee Benefit Plans have been
maintained and administered in accordance with their terms and with all
provisions of ERISA, the Code and other applicable Law, and neither Bekins or
any "party-in-interest" or "disqualified person" with respect to the Pension
Plans and the Employee Benefit Plans has engaged in a "prohibited transaction"
within the meaning of section 4975 of the Code or section 406 of ERISA. Bekins
and each ERISA Affiliate has performed all of its obligations currently required
to have been performed under all Pension Plans and Employee Benefit Plans. No
event has occurred that could subject Bekins, any ERISA Affiliate or any Pension
Trust or Employee Benefit Trust, as applicable, to any tax liability arising
under section 511 of the Code that has not been timely paid. Bekins and all
ERISA Affiliates have complied with all obligations imposed by section 4980B of
the Code.
(g) None of Bekins, any trustee, administrator or other
fiduciary has engaged in any transaction or acted in a manner that could, or
failed to act so as to, subject Bekins or any fiduciary to any liability for
breach of fiduciary duty under ERISA or other applicable Law. With respect to
any Pension Plan and Employee Benefit Plan, Pension Trust or Employee Benefit
Trust, no insurance contract, annuity contract, or other agreement or
arrangement will impose a penalty, discount, sales charge, or other reduction on
account of the withdrawal of assets from such organization or the change in
investment or such assets.
(h) Except as disclosed on Schedule 2.15(h), there has been no
"reportable event" as that term is defined in section 4043
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of ERISA and the regulations thereunder with respect to the Pension Plans
subject to Title IV of ERISA that would require the giving of notice or any
event requiring disclosure under section 404(c)(3)(C) or 4063(a) of ERISA.
(i) Except as disclosed on Schedule 2.15(i), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming due to
any employee or group of employees; (ii) increase any benefits otherwise payable
under any Employee Benefit Plan or Pension Plan; or (iii) result in the
acceleration of the time of payment or vesting of any such benefits. Except as
disclosed on Schedule 2.15(i), there are no severance agreements, employment
agreements, or consulting agreements between Bekins and any employee or any
individual which provide for payments over a period in excess of one year or
which when aggregated with all such agreements or arrangements provides for
total payments in excess of $100,000. True, correct and complete copies of all
such severance agreements, employment agreements and consulting agreements have
been provided to Buyer.
(j) Except as disclosed on Schedule 2.15(j) hereto, no stock
or other security issued by Bekins or any of its subsidiaries forms or has
formed a part of the assets of any Pension Plan or Employee Benefit Plan within
the last five years.
(k) Except as disclosed on Schedule 2.15(k), all contributions
to, and payments from, each Pension Plan and Employee Benefit Plan that have
been required to be made in accordance with the terms of such plans and, when
applicable, section 302 of ERISA or section 412 of the Code, have been timely
made; (ii) there has been no application for or waiver of the minimum funding
standards of section 412 of the Code with respect to the Pension Plan; and (iii)
none of the Pension Plans has an "accumulated funding deficiency" within the
meaning of section 412(a) of the Code as of the end of the most recently
completed plan year. As of the most recent valuation date for each Pension Plan
that is a "defined benefit pension plan," as defined in section 3(35) of ERISA
(hereinafter a "Defined Benefit Plan"), there was not any amount of "unfunded
benefit liability." None of Seller nor Bekins is not aware of any facts or
circumstances that could change the funded status of any such Defined Benefit
Plan. Bekins has furnished Buyer with the most recent actuarial report or
valuation with respect to each Defined Benefit Plan.
(l) Except as disclosed on Schedule 2.15(l), all premium
payments due to the Pension Benefit Guaranty Corporation pursuant to section
4007 of ERISA prior to the date hereof have been timely paid.
(m) Except as disclosed on Schedule 2.15(m), there are no
investigations by any Governmental Authority, other claims,
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suits or proceedings against or involving any Pension Plan or Employee Benefit
Plan, and no events of default that could give rise to liability to Bekins or
any ERISA Affiliate.
(n) Except as disclosed on Schedule 2.15(n), no employee or
former employee of Bekins or any ERISA Affiliate is, by reason of such
employee's or former employee's employment, entitled to receive any benefits,
including without limitation, death or medical benefits (whether or not insured)
beyond retirement or other termination of employment, other than (i) death or
retirement benefits under an Pension Plan; or (ii) continuation coverage
pursuant to section 4980B of the Code.
(o) Except as disclosed on Schedule 2.15(o), Bekins has not
incurred, nor, after the Closing, will Bekins or Buyer incur, any liability
under Section 4980B of the Code with respect to any failure to comply by Bekins
with the continuation health care coverage requirements of Section 4980B of the
Code and Sections 601 and 608 of ERISA, which failure occurs with respect to any
person who is or was a qualified beneficiary of an Employee (as defined in
Section 4980B(g)(1) of the Code).
SECTION 2.16 LABOR MATTERS. Except as set forth on Schedule
2.16 hereto, none of Bekins' employees is represented by any labor union,
association or other organization. Bekins has not received any notice from any
labor union, association or other organization that it represents or intends to
represent Bekins' employees. Bekins has complied with all applicable laws
affecting employment and employment practices, terms and conditions of
employment and wages and hours. Bekins has not received any notice of and there
is no complaint alleging unfair labor practices against Bekins pending, or to
the knowledge of Bekins, threatened before the National Labor Relations Board or
any other charges or complaints pending, or to the knowledge of Bekins,
threatened before the Equal Employment Opportunity Commission, any state or
local Human Rights Commission or any other state or local agency in respect of
labor or employment matters. No labor strike, material dispute, slowdown or
stoppage has occurred with respect to Bekins' employees and there is no labor
strike, material dispute, slowdown or stoppage pending or, to the knowledge of
Bekins, threatened with respect to Bekins' employees. Schedule 2.16 hereto sets
forth all pending grievances or arbitration proceedings against Bekins with
respect to Bekins' operation of the Business.
SECTION 2.17 ENVIRONMENTAL MATTERS. (a) Bekins is not the
subject of, or, to Bekins, knowledge, being threatened to be the subject of (i)
any enforcement proceeding, or (ii) any investigation, brought in either case
under any Federal, state or local environmental law, rule, regulation, or
ordinance at any time in effect or (iii) any third party claim relating to
environmental conditions on or off the properties of Bekins. Bekins has not been
notified that it must obtain any permits and licenses or file
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documents for the operation of its business under federal, state and local laws
relating to pollution protection of the environment. Bekins has not been
notified of any conditions on or off the properties of Bekins which will give
rise to any liabilities of Bekins under any Federal, state or local
environmental law, rule, regulation or ordinance, or as the result of any claim
of any third party. For the purposes of this Section 2.17, an investigation
shall include, but is not limited to, any written notice received by Bekins
which relates to the onsite or offsite disposal, release, discharge or spill of
any waste, waste water, pollutant or contaminants.
(b) There are no toxic wastes or other toxic or hazardous
substances or materials, pollutants or contaminants which Bekins (or, to the
best of Bekins' knowledge, any previous occupant of Bekins' facilities) has
used, stored or otherwise held in or on any of the facilities of Bekins, which,
are present at or have migrated from the facilities, whether contained in
ambient air, surface water, groundwater, land surface or subsurface strata,
excluding such quantities of hazardous material lawfully stored and typically
found in facilities of this kind. The facilities have been maintained by Bekins
in compliance with all environmental protection, occupational, health and safety
or similar laws, ordinances, restrictions, licenses, and regulations. Bekins has
not disposed of or arranged (by contract, agreement or otherwise) for the
disposal of any material or substance that was generated or used by Bekins at
any off-site location that has been or is listed or proposed for inclusion on
any list promulgated by any Governmental Authority for the purpose of
identifying sites which pose a danger to health and safety. Except as identified
on Schedule 2.17(b) hereto, to the best of the knowledge of Bekins, there have
been no environmental studies, reports and analyses made or prepared in the last
five years relating to the facilities of Bekins. Bekins has not installed any
underground storage tanks in any of its facilities and, to the best of Bekins'
knowledge, none of such facilities contain any underground storage tanks.
SECTION 2.18 ILLEGAL PAYMENTS. Bekins has not, directly or
indirectly, paid or delivered any fee, commission or other sum of money or item
of property, however characterized, to any finder, agent, government official or
other party, in the United States or any other country, which is in any manner
related to the business or operations of Bekins, which Bekins knows or has
reason to believe to have been illegal under any federal, state or local laws or
the laws of any other country having jurisdiction. Bekins has not participated,
directly or indirectly, in any boycotts affecting any of its actual or potential
customers.
