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EXHIBIT 2.1
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Asset Purchase Agreement
among
The Wackenhut Corporation
and
Professional Employee Management, Inc.,
Professional Employee Management II, Inc.,
Professional Employee Management III, Inc.,
Professional Employee Management IV, Inc.,
Xxxxxxx X. Xxxxxxx
and
Xxxxxx X. Xxxxxx
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November 24, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS..............................................................................................1
1.1 Defined Terms..........................................................................1
1.2 Interpretation and Other Definitional Provisions.......................................6
ARTICLE II
PURCHASE AND SALE OF ASSETS..............................................................................7
2.1 Purchased Assets.......................................................................7
2.2 Excluded Assets........................................................................8
2.3 Assignment of Contracts and Rights.....................................................8
2.4 Purchase Price.........................................................................9
2.5 Purchase Price Allocation and Tax Returns.............................................15
2.6 Closing Date Payment Adjustment.......................................................16
2.7 Assumed Liabilities...................................................................17
2.8 Excluded Liabilities..................................................................18
2.9 No Expansion of Third Party Rights....................................................19
2.10 Time and Place of the Closing.........................................................19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WACKENHUT.............................................................19
3.1 Corporate Status......................................................................19
3.2 Corporate Power and Authority.........................................................20
3.3 Enforceability........................................................................20
3.4 No Commissions........................................................................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANIES AND THE SHAREHOLDERS......................................................................20
4.1 Corporate Status......................................................................20
4.2 Power and Authority...................................................................21
4.3 Enforceability........................................................................21
4.4 Capitalization........................................................................21
4.5 Shareholders of the Companies.........................................................21
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4.6 No Violation; Consents and Approvals..................................................22
4.7 Records of the Companies..............................................................22
4.8 Subsidiaries..........................................................................22
4.9 Financial Statements..................................................................22
4.10 Changes Since the Current Balance Sheet Date..........................................23
4.11 Liabilities of the Companies..........................................................24
4.12 Litigation............................................................................24
4.13 Environmental Matters.................................................................24
4.14 Real Estate...........................................................................27
4.15 Good Title to and Condition of Assets.................................................28
4.16 Compliance with Laws..................................................................28
4.17 Labor and Employment Matters..........................................................29
4.18 Employee Benefit Plans................................................................29
4.19 Tax Matters...........................................................................35
4.20 Insurance.............................................................................36
4.21 Receivables...........................................................................36
4.22 Licenses and Permits..................................................................36
4.23 Adequacy of the Assets; Relationships with Customers
and Suppliers; Affiliated Transactions................................................37
4.24 Intellectual Property.................................................................37
4.25 Contracts.............................................................................37
4.26 Investment Intent; Accredited Investor Status; Securities Documents...................38
4.27 Bank Accounts; Business Locations.....................................................38
4.28 No Commissions........................................................................38
4.29 Projections...........................................................................39
4.30 Accuracy of Information Furnished.....................................................39
ARTICLE V
CONDUCT OF BUSINESS PENDING THE CLOSING.................................................................39
5.1 Conduct of Business by Each Company Pending the Closing...............................39
ARTICLE VI
ADDITIONAL AGREEMENTS...................................................................................41
6.1 Further Assurances....................................................................41
6.2 Compliance with Covenants.............................................................41
6.3 Cooperation...........................................................................41
6.4 HSR Act...............................................................................41
6.5 Other Actions.........................................................................42
6.6 Contribution of Assets................................................................42
6.7 Notification of Certain Matters.......................................................42
6.8 Confidentiality; Publicity............................................................42
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6.9 No Other Discussions..................................................................43
6.10 Restrictive Covenant..................................................................43
6.11 Due Diligence Review..................................................................45
6.12 Trading in Wackenhut Common Stock.....................................................45
6.13 Delivery of Property Received by the Companies After Closing..........................45
6.14 Wackenhut and Wackenhut Subsidiaries Appointed Attorney
for the Companies.....................................................................46
6.15 Execution of Further Documents........................................................46
6.16 Employment Agreements.................................................................46
6.17 Payoff and Estoppel Letters...........................................................47
6.18 Shareholder and Director Vote.........................................................47
6.19 Closing Date Working Capital, Long Term Liabilities and Net Worth.....................47
6.20 Conduct of the Business Following the Closing.........................................47
6.21 Transfer of Insurance Rating..........................................................48
6.22 Name Changes..........................................................................48
6.23 Repayment of Shareholders Indebtedness................................................48
6.24 Tax Treatment.........................................................................48
6.25 Certain Tax Matters...................................................................48
6.26 Dissolution of Xxxxx, XxXxxxxx & Company, Inc.........................................48
6.27 Employee Tenure Credit................................................................48
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF WACKENHUT
AND THE WACKENHUT SUBSIDIARIES..........................................................................49
7.1 Accuracy of Representations and Warranties and
Compliance with Obligations...........................................................49
7.2 No Material Adverse Change or Destruction of Property.................................49
7.3 Corporate Certificate.................................................................50
7.4 Opinion of Counsel....................................................................50
7.5 Consents..............................................................................50
7.6 Licenses..............................................................................50
7.7 No Adverse Litigation.................................................................50
7.8 Board Approval........................................................................50
7.9 Employment Agreements.................................................................50
7.10 Delivery of Purchased Assets..........................................................50
7.11 HSR Act Compliance....................................................................51
7.12 Shareholder Indebtedness..............................................................51
7.13 Dissolution of Xxxxx, XxXxxxxx & Company, Inc.........................................51
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ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF
THE SHAREHOLDERS AND COMPANIES..........................................................................51
8.1 Accuracy of Representations and Warranties and
Compliance with Obligations...........................................................51
8.2 Delivery of Closing Date Payment......................................................51
8.3 No Order or Injunction................................................................52
8.4 Employment Agreements.................................................................52
8.5 Payment of Software Note..............................................................52
ARTICLE IX
REGISTRATION RIGHTS.....................................................................................52
9.1 Registration Rights for Wackenhut Shares; Filing of
Registration Statement................................................................52
9.2 Expenses of Registration..............................................................52
9.3 Furnishing of Documents...............................................................53
9.4 Amendments and Supplements............................................................53
9.5 Duration..............................................................................53
9.6 Further Information...................................................................53
9.7 Indemnification.......................................................................53
ARTICLE X
INDEMNIFICATION.........................................................................................55
10.1 Agreement by the Companies and the Shareholders to Indemnify..........................55
10.2 Agreement by Wackenhut to Indemnify...................................................57
10.3 Survival of Representations and Warranties............................................58
10.4 Remedies Cumulative...................................................................58
ARTICLE XI
SECURITIES LAW MATTERS..................................................................................58
11.1 Disposition of Shares.................................................................58
11.2 Legends...............................................................................59
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER.......................................................................59
12.1 Termination...........................................................................59
12.2 Effect of Termination.................................................................60
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ARTICLE XIII
GENERAL PROVISIONS......................................................................................60
13.1 Notices...............................................................................60
13.2 Entire Agreement......................................................................62
13.3 Expenses..............................................................................62
13.4 Amendment; Waiver.....................................................................62
13.5 Binding Effect; Assignment............................................................62
13.6 Counterparts..........................................................................63
13.7 Governing Law; Interpretation.........................................................63
13.8 Jurisdiction..........................................................................63
13.9 Arm's Length Negotiations.............................................................63
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
November 24, 1997 among THE WACKENHUT CORPORATION, a Florida corporation
("Wackenhut");and PROFESSIONAL EMPLOYEE MANAGEMENT, INC., PROFESSIONAL EMPLOYEE
MANAGEMENT II, INC., PROFESSIONAL EMPLOYEE MANAGEMENT III, INC. and PROFESSIONAL
EMPLOYEE MANAGEMENT IV, INC., each of which is a Florida corporation (each, a
"Company" and together, the "Companies"); and XXXXXXX X. XXXXXXX ("Xxxxxxx") and
XXXXXX X. XXXXXX ("Xxxxxx", and together with Xxxxxxx, the "Shareholders"), each
of whom is a resident of the State of Florida and who together constitute all of
the shareholders of the Companies.
RECITALS
The Companies own and operate a series of professional employer
organizations (collectively the "Business"). Wackenhut (acting through one or
more subsidiaries) desires to purchase, and the Companies' desire to sell,
substantially all of the business, properties and assets of the Companies on the
terms and subject to the conditions set forth in this Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein and in the Schedules attached
hereto, the following terms shall have the following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations promulgated under the Exchange Act, as in effect
on the date hereof.
"Base EBIT" of the Wackenhut Subsidiaries shall mean:
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(i) for fiscal year 1998, One Million Eight Hundred Ninety
Thousand Dollars ($1,890,000);
(ii) for fiscal year 1999, the greater of (a) One Million
Eight Hundred Ninety Thousand Dollars ($1,890,000), or (b) the actual
EBIT of the Wackenhut Subsidiaries for their 1998 fiscal year; and
(iii) for fiscal year 2000, the greater of (a) One Million
Eight Hundred Ninety Thousand Dollars ($1,890,000), (b) the actual EBIT
of the Wackenhut Subsidiaries for their 1998 fiscal year, or (c) the
actual EBIT of the Wackenhut Subsidiaries for their 1999 fiscal year.
"Clients" means and includes any past and present clients and customers
of any of the Companies, including, without limitation, any party to whom any of
the Companies' employees are or have been leased.
"CMC" means Xxxxx, XxXxxxxx & Company, Inc., a Florida corporation.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto, and any rules and regulations promulgated thereunder.
"EBIT" of the Wackenhut Subsidiaries for any fiscal year shall equal
the net income of the Wackenhut Subsidiaries for such fiscal year (determined in
accordance with GAAP), PLUS THE SUM OF (a) any interest expense of the Wackenhut
Subsidiaries for such fiscal year, and (b) the provision for federal or state
income taxes reflected on the financial statements of the Wackenhut Subsidiaries
for such fiscal year, MINUS THE SUM OF (w) any interest income earned by the
Wackenhut Subsidiaries during such fiscal year, (x) any federal or state income
tax refunds received by the Wackenhut Subsidiaries during such fiscal year, and
(y) any income arising from any sale by the Wackenhut Subsidiaries of securities
or other assets other than in the ordinary course of business during such fiscal
year; PROVIDED, HOWEVER, THAT, in calculating the EBIT of the Wackenhut
Subsidiaries for any fiscal year (a) the straight-line method shall be used for
computation of depreciation and amortization expense related to the Wackenhut
Subsidiaries, (b) the effects of any depreciation and amortization expense
related to purchase accounting adjustments arising out of the transactions
contemplated by this Agreement or any adjustments of the present assets or
liabilities of the Companies as a result of the transactions contemplated by
this Agreement shall be excluded, (c) the Wackenhut Subsidiaries shall be
charged by Wackenhut an annual overhead fee equal to (i) in the case of the
Wackenhut Subsidiaries' 1998 fiscal year, One Hundred Seventy-Five Thousand
Dollars ($175,000), (ii) in the case of the Wackenhut Subsidiaries' 1999 fiscal
year, Two Hundred Seventy-Five Thousand Dollars ($275,000), and (iii) in the
case of the Wackenhut Subsidiaries' 2000 fiscal year, Three Hundred Seventy-Five
Thousand
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Dollars ($375,000), (d) the Wackenhut Subsidiaries shall be charged by Wackenhut
for any costs or expenses paid by Wackenhut or its Affiliates to any third party
for goods or services provided to or for the benefit of the Wackenhut
Subsidiaries, and (e) any Receivables which have not been collected within 120
days of the date billed or invoiced shall be deemed to be uncollectible and
shall be written off.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor thereto, and any rules and regulations promulgated
thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor thereto, and any rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time as set forth in the standards
promulgated from time to time by the American Institute of Certified Public
Accountants.
"Governmental Authority" means (a) any nation, state, county, city or
other jurisdiction of any nature, (b) any federal, state, local, municipal,
foreign or other government, (c) any governmental or quasi-governmental
authority of any nature (including any agency, branch, department, official or
entity and any court or other tribunal), and (d) any body exercising or entitled
to exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, or any successor law, and any rules and regulations
promulgated thereunder.
"Incremental EBIT" of the Wackenhut Subsidiaries for any fiscal year
shall equal the difference between the EBIT of the Wackenhut Subsidiaries for
such fiscal year and the Base EBIT of the Wackenhut Subsidiaries for such fiscal
year.
"Independent Accountants" shall mean the firm of outside independent
certified public accountants selected by mutual agreement of Wackenhut and both
of the Shareholders from time to time for the purposes set forth herein or, if
Wackenhut and the Shareholders cannot at any time agree on the selection of such
firm, then the firm of outside independent certified public accountants selected
by mutual agreement of the Wackenhut Accountants and the PEM Accountants from
time to time for such purposes.
"IRS" means the United States Internal Revenue Service or any successor
agency, and to the extent relevant, the United States Department of the
Treasury.
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"Knowledge" means, whenever any representation of the Companies or
Shareholders is expressly qualified by reference to knowledge, the knowledge of
the Companies and the Shareholders after due and diligent inquiry, including,
without limitation, inquiry of the current officers, managers, employees of and
consultants to the Companies having authority over or responsibility for the
subject matter of such representation or warranty and a review of the books,
records and files of the Companies and the Shareholders containing information
relating to the subject matter of such representation or warranty.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational or other administrative order, decree,
constitution, law, ordinance, principle of common law, rule, regulation, statute
or treaty.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including, without limitation, any conditional sale or
other title retention agreement, any lease in the nature thereof, and the filing
of or agreement to give any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction in connection with such mortgage,
pledge, security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)"means a change (or effect), in the
condition (financial or otherwise), properties, assets, business, prospects,
liabilities, rights, obligations or operations which change (or effect)
individually or in the aggregate, is materially adverse to such condition,
properties, assets, business, prospects, liabilities, rights, obligations or
operations.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, estate, trust, unincorporated association, joint venture,
Governmental Authority or any other entity, of whatever nature.
"PEM" means Professional Employee Management, Inc., a Florida
corporation.
