SALE AGREEMENT by and among SELLERS and PURCHASER Dated as of May 27, 2005
EXHIBIT 2.1
This Sale Agreement has been filed to provide investors with information regarding its terms.
It is not intended to provide any other factual information about ABM Industries Incorporated,
CommAir Mechanical Services or Carrier Corporation. The representations and warranties of the
parties in this Sale Agreement were made to, and solely for the benefit of, the other parties. The
assertions embodied in the representations and warranties are qualified by information included in
disclosure schedules exchanged by the parties that may modify or create exceptions to the
representations and warranties. Accordingly, investors should not rely on the representations and
warranties as characterizations of the actual state of facts at the time they were made or
otherwise.
by and among
SELLERS
and
PURCHASER
Dated as of May 27, 2005
TABLE OF CONTENTS
Page | ||||
ARTICLE I. DEFINITIONS |
1 | |||
1.1 Definitions |
1 | |||
ARTICLE II. SALE AND PURCHASE |
8 | |||
2.1 The Sale |
8 | |||
2.2 Excluded Assets |
10 | |||
2.3 Assumed Liabilities |
11 | |||
2.4 Excluded Liabilities |
12 | |||
2.5 Shared Liabilities |
13 | |||
ARTICLE III. PURCHASE PRICE |
14 | |||
3.1 Purchase Price – General |
14 | |||
3.2 Closing Purchase Price Adjustments |
14 | |||
3.3 Project Contracts |
17 | |||
ARTICLE IV. THE CLOSING |
18 | |||
4.1 Time and Place of Closing |
18 | |||
4.2 Deliveries by Sellers |
18 | |||
4.3 Deliveries by Purchaser |
19 | |||
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SELLERS |
20 | |||
5.1 Organization; Qualification |
20 | |||
5.2 Authority Relative to this Agreement |
20 | |||
5.3 Consents and Approvals; No Violation |
20 | |||
5.4 Absence of Certain Changes or Events |
21 | |||
5.5 Labor Matters |
21 | |||
5.6 Employee Benefit Plans |
21 | |||
5.7 Material Contracts and Arrangements |
23 | |||
5.8 Legal Proceedings, etc. |
23 | |||
5.9 Compliance with Law |
24 | |||
5.10 Taxes |
24 | |||
5.11 Intellectual Property; Intangible Assets |
25 | |||
5.12 Brokers; Finders Fees |
25 | |||
5.13 Financial Information |
25 | |||
5.14 No Undisclosed Liabilities |
25 | |||
5.15 Title to Purchased Assets; Sufficiency of Assets |
26 | |||
5.16 Environmental |
26 | |||
5.17 Real Property |
27 | |||
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF PURCHASER |
27 | |||
6.1 Organization |
27 | |||
6.2 Authority Relative to This Agreement |
27 | |||
6.3 Consents and Approvals; No Violation |
28 | |||
6.4 Legal Proceedings, etc. |
28 | |||
6.5 Financial Capacity |
28 | |||
6.6 Brokers, Finders Fees |
28 | |||
ARTICLE VII. COVENANTS OF THE PARTIES |
28 |
i
Page | ||||
7.1 Access to Information after Closing |
28 | |||
7.2 Expenses |
29 | |||
7.3 Further Assurances |
29 | |||
7.4 Public Statements |
30 | |||
7.5 Tax Matters |
30 | |||
7.6 Employees |
32 | |||
7.7 Transfers Not Effected as of Closing |
36 | |||
7.8 Agreement Not to Compete |
38 | |||
7.9 Partially Utilized Facilities; Subleases |
39 | |||
7.10 Conduct of Business Prior to Closing |
39 | |||
7.11 Access to Information Prior to Closing |
40 | |||
7.12 Commercially Reasonable Efforts |
41 | |||
7.13 Risk of Loss |
41 | |||
7.14 No Other Bids |
42 | |||
7.15 ABM Facility Services |
43 | |||
7.16 Xxxxx Commissions |
43 | |||
ARTICLE VIII. CLOSING CONDITIONS |
43 | |||
8.1 Conditions to Obligations of the Parties |
43 | |||
8.2 Conditions to Obligations of Purchaser |
43 | |||
8.3 Conditions to Obligations of Sellers |
44 | |||
ARTICLE IX. SURVIVAL AND INDEMNIFICATION |
45 | |||
9.1 Survival |
45 | |||
9.2 Indemnification |
45 | |||
9.3 Defense of Claims |
48 | |||
9.4 Remedies Exclusive |
49 | |||
9.5 Comprehensive Basket |
50 | |||
ARTICLE X. TERMINATION AND ABANDONMENT |
50 | |||
10.1 Termination |
50 | |||
10.2 Procedure and Effect of Termination |
51 | |||
ARTICLE XI. MISCELLANEOUS PROVISIONS |
52 | |||
11.1 Amendment and Modification |
52 | |||
11.2 Waiver of Compliance; Consents |
52 | |||
11.3 Notices |
52 | |||
11.4 Assignment |
53 | |||
11.5 Governing Law |
53 | |||
11.6 Waiver of Jury Trial |
53 | |||
11.7 Counterparts |
53 | |||
11.8 Interpretation |
53 | |||
11.9 Severability |
54 | |||
11.10 Entire Agreement |
54 | |||
11.11 Bulk Sales or Transfer Laws |
54 |
EXHIBITS
Exhibit A
|
Xxxx of Sale | |
Exhibit B
|
Instrument of Assumption |
ii
Exhibit C
|
Interim Services Agreement | |
Exhibit D
|
Employee Services Loan Agreement |
iii
Sellers Disclosure Schedule
Schedule
|
1.1(a) | Sellers’ Persons with Knowledge | ||||
2.1(m) | Permits | |||||
2.2(g) | Partially Utilized Facilities | |||||
2.2(k) | Other Assets | |||||
2.4(b) | Legal Proceedings | |||||
3.2(a) | Agreed Accounting Principles | |||||
3.2(b) | Cash Change Schedule | |||||
3.3(a) | Project Contracts | |||||
5.3 | Consents and Approvals | |||||
5.4 | Certain Changes or Events | |||||
5.5(b) | Labor Unions | |||||
5.6 | Seller Plans | |||||
5.7 | Material Contracts | |||||
5.8 | Governmental Authority | |||||
5.10(a) | Compliance with Tax Law | |||||
5.10(b) | Withholding and Payment of Taxes | |||||
5.13 | Financial Information | |||||
5.14 | Undisclosed Liabilities; Performance Bonds | |||||
5.15 | Title to Purchased Assets; Location | |||||
5.17 | Real Property | |||||
7.6(b) | Excluded Employees | |||||
7.7(b) | Material Service Contract Consents | |||||
7.10 | Conduct of Business Prior to Closing | |||||
7.16 | Xxxxx Account |
iv
SALE AGREEMENT, dated as of May 27, 2005 (this “Agreement”), by and among ABM Industries
Incorporated, a Delaware corporation (“ABM”), CommAir Mechanical Services, a California corporation
(“CMS”) (ABM and CMS each a “Seller” and collectively, “Sellers”), and Carrier Corporation, a
Delaware corporation (“Purchaser”).
WHEREAS, ABM through CMS, its wholly owned subsidiary, owns and operates a business segment
that installs, services (including the provision of water treatment services) and repairs
commercial heating, ventilation and air conditioning equipment and controls;
WHEREAS, Purchaser desires to purchase from Sellers, and Sellers desire to sell to Purchaser,
substantially all of the assets of the Business (as defined hereinafter) upon the terms and subject
to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and
agreements hereinafter set forth, and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS
DEFINITIONS
1.1 Definitions As used in this Agreement, each of the following
terms shall have the following meanings:
(i) “ACM” means any asbestos containing material.
(ii) “Adjusted Net Assets” means the Net Assets computed based on the
information contained in the Final Preceding Month End Balance Sheet prepared in
accordance with the Agreed Accounting Principles.
(iii) “Affiliate” shall have the meaning set forth in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended.
(iv) “Agreed Accounting Principles” means those accounting principles
set forth on Schedule 3.2(a) of Sellers Disclosure Schedule and used for the
preparation of the Preceding Month End Balance Sheet. Such schedule also sets forth
the methodology used for the calculation of Adjusted Net Assets and Target Net
Assets, used in determining the adjustment to the Closing Purchase Price described
in Section 3.2.
(v) “Applicable Law” means any law, code, regulation, rule, order,
judgment or decree to which the Business, Sellers, or any of their Affiliates are
subject.
(vi) “Asbestos Activity” means any possession, purchase, sale,
brokering, owning, leasing, using, manufacturing, fabricating, controlling,
handling, installing, encapsulating, servicing, maintaining, disposing of,
remediating or transporting, or exposure to, any asbestos or ACM, or any products,
assets, materials, supplies or other property (including personal property, real
property and fixtures) containing asbestos or ACM.
(vii) “Balance Sheet” means the unaudited balance sheet of CMS as of
February 28, 2005, which is attached hereto as part of Schedule 5.13 of Sellers
Disclosure Schedule.
(viii) “Xxxx of Sale” means the Xxxx of Sale to be delivered at the
Closing with respect to the Purchased Assets substantially in the form of Exhibit A
hereto.
(ix) “Books and Records” means all books, records, files, documents,
financial records, bills, accounting records, tax records, operating manuals,
personnel records, customer and supplier lists and files, including customer lists,
preprinted materials, artwork, and other similar items.
(x) “Business” means Sellers’ business of installing, servicing and
repairing commercial heating, ventilation and air conditioning equipment and
controls, but excluding the provision of water treatment services.
(xi) “Business Day” means any day other than Saturday, Sunday and any
day which is a legal holiday or a day on which banking institutions in the State of
New York are authorized by law or other governmental action to close.
(xii) “Cash Change” means the net cash transfers between CMS and ABM
during the period from (a) the date of the Preceding Month End Balance Sheet through
(b) the Closing Date as determined in accordance with the methodology illustrated on
Schedule 3.2(b) of Sellers Disclosure Schedule. The computation of Cash Change
shall reflect (x) cash disbursements in respect of Sellers’ payment of (i)
liabilities reflected on the Preceding Month End Balance Sheet or (ii) Stub Period
Operational Expenses, netted against (y) cash receipts in respect of Sellers’
collection on accounts receivable reflected on the Preceding Month End Balance Sheet
or otherwise arising during the period between the date of the Preceding Month End
Balance Sheet and the Closing Date.
(xiii) “Code” means the United States Internal Revenue Code of 1986,
as amended, and Treasury regulations promulgated thereunder.
(xiv) “Confidentiality Agreement” means the Confidentiality
Agreement, dated as of February 16, 2005, by and between ABM and Purchaser.
(xv) “Employee” means any employee of any Seller as of the Closing
Date (including employees who are not actively at work as of the Closing Date on
account of sickness, vacation, family medical leave, sick leave or other normal
course temporary absence (but excluding disability, authorized leave of absence
2
or other situations where the absence is either long-term or indeterminate))
whose work or function is related primarily to the operation of the Business.
(xvi) “Employee Services Loan Agreement” means the Employee Services
Loan Agreement to be delivered at the Closing substantially in the form of Exhibit D
hereto.
(xvii) “Encumbrances” means any mortgages, pledges, liens (statutory
or otherwise), security interests, easements, rights-of-way, covenants, claims,
conditional and installment sale agreements, restrictions or encumbrances and
charges of any kind or nature whatsoever (other than those related to this
Agreement).
(xviii) “Environmental Condition” means the Release of a Regulated
Substance or the presence of a Regulated Substance on, in, under or within any
property (including the presence in surface water, groundwater, soils or subsurface
strata, or air), other than the presence of a Regulated Substance in locations and
at concentrations that are naturally occurring.
(xix) “Environmental Law” shall mean any federal, state or local
statute, ordinance, rule or regulation, any judicial or administrative order or
judgment, to the extent such order or judgment is specifically applicable to the
Purchased Assets or the Business, and any provision or condition of any Permit or
other operating authorization specifically applicable to the Purchased Assets or the
Business relating to the protection of the environment or the public welfare from
actual or potential exposure to any actual or potential release, discharge, disposal
or emission of any Regulated Substance.
(xx) “ERISA” means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations thereunder.
(xxi) “ERISA Affiliate” means each trade or business (whether or not
incorporated) that, together with any Seller, is treated as a single employer under
Sections 414(b), (c), (m) or (o) of the Code.
(xxii) “Existing Environmental Conditions” means any Environmental
Condition existing prior to or as of the Closing Date at any property or facility,
including the subsequent migration of any Regulated Substances comprising such an
Environmental Condition.
(xxiii) “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
(xxiv) “Governmental Authority” means a domestic or foreign federal,
state, municipal or local government, legislative, or regulatory authority, agency
or commission, including courts of competent jurisdiction and arbitrators.
3
(xxv) “Head Office” means the head corporate office of the Business
located in Oakland, California.
(xxvi) “HVAC” means commercial heating, ventilation and air
conditioning equipment and controls.
(xxvii) “Instrument of Assumption” means the Instrument of Assumption
to be delivered at the Closing with respect to the Assumed Liabilities substantially
in the form of Exhibit B hereto.
(xxviii) “Interim Services Agreement” means the Interim Services
Agreement to be delivered at the Closing substantially in the form of Exhibit C
hereto.
(xxix) “Inventory” means the complete inventory of goods in transit,
work in progress, raw materials, spare parts, supplies, materials and merchandise of
the Business held for sale or to be consumed in the performance of maintenance,
installation, repair and project services.
(xxx) “Knowledge” means the actual knowledge, after diligent inquiry
or investigation, of (a) with respect to Sellers, the individuals set forth on
Schedule 1.1(a) of Sellers Disclosure Schedule and (b) with respect to Purchaser,
senior executives of Purchaser.
(xxxi) “Material Adverse Effect” means (a) any change in or effect
that is, individually or in the aggregate, materially adverse to the business,
operations or results of operations of the Business taken as a whole, excluding any
such change or effect resulting from or arising in connection with (A) changes in
conditions or circumstances generally affecting the industry in which the Business
operates or (B) the compliance with the terms and conditions of this Agreement or
(b) any material adverse effect on the ability of Sellers to consummate the
transactions contemplated by this Agreement.
(xxxii) “Net Assets” means the net assets of CMS computed based on
information contained in the Balance Sheet, the Preceding Month End Balance Sheet or
the Final Preceding Month End Balance Sheet, as the case may be, all prepared
according to the Agreed Accounting Principles.
(xxxiii) “Other Taxes” means all Taxes other than income Taxes.
(xxxiv) “Permitted Encumbrances” means (A) Encumbrances arising or
incurred in the ordinary course of business that are not material in amount or do
not materially detract from the value of or materially impair the use of the
Purchased Assets, (B) Encumbrances for Taxes not yet due and payable or the validity
of which is being contested in good faith by appropriate proceedings, (C)
Encumbrances of carriers, warehousemen, mechanics and material men and other like
Encumbrances arising in the ordinary course of business, and (D) Encumbrances which
do not, individually or in the aggregate, have a Material
4
Adverse Effect; provided that for purposes of Section 2.1 clause (D) hereof
shall not apply.
(xxxv) “Permitted Services” means (i) HVAC services performed by
onsite employees of ABM Engineering Services Company in connection with customer
preventative maintenance program, and (ii) HVAC services performed by employees and
subcontractors on behalf of ABM Facility Services Company; provided, however, that
in each case of (i) and (ii) the HVAC services are in good-faith related to other
services (i.e. a bundled offering) involving mechanical equipment in addition to
HVAC equipment; and provided, further, that with respect to clauses (i) and (ii),
the direct performance of such HVAC services by employees of such ABM Affiliates is
in the nature of ordinary preventative maintenance (changing filters, hosing coils,
etc.) and not major repairs, replacement, retrofit or installation of new equipment.
By way of clarification, “Permitted Services” would not permit ABM Engineering
Services Company, ABM Facility Services Company and other ABM Affiliates to bid and
perform HVAC services on a stand-alone basis for a period of five (5) years
following the Closing Date as outlined in Section 7.8 of this Agreement. By way of
further clarification, this provision and Section 7.8 hereof shall not restrict ABM
Facility Services Company and ABM Engineering Services Company from providing the
same type and range of HVAC services as currently provided to their present
customers, or from providing such HVAC services to future customers; provided if
such services are not consistent with the above definition of Permitted Services,
they are de-minimus.
(xxxvi) “Person” means an individual, a partnership, a joint venture,
a corporation, a limited liability company, a limited liability partnership, a
trust, an unincorporated organization or a Governmental Authority or any department
or agency thereof.
(xxxvii) “Predecessor” means any person that was or is a predecessor
entity or entities to Sellers or any Affiliate of Sellers by any legal means,
including, without limitation, (i) pursuant to any legal requirement, whether by
statutory merger, de facto merger, consolidation, combination, division, sale of
assets, dissolution, reorganization or otherwise or (ii) based on any theory or
doctrine of successor liability, whether by statute or at common law.
(xxxviii) “Regulated Substance” means petroleum or petroleum products
and any other material, substance or waste that is identified and regulated by any
federal, state or local statute, ordinance, rule or regulation intended to protect
the environment or public health.
(xxxix) “Release” means any spill, leak, emission, discharge,
deposit, disposal, injection, escape, leaching, dumping or other release of any
Regulated Substance into the environment, whether intentional or unintentional,
including the abandonment or discarding of barrels, containers and other receptacles
containing any Regulated Substance.
5
(xl) “Sellers Disclosure Schedule” means the disclosure schedule
attached to this Agreement and delivered by Sellers to Purchaser pursuant to the
terms of this Agreement.