SECTION 2.19 BUSINESS RELATIONSHIPS. Although there can be no
assurance that such relationships or arrangements will continue, except as set
forth on Schedule 2.19 hereto, Bekins does not have material business
relationship or arrangements of any
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nature whatsoever which it knows or has reason to believe will not be available
to Bekins, following the consummation of the transactions contemplated hereby,
on substantially the same terms or conditions as they are currently available to
Bekins.
SECTION 2.20 SUPPLIERS AND CUSTOMERS. Except as set forth on
Schedule 2.20 hereto, no material supplier or customer of Bekins has during the
past twelve months cancelled or otherwise terminated its services or supplies to
Bekins or its use or purchase of Bekins' services, or has communicated any
threat to Bekins' management to do so. Except as set forth on Schedule 2.20
hereto, Bekins does not have any knowledge that any material supplier or
customer intends to cancel or otherwise terminate its relationship with Bekins
or the usage or purchase of the services of Bekins or that the transactions
contemplated by this Agreement will result in any such termination.
Notwithstanding the foregoing, Bekins has completed projects during the past 12
months for customers who may not contract with respect to future projects, if
any.
SECTION 2.21 RESTRICTIVE DOCUMENTS OR LAWS. Except as set
forth on Schedule 2.21 hereto, Bekins is not a party to or bound under any, and
there is no pending, proposed or, to the best of Bekins' knowledge, threatened
certificate, mortgage, lien, lease, agreement, contract, instrument, order,
judgment or decree, or any similar restriction which has, or reasonably could be
expected to have, a Material Adverse Effect with respect to Bekins.
SECTION 2.22 PROPERTIES.
(a) Schedule 2.22(a) hereto contains a correct and complete
schedule of all leases, subleases, easements, licensees and other
agreements of like kind, as amended, modified or supplemented to date,
(collectively, the "Leases") under which Bekins occupies or has the
right to occupy any real property (the land, buildings and other
improvements covered by the Leases being referred to hereinafter as the
"Leased Real Property.") A representative of Buyer has had an
opportunity to review true, correct and complete copies of all Leases.
Each Lease is valid, binding and in full force and effect and
enforceable against the parties thereto in accordance with its
respective terms; all rent and other sums and charges payable by or to
Bekins, as appropriate, as tenant, sublessor or sublessee thereunder
are current. Except as listed on Schedule 2.22(a) hereto, no notice of
default or termination under any Lease is outstanding, no termination
event or condition or uncured default on the part of Bekins or, to
Bekins' knowledge, on the part of the counterparty, exists under any
Lease, and no event has occurred and no condition exists, and the
consummation of the transactions contemplated by this Agreement will
not create or result in an event or condition, which with the giving of
notice or the
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lapse of time (or both) would constitute such a default or termination
event or condition. Neither Sellers, nor Bekins, has any ownership
interest in the landlord under any Lease.
(b) Bekins is owner of valid fee title to the real property
listed on Schedule 2.22(b) hereto, which Schedule contains a complete
legal description of each such parcel of real property. Except for
Permitted Liens and as listed on Schedule 2.22(b) hereto, all real
property and leasehold interests of Bekins are held free and clear of
all mortgages, liens, security interests or encumbrances of any nature
whatsoever and Bekins has furnished Buyer copies of all engineering,
geologic and environmental reports prepared by or for Sellers or Bekins
in respect of such real property or Leased Real Property.
(c) Neither Sellers nor Bekins have received notice, and
Bekins has no knowledge of any pending or threatened condemnation
proceeding affecting any real property of Bekins or any sale or other
disposition of the real property of Bekins in lieu of condemnation.
(d) Except as provided in the Leases, Bekins does not own or
hold, and is not obligated under or a party to, any option, right of
first refusal or any other contractual right to purchase, acquire, sell
or dispose of the real property of Bekins or any portion thereof or
interest therein.
(e) Except as listed on Schedule 2.22(e) hereto, no financing
statement under the Uniform Commercial Code or similar law naming
Bekins as debtor has been filed in any jurisdiction in respect of any
of its properties, and Bekins is not a party to or bound under any
agreement or legal obligation authorizing any party to file any such
financing statement.
(f) Schedule 2.22(f) hereto contains a complete and accurate
list of all machinery, equipment, inventory, tooling, parts, furniture,
supplies and other tangible personal property owned or used by Bekins
valued at $5,000 or above, including, without limitation, the equipment
capitalized for financial statement reporting purposes on the Financial
Statements.
SECTION 2.23 CONTRACTS AND COMMITMENTS. Schedule 2.23 hereto
lists all personal property leases, contracts, agreements, contract rights,
license agreements, franchise rights and agreements, policies, purchase and
sales orders, quotations and executory commitments, instruments, third party
guaranties, indemnifications, arrangements, obligations and understandings,
whether oral or written, to which Bekins is a party (whether or not legally
bound thereby) (collectively, the "Contracts"), other than
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purchase and sale orders, quotations and executory commitments incurred in the
ordinary course of business of Bekins that are currently in effect and are not
reasonably expected to exceed $50,000. Each of the Contracts is valid and
binding, in full force and effect and enforceable against Bekins and the other
entities that are parties thereto in accordance with its provisions. Other than
in connection with its bank borrowings, Bekins has not assigned, mortgaged,
pledged, encumbered, or otherwise hypothecated any of its right, title or
interest under any of the Contracts. Except as set forth on Schedule 2.23
hereto, neither Bekins, nor any other party thereto is in violation of, in
default in respect of nor has there occurred an event or condition which, with
the passage of time or giving of notice (or both), would constitute a material
violation or a default of any Contract. No notice has been received by Sellers
or Bekins claiming any such default by Bekins or indicating the desire or
intention of any other party thereto to amend, modify, rescind or terminate the
same.
SECTION 2.24 ACCOUNTS RECEIVABLE. All accounts receivable and
notes receivable reflected in the Financial Statements and any account
receivable and notes receivable arising between the date of such Financial
Statements and the Closing Date are or will be, to the extent not collected
between the date hereof and the Closing Date, subsisting; arose or will arise in
the ordinary and usual course of business; and except for the reserves set forth
in the Financial Statements and reserves established thereafter in accordance
with Bekins' prior practice, credit experience and GAAP consistently applied,
are not and will not be subject to any counterclaim, set-off or defense and are
not and, other than in connection with its bank borrowings and liens held by
Aetna to secure bonds issued on behalf of Bekins, will not be subject to any
lien, charge or encumbrance of any nature.
SECTION 2.25 OFFICERS, EMPLOYEES AND COMPENSATION. Schedule
2.25 hereto lists and describes as of the date hereof, the base salary, fringe
benefits and perquisites of any employee of Bekins (other than temporary
employees) whose total current base salary exceeds or exceeded in any of the
last three years $25,000 annually. Except as disclosed on Schedule 2.25 hereto,
there are no other forms of compensation paid by Bekins to any such officer or
employee. Except as disclosed on Schedule 2.25 hereto, the provisions for wages
and salaries accrued on the Financial Statements are and will be adequate to
reflect all obligations for wages and salaries and other compensation to Bekins'
employees through September 30, 1997 including, without limitation, vacation
pay, sick pay, and all commissions and other fees due and payable to agents,
salesmen and other employees of Bekins. Except as listed on Schedule 2.25
hereto, Bekins is not obligated, directly or indirectly, to any director or
shareholder of Bekins or any person related to such person by blood or marriage,
except for current liability for compensation. No shareholder or director and no
"affiliate" or "associate" (as such terms are defined in the
-23-
rules and regulations promulgated under the Securities Act of 1933, as amended
(the "Securities Act")) thereof holds any position or office with or has any
material financial interest, direct or indirect, in any supplier, customer or
account of, or other outside business that has material transactions with
Bekins. Bekins does not have any agreements or understandings with any officer,
employee or representative of Bekins that would influence any such person not to
remain associated with Bekins or to become associated with Buyer from and after
the Closing Date or from serving Bekins, Buyer or HWS in a capacity similar to
the capacity currently held. Bekins has no present severance policy. Schedule
2.25 hereto sets forth any rights of employees under existing contracts with
Bekins in respect of severance arrangements.
SECTION 2.26 BANKS; SAFE DEPOSIT BOXES. Schedule 2.26 hereto
lists the names and locations of all banks at which Bekins has an account and/or
safe deposit boxes, the numbers of any such accounts and the names of all
persons authorized to draw thereon or to have access thereto.
SECTION 2.27 BOOKS OF ACCOUNT; RECORDS. The general ledgers,
books of account and other records of Bekins are complete and correct, have been
maintained in accordance with good business practices and the matters contained
therein are appropriately and accurately reflected in the Financial Statements.