"PEM II" means Professional Employee Management II, Inc., a Florida
corporation.
"PEM III" means Professional Employee Management III, Inc., a Florida
corporation.
"PEM IV" means Professional Employee Management IV, Inc., a Florida
corporation.
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"PEM Accountants" means Coopers & Xxxxxxx LLP or, if Coopers & Xxxxxxx
LLP is unable or unwilling to serve as outside independent certified public
accountants on behalf of the Companies, such other firm of outside independent
certified public accountants selected unanimously by the Shareholders from time
to time.
"Register", "registered" and "registration" refer to a registration of
the offering and sale of securities effected by preparing and filing a
registration statement in compliance with the Securities Act and the declaration
or ordering of the effectiveness of such registration statement.
"Retrospective Policy" means the Liberty Mutual Insurance Company
Workers Compensation Policy No. WC-2-651-004125-016 maintained by the
Companies between April 1, 1996 and April 1, 1997.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor thereto, and any rules and regulations promulgated thereunder.
"Special Cause" shall mean (i) a Shareholder's commission of an act of
dishonesty, fraud or embezzlement affecting the Wackenhut Subsidiaries or their
Clients, or commission of an act (other than the good faith exercise of his
business judgment in the performance of his duties) resulting in material damage
to the Wackenhut Subsidiaries, or (ii) a Shareholder's conviction by any county,
state or federal court of any crime punishable by incarceration. Wackenhut shall
have the right, exercisable from time to time in Wackenhut's sole discretion, to
waive in writing any rights or remedies available under this Agreement upon the
occurrence of any event or circumstances which constitute Special Cause.
"Tax" or Taxes" means any tax (including any income tax, value added
tax, sales tax, property tax, gift tax, escheat tax, exercise tax, franchise
tax, intangible tax, payroll tax, withholding tax, social security tax and
unemployment tax), levy, assessment, tariff, duty (including customs duty),
deficiency or other fee, and any related charge or amount (including any fine,
penalty, interest or additional tax), imposed, assessed or collected by or under
the authority of any Governmental Authority or payable pursuant to any tax
sharing agreement or other contract relating to the sharing or payment of any
such tax, levy, assessment, tariff, duty, deficiency or fee.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form or other document or information filed
with or
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submitted to any Governmental Authority in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirements relating to any Tax.
"Wackenhut Accountants" means Xxxxxx Xxxxxxxx LLP or such other firm of
outside independent certified public accountants used from time to time by
Wackenhut to conduct the annual audit of its financial statements.
"Wackenhut Shares" means any shares of Wackenhut Series B Common Stock
issued by Wackenhut hereunder in full or partial payment of any Earnout Payment.
"Wackenhut Series B Common Stock" means the Wackenhut Series B Common
Stock, par value $.10 per share.
"Wackenhut Subsidiaries" means the direct or indirect wholly-owned
subsidiaries formed by Wackenhut for purposes of acquiring the Purchased Assets
(as defined below).
1.2 INTERPRETATION AND OTHER DEFINITIONAL PROVISIONS.
(a) When a reference is made in this Agreement to article,
section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated.
(b) All terms defined in this Agreement shall have the
meanings ascribed to them when used in any certificates or other
documents made or delivered pursuant hereto or in connection herewith
unless the context otherwise requires.
(c) All terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(d) All headings contained in this Agreement and the Schedules
and Exhibits attached hereto are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement
or the attached Schedules and Exhibits.
(e) All matters of an accounting nature in connection with
this Agreement and the transactions contemplated hereby shall be
determined in accordance with GAAP applied on a basis consistent with
prior periods, where applicable.
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(f) As used in this Agreement, the neuter gender shall also
denote the masculine and feminine, and the masculine gender shall also
denote the neuter and feminine, where the context so permits.
(g) Whenever the words "include" "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the
words "without limitation."
(h) Any term defined in any other Section of this Agreement
shall have the meaning ascribed to such term in such Section as used
throughout this Agreement and the Schedules attached hereto unless the
context otherwise required.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASED ASSETS. Subject to the terms and conditions of this
Agreement, each Company agrees to and will at Closing sell, convey, transfer,
assign and deliver to one or more Wackenhut Subsidiaries designated by
Wackenhut, and such Wackenhut Subsidiaries shall purchase, all of the Companies'
business, properties and assets of every kind and description, whether real,
personal or mixed, tangible or intangible, wherever located (other than the
Excluded Assets (as defined below)) as shall exist on the Closing Date (as
defined below), whether or not appearing on the Current Balance Sheet (as
defined below) (collectively, the "Purchased Assets"). Without limiting the
generality of the foregoing, the Purchased Assets shall include the following:
(a) all tangible personal property, including, without
limitation, all machinery, equipment, leasehold improvements, vehicles,
inventories, supplies, furniture and fixtures (whether located at or on
the Leased Premises (as defined below) or elsewhere);
(b) to the extent assignable, all permits, licenses,
certificates of authority, franchises, accreditations, registrations
and other authorizations issued or used in connection with the
Business;
(c) all cash, cash equivalents, marketable securities,
documents, instruments, deposits, rights of offset under Contracts,
security deposits, escrows, prepaid taxes or other advance payments,
work in process and receivables of each Company (the "Receivables"),
including without limitation, all trade accounts receivable, notes
receivable and receivables from manufacturers, insurance companies,
service contract providers and any other vendors or suppliers of each
Company;
(d) all leases covering the Leased Premises (as defined below)
and any leases covering machinery, equipment, tools, furniture,
fixtures and other tangible assets;
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(e) subject to SECTION 2.3, all rights in, to or under any
agreements, contracts, arrangements, obligations, promises or
undertakings made or entered into by each Company or by which it or its
properties or assets are bound, whether written or oral, express or
implied (collectively, the "Contracts");
(f) all choses in action, causes of action, claims and other
rights of every kind and nature of each Company against any third
party;
(g) all operating data and records of each Company, including
without limitation, all employee records for the present and previous
employees of, and independent contractors retained by, each Company,
customer and client lists and records of past, present and prospective
customers and clients, financial, accounting and credit records,
training materials, operating manuals, human resource manuals and
materials, marketing brochures and materials, sales materials, computer
data, computer software, correspondence, budgets and other similar
documents and records;
(h) all trademarks, trademark applications, trade names,
service marks, trade dress, fictitious names, corporate names, patents,
patent applications, trade secrets, technology, know-how, formulae,
designs and drawings, computer software, slogans, copyrights,
processes, operating rights, licenses and permits and other
intellectual property and intangible property and rights of each
Company, in each such case, and any goodwill of the business connected
with the use of and symbolized by each trademark, tradename, service
xxxx and trade dress and all other rights necessary for the
continuation of the reality symbolized by any trademarks included
therein and copyrights related thereto (collectively, the "Intellectual
Property"); and
(i) all insurance proceeds arising in connection with damage
to Purchased Assets occurring after the date hereof and prior to the
Closing Date, to the extent not expended on the repair or restoration
of the Purchased Assets.
2.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary set forth
in SECTION 2.1, the Purchased Assets shall not include the following assets of
each Company: (a) the Purchase Price (as defined below) and other rights of each
Company under this Agreement; (b) the shares of capital stock of each Company
which are owned and held by the Company as treasury shares; (c) the corporate
minute books and stock records of each Company and (d) cash in the amount of
Four Hundred Seventy-Nine Thousand Seven Hundred Eighty-Five Dollars ($479,785)
representing the reserve maintained by the Companies on account of the
Retrospective Policy (collectively, the "Excluded Assets").
2.3 ASSIGNMENT OF CONTRACTS AND RIGHTS. Notwithstanding anything to the
contrary set forth in this Agreement, this Agreement shall not constitute an
assignment of any claim, contract, license, franchise, lease, commitment, sales
order, sales contract, supply contract, service agreement, purchase order,
purchase commitment or other right or benefit if an attempted assignment
thereof,
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without the consent of a third party thereto, would constitute a breach thereof
or in any way adversely affect the rights of the Wackenhut Subsidiaries
thereunder following the Closing. If such consent is not obtained, or if any
attempt at an assignment thereof would be ineffective or would adversely affect
the rights of the Wackenhut Subsidiaries thereunder following the Closing so
that the Wackenhut Subsidiaries would not in fact receive all such rights, the
Companies shall (i) cooperate with Wackenhut and the Wackenhut Subsidiaries (at
the expense of Wackenhut and the Wackenhut Subsidiaries) to the extent necessary
to provide for the Wackenhut Subsidiaries the benefits under such claim,
contract, license, franchise, lease, commitment, sales order, sales contract,
supply contract, service agreement, purchase order, purchase commitment or other
right or benefit, including enforcement for the benefit of the Wackenhut
Subsidiaries of any and all rights of the Companies against a third party
thereto arising out of the breach or cancellation by such third party or
otherwise, (ii) use reasonable commercial efforts to secure the consents of the
applicable third parties to the assignment of the foregoing rights and benefits,
and (iii) assign to the appropriate Wackenhut Subsidiaries any such right or
benefits immediately upon receipt of the appropriate consents.
2.4 PURCHASE PRICE. The aggregate purchase price to be paid by the
Wackenhut Subsidiaries to the Companies (the "Purchase Price") shall consist of
an initial payment (the "Closing Date Payment") and a series of contingent
payments payable on account of the performance of the Wackenhut Subsidiaries
during their 1998, 1999 and 2000 fiscal years, each of which shall be calculated
and paid as set forth below. Notwithstanding anything to the contrary set forth
herein, in no event shall the aggregate Purchase Price (including the initial
payment and all such contingent payments) exceed Fifty Million Six Hundred Sixty
Thousand Dollars ($50,660,000).
(a) CLOSING DATE PAYMENT. The Closing Date Payment shall equal
Eighteen Million Eight Hundred Thousand Dollars ($18,800,000) MINUS THE
SUM OF (i) the positive amount, if any, by which the aggregate net
worth of the Companies (calculated in accordance with GAAP) as of the
Closing Date is less than One Million Five Hundred Eighteen Thousand
Eight Hundred Thirty-Four Dollars ($1,518,834) (such amount being
referred to as the "Downward Net Worth Adjustment"), (ii) the positive
amount, if any, by which the Long Term Liabilities of the Companies (as
such term is used in the Financial Statements (as defined below)) as of
the Closing Date exceeds Forty-Three Thousand Five Hundred Eighty-Six
Dollars ($43,586) (such amount being referred to as the "Long Term
Liability Adjustment"), and (iii) the positive amount, if any, by which
the Working Capital of the Companies as of the Closing Date is less
than One Million One Hundred Fifty-Two Thousand Five Hundred and
Seventy-One Dollars ($1,152,571) (such amount being referred to as the
"Working Capital Adjustment") PLUS THE POSITIVE AMOUNT, if any, by
which the aggregate net worth of the Companies (calculated in
accordance with GAAP) as of the Closing Date is more than One Million
Five Hundred Eighteen Thousand Eight Hundred Thirty-Four Dollars
($1,518,834) (such amount being referred to as the "Upward Net Worth
Adjustment," and together with the Downward Net Worth Adjustment, the
Working Capital Adjustment and the Long Term Liability Adjustment, as
the "Closing Date Payment Adjustment"); PROVIDED, HOWEVER, THAT, the
Companies shall not be charged more than once
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for any single shortfall (e.g. if the Long Term Liabilities are in
excess of $43,586, and such excess causes a shortfall in the required
Net Worth, then such amount shall only be charged once against the
Purchase Price). At least two days prior to the Closing, Wackenhut and
the Companies shall estimate by mutual agreement the amount of the
Closing Date Payment (the "Estimated Closing Date Payment") and shall
pay such Estimated Closing Date Payment on the Closing Date as follows:
(i) the Wackenhut Subsidiaries shall pay to the Companies an amount
equal to the Estimated Closing Date Payment minus the sum of Five
Hundred Thousand Dollars ($500,000) by certified check or wire transfer
of immediately available funds, and (ii) the Wackenhut Subsidiaries
shall retain Five Hundred Thousand Dollars ($500,000) (the "Closing
Date Payment Reserve") to be held and disposed of in accordance with
SECTION 2.6 below.
(b) EARNOUT PAYMENTS. In addition to the Closing Date Payment,
the Wackenhut Subsidiaries shall pay to the Companies on account of
each of the 1998, 1999 and 2000 fiscal years of the Wackenhut
Subsidiaries an amount equal to the product of the Incremental EBIT of
the Wackenhut Subsidiaries for such fiscal year, multiplied by five (5)
(each such payment being referred to individually as an "Earnout
Payment" and together as the "Earnout Payments").
(c) CALCULATION OF EARNOUT PAYMENTS. No later than ten (10)
business days following the date on which Wackenhut is required to file
its annual report on Form 10-K with the SEC for any fiscal year on
account of which an Earnout Payment may be due, Wackenhut shall prepare
and deliver to the Companies a certificate, verified as to accuracy by
the Wackenhut Accountants (the "Earnout Certificate") (i) attaching a
copy of the audited financial statements of the Wackenhut Subsidiaries
for such fiscal year, (ii) setting forth the EBIT, Base EBIT and
Incremental EBIT of the Wackenhut Subsidiaries for such fiscal year,
and (iii) designating the Earnout Payment, if any, payable by the
Wackenhut Subsidiaries to the Companies on account of such fiscal year.