(xli) “Stub Period Operational Expenses” means all expenses of the
Business other than for Excluded Liabilities (except for this purpose, Other Taxes)
incurred in the ordinary course of business by the Business (including, but not
limited to, all trade obligations and expenses for payroll, vacation, bonuses and
commissions, and contributions to the Seller Plans) between the date of the
Preceding Month End Balance Sheet and the Closing Date, but excluding any amounts
owed to ABM or an Affiliate of ABM other than (i) in respect of insurance premiums
for general liability and workers compensation (which shall be calculated at a rate
of no more than four thousand dollars ($4,000) per calendar day) and (ii)
information management and related services provided to CMS by ABM that continue
under the Interim Services Agreement (which shall be calculated at the rates
negotiated in the Interim Services Agreement), which shall be included.
(xlii) “Target Net Assets” means $10,529,000, which is the Net Assets
as of October 31, 2004 as shown on Schedule 3.2(a) of the Sellers Disclosure
Schedule which was calculated from the October 31, 2004 balance sheet of CMS
prepared in accordance with the Agreed Accounting Principles on such Schedule 3.2(a)
of Sellers Disclosure Schedule.
(xliii) “Tax” means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not.
(xliv) “Tax Return” means any return, report, information return or
other document (including any amendment thereto, and any schedule or attachment
thereto and related or supporting information) supplied or required to be supplied
to any authority with respect to Taxes.
(xlv) “Temporary Lease Period” means the period, not to exceed 150
days from the Closing Date, for which Purchaser is leasing the Partially Utilized
Facilities pending relocation of the Business from the Partially Utilized
Facilities.
(xlvi) “WARN Act” means the Federal Worker Adjustment Retraining and
Notification Act of 1988, and the rules and regulations thereunder.
(b) Each of the following terms has the meaning specified in the Section set
forth opposite such term:
6
Term | Section | |
ABM
|
Preamble | |
ABM Transaction
|
7.14 | |
Adjustment Statements
|
3.2(b) | |
Agreement
|
Preamble | |
Allocation Schedule
|
7.5(c) | |
Ancillary Documents
|
5.2 | |
Assigned Employees
|
7.6(b) | |
Assumed Contracts
|
2.1(a) | |
Assumed Leases
|
2.1(b) | |
Assumed Liabilities
|
2.3 | |
Bonus Plan
|
2.3(e) | |
Cash Change Amount
|
3.2(b) | |
Cash Change Schedule
|
3.2(b) | |
Closing
|
4.1 | |
Closing Date
|
4.1 | |
Closing Purchase Price
|
3.1 | |
CMS
|
Preamble | |
Competitive Business
|
7.8(a) | |
Comprehensive Basket
|
9.5 | |
Consent Period
|
7.7(c) | |
Excluded Assets
|
2.2 | |
Excluded Employees
|
7.6(b) | |
Excluded Liabilities
|
2.4 | |
Excluded Records
|
2.1(g) | |
Final Preceding Month End Balance Sheet
|
3.2(c) | |
Immediately Hired Employees
|
7.6(b) | |
Incurred Costs
|
3.3(a) | |
Indemnifiable Losses
|
9.2(a) | |
Indemnifying Party
|
9.2(d) | |
Indemnitee
|
9.2(d) | |
Labor Unions
|
5.5(b) | |
Material Contracts
|
5.7 | |
Material Project Contracts
|
5.7 | |
Material Service Contracts
|
5.7 | |
Multiemployer Plan
|
5.6(d) | |
Net Asset Adjustment Statements
|
3.2(a) | |
Neutral Accountant
|
3.2(c) | |
Partially Utilized Facilities
|
2.1(g) |
Term | Section | |
Partially Utilized Facility Leases
|
2.2(g) | |
Performance Bonds
|
2.1(n) | |
Permits
|
5.9 | |
Xxxxx Cash
|
2.1(i) | |
Preceding Month End Balance Sheet
|
3.2(a) | |
Project Contracts
|
3.3(a) |
7
Term | Section | |
Project Losses
|
3.3(a) | |
Project Losses Statement
|
3.3(c) | |
Purchased Assets
|
2.1 | |
Purchaser
|
Preamble | |
Purchaser Group
|
9.2(a) | |
Purchaser Plans
|
7.6(b) | |
Purchaser’s Savings Plan
|
7.6(d) | |
Registration
|
5.11 | |
Reimbursable Liabilities
|
2.3(a) | |
Requested Required Consents
|
7.7(c) | |
Required Consents
|
7.7(b) | |
Seller
|
Preamble | |
Seller Group
|
9.2(c) | |
Seller Plans
|
5.6(a) | |
Sellers Savings Plans
|
7.6(d) | |
Shared Liabilities
|
2.5(a) | |
Target Business
|
7.8(a) | |
Tax Information
|
7.5(a) | |
Termination Date
|
10.1(b) | |
Third Party Claim
|
9.3(a) | |
Transferred Employees
|
7.6(b) | |
Transfer Taxes
|
7.5(b) | |
U.S. GAAP
|
5.13 |
ARTICLE
II.
SALE AND PURCHASE
SALE AND PURCHASE
2.1 The Sale Upon the terms and subject to the satisfaction of the conditions
contained in this Agreement, at the Closing, Sellers agree to sell, assign, convey, transfer and
deliver to Purchaser and Purchaser agrees to purchase, acquire and accept from Sellers, free and
clear of all Encumbrances (other than Permitted Encumbrances) all of Sellers’ right, title and
interest in and to all of the business, properties, assets, goodwill and rights of Sellers
primarily related to the Business of whatever kind or nature, tangible or intangible, other than
the Excluded Assets (collectively, the “Purchased Assets”), including, without limitation:
(a) all of Sellers’ service, repair, maintenance, installation and project
contracts and agreements of the Business, including any amendments and supplements,
modifications or side letters thereto and any other agreements related to work performed by
Sellers in connection with the Business whether or not such contracts or agreements are
valid or expired by their terms (collectively, the “Assumed Contracts”);
(b) the leasehold interests, including any prepaid rent, security deposits
and options to renew or purchase in connection therewith, of Sellers in real property
primarily relating to the Business (the “Assumed Leases”);
8
(c) the furniture, equipment, machinery, supplies, vehicles, tools, personal
property, fixtures and other tangible property owned, used, leased or licensed by Sellers
and primarily relating to the Business;
(d) all vehicle and equipment leases of the Business;
(e) all accounts receivable of the Business as of the date of the Final
Preceding Month End Balance Sheet and all accounts receivable of the Business arising
between the date of the Preceding Month End Balance Sheet and the Closing Date;
(f) the Inventory of the Business;
(g) the Books and Records of the Business residing at the branches, the Head
Office and in the locations occupied by the Business at the facilities partially utilized by
the Business listed on Schedule 2.2(g) of Sellers Disclosure Schedule (the “Partially
Utilized Facilities”), except for all (i) personnel and related human resources records with
respect to employees of the Business as of the Closing Date, including Employees and former
employees and (ii) payroll and sales and use Tax records ((i) and (ii), the “Excluded
Records”);
(h) the operating manuals of the Business;
(i) all xxxxx cash of the Business maintained at the branches, the Head
Office and the Partially Utilized Facilities, in any event not to exceed fifteen thousand
dollars ($15,000) in the aggregate for all such facilities (the “Xxxxx Cash”);
(j) the know-how (including all material documentation relating thereto in
existence as of the Closing Date) and, to the extent existing, the trade secrets, technology
and inventions, related to the Business;
(k) to the extent existing, the patents (including all reissues, divisions,
continuations and extensions of such patents), patent applications, trade names, trademarks,
service marks, trademark or service xxxx registrations and registration applications,
product designations, product and service goodwill, trade dress, copyrights, license rights,
computer software, specifications, data, logos, slogans, and designs together with all
registrations and applications relating primarily to the Business;
(l) all rights under warranties, representations and guarantees made by
suppliers, manufacturers or contractors in connection with the operation of the Business or
affecting any of the Purchased Assets;
(m) all Permits relating primarily to the Business as set forth on Schedule
2.1(m) of Sellers Disclosure Schedule;
(n) to the extent assignable, all right, title and interest in and under
fidelity, performance and surety bonds of the Business, including those relating to specific
jobs of the Business involving sub-contractors performing work for the Business (the
“Performance Bonds”);
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(o) all goodwill relating to the Business;
(p) all post office boxes, telephone numbers, and other communication codes,
numbers or devices used in connection with the Business and (non-ABM specific) content of
the Mechanical section of the ABM website, located at xxx.xxx.xxx/xxxxxxxxxx; and
(q) any other assets primarily used by Sellers in the Business on the Closing
Date that are not specifically listed above or identified as Excluded Assets; provided,
however that, and notwithstanding the foregoing, any tangible personal property used by
Sellers in both the Business and for the provision of water treatment services shall be
included herein as Purchased Assets to the extent such property is not primarily used for
the provision of water treatment services.
2.2 Excluded Assets
Purchaser shall not acquire pursuant to this Agreement, the Purchased Assets shall not include
and Sellers shall retain the following (collectively, the “Excluded Assets”):
(a) all cash, bank deposits in transit and cash equivalents of the Business,
except for Xxxxx Cash;
(b) the Excluded Records;
(c) all insurance policies covering the Business or the Purchased Assets;
(d) all rights to insurance proceeds arising (i) prior to the Closing Date
with respect to the Purchased Assets or the conduct of the Business, or (ii) at any time
with respect to the Excluded Assets;
(e) all refunds and credits relating to Taxes paid by Sellers (and Sellers’
Affiliates) or Taxes in connection with the conduct of the Business prior to the Closing
whether such refund is received as a payment or a credit against future taxes payable;
(f) all property and assets of Sellers (and Sellers’ Affiliates), including
those primarily related to the provision of water treatment services, that are not used
primarily in the operation of the Business; provided, however, that any tangible personal
property that is used in both the Business and for the provision of water treatment services
shall not be Excluded Assets but shall be included in Purchased Assets to the extent such
property is not primarily used for the provision of water treatment services;
(g) the leasehold interests, including any prepaid rent, security deposits
and options to renew or purchase in connection therewith, of Sellers with respect to the
Partially Utilized Facilities (the “Partially Utilized Facility Leases”) as set forth on
Schedule 2.2(g) of Sellers Disclosure Schedule;
(h) the minute and record books, corporate seal, stock records and
organizational documents of Sellers;
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(i) all rights under any retirement, profit sharing or other employee benefit
plan of Sellers; and
(j) all loans, employment commission, employment and consulting contracts or
similar contracts and life insurance maintained by Sellers;
(k) any other assets that are specifically identified and described on
Schedule 2.2(k) of Sellers Disclosure Schedule.
2.3 Assumed Liabilities
Except as provided in Section 2.4 hereof, Purchaser agrees, effective at the Closing Date, to
assume, pay, perform and discharge, when due:
(a) (i) trade accounts payable and (ii) except as may otherwise be provided
in the Employee Services Loan Agreement, an amount equal to the accrued expenses for
payroll, vacation, bonuses and commissions, and contributions to the Sellers Plans and Other
Taxes (the “Reimbursable Liabilities”) to the extent and in the amounts reflected on the
Final Preceding Month End Balance Sheet;
(b) all obligations or liabilities, including performance obligations, under
the Assumed Contracts, Assumed Leases, vehicle and equipment leases (and all other contracts
and agreements of the Business entered into in the ordinary course of business and
consistent with past practices) incurred in the ordinary course of business and consistent
with past practices prior to the Closing Date or relating to the period after the Closing
Date (excluding liability for material breach or material non-performance under the Assumed
Contracts or Assumed Leases occurring prior to the Closing Date, provided that Sellers shall
retain such liability for material breach or material non-performance under the Assumed
Contracts and Assumed Leases in the event and to the extent that the Purchaser shall have
notified Sellers of any such breach or non-performance within one year of the Closing Date);
(c) all obligations under Performance Bonds issued by Sellers on behalf of
the Business, to the extent assignable;
(d) trade accounts payable of the Business as of the date of the Final
Preceding Month End Balance Sheet and an amount equal to the Stub Period Operational
Expenses (other than the trade accounts payable);
(e) all obligations under the FY 2005 bonus plan of the Business to the
extent arising in the ordinary course of the Business (the “Bonus Plan”); and
(f) subject to Section 2.5 hereof, all other liabilities of the Business
arising out of the operation of the Business after the Closing Date.
The foregoing obligations, liabilities and commitments, and no others, shall be hereinafter
referred to as the “Assumed Liabilities”.
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2.4 Excluded Liabilities
Purchaser shall not assume and shall not be obligated to pay, perform or otherwise discharge
any liabilities and obligations of Sellers not expressly assumed pursuant to this Agreement,
including without limitation (collectively, the “Excluded Liabilities”):
(a) all interest bearing liabilities in respect of money borrowed by the
Business as of the Closing Date;
(b) subject to Section 2.5, all liabilities in respect of causes of action,
claims, suits or proceedings of or involving third parties against Sellers relating to the
Business or the Purchased Assets arising out of incidents or events occurring on or prior to
the Closing Date, including, without limitation, all insurance (including, without
limitation, workers compensation, general liability, automobile and property damage) claims
with an incident date on or prior to the Closing Date and all other claims as set forth on
Schedule 2.4(b) of Sellers Disclosure Schedule;
(c) all liabilities for material breach or material non-performance under the
Assumed Contracts or Assumed Leases occurring prior to the Closing Date, provided that
Sellers shall retain such liability for material breach or material non-performance under
the Assumed Contracts and Assumed Leases only in the event and to the extent that Purchaser
shall have notified Sellers of any such breach or non-performance within one year of the
Closing Date; except, however, that Sellers shall retain and Purchaser shall not assume any
such liabilities arising out of Sellers’ violations of Applicable Law (including, without
limitation, Environmental Law);
(d) any liabilities or obligations of Sellers in respect of any Excluded
Assets or other assets of Sellers which are not Purchased Assets, whether or not such
liabilities or obligations arise before or after the Closing Date;
(e) any liabilities or obligations with respect to Taxes attributable to
Sellers, the Business, or the Purchased Assets for taxable periods, or any portion thereof,
ending on or before the Closing Date;
(f) any liabilities or obligations of ABM or CMS for the unpaid Taxes of any
Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local,
or foreign law or regulation), as a transferee or successor, by contract, or otherwise;
(g) any liabilities or obligations of Sellers pursuant to any employment or
consulting agreements with either Seller and any liabilities or obligations of Sellers
pursuant to any employment or similar agreements with any Employee or independent contractor
under the Seller Plans or any stay bonus or similar arrangement entered into or created as a
result of this transaction, unless specifically assumed (it being understood and agreed by
the parties that, to the extent obligations thereunder arise in the ordinary course of
business, the Bonus Plan is being assumed by Purchaser hereunder) pursuant to this
Agreement;
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(h) subject to Section 2.5 hereof, any liabilities arising out of (1)
incidents or events occurring prior to the Closing Date involving any violation of
Environmental Laws with respect to the operations of the Business prior to or as of the
Closing Date, (2) actions or incidents occurring prior to the Closing Date that could form
the basis for a claim of liability under Environmental Law, including without limitation,
the release or disposal of Regulated Substances by or in connection with the Business; (3)
any Existing Environmental Conditions on, at, under or from any properties or facilities now
or formerly owned, leased, or operated by the Sellers, the Business or any Predecessor; and
(4) the storage, transportation, treatment, disposal, discharge, recycling or release of any
Regulated Substances at any location by any Seller, the Business or any Predecessor on or
before the Closing Date, or the arrangement by any Seller, the Business or any Predecessor
for any storage, transportation, disposal, discharge, recycling or release of any Regulated
Substances at any location on or before the Closing Date;
(i) the use, procurement, manufacture or sale of, or exposure to, ACM in
products manufactured, sold, installed or serviced in connection with the Business or any
discontinued product or product line on or prior to the Closing Date by any Seller or any
Predecessor and any other Asbestos Activity performed or undertaken by any Seller or any
Predecessor whether or not in connection with the Business; and
(j) any obligations or liabilities arising from or related to discontinued,
sold or abandoned businesses, or commercial operations of Sellers or any Predecessors.
2.5 Shared Liabilities
(a) Subject to Section 2.5(b), with respect to certain liabilities of the
Business relating to causes of action, claims, suits or proceedings of or involving third
parties concerning Environmental Law which arise from incidents or events occurring over a
period of time beginning before the Closing Date (for which Sellers are responsible as
Excluded Liabilities) and ending after the Closing Date (for which Purchaser may be liable
as Assumed Liabilities) (“Shared Liabilities”), such Shared Liabilities shall be allocated
to the parties in an equitable manner taking into account the relative fault of each of the
parties as determined by a trier of fact as well as the relative proportions of time such
incidents or events occurred before and after the Closing Date.
(b) Notwithstanding Section 2.5(a), the following liabilities shall not be
considered Shared Liabilities, and Sellers shall remain solely liable for: (i) any
liabilities of Sellers or any Predecessors arising from or relating to Existing
Environmental Conditions (including any ongoing migration of Existing Environmental
Conditions); (ii) any liabilities of Sellers or any Predecessors arising out of any Asbestos
Activity or any products containing ACM; and (iii) any other liabilities or obligations for
which Sellers are obligated to provide indemnification to the Purchaser Group under Section
10.2(b).
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ARTICLE III.
PURCHASE PRICE
PURCHASE PRICE
3.1 Purchase Price – General
In consideration of the sale, conveyance, assignment and transfer of the Purchased Assets, at
the Closing, Purchaser shall pay to ABM, on behalf of Sellers, an amount equal to thirty-two
million dollars ($32,000,000) (the “Closing Purchase Price”). The Closing Purchase Price shall be
paid at the Closing in immediately available funds by wire transfer. The Closing Purchase Price
payable by Purchaser at the Closing will be subject to future adjustment as provided in Sections
3.2 and 3.3.