SECTION 2.28 CREDIT TERMS. Schedule 2.28 hereto sets forth all
the terms and conditions of credit greater than "net 30" given to any customer
of Bekins and all discounts given by Bekins to its customers. Schedule 2.28
hereto sets forth a copy of Bekins' standard warranties and guarantees and any
material departures therefrom.
SECTION 2.29 CLOSING DATE EFFECT. All of the representations
and warranties of Bekins are true and correct as of the date hereof and shall be
true and correct on and as of the Closing Date with the same force and effect as
if such representations and warranties were made by Bekins to Buyer and
Acquisition Corp. on the Closing Date.
SECTION 2.30 COMPLETE DISCLOSURE. No representation or
warranty made by Bekins in this Agreement, and no exhibit, schedule, statement,
certificate or other writing furnished to Buyer or Acquisition Corp. by or on
behalf of Bekins pursuant to this Agreement or in connection with the
transactions contemplated hereby, contains or will contain, any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained herein and therein not misleading.
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------------------
Each Seller individually hereby represents and warrants to the
Buyer and Acquisition Corp., with respect to such Seller as follows (except with
respect to Section 3.8 hereof as to which the representations and warranties of
Sellers are joint and several):
SECTION 3.1 SHARES. Each Seller owns the number of shares of
Bekins Common Stock as set forth next to its name on Schedule 1 hereto, free and
clear of all liens, claims or encumbrances except as set forth on Schedule 3.1
hereto. Each Seller has full right, power, legal capacity and authority to
transfer and deliver the Shares pursuant to this Agreement.
SECTION 3.2 AUTHORITY RELATIVE TO AND VALIDITY OF THIS
AGREEMENT. This Agreement, the Employment Agreements to which such Seller is a
party, the Escrow Agreement and the registration rights agreement to be entered
into by and among Buyer and Sellers substantially in the form of Annex F hereto
(the "Registration Rights Agreement" and together with this Agreement and the
Ancillary Agreements to which such Seller is a party, the "Sellers' Agreements")
have been duly executed and delivered by each Seller and constitute the legal,
valid and binding obligations of such Seller, enforceable in accordance with
their terms, except (i) as such enforceability may be limited by or subject to
any bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, (ii) as such obligations are subject to
general principles of equity and (iii) as rights to indemnity may be limited by
federal or state securities laws or by public policy. Neither the execution and
delivery by Seller of Sellers' Agreements, nor the consummation of the
transactions contemplated thereby, will violate any provision of law, any order
of any court or other agency of government, or any judgment, award or decree or
any indenture, agreement or other instrument to which each Seller is a party, or
by which he or any of his properties or assets is bound or affected, or result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of such Seller.
SECTION 3.3 BROKERS. All negotiations relative to the Sellers'
Agreements and the transactions contemplated hereby have been carried out by
such Seller directly with Buyer and Acquisition Corp., without the intervention
of any person on behalf of such Seller in such manner as to give rise to any
claim by any person against Buyer, Sellers or Bekins for a finder's fee,
brokerage commission, advisory fee or similar payment.
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SECTION 3.4 SELLER'S ADDRESSES, ACCESS TO INFORMATION,
EXPERIENCE, ETC.
(a) The address set forth on Schedule 1 hereto is each
Seller's true and correct business, residence or domicile address. Each Seller
has received and read and is familiar with the Sellers' Agreements. Each Seller
has had an opportunity to ask questions of and receive answers from
representatives of Buyer concerning the terms and conditions of this
transaction. Each Seller has substantial experience in evaluating non-liquid
investments such as the Payment Shares and is capable of evaluating the merits
and risks of an investment in Buyer (or has consulted with a purchaser
representative who has such experience).
(b) Each Seller acknowledges that it has had an opportunity to
evaluate all information regarding Buyer as it has deemed necessary or desirable
in connection with the transactions contemplated by this Agreement, has
independently evaluated the transactions contemplated by this Agreement and has
reached its own decision to enter into this Agreement.
SECTION 3.5 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Payment
Shares to be received by each Seller pursuant to the terms hereof will be
acquired for investment for each Seller's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof.
The Sellers each have no present plan or arrangement to dispose of the Payment
Shares in any manner, except pursuant to the registration statement to be filed
pursuant to the Registration Rights Agreement.
SECTION 3.6 RESTRICTED SECURITIES. Each Seller understands and
acknowledges that the Payment Shares it is receiving are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this regard, each Seller represents that it is familiar with Rule 144
promulgated under the Securities Act ("Rule 144"), as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Each Seller further acknowledges that the issuance of the Payment Shares is
intended to be exempt from registration under the Securities, by virtue of
Section 4(2) of the Securities Act. In furtherance thereof, such Seller
represents and warrants to Buyer and Acquisition Corp. as follows:
(i) Such Seller realizes that the basis for the exemption may
not be present if, notwithstanding any representations and/or
warranties to the contrary herein contained, such Seller has
in mind merely acquiring the Payment Shares for a fixed or
determinable period in the
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future, or for a market rise, or for sale if the market does
not rise;
(ii) Such Seller has the financial ability to bear the
economic risk of his investment, has adequate means for
providing for his current needs and personal contingencies and
has no need for liquidity with respect to his investment in
Buyer; and
(iii) Such Seller (together with such Seller's Seller
Representative(s) (which term is used herein with the same
meaning as given in Rule 501(h) of Regulation D promulgated
under the Securities Act), if any), has such knowledge and
experience in financial, and business matters as to be capable
of evaluating the merits and risks of an investment in the
Payment Shares. If such Seller has appointed a Seller
Representative, such Seller has been advised by such Seller
Representative as to the merits and risks of an investment in
Buyer in general and the suitability of an investment in the
Payment Shares for such Seller in particular.
SECTION 3.7 LEGENDS. It is understood that the certificates
evidencing the Payment Shares may bear a legend substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE
ACT SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO AND THEY
SHALL HAVE BEEN REGISTERED OR QUALIFIED FOR SALE UNDER THE
APPROPRIATE STATE SECURITIES LAWS OR (II) IN THE OPINION OF
COUNSEL TO THE CORPORATION, REGISTRATION AND QUALIFICATION
UNDER THE ACT AND THE SECURITIES LAWS OF THE APPROPRIATE STATE
IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER."
The legend referred to above shall be removed by Buyer from
any certificate at such time as the holder of the shares represented by the
certificate delivers an opinion of counsel reasonably satisfactory to Buyer to
the effect that such legend is not required in order to establish compliance
with any provisions of the Securities Act, or at such time as the holder of such
shares satisfies the requirements of Rule 144(k) under the Securities Act,
provided that Buyer has received from the holder a written representation that
(i) such holder is not an affiliate of Buyer and has not been an affiliate of
Buyer during the preceding three months, (ii) such holder has beneficially owned
the shares represented by the certificate for a period of at least two years or
such shorter period as required by Rule 144(k), and (iii) such
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holder otherwise satisfies the requirements of Rule 144(k) as then in effect
with respect to such shares.
SECTION 3.8 TAXES. Except as set forth on Schedule 3.8 hereto:
(a) Bekins has duly filed all federal and state income tax
returns and tax reports required to be filed by it as of the Closing
Date, all such returns and reports are true, correct and complete, none
of such returns and reports has been amended, and all taxes,
assessments, fees and other governmental charges arising under such
returns and reports have been fully paid for all periods prior to
December 31, 1997 or will be timely paid;
(b) Schedule 3.8 hereto sets forth the dates and results of
any and all audits of federal and state income tax returns of Bekins
performed by federal and state taxing authorities. No waivers of any
applicable statutes of limitations are outstanding. All deficiencies
proposed as a result of any audits have been paid or settled. There is
no pending or threatened federal or state income tax audit of Bekins
and no agreement with any federal, state tax authority that may affect
the subsequent federal or state income tax liabilities of Bekins;
(c) Bekins has no liabilities for income taxes other than as
shown on the Financial Statements or occurring after September 30, 1997
in the ordinary course of business and no federal or state tax
authority is now asserting or threatening to assert any deficiency or
assessment for additional taxes with respect to Bekins; and
(d) Without limiting the foregoing, (i) the books and records
of Bekins include adequate provision (in accordance with GAAP) for all
federal and state income taxes assessments and fees, penalties and
governmental charges related and thereto that have been or may, in the
future, be assessed against Bekins for all periods ending on or prior
to the Closing Date (without giving effect to the termination of
Bekins' status as an S corporation on the Closing Date), and (ii)
Bekins is not as of the Closing Date, and will not be as of the Closing
Date, liable for federal and state taxes and assessments and fees or
governmental charges related thereto for which Bekins has not made
adequate provision on its books and records (without giving effect to
the termination of Bekins' status as an S corporation on the Closing
Date).