If within ten (10) business days after the Earnout Certificate is
delivered to the Companies, the Companies shall not have given written
notice to Wackenhut setting forth in detail any objection of the
Companies to the Earnout Payment, then such determination of the
Earnout Payment shall be final and binding on the parties hereto. In
the event that the Companies, within such 10 business day period
following delivery of the Earnout Certificate, give written notice to
Wackenhut of any objection to such determination of the Earnout
Payment, Wackenhut and the Companies shall endeavor to reach agreement
on all differences within the 10 business day period following the
giving of notice by the Companies of their objection. To the extent
that any portion of the Earnout Payment is undisputed by the parties at
the end of the 10 business day period following the giving of the
notice of objection, such undisputed portion shall be paid, without
interest, at that time. If the parties are unable to reach agreement
within such 10 business day period, then the matter shall be submitted
to the Independent Accountants for determination of the Earnout Payment
due to the Companies on account of such fiscal year, which
determination shall be final and binding on the parties. In connection
with the resolution of any dispute, each party shall pay its own fees
and expenses, including, without
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limitation, their own legal, accounting and consultant fees and
expenses; PROVIDED, HOWEVER, that Wackenhut shall pay fifty percent
(50%) of the cost and expenses of the Independent Accountants and the
Companies and Shareholders, jointly and severally, shall pay the other
fifty percent (50%) of the cost and expenses of the Independent
Accountants. If the actual Earnout Payment determined to be due by the
Independent Accountants is greater than the amount paid by the
Wackenhut Subsidiaries pursuant to SECTION 2.4(D) below, then the
Wackenhut Subsidiaries shall within ten (10) business days of receipt
of the determination from the Independent Accountants pay such
difference to the Companies (without interest). If the actual Earnout
Payment determined to be due by the Independent Accountants is less
than the amount paid by the Wackenhut Subsidiaries pursuant to SECTION
2.4(D) below, then the Companies and the Shareholders shall be jointly
and severally obligated to pay and shall pay such difference to the
Wackenhut Subsidiaries (without interest) within ten (10) business days
of receipt of the determination from the Independent Accountants. If
the Companies and Shareholders shall fail to pay such amount when due,
Wackenhut shall have the right (but not the obligation), in addition to
any other remedies which it may have, to deem such amount to be
Wackenhut Indemnifiable Damages in accordance with ARTICLE X (provided
that the Wackenhut Indemnification Threshold shall not be applicable to
such amount and such amount shall not count against the Wackenhut
Indemnification Cap). Notwithstanding anything to the contrary set
forth herein, the aggregate amount of the Earnout Payments hereunder
shall not exceed Thirty-One Million Eight Hundred Sixty Thousand
Dollars ($31,860,000).
(d) PAYMENT OF EARNOUT PAYMENTS. The Earnout Payment, if any,
payable on account of the Wackenhut Subsidiaries' 1998 and 1999 fiscal
years shall be payable by the Wackenhut Subsidiaries to the Companies
(in each case, net of any set off permitted to be made on account of
Wackenhut Indemnifiable Damages pursuant to ARTICLE X hereof) no later
than 15 business days following the date on which Wackenhut is required
to file its annual report on Form 10-K with the SEC on account of such
year, and the Earnout Payment, if any, payable on account of the
Wackenhut Subsidiaries' 2000 fiscal year shall be payable by the
Wackenhut Subsidiaries to the Companies (net of any set off permitted
to be made on account of Wackenhut Indemnifiable Damages pursuant to
ARTICLE X hereof) no later than July 31, 2001, with interest on such
final payment from April 1, 2001 through the date of payment at the
rate of six and one-half percent (6 1/2%) per annum (compounded
monthly). Any Earnout Payment required to be paid under this Agreement
may be paid, at the election of Wackenhut, in cash (by certified check
or wire transfer of immediately available funds), in shares of
Wackenhut Series B Common Stock or in any combination thereof. If
Wackenhut shall elect to pay all or any portion of an Earnout Payment
in shares of Wackenhut Series B Common Stock, then Wackenhut shall
issue that number of shares of Wackenhut Series B Common Stock
determined by dividing that portion of the Earnout Payment to be paid
in shares of Wackenhut Series B Common Stock, by the average closing
price of a share of Wackenhut Series B Common Stock on the New York
Stock Exchange (the "NYSE") for the five consecutive trading days
preceding the third trading day prior to the date on which such shares
are delivered by Wackenhut to the Companies. Amounts
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payable under this SECTION 2.4 shall be due and payable regardless of
whether either or both of the Shareholders are employed by the
Wackenhut Subsidiaries at the time such payment is due, PROVIDED
HOWEVER, THAT, if either shareholder (the "Breaching Shareholder")
shall (i) breach his obligations under SECTION 6.10 of this Agreement
or SECTION 7 of his respective Employment Agreement, (ii) resign his
employment with the Wackenhut Subsidiaries (or with Wackenhut or any
other Wackenhut Affiliate by which he may be employed), or (iii) have
his employment with the Wackenhut Subsidiaries (or with Wackenhut or
any other Wackenhut Affiliate by which he may be employed) terminated
for Special Cause, then Wackenhut shall have the right exercisable in
its sole discretion not to pay that portion of the Earnout Payments
thereafter required to be paid hereunder equal to the Breaching
Shareholder's proportionate present interest in the Companies (i.e. if
Xxxxxxx shall be the Breaching Shareholder, then the amount of any
Earnout Payments thereafter required to be paid hereunder shall be
reduced by sixty-five percent (65%) (or by sixty-percent (60%) if the
Closing Date shall occur after December 31, 1997 and Xxxxxxx shall have
on or prior to the Closing Date transferred a five-percent (5%)
interest in the Companies to Xxxxxx); and if Xxxxxx shall be the
Breaching Shareholder, then the amount of any Earnout Payments
thereafter required to be paid hereunder shall be reduced by
thirty-five percent (35%) (or by forty-percent (40%) if the Closing
Date shall occur after December 31, 1997 and Xxxxxxx shall have on or
prior to the Closing Date transferred a five-percent (5%) interest in
the Companies to Xxxxxx), and if Wackenhut shall elect not to pay such
portion of the Earnout Payments, then the Companies shall be deemed to
have automatically waived and released the right to receive such
payments.
(e) DETERMINATION OF ADJUSTMENT OF EARNOUT PAYMENTS. The
Earnout Payment paid or payable on account of any fiscal year shall be
subject to adjustment upward or downward if there shall be any
adjustments to the Wackenhut Subsidiaries' audited financial statements
for such fiscal year which are made by Wackenhut on or prior to the
date on which Wackenhut is required to file its annual report on Form
10-K with the SEC for the fiscal year following the subject fiscal
year. If there shall be any such adjustment to the Wackenhut
Subsidiaries' audited financial statements for any fiscal year on
account of which an Earnout Payment was paid or is payable, Wackenhut
shall prepare and deliver to the Companies a certificate, verified as
to accuracy by the Wackenhut Accountants (the "Earnout Adjustment
Certificate") (i) attaching a copy of the audited financial statements
of the Wackenhut Subsidiaries for such fiscal year as revised to
reflect any adjustments thereto, (ii) setting forth the adjusted EBIT,
Base EBIT and Incremental EBIT of the Wackenhut Subsidiaries for such
fiscal year, and (iii) setting forth any overpayment or underpayment in
the Earnout Payment, if any, payable by the Wackenhut Subsidiaries to
the Companies on account of such fiscal year. If within ten (10)
business days after the Earnout Adjustment Certificate is delivered to
the Companies, the Companies shall not have given written notice to
Wackenhut setting forth in detail any objection of the Companies to the
Earnout Adjustment Certificate, then such determination of the earnout
adjustment shall be final and binding on the parties hereto. In the
event that the Companies, within such 10 business day period following
delivery of the Earnout Adjustment Certificate, give written notice to
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Wackenhut of any objection to such determination of the earnout
adjustment, Wackenhut and the Companies shall endeavor to reach
agreement on all differences within the 10 business day period
following the giving of notice by the Companies of their objection. To
the extent that any portion of the earnout adjustment is undisputed by
the parties at the end of the 10 business day period following the
giving of the notice of objection, such undisputed portion shall be
paid, without interest, at that time. If the parties are unable to
reach agreement within such 10 business day period, then the matter
shall be submitted to the Independent Accountants for determination of
the earnout adjustment due on account of such fiscal year, which
determination shall be final and binding on the parties. In connection
with the resolution of any dispute, each party shall pay its own fees
and expenses, including, without limitation, their own legal,
accounting and consultant fees and expenses; PROVIDED, HOWEVER, that
Wackenhut shall pay fifty percent (50%) of the cost and expenses of the
Independent Accountants and the Companies and Shareholders shall,
jointly and severally, pay the other fifty percent (50%) of the cost
and expenses of the Independent Accountants.
(f) PAYMENTS ON ACCOUNT OF ADJUSTMENT OF EARNOUT PAYMENTS. If
any adjustment in the Wackenhut Subsidiaries' audited financial
statements for any fiscal year shall under SECTION 2.4(E) above result
in an increase in the Earnout Payment payable on account of such fiscal
year, then the Wackenhut Subsidiaries shall pay to the Companies any
incremental Earnout Payment, without interest, no later than ten (10)
business days following the delivery of the Earnout Adjustment
Certificate (or, if written objection to such calculation has been
timely given by the Companies to Wackenhut, then within 10 business
days following the determination of the Earnout Payment by the
Independent Accountants). If any such adjustment in the Wackenhut
Subsidiaries audited financial statements for any fiscal year shall
under SECTION 2.4(E) above result in a decrease in the Earnout Payment
payable on account of such fiscal year, then the Companies and the
Shareholders shall be jointly and severally obligated to, and shall,
repay to the Wackenhut Subsidiaries any overpayment in the Earnout
Payment, without interest, no later than ten (10) business days
following the delivery of the Earnout Adjustment Certificate (or, if
written objection to such calculation has been timely given by the
Companies to Wackenhut, then within 10 business days following the
determination of the Earnout Payment by the Independent Accountants).
If the Companies and the Shareholders shall fail to repay any
overpayment in the Earnout Payment payable on account of any fiscal
year when due, then the Wackenhut Subsidiaries shall have the right
(but not the obligation), in addition to any other remedies which they
may have, to deem any portion of such overpayment which remains unpaid
to be Wackenhut Indemnifiable Damages under ARTICLE X (provided that
the Wackenhut Indemnification Threshold shall not be applicable to any
such amount and such amount shall not count against the Wackenhut
Indemnification Cap).
(g) ACCELERATION OF EARNOUT PAYMENTS. Notwithstanding anything
to the contrary set forth herein, if (i) the Wackenhut Subsidiaries
shall sell, transfer or otherwise dispose of a material part of their
"book of business" (i.e. leased employees) taken on an aggregate basis
(PROVIDED, HOWEVER, THAT, the Wackenhut Subsidiaries shall not be
deemed to have disposed
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of any portion of their "book of business" if they shall either (x)
elect to cease doing business with any of their clients or if any of
their clients shall elect to cease doing business with the Wackenhut
Subsidiaries or (y) transfer any of their employees to another direct
or indirect wholly owned subsidiary of Wackenhut principally for the
purpose of obtaining or maintaining reduced unemployment insurance
rates), (ii) Wackenhut shall cease to own, directly or indirectly, a
majority of the capital stock of the Wackenhut Subsidiaries or their
successors, other than as a result of a public offering by any
Affiliate of Wackenhut that directly or indirectly owns the capital
stock of the Wackenhut Subsidiaries or their successors, or other than
the distribution by Wackenhut to its shareholders of the capital stock
of any Affiliate of Wackenhut that directly or indirectly owns the
capital stock of the Wackenhut Subsidiaries or their successors, (iii)
the employment of both of the Shareholders by the Wackenhut
Subsidiaries (and by Wackenhut and any other Wackenhut Affiliate by
which he may be employed) shall be terminated without "cause" (as
defined in the respective Employment Agreements), (iv) any of the
Wackenhut Subsidiaries shall merge or consolidate with or into another
entity (other than a merger or consolidation involving only the
Wackenhut Subsidiaries themselves), in each case, without the consent
of the Companies or (v) any Person or group (as such term is defined in
Section 13(d) of the Exchange Act and the rules promulgated thereunder)
(other than Xxxxxx Xxxxxxxxx, members of his family or his heirs and
descendants, or trusts of which any of Xxxxxx Xxxxxxxxx, members of his
family or his heirs and descendants are beneficiaries, or any group
consisting of Xxxxxx Xxxxxxxxx, members of his family or his heirs and
descendants, or trusts of which any of such parties are beneficiaries)
shall acquire a majority of the issued and outstanding shares of the
voting capital stock of Wackenhut (any such event set forth in items
(i) through (v) above being referred to as a "Disposition"), then the
Companies shall have the right, exercisable by delivery of a written
notice (an "Earnout Acceleration Notice") to Wackenhut within 30
calendar days following the receipt by the Companies of notice of any
Disposition to elect to accelerate the payment of the remaining Earnout
Payments. If the Companies shall elect to so accelerate the payment of
the remaining Earnout Payments, then the amount of the accelerated
Earnout Payments shall equal the average of the Earnout Payments, if
any, paid or payable on account of each of the previous fiscal years
and the fiscal year in which the Disposition occurs (based upon an
annualized EBIT of the Wackenhut Subsidiaries for that portion of the
fiscal year occurring prior to the Disposition) multiplied by the
number of then remaining fiscal years on account of which Wackenhut may
be obligated to pay Earnout Payments (including the fiscal year in
which the Disposition occurs). If the Companies shall deliver an
Earnout Acceleration Notice, then Wackenhut shall cause the Wackenhut
Accountants to prepare an audit of the financial statements of the
Wackenhut Subsidiaries for the period of the then current fiscal year
which occurs prior to the Disposition, and Wackenhut shall prepare and
deliver to the Companies a certificate, verified as to accuracy by the
Wackenhut Accountants (the "Accelerated Earnout Certificate") (i)
attaching a copy of the audited financial statements of the Wackenhut
Subsidiaries for such period, (ii) setting forth the annualized EBIT,
Base EBIT and Incremental EBIT on account of such fiscal year, and
(iii) setting forth the amount of the accelerated Earnout Payment, if
any, payable by the Wackenhut Subsidiaries to the Companies. If within
ten (10) business
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days after the Accelerated Earnout Certificate is delivered to the
Companies, the Companies shall not have given written notice to
Wackenhut setting forth in detail any objection of the Companies to the
Accelerated Earnout Payment, then such determination of the Accelerated
Earnout Payment shall be final and binding on the parties hereto. In
the event that the Companies, within such 10 business day period
following delivery of the Accelerated Earnout Certificate, give written
notice to Wackenhut of any objection to such determination of the
Accelerated Earnout Payment, Wackenhut and the Companies shall endeavor
to reach agreement on all differences within the 10 business day period
following the giving of notice by the Companies of their objection. To
the extent that any portion of the Accelerated Earnout Payment is
undisputed by the parties at the end of the 10 business day period,
such undisputed portion shall be paid, without interest, at that time.