3.2 Closing Purchase Price Adjustments
(a) Net Adjustment; Preparation of the Preceding Month End Balance Sheet. As
soon as reasonably practicable but not later than ninety (90) days after the Closing Date,
Sellers shall prepare and deliver to Purchaser an unaudited balance sheet of CMS as of the
end of the month ending immediately preceding the Closing Date (the “Preceding Month End
Balance Sheet”), and (ii) the calculation of the Adjusted Net Assets, based upon the
Preceding Month End Balance Sheet and the Agreed Accounting Principles as set forth on
Schedule 3.2(a) of Sellers Disclosure Schedule ((i) and (ii) together, the “Net Asset
Adjustment Statements”). The Preceding Month End Balance Sheet shall be prepared on a basis
consistent with the preparation of the Balance Sheet, including the Agreed Accounting
Principles and, as specified thereby, U.S. GAAP to the extent applicable. The calculation
of Adjusted Net Assets shall be prepared on a basis consistent with the calculation of the
Target Net Assets. In connection with Sellers’ preparation of the Adjustment Statements,
Sellers and their representatives shall have reasonable access during normal business hours
to the Books and Records and personnel of the Business.
(b) Stub Period Cash Adjustment; Preparation of Cash Change Schedule. As
soon as reasonably practicable but not later than sixty (60) days after the Closing Date,
Sellers shall also deliver to Purchaser a schedule (the “Cash Change Schedule”),
substantially in the form set forth on Schedule 3.2(b) of Sellers Disclosure Schedule, which
shall set forth the Cash Change in the Business (the absolute value of such amount, the
“Cash Change Amount”). Sellers shall prepare the Cash Change Schedule in good faith and in
accordance with past practices of CMS and the Business. The Net Asset Adjustment Statements
and the Cash Change Schedule shall be collectively known herein as the “Adjustment
Statements”. The parties understand and agree that the mechanism of the Cash Change
adjustment is intended to reimburse Sellers with respect to Sellers’ payment of Reimbursable
Liabilities and Stub Period Operational Expenses to the extent Sellers pay any such amounts
during the period from the date of the Preceding Month End Balance Sheet through and
including the Closing Date. If any such Reimbursable Liabilities and Stub Period
Operational Expenses are not reflected as paid by Sellers on the Cash Change Schedule,
Purchaser shall pay such amounts to the Sellers, if and when such liabilities are paid by
Sellers following the Closing Date, pursuant to the mechanics set forth in the Interim
Services Agreement, as provided in Section 3.2(f) hereof.
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(c) Review of Adjustment Statements. After delivery to it of the applicable
Adjustment Statement(s), Purchaser (and its representatives) shall be afforded the
opportunity to review the work papers, schedules and other supporting papers relating to the
preparation of the Adjustment Statements and to consult with Sellers and their
representatives, if necessary, regarding the methods used in the preparation thereof.
Within thirty (30) days after Purchaser’s receipt of the applicable Adjustment Statements
Purchaser shall either inform the other in writing that the applicable Adjustment Statement
is acceptable or object to such Adjustment Statement in writing setting forth a specific
description of the objections and specifying in reasonable detail the nature and extent of
such disagreement. Purchaser shall not give a notice of disagreement unless the aggregate
amount in dispute exceeds fifteen thousand dollars ($15,000). The failure of Purchaser to
deliver written objections to Sellers within thirty (30) days after receipt of the
applicable Adjustment Statement shall be deemed acceptance of such Adjustment Statement. If
Purchaser objects to the Adjustment Statement and if Sellers do not agree with such
objections (it being agreed that the failure of Sellers to deliver written notice to
Purchaser of Sellers’ disagreement with Purchaser’s objections within fifteen (15) days of
receipt of such objections shall be deemed acceptance by Sellers failing to deliver notice),
or such objections are not resolved on a mutually agreeable basis within thirty (30) days
after the Sellers’ receipt of such objections, any disagreement between the parties
regarding the same shall be resolved by Deloitte & Touche LLP, but if Deloitte & Touche LLP
is not available to serve, then an alternative unaffiliated accounting firm to be selected
by the parties (the “Neutral Accountant”). The decision of the Neutral Accountant shall be
(i) made within thirty (30) days of the submission of the dispute based solely on the
presentations by Purchaser and Sellers, (ii) in accordance with this Agreement and (iii)
final and binding upon the parties. Upon the agreement of the parties or the decision of
the Neutral Accountant or Purchaser’s failure to deliver a written objection to Sellers
within the thirty (30) day period after receipt of the applicable Adjustment Statement
provided above, the Preceding Month End Balance Sheet (as adjusted, if necessary) shall be
deemed the Final Preceding Month End Balance Sheet (the “Final Preceding Month End Balance
Sheet”) and the determination of the Adjusted Net Assets shall be deemed final or the Cash
Change Schedule and the determination of the Cash Change shall be deemed final, as the case
may be. Each party shall bear the fees, costs and expenses of its own accountants and shall
share equally the fees, costs and expenses of the Neutral Accountant.
(d) Adjustment to the Closing Purchase Price; Payment. Upon final
determination in accordance with the procedures set forth in Section 3.2(c) (A) the Final
Preceding Month End Balance Sheet and the Adjusted Net Assets and (B) the Cash
Change Amount, a net payment, reflecting an adjustment to the Closing Purchase Price, shall
be made by one party to the other according to the following rules:
(i) if the Adjusted Net Assets exceed the Target Net Assets, the amount of
such excess shall be payable by Purchaser to Sellers, or
(ii) if the Adjusted Net Assets are less than the Target Net Assets, the
amount of any deficiency shall be payable by Sellers to Purchaser; and
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(iii) if the Cash Change is a net cash outflow (as reflected on the Cash
Change Schedule), the Cash Change Amount shall be payable by Purchaser to Sellers, or
(iv) if the Cash Change is a net cash inflow (as reflected on the Cash Change
Schedule), the Cash Change Amount shall be payable by Sellers to Purchaser.
Any adjustment to the Closing Purchase Price required under this Section 3.2(d) in respect
of such net payment shall be made by wire transfer of immediately available funds within ten
(10) days after the date that the final determination with respect to both of (A) the
Adjusted Net Assets and (B) Cash Change Amount in accordance with Section 3.2(c), together
with interest thereon from the Closing Date to the date of payment calculated at the prime
rate in effect on the Closing Date as reported in the Wall Street Journal.
(e) Notwithstanding the foregoing, if the Closing occurs on the last Business
Day of a month, there shall be no adjustment to the Closing Purchase Price made in respect
of the Cash Change, and all references to the Cash Change, the Cash Change Amount, the Stub
Period Operational Expenses and the Cash Change Schedule (other than in this Section 3.2(e))
shall not apply. In such event, the only adjustment to the Purchase Price shall be based
upon the difference between the Target Net Assets and the Adjusted Net Assets. In addition,
if the Closing occurs on the last Business Day of a month, the Preceding Month End Balance
Sheet shall be as of the Closing Date, and not as of the end of the month ending immediately
preceding the Closing Date.
(f) Reimbursement for Final Preceding Month End Balance Sheet and Stub Period
Operational Expenses. To the extent Sellers pay any amounts in respect of (i) Reimbursable
Liabilities or (ii) Stub Period Operational Expenses, Purchaser shall, at Sellers’ request,
promptly reimburse Sellers with respect thereto in accordance with the mechanics agreed upon
in the Interim Services Agreement; provided that Purchaser shall not be obligated to
reimburse Sellers with respect to such payments prior to the final determination of the
Final Preceding Month End Balance Sheet and the Cash Change Schedule. Following the final
determination of the Final Preceding Month End Balance Sheet and the Cash Change Schedule,
Purchaser may, within a period of 15 days thereafter (with respect to requests for
reimbursement made prior to such final determination) or 15 days following Sellers’ request
for reimbursement (with respect to requests for reimbursement made by Sellers to Purchaser
after the final determination of the Final Preceding Month End Balance Sheet and the Cash
Change Schedule) object to such reimbursement in writing to Sellers setting forth a specific
description of the objections and specifying in reasonable detail the nature of the
disagreement. The failure of Purchaser to deliver a written objection to Sellers within the
applicable 15 day period shall be deemed agreement by Purchaser with respect to such amount
requested, and Purchaser shall promptly reimburse Sellers with respect thereto. If
Purchaser objects within the applicable 15 day period and the disagreement cannot be
resolved by mutual agreement within 15 additional days following Sellers’ receipt of such
objection, the
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disagreement shall be resolved by a Neutral Accountant. The decision of the Neutral
Accountant with respect to any amount requested by Sellers for reimbursement in accordance
with the foregoing provisions shall be (i) made within thirty (30) days of the submission of
the dispute based solely on the presentations by Purchaser and Sellers, (ii) in accordance
with this Agreement and (iii) final and binding upon the parties.
(g) Water Treatment Services. The parties understand that certain assets and
liabilities related to the provision by CMS of water treatment services (which assets and
liabilities are not being acquired by Purchaser as expressly provided above) have been
included in the financial statements of CMS and will be included in the Final Preceding
Month End Balance Sheet. The parties have not attempted to remove such assets and
liabilities from such statements, because they believe in good faith that any resulting
effect on the Purchase Price Adjustment would not be material.
3.3 Project Contracts
(a) In the event that Purchaser in the course of completing all Assumed
Contracts relating to project work (the “Project Contracts”) incurs costs with respect to
such Project Contracts, which together with the costs incurred by the Business prior to the
Closing Date with respect to such Project Contracts (such costs together, the “Incurred
Costs”), are in excess of the total sales prices of all such Project Contracts in the
aggregate (such excess, the “Project Losses”), Purchaser shall be permitted to recover the
amount of such Project Losses from Sellers; provided that for purposes of determining costs
incurred for any particular Project Contract the Agreed Accounting Principles shall govern
and an overhead allocation calculated in accordance with the Agreed Accounting Principles
shall be included. Notwithstanding the foregoing, and subject to Section 9.5, in no event
will Purchaser be able to collect any Project Losses unless and until the total amount of
Project Losses exceeds $300,000 (but only in the amount of such excess). Schedule 3.3(a) of
Sellers Disclosure Schedule sets forth a list of CMS’s portfolio of Project Contracts as of
April 1, 2005, and Sellers (within 60 days following the Closing Date) shall update such
schedule as of the Closing Date for new Project Contracts obtained between April 1, 2005 and
May 31, 2005. In connection with Sellers’ preparation of such updated Schedule 3.3(a) of
Sellers Disclosure Schedule, Sellers and their representatives shall have reasonable access
during normal business hours to the Books and Records and personnel of the Business.
(b) Following the Closing Date, Purchaser shall provide Sellers with written
reports on a consistent quarterly basis as to (i) whether or not Project Losses then exist,
(ii) whether any particular Project Contract has either (a) resulted in incurred costs in
respect of such contract in excess of the sales price under such contract or (b) in
Purchaser’s reasonable judgment, based on past experience and generally accepted industry
practices, is likely to begin resulting in costs that, together with previously incurred
costs in respect of such contract, will exceed the sales price under such contract, and
(iii) the cumulative revenue and expense recognized (as determined in accordance with the
Agreed Accounting Principles and, as specified thereby, U.S. GAAP to the extent applicable)
since the Closing Date with respect to each Project Contract, and the projected completion
date of each such contract.
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(c) As soon as reasonably practicable but not later than sixty (60) days
after the completion of all Project Contracts included on Schedule 3.3(a) of Sellers
Disclosure Schedule (as updated), Purchaser shall prepare and deliver to Sellers a statement
(the “Project Losses Statement”) setting forth the Project Losses and a table including the
sales price and incurred costs for each such Project Contract listed on Schedule 3.3(a) of
Sellers Disclosure Schedule. Sellers shall have a right to inspect Purchaser’s records with
respect to incurred costs and payments received if recovery for any Project Losses applies
in accordance with Section 3.3(a).
(d) After delivery to Sellers of the Project Losses Statement, Sellers (and
their representatives) shall be afforded the opportunity to review the work papers,
schedules and other supporting papers relating to the Project Losses Statement delivered by
the Purchaser and to consult with the Purchaser and its representatives, if necessary,
regarding the methods used in the preparation thereof. Within thirty (30) days after
Sellers receipt of the Project Losses Statement, Sellers shall either inform the Purchaser
in writing that the Project Losses Statement is acceptable or object to the Project Losses
Statement in writing setting forth a specific description of the objections and specifying
in reasonable detail the nature and extent of such disagreement. Such disagreement and
final resolution of the amount of Project Losses shall be determined consistent with the
procedures described in Section 3.2(c) above.
(e) Purchaser shall use commercially reasonable efforts to perform and
complete the Project Contracts in accordance with the terms and conditions of such
contracts, generally accepted industry practices and otherwise in good faith and consistent
with the past practices of the Business and Purchaser with respect to Project Contracts.
ARTICLE IV.
THE CLOSING
THE CLOSING
4.1 Time and Place of Closing
Upon the terms and subject to the satisfaction of the conditions contained in this Agreement,
the closing of the transactions contemplated by this Agreement (the “Closing") will take place at
1:00 P.M. (New York time) on such date as the parties may agree. Subject to the conditions herein,
the parties will make commercially reasonable efforts to cause Closing to occur on May 31, 2005.
The date and time at which the Closing actually occurs is hereinafter referred to as the “Closing
Date.” The Closing shall be considered effective as of 11:59 P.M. (New York time) on the Closing
Date.
4.2 Deliveries by Sellers
At the Closing, Sellers shall deliver the following to Purchaser:
(a) The Xxxx of Sale, duly executed by Sellers;
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(b) Executed consents, applications or other documents to transfer the
Assumed Contracts, Assumed Leases and the Permits as disclosed on Schedule 5.7 of Sellers
Disclosure Schedule;
(c) The certificate contemplated by Section 8.2(d);
(d) All such other instruments of assignment or conveyance as shall, in the
reasonable opinion of Purchaser and its counsel, be necessary to transfer to Purchaser the
Purchased Assets in accordance with this Agreement and, where necessary or desirable, in
recordable form;
(e) A certification of non-foreign status in a form which complies with
Section 1445 of the Code and the regulations thereunder;
(f) The Interim Services Agreement, duly executed by Sellers;
(g) Such other agreements, documents, instruments and writings as are
required to be delivered by Sellers at or prior to the Closing Date pursuant to this
Agreement or as may otherwise be required to transfer the Purchased Assets to Purchaser in
connection herewith;
(h) The Employee Services Loan Agreement, duly executed by Sellers;
(i) A written legal opinion of the general counsel of ABM, dated as of the
Closing Date, with respect to the matters set forth in Sections 5.1 and 5.2; and
(j) A lease and a sublease with respect to the Partially Utilized Facilities
as described in Section 7.9, which shall be executed by the parties simultaneous with the
Closing.
4.3 Deliveries by Purchaser
At the Closing, Purchaser shall deliver the following to Sellers:
(a) The Closing Purchase Price by wire transfer of immediately available
funds to ABM;
(b) The certificate contemplated by Section 8.3(c);
(c) The Instrument of Assumption, duly executed by Purchaser;
(d) The Interim Services Agreement, duly executed by Purchaser;
(e) The Employee Services Loan Agreement, duly executed by Purchaser;
(f) Any other instruments or writings, as shall, in the reasonable opinion of
Sellers, be necessary for Purchaser to be legally bound to fulfill its obligations under
Section 2.3 hereof; and
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(g) All such other agreements, documents, instruments and writings as may be
required to be delivered by Purchaser at or prior to the Closing Date pursuant to this
Agreement or otherwise required in connection herewith.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLERS
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as set forth in Sellers Disclosure Schedule prepared by Sellers and delivered to
Purchaser simultaneously with the execution hereof, each Seller, jointly and severally, hereby
represents and warrants to Purchaser the following:
5.1 Organization; Qualification
Each Seller is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization. Each Seller has all requisite corporate
power and authority to own, lease, and operate the Purchased Assets and to carry on the Business as
it is now being conducted by such Seller. Each Seller is duly qualified to do business and is in
good standing under the laws of each state or other jurisdiction in which either the ownership or
use of the properties of the Business owned or used by it requires such qualification, except where
the failure to be so qualified would not have a Material Adverse Effect.
5.2 Authority Relative to this Agreement
Each Seller has full corporate power and authority to execute and deliver this Agreement and
all other agreements and documents contemplated hereby to be delivered by such party (as to any
party hereto, the “Ancillary Documents”) and to consummate the transactions contemplated hereby and
by the Ancillary Documents. The execution and delivery of this Agreement and the Ancillary
Documents and the consummation of the transactions contemplated hereby and by the Ancillary
Documents have been duly and validly authorized and approved by all requisite corporate action and
no other corporate proceedings on the part of any Seller is necessary to authorize this Agreement,
the Ancillary Documents, or to consummate the transactions contemplated hereby and by the Ancillary
Documents. This Agreement has been duly executed and delivered by each Seller and at the Closing
each Seller will have executed and delivered its respective Ancillary Documents. Assuming due
authorization, execution and delivery by Purchaser of this Agreement and the Ancillary Documents,
this Agreement constitutes, and, upon their execution and delivery the Ancillary Documents will
constitute, valid and binding obligations of each Seller, enforceable against each Seller in
accordance with their respective terms.