SECTION 3.9 NEGATIVE ASSURANCE. Each Seller for itself only
represents and warrants that it has no actual knowledge that any representation
or warranty contained in Article II is not true and correct in any material
respect.
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SECTION 3.10 CLOSING DATE EFFECT. All of the representations
and warranties of Sellers are true and correct as of the date hereof and shall
be true and correct on and as of the Closing Date with the same force and effect
as if such representations and warranties were made by Sellers to Buyer and
Acquisition Corp. on the Closing Date.
SECTION 3.11 COMPLETE DISCLOSURE. No representation or
warranty made by Sellers in this Agreement, and no exhibit, schedule, statement,
certificate or other writing furnished to Buyer and Acquisition Corp. by or on
behalf of Sellers in their capacity as such pursuant to this Agreement or in
connection with the transactions contemplated hereby, contains or will contain,
any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein and therein not
misleading.
SECTION 3.12 CAPITALIZATION. Bekins authorized capital stock
consists of 2,000 shares of Bekins Common Stock of which 988.72 shares are
issued and outstanding. No shares of Bekins capital stock are owned directly or
indirectly by Bekins. All issued and outstanding shares of Bekins capital stock
are duly authorized and issued, fully paid and non-assessable. There are no
subscriptions, options, warrants, calls, rights, contracts, commitments,
understandings, restrictions or arrangements of any kind relating to the
issuance, sale or transfer of any shares of Bekins capital stock including,
without limitation, any rights of conversion or exchange under any outstanding
securities or other instruments.
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND ACQUISITION CORP.
------------------------------------------------------------------------
Buyer and Acquisition Corp. represent and warrant to Sellers
and Bekins that:
SECTION 4.1 CORPORATE EXISTENCE. Each of Buyer and Acquisition
Corp. is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Complete and correct
copies of the Certificate of Incorporation of each of Buyer and Acquisition
Corp. and all amendments thereto, certified by Secretary of State of the
respective jurisdiction of its incorporation, the By-laws of each of Buyer and
Acquisition Corp., and all amendments thereto, certified by the Secretary of
each of Buyer and Acquisition Corp., as the case may be, have been heretofore
delivered to Sellers.
SECTION 4.2 AUTHORIZATION; VALIDITY. Each of Buyer and
Acquisition Corp. has all requisite corporate power and authority to enter into
this Agreement, the Escrow Agreement and the Registration Rights Agreement to
which it is a party, perform
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its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. All necessary corporate action has been taken
by each of Buyer and Acquisition Corp. with respect to the execution, delivery
and performance by each of Buyer and Acquisition Corp. of this Agreement, the
Escrow Agreement and the Registration Rights Agreement to which it is a party
and the consummation of the transactions contemplated hereby and thereby.
Assuming the due execution and delivery of this Agreement, the Escrow Agreement
and the Registration Rights Agreement by Sellers and Bekins (to the extent each
is a party thereto), each of this Agreement, the Escrow Agreement and the
Registration Rights Agreement to which it is a party, is a legal, valid and
binding obligation of each of Buyer and Acquisition Corp., enforceable against
each of Buyer and Acquisition Corp. in accordance with its terms, except (i) as
such enforceability may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, (ii) as such obligations are subject to general principles of equity
and (iii) as rights to indemnity may be limited by federal or state securities
laws of public policy. There does not exist any circumstances that would operate
to terminate, reduce, alter or impair the obligation of Buyer to issue the Make
Whole Shares or that give to rise to or would give rise to a right of set-off by
Buyer or any defense to the performance of Buyer's obligation to issue the Make
Whole Shares in accordance with the terms of this Agreement.
SECTION 4.3 CAPITALIZATION. The authorized capital stock of
Buyer consists of (i) 20,000,000 shares of HWS Common Stock, 11,279,239 of which
were issued and outstanding at September 30, 1997 and (ii) 3,000,000 shares of
preferred stock, 200,000 of which were issued and outstanding at September 30,
1997. The capital stock of Buyer is duly authorized and all issued capital stock
has been duly and validly issued and is fully paid and nonassessable and free of
preemptive rights. The Payment Shares and the Make Whole Shares are duly
authorized and when issued in accordance with the terms and conditions of this
Agreement will be listed on the American Stock Exchange or Buyer's then
principal trading market and will be validly issued, fully paid and
nonassessable. The Payment Shares are not subject to any preemptive rights or
other similar restrictions. The authorized capital stock of Acquisition Corp.
consists of 1,000 shares of Common Stock, $.01 par value per share, of which 100
shares are issued and outstanding and owned by Buyer. The capital stock of
Acquisition Corp. is duly authorized and all issued capital stock has been duly
and validly issued and is fully paid and nonassessable and free of preemptive
rights.
SECTION 4.4 LITIGATION. There is no claim, litigation, action,
suit, proceeding, investigation or inquiry, administrative or judicial, pending
or, to the knowledge of Buyer, threatened against Buyer or Acquisition Corp., at
law or in equity,
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before any federal, state or local court or regulatory agency, or other
governmental authority, which might have an adverse effect on Buyer's or
Acquisition Corp.'s ability to perform any of its respective obligations under
this Agreement or upon the consummation of the transactions contemplated by this
Agreement.
SECTION 4.5 NO BREACH OF STATUTE OR CONTRACT. Neither the
execution and delivery of this Agreement, the Escrow Agreement or the
Registration Rights Agreement, nor the consummation by Buyer or Acquisition
Corp. of the transactions contemplated hereby or thereby, nor compliance by
Buyer or Acquisition Corp. with any of the provisions hereof and thereof, will
violate or cause a default under any statute (domestic or foreign), judgment,
order, writ, decree, rule or regulation of any court or governmental authority
applicable to Buyer, Acquisition Corp. or any of Buyer's material properties;
breach or conflict with any of the terms, provisions or conditions of the
Certificate of Incorporation or By-laws of Buyer or Acquisition Corp.; or
violate, conflict with or breach any agreement, contract, mortgage, instrument,
indenture or license to which Buyer or Acquisition Corp. is party or by which
Buyer or Acquisition Corp. is or may be bound, or constitute a default (in and
of itself or with the giving of notice, passage of time or both) thereunder, or
result in the creation or imposition of any encumbrance upon, or give to any
other party or parties, any claim, interest or right, including rights of
termination or cancellation in, or with respect to any of Buyer's properties.
SECTION 4.6 INVESTMENT. (a) Acquisition Corp. is acquiring the
Shares solely for its own account as an investment and not with a view to any
distribution or resale thereof within the meanings of such terms under the
Securities Act.
(b) Each of Buyer and Acquisition Corp. acknowledges that it
has had an opportunity to evaluate all information regarding Bekins as it has
deemed necessary or desirable in connection with the transactions contemplated
by this Agreement, has independently evaluated the transactions contemplated by
this Agreement and has reached its own decision to enter into this Agreement.
Each of Buyer and Acquisition Corp. has had an opportunity to ask questions of
and receive answers from each Seller and representatives of Bekins of which it
wished to inquire concerning the terms and conditions of this transaction. Each
of Buyer and Acquisition Corp. has substantial experience in evaluating
non-liquid investments and is capable of evaluating the merits and risks of an
investment in Bekins. Each of Buyer and Acquisition Corp. acknowledges that all
of the Sellers were available for questioning by Buyer or Acquisition Corp. and
each of Buyer and Acquisition Corp. has received all information and
documentation that it requested from Bekins and each Seller.
SECTION 4.7 SEC REPORTS AND FINANCIAL STATEMENTS. Buyer has
filed with the Securities and Exchange Commission (the
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"SEC"), and has heretofore made available to Sellers true and complete copies of
all forms, reports, schedules, statements and other documents required to be
filed by it under the Securities Act and the Exchange Act (as such documents
have been amended or supplemented since the time of their filing, collectively,
the "SEC Reports"). As of their respective dates, the SEC Reports (including
without limitation, any financial statements or schedules included therein) (a)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (b) complied in all material respects with the applicable
requirements of the Securities Act and Exchange Act (as the case may be) and all
applicable rules and regulations of the SEC promulgated thereunder. Each of the
consolidated financial statements included in the SEC Reports has been prepared
from, and are in accordance with, the books and records of Buyer, comply in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present in all
material respects the consolidated results of operations and cash flows (and
changes in financial position, if any) of Buyer as at the dates thereof or for
the periods presented therein. Since September 30, 1997 (the end of the period
covered by the last quarterly report on Form 10-Q filed by Buyer with the SEC),
there has been no material adverse change in the business, financial condition
and results of operations of Buyer.
SECTION 4.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as
disclosed in the SEC Reports or as incurred in the ordinary course of business,
Buyer has no material debts, liabilities or obligations of any kind, whether
accrued, absolute, contingent or other, whether due or to become due, that would
have a Material Adverse Effect.