If the parties are unable to reach agreement within such 10 business
day period following the giving of the notice of objection, then the
matter shall be submitted to the Independent Accountants for
determination of the Accelerated Earnout Payment, which determination
shall be final and binding on the parties. In connection with the
resolution of any dispute, each party shall pay its own fees and
expenses, including, without limitation, their own legal, accounting
and consultant fees and expenses; PROVIDED, HOWEVER, that Wackenhut
shall pay fifty percent (50%) of the cost and expenses of the
Independent Accountants and the Companies and Shareholders, jointly and
severally, shall pay the other fifty percent (50%) of the cost and
expenses of the Independent Accountants. The Accelerated Earnout
Payment, if any, payable under this Section shall be payable without
interest, shall be in lieu of any further Earnout Payments otherwise
due from the Wackenhut Subsidiaries hereunder and shall in no event
exceed the difference between Thirty-One Million Eight Hundred Sixty
Thousand Dollars ($31,860,000) and the aggregate amount of Earnout
Payments previously paid or payable hereunder by the Wackenhut
Subsidiaries to the Companies.
(h) GUARANTY. As a material inducement to the Shareholders and
the Companies to enter into this Agreement, Wackenhut hereby absolutely
and unconditionally guarantees to the Shareholders and the Companies
the due and punctual payment of all amounts owed to the Shareholders
and the Companies under this Agreement. The liability of Wackenhut
under this Agreement shall be joint and several with the liability of
the Wackenhut Subsidiaries. In the event of a default in payment by the
Wackenhut Subsidiaries, Wackenhut shall make payment of all such
amounts within seven (7) business days of Wackenhut's receipt of
written notice of such default. The guarantee of Wackenhut contained in
this SECTION 2.4(H) shall be a continuing guarantee and may not be
assigned, revoked, modified or amended by Wackenhut without the consent
of both of the Shareholders, which may be given or withheld in the sole
and absolute discretion of the Shareholders. Wackenhut agrees to pay
all attorneys' fees, paralegals' fees and all other costs and expenses
which may be incurred by the Shareholders and the Companies in the
enforcement of Wackenhut's obligations under this SECTION 2.4(H).
2.5 PURCHASE PRICE ALLOCATION AND TAX RETURNS. The purchase price
as determined for tax purposes only (which includes the amount of cash and other
property paid to the Companies plus
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liabilities assumed pursuant to this Agreement) shall be allocated among the
Purchased Assets of the Companies and the covenants set forth in SECTION 6.10
below, and such allocated purchase price shall be further allocated among the
particular Purchased Assets of each Company. The purchase price (including the
Earnout Payments, if any, payable hereunder) shall be allocated as of the
Closing Date by mutual agreement of the parties and shall be reflected in a
certificate signed by the parties on the Closing Date (the "Purchase Price
Allocation Certificate") (which allocation shall be subject to adjustment by the
parties upon the determination of the Actual Closing Date Payment which is made
pursuant to SECTION 2.6). Notwithstanding anything to the contrary set forth
herein, the amount allocated to the tangible assets of the Companies shall be no
less than the book value thereof as reflected on the Closing Date Balance Sheet
and the amount allocated to the covenants set forth in SECTION 6.10 below shall
be no less than Fifty Thousand Dollars ($50,000). The parties agree that all Tax
Returns, including, without limitation, IRS Form 8594, shall be consistent with
the allocation set forth on SCHEDULE 2.5 (as adjusted by Wackenhut) and the
Companies and the Shareholders shall not take any position which is inconsistent
therewith.
2.6 CLOSING DATE PAYMENT ADJUSTMENT. Within sixty (60) days following
the Closing Date, Wackenhut shall cause the Wackenhut Accountants to prepare an
audit of the financial statements of the Companies for the portion of the then
current fiscal year through and including the Closing Date, and Wackenhut shall
prepare and deliver to the Companies a certificate, verified as to accuracy by
the Wackenhut Accountants (the "Closing Date Payment Certificate") (i) attaching
a copy of the audited financial statements of the Companies for such period, and
(ii) setting forth the actual amount of the Closing Date Payment (which actual
amount is referred to herein as the "Actual Closing Date Payment"), which shall
be determined on a basis consistent with the determination of the Estimated
Closing Date Payment. If within ten (10) business days after the Closing Date
Payment Certificate is delivered to the Companies, the Companies shall not have
given written notice to Wackenhut setting forth in detail any objection of the
Companies to the Actual Closing Date Payment, then such determination of the
Actual Closing Date Payment shall be final and binding on the parties hereto. In
the event that the Companies, within such 10 business day period following
delivery of the Closing Date Payment Certificate, give written notice to
Wackenhut of any objection to such determination of the Actual Closing Date
Payment, Wackenhut and the Companies shall endeavor to reach agreement on all
differences within the 10 business day period following the giving of notice by
the Companies of their objection. To the extent that any portion of the Actual
Closing Date Payment is undisputed by the parties at the end of the 10 business
day period following the giving of the notice of objection and such undisputed
portion of the Actual Closing Date Payment exceeds the Estimated Closing Date
Payment, then Wackenhut shall pay such undisputed portion to the Companies (to
the extent not already paid by Wackenhut to the Companies) without interest, at
that time. If the parties are unable to reach agreement within such 10 business
day period, then the matter shall be submitted to the Independent Accountants
for determination of the Actual Closing Date Payment due to the Companies, which
determination shall be final and binding on the parties. In connection with the
resolution of any dispute, each party shall pay its own fees and expenses,
including, without limitation, their own legal, accounting and consultant fees
and expenses; PROVIDED, HOWEVER, that Wackenhut shall pay fifty percent (50%) of
the cost and expenses of the Independent Accountants and the Companies and
Shareholders shall jointly and severally pay
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the other fifty percent (50%) of the cost and expenses of the Independent
Accountants. If the Estimated Closing Date Payment is greater than the Actual
Closing Date Payment, then the Companies and the Shareholders shall be jointly
and severally obligated to repay, in the manner set forth below, to the
Wackenhut Subsidiaries, within ten (10) business days following the date of
delivery of the Closing Date Payment Certificate or, if disputed, the date of
the determination of the Actual Closing Day Payment by the Independent
Accountants, the difference between the Estimated Closing Date Payment and the
Actual Closing Date Payment, with interest on such difference from the Closing
Date through the date of payment at the rate of six and one-half percent (6
1/2%) per annum (compounded monthly). As collateral security for the Companies'
and Shareholders' obligations to repay such amount, the Wackenhut Subsidiaries
shall set aside and hold the Closing Date Payment Reserve, and the Companies and
the Shareholders hereby xxxxx Xxxxxxxxx and the Wackenhut Subsidiaries a first
priority security interest in the Closing Date Payment Reserve and any and all
interest which may accrue thereon. If the Estimated Closing Date Payment is
greater than the Actual Closing Date Payment, but such difference is less than
the amount of the Closing Date Payment Reserve, then the Wackenhut Subsidiaries
shall set off such difference against the Closing Date Payment Reserve and
shall, within ten (10) business days following the date of delivery of the
Closing Date Payment Certificate or, if disputed, the date of the determination
of the Actual Closing Date Payment by the Independent Accountants, return the
balance of the Closing Date Payment Reserve, if any, to the Companies, together
with interest on such balance from the Closing Date through the date of payment
at the rate of six and one-half percent (6 1/2%) per annum (compounded monthly).
If the Estimated Closing Date Payment is equal to the Actual Closing Date
Payment then the Wackenhut Subsidiaries shall, within ten business days
following the date of delivery of the Closing Date Payment Certificate or, if
disputed, the date of the determination of the Actual Closing Date Payment by
the Independent Accountants, return the balance of the Closing Date Payment
Reserve to the Companies, together with interest thereon from the Closing Date
through the date of payment at the rate of six and one-half percent (6 1/2%) per
annum (compounded monthly). If the Estimated Closing Date Payment is greater
than the Actual Closing Date Payment by more than the amount of the Closing Date
Payment Reserve, then Wackenhut shall set off such difference against the
Closing Date Payment Reserve, and the Companies and the Shareholders shall be
jointly and severally obligated to pay and shall pay the balance of such
shortfall to the Wackenhut Subsidiaries within ten (10) business days of receipt
of the Closing Date Payment Certificate. If the Companies and Shareholders shall
fail to pay such amount when due, then the Wackenhut Subsidiaries shall have the
right (but not the obligation), in addition to any other remedies which they may
have, to deem such amount to be Wackenhut Indemnifiable Damages in accordance
with ARTICLE X (provided that the Wackenhut Indemnification Threshold shall not
be applicable to any such amount and such amount shall not counted against the
Wackenhut Indemnification Cap). If the Actual Closing Date Payment is greater
than the Estimated Closing Date Payment, then the Wackenhut Subsidiaries shall
pay to the Companies the sum of (i) the full amount of the Closing Date Payment
Reserve, and (ii) the difference between the Actual Closing Date Payment and the
Estimated Closing Date Payment, to the extent that Wackenhut has not already
paid all or any portion of such amount to the Companies, in each case, together
with interest thereon from the Closing Date through the date of payment at the
rate of six and one-half percent (6 1/2%) per annum (compounded monthly).
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2.7 ASSUMED LIABILITIES. The Wackenhut Subsidiaries shall at the
Closing assume and agree to pay, discharge and perform when lawfully required
all of the obligations, duties and liabilities of the Companies which are (a)
reflected on the Current Balance Sheet (as defined below) and not theretofore
paid or discharged, (b) incurred since the date of the Current Balance Sheet but
on or prior to the Closing Date in the ordinary course of business consistent
with past practice (other than those which relate to breach of contract, breach
of warranty, tort, infringement or violation of law, or which arise out of any
action, suit, claim, governmental investigation or arbitration proceeding), (c)
incurred in the ordinary course of business consistent with the past practice
prior to the date of the Current Balance Sheet (other than obligations and
liabilities relating to any default by any of the Companies under any Contract
or obligation which default existed or had occurred prior to the Closing) which
in accordance with GAAP consistently applied were not required to be recorded on
the Current Balance Sheet and which in the aggregate would not have a Material
Adverse Effect on the Wackenhut Subsidiaries and (d) due and owing under the
Software Note (collectively the "Assumed Liabilities"); PROVIDED, HOWEVER, that
any obligations, duties or liabilities set forth in sub-sections (b) through
(i), inclusive, of SECTION 2.8 shall not constitute Assumed Liabilities
hereunder whether or not such obligations, duties or liabilities fall within
sub-sections (a), (b) or (c) of this SECTION 2.7. The Wackenhut Subsidiaries
shall not assume or be responsible for any obligations, duties or liabilities of
CMC, PEM II and PEM III, whether or not reflected on the Current Balance Sheet.
2.8 EXCLUDED LIABILITIES. The parties expressly agree that neither
Wackenhut nor the Wackenhut Subsidiaries shall assume, agree to pay or otherwise
become liable for any obligation or liability of any Company, Shareholder or
other Person other than the Assumed Liabilities (with any liabilities or
obligations other than the Assumed Liabilities being referred to herein as the
"Excluded Liabilities"). The Excluded Liabilities shall include, without
limitation, the following:
(a) any liability or obligation of any Company, Shareholder or
other Person, absolute or contingent, known or unknown, not expressly
agreed to be assumed pursuant to the provisions of SECTION 2.7 of this
Agreement;
(b) any liability or obligation of any Company, Shareholder or
other Person against which Wackenhut is indemnified pursuant to ARTICLE
X of this Agreement;
(c) any liability or obligation of any Company or Shareholder
arising under this Agreement;
(d) any liability or obligation of any Company, Shareholder or
other Person relating to any Taxes, including any interest or penalties
thereon;
(e) any liability or obligation of any Company, Shareholder or
other Person relating to any default under any of the Assumed
Liabilities to the extent such default existed prior to Closing;
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(f) any liability or obligation of any Company to any of the
Shareholders or any of their Affiliates, whether by contract, tort,
pursuant to law or otherwise.
(g) any liability or obligation of any Company, Shareholder or
other Person relating to or arising under the Retrospective Policy; and
(h) any liability or obligation of CMC, PEM II or PEM III, and
(i) any liability or obligation of any Company, Shareholder or
other Person relating to any claims of a franchisee of any Company
arising from or related to (w) the offering or sale of the franchise to
any Person, (x) the transactions contemplated by this Agreement, (y)
the termination or attempted termination or modification or attempted
modification of any franchise rights or (z) any facts, circumstances,
events, actions or failure to act occurring on or prior to the Closing
Date.
2.9 NO EXPANSION OF THIRD PARTY RIGHTS. The transfer by the Companies
of the Assumed Liabilities and the assumption thereof by the Wackenhut
Subsidiaries, subject to the terms and conditions of this Agreement, shall in no
way expand the rights or remedies of any third party against Wackenhut, any of
the Wackenhut Subsidiaries or any of the Companies as compared to the rights and
remedies which such third party would have had against the Companies had the
Wackenhut Subsidiaries not assumed such liabilities. Without limiting the
generality of the preceding sentence, the assumption by the Wackenhut
Subsidiaries of the Assumed Liabilities shall not create any third party
beneficiary rights.
2.10 TIME AND PLACE OF THE CLOSING. Subject to and after the
fulfillment or waiver of the terms and conditions set forth in this Agreement,
the closing of the purchase and sale of the Purchased Assets shall take place at
the offices of Akerman, Senterfitt & Xxxxxx, P.A. in West Palm Beach, Florida,
on a date mutually acceptable to the parties within ten (10) business days
following the fulfillment or written waiver of such conditions, or such other
date, time and place as the parties may mutually agree. Such event is referred
to throughout this Agreement as the "Closing" and such date and time are
referred to as the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF WACKENHUT
As a material inducement to the Companies and the Shareholders to enter
into this Agreement and to consummate the transactions contemplated hereby,
Wackenhut makes the following representations and warranties to the Companies
and the Shareholders:
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3.1 CORPORATE STATUS. Wackenhut is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida.