5.3 Consents and Approvals; No Violation
Except as set forth on Schedule 5.3 of Sellers Disclosure Schedule, the execution and delivery
of this Agreement and the Ancillary Documents by each Seller, the consummation by each Seller of
the transactions contemplated by this Agreement or the compliance of each Seller with the
provisions of this Agreement will not (a) conflict with or result in any breach of
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any provision of the articles of organization or by-laws of such Seller or result in the
creation of any Encumbrance (other than any Permitted Encumbrance) upon any of the Purchased Assets
pursuant to any mortgage, indenture, lease agreement or other instrument to which either Seller is
a party, (b) require any consent, approval, waiver, filing with or notification to, any
Governmental Authority except (i) where the failure to obtain such consent, approval, or waiver, or
to make such filing or notification, would not have a Material Adverse Effect or (ii) for those
requirements which become applicable to such Seller as a result of the specific regulatory status
of Purchaser (or any of its Affiliates) or as a result of any other facts that specifically relate
to the business or activities in which Purchaser (or any of its Affiliates) are or propose to be
engaged; (c) result in a violation or breach of or default (or give rise to any right of
termination, cancellation or acceleration) under, or require any consent under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which such Seller is a party or by which such Seller, or any of the
Purchased Assets may be bound, except for such instances where requisite waivers or consents have
been obtained or which, in the aggregate, would not have a Material Adverse Effect; or (d) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to such Seller, or any
of the Purchased Assets, except for violations that would not have a Material Adverse Effect.
5.4 Absence of Certain Changes or Events
Except as otherwise contemplated by this Agreement or as set forth on Schedule 5.4 of Sellers
Disclosure Schedule, since October 31, 2004 Sellers have conducted the Business in the ordinary
course consistent with past practices and there has not been (a) any Material Adverse Effect; (b)
any damage, destruction or casualty loss, whether covered by insurance or not, which had a Material
Adverse Effect; and (c) any entry into any agreement, commitment or transaction (including, without
limitation, any borrowing or capital financing) by Sellers, which is material to the business or
operations of the Purchased Assets, except agreements, commitments or transactions in the ordinary
course of business or as contemplated herein.
5.5 Labor Matters
(a) Except for such matters as do not have Material Adverse Effect, with
respect to employees of Sellers who perform services relating to the Business: (i) Sellers
are in compliance with all Applicable Laws respecting employment and employment practices,
terms and conditions of employment and wages and hours; (ii) there is no labor strike,
slowdown or stoppage actually pending or to the Sellers’ Knowledge threatened against or
affecting Sellers; and (iii) Sellers have not received notice that any representation
petition respecting the Employees has been filed with the National Labor Relations Board.
(b) Schedule 5.5(b) of Sellers Disclosure Schedule lists all collective
bargaining agreements with any labor organization, union group or association (“Labor
Unions”) directly relating to the Business and to which Sellers are a party as of the date
hereof.
5.6
Employee Benefit Plans Schedule 5.6 of Sellers Disclosure
Schedule contains a true and complete list of each deferred compensation, bonus or other
incentive
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compensation plan, program, agreement or arrangement; each severance or
termination pay, medical, surgical, hospitalization, life insurance and other “welfare”
plan, fund or program (within the meaning of Section 3(1) of ERISA); each profit-sharing,
stock bonus or other “pension” plan, fund or program (within the meaning of Section 3(2) of
ERISA); each employment termination or severance agreement; and each other employee benefit
plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained
or contributed to or required to be contributed to by any Seller or any ERISA Affiliate or
to which any Seller or any ERISA Affiliate is a party, whether written or oral, for the
benefit of any Employee or any director or independent contractor of any Seller whose
services are related primarily to the operation of the Business as of the date hereof (the
“Seller Plans”).
(b) The Seller Plans have at all times complied with all Applicable Laws,
including, without limitation, the Code and ERISA and except as provided in Section 7.6
hereof, Purchaser shall have no liability with respect to Seller Plans. The Sellers Savings
Plans have been determined by the Internal Revenue Service to be qualified under Section
401(a) of the Code, and each trust related thereto has been determined to be exempt from tax
pursuant to Section 501(a) of the Code. Sellers have made all employee and employer
contributions required to be made to Sellers Savings Plans as of the Closing Date. To the
extent Sellers have not made all such contributions, the liability for such contributions
shall be properly and fully reflected on the Final Preceding Month End Balance Sheet and on
the Business’ financial records as of the Closing Date.
(c) Neither any Seller nor any ERISA Affiliate maintains or contributes to,
nor has any Seller or any ERISA Affiliate ever maintained or contributed to, any plan
subject to Title IV or Section 302 of ERISA with respect to any Employee, other than a
Multiemployer Plan.
(d) Schedule 5.6 of Sellers Disclosure Schedule identifies each Seller Plan
which is a “multiemployer plan” within the meaning of Section 3(37) of ERISA (“Multiemployer
Plan”). With respect to each Multiemployer Plan and, except as set forth on Schedule 5.6 of
Sellers Disclosure Schedule, (A) neither any Seller nor any ERISA Affiliate has withdrawn,
partially withdrawn, or received any notice of any claim or demand for withdrawal liability
or partial withdrawal liability; (B) neither any Seller nor any ERISA Affiliate has received
any notice that such Multiemployer Plan is in reorganization, that increased contributions
may be required to avoid a reduction in plan benefits or the imposition of any excise tax,
or that any such plan is or may become insolvent; (C) neither any Seller nor any ERISA
Affiliate has failed to make any required contributions; (D) to the Sellers’ Knowledge such
Multiemployer Plan is not a party to any pending merger or asset or liability transfer; (E)
to the Sellers’ Knowledge there are no proceedings with or involving the Pension Benefit
Guaranty Corporation against or affecting such Multiemployer Plan; and (F) neither any
Seller nor any ERISA Affiliate
has any withdrawal liability by reason of a sale of assets pursuant to Section 4204 of
ERISA.
(e) The consummation of the transactions contemplated by this Agreement will
not, either alone or in combination with another event, (i) entitle any current or
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former employee or officer of the Business to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such employee or officer.
(f) Purchaser shall have no liability (i) under the Consolidated Omnibus
Budget Reconciliation Act of 1985 with respect to any employee of Sellers who has a
qualifying event under COBRA before the hire date of the Immediately Hired or the
Transferred Employees or (ii) with respect to any post-employment benefits provided by any
Seller or any ERISA Affiliate to their employees, former employees or retirees.
(g) There are no pending, threatened or anticipated claims by or on behalf of
any Seller Plan (other than a Multiemployer Plan), by any employee or beneficiary covered
under any such Seller Plan, or otherwise involving any such Seller Plan (other than routine
claims for benefits).
5.7 Material Contracts and Arrangements
Schedule 5.7 of Sellers Disclosure Schedule sets forth (a)(i) contracts that generate annual
revenues of $100,000 or more for maintenance services and related service extras provided by the
Sellers related to the Business (the “Material Service Contracts”) and (ii) Project Contracts with,
to Sellers’ Knowledge, unearned revenue as of April 1, 2005 of $100,000 or more in respect of
project services, as calculated in accordance with the accounting practices of Sellers (the
“Material Project Contracts”), (b) all joint venture or partnership agreements primarily related to
the Business to which Sellers are a party, (c) all agreements restricting the right of Sellers or
Business to compete with third parties, and (d) all other material contracts included in the
Purchased Assets (all of the foregoing in clauses (a) through (d) collectively, the “Material
Contracts”). As of the date hereof, Sellers are not in material breach of any of their obligations
under the Material Contracts, and no event has occurred which constitutes or, with the lapse of
time, the giving of notice, or both, would constitute, such a material breach or a material
violation or material default by Sellers thereunder. There are no material contracts by and
between Sellers and the United States federal, state or local governments related to the Business.
All Material Contracts shall be included in the Assumed Contracts or Assumed Leases. Immediately
after Closing, no Material Contract will have ABM or any Affiliate of ABM as a party thereto
(except that CMS may continue to be deemed to be a party to those Material Contracts that prohibit
assignment if consent is not obtained from the other parties thereto; provided, however that after
Closing Purchaser shall receive the full and exclusive benefit of all of CMS’s rights under all
Material Contracts as provided in Section 2.1(a)). No Material Contract has been terminated or, to
Sellers’ Knowledge, will be terminated in the reasonable foreseeable future or are being
renegotiated (other than contracts that expressly contain month-to-month terms). Sellers have not
received any written notice of any actual or threatened cancellation or termination of any Material
Contract.
5.8 Legal Proceedings, etc.
There are no claims, actions, or proceedings pending or to Sellers’ Knowledge, investigation
pending or, to Sellers’ Knowledge threatened against Sellers, relating to the
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Business or the Purchased Assets before any Governmental Authority or other tribunals, which, if adversely
determined, would have a Material Adverse Effect. Schedule 2.4(b) of Sellers Disclosure Schedule
sets forth all actions, claims, suits or proceedings of or involving third parties relating to the
Business which have been brought or filed as of the date of this Agreement. Except as set forth on
Schedule 5.8 of Sellers Disclosure Schedule, Sellers are not subject to any outstanding judgment,
rule, order, writ, injunction or decree of any Governmental Authority relating to the Business and
the Purchased Assets which has a Material Adverse Effect.
5.9 Compliance with Law
The Business is not being and has not been conducted in material violation of any material
Applicable Law or any order, writ, injunction or decree of any court or Governmental Authority.
The Business has all material permits, certifications, licenses, approvals, orders, consents and
other authorizations of any Governmental Authority necessary to conduct its business as currently
conducted (collectively, the “Permits”). The Business is not in material violation of the terms of
any Permit. Except as would not have, individually or in the aggregate, a Material Adverse Effect,
all property that is the subject of Assumed Contracts have been maintained in accordance with (i)
the material terms and conditions of the applicable Assumed Contracts, (ii) Sellers’ policies and
procedures with respect to the Business and (iii) generally accepted industry standards prevailing
as of the date hereof and no written notice of a material violation of a material Applicable Law
has been received with respect to the condition of any such property as of the date hereof.
5.10 Taxes
(a) Except as set forth on Schedule 5.10(a) of Sellers Disclosure Schedule,
to the extent that under Applicable Laws the failure of this representation to be true or
correct could result in an Encumbrance upon or claim against the Purchased Assets or in a
claim against Purchaser as transferee or owner of the Purchased Assets: (i) Sellers have
filed or have caused to be filed on a timely basis all Tax Returns that are or were required
to be filed with respect to the Purchased Assets and the operation of the Business; (ii) all
such Tax Returns were correct in all material respects and accurately reflect in all
material respects all liability for Taxes for the periods covered thereby; and (iii) all
Taxes due and payable by Sellers with respect to the Purchased Assets and the operation of
the Business shown in such Tax Returns have been paid; and (iv) there are no Encumbrances
for Taxes upon the Purchased Assets except for Permitted Encumbrances.
(b) Except as set forth on Schedule 5.10(b) of Sellers Disclosure Schedule,
to the extent that under Applicable Laws the failure of this representation to be true or
correct could result in an Encumbrance upon or claim against the Purchased Assets or in a
claim against Purchaser as transferee or owner of the Purchased Assets: CMS and, with
respect to the Business, ABM and any Affiliate of ABM, have complied in all material
respects with all Applicable Laws relating to the withholding and payment of Taxes and
have, within the time and the manner prescribed by law, withheld and paid to the proper
taxing authorities all amounts required to be so withheld and paid under Applicable Laws.
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5.11 Intellectual Property; Intangible Assets
Sellers have assigned, or at Closing will have assigned, ownership of, or such rights by
license or other agreement to use, all of the intellectual property and the intangible assets owned
by Sellers as are necessary to permit the Business to conduct its business as currently conducted.
Sellers do not license from a third party any intellectual property or intangible assets that are
material to the Business. Except as would not have a Material Adverse Effect, (i) to Sellers’
Knowledge, the conduct of the Business as currently conducted does not infringe upon the
proprietary rights of any third party Person and (ii) there are no present or, to Sellers’
Knowledge, threatened infringements relating to the intellectual property and the intangible assets
owned by Sellers by any third party Person. There are no pending or, to Sellers’ Knowledge,
threatened proceedings or litigation or other adverse claims by any Person against the use by the
Business of any intellectual property or any intangible assets except as would not have a Material
Adverse Effect. Sellers are the sole owners of the US service xxxx registration 1,174,548, for the
xxxx COMMAIR and all rights therein (the “Registration”) free and clear of any liens, security
interests, licenses or other encumbrances. To the best of Sellers’ Knowledge, COMMAIR has been
used on a regular and continuous basis, in connection with HVAC services, by the owner of the
Registration, since the date of first use recited in the Registration. Neither Sellers nor any of
their predecessors in interest have taken any actions intended to cause an abandonment of the
rights in the xxxx COMMAIR and the Registration.
5.12 Brokers; Finders Fees
There is no investment banker, broker, finder or other intermediary which has been retained by
or is authorized to act on behalf of Sellers or the Business who is entitled to any fee or
commission from Sellers in connection with the transactions contemplated by this Agreement.
5.13 Financial Information
The financial information of CMS heretofore provided to Purchaser and set forth on Schedule
5.13 of Sellers Disclosure Schedule, including the unaudited balance sheet and income statements of
CMS as of October 31, 2004, the Balance Sheet and the statements of earnings and cash flows of CMS
for the four month period ended February 28, 2005, present fairly, in all material respects, the
financial position and the results of operations and cash flows of CMS as of the dates and for the
periods presented in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”)
(except as indicated on Schedule 5.13 of Sellers Disclosure Schedule), subject, in the case of the
Balance Sheet, to normal end of period adjustments, none of which, individually or in the
aggregate, will be material.
5.14
No Undisclosed Liabilities
Except as set forth on Schedule 5.14 of Sellers Disclosure Schedule or except for the
Excluded Liabilities, Sellers have no debts, liabilities or obligations with respect to the
Business of any nature whatsoever (whether absolute, accrued, contingent or
otherwise) except (i) liabilities which are reflected or reserved against on the Balance Sheet,
(ii) liabilities incurred in the ordinary course of business and consistent with past practice since
the date of the Balance
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Sheet and (iii)
liabilities which in the aggregate would not have a Material Adverse Effect. Schedule 5.14 also
sets forth a list of all Performance Bonds.
5.15 Title to Purchased Assets; Sufficiency of Assets
Except as disclosed on Schedule 5.15 of Sellers Disclosure Schedule, Sellers have good title
to, or, with respect to leasehold interests, a valid leasehold interest in the Purchased Assets and
the Assumed Leases, as the case may be, free and clear of all Encumbrances, except for Permitted
Encumbrances and such imperfections of title, liens, covenants, restrictions and easements that
would not, individually or in the aggregate, materially detract from the value of the properties or
assets subject thereto and do not interfere with the present and continued use of such property or
assets or the operation of the Business. Sellers have the power and right to sell, assign,
transfer and deliver to Purchaser the Purchased Assets and the Assumed Leases, except with respect
to such items that would not, individually or in the aggregate, materially detract from the value
of the properties or assets subject thereto and do not interfere with the present and continued use
of such property or assets or the operation of the Business. The Ancillary Documents, Xxxx of
Sale, Instrument of Assumption, and any other deeds, endorsements, assignments and other
instruments to be executed and delivered to Purchaser by Sellers at the Closing, will be the valid
and binding obligations of Sellers enforceable in accordance with their terms. The Purchased
Assets (taken together with the Interim Services Agreement) are sufficient to conduct the Business
as it is presently conducted by Sellers. Schedule 5.15 identifies the location of all tangible
personal property included in the Purchased Assets.
5.16 Environmental
(a) The Purchased Assets and Business are and have been in material
compliance with all applicable Environmental Laws, except where such non-compliance would
not be reasonably expected to have a Material Adverse Effect;
(b) Sellers have obtained and are in compliance with all Permits required
under applicable Environmental Laws, except for the failure to have obtained such Permits,
or be in compliance with such laws, as would not be reasonably expected to have a Material
Adverse Effect and there are no actions pending, or to Sellers’ Knowledge threatened, to
revoke, suspend, modify or limit any such Permit;
(c) To Sellers’ Knowledge there are no claims, actions, proceedings, or
investigations pending, or threatened, against Sellers relating to the Purchased Assets or
the Business arising under any Environmental Law except for such claims, actions,
proceedings or investigations that have been fully resolved with no future liability or
obligation on the part of the Business or that are not reasonably likely to result in a
Material Adverse Effect;
(d) To Sellers’ Knowledge, no Asbestos Activity or releases of Regulated
Substances have occurred at any of the Purchased Assets or in connection with the operation
of the Business which are likely to result in imposition of liability for cleanup, personal
injury, property damage or natural resource damage that would reasonably be expected to have
a Material Adverse Effect;
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(e) Sellers have not received any written notice from any person or
Governmental Authority that Sellers may be potentially liable under any Environmental Law
for response actions or natural resource damages at any location arising out of conditions
at the Purchased Assets or relating to past or current operations of the Business except
with respect to such matters that have been fully resolved with no future liability or
obligation on the part of the Business or that are not reasonably likely to result in a
Material Adverse Effect; and
(f) The representations and warranties set forth in this Section 5.16 are the
Sellers’ sole and exclusive representations and warranties with respect to environmental
matters.
5.17 Real Property Other than the commercial real property located at 0000 Xxxx
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx, Sellers do not own any real property primarily relating to the
Business. Sellers are the lessees of all the leasehold estates purported to be granted by the
leases shown on Schedule 5.17 of Sellers Disclosure Schedule, and Sellers are in possession of the
premises purported to be leased under such leases.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
6.1 Organization
Purchaser is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted. Purchaser has
heretofore delivered to Sellers complete and correct copies of its Certificate of Incorporation and
By-Laws (or other similar governing documents), as currently in effect.