SECTION 4.9 BROKERS. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by or on
behalf of Buyer in such a manner as not to give rise to any claim against Buyer,
Sellers or Bekins for a finder's fee, brokerage commission, advisory fee or
other similar payment.
SECTION 4.10 COMPLETE DISCLOSURE. No representation or
warranty made by Buyer or Acquisition Corp. in this Agreement, and no exhibit,
schedule, statement, certificate or other writing furnished to Bekins or Seller
by or on behalf of Buyer or Acquisition Corp. pursuant to this Agreement or in
connection with the transactions contemplated hereby, contains or will contain,
any untrue statement of a material fact or omits or will omit to state
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a material fact necessary to make the statements contained herein and therein
not misleading.
SECTION 4.11 NO TRANSACTIONS. Buyer has not entered into any
agreements of any kind or taken any actions to authorize, nor has it engaged in
any discussions with a person or entity with respect to a change of control of
the Buyer (including, without limitation, Buyer's merger or consolidation with
any other person entity or the acquisition of shares of the Buyer's capital
stock by any other person or entity prior to the Closing Date), and Buyer has no
present intention or expectation with respect to any kind of change of control
transaction what would occur before the Closing Date or 12 months thereafter.
The Board of Directors of Buyer has not authorized, nor is it considering, any
pending recapitalization, reclassification, spin-off, split-up, stock or
extraordinary cash dividend, combination, or reverse split with respect to any
class of capital stock of the Buyer.
SECTION 4.12 FORMATION AND AUTHORITY OF ACQUISITION CORP.
Acquisition Corp. was formed solely for the purposes of the Merger and engaging
in the transactions contemplated hereby. As of the date hereof and the Closing
Date, all issued and outstanding shares of capital stock of Acquisition Corp.
are and will be directly owned by Buyer. There are not as of the date hereof,
and there will not be as of the Closing Date, any outstanding or authorized
options, warrants, calls rights, commitments, or any other agreements requiring
Acquisition Corp. to issue, transfer, sell, purchase, redeem, or acquire any
shares of its capital stock. As of the date hereof and the Closing Date, except
for the obligations or liabilities incurred in connection with its incorporation
or organization in the transactions contemplated hereby, Acquisition Corp. has
not or will not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities, or engaged in any activities of any
kind whatsoever or entered into any agreements or arrangements with any person
or entity.
SECTION 4.13 FILINGS. Except (a) for the filing of the
Certificate of Merger with the Secretary of the State of Delaware and any other
appropriate documents with the relevant authorities of other states in which
Acquisition Corp. or Bekins is qualified to do business, and (b) as described on
Schedule 4.13 hereto, no consent, approval, or action of, filing with, or notice
to any Governmental Authority of other public or private third party is
necessary or required under any of the terms, conditions, or provisions of any
law or order of any Governmental Authority or any contract to which Buyer or
Acquisition Corp. or any of their respective assets or properties is bound for
the execution and delivery of this Agreement by Buyer or Acquisition Corp., the
performance by Buyer and Acquisition Corp. of their respective obligations
hereunder, or the consummation of the transactions contemplated hereby.
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ARTICLE V COVENANTS
--------- ---------
SECTION 5.1 COVENANT AGAINST DISCLOSURE. Sellers each agree
not to (a) disclose to any person, association, firm, corporation or other
entity (other than Buyer, Acquisition Corp. or those designated in writing by
Buyer) in any manner, directly or indirectly, any confidential information or
data relevant to Bekins, whether of a technical or commercial nature, or (b)
use, or permit or assist, by acquiescence or otherwise, any person, association,
firm, corporation or other entity (other than Buyer or those designated in
writing by Buyer) to use, in any manner, directly or indirectly, any such
information or data, excepting only use of such data or information as is at the
time generally known to the public and which did not become generally known
through any breach by Sellers of any provision of this Section 5.1 and further
excepting disclosure that is required pursuant to law or the order of a court of
competent jurisdiction, or other legal process or authority, it being
understood, however, that Sellers will provide Buyer with prompt notice of the
requirement for such disclosure as soon as practical after any Seller is
notified thereof and prior to its disclosure thereof so as to enable Buyer, at
Buyer's sole cost and expense, to challenge the order compelling such disclosure
if Buyer so desires.
SECTION 5.2 COVENANT AGAINST HIRING. Sellers each understand
and acknowledge that in Buyer's view, it is essential to the successful
operation of Bekins that Buyer retain substantially unimpaired Bekins' operating
organization. Neither Sellers nor Bekins shall take any action which would
induce any employee or representative of Bekins not to become or continue as an
employee or representative of Buyer; PROVIDED, HOWEVER, that Sellers shall
-------- ------- not be liable for the failure of any Bekins' employees to
continue their employment with Buyer after the Closing Date. Without limiting
the generality of the foregoing, Sellers shall not, whether directly or
indirectly, through any subsidiary or affiliate, employ, whether as an employee,
officer, agent, consultant or independent contractor, or enter into any
partnership, joint venture or other business association with, any person (other
than Xxxxx X. Xxxxx XX) who was at any time during the 12 months preceding the
Closing Date an employee, representative or officer of Bekins, for a period of
12 months after the Closing Date.
SECTION 5.3 INJUNCTIVE RELIEF. Sellers each acknowledge and
agree that Buyer's and Acquisition Corp.'s remedy at law for any breach of any
of Sellers' obligations under Section 5.1 or 5.2 hereof would be inadequate, and
agree and consent that temporary and permanent injunctive relief may be granted
in a proceeding that may be brought to enforce any provision of Section 5.1 or
5.2 without the necessity of proof of actual damage.
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SECTION 5.4 TRANSITION OF CUSTOMERS. Each Seller that has been
actively involved in the Business through the date of this Agreement (other than
Xxxxx X. Xxxxx XX) shall use reasonable commercial efforts to insure that all of
Bekins present customers continue to utilize Bekins trucking, distribution and
shipping services (together, the "Services"); PROVIDED, HOWEVER, that such
-------- ------- Sellers shall not be liable for the failure of any of customers
to continue their utilization of the Services after the Closing Date.
SECTION 5.5 SEVERABILITY. With respect to any provision of
this Agreement finally determined by a court of competent jurisdiction to be
unenforceable, such court shall have jurisdiction to reform such provision so
that it is enforceable to the maximum extent permitted by law, and the parties
shall abide by such court's determination. In the event that any provision of
this Agreement cannot be reformed, such provision shall be deemed to be severed
from this Agreement, but every other provision of this Agreement shall remain in
full force and effect.
SECTION 5.6 FURTHER ASSURANCES. On and after the Closing Date,
Sellers shall prepare, execute and deliver, at Sellers' expense, such further
instruments or documents, and shall take or cause to be taken such other or
further action as Buyer or Acquisition Corp. shall reasonably request at any
time or from time to time in order to consummate the transactions contemplated
by this Agreement. On and after the Closing Date, Buyer shall prepare, execute
and deliver, at Buyer's expense, such further instruments, and shall take or
cause to be taken such other or further action as Sellers shall reasonably
request at any time or from time to time in order to consummate the transactions
contemplated by this Agreement. On or after the Closing Date, Buyer shall, upon
reasonable notice, make available the books and records of Bekins to Sellers and
their representative during normal business hours for the purpose of assisting
Sellers in (i) preparing financial statements and tax returns, reports or forms
for periods which are, in whole or in part, prior to the Closing Date, (ii)
defending litigation instituted by a third party and (iii) performing their
obligations under Article VIII hereof.
SECTION 5.7 S CORPORATION TAX RETURNS. Bekins and Sellers will
elect not to apply the pro rata allocation rules to the S termination year
pursuant to Section 1362(e)(3) of the Code. Accordingly, Bekins will close its
books on the Closing Date. Buyer agrees to cooperate in the filing of such
election as the election must be included in the C short taxable year of Bekins.
Buyer also agrees to cooperate in the filing of the tax returns for the final
period during which Bekins was an S corporation.
SECTION 5.8 ANNOUNCEMENTS. None of the parties to this
Agreement shall make any public announcements prior to the Closing Date with
respect to this Agreement or the transactions
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contemplated hereby without the written consent of the other parties hereto,
except as required by law.
SECTION 5.9 CONSENTS. Sellers and Bekins each shall use their
best efforts to take or cause to be taken all action and do or cause to be done
all things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement including, without limitation, to obtain all
permits, approvals (regulatory, governmental or otherwise), authorizations and
consents of all third parties and to make all filings with and give all notices
to third parties which may be necessary or required in order to effectuate the
transactions contemplated hereby.