3.2 CORPORATE POWER AND AUTHORITY. Wackenhut has the corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Wackenhut has
taken all actions necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by Wackenhut and constitutes the legal, valid and binding obligation of
Wackenhut, enforceable against Wackenhut in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
3.4 NO COMMISSIONS. Wackenhut has not incurred any obligation for any
finder's, broker's or agent's fees or commissions or similar compensation in
connection the transactions contemplated hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANIES AND THE SHAREHOLDERS
As a material inducement to Wackenhut to enter into this Agreement and
to consummate the transactions contemplated hereby, each Company and
Shareholder, jointly and severally, make the following representations and
warranties to Wackenhut and each of the Wackenhut Subsidiaries:
4.1 CORPORATE STATUS. Each Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida and
has the requisite corporate power and authority to own or lease its properties
and to carry on its business as now being conducted. SCHEDULE 4.1 sets forth a
list of the jurisdictions in which each Company is qualified to conduct business
as a foreign corporation and each Company is in good standing in each of the
jurisdictions in which it is so qualified. The jurisdictions listed on SCHEDULE
4.1 for each Company are the only jurisdictions where the nature of the
properties and assets and the conduct of the business by each Company requires
such qualification. SCHEDULE 4.1 sets forth a list of all names under which each
Company has at any time done business. Each Company is in compliance with all
material requirements of any statute governing the use and registration of
fictitious names, and has the legal right to use the names under which it
operates its business. No Company has changed its name or used any assumed or
fictitious name other than those listed on SCHEDULE 4.1, or been the surviving
entity in a merger, acquired any business or changed its principal place of
business or chief executive
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office, in each case, since the date of its organization. There is no pending
or, to the Company's and Shareholders' knowledge, threatened proceeding for the
dissolution, liquidation, insolvency or rehabilitation of any Company.
4.2 POWER AND AUTHORITY. Each Company has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Each Company
has taken all actions necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby. Each of the Shareholders is an individual
residing in the State of Florida and has the requisite competence and authority
to execute and deliver this Agreement, to perform his respective obligations
hereunder and to consummate the transactions contemplated hereby.
4.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by each Company and Shareholder, and constitutes the legal, valid and binding
obligation of each of the them, enforceable against each of them in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
4.4 CAPITALIZATION. SCHEDULE 4.4 sets forth, with respect to each
Company, (a) the number of authorized shares of each class of its capital stock,
(b) the number of issued and outstanding shares of each class of its capital
stock, and (c) the number of shares of each class of its capital stock which are
held in treasury. All of the issued and outstanding shares of capital stock of
each Company (i) have been duly authorized and validly issued and are fully paid
and non-assessable, (ii) were issued in compliance with all applicable state and
federal securities laws, and (iii) were not issued in violation of any
preemptive rights or rights of first refusal. No preemptive rights or rights of
first refusal exist with respect to the shares of capital stock of any Company
and no such rights arise by virtue of or in connection with the transactions
contemplated hereby. Except as set forth on SCHEDULE 4.4, there are no
outstanding or authorized rights, options, warrants, convertible securities,
subscription rights, conversion rights, exchange rights or other agreements or
commitments of any kind that could require any Company to issue or sell any
shares of its capital stock (or securities convertible into or exchangeable for
shares of its capital stock) to any Person. There are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights with
respect to any Company. There are no proxies, voting rights or other agreements
or understandings with respect to the voting or transfer of the capital stock of
any Company. No Company is obligated to redeem or otherwise acquire any of its
outstanding shares of capital stock.
4.5 SHAREHOLDERS OF THE COMPANIES. SCHEDULE 4.5 sets forth, with
respect to each Company, the name, address and federal taxpayer identification
number of, and the number of outstanding shares of each class of its capital
stock owned beneficially and of record by, each Shareholder as of the close of
business on the date of this Agreement. The Shareholders constitute all of the
record and beneficial holders of all issued and outstanding shares of capital
stock of the
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Companies, and each of the Shareholders owns such shares as is set forth next to
his name on SCHEDULE 4.5, free and clear of all Liens, claims or restrictions of
any kind.
4.6 NO VIOLATION; CONSENTS AND APPROVALS. Except as set forth on
SCHEDULE 4.6, the execution and delivery of this Agreement by each Company and
Shareholder, the performance by each of them of its obligations hereunder and
the consummation by each of them of the transactions contemplated by this
Agreement will not (a) contravene any provision of the Articles of Incorporation
or Bylaws of any Company, (b) violate or conflict with any Legal Requirement
which is either applicable to, binding upon or enforceable against any Company
or Shareholder, (c) conflict with, result in any breach of, or constitute a
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right of payment
or right to terminate, amend, modify, abandon or accelerate, any Contract which
is applicable to, binding upon or enforceable against any Company or
Shareholder, (d) result in or require the creation or imposition of any Lien,
claim or restriction upon or with respect any of the Purchased Assets, (e) give
to any individual or entity a right or claim against any Company or Shareholder
or any of the Purchased Assets, or (f) require the consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person, except any SEC and other
filings required to be made by Wackenhut and any applicable filings required to
be made by the parties under the HSR Act.
4.7 RECORDS OF THE COMPANIES. The copies of the Articles of
Incorporation and Bylaws of each Company which were provided to Wackenhut are
true, accurate and complete and reflect all amendments made through the date of
this Agreement. Except as set forth on SCHEDULE 4.7, the minute books for each
Company made available to Wackenhut for review were correct and complete as of
the date of such review, no further entries have been made through the date of
this Agreement, such minute books contain the true signatures of the persons
purporting to have signed them. All material accounts, books, ledgers and
official and other records of each Company have been fully, properly and
accurately kept and completed in all material respects, and there are no
material inaccuracies or discrepancies of any kind contained therein. Except as
set forth on SCHEDULE 4.7, the stock ledgers of each Company, as previously made
available to Wackenhut, contain true, accurate and complete records of all
issuances, transfers and cancellations of shares of the capital stock of each
Company.
4.8 SUBSIDIARIES. No Company owns, directly or indirectly, any
outstanding voting securities of or other interests in, or has any control over,
any other corporation, partnership, joint venture or other business entity.
4.9 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 4.9 are (i) the
consolidated financial statements of PEM and PEM IV for the nine months ended
September 30, 1997, including the notes thereto (collectively, the "Interim
Financial Statements"), and (ii) the financial statements of PEM, PEM IV
(formerly known as "Xxxxxxx Xxxxxxx, Inc.") and Xxxxx XxXxxxxx & Company for the
fiscal years ended December 31, 1994, December 31, 1995 and December 31, 1996,
including the notes thereto, which have been audited by Xxxxx & Company P.A.,
Inc. for 1994 and 1995 and
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by Coopers & Xxxxxxx LLP for 1996 (collectively, the "Audited Financial
Statements" and together with the Interim Financial Statements sometimes
referred to herein as the "Financial Statements"). The consolidated balance
sheet of the Companies dated as of September 30, 1997 included in the Financial
Statements is referred to herein as the "Current Balance Sheet." The Financial
Statements fairly present the financial position of the Companies at each of the
balance sheet dates and the results of operations for the periods covered
thereby, and have been prepared in accordance with GAAP consistently applied
throughout the periods indicated. The books and records of the Companies fully
and fairly reflect all of their material transactions, properties, assets and
liabilities. There are no material special or non-recurring items of income or
expense during the periods covered by the Financial Statements and the balance
sheets included in the Financial Statements do not reflect any writeup or
revaluation increasing the book value of any assets, except as specifically
disclosed in the notes thereto. The Financial Statements reflect all adjustments
necessary for a fair presentation of the financial information contained
therein. Neither PEM II nor PEM III have any assets or liabilities of kind or
nature whatsoever.
4.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as set forth
on SCHEDULE 4.10, none of the Companies have since the date of the Current
Balance Sheet (a) issued any capital stock or other securities; (b) made any
distribution of or with respect to its capital stock or other securities or
purchased or redeemed any of its securities; (c) paid any bonus to or increased
the rate of compensation of any of its officers or employees or amended any
other terms of employment of such persons (other than in the ordinary course of
business consistent with past practice); (d) sold, leased or assigned any of its
properties or assets (including, without limitation, any of its "book of
business") other than in the ordinary course of business consistent with past
practice; (e) made or obligated itself to make capital expenditures other than
in the ordinary course of business consistent with past practice; (f) made any
payment in respect of its liabilities other than in the ordinary course of
business consistent with past practice; (g) incurred any obligations or
liabilities (including any indebtedness) or entered into any transaction or
series of transactions involving in excess of $10,000 in the aggregate other
than in the ordinary course of business consistent with past practice, except
for this Agreement and the transactions contemplated hereby; (h) suffered any
theft, damage, destruction or casualty loss, whether or not covered by insurance
and for which a timely claim was filed, in excess of $10,000 in the aggregate;
(i) suffered any extraordinary losses (whether or not covered by insurance); (j)
waived, canceled, compromised or released any rights having a value in excess of
$10,000 in the aggregate; (k) made or adopted any change in its accounting
practices or policies; (l) made any adjustment to its books and records other
than in respect of the conduct of its business activities in the ordinary course
of business consistent with past practice; (m) entered into any transaction with
any Shareholder or an Affiliate of any Company or Shareholder; (n) entered into
any employment, consulting or independent contractor agreement (other than
agreements entered into with the Companies's employees who are leased to the
Companies' clients in the ordinary course of business consistent with past
practice); (o) terminated, amended or modified any agreement involving an amount
in excess of $10,000 in the aggregate; (p) imposed any security interest or
other Lien or restriction on any of the Purchased Assets; (q) not paid in the
ordinary course of business consistent with past practice any account payable
which is due and payable except to the extent being contested in good faith; (r)
made or pledged any charitable contributions in excess
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of $10,000 in the aggregate; (s) entered into any other transaction or been
subject to any event which has or may have a Material Adverse Effect on the
Companies, taken as a whole; or (t) agreed to do or authorized any of the
foregoing.
4.11 LIABILITIES OF THE COMPANIES. None of the Companies has any
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except (a) to the extent reflected on the Current Balance Sheet and not
heretofore paid or discharged, (b) liabilities incurred in the ordinary course
of business consistent with past practice since the date of the Current Balance
Sheet (none of which relates to breach of contract, breach of warranty, tort,
infringement or violation of law, or which arose out of any action, suit, claim,
governmental investigation or arbitration proceeding), and (c) liabilities
incurred in the ordinary course of business prior to the date of the Current
Balance Sheet which, in accordance with GAAP consistently applied, were not
required to be recorded thereon (none of which relate to any default by any of
the Companies under any Contract or obligation).
4.12 LITIGATION. Except as set forth on SCHEDULE 4.12, there is no
action, suit or other legal or administrative proceeding or governmental
investigation pending, or to the knowledge of the Companies and the
Shareholders, threatened against, by or affecting any Company or Shareholder,
any Company's properties or assets or which question the validity or
enforceability of this Agreement or the transactions contemplated hereby. There
are no outstanding orders, decrees or stipulations issued by any Governmental
Authority in any proceeding to which any Company is or was a party which have
not been complied with in full or which continue to impose any material
obligations on any Company or which may have a Material Adverse Effect on any
Company, or the Business.
4.13 ENVIRONMENTAL MATTERS.
(a) Each Company and Shareholder is and has at all times been
in full compliance with all Environmental Laws (as defined herein)
governing each Company and its business, operations, properties and
assets, including, without limitation: (i) all requirements relating to
the Discharge (as defined herein) and Handling (as defined herein) of
Hazardous Substances (as defined herein); (ii) all requirements
relating to notice, record keeping and reporting; (iii) all
requirements relating to obtaining and maintaining Licenses (as defined
herein) for the ownership of properties and assets and the operations
by each Company of its business as conducted at the present time or at
any time in the past; or (iv) all applicable writs, orders, judgements,
injunctions, governmental communications, decrees, informational
requests or demands issued pursuant to, or arising under, any
Environmental Laws.
(b) There are no (and there is no basis for any)
non-compliance orders, warning letters, notices of violation
(collectively "Notices"), claims, suits, actions, judgments, penalties,
fines, or administrative or judicial investigations of any nature or
proceedings (collectively "Proceedings") pending or threatened against
or involving any Company, its business, operations, properties or
assets, issued by any Governmental Authority or third
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party with respect to any Environmental Laws or Licenses issued to any
Company or Shareholder thereunder in connection with, related to or
arising out of the ownership by any Company of its properties or assets
or the operation of its business which have not been resolved to the
satisfaction of the issuing Governmental Authority or third party in a
manner that would not impose any obligation, burden or continuing
liability on Wackenhut or its Affiliates hereunder in the event that
the transactions contemplated by this Agreement are consummated.
(c) None of the Companies or Shareholders have Handled or
Discharged, or allowed or arranged for any third party to Handle or
Discharge, Hazardous Substances to, at or upon: (i) any location other
than a site lawfully permitted to receive such Hazardous Substances;
(ii) any parcel of real property owned or leased by the Company now or
at any time; (iii) any site which, pursuant to CERCLA or any similar
state law (x) has been placed on the National Priorities List or its
state equivalent; or (y) the Environmental Protection Agency or any
relevant state agency has notified any Company or any of the
Shareholders that it has proposed or is proposing to place on the
National Priorities List or its state equivalent. There has not
occurred, nor is there presently occurring, a Discharge, or threatened
Discharge, of any Hazardous Substance on, into or beneath the surface
of, or adjacent to, any real property owned or leased by any Company.
(d) Except as set forth on SCHEDULE 4.13, (i) none of the
Companies uses, or has used, any Aboveground Storage Tanks (as defined
herein) or Underground Storage Tanks (as defined herein), (ii) there
are not now nor have there ever been any Underground Storage Tanks on
any real property owned or leased by any of the Companies, and (iii)
there has been no discharge from or rupture of any such Aboveground
Storage Tanks or Underground Storage Tanks listed on SCHEDULE 4.13.