6.2 Authority Relative to This Agreement
Purchaser has full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and validly authorized by all required corporation action of Purchaser and no other
corporate proceedings on the part of Purchaser or any Affiliates of Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Purchaser, and assuming due authorization, execution and
delivery by Sellers, constitutes a valid and binding agreement of Purchaser, enforceable against
Purchaser in accordance with its terms.
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6.3 Consents and Approvals; No Violation
None of the execution and delivery of this Agreement by Purchaser, the consummation by
Purchaser of the transactions contemplated by this Agreement or the compliance of Purchaser with
the provisions of this Agreement will (i) conflict with or result in any breach of any provision of
the organizational documents of Purchaser; (ii) require any consent, approval, waiver or filing
with or notification to any Governmental Authority; (iii) result in a violation or breach of or
default (or give rise to any right of termination, cancellation or acceleration) under, or require
any consent under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, agreement, lease or other instrument or obligation to which Purchaser or any of its
Affiliates are a party or by which any of its respective assets may be bound; or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to Purchaser, or any of its
assets, except in the case of (iii) or (iv) for violations which would not individually or in the
aggregate reasonably be expected to prevent or materially delay the consummation of the
transactions contemplated hereby.
6.4 Legal Proceedings, etc.
There are no claims, actions or proceedings pending or to Purchaser’s Knowledge investigations
pending or threatened against Purchaser before any Governmental Authority, which, if adversely
determined, could prevent or materially delay the consummation of the transactions contemplated
hereby. Purchaser is not subject to any outstanding judgment, rule, order, writ, injunction or
decree of any Governmental Authority that could prevent or materially delay the consummation of the
transactions contemplated hereby.
6.5 Financial Capacity
On and after the date hereof, Purchaser has, and will have, cash on hand sufficient to pay at
the Closing Purchase Price and to perform the obligations of Purchaser under this Agreement.
6.6 Brokers, Finders Fees
There is no investment banker, broker, finder or other intermediary that has been retained by
or is authorized to act on behalf of Purchaser who is entitled to any fee or commission from
Purchaser in connection with the transactions contemplated by this Agreement.
ARTICLE VII.
COVENANTS OF THE PARTIES
7.1 Access to Information after Closing
(a) Following the Closing Date, (A) Sellers and their representatives shall
have reasonable access to any of the Books and Records transferred to Purchaser hereunder to
the extent that such access may reasonably be required by Sellers in connection with matters
relating to or affected by the operation of the Business or the
28
Purchased Assets prior to
the Closing Date, and (B) Purchaser and its representatives shall have reasonable access to
the Excluded Records, and to the extent reasonably required by Purchaser in good faith,
other limited Books and Records retained by Sellers primarily related to the Business (but
excluding, in any case, the portion of Excluded Records pertaining to personnel records of
former employees of the Business) to the extent such access may reasonably be required by
Purchaser in connection with matters relating to or affected by the operation of the
Business or the Purchased Assets after the Closing Date. In addition, Sellers and their
representatives shall have reasonable access to any of the Books and Records transferred to
Purchaser hereunder or to the personnel of the Business to the extent that such access may
reasonably be required by Sellers in connection with Sellers’ preparation of (i) the
Adjustment Statements pursuant to Section 3.2(a) or (ii) ABM’s fiscal year 2005 legal and
regulatory filings, including its Quarterly Reports on Form 10-Q for the quarters ending
April 30, 2005 and July 31, 2005, and its Annual Report on Form 10-K, and, further, Sellers
shall appoint one of its employees (anticipated to be Xxxxxxx Xxxxxxxx, the Controller of
CMS) to remain full time in the Head Office for up to forty-five (45) days following the
Closing Date to assist in the preparation of the Preceding Month End Balance Sheet and the
Adjustment Statements, and to assist in the transition of accounting services for the
Business from Sellers to Purchaser. The access under this Section 7.1(a) shall be afforded
by Purchaser and Sellers to the other party upon receipt of reasonable advance notice and
during normal business hours. The party requesting such access shall be responsible for any
costs or expenses incurred by it pursuant to this Section 7.1(a). All access hereunder
shall be subject to the Confidentiality Agreement.
(b) If (i) Purchaser shall desire to dispose of any Books and Records
transferred to Purchaser hereunder or (ii) Sellers shall desire to dispose of the Excluded
Records (other than the Excluded Records pertaining to personnel records of former employees
of the Business) or, to the extent Purchaser has requested access pursuant to Section
7.1(a), other limited Books and Records retained by Sellers primarily related to the
Business, within five (5) years following the Closing Date, such party shall, prior to such
disposition, give the other party a reasonable opportunity at the other party’s expense, to
segregate and remove such Books and Records as the other party may select.
7.2 Expenses
Except to the extent specifically provided herein, whether or not the transactions
contemplated hereby are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by the party incurring such
costs and expenses.
7.3 Further Assurances
Subject to the terms and conditions of this Agreement, each of the parties hereto will use all
commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary, proper or advisable under Applicable Laws and regulations to
consummate the transactions contemplated by this Agreement and make effective the sale of the
Purchased Assets pursuant to this Agreement. From time to time after the date
29
hereof, without
further consideration, Sellers will, at their own expense, execute and deliver such documents to
Purchaser as Purchaser may reasonably request in order more effectively to vest in Purchaser good
title to the Purchased Assets. From time to time after the date hereof, Purchaser will, at its own
expense, execute and deliver such documents to Sellers as Sellers may reasonably request in order
to more effectively consummate the sale of the Purchased Assets pursuant to this Agreement.
7.4 Public Statements
The parties shall consult with each other prior to issuing any public announcement, statement
or other disclosure with respect to this Agreement or the transactions contemplated hereby and
shall not issue any such public announcement, statement or other disclosure prior to such
consultation; provided that nothing herein shall require any approval by the other party and the
length of any such consultation shall be in the sole discretion of the party issuing such public
announcement.
7.5 Tax Matters
(a) Purchaser and Sellers agree to furnish or cause to be furnished to each
other, promptly upon request, any information and assistance relating to the Business or the
Purchased Assets as may be reasonably requested by the other party in connection with the
filing of any Tax Return, the preparation for any audit or other examination by any
Governmental Authority, the mailing or filing of any notice and the prosecution or defense
of any claim, suit or proceeding relating to any Tax Return or any other matter related to
Taxes with respect to the Business and the Purchased Assets. Purchaser and Sellers shall
cooperate with each other in the conduct of any audit or other proceeding related to Taxes
involving the Business or the Purchased Assets whether prior to or after the Closing.
Purchaser further agrees to (i) retain within its possession any other information regarding
Taxes relating to the Business or the Purchased Assets for any taxable period or portion
thereof ending on or before the Closing (the “Tax Information”) until the date that is six
(6) years after the Closing Date, (ii) maintain the Tax Information in such manner so as to
enable Sellers to have prompt and complete access thereto; provided, however, that Sellers
must bear all costs incurred in accessing such Tax Information, and (iii) not destroy any
Tax Information without first offering such information to Sellers.
(b) Notwithstanding any other provision of this Agreement, Sellers and
Purchaser shall cooperate in the preparation, execution and filing of all Tax Returns
regarding any Transfer Taxes that become payable in connection with the purchase of the
Purchased Assets contemplated by this Agreement. For purposes of this Agreement, “Transfer
Taxes” shall mean all transfer, documenting, stamp or registration Taxes applicable to the
purchase of the Purchased Assets contemplated hereby. All such Transfer Taxes shall be paid
when due one-half (1/2) by Sellers and one-half (1/2) by Purchaser, and Sellers shall, at
their own expense, file, to the extent required by Applicable Law, all necessary Tax Returns
with respect to all such Transfer Taxes, and, if required by Applicable Law, Purchaser shall
join in the execution of any such Tax Returns; provided, however, that prior to filing any
Tax Return relating to Transfer Taxes
30
Sellers shall provide to Purchaser for its review and
comment a copy of any such Tax Return at least fifteen (15) days prior to the date such Tax
Return is filed or required to be filed and Sellers shall amend such Tax Return as
reasonably requested by Purchaser (provided Purchaser’s comments are received at least five
(5) days prior to the due date, without extensions, for filing the relevant Tax Return). If
governing law does not allow Sellers, but requires Purchaser, to file a Tax Return with
respect to a Transfer Tax for which Sellers and Purchaser are liable under this Agreement,
Purchaser shall prepare such Tax Return, present such Tax Return to Sellers for review and
comment at least fifteen (15) days prior to the date such Tax Return is filed or required to
be filed and Purchaser shall amend such Tax Return as reasonably requested by Sellers
(provided Sellers comments are received at least five (5) days prior to the due date,
without extensions, for filing the relevant Tax Return). Sellers shall join in the
execution of any such Tax Returns if required by Applicable Law.
(c) Purchaser shall prepare a schedule that allocates the Closing Purchase
Price and Assumed Liabilities consistent with Section 1060 of the Code and the Treasury
Regulations thereunder (the “Allocation Schedule”) within sixty (60) days after the Closing
Date and submit it to Sellers. Sellers may dispute the Allocation Schedule;
provided, however, that if Sellers fail to notify Purchaser in writing of
the disputed amount, and the basis of such dispute, within ten (10) days of receipt of the
Allocation Schedule, the Allocation Schedule shall be incorporated herein as if part of this
Agreement. If Sellers timely notify Purchaser of any such dispute, Sellers and Purchaser
shall cooperate and use their commercially reasonable efforts in reaching a mutually
satisfactory agreement regarding the Allocation Schedule. If Sellers and Purchaser are
unable to reach a mutually satisfactory agreement regarding the Allocation Schedule, then
Sellers and Purchaser shall submit in writing any matters in dispute to the Neutral
Accountant, which Neutral Accountant will resolve the dispute in a fair and equitable manner
within thirty (30) days after Purchaser and Sellers have presented their arguments to the
Neutral Accountant, which decision shall be final, conclusive and binding on Purchaser and
Sellers. Purchaser and Sellers each agree to file Internal Revenue Service Form 8594 and
all Tax Returns in accordance with such agreed allocation unless otherwise required by
Applicable Law. Each of Purchaser and Sellers shall report the transactions contemplated by
this Agreement for Tax purposes in a manner consistent with the allocation determined
pursuant to this Section 7.5(c). Each of Purchaser and Sellers agree to provide the other
promptly with any other information required to complete Form 8594. Each of Purchaser and
Sellers shall notify and provide the other with reasonable assistance in the event of an examination, audit or other proceeding
regarding the agreed upon allocation of the Closing Purchase Price.
(d) Sellers agree that Purchaser is not assuming liability for Other Taxes
but only agreeing to reimburse Sellers at Sellers request with respect to Sellers’ payment
following the Closing of any Other Taxes reflected on the Preceding Month End Balance Sheet;
it being understood by the parties that the obligation to file returns with respect to and
pay, any such Taxes shall be retained by Sellers in accordance with the provisions of
2.4(e).
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7.6 Employees
(a) As of the Closing, Purchaser shall take all necessary steps to ensure the
Transferred Employees are covered by Purchaser’s National Agreement with the United
Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the
United States. Purchaser shall execute any and all documents necessary to effectuate the
Transferred Employees’ coverage by the National Agreement with United Association as well as
any related United Association local agreement(s) also in effect. Purchaser shall ensure
that there will be no lapse in coverage of the Transferred Employees by the applicable union
agreement(s) and no loss of wages or benefits by the Transferred Employees as a result of
the Transferred Employees’ coverage by Purchaser’s national or local agreements with United
Association.
(b) (i) Prior to the Closing Date, Purchaser shall furnish to Sellers the
names of all Employees (not to exceed ten) who, following the Closing Date, will be offered
immediate employment with Purchaser or an Affiliate of Purchaser (the “Immediately Hired
Employees”. For a period of at least one (1) year following the Closing Date, Purchaser
shall cause each such Immediately Hired Employee who accepts and commences employment with
Purchaser or an Affiliate of Purchaser as of the Closing, to the extent that such
Immediately Hired Employee remains employed during such period, to be provided with salary,
wages, and employee benefit arrangements that shall be at least substantially equivalent, on
an aggregate basis, to the compensation and benefits provided by Purchaser to its similarly
situated employees; provided that the foregoing provision shall not apply to any Immediately
Hired Employees subject to a collective bargaining agreement.
(ii) All Employees other than the Immediately Hired Employees (the “Assigned
Employees”) shall continue employment with Sellers pursuant to the Employee Services Loan
Agreement, and upon the expiration of the Employee Services Loan Agreement each such
Employee (other than Employees listed on Schedule 7.6(b) of Sellers Disclosure Schedule (the
“Excluded Employees”)) will be offered employment with Purchaser or an Affiliate of
Purchaser. For a period of at least one year following expiration of the Employee Services
Loan Agreement, Purchaser shall cause each Assigned Employee who accepted and commenced
employment with Purchaser or an Affiliate of Purchaser following expiration of the Employee
Services Loan Agreement, to the extent that such Assigned Employee remains employed during
such period, to be provided with salary, wages, and employee benefit arrangements that shall
be at least substantially equivalent, on an aggregate basis, to the compensation and benefits
provided by Purchaser to its similarly situated employees; provided that the foregoing
provision shall not apply to any Assigned Employees who become parties to any employment
agreements with Purchaser or individuals subject to a collective bargaining agreement.
Sellers shall offer to the Assigned Employees the opportunity to cash out their vacation
prior to termination of the term of the Employee Services Loan Agreement. All of the
Employees who accept employment with Purchaser or an Affiliate of Purchaser pursuant to
Sections 7.6(b)(i) or (ii) shall hereinafter be referred to as the “Transferred Employees”.
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(iii) Purchaser shall cause the Transferred Employees to be given credit for all
service with Sellers or any Affiliate of Sellers prior to such Transferred Employees date of
hire with Purchaser (or an Affiliate thereof) for purposes of eligibility (except for
Retiree Life Insurance and access to the fixed credits in Retiree Medical) and vesting (but
not for purposes of benefit accrual) under any employee benefit plans or arrangements of
Purchaser or any Affiliate of Purchaser in which such Transferred Employees participate
after their applicable date of hire with Purchaser (or an Affiliate thereof) (“Purchaser
Plans”), to the same extent that such service was recognized by Sellers or any Affiliate of
Sellers immediately prior to such date of hire with Purchaser (or an Affiliate thereof)
under any comparable programs or arrangements of Sellers or any Affiliate of Seller (except
to the extent that such crediting would result in duplication of benefits). Without
limiting the generality of the foregoing, all vacation, sickness, holiday and personal days
accrued by the Transferred Employees prior to their applicable date of hire with Purchaser
(or an Affiliate thereof) shall be honored by Purchaser to the extent that accruals for such
liabilities are fully and properly reflected on the Final Preceding Month End Balance Sheet
or to the extent such liabilities are properly accrued in accordance with past practice. To
the extent commercially reasonable, all limitations as to preexisting conditions, exclusions
and waiting periods with respect to participation and coverage requirements applicable to
the Transferred Employees shall be waived by Purchaser. To the extent commercially
reasonable, Transferred Employees shall also be given credit for any deductible or
co-payment amounts paid in respect of Purchaser Plan year in which the Closing occurs, to
the extent that, following the Closing, they participate in any Purchaser Plan during such
plan year for which deductibles or co-payments are required and to the extent permitted by
the relevant Purchaser Plan.
(iv) With respect to any employee of any Seller whose work or function is related
primarily to the operation of the Business, and who is, as of the Closing Date (if an
Immediately Hired Employee) or the date of expiration of the Employee Services Loan
Agreement (if an Assigned Employee) on authorized leave of absence (including, but not
limited to, employees on disability), Purchaser shall offer employment to any such employee
in the event such employee returns to active employment within six (6) months of Closing
Date or the date of expiration of the Employee Services Loan Agreement, as applicable, and
such employee shall then be deemed to be a Transferred Employee. Any represented employee
shall be reemployed in accordance with the terms of the applicable collective bargaining
agreement.
(c) Purchaser shall assume and be solely responsible for, and shall indemnify
Sellers and defend and hold Sellers harmless against, any and all claims, losses, damages,
expenses, obligations and liabilities (including costs of collection, attorney’s fees and
other costs of defense) incurred by Sellers or any Affiliate of Sellers arising from or
relating to (i) the termination of employment by Purchaser of any Transferred Employee as of
or after the Closing Date, and (ii) the hiring, employment or discharge of any Transferred
Employee. Purchaser shall assume and be solely responsible for, and shall indemnify Sellers
and defend and hold Sellers harmless against, any and all claims, losses, damages, expenses,
obligations and liabilities (including costs of collection, attorney’s fees and other costs
of defense) incurred by Sellers or any Affiliate of Sellers in connection with any suit or
claim or violation brought against Sellers under the WARN
33
Act or any similar state, local or
foreign law which arise, in whole or in part, from actions taken by Purchaser following the
Closing. Sellers shall assume and be solely responsible for and shall indemnify Purchaser,
and hold Purchaser harmless against any and all claims, attorneys’ fees and other costs of
defense incurred by Purchaser or any Affiliate of Purchaser arising from or related to the
hiring, employment, benefit plan participation, or discharge of any employee of any Seller
who is not a Transferred Employee.