SECTION 5.10 CERTAIN TAX DEDUCTIONS. Sellers and Bekins agree
that all deductions relating to the exercise of options or warrants previously
held by Sellers to acquire shares of Bekins Common Stock, which options or
warrants have been exercised in connection with the transactions contemplated by
this Agreement, shall be for the benefit of the Surviving Corporation subsequent
to the Effective Time; provided that Sellers shall not incur any liability to
Buyer under this Section 5.10 if the Internal Revenue Service (the "IRS")
determines that any part of such benefit is to be allocated to Sellers; and
provided further that Sellers shall take no action to cause the IRS to require
such an allocation.
ARTICLE VI CLOSING DOCUMENTS
---------- -----------------
SECTION 6.1 DELIVERIES BY SELLERS. On or prior to the Closing
Date, Sellers shall deliver to Buyer and Acquisition Corp., duly and properly
executed, the following:
(a) A certificate or certificates representing the Shares duly
endorsed in blank for transfer or accompanied by separate stock powers
duly executed in blank, with all necessary documentary stamps
evidencing the payment of all applicable transfer taxes.
(b) Resignation letters, effective immediately, executed by
each incumbent director and officer of Bekins designated by Buyer.
(c) Resolutions of the Board of Directors of Bekins
authorizing the execution and delivery of this Agreement and the
Employment Agreements by Bekins and the performance of its respective
obligations hereunder and thereunder, certified by the Secretary of
Bekins.
(d) A certificate of the Secretary of State of the State of
Delaware dated as of a recent date as to the good standing of Bekins in
such jurisdictions, along with telephonic or
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facsimile confirmation of such good standing on the Closing
Date.
(e) A certificate of the Secretary of State of each state
listed on Schedule 2.1, dated as of a recent date as to the good
standing of Bekins in each such state, along with telephonic or
facsimile confirmation of such good standing on the Closing Date.
(f) The legal opinion of counsel to Sellers and Bekins in the
form attached hereto as Exhibit C hereto.
(g) A Certificate of the President and Secretary of Bekins in
accordance with Section 7.1(d) hereof.
(h) A Certificate of Sellers in accordance with Section 7.1(d)
hereof .
(i) The Employment Agreement of Xxxxxxx X. Xxxxx.
(j) The Employment Agreement of Xxxxxx X. Field.
(k) The Employment Agreement of Xxxxxx X. Xxxxx.
(l) The Employment Agreement of Xxxxxxx X. Xxxxx.
(m) The Registration Rights Agreement.
(n) The Escrow Agreement.
(o) Such other separate instruments or documents that Buyer
may reasonably deem necessary or appropriate in order to consummate the
transactions contemplated by this Agreement.
SECTION 6.2 DELIVERIES BY BUYER AND ACQUISITION CORP.. On or
prior to the Closing Date, Buyer and Acquisition Corp. shall deliver to Sellers
all duly and properly executed, the following:
(a) Resolutions of the Board of Directors of each of Buyer and
Acquisition Corp. authorizing the execution and delivery of this
Agreement, the Escrow Agreement and the Registration Rights Agreement
to which it is a party by each of Buyer and Acquisition Corp. and the
performance of its obligations hereunder and thereunder, certified by
the Secretary of each of Buyer and Acquisition Corp., as the case may
be.
(b) A certificate of the Secretary of State of the State of
New York dated as of a recent date as to the good standing of Buyer in
the State of New York and a certificate of the Secretary of State of
the State of Delaware as of a recent
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date as to the good standing of Acquisition Corp. in the State
of Delaware.
(c) The legal opinion of counsel to each of Buyer and
Acquisition Corp. in the form attached hereto as Exhibit D hereto.
(d) A certificate of the President and Secretary of Buyer
and Acquisition Corp. in accordance with Section 7.2(d).
(e) The Registration Rights Agreement.
(f) The Escrow Agreement.
(g) The Payment Shares to be delivered at Closing to
Sellers.
(h) Payment to National Automobile & Casualty Insurance
Co.
(i) Such other separate instruments or documents that Sellers
may reasonably deem necessary or appropriate in order to consummate the
transactions contemplated by this Agreement.
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS.
------------------------------------------------
SECTION 7.1 CONDITIONS TO OBLIGATIONS OF BUYER AND ACQUISITION
CORP. Each and every obligation of each of Buyer and Acquisition Corp. to be
performed on the Closing Date shall be subject to the satisfaction as of or
before the Closing Date of the following conditions (unless waived in writing by
Buyer and Acquisition Corp.):
(a) REPRESENTATIONS AND WARRANTIES. Sellers' and Bekins
representations and warranties set forth in Articles II and III of this
Agreement shall have been true and correct when made and shall be true
and correct at and as of the Closing Date as if such representations
and warranties were made as of the Closing Date. No representation or
warranty of Sellers contained in Article III hereof shall be deemed
untrue or incorrect for the purposes of this Section 7.1(a), as a
consequence of the existence of any fact, circumstance or event, unless
such fact, circumstance or event, individually or taken together with
all other facts, circumstances or events inconsistent with any Section
of Article III has or would have a Material Adverse Effect with respect
to Bekins or the Business taken as a whole, provided, however, that as
used above "Material Adverse Effect" shall exclude (i) any change or
effect due to general economic or industry wide conditions, (ii) any
continuation of an adverse trend disclosed to Buyer, Acquisition Corp.
or any affiliate of Buyer on or prior to the
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date hereof and (iii) any condition described in the Schedules
to this Agreement.
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions and
other obligations under this Agreement which are to be performed or
complied with by Sellers and Bekins shall have been fully performed and
complied with on or prior to the Closing Date including, without
limitation, the delivery of the fully executed instruments and
documents in accordance with Section 6.2.
(c) NO ADVERSE PROCEEDING. There shall be no pending or
threatened claim, action, litigation or proceeding, judicial or
administrative, or governmental investigation against Buyer,
Acquisition Corp., Sellers or Bekins, for the purpose of enjoining or
preventing the consummation of this Agreement, or otherwise claiming
that this Agreement or the consummation hereof is illegal.
(d) CERTIFICATES. Each of Bekins and each Seller shall have
delivered to Buyer and Acquisition Corp. its certificate, dated the
Closing Date, executed by Bekins' President and Secretary, and each
Seller, respectively, to the effect that (i) the conditions set forth
in subsections (a) and (b) and, to the best knowledge of such officers
and Sellers, respectively, (c), of this Section 7.1 have been satisfied
and (ii) the Certificate of Incorporation and By-laws of Bekins shall
have not been amended since the date upon which certified copies of
each had been delivered to Buyer and Acquisition Corp. and remain in
full force and effect.
(e) OPERATION OF THE BUSINESS. The operation of Bekins in the
ordinary course shall have continued without material adverse change,
as determined by Buyer in its sole discretion.
(f) RIGHTS TO ACQUIRE CAPITAL STOCK. There shall not exist any
rights to acquire capital stock of Bekins other than the rights of
Buyer and Acquisition Corp. arising under this Agreement.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF SELLERS AND BEKINS.
Each and every obligation of Sellers and Bekins to be
performed on the Closing Date shall be subject to the satisfaction as of or
before the Closing Date of the following conditions (unless waived in writing by
Sellers and Bekins):
(a) REPRESENTATIONS AND WARRANTIES. Buyer's and Acquisition
Corp.'s representations and warranties set forth in Article III of this
Agreement shall have been true and correct when made and shall be true
and correct at and as of
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the Closing Date as if such representations and warranties
were made as of the Closing Date.
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions and
other obligations under this Agreement which are to be performed or
complied with by Buyer and Acquisition Corp. shall have been fully
performed and complied with on or prior to the Closing Date including
the delivery and the fully executed instruments and documents in
accordance with Section 6.3.
(c) NO ADVERSE PROCEEDING. There shall be no pending or
threatened claim, action, litigation or proceeding, judicial or
administrative, or governmental investigation against Buyer,
Acquisition Corp., Sellers or Bekins, for the purpose of enjoining or
preventing the consummation of this Agreement, or otherwise claiming
that this Agreement or the consummation hereof is illegal.
(d) CERTIFICATE. Buyer and Acquisition Corp. shall have
delivered to Sellers a certificate, dated the Closing Date, executed by
each of Buyer's and Acquisition Corp.'s President and Secretary to the
effect that (i) the conditions set forth in subsections (a) and (b)
and, to the best knowledge of such officers, (c), of this Section 7.2
have been satisfied and (ii) the Certificate of Incorporation and
By-laws of each of Buyer and Acquisition Corp. shall have not been
amended since the date upon which certified copies of each had been
delivered to Sellers and remain in full force and effect.
ARTICLE VIII INDEMNIFICATION
----------------------------
SECTION 8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.