(e) SCHEDULE 4.13 identifies (i) all environmental audits,
assessments or occupational health studies undertaken by any of the
Companies, any of the Shareholders or any agents or representatives of
any of the Companies or any of the Shareholders, or, to the knowledge
of any of the Companies or Shareholders, undertaken by any Governmental
Authority, or any third party, relating to or affecting any of the
Companies or any real property owned or leased by any of the Companies;
(ii) the results of any ground water, soil, air or asbestos
investigations or monitoring undertaken by any of the Companies or any
of the Shareholders or any agents or representatives of any of the
Companies or any of the Shareholders, or, undertaken by any
Governmental Authority or any third party, relating to or affecting any
of the Companies or any real property owned or leased by any of the
Companies; (iii) all material written communications between any of the
Companies or any of the Shareholders and any Governmental Authority
arising under or related to Environmental Laws, including, but no
limited to, any notice of violation and notices of non-compliance; and
(iv) all outstanding citations issued under OSHA, or similar state or
local statutes, laws, ordinances, codes, rules, regulations, orders,
rulings, or decrees, relating to or
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affecting any of the Companies or any real property owned or leased by
any of the Companies.
(f) For purposes of this Section, the following terms shall
have the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 ET SEQ., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Aboveground Storage
Tanks.
"Company" or "Companies" is deemed to refer in this Section to
each of the Companies and their respective officers, directors,
employees, subsidiaries and other Affiliates.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing, migrating or emitting, as any of such terms may
further be defined in any Environmental Law, into or through any medium
including, without limitation, ground water, land, surface water, soil
or air.
"Environmental Laws" means all federal, state, regional or
local statutes, laws, rules, regulations, codes, ordinances, orders,
ordinances, plans, injunctions, decrees, rulings, licenses, and changes
thereto or judicial or administrative interpretations thereof, or
similar laws of foreign jurisdictions where any of the Companies
conducts business, whether currently in existence or hereafter enacted,
issued or promulgated, any of which govern, or purport to govern, or
relate to pollution, protection of the environment, public health and
safety, air emissions, water discharges, hazardous or toxic substances,
solid or hazardous waste, petroleum or petroleum products or
occupational health and safety, as any of these terms are or may be
defined in such statutes, laws, rules, regulations, codes, orders,
ordinances, plans, injunctions, decrees, rulings, licenses and changes
thereto, or judicial or administrative interpretations thereof,
including, without limitation: the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendment and Reauthorization Act of 1986, 42 U.S.C. ss.9601,
ET SEQ. (herein collectively "CERCLA"); the Solid Waste Disposal Act,
as amended by the Resource Conversation and Recovery Act of 1976 and
subsequent Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
ss.6901 ET SEQ. (herein collectively "RCRA"); the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. ss.1801, ET SEQ.; the Clean
Water Act, as amended, 33 U.S.C. ss.1311, ET SEQ.; the Clean Air Act,
as amended (42 U.S.C. ss.7401- 7642); the Toxic Substances Control Act,
as amended, 15 U.S.C. ss.2601 ET SEQ.; the Federal Insecticide,
Fungicide, and Rodenticide Act as amended, 7 U.S.C. ss.136-136y
("FIFRA"); the Emergency Planning and Community Right-to-Know Act of
1986 as amended, 42 U.S.C. ss.11001, ET SEQ. (Title III of XXXX)
("EPCRA"); and the Occupational Safety and Health Act of 1970, as
amended, 29 U.S.C. ss.651, ET SEQ. ("OSHA").
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"Handle" means any manner of generating, accumulating,
storing, treating, disposing of, transporting, transferring, labeling,
handling, manufacturing or using, as any of such terms may further be
defined in any Environmental Law.
"Hazardous Substances" shall be construed broadly to include
any toxic or hazardous substance, material, or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated
biphenyls, the presence of which requires investigation or remediation
under any Environmental Laws or which are or become regulated, listed
or controlled by, under or pursuant to any Environmental Laws or which
has been or shall be determined or interpreted at any time by any
Governmental Authority to be a hazardous or toxic substance regulated
under any other statute, law, regulation, order, code, rule, order, or
decree.
"Licenses" means all licenses, certificates, permits,
approvals, decrees and registrations.
"Underground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 ET SEQ., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Underground Storage
Tanks.
4.14 REAL ESTATE.
(a) None of the Companies owns or has ever owned any real
property or any interest therein (including without limitation any
option or other right or obligation to purchase any real property or
any interest therein).
(b) SCHEDULE 4.14(B) sets forth a list of all leases, licenses
or similar agreements ("Leases") to which any Company is a party, which
are for the use or occupancy of real property (true, correct and
complete copies of which have previously been furnished to Wackenhut),
in each case, setting forth (A) the lessor and lessee thereof and the
commencement date and term of each of the Leases, and (B) the street
address of each property covered thereby (the "Leased Premises"). The
Leases are in full force and effect and have not been amended, and, to
the knowledge of the Companies and the Shareholders, no party thereto
is in default or breach under any such Lease. To the knowledge of the
Companies and the Shareholders, there is no anticipated breach by any
other party to such Leases. To the knowledge of the Companies and the
Shareholders, no event has occurred which, with the passage of time or
the giving of notice or both, would cause a material breach of or
default under any of such Leases. With respect to each such Leased
Premises: (i) the Companies have valid leasehold interests in the
Leased Premises, free and clear of any Liens, covenants and easements
or title defects of any nature whatsoever; (ii) the portions
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of the buildings located on the Leased Premises that are used in the
business of any Company are each in good repair and condition, normal
wear and tear excepted, and are in the aggregate sufficient to satisfy
the Companies' current and reasonably anticipated normal business
activities as conducted thereat; (iii) each of the Leased Premises (a)
has direct access to public roads or access to public roads by means of
a perpetual access easement, such access being sufficient to satisfy
the current and reasonably anticipated normal transportation
requirements of the Companies' business as presently conducted at such
parcel; and (b) is served by all utilities in such quantity and quality
as are sufficient to satisfy the current normal business activities as
conducted at such parcel; and (iv) no Company has received notice of
(a) any condemnation proceeding with respect to any portion of the
Leased Premises or any access thereto, and, to the knowledge of the
Companies and the Shareholders, no such proceeding is contemplated by
any Governmental Authority; or (b) any special assessment which may
affect any of the Leased Premises for which any of the Companies my be
responsible, and no such special assessment is, to the knowledge of the
Shareholders and the Companies, contemplated by any Governmental
Authority.
4.15 GOOD TITLE TO AND CONDITION OF ASSETS. Except as set forth on
SCHEDULE 4.15, each Company has good and marketable title to all of the
Purchased Assets, free and clear of any Liens, with full power to sell, transfer
and assign the same to the Wackenhut Subsidiaries free and clear of any Liens.
With exceptions that are not material in the aggregate, the tangible Purchased
Assets are in good operating condition, normal wear and tear excepted, and have
been maintained substantially in accordance with all applicable manufacturer's
specifications and warranties. The Purchased Assets constitute, in the
aggregate, all of the assets and properties necessary for the conduct of the
Business in the manner in which and to the extent to which such Business is
currently being conducted. SCHEDULE 4.15 lists the vehicles owned, leased or
used by the Companies, setting forth the make, model, vehicle identification
number and year of manufacture and for each vehicle, whether it is owned or
leased, and if owned, the name of any lienholder and the amount of any lien, and
if leased, the name of the lessor and a summary of the general terms of the
lease.
4.16 COMPLIANCE WITH LAWS. Each of the Companies is in compliance with
all Legal Requirements applicable to it, its business and operations (as
conducted by it now and in the past), the Purchased Assets and any other
properties and assets (in each case owned or used by it now or in the past) and
none of the Companies or Shareholders is currently charged with or is in receipt
of any notice (currently in effect) of any violation of any Legal Requirements
relating to any of the Companies or the Business. Each of the Companies is and
has at all times been in compliance with all Legal Requirements relating to its
relationship and any transactions with or involving AIA, Inc. None of the
Companies or, to the knowledge of the Companies and the Shareholders, any of
their respective officers, directors, employees, Affiliates or agents, has made
any payment of funds in connection with the Companies and their business and
operations which is prohibited by law, and no funds have been set aside to be
used in connection with the Companies and their business and operations for any
payment prohibited by law. None of the Companies is subject to any Contract or
Legal Requirement which restricts the continued operation of any business or the
expansion thereof to other geographical areas, customers and suppliers or lines
of business. None of the
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Companies or Shareholders has actual knowledge that any present or former
clients of any of the Companies has failed to comply with all Legal Requirements
applicable to it and its business and operations, including, without limitation,
all Environmental Laws and Labor Laws.
4.17 LABOR AND EMPLOYMENT MATTERS. SCHEDULE 4.17 sets forth the name,
address, social security number and current rate of compensation of the
employees of each Company, other than those employees who are leased to a third
party. No Company is a party to or bound by any collective bargaining agreement
or any other agreement with a labor union, and there has been no effort by any
labor union during the 24 months prior to the date hereof to organize any
employees of any Company into one or more collective bargaining units. There has
never been any actual or threatened labor dispute, strike or work stoppage which
affects or which may affect the business of any Company or which may interfere
with its continued operations. To the knowledge of the Companies and the
Shareholders, no Company or any agent, representative or employee thereof has
committed any unfair labor practice as defined in the National Labor Relations
Act, as amended, and there is no pending or, to the knowledge of the Companies
and Shareholders, threatened charge or complaint against any Company by or with
the National Labor Relations Board or any representative thereof. To the
knowledge of the Companies and the Shareholders, no employee or group of
employees has any plans to terminate his or her employment with any Company as a
result of the transactions contemplated hereby or otherwise. Each Company has
complied with applicable Legal Requirements relating to employment, civil rights
and equal employment opportunities, including but not limited to, the Civil
Rights Act of 1964, the Fair Labor Standards Act, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, the Family Medical
Leave Act, the Employee Retirement Income Security Act, the Older Workers
Benefit Protection Act, the Immigration and Naturalization Act, the Florida
Civil Rights Act of 1992 and the Florida Workers Compensation Law and comparable
statutes promulgated by other states, in each case, as amended, or any successor
law, and any rules and regulations promulgated thereunder (collectively, the
"Labor Laws").
4.18 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE BENEFIT PLANS. SCHEDULE 4.18 contains a list
setting forth each employee benefit plan or arrangement of each
Company, including but not limited to employee pension benefit plans,
as defined in Section 3(2) of ERISA, multiemployer plans, as defined in
Section 3(37) of ERISA, employee welfare benefit plans, as defined in
Section 3(1) of ERISA, deferred compensation plans, stock option plans,
bonus plans, stock purchase plans, hospitalization, disability and
other insurance plans, severance or termination pay plans and policies,
whether or not described in Section 3(3) of ERISA, in which employees,
their spouses or dependents, of any of the Companies participate
(collectively, the "Employee Benefit Plans") (true and accurate copies
of which, together with the most recent annual reports on Form 5500 and
summary plan descriptions with respect thereto, were furnished to
Wackenhut). None of the Employee Benefit Plans is a plan described in
Section 4021(a) of ERISA and, thus, none is subject to Title IV of
ERISA and none of the Employee Benefit Plans is a Defined Benefit Plan
as defined in Section 414(j) of the Code.
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(b) COMPLIANCE WITH LAW. With respect to each Employee Benefit
Plan (i) each has been administered in all material respects in
compliance with its terms and with all applicable Legal Requirements,
including, but not limited to, ERISA and the Code; (ii) no actions,
suits, claims (other than routine claims for benefits) or disputes are
pending, or, to the knowledge of the Companies and the Shareholders,
threatened; (iii) no audits, inquiries, reviews, proceedings, claims,
or demands are pending with any Governmental Authority; and (iv) there
are no facts which could give rise to any liability in the event of any
such investigation, claim, action, suit, audit, review or other
proceeding; and (v) no "prohibited transaction" has occurred within the
meaning of the applicable provisions of ERISA or the Code.
(c) QUALIFIED PLANS. With respect to each Employee Benefit
Plan intended to qualify under Sections 401(a) or 403(a) (i) of the
Code, the Internal Revenue Service has issued a favorable determination
letter to that effect, true and correct copies of which have been
furnished to Wackenhut; (ii) no such determination letter has been
revoked and no such revocation has been threatened, and no amendment or
other action or omission has occurred with respect to any such plan
since the date of its most recent determination letter or application
therefor in any respect which would adversely affect its qualification
or materially increase its costs; and (iii) all contributions to, and
payments from and with respect to such plans, which may have been
required to be made in accordance with such plans and, when applicable,
Section 302 of ERISA or Section 412 of the Code, have been timely made;
and (vii) all such contributions to the plans, and all payments under
the plans (except those to be made from a trust qualified under Section
401(a) of the Code) and all payments with respect to the plans
(including, without limitation, PBGC (as defined below) and insurance
premiums) for any period ending before the Closing Date that are not
yet, but will be, required to be made are properly accrued and
reflected on the Current Balance Sheet.
(d) MULTIEMPLOYER PLANS. With respect to any multiemployer
plan, as described in Section 4001(a)(3) of ERISA ("MPPA Plan") (i) all
contributions required to be made with respect to employees of the
Companies have been timely paid; (ii) none of the Companies have
incurred, or are expected to incur, directly or indirectly, any
withdrawal liability under ERISA with respect to any such plan (whether
by reason of the transactions contemplated by the Agreement or
otherwise); (iii) SCHEDULE 4.18 sets forth (A) the withdrawal liability
under ERISA to each MPPA Plan, (B) the date as of which such amount was
calculated, and (C) the method for determining the withdrawal
liability; and (iv) no such plan is (or is expected to be) insolvent or
in reorganization and no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists or is expected to exist with respect to any such plan.