(d) Effective as of their applicable date of hire with Purchaser (or an
Affiliate thereof), Transferred Employees shall no longer actively participate in Sellers’
401(k) plans (the “Sellers Savings Plans”). Purchaser shall designate a tax-qualified
defined contribution plan of Purchaser or one of its Affiliates (such plan(s), the
“Purchaser’s Savings Plan”) that either (i) currently provides for the receipt from
Transferred Employees of “eligible rollover distributions” (as such term is defined under
Section 402 of the Code) or (ii) shall be amended as soon as practicable following the
Closing Date to provide for the receipt from the Transferred Employees of eligible rollover
distributions. As soon as practicable following the Closing Date, Purchaser shall provide
Sellers with such documents and other information as Sellers shall reasonably request to
assure themselves that Purchaser’s Savings Plan provides for the receipt of eligible
rollover distributions, and Sellers shall provide Purchaser with such documents and other
information as Purchaser shall reasonably request to assure itself that the accounts of the
Transferred Employees would be eligible rollover distributions. Each Transferred Employee
who is a participant in Sellers Savings Plans shall be given the opportunity to receive a
distribution of his or her account balance and shall be given the opportunity to elect to
“roll over” such account balance to Purchaser’s Savings Plan, subject to and in accordance
with the provisions of such plan(s) and Applicable Law. Following the Closing Date, Sellers
shall provide Purchaser with copies of such personnel and other records of Sellers
pertaining to the Transferred Employees and such records of any agent or representative of
Sellers pertaining to the Transferred Employees and such records of any agent or
representative of Sellers, in each case pertaining to Sellers Savings Plans and as Purchaser
may reasonably request in order to administer and manage the accounts and assets rolled over
to Purchaser’s Savings Plan.
(e) With respect to the Multiemployer Plans, after the Closing, if the amount
of potential withdrawal liability of Sellers with respect to the Multiemployer Plans as of
the date of termination of the Employee Services Loan Agreement is greater than zero:
(i) Purchaser will be obligated to make contributions to the
Multiemployer Plans with respect to those Transferred Employees for whom Sellers had
an obligation to contribute to the Multiemployer Plans prior to the date of
termination of the Employee Services Loan Agreement. Purchaser shall be obligated
to make such contributions in accordance with any collective bargaining agreement
relating thereto and shall contribute to each Multiemployer Plan with respect to
such operations for substantially the same number of contribution base units for
which Sellers had an obligation to contribute to such plan with respect to employees
employed by Sellers in the Business prior to the date of termination of the Employee
Services Loan Agreement.
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(ii) Purchaser hereby represents to Sellers that, for purposes of
complying with Section 4204 of ERISA, no surety bond will be required of Purchaser
in order for Sellers to be exempt from any partial withdrawal liability. Purchaser
represents that it is exempt from the surety bond requirement in accordance with
PBGC Regulation Section 4204.13. In addition, the transaction contemplated herein
may be an exempt de minimus transaction within the meaning of PBGC Regulation
Section 4204.12. If, within the five-year period following the Closing Date,
Purchaser no longer qualifies for any relevant exemption under Section 4204 of
ERISA, it will post a surety bond or take such other action reasonably acceptable to
Sellers to prevent the sale of the Business from being deemed a partial withdrawal
from any Multiemployer Plan.
(iii) If Purchaser withdraws from any of the Multiemployer Plans in a
complete withdrawal or a partial withdrawal with respect to the Transferred
Employees who are covered by a collective bargaining agreement within the period
referred to in the preceding subsection (ii), Purchaser will be primarily liable and
Sellers agree to be secondarily liable for any withdrawal liability Sellers would
have had at the Closing Date to such Multiemployer Plan, but for the application of
Section 4204 of ERISA, if the withdrawal liability of Purchaser with respect to such
Multiemployer Plan is not paid. Purchaser shall indemnify Sellers for any liability
Sellers incur pursuant to this Section 7.6(e)(iii).
(iv) Purchaser agrees that any action on its part that causes
withdrawal liability (either partial or complete) during the period referred to in
subsection (ii) hereof shall be for valid business reasons only. In the event of a
subsequent sale of the assets of the Business by Purchaser during such period,
Purchaser agrees to comply with the provisions of Section 4204(a)(1) of ERISA.
(v) If all, or substantially all, of Sellers’ assets are distributed,
or if Sellers are liquidated before the end of the first five plan years beginning
after Closing, then except as may otherwise be required by law, Sellers shall
provide a bond, an amount in escrow or such other security as may be permitted under
Section 4204(a)(1)(B) of ERISA or regulations thereunder, equal to the present value
of the withdrawal liability Sellers would have had but for the application of
Section 4204 of ERISA, which bond, amount in escrow or other security may be
applied toward the satisfaction of Sellers’ secondary liability described in
subsection (iii) hereof.
(vi) Purchaser agrees to provide Sellers with reasonable advance
notice of any action or event which could result in the imposition of withdrawal
liability contemplated by this Section 7.6(e), and in any event Purchaser shall
immediately furnish Sellers with a copy of any notice of withdrawal liability it may
receive with respect to the Multiemployer Plans, together with all the pertinent
details. In the event that any such withdrawal liability shall be assessed against
Purchaser, Purchaser further agrees to provide Sellers with reasonable advance
notice of any intention on the part of Purchaser not to make full payment of any
withdrawal liability when the same shall become due.
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(vii) Notwithstanding any other provision of this Agreement,
Purchaser shall have no obligation to indemnify Sellers for any losses or expenses
(including without limitation reasonable attorney’s fees and expenses) which Sellers
may incur as a result of a determination that the requirements of Section 4204 of
ERISA are not met (provided that such determination does not result from Purchaser’s
failure to comply with its obligations hereunder); (ii) Sellers shall indemnify
Purchaser for any losses or expense (including without limitation reasonable
attorneys’ fees and expenses) which Purchaser may incur as a result of a
determination that the requirements of Section 4204 of ERISA are not met (provided
that such determination does not result from Purchaser’s failure to comply with its
obligations hereunder); and (iii) Purchaser shall indemnify Sellers for any losses
or expense (including without limitation, any assessed withdrawal liability,
reasonable attorneys’ fees and expenses) which Sellers may incur as a result of a
determination that the requirements of Section 4204 of ERISA are not met (provided
that such determination results from Purchaser’s failure to comply with its
obligations hereunder).
(f) So long as Xxxx Xxxxxxxx is employed by Purchaser (or an Affiliate of
Purchaser active in the Business) on December 31, 2005, Seller shall pay to Purchaser on
December 31, 2005 the sum of $19,500 by wire transfer of federal funds. So long as Xxxx
Xxxxxxxx is employed by Purchaser (or an Affiliate of Purchaser active in the Business) on
December 31, 2006, Seller shall pay to Purchaser on December 31, 2006 the sum of $19,500 by
wire transfer of federal funds.
7.7 Transfers Not Effected as of Closing
(a) Nothing herein shall be deemed to require the conveyance, assignment or
transfer of any Assumed Contract or Assumed Lease that by its terms or by operation of law
cannot be freely conveyed, assigned, transferred or assumed. To the extent the parties
hereto have been unable to obtain any Person’s consent or approval required for the transfer
of any Assumed Contract or Assumed Lease and to the extent not otherwise prohibited by the
terms of any Assumed Contract or Assumed Lease, Sellers shall continue to be bound by the
terms of such applicable Assumed Contract or Assumed Lease and Purchaser shall pay, perform
and discharge fully all of the obligations of Sellers or any of their respective Affiliates
thereunder from and after the Closing;
provided however that such applicable Assumed Contract shall be an Assumed Contract for the
purposes of Assumed Liabilities pursuant to Section 2.3 hereof. Sellers shall, without
consideration therefore, pay, assign and remit to Purchaser promptly all monies, rights and
other consideration received in respect of such performance. Subject to Section 7.7(b), if
Purchaser determines to seek consent to assign any Assumed Contract or Assumed Lease,
Sellers shall use commercially reasonable efforts to cooperate with Purchaser in obtaining
such consent (provided that neither Purchaser nor Sellers shall be required to pay any
consideration to the third party from whom such consent is sought) and the parties hereto
shall continue to use their commercially reasonable efforts to obtain any such sought and
unobtained consents or approvals at the earliest practicable date. If and when any such
consents or approvals shall be obtained, Sellers shall promptly assign their rights and
obligations thereunder to Purchaser without payment of
36
consideration and Purchaser shall,
without the payment of any consideration therefore, assume such rights and obligations,
deemed to be effective as of the Closing Date; provided that if Purchaser subcontracts
performance of any Assumed Contract in accordance with its terms Purchaser shall be
obligated to pay, perform and discharge all of the obligations of the Sellers thereunder
effective as of the Closing Date. The parties shall execute such good and sufficient
instruments as may be necessary to evidence such assignment and assumption.
(b) Following the date hereof, Purchaser shall use reasonable commercial
efforts to cooperate with Sellers with respect to obtaining any consent to assignment
required under Assumed Contracts. Schedule 5.7 of Sellers Disclosure Schedule sets forth a
list of Material Service Contracts requiring consent to assignment (the “Required
Consents”). At or immediately prior to Closing, Sellers shall deliver to Purchaser (i) an
updated Schedule 5.7 of Sellers Disclosure Schedule which shall include new maintenance
services contracts of the Business entered into after the date hereof with monthly revenue
in excess of eight thousand three hundred thirty-three dollars ($8,333), (ii) a list of
Required Consents with respect to such updated Schedule 5.7 of Sellers Disclosure Schedule
and (iii) the status with respect to obtaining such Required Consents described in clause
(ii) hereof. The parties agree that all references to Required Consents set forth in
Section 7.7(c) shall be only in respect of the Required Consents on the updated Schedule 5.7
of Sellers Disclosure Schedule delivered in accordance with the provisions hereof.
(c) Notwithstanding the provisions of Section 7.7(a), Sellers shall have
ninety (90) calendar days from the Closing Date (the “Consent Period”) in which to obtain
any Required Consent requested by Purchaser (the “Requested Required Consents”); provided
that Purchaser shall use commercially reasonable efforts to cooperate with Sellers in
obtaining such Requested Required Consents; provided further that neither Purchaser nor
Sellers shall be obligated hereunder to pay any consideration to the third party for any
such Requested Required Consent. If any such Requested Required Consents are obtained and
delivered to Purchaser within the Consent Period, the assignment of the Material Service
Contracts to which such consents relate shall be made promptly and deemed to be effective,
and Purchaser shall be deemed to have assumed the obligations and liabilities thereunder, as
of the Closing Date. If any such Requested
Required Consents are not obtained within the Consent Period, Purchaser shall be
entitled to recover from Sellers an amount equal to twelve (12) months’ maintenance and
service revenues attributable to such contract (calculated by annualizing the average
monthly maintenance and service revenue attributable to such contract for the ten (10)
months ending August 31, 2005); provided that Purchaser shall not be entitled to collect any
amount in respect of any Material Service Contract for which consent is not obtained within
the Consent Period if (i) the customer under any such Material Service Contract for whom a
Requested Required Consent applies shall have continued to receive and pay for HVAC services
under the terms of such contract for the monthly period following the end of the Consent
Period and such customer shall not have provided written notification of termination of such
Material Service Contract during the Consent Period, (ii) Purchaser is able to subcontract
the performance of the applicable Material Service Contract from Sellers in accordance with
its terms or (iii) after the Consent Period,
37
Purchaser informs Sellers that Sellers should
continue to use all reasonable efforts to obtain the Requested Required Consent; provided
that, subject to the provisions of Section 9.5 hereof, Sellers shall only be required to pay
Purchaser in respect of qualifying unobtained Requested Required Consents hereunder after
the aggregate of all lost monthly maintenance and service revenue with respect to such
Material Service Contracts for which consents were not obtained exceeds one hundred fifty
thousand dollars ($150,000) (and then only in the amount of such excess).
(d) With respect to any Performance Bonds issued by ABM in respect of the
Business that are not otherwise assignable without consent to Purchaser hereunder as of the
Closing, Purchaser covenants to promptly replace any such Performance Bonds with equivalent
performance and surety bonds of Purchaser or an Affiliate thereof in accordance with the
terms of any applicable Assumed Contracts and use commercially reasonable efforts to obtain
a release of ABM with respect thereto.
7.8 Agreement Not to Compete
(a) Sellers understand that Purchaser shall be entitled to protect and
preserve the going concern value of the Business to the extent permitted by law and that
Purchaser would not have entered into this Agreement absent the provisions of this Section
7.8 and, therefore, Sellers agree that for a period of five (5) years following the Closing
Date Sellers will not (other than with respect to Permitted Services), directly or
indirectly own, manage, control or participate in the ownership, management or control of or
be related or otherwise affiliated in any manner with, any business similar to that engaged
in by the Business (a “Competitive Business”); provided, however, that nothing in this
Section 7.8 shall prohibit Sellers, or their Affiliates, from owning up to five percent (5%)
of the outstanding voting securities of any publicly traded entity; provided, further, that
nothing in this Section 7.8 shall prohibit Sellers, or their Affiliates, from acquiring a
Competitive Business as part of an acquisition (by joint venture, merger or other) of the
assets of, or the majority of voting interest in, another Person (a “Target Business”) if
the worldwide sales from the Competitive Business are not in excess of thirty percent (30%)
of the worldwide sales of the Target Business in the most recent fiscal year of the Target
Business preceding such acquisition. In the event the Sellers, or their Affiliates, acquire
a Competitive Business pursuant to the second proviso in the preceding sentence, Sellers
shall divest such Competitive Business by way of auction or other competitive bidding
process, negotiation, sale or such other manner or divestiture as the Sellers shall deem
appropriate and shall use commercially reasonable efforts to do so within a period of six
(6) months from the date of such acquisition. For a period of two (2) years following the
Closing Date, Sellers and their Affiliates shall not solicit any Employees of the Business
or otherwise affirmatively and intentionally induce any Employee of the Business to leave
such employ for purposes of accepting a position with Sellers; provided that the preceding
non-solicitation obligation of Sellers and their Affiliates shall not apply to
administrative or clerical Employees of the Business. Sellers and Purchaser intend that the
covenants contained in this Section be construed as a series of separate covenants and
Sellers acknowledge that the limitations as to time, geographic area and scope of activity
set forth above are reasonable and do not impose a greater restraint than is necessary to
protect the goodwill and the Business to be acquired by Purchaser under this Agreement.
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(b) Notwithstanding any other provision of this Agreement, it is understood
by the parties hereto and agreed that the remedy of indemnity payments pursuant to Section
9.2 and other remedies at law would be inadequate in the case of any breach of the covenants
contained in Section 7.8(a), and each party hereto agrees that the other party shall be
entitled to equitable relief, including the remedy of specific performance with respect to
any breach or attempted breach of such covenants. If, in any judicial proceeding, a court
refuses to enforce any of the separate covenants contained in Section 7.8(a), the
unenforceable covenant will be considered eliminated from this Section 7.8 for the purpose
of those proceedings to the extent necessary to permit the remaining separate covenants to
be enforced.
(c) Nothing contained herein to the contrary shall prohibit ABM (or any of
its Affiliates) from being acquired, through sale, merger or related transaction, by any
entity which qualifies as, owns or operates or is affiliated with, a Competitive Business.
Purchaser agrees that neither any such acquirer nor any of its Affiliates (including ABM
after such acquisition) will be bound by the terms of Section 7.8(a).
7.9 Partially Utilized Facilities; Subleases
(a) Purchaser is entering into a lease (with respect to the Fresno,
California facility) and a sublease (with respect to the Oakland, California facility) with
Sellers’ Affiliates in respect of the Partially Utilized Facilities providing in each case
for (i) a lease term through October 31, 2005 and (ii) monthly rental payments to Sellers
calculated based on the total rent currently payable under the master lease for the location
of the applicable Partially Utilized Facilities Lease, pro-rata for the current square
footage occupied by the Business at such Partially Utilized Facility as of the date hereof.
The parties acknowledge and agree that no leasehold improvements will be made to the
Partially Utilized Facilities during the Temporary Lease Period.
(b) With respect to any guarantees by ABM of Assumed Leases, Purchaser shall
promptly following Closing replace such guarantees with suitable equivalent guarantees, if
required, of Purchaser or an Affiliate thereof pursuant to such Assumed Leases and use commercially reasonable efforts to promptly obtain a release of ABM with
respect to all such guarantees.
7.10 Conduct of Business Prior to Closing
Except as otherwise contemplated hereby, during the period from the date of this
Agreement to the Closing Date, Sellers will operate and maintain the Purchased Assets in the
usual, regular and ordinary course of business and in substantially the same manner as they
did prior to the date of this Agreement. Sellers will also operate and maintain the water
treatment services business of CMS in the usual, regular and ordinary course of business and
in substantially the same manner as they did prior to the date of this Agreement, and in
particular shall take no action that would cause inventory, receivables, payables or other
accounts related to such business to be materially different than as reflected on the
October 31, 2004 balance sheet of CMS. Sellers shall use all reasonable efforts to (i)
preserve intact the Business, (ii) keep available the services of its present
39
officers and
employees and (iii) preserve its relationships with customers, suppliers and others having
dealings with Sellers. Without limiting the generality of the foregoing, and, except as
otherwise expressly provided in this Agreement and except as set forth on Schedule 7.10 of
Sellers Disclosure Schedule, prior to the Closing Date, without the prior written consent of
Purchaser, which will not be unreasonably withheld or delayed, Sellers shall not with
respect to the Purchased Assets or the Business:
(a) create, incur or assume debt that will remain an obligation of Purchaser
following the Closing other than trade payables and other applicable operational liabilities
incurred in the ordinary course of business;
(b) increase the compensation of the Employees or benefits due the Employees
under the Seller Plans, except for such increases in compensation or benefits as are
contractually required or granted in the ordinary course of the Business in accordance with
its past practice; provided that Sellers may make, prior to the Closing Date, any payment
with respect to any such prohibited increase in compensation of any Employee it so elects
and in its sole discretion;
(c) sell, transfer, or otherwise dispose of, or agree to sell, transfer or
otherwise dispose of, any material assets constituting to the Purchased Assets, other than
sales, transfers or disposals of, or enter into agreements to sell, transfer or otherwise
dispose of, Inventory in the ordinary course of business in accordance with past practice;
(d) enter into any material agreement that would constitute an Assumed
Contract, other than agreements made in the ordinary course of business in accordance with
past practice;
(e) amend or unilaterally terminate any material Assumed Contract, other than
in the ordinary course of business in accordance with past practice; or
(f) permit to be incurred any Encumbrance on any assets of the Business other
than Permitted Encumbrances.