Subject to the limitations set forth in this Article VIII and
notwithstanding any investigation conducted at any time with regard thereto by
or on behalf of Buyer, Acquisition Corp. or Sellers, all representations,
warranties, covenants and agreements of Buyer and Acquisition Corp. or Sellers
in this Agreement and in the Additional Documents (as hereinafter defined) shall
survive the execution, delivery and performance of this Agreement and shall be
deemed to have been made again by Buyer and Acquisition Corp. or Sellers on and
as of the Closing Date. All statements contained in any Additional Document
shall be deemed representations and warranties of Buyer and Acquisition Corp. or
Sellers, as the case may be, set forth in this Agreement within the meaning of
this Article. From and after the Closing, none of the parties hereto shall be
liable or responsible in any manner whatsoever to any other party, whether for
indemnification or otherwise, except for indemnity as expressly provided in this
Article VIII, which
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provides the exclusive remedy and cause of action of the parties hereto with
respect to any matter arising out of or in connection with this Agreement or any
Schedule hereto, or any opinion or certificate delivered in connection herewith,
provided that the foregoing shall not restrict Buyer's right to (i) seek
equitable relief as provided in Section 5.3 hereof or (ii) assert a cause of
action against a Seller under Section 10(b) of the Exchange Act and Rule 10b-5
promulgated thereunder, if such Seller, with actual knowledge and the intent to
defraud Buyer, has (a) made an untrue statement of material fact to Buyer or (b)
omitted to state a material fact to Buyer, in either case in connection with
such Seller's sale of its Shares to Buyer. After the Closing, Buyer shall not be
entitled to a rescission of the transactions contemplated by this Agreement,
including, without limitation, Buyer's purchase of the Shares from the Sellers.
SECTION 8.2 INDEMNIFICATION.
(a) Subject to the limitations set forth in this Article VIII,
each Seller shall severally (and not jointly and severally) indemnify
and hold harmless Buyer and Acquisition Corp. from and against any and
all losses, liabilities, damages, demands, claims, suits, actions,
judgments or causes of action, assessments, costs and expenses
including, without limitation, interest, penalties, reasonable
attorneys' fees, any and all reasonable expenses incurred in
investigating, preparing or defending against any litigation, commenced
or threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation (collectively, "Damages"),
asserted against, resulting to, imposed upon, or incurred or suffered
by Buyer or Acquisition Corp., directly or indirectly, as a result of
or arising from the following (individually an "Indemnifiable Claim"
and collectively "Indemnifiable Claims" when used in the context of
Buyer or Acquisition Corp. as the Indemnified Party (as defined
below)):
(i) Any inaccuracy in or breach of any of the
representations, warranties or agreements made in this
Agreement by Sellers or the non-performance of any covenant or
obligation to be performed by Sellers; or
(ii) Any misrepresentation in or any omission from
any certificate, schedule, exhibit or other material document
(collectively, the "Additional Documents") furnished or to be
furnished by or on behalf of Sellers in their capacity as such
under this Agreement.
(b) Subject to the limitations set forth in this Article VIII,
Buyer shall indemnify and hold harmless Sellers from and against any
and all Damages asserted against, resulting to, imposed upon, or
incurred or suffered by Sellers, directly or
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indirectly, as a result of or arising from the following (individually
an "Indemnifiable Claim" and collectively "Indemnifiable Claims" when
used in the context of Sellers as the Indemnified Party):
(i) Any inaccuracy in or breach of any of the
representations, warranties or agreements made by Buyer and
Acquisition Corp. in this Agreement or the non-performance of
any covenant or obligation to be performed by Buyer; or
(ii) Any misrepresentation in or any omission
from any Additional Document furnished or to be furnished by
or on behalf of Buyer or Acquisition Corp.
(c) Without duplication of Damages, Buyer, Acquisition Corp.
or Sellers, as the case may be, shall be deemed to have suffered
Damages arising out of or resulting from the matters referred to in
subsections (a) and (b) of this Section 8.2 if the same shall be
suffered by any parent, subsidiary or affiliate of Buyer, Acquisition
Corp. or Sellers, respectively.
SECTION 8.3 LIMITATIONS ON INDEMNIFICATION. Rights to
indemnification hereunder are subject to the following limitations:
(a) Neither Buyer and Acquisition Corp. nor Sellers shall be
entitled to indemnification hereunder with respect to an Indemnifiable
Claim (or, if more than one Indemnifiable Claim is asserted, with
respect to all Indemnifiable Claims) unless the aggregate amount of
Damages with respect to such Indemnifiable Claim or Claims on behalf of
Sellers on the one hand, and Buyer and Acquisition Corp. on the other
hand, exceeds $105,000, in which event the Indemnified Party shall be
entitled to be indemnified for the full amount of all Indemnifiable
Claims arising hereunder. The $105,000 limitation referred to above
shall not apply to Sellers' representations or agreements set forth in
Sections 3.1, 3.8, 3.12 and 5.10 hereof or Buyer's representations set
forth in Section 4.3 hereof.
(b) The obligation of indemnity of each Seller provided herein
with respect to the representations set forth in Sections 3.2 through
3.7 and 3.9 through 3.11, shall be limited to 10% of the value of the
Payment Shares received by such Seller pursuant to this Agreement and
such indemnification obligations may be satisfied by delivery of cash
or Payment Shares to Buyer. For purposes of this Section 8.3(b), the
Payment Shares shall be valued using the Closing Date Average Price.
168658.11
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(c) The obligation of indemnity provided herein with respect
to the representations and warranties set forth in Section 3.8 of this
Agreement shall terminate on:
(i) the expiration of the periods of limitations and
any extensions thereof applicable to assessment and collection
of federal income taxes under the Code with respect to the
representations as to the absence of unpaid or undisclosed
federal income taxes (including any interest, penalties or
expenses) of Sellers; and
(ii) the expiration of the periods of limitations and
any extensions thereof applicable to assessment and collection
of state taxes, with respect to the representations as to the
absence of unpaid or undisclosed state income taxes (including
any interest, penalties or expenses) of Sellers.
(d) The obligation of indemnity provided herein resulting from
the assertion of liability with respect to the representations and
warranties set forth in Articles III and IV (except Section 3.8 which
shall survive all applicable statutes of limitations and Sections 3.12
and 4.3 which shall survive without limitation) shall terminate 18
months after the Closing Date.
(e) The obligation of indemnity provided herein resulting from
the assertion of liability with respect to Section 5.10 hereof shall
survive without limitation.
(f) If, prior to the termination of any obligation to
indemnify as provided for herein, written notice of a claimed breach is
given by the party seeking indemnification including in detail the
basis therefor (the "Indemnified Party") to the party from whom
indemnification is sought (the "Indemnifying Party") or a suit or
action based upon a claimed breach is commenced against the Indemnified
Party, the Indemnified Party shall not be precluded from pursuing such
claimed breach or suit or action, or from recovering from the
Indemnifying Party (whether through the courts or otherwise) on the
claim, suit or action, by reason of the termination otherwise provided
for above.
Section 8.4 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO
THIRD-PARTY CLAIMS.
The Indemnified Party will give the Indemnifying Party prompt
written notice of any third party claim, demand, assessment, suit or proceeding
to which the indemnity set forth in Section 8.2 applies, which notice to be
effective must describe said claim in reasonable detail (the "Indemnification
Notice"). Notwithstanding the foregoing, the Indemnified Party shall not have
any obligation
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to give any notice of any assertion of liability by a third party unless such
assertion is in writing and the rights of the Indemnified Party to be
indemnified hereunder in respect of any third party claim shall not be adversely
affected by its failure to give notice pursuant to the foregoing unless and, if
so, only to the extent that, the Indemnifying Party is materially prejudiced
thereby. The Indemnifying Party will have the right to control the defense or
settlement of any such action subject to the provisions set forth below, but the
Indemnified Party may, at its election, participate in the defense of any action
or proceeding at its sole cost and expense. Should the Indemnifying Party fail
to defend any such action (except for failure resulting from the Indemnified
Party's failure to timely give the Indemnification Notice), then, in addition to
any other remedy, the Indemnified Party may settle or defend such action or
proceeding through counsel of its own choosing and may recover from the
Indemnifying Party the amount of such settlement, demand, or any judgment or
decree and all of its costs and expenses, including reasonable fees and
disbursements of counsel. The Indemnified Party will not compromise or settle
any claim without the prior written consent of the Indemnifying Party which
consent shall not be unreasonably withheld; PROVIDED, HOWEVER, if such approval
is unreasonably withheld, the liability of the Indemnified Party will be limited
to the total sum represented in the amount of the proposed compromise or
settlement and the amount of the Indemnified Party's reasonable counsel fees
incurred in defending such claim, as permitted by the preceding sentence,
accrued at the time said approval is unreasonably withheld. Notwithstanding the
preceding sentence, the foregoing limitation on the liability of the Indemnified
Party shall only be applicable if (i) a complete release of the Indemnifying
Party is contemplated to be part of the proposed compromise or settlement of
such third party claim and (ii) the Indemnifying Party withholds its consent to
such compromise or settlement.