(e) WELFARE PLANS. (i) Except as may be required by applicable
law, no Company is obligated under any employee welfare benefit plan as
described in Section 3(1) of ERISA ("Welfare Plan") to provide medical
or death benefits with respect to any employee or former
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employee of the Companies or its predecessors after termination of
employment; (ii) each Company has complied with the notice and
continuation coverage requirements of Section 4980B of the Code and the
regulations thereunder with respect to each Welfare Plan that is, or
was during any taxable year for which the statute of limitations on the
assessment of federal income taxes remains, open, by consent or
otherwise, a group health plan within the meaning of Section 5000(b)(1)
of the Code; and (iii) there are no reserves, assets, surplus or
prepaid premiums under any Welfare Plan which is an Employee Benefit
Plan. The consummation of the transactions contemplated by this
Agreement will not entitle any individual to severance pay, and, will
not accelerate the time of payment or vesting, or increase the amount
of compensation, due to any individual.
(f) CONTROLLED GROUP LIABILITY. None of the Companies, nor any
entity that would be aggregated with them under Sections 414(b), (c),
(m) or (o) of the Code: (i) has ever terminated or withdrawn from an
employee benefit plan under circumstances resulting (or expected to
result) in liability to the Pension Benefit Guaranty Corporation
("PBGC"), the fund by which the employee benefit plan is funded, or any
employee or beneficiary for whose benefit the plan is or was maintained
(other than routine claims for benefits); (ii) has any assets subject
to (or expected to be subject to) a lien for unpaid contributions to
any employee benefit plan; (iii) has failed to pay premiums to the PBGC
when due; (iv) is subject to (or expected to be subject to) an excise
tax under Code Section 4971; (v) has engaged in any transaction which
would give rise to liability under Section 4069 or Section 4212(c) of
ERISA; or (vi) has violated Section 4980B of the Code or Section 601
through 608 of ERISA.
(g) OTHER LIABILITIES. (i) None of the Employee Benefit Plans
obligates any Company to pay separation, severance, termination or
similar benefits solely as a result of any transaction contemplated by
this Agreement or solely as a result of a "change of control" (as such
term is defined in Section 280G of the Code); (ii) all required or
discretionary (in accordance with historical practices) payments,
premiums, contributions, reimbursements, or accruals for all periods
ending prior to or as of the Effective Date shall have been made or
properly accrued on the Current Balance Sheet or will be properly
accrued on the books and records of the applicable Company as of the
Closing Date; and (iii) none of the Employee Benefit Plans has any
unfunded liabilities which are not reflected on the Current Balance
Sheet or the books and records of the applicable Company.
4.19 TAX MATTERS. All Tax Returns required to be filed prior to the
date hereof with respect to each Company or any of its income, properties,
franchises or operations have been timely filed, each such Tax Return has been
prepared in compliance with all applicable legal requirements, and all such Tax
Returns are true and accurate in all respects. Except as set forth on SCHEDULE
4.19, all Taxes due and payable by or with respect to each Company (other than
any income taxes payable solely by the Shareholders) have been paid or are
accrued on the Current Balance Sheet or will be accrued on such Company's books
and records as of the Closing. Except as set forth in SCHEDULE
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4.19 hereto: (i) with respect to each taxable period of each Company, either
such taxable period has been audited by the relevant taxing authority or the
time for assessing or collecting Taxes with respect to each such taxable period
has closed and such taxable period is not subject to review by any relevant
taxing authority; (ii) no deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Taxes has been asserted or
assessed by any taxing authority against any Company; (iii) no Company has
consented to extend the time in which any Taxes may be assessed or collected by
any taxing authority; (iv) no Company has requested or been granted an extension
of the time for filing any Tax Return to a date later than the Closing; (v)
there is no action, suit, taxing authority proceeding, or audit or claim for
refund now in progress, pending or, to the knowledge of the Companies and the
Shareholders, threatened against or with respect to any Company regarding Taxes;
(vi) no Company has made an election or filed a consent under Section 341(f) of
the Code (or any corresponding provision of state, local or foreign law) on or
prior to the Closing; (vii) there are no Liens for Taxes (other than for current
Taxes not yet due and payable) upon the assets of any Company; (viii) no Company
will be required (A) as a result of a change in method of accounting for a
taxable period ending on or prior to the Closing, to include any adjustment
under Section 481(c) of the Code (or any corresponding provision of state, local
or foreign law) in taxable income for any taxable period (or portion thereof)
beginning after the Closing or (B) as a result of any "closing agreement,"as
described in Section 7121 of the Code (or any corresponding provision of state,
local or foreign law), to include any item of income or exclude any item of
deduction from any taxable period (or portion thereof) beginning after the
Closing; (ix) no Company has been a member of an affiliated group (as defined in
Section 1504 of the Code) or filed or been included in a combined, consolidated
or unitary income Tax Return; (x) no Company is a party to or bound by any tax
allocation or tax sharing agreement or has any current or potential contractual
obligation to indemnify any other Person with respect to Taxes; (xi) no taxing
authority will claim or assess any additional Taxes against any Company for any
period for which Tax Returns have been filed; (xii) no Company has made any
payments, and is not nor will it become obligated (under any contract entered
into on or before the Closing) to make any payments, that will be non-deductible
under Section 280G of the Code (or any corresponding provision of state, local
or foreign law); (xiii) no Company has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code (or any
corresponding provision of state, local or foreign law) during the applicable
period specified in Section 897(c)(1)(a)(ii) of the Code (or any corresponding
provision of state, local or foreign law); (xiv) no claim has ever been made by
a taxing authority in a jurisdiction where a Company does not file Tax Returns
that such Company is or may be subject to Taxes assessed by such jurisdiction;
(xv) no Company has any permanent establishment in any foreign country, as
defined in the relevant tax treaty between the United States of America and such
foreign country; (xvi) true, correct and complete copies of all income and sales
Tax Returns filed by or with respect to each Company for the past three years
have been furnished or made available to Wackenhut; (xvii) no Company will be
subject to any Taxes for the period ending at the Closing for any period for
which a Tax Return has not been filed imposed pursuant to Section 1374 or
Section 1375 of the Code (or any corresponding provision of state, local or
foreign law); (xviii) no taxing authority will claim or assess any Taxes against
Wackenhut or any of the Wackenhut Subsidiaries by virtue of the operation of the
Companies or the Business prior to the Closing Date or by virtue of the
transactions contemplated hereby; and (xix) a valid election under
Section 1362(a) of the Code has been in effect for each Company for each such
Company's taxable
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years since its date of incorporation and none of the Companies or any existing
or previous shareholders of any of the Companies have taken any action (nor are
they aware of any such action by any other Person) which would cause or have
caused a termination of such S elections and none of the Companies has ever
failed to be a small business corporation as defined in Section 1361(b) of the
Code and the Treasury Regulations thereunder.
4.20 INSURANCE. Each Company is covered by valid, outstanding and
enforceable policies of insurance issued to it by reputable insurers covering
its properties, assets and businesses against risks of the nature normally
insured against by corporations in the same or similar lines of business and in
coverage amounts typically and reasonably carried by such corporations (the
"Insurance Policies"). Such Insurance Policies are in full force and effect, and
all premiums due thereon have been paid. Through the Closing Date, each of the
Insurance Policies will be in full force and effect, except for termination of
any Insurance Policy due to events out of the control of the Companies or the
Shareholders. None of the Insurance Policies will lapse or terminate as a result
of the transactions contemplated by this Agreement. Each Company has complied
with the provisions of such Insurance Policies. SCHEDULE 4.20 contains (i) a
complete and correct list of all Insurance Policies and all amendments and
riders thereto (copies of which have been provided to Wackenhut) and (ii) a
description of each pending claim under any of the Insurance Policies for an
amount in excess of $10,000 that relates to loss or damage to the properties,
assets or businesses of any Company. To the knowledge of the Companies and the
Shareholders, no Company has failed to give, in a timely manner, any notice
required under any of the Insurance Policies to preserve its rights thereunder.
4.21 RECEIVABLES. All of the Receivables are valid and legally binding,
represent bona fide transactions and arose in the ordinary course of business of
the Companies. All of the Receivables are good and collectible receivables, and
will be collected in full (and in any event within three months following the
Closing), without set off or counterclaim, subject to the allowance for doubtful
accounts, if any, set forth on the Current Balance Sheet.
4.22 LICENSES AND PERMITS. Each Company possesses all material licenses
and required governmental or official approvals, permits or authorizations
(collectively, the "Permits") necessary for its business and operations.
SCHEDULE 4.22 sets forth a true, complete and accurate list of all such Permits.
All such Permits are valid and in full force and effect, each Company is in
compliance with the respective requirements thereof, and no proceeding or other
action is pending or threatened to revoke or amend any of them. Except as set
forth on SCHEDULE 4.22, to the knowledge of the Companies and the Shareholders,
none of such Permits is or will be impaired or in any way affected by the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
4.23 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. The Purchased Assets constitute, in the
aggregate, all of the material assets and properties necessary for the conduct
of the business of the Companies in the manner in which and to the extent to
which such business is currently being conducted. To the knowledge of the
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Companies and the Shareholders, no current supplier to any Company of items or
services essential to the conduct of its business has threatened to terminate
its business relationship with such Company for any reason. Except as set forth
on SCHEDULE 4.23, none of the Companies or Shareholders have any direct or
indirect interest in any client, customer, supplier or competitor of any
Company, or in any person from whom or to whom any Company leases real or
personal property. Except as set forth on SCHEDULE 4.23, no officer, director or
shareholder of any Company, nor any person related by blood or marriage to any
such person, nor any entity in which any such person owns any beneficial
interest, is a party to any Contract or transaction with the Company or has any
interest in any property used by the Company.
4.24 INTELLECTUAL PROPERTY. SCHEDULE 4.24 contains a list of all
material Intellectual Property (including licenses for the use of computer
software programs) used by the Companies in the conduct of their business.
Except as set forth on SCHEDULE 4.24, the Companies have the exclusive
unencumbered right, title and interest in and to all Intellectual Property. The
conduct of the business of each Company as presently conducted, and the current
use and exploitation of the Companies' Intellectual Property, does not infringe
or misappropriate any rights held or asserted by any Person, and no Person is
infringing on the Intellectual Property. Except as set forth on SCHEDULE 4.24,
no payments are required for the continued use of the Companies' current
Intellectual Property. None of the Companies' current Intellectual Property has
ever been declared invalid or unenforceable, or is the subject of any pending
or, to the knowledge of the Companies and the Shareholders, threatened action
for opposition, cancellation, declaration, infringement, or invalidity,
unenforceability or misappropriation or like claim, action or proceeding.
4.25 CONTRACTS. SCHEDULE 4.25 sets forth a list of each Contract
(including any amendments and modifications thereto). True, correct and complete
copies of each written Contract have been made available to Wackenhut, and true
and accurate summaries of each oral Contract are set forth on SCHEDULE 4.25. To
the knowledge of the Companies and the Shareholders, each Contract constitutes a
legal, valid and binding obligation of the parties thereto. To the knowledge of
the Companies and the Shareholders, (i) no Company is in violation of any of the
terms or conditions of any Contract or any term or condition which would permit
termination or modification of any Contract, (ii) all of the covenants to be
performed by any other party thereto have been fully performed, and (iii) there
are no claims for breach or indemnification or notice of default or termination
under any Contract. To the knowledge of the Companies and the Shareholders, no
event has occurred which constitutes, or after notice or the passage of time, or
both, would constitute, a default by any Company under any Contract, and no such
event has occurred which constitutes or would constitute a default by any other
party. Except as set forth on SCHEDULE 4.25, no Contract requires consent to the
assignment to and assumption by the Wackenhut Subsidiaries and any such
assignment and assumption will not result in any penalty, premium or variation
of the rights, remedies, benefits or obligations of any party thereunder.
SCHEDULE 4.25 accurately identifies all parties to the Contracts, and where
applicable, specifies the relationship of each such party to the Companies, the
Shareholders and their Affiliates. Except as set forth on SCHEDULE 4.25, all of
the Contracts to which any of the Shareholders or their Affiliates are a party
are cancelable by the Companies upon not more than 30 days notice.
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4.26 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. If Wackenhut shall elect to pay all or any portion of the Earnout
Payments in Wackenhut Shares, each Company will acquire the Wackenhut Shares
solely for distribution to the Shareholders, which distribution to the
Shareholders shall be in compliance with applicable state and federal securities
laws. Each Company and Shareholder has had the opportunity to discuss the
transactions contemplated hereby with Wackenhut and has had the opportunity to
obtain such information pertaining to Wackenhut as have been requested,
including but not limited to filings made by Wackenhut with the SEC under the
Exchange Act. Each of the Shareholders is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act, and has such
knowledge and experience in business or financial matters that he is capable of
evaluating the merits and risks of an investment in the Wackenhut Shares. Each
of the Shareholders hereby represents that he/she can bear the economic risk of
losing his investment in the Wackenhut Shares and has adequate means for
providing for his current financial needs and contingencies. The Shareholders
acknowledge that they have received copies of those filings made by Wackenhut
with the SEC under the Exchange Act which are listed on SCHEDULE 4.26.
4.27 BANK ACCOUNTS; BUSINESS LOCATIONS. SCHEDULE 4.27 sets forth (a)
all accounts of each Company with any bank, broker or other depository
institution, and the names of all persons authorized to withdraw funds from each
such account and, (b) all Certificates of Deposit and all securities owned or
held by each Company and the bank, broker or other depository institution
through which they are held. As of the date hereof, no Company has an office or
place of business other than as identified on SCHEDULES 4.14(B) and the
Companies' principal places of business and chief executive offices are
indicated on SCHEDULE 4.14(B), and, except for equipment leased to customers in
the ordinary course of business, all locations where the equipment, inventory,
chattel paper and books and records of the Company is located as of the date
hereof are fully identified on SCHEDULE 4.14(B).
4.28 NO COMMISSIONS. None of the Companies or Shareholders has incurred
any obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
4.29 PROJECTIONS. All projections prepared by the Companies or
Shareholders, or any of their respective officers, directors, employees,
accountants or agents, which have been delivered to Wackenhut (the
"Projections") were prepared based on the reasonable business judgment of the
Companies and the Shareholders and were supported by the reasonable belief of
the Companies and the Shareholders when prepared. As of the date hereof, the
Companies and the Shareholders believe that the Projections continue to be based
upon the reasonable business judgment of the Companies and the Shareholders and
continue to be supported by the reasonable belief of the Companies and the
Shareholders as of the date hereof.