7.11 Access to Information Prior to Closing
(a) From the date hereof through the Closing Date, upon reasonable notice by
Purchaser and during regular business hours, Sellers shall give Purchaser and its authorized
representatives (i) reasonable access to the properties, contracts and Books and Records
related primarily to the Business and the Purchased Assets and (ii) reasonable access to
employees and agents of Sellers; provided however that any such access shall be in such
manner as not to materially interfere with the operation of the Business. Notwithstanding
the foregoing, Sellers need not disclose to Purchaser or any representative of Purchaser any
information which, in the opinion of Sellers’ counsel, would violate Applicable Law, result
in a waiver of attorney-client privilege or similar privilege or result in a breach of any
contract to which any Seller is a party.
(b) From the date hereof through the Closing Date, Purchaser will hold, and
will cause its officers, directors, employees, representatives, consultants and advisors to
40
hold, in confidence, all documents and information furnished to Purchaser and Purchaser’s
officers, directors, employees, representatives, consultants and advisors by or on behalf of
Sellers in connection with this Agreement and the transactions contemplated hereby, provided
that nothing herein shall be deemed to alter or amend the Confidentiality Agreement, which
remains in full force and effect in accordance with its terms.
7.12 Commercially Reasonable Efforts
(a) The Purchaser and Sellers shall act in good faith and use their
respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated hereby as soon as practicable. Without limiting the
foregoing, the Purchaser and Sellers shall use their reasonable best efforts to (i) obtain
all consents, approvals, waivers, licenses, permits, authorizations, registrations,
qualifications or other permissions or actions by, and give all necessary notices to, and
make all filings with and applications and submissions to, any Governmental Authority or
Persons necessary in connection with the consummation of the transactions contemplated
hereby as soon as reasonably practicable; (ii) provide all relevant information as may be
necessary or reasonably requested in connection with any of the foregoing; and (iii) avoid
the entry of, or have vacated or terminated, any injunction, decree, order, or judgment that
would restrain, prevent, or delay the consummation of the transactions contemplated hereby,
including but not limited to defending through litigation on the merits any claim asserted
in any court by any person so as to enable the consummation of such transactions to occur as
expeditiously as possible, including, with respect to the Purchaser, the taking by the
Purchaser of all such actions, as may be required in order to avoid the entry of, or to
effect the dissolution of, any injunction, temporary restraining order, or other order in
any suit or proceeding, which would otherwise have the effect of preventing or materially
delaying the Closing.
(b) The Purchaser and Sellers shall keep each other reasonably informed as to
the status of matters relating to the completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notices or other communications
received by any of them or by any of their respective Affiliates, from any Person or any
Governmental Authority with respect to the transactions contemplated hereby.
(c) Notwithstanding the above or any other provision of this Agreement, the
Purchaser shall not be required to take any action that would reasonably be expected to
impair the benefits to Purchaser of the transaction contemplated by this Agreement in a
materially adverse manner.
7.13 Risk of Loss
(a) From the date hereof through the Closing Date, risk of loss or damage to
the Purchased Assets shall be borne by Sellers.
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(b) If, before the Closing Date, all or any portion of the Purchased Assets
are (i) taken by eminent domain, (ii) the subject of a pending or (to Sellers’ Knowledge)
contemplated taking which has not been consummated, or (iii) damaged or destroyed by fire or
other casualty, Sellers shall notify Purchaser promptly in writing of such fact.
(c) If such taking, damage or destruction would not have a Material Adverse
Effect, Purchaser and Sellers shall negotiate in good faith to settle the loss resulting
from such taking, damage or destruction (including, without limitation, by making a fair and
equitable adjustment to the Closing Purchase Price) and, upon such settlement, consummate
the transaction contemplated by this Agreement pursuant to the terms of this Agreement. If
no such settlement is reached within sixty (60) days after Sellers have notified Purchaser
of such taking, damage or destruction, then, upon the written request of either Purchaser or
Sellers, the Neutral Accountant shall resolve any disagreement. The Neutral Accountant
shall determine the loss resulting from such taking, damage or destruction as promptly as
practicable (but in any event within sixty (60) days following the date on which such
dispute is referred to the Neutral Accountant), based solely on written submissions made to
the Neutral Accountant within fifteen (15) days following the Neutral Accountant’s selection
and such other information or submissions as may be requested by the Neutral Accountant
thereafter. Purchaser on the one hand and Sellers on the other shall share equally the fees
and expenses of the Neutral Accountant. The determination of the Neutral Accountant shall
be final, conclusive and binding on Purchaser and Sellers, and the Neutral Accountant’s
determination of the loss resulting from such taking, damage or destruction shall then be
deducted from the Closing Purchase Price.
7.14 No Other Bids
Sellers agree that they shall not, and shall not permit any of their Affiliates, or any
officers, directors, employees, agents or representatives of any of the foregoing to,
directly or indirectly, solicit or initiate (including by way of furnishing any non-public
information concerning the Business or CMS) inquiries or proposals, or participate in any
discussions or negotiations or enter into any agreement with any Person with respect to such
inquiries or proposals, concerning an acquisition of all or any substantial portion of
CMS, the Business or the Purchased Assets, except for the transactions with Purchaser
contemplated by this Agreement, and Sellers shall immediately advise Purchaser of any such
inquiry or proposal, including the terms thereof and the identity of the Person making such
inquiry or proposal. Notwithstanding anything to the contrary contained in this Section
7.14, ABM shall in no way by the terms of this Section 7.14 be restricted from soliciting or
initiating inquiries or proposals, participating in any discussions or negotiations or
entering into any agreement, with respect to a sale, merger, consolidation,
recapitalization, liquidation or other business combination involving ABM, or the sale of
all or substantially all the assets thereof (an “ABM Transaction”), and ABM shall have no
obligations with respect to the notification of Purchaser with respect to any inquiry or
proposal regarding an ABM Transaction. In addition, notwithstanding anything to the
contrary contained in this Section 7.14, Sellers shall in no way by the terms of this
Section 7.14 be restricted from soliciting or initiating inquiries or proposals,
participating in any discussions or negotiations or entering into any agreement, with
respect to a sale of
42
all or substantially all of the assets of the water treatment business
of CMS (a “WT Transaction”), and Sellers shall have no obligations with respect to the
notification of Purchaser with respect to any inquiry or proposal regarding a WT
Transaction.
7.15 ABM Facility Services
For a period of five (5) years from the Closing Date, ABM shall use its commercially
reasonable efforts to provide Purchaser the opportunity to bid on HVAC services that ABM
Facility Services or ABM Engineering Services may seek to have provided by a subcontractor
or other third party.
7.16 Xxxxx Commissions
As of the Closing Date, Purchaser shall assume and pay when due all commissions, to the
extent such commissions relate to new accounts obtained by Purchaser or the Business
following the Closing Date and such accounts are listed on Schedule 7.16 of the Sellers
Disclosure Schedule, owed to Xxxxx Xxxxx as a result of his efforts between March 1, 2005
and the Closing Date pursuant to sections 3(b) and 3(c) of the Consultant Agreement,
effective as of March 1, 2005, between Xxxxx Xxxxx and CMS (a copy of which has been
previously furnished to the Purchaser).
ARTICLE VIII.
CLOSING CONDITIONS
8.1 Conditions to Obligations of the Parties
The respective obligations of each party to effect the transactions contemplate hereby
shall be subject to the condition that no preliminary or permanent injunction or other order
or decree by any Governmental Authority which prevents the consummation of the transactions
contemplated hereby shall have been issued and remain in effect (each party agreeing to use
its commercially reasonable efforts to have any such injunction,
order or decree lifted) and no statute, rule or regulation shall have been enacted by any
Governmental Authority which prohibits the consummation of the transactions contemplated
hereby.
8.2 Conditions to Obligations of Purchaser
The obligation of Purchaser to effect the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) Each Seller shall have performed and complied with in all material
respects the covenants and agreements contained in this Agreement that are required to be
performed and complied with by it on or prior to the Closing Date;
43
(b) All of the representations or warranties of each Seller set forth in this
Agreement that are qualified by materiality or Material Adverse Effect shall be true and
correct and the representations and warranties of each Seller set forth in the Agreement
that are not so qualified shall be true and correct in all material respects, in each case,
as of the date of this Agreement and as of the Closing Date (except to the extent such
representations and warranties speak as of a specific date or as of the date hereof, in
which case such representations and warranties shall be true and correct or true and correct
in all material respects, as the case may be, as of such specific date or as of the date
hereof, respectively);
(c) Sellers shall have completed fully the clean up of the facilities of the
Business as is provided in the engagement letter, dated as of May 6, 2005, between ABM and
Evergreen Environmental Services, Inc. (a copy of which has been previously furnished to the
Purchaser);
(d) Purchaser shall have received a certificate from an authorized officer of
each Seller, dated the Closing Date, to the effect that, to the best of such officer’s
Knowledge, the conditions set forth in Sections 8.2(a), (b) and (c) have been satisfied;
(e) There shall have been no cancellation of any Material Service Contract;
(f) Sellers shall have made the deliveries to Purchaser required to be
delivered by Sellers pursuant to Section 4.2;
(g) Purchaser shall have concluded employment contracts with Xxxx Xxxxxx and
Xxxx Xxxxxxxx, in form and substance satisfactorily to Purchaser in its sole discretion;and
(h) Sellers shall have delivered to Purchaser Schedule 7.16 of the Sellers Disclosure
Schedule in form and substance satisfactory to Purchaser prior to the Closing Date.
8.3 Conditions to Obligations of Sellers
The obligations of Sellers to effect the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) Purchaser shall have performed and complied in all material respects with
the covenants and agreements contained in this Agreement that are required to be performed
and complied with by it on or prior to the Closing Date;
(b) All of the representations or warranties of Purchaser set forth in the
Agreement that are qualified by materiality or Material Adverse Effect shall be true and
correct, and the representations and warranties of Purchaser set forth in the Agreement that
are not so qualified shall be true and correct in all material respects, in each case, as of
the date of this Agreement and as of the Closing Date (except to the extent such
representations and warranties speak as of a specific date or as of the date hereof, in
44
which case such representations and warranties shall be true and correct or true and correct
in all material respects, as the case may be, as of such specific date or as of the date
hereof, respectively);
(c) Sellers shall have received a certificate from an authorized officer of
Purchaser, dated the Closing Date, to the effect that, to the best of such officer’s
Knowledge, the conditions relating to Purchaser and set forth in Sections 8.3(a) and (b)
have been satisfied; and
(d) Purchaser shall have made the deliveries to Sellers required to be
delivered by Sellers pursuant to Section 4.3.
ARTICLE IX.
SURVIVAL AND INDEMNIFICATION
9.1 Survival
All representations and warranties made by the parties hereto pursuant to this Agreement shall
survive the Closing (a) in the case of the representations and warranties contained in Section 5.2
relating to authority, without limitation and (b) in the case of any other representation and
warranty in this Agreement for a period of eighteen (18) months after the Closing Date. All
representations and warranties, except Section 5.2, shall terminate and be of no further force or
effect following the eighteen-month anniversary of the Closing Date, and no claims shall thereafter
be brought thereunder. The covenants and agreements of the parties hereto contained herein shall
survive in accordance with their respective terms.
9.2 Indemnification Sellers will, jointly and severally,
indemnify, defend and hold harmless the Purchaser from and against any and all claims,
demands or suits, losses, liabilities, damages, obligations, payments, costs and expenses (including, without limitation, the
costs and expenses of any and all actions, suits, proceedings, assessments, judgments,
settlements and compromises relating thereto and reasonable attorneys’ fees and reasonable
disbursements in connection therewith) (collectively, “Indemnifiable Losses”), asserted
against or suffered by Purchaser and its Affiliates (including, without limitation, United
Technologies Corporation), and each of their officers, directors, employees, agents,
successors and assigns (collectively, the “Purchaser Group”) relating to, resulting from or
arising out of (i) any breach of any warranty or the inaccuracy of any representation of
Sellers contained in this Agreement, (ii) any breach by Sellers of any covenant in this
Agreement or any failure of Sellers to perform any of their obligations contained in this
Agreement, (iii) the Excluded Liabilities or (iv) claims under Sections 3.3 or 7.7(c);
provided, however, that, subject to provisions of Section 9.5, Sellers shall
be required to indemnify, defend and hold harmless under clause (i) of this Section 9.2(a)
with respect to Indemnifiable Losses incurred by the Purchaser Group only to the extent that
the aggregate amount of such Indemnifiable Losses exceed three hundred thousand dollars
($300,000) (and then only in the amount of such excess), and provided further, that the
aggregate liability of Sellers under clause (i) this Section 9.2(a) shall not exceed fifty
percent (50%) of the Closing Purchase Price. For purposes of this
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Article IX, in
determining whether there has been a breach of any representation or warranty contained in
Article V of this Agreement or the amount of any Indemnifiable Losses resulting from any
such breach, (i) such representation and warranties (other than Section 5.4(a)) shall be
read without regard to any “Material Adverse Effect” qualifier contained therein; provided
that in the first sentence of Section 5.8 the phrase “which, if adversely determined, would
have a Material Adverse Effect” shall be replaced with the phrase “except as set forth in
Schedule 2.4(b) of Sellers Disclosure Schedule” (ii) the word “material” (in lower case)
shall be disregarded in (1) the second sentence of Section 5.7, and (2) the second and third
sentences of Section 5.9; and (iii) the word “materially” shall be disregarded in the first
and second sentence of Section 5.15.
(b) (i) Except as provided in Section 9.2(b)(ii), and in addition to any
indemnity obligation under Section 9.2(a), Sellers, jointly and severally, shall indemnify,
defend and hold harmless the Purchaser Group from any and all Indemnifiable Losses, relating
to or arising out of (A) any violation of Environmental Laws occurring at the Partially
Utilized Facilities or the properties containing such Partially Utilized Facilities
occurring during the Temporary Lease Period, including without limitation any violations of
Environmental Laws relating to the operation of the Business at the Partially Utilized
Facilities occurring during the Temporary Lease Period; (B) any actions or incidents
occurring during the Temporary Lease Period with respect to the operation of the Business at
the Partially Utilized Facilities that could form the basis of a claim of liability under
Environmental Law; (C) any Environmental Condition on, at, under or resulting from the
Partially Utilized Facilities or the properties containing such Partially Utilized
Facilities, including without limitation any Environmental Condition arising from incidents
or events associated with operation of the Business at the Partially Utilized Facilities
during the Temporary Lease Period (including the Release, storage treatment, transportation
or disposal of Regulated Substances, or the arrangement for such, by or in connection with
operation of the Business at the Partially Utilized Facilities during the
Temporary Lease Period). For purposes of this Article IX, in no event shall the
Temporary Lease Period exceed 150 days from the Closing Date.
(ii) Sellers shall not be obligated to indemnify the Purchaser Group for Indemnifiable
Losses arising under Section 9.2(b)(i) to the extent that such Indemnifiable Losses are
caused or contributed by: (1) the willful misconduct or gross negligence of the Purchaser;
or (2) the failure of the Purchaser to conduct the Business at the Partially Utilized
Facilities in a manner that is equal to or better than the environmental and safety
practices followed by Sellers in the conduct of the Business at the Partially Utilized
Facilities prior to the Closing Date.
(iii) In addition to any indemnity obligation under Section 9.2(a), Sellers, jointly
and severally, shall indemnify, defend and hold harmless the Purchaser Group from any and
all Indemnifiable Losses, relating to or arising out of the use, procurement, manufacture,
sale of ACM in products manufactured, sold, installed or serviced in connection with the
Business or any discontinued product or product line on or prior to the Closing Date by any
Seller or any Predecessor and any Asbestos Activity performed or undertaken by Seller or any
Predecessor, whether or not in connection with operation of the Business, prior to the
Closing Date. The foregoing indemnity shall extend to and
46
include any Indemnifiable Losses
incurred after the Closing Date: (i) due to any exposure to ACM on or prior to the Closing
Date in connection with any Asbestos Activity by any Seller, Predecessor or the Business,
(ii) arising out of any Asbestos Activity conducted by, or existing in connection with, any
Seller, Predecessor or the Business prior to the Closing Date, and (iii) arising out of any
exposure to ACM after the Closing Date, or arising out of any development, aggravation or
continuance of any asbestos related diseases after the Closing Date, related to conditions
on the Closing Date in connection with any Asbestos Activity by any Seller, Predecessor or
the Business.
(iv) Sellers’ obligations under this Section 9.2(b) shall not be subject to the
Comprehensive Basket or any other limitation or restriction hereunder as to time, amounts or
deductions, and Sellers irrevocably waive any rights of contribution from Purchaser that
they may have under the law in respect of any such Indemnifiable Losses.