SECTION 8.5 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO
NON-THIRD-PARTY CLAIMS.
In the event that the Indemnified Party asserts the existence
of an Indemnifiable Claim (but excluding claims resulting from the assertion of
liability by third parties), it shall give prompt written notice to the
Indemnifying Party specifying the nature and amount of the claim asserted (the
"Non-Third Party Claim Indemnification Notice"). If the Indemnifying Party,
within 30 days (or such greater time as may be necessary for the Indemnifying
Party to investigate such Indemnifiable Claim not to exceed 60 days), after
receiving the Non-Third Party Claim Indemnification Notice from the Indemnified
Party, shall not give written notice to the Indemnified Party announcing their
intent to contest such assertion of the Indemnified Party (the "Contest
Notice"), such assertion shall be deemed accepted and the amount of claim shall
be deemed a valid Indemnifiable Claim. During the time period set forth in the
preceding sentence, the Indemnified Party shall
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cooperate fully with the Indemnifying Party in respect of such Indemnifiable
Claim. In the event, however, that the Indemnifying Party contests the assertion
of a claim by giving a Contest Notice to the Indemnified Party within said
period, then if the parties hereto, acting in good faith, cannot reach agreement
with respect to such claim within ten days after such notice, the contested
assertion of a claim shall be referred to arbitration in accordance with Section
10.12 hereof.
ARTICLE IX MISCELLANEOUS PROVISIONS
---------- ------------------------
SECTION 9.1 NOTICES. All notices and other communications
required or permitted under this Agreement shall be deemed to have been duly
given and made if in writing and if served either by personal delivery to the
party for whom intended (which shall include delivery by Federal Express or
similar nationally recognized service) or three business days after being
deposited, postage prepaid, certified or registered mail, return receipt
requested, in the United States mail bearing the address shown in this Agreement
for, or such other address as may be designated in writing hereafter by, such
party:
If to Sellers: At their addresses set
------------- forth on Schedule 1
with a copy to: Husch & Eppenberger
000 X. Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
If to Buyer or Hospitality Worldwide Services, Inc.
Acquisition Corp.: 000 Xxxx Xxxxxx, Xxxxx 0000
----------------- Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
with a copy to: Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
SECTION 9.2 ENTIRE AGREEMENT. This Agreement, the Additional
Documents and the documents referred to herein embody the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof,
and supersede all prior and contemporaneous agreements and understandings, oral
or written, relative to said subject matter.
SECTION 9.3 BINDING EFFECT; ASSIGNMENT. This Agreement and the
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon Buyer,
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Acquisition Corp., Sellers and Bekins and their respective successors and
permitted assigns, beneficiaries or personal representatives. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
transferred or assigned (by operation of law or otherwise) by any of the parties
hereto without the prior written consent of the other parties except that Buyer
shall have the right to assign its rights but not its obligations hereunder to
any affiliate of Buyer. Any transfer or assignment of any of the rights,
interests or obligations hereunder in violation of the terms hereof shall be
void and of no force or effect.
SECTION 9.4 CAPTIONS. The Article and Section headings of this
Agreement are inserted for convenience only and shall not constitute a part of
this Agreement in construing or interpreting any provision hereof.
SECTION 9.5 EXPENSES OF TRANSACTION. Bekins shall pay all
reasonable costs and expenses incurred by it and Sellers in connection with this
Agreement and the transactions contemplated hereby, which payment or accrual of
expenses shall be reflected on the Closing Date Balance Sheet. Buyer shall pay
all costs and expenses incurred by it and Acquisition Corp. in connection with
this Agreement and the transactions contemplated hereby.
SECTION 9.6 WAIVER; CONSENT. This Agreement may not be
changed, amended, terminated, augmented, rescinded or discharged (other than by
performance), in whole or in part, except by a writing executed by each of the
parties hereto, and no waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or binding
unless such waiver shall be in writing and signed by the party claimed to have
given or consented thereto. Except to the extent that a party hereto may have
otherwise agreed to in writing, no waiver by that party of any condition of this
Agreement or breach by any other party of any of its obligations,
representations or warranties hereunder shall be deemed to be a waiver of any
other condition or subsequent or prior breach of the same or any other
obligation or representation or warranty by such other party, nor shall any
forbearance by the first party to seek a remedy for any noncompliance or breach
by such other party be deemed to be a waiver by the first party of its rights
and remedies with respect to such noncompliance or breach.
SECTION 9.7 NO THIRD PARTY BENEFICIARIES. Subject to Section
9.3 hereof, nothing herein, expressed or implied, is intended or shall be
construed to confer upon or give to any person, firm, corporation or legal
entity, other than the parties hereto, any rights, remedies or other benefits
under or by reason of this Agreement.
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SECTION 9.8 COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument. Facsimile
signatures may be delivered; provided that original signatures follow by mail or
courier.
SECTION 9.9 GENDER. Whenever the context requires, words used
in the singular shall be construed to mean or include the plural and vice versa,
and pronouns of any gender shall be deemed to include and designate the
masculine, feminine or neuter gender.
SECTION 9.10 GOVERNING LAW. This Agreement shall in all
respects be construed in accordance with and governed by the laws of the State
of New York, without regard to the principles of conflicts of laws thereof.
SECTION 9.11 ARBITRATION. Any dispute or controversy arising
out of Section 1.8 of this Agreement that cannot be settled through negotiation
shall be settled by arbitration in accordance with the commercial arbitration
rules of the American Arbitration Association (the "AAA"), to be held in St.
Louis, Missouri before a single arbitrator and to commence within thirty (30)
days of the appointment of the arbitrator by the AAA. The determination of such
arbitrator shall be set forth in a written opinion and shall be final and
binding and may be entered in the United States District Court for the Southern
District of New York or the Eastern District of Missouri or the State Courts
located in New York or Missouri. Each Bekins and Sellers shall pay (i) one half
of the fees and expenses of such arbitrator and (ii) the expenses incurred by
such party in connection with such arbitration.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
BUYER:
HOSPITALITY WORLDWIDE SERVICES, INC.
By:
-----------------------------------
Name:
Title:
HWS ACQUISITION CORP.
By:
-----------------------------------
Name:
Title:
BEKINS DISTRIBUTION SERVICES CO., INC.
By:
-----------------------------------
Name:
Title:
SELLERS:
--------------------------------------
Xxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxx X. Xxxxx, XX
--------------------------------------
Xxxxxx X. Xxxxx
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--------------------------------------
Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Field
--------------------------------------
Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxxxxx Xxxxxxxx
--------------------------------------
X.X. Xxxxxxxxx
--------------------------------------
Xxxxx X. XxXxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx Xxxxxxxx
National Automobile and
Casualty Insurance Co.
By:
-----------------------------------
Name:
Title:
Fair Oaks Investment LLC
By:
-----------------------------------
Name:
Title:
-00-
Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxxxx LLP agrees to furnish a copy of any
omitted schedule to this Agreement to the Securities & Exchange Commission upon
request.
INDEX TO SCHEDULES
------------------
Schedule
--------
2.1 List of Jurisdictions in Which Bekins is Qualified to Do
Business
2.2 Authorization; Validity
2.3 Breach of Statute or Contract
2.4 Subsidiaries
2.6 Financial Statements
2.7 Changes or Events Events
2.8 Material Adverse Events
2.9 Taxes
2.10 Proprietary Rights
2.11 Insurance
2.12 Litigation
2.13(b) Permits
2.15 Employee Benefit Plans
2.15(a) Pension Plan Amendments
2.15(b) Employee Welfare Benefit Plan
2.15(d) Multi-employer Benefit Plans
2.15(h) Reportable Events
2.15(i) Payments
2.15(j) Stock Comprising Assets of Pension Plans
2.15(k) Timeliness of Contributions
2.15(l) Premium Payments
2.15(m) Governmental Investigations
2.15(n) Entitlements
2.15(o) Liabilities
2.16 Labor Matters
2.17(b) Environmental Studies
2.19 Business Relationships
2.20 Suppliers and Customers
2.21 Restrictive Documents or Laws
2.22(a) Leases
2.22(b) Real Property
2.22(e) Financing Statements
2.22(f) Personal Property
2.23 Contracts
2.25 Officers, Employees and Compensation
2.26 Banks; Safe Deposit Boxes
2.28 Credit Terms
3.1 Liens and Encumberances on Sellers Shares
3.8 Taxes
4.13 Filings
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