(c) The Purchaser will, jointly and severally, indemnify, defend and hold
harmless Sellers from and against any and all Indemnifiable Losses asserted against or
suffered by Sellers and their Affiliates, and each of their respective officers, directors,
employees, agents, successors and assigns (collectively, the “Seller Group”) relating to,
resulting from or arising out of (i) any breach of any warranty or the inaccuracy of any
representation of the Purchaser contained in this Agreement, it being understood that for
purposes of this 8.2(c) in determining whether there has been a breach of any representation
or warranty contained in Article VI of this Agreement or the amount of any losses resulting
from any such breach, the word “materially” in the first and second sentence of Section 6.4
shall be disregarded, (ii) any breach by Purchaser of any covenant in this Agreement or any
failure of Purchaser to perform any of their obligations contained in this Agreement or
(iii) the Assumed Liabilities; provided, however, that, subject to the
provisions of Section 9.5, the Purchaser shall be required to indemnify, defend and hold
harmless under clause (i) of this Section 9.2(c) with respect to
Indemnifiable Losses incurred by the Seller Group only to the extent that the aggregate
amount of such Indemnifiable Losses exceed three hundred thousand dollars ($300,000) (and
then only in the amount of such excess), and provided further, that the aggregate liability
of the Purchaser under clause (i) of this Section 9.2(c) shall not exceed fifty percent
(50%) of the Closing Purchase Price.
(d) Either the party required to provide indemnification under this Agreement
(the “Indemnifying Party”) or the party entitled to receive indemnification under this
Agreement (the “Indemnitee”) may assert any offset or similar right in respect of its
obligations under this Section 9.2 based upon any actual breach of any covenant or agreement
contained in this Agreement.
(e) Any Indemnitee having a claim under these indemnification provisions
shall make a good faith effort to recover all losses, damages, costs and expenses from third
party insurers of such Indemnitee under applicable insurance policies so as to reduce the
amount of any Indemnifiable Loss hereunder. The amount of any Indemnifiable Loss shall be
reduced to the extent that Indemnitee receives any insurance proceeds with respect to an
Indemnifiable Loss from a third party (non-captive) insurer (net of one year’s increase in
premiums payable to such third party insurer). For
47
purposes of this Agreement, payments
made by a third party insurer administering claims under a fronting policy or any
self-insurance program shall not be considered payments by a third party (non-captive)
insurer. The expiration, termination or extinguishment of any covenant, agreement,
representation or warranty shall not affect the parties’ obligations under this Section 9.2
if the Indemnitee provided the Indemnifying Party with notice of the claim or event for
which indemnification is sought prior to such expiration, termination or extinguishment.
9.3 Defense of Claims
(a) If any Indemnitee receives notice of the assertion of any claim or of the
commencement of any claim, action, or proceeding made or brought by any Person who is not a
party to this Agreement or any affiliate of a party to this Agreement (a “Third Party
Claim”) with respect to which indemnification is to be sought from an Indemnifying Party,
the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof.
Such notice shall describe the nature of the Third Party Claim in reasonable detail and will
indicate the estimated amount, if practicable, of the Indemnifiable Loss that has been or
may be sustained by the Indemnitee. The Indemnifying Party will have the right to
participate in or, by giving written notice to the Indemnitee, to elect to assume the
defense of any Third Party Claim not involving any matter arising under Section 9.2(b) at
such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel, and the
Indemnitee will cooperate in good faith in such defense at such Indemnitee’s own expense.
If a Third Party Claim involves any matter arising under Section 9.2(b), then the Indemnitee
shall have the right in such written notice to require the Indemnifying Party to assume the
defense of such Third Party Claim, and the Indemnitee will cooperate in good faith in such
defense at the Indemnifying Party’s expense.
(b) If within ten (10) calendar days after an Indemnitee provides written
notice to the Indemnifying Party of any Third Party Claim the Indemnitee receives written
notice from the Indemnifying Party that such Indemnifying Party has elected (or is required)
to assume the defense of such Third Party Claim as provided in the last sentence of Section
9.3(a), the Indemnifying Party will not be liable for any legal expenses subsequently
incurred by the Indemnitee in connection with the defense thereof; provided,
however, that if the Indemnifying Party fails to take reasonable steps necessary to
defend diligently such Third Party Claim within twenty (20) calendar days (unless waiting
twenty (20) calendar days would prejudice the Indemnitee’s rights) after receiving notice
from the Indemnitee that the Indemnitee believes the Indemnifying Party has failed to take
such steps the Indemnifying Party shall permit the Indemnitee to participate in such
defense, and the Indemnifying Party will be liable for all reasonable expenses thereof. The
Indemnifying Party shall permit the Indemnitee to participate in such defense or settlement
through counsel chosen by the Indemnitee, with the fees and expenses of such counsel borne
by the Indemnitee unless under applicable standards of professional conduct a conflict may
exist between the Indemnifying Party and the Indemnitee in which event the fees and expenses
of such counsel shall be borne by the Indemnifying Party. Without the prior written consent
of the Indemnitee, the Indemnifying Party will not enter into any settlement of any Third
Party Claim which
48
would lead to liability or create any financial or other obligation on the
part of the Indemnitee for which the Indemnitee is not entitled to indemnification
hereunder. If a firm offer is made to settle a Third Party Claim without leading to
liability or the creation of a financial or other obligation on the part of the Indemnitee
for which the Indemnitee is not entitled to indemnification hereunder and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party will give written
notice to the Indemnitee to that effect. If the Indemnitee fails to consent to such firm
offer within ten (10) calendar days after its receipt of such notice, the Indemnitee may
continue to contest or defend such Third Party Claim, and in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will be the amount of such
settlement offer, plus reasonable costs and expenses paid or incurred by the Indemnitee up
to the date of such notice.
(c) If the amount of any Indemnifiable Loss, at any time subsequent to the
making of an indemnity payment in respect thereof, is reduced by recovery, settlement or
otherwise under or pursuant to any third party (non-captive) insurance coverage, or pursuant
to any claim, recovery, settlement or payment by or against any other entity, the amount of
such reduction, less any costs, expenses or premiums incurred in connection therewith
(together with interest thereon from the date of payment thereof at the prime rate as of the
Closing Date), will promptly be repaid by the Indemnitee to the Indemnifying Party. Upon
making any indemnity payment, the Indemnifying Party will, to the extent of such indemnity
payment, be subrogated to all rights of the Indemnitee against any third party (non captive)
insurer in respect of the Indemnifiable Loss to which the indemnity payment relates;
provided, however, that (i) for purposes of this Agreement, payments made by
a third party insurer administering claims under a fronting policy or any self-insurance
program shall not be considered payments by a third party (non-captive) insurer, (ii) the
Indemnifying Party will then be in compliance with its obligations under this Agreement in
respect of such Indemnifiable Loss and (iii) until the Indemnitee recovers full payment of its Indemnifiable Loss, any and all claims of the
Indemnifying Party against any such third party (non-captive) insurer on account of said
indemnity payment is hereby made expressly subordinated and subjected in right of payment to
the Indemnitee’s rights against such third party. Without limiting the generality or effect
of any other provision hereof, each such Indemnitee and Indemnifying Party will duly execute
upon request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights. Nothing in this Section 9.3(c) shall
be construed to require any party hereto to obtain or maintain any insurance coverage.
(d)
A failure to give timely notice as provided in this Section 9.3 will not
affect the rights or obligations of any party hereunder except if, and only to the extent
that, as a result of such failure, the party which was entitled to receive such notice was
actually prejudiced as a result of such failure.
9.4 Remedies Exclusive
Except for intentional fraud and for injunctive relief to enforce the Purchaser’s or Sellers’
rights under this Agreement, the remedies set forth in this Article IX will constitute the
49
sole and
exclusive remedy for breaches of this Agreement (including any covenant, obligation, representation
or warranty contained in this Agreement or in any certificate delivered pursuant to this Agreement)
or otherwise in respect of the sale of the Purchased Assets contemplated hereby. Each of the
Purchaser and Sellers waive any provision of law to the extent that it would limit or restrict the
agreements contained in this Article IX. Notwithstanding anything to the contrary set forth in
this Agreement, the parties agree that the sole and exclusive remedy of Purchaser (i) with respect
to the profitability of any Project Contract shall be the post-closing adjustment set forth in
Section 3.3 and (ii) with respect to the loss of customers or the cancellation or termination of
any Assumed Contract or other customer contract, including as a result of the failure to obtain
consent to assignment of any Material Service Contract, shall be the post closing adjustment set
forth in Section 7.7(b); provided that, with respect to clause (ii), the indemnification rights
set forth in Section 9.2(a) shall also apply in the event that (A) such customer loss or contract
cancellation or termination arose from material breach or material non-performance of such contract
prior to the Closing Date and (B) Sellers shall have retained liability for such material breach or
material non-performance in accordance with the provisions of Section 2.4(c).
9.5 Comprehensive Basket.
Notwithstanding anything to the contrary contained in this Agreement, the basket provisions
contained in Sections 3.3 ($300,000, with respect to Project Losses), 7.7 ($150,000, with respect
to qualifying unobtained Requested Required Consents) and 9.2(a) ($300,000, with respect to
Indemnifiable Losses) shall not apply at such time as the losses or related items otherwise
aggregating under all such provisions for purposes of reaching the basket thresholds contained
therein exceed three hundred seventy-five thousand dollars ($375,000) (the “Comprehensive Basket”);
provided that Purchaser shall only be permitted to collect for any losses (or related items)
aggregating under all such provisions in the amount of the excess of the Comprehensive Basket. For
avoidance or doubt and for purposes of illustration: in the event that Sellers would otherwise be
required to indemnify and pay Purchaser in respect of Indemnifiable Losses but for the basket contained in Section 9.2(a), if the sum of (x) Project
Losses (as determined under Section 3.3), (y) revenue losses in respect of qualifying unobtained
Requested Required Consents (as calculated under Section 7.7) and (z) such Indemnifiable Losses
total more than $375,000 in the aggregate, Purchaser shall be entitled to payments from Sellers in
respect of such Indemnifiable Losses notwithstanding the basket contained in Section 9.2(a) (but
only to the extent of the excess of such total above the Comprehensive Basket). This Section shall
not apply to any matters involving any Excluded Liability, any Assumed Liability or any matters
arising under Section 9.2(b).
ARTICLE X.
TERMINATION AND ABANDONMENT
10.1 Termination
(a) This Agreement may be terminated at any time prior to Closing Date, by
mutual written consent of Purchaser and Sellers.
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(b) This Agreement may be terminated by Sellers or by Purchaser if (i) the
transactions contemplated hereby shall not have been consummated on or before June 15, 2005
(the “Termination Date”); provided that the right to terminate this Agreement under this
Section 10.1(b) shall not be available to either such party if such party’s failure to
fulfill any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing Date to occur on or before such date.
(c) This Agreement may be terminated by Sellers or by Purchaser if (i) any
Governmental Authority, the consent or approval of which is a condition to the obligations
of Sellers and Purchaser to consummate the transactions contemplated hereby, shall have
determined not to grant its consent or approval and all appeals of such determination shall
have been taken and have been unsuccessful, or (ii) any Governmental Authority shall have
issued a statute, rule, regulation, order, judgment or decree or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby and such statute, rule, regulation, order, judgment or decree or other action shall
have become final and non-appealable; provided, however, that all parties hereto shall have
used their commercially reasonable efforts to remove such restraint, enjoinment or
prohibition.
(d) This Agreement may be terminated by Purchaser, if there has been a
material violation or breach by Sellers of any agreement, covenant, representation or
warranty contained in this Agreement which has rendered the satisfaction of any condition to
the obligations of Purchaser set forth in Sections 8.2(a) or 8.2(b) hereof impossible, such
violation or breach has not been waived by Purchaser, and the violation or breach has not
been cured within thirty (30) days following Purchaser’s written notice of the violation or
breach; provided, however, that if such breach cannot reasonably be cured within thirty (30)
days and Sellers have commenced and are diligently proceeding to cure such breach, this
Agreement may not be terminated pursuant to this subsection (d).
(e) This Agreement may be terminated by Sellers, if there has been a material
violation or breach by Purchaser of any agreement, covenant, representation or warranty
contained in this Agreement which has rendered the satisfaction of any condition to the
obligations of Sellers set forth in Section 8.3(a) or 8.3(b) hereof impossible, such
violation or breach has not been waived by Sellers, or the violation or breach has not been
cured within thirty (30) days following either Sellers’ written notice of the violation or
breach; provided, however, that if such breach cannot reasonably be cured within thirty (30)
days and Purchaser has commenced and is diligently proceeding to cure such breach, this
Agreement may not be terminated pursuant to this subsection (e).
10.2 Procedure and Effect of Termination
In the event of termination of this Agreement and abandonment of the transactions
contemplated hereby by either or both of the parties pursuant to Section 10.1, written
notice thereof shall forthwith be given by the terminating party to the other party and this
Agreement shall terminate and the transactions contemplated hereby shall be abandoned, and
all obligations of the parties hereunder will terminate without liability of
51
any party to
the other party (except for any liability of any party then in material breach of this
Agreement); provided that the provisions of Sections 7.2 and 7.4 of this Agreement and the
Confidentiality Agreement will survive the termination and remain in full force and effect
thereafter). If this Agreement is terminated as provided herein, all filings, applications
and other submissions made pursuant to this Agreement, to the extent practicable, shall be
withdrawn from the agency or other person to which they were made.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
11.1 Amendment and Modification
This Agreement may be amended, modified or supplemented only by a written mutual agreement
executed and delivered by each of the Sellers and Purchaser.
11.2 Waiver of Compliance; Consents
Except as otherwise provided in this Agreement, any failure of any of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived by the party entitled to
the benefits hereof only by a written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
11.3 Notices
All notices and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or by facsimile transmission, telexed or mailed by
overnight courier or registered or certified mail (return receipt requested), postage prepaid,
to the parties at the following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be effective only upon
receipt thereof):
(a) If to Sellers:
ABM Industries Incorporated
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(b) If to Purchaser:
Carrier Corporation
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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Attention: General Counsel
Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
11.4 Assignment
This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other party, nor is this Agreement intended to
confer upon any other Person except the parties hereto any rights or remedies hereunder. If ABM
sells all or substantially all of its assets, however, ABM will be certain that its obligations
herein are transferred with such assets. That transfer would not constitute a novation of this
Agreement.
11.5 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of
New York (regardless of the laws that might otherwise govern under applicable New York principles
of conflicts of law) as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies, and Sellers and Purchaser hereby agree to
irrevocably and unconditionally submit to the exclusive jurisdiction of any State or Federal court
sitting in New York County over any suit, action or proceeding arising out of or relating to this
Agreement. If requested by Sellers, Purchaser will consent to appointing an agent for service of
process in New York County.
11.6 Waiver of Jury Trial
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.7 Counterparts
This Agreement may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
11.8 Interpretation
The Article and Section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. Definitions in this Agreement shall apply equally to both the
singular and plural forms of the terms defined. All references herein to Articles, Sections and
Exhibits shall be deemed to be references to Articles and Sections of, and Exhibits to, this
Agreement unless the context shall otherwise require. All Exhibits attached hereto shall be deemed
incorporated herein as if set forth in full herein and, unless otherwise defined therein, all terms
used in any Exhibit shall have the meanings ascribed to such terms in this Agreement. The words
“hereof,” “hereinafter,” “herein” and “hereunder” and words of
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similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise expressly provided herein, any statute referred to herein means such
statute as may from time to time be amended, modified or supplemented. Any payments required by
this Agreement shall be in U.S. Dollars.
11.9 Severability
If for any reason any term or provision of this Agreement is held to be invalid or
unenforceable, all other valid terms and provisions hereof shall remain in full force and effect,
and all of the terms and provisions of this Agreement shall be deemed to be severable in nature.
If for any reason any term or provision containing a restriction set forth herein is held to cover
an area or to be for a length of time which is unreasonable, or in any other way is construed to be
too broad or to any extent invalid, such term or provision shall not be determined to be null, void
and of no effect, but to the extent the same is or would be valid or enforceable under Applicable
Law, any court of competent jurisdiction shall construe and interpret or reform this Agreement to
provide for a restriction having the maximum enforceable area, time period and other provisions
(not greater than those contained herein) as shall be valid and enforceable under Applicable Laws.
11.10 Entire Agreement
This Agreement (including the Exhibits and Schedules referred to herein) and the
Confidentiality Agreement embody the entire agreement and understanding of the parties hereto in
respect of the transactions contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those expressly set forth or
referred to herein or therein. This Agreement supersedes all prior writings, discussions and
understandings between the parties with respect to such transactions other than the Confidentiality
Agreement.
11.11 Bulk Sales or Transfer Laws
Each party hereto waives compliance by Purchaser and Sellers with the provisions of the bulk
sales or similar laws of all applicable jurisdictions.
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IN WITNESS WHEREOF, Sellers and Purchaser have caused this agreement to be signed by their
respective duly authorized officers as of the date first above written.
ABM INDUSTRIES INCORPORATED | ||||||||||||
By: | /s/ Xxxxxx X. Xxxxxx | |||||||||||
Name: | Xxxxxx X. Xxxxxx | |||||||||||
Title: | Executive Vice President & | |||||||||||
Chief Financial Officer | ||||||||||||
COMMAIR MECHANICAL SERVICES | ||||||||||||
By: | /s/ Xxxxxx X. Xxxxxxxxxx | |||||||||||
Name: | Xxxxxx X. Xxxxxxxxxx | |||||||||||
Title: | President | |||||||||||
CARRIER CORPORATION | ||||||||||||
By: | /s/ Xxxx X. Xxxxxx | |||||||||||
Name: | Xxxx X. Xxxxxx | |||||||||||
Title: | Director, Business Development |
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