4.30 ACCURACY OF INFORMATION FURNISHED. No written representation made
or information provided by any Company or Shareholder, including without
limitation, those contained
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in this Agreement (including without limitation, the various Schedules and
Exhibits attached hereto) or any agreement executed in connection herewith or in
any certificate delivered pursuant hereto or thereto, contains or shall contain
any untrue statement of a material fact or omits or shall omit any material fact
necessary to make the information contained therein not misleading. The
Companies and Shareholders have provided Wackenhut with true, accurate and
complete copies of all documents listed or described in the various Schedules
attached hereto.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE CLOSING
5.1 CONDUCT OF BUSINESS BY EACH COMPANY PENDING THE CLOSING. Each
Company and Shareholder, jointly and severally, covenant and agree that, between
the date of this Agreement and the Closing Date, the business of each Company
shall be conducted only in, and each Company shall not take any action except
in, the ordinary course of business consistent with past practice. Each Company
and Shareholder shall use its reasonable best efforts to preserve intact the
business organization of each Company, to keep available the services of the
current officers, employees and consultants of each Company, and to preserve the
present relationships of each Company with clients, customers, suppliers and
other persons with which it has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement, each
Company shall not (and each Shareholder shall not permit any Company to),
between the date of this Agreement and the Closing Date, directly or indirectly,
do or propose or agree to do any of the following without the prior written
consent of Wackenhut:
(a) amend or otherwise change its Articles of Incorporation or
Bylaws;
(b) issue, sell, pledge, dispose of, encumber, or, authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i)
any shares of its capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest of such
Company or (ii) any of its assets (including, without limitation, the
Purchased Assets) (provided, however, that such restrictions shall not
apply to the items set forth on Schedule 6.6);
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, for cash or
shares of stock, by merger, consolidation or acquisition of stock or
assets) any interest in any corporation, partnership or other business
organization or division thereof or make any investment either
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by purchase of stock or securities, contributions of capital or
property transfer, or, except in the ordinary course of business
consistent with past practice, purchase any property or assets of any
other Person, (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any Person, or
make any loans or advances (except for loans to employees made in the
ordinary course consistent with past practice, which in the aggregate
are not material to the Companies), or (iii) amend or terminate any
Contract, or enter into any Contract other than in the ordinary course
of business consistent with past practice;
(f) increase the compensation payable or to become payable to
its officers or employees except in the ordinary course of business
consistent with past practice, or, except as presently bound to do,
grant any severance or termination pay to, or enter into any employment
or severance agreement with, any of its officers, directors, or
employees, or establish, adopt, enter into or amend or take any action
to accelerate any rights or benefits under any collective bargaining,
bonus, profit sharing, trust, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any officers, directors, or employees;
(g) take any action with respect to accounting policies or
procedures other than in the ordinary course of business and in a
manner consistent with past practice;
(h) pay, discharge or satisfy any existing claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of due
and payable liabilities reflected or reserved against in its financial
statements, as appropriate, or liabilities incurred after the date
thereof in the ordinary course of business and consistent with past
practice;
(i) fail to make any regularly scheduled payments in its
existing debt, leases and other obligations;
(j) make any capital investments, in the aggregate, in excess
of $75,000;
(k) increase or decrease prices charged to its customers, or
take any other action which might result in any loss of customers, in
each case, except in the ordinary course of business consistent with
past practice;
(l) enter into any transaction with any Shareholder or
Affiliates thereof; or
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(m) agree, in writing or otherwise, to take or authorize any
of the foregoing actions or any action which would make any
representation or warranty in ARTICLE IV untrue or incorrect.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be reasonably necessary or appropriate to effectuate, carry out and
comply with all of the terms of this Agreement and the transactions contemplated
hereby.
6.2 COMPLIANCE WITH COVENANTS. The Shareholders shall cause each
Company to comply with all of the covenants of such Company under this
Agreement. Wackenhut shall cause each Wackenhut Subsidiary to comply with all of
the covenants of such Wackenhut Subsidiary under this Agreement. At the Closing,
the Companies and Shareholders covenant and agree to deliver to Wackenhut the
certificates, opinions and other documents required to be delivered to Wackenhut
pursuant to ARTICLE VII, and Wackenhut covenants and agrees to deliver and to
cause the Wackenhut Subsidiaries to deliver to the Companies and Shareholders
the certificates and other documents required to be delivered to the Companies
and Shareholders pursuant to ARTICLE VIII.
6.3 COOPERATION. Each of the parties agrees to cooperate with the
others in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
Legal Requirement in connection with the transactions contemplated by this
Agreement and to use their respective reasonable efforts to agree jointly on a
method to overcome any objections by any Governmental Authority to any such
transactions.
6.4 HSR ACT. Each of the parties hereto shall promptly make its
respective filings, if any, and thereafter make any other required submissions,
if any, under the HSR Act, with respect to the transactions contemplated hereby,
and shall request early termination of the applicable waiting period under the
HSR Act.
6.5 OTHER ACTIONS. Each of the parties shall use its reasonable best
efforts to take, or cause to be taken, all appropriate actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Legal Requirements to consummate and make effective the transactions
contemplated herein, including, without limitation, using its reasonable best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Authority and parties to Contracts
with each Company as are necessary for the consummation of the transactions
contemplated hereby. Each of the parties shall make on a prompt and timely basis
all governmental or regulatory notifications and filings required to be made by
it for the consummation of the transactions contemplated hereby. The parties
also agree to use
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reasonable best efforts to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby and to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby.
6.6 CONTRIBUTION OF ASSETS. Prior to Closing, (i) the Shareholders and
their Affiliates shall, for no additional consideration, contribute to the
capital of the Companies all assets (of whatsoever kind or nature) owned or
otherwise held by them which are used by the Companies in connection with the
Companies' business and operations; PROVIDED, HOWEVER, that those items
described on SCHEDULE 6.6 shall not be required to be contributed to the capital
of the Companies, and (ii) the Lease from Xxxxxxx to the Companies of the
payroll software program presently used by the Companies shall be terminated and
Xxxxxxx shall transfer to PEM, in consideration for a promissory note in the
principal amount of $64,000, payable upon demand without interest (the "Software
Note"), all right, title and interest in to such program and any related source
code, object code and documentation and shall execute such instruments of
transfer of title thereto as shall be reasonably requested by Wackenhut, and
such contributed assets and the program and related source code, object code and
documentation shall be treated as Purchased Assets hereunder. At the Closing,
the Wackenhut Subsidiaries shall pay the Software Note in full.
6.7 NOTIFICATION OF CERTAIN MATTERS. Each Company and Shareholder shall
give prompt written notice to Wackenhut, and Wackenhut shall give prompt written
notice to the Shareholders, of the occurrence or non-occurrence of any event
which would likely cause any representation or warranty contained herein to be
untrue or inaccurate, or any covenant, condition or agreement contained herein
not to be complied with or satisfied.
6.8 CONFIDENTIALITY; PUBLICITY. Except as may be required by law, the
rules of the NYSE or any exchange on which Wackenhut common stock is listed or
as otherwise permitted or expressly contemplated herein, no party hereto or
their respective Affiliates, employees, agents and representatives shall
disclose to any third party the existence of this Agreement or the subject
matter or terms hereof. Wackenhut shall keep confidential and shall not disclose
any confidential or proprietary information furnished to it by the Companies or
the Shareholders and shall exercise reasonable precautions to safeguard and
protect the confidentiality and integrity of such information, except that
Wackenhut may make such disclosures to its advisors, representatives, officers,
shareholders, employees and present and potential lenders who need to know the
information to effectuate the intent of this Agreement. Disclosure of such
information will be permitted to any other third party where (a) each of the
Companies or the Shareholders consents to such disclosure, (b) such information
is or becomes generally available to the public or within the industry in which
the Companies operate through no action of Wackenhut or its representatives, (c)
such information is received by Wackenhut from an independent third party whose
disclosure of such information did not constitute a breach by that third party
of any duty of confidentiality owed to Companies or the Shareholders, (d) such
disclosure shall be required by applicable law, the rules of the NYSE or any
exchange on which the Wackenhut common stock is listed or in a judicial,
governmental or administrative proceeding or (e) such disclosure is necessary to
the enforcement of any rights of
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Wackenhut or the Wackenhut Subsidiaries hereunder. No press release or other
public announcement related to this Agreement or the transactions contemplated
hereby or the business of the Companies shall be issued by any party hereto
without the prior approval of the other parties, except that Wackenhut may make
such public disclosure which it believes in good faith to be required by law or
by the terms of any listing agreement with or requirements of NYSE (in which
case Wackenhut will consult with the Companies prior to making such disclosure).
6.9 NO OTHER DISCUSSIONS. From the date hereof until the Closing Date,
the Companies, the Shareholders and their respective Affiliates, officers,
directors, employees, agents and representatives will not (a) solicit,
encourage, consider or accept any offers to acquire all or any portion of the
assets or any interest in any of the Companies from any other person, (b)
participate in any discussions or negotiations with any other person concerning
the sale of all or any portion of the assets of or any interest in any of the
Companies, (c) provide any non-public information about any of the Companies
(other than to Wackenhut and its agents and consultants as provided herein), (d)
enter into agreement or commitment (whether or not binding) with respect to the
foregoing transactions, or (e) otherwise cooperate in any way with, or assist,
facilitate or encourage any effort by any other person seeking to acquire all or
any portion of the assets of or any interest in the Companies. The Companies and
the Shareholders shall immediately notify Wackenhut in writing of any such
inquiry or proposal which the Companies and the Shareholders may receive,
including the terms and identity of the inquirer or offeror.
6.10 RESTRICTIVE COVENANT. Each Shareholder and Company, jointly and
severally, agrees with Wackenhut that it will not:
(a) in the case of the Companies, for a period of five (5)
years from the Closing Date, and in the case of the Shareholders, for
the longer of (i) a period of five (5) years from the Closing Date and
(ii) a period of two (2) years following the termination of such
Shareholder's employment with Wackenhut and any of its Affiliates
(including, without limitation, the Wackenhut Subsidiaries), directly
or indirectly, alone or as a partner, joint venturer, officer,
director, member, employee, consultant, agent, independent contractor
or shareholder of, or lender to, any company or business, engage in the
temporary help, employee placement, employee leasing or any related
business in any state in which Wackenhut or any of its Affiliates
(including, without limitation, the Wackenhut Subsidiaries), are then
engaging in the temporary help, employee placement, employee leasing or
related businesses; PROVIDED, HOWEVER, that the beneficial ownership of
less than two percent (2%) of the shares of stock of any other
corporation having a class of equity securities actively traded on a
national securities exchange or over-the-counter market shall not be
deemed, in and of itself, to violate the prohibitions of this SECTION
6.10;
(b) in the case of the Companies, for a period of five (5)
years from the Closing Date, and in the case of the Shareholders, for
the longer of (i) a period of five (5) years from the Closing Date and
(ii) a period of two (2) years following the termination of such
Shareholder's employment with Wackenhut and any of its Affiliates
(including, without
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limitation, the Wackenhut Subsidiaries), directly or indirectly (i)
induce any Client of Wackenhut or any of its Affiliates (including,
without limitation, the Wackenhut Subsidiaries) to patronize any
business, directly or indirectly, in competition with the temporary
help, employee placement, employee leasing or any related business
conducted by Wackenhut or any of its Affiliates (including, without
limitation, the Wackenhut Subsidiaries); (ii) canvass, solicit or
accept from any Client of Wackenhut or any of its Affiliates
(including, without limitation, the Wackenhut Subsidiaries), any such
competitive business; or (iii) request or advise any Person which has a
business relationship with Wackenhut or any of its Affiliates
(including, without limitation, the Wackenhut Subsidiaries) to
withdraw, curtail or cancel any business with Wackenhut or any of its
Affiliates (including, without limitation, the Wackenhut Subsidiaries);
(c) in the case of the Companies, for a period of five (5)
years from the Closing Date, and in the case of the Shareholders, for
the longer of (i) a period of five (5) years from the Closing Date and
(ii) a period of two (2) years following the termination of such
Shareholder's employment with Wackenhut and any of its Affiliates
(including, without limitation, the Wackenhut Subsidiaries), directly
or indirectly employ, or knowingly permit any company or business
directly or indirectly controlled by him to employ, any person who was
employed by Wackenhut or any of its Affiliates (including, without
limitation, the Wackenhut Subsidiaries), at or within the then prior
six months or in any manner seek to induce any such person to leave his
or her employment; or
(d) at any time following the Closing Date, directly or
indirectly, in any way utilize, disclose, copy, reproduce or retain in
his possession any confidential or proprietary information or records
of Wackenhut or any of its Affiliates (including, without limitation,
the Wackenhut Subsidiaries), including, but not limited to, any of its
Client and employee lists, except during the period of employment by
Wackenhut and its Affiliates (including, without limitation, the
Wackenhut Subsidiaries) as appropriate for the purposes of rendering
services to Wackenhut and its Affiliates (including, without
limitation, the Wackenhut Subsidiaries).
Each Company and Shareholder agrees and acknowledges that the restrictions
contained in this SECTION 6.10 are reasonable in scope, duration and area, and
are necessary to protect Wackenhut and the Wackenhut Subsidiaries after the
Closing Date. The parties agree and acknowledge that the breach of this SECTION
6.10 will cause irreparable damage to Wackenhut and the Wackenhut Subsidiaries
for which monetary damages will not be adequate, and upon breach (or threatened
breach) of any provision of this SECTION 6.10, Wackenhut and the Wackenhut
Subsidiaries shall be entitled to injunctive relief, specific performance or
other equitable relief; PROVIDED, HOWEVER, that this shall in no way limit any
other remedies which Wackenhut or the Wackenhut Subsidiaries may have
(including, without limitation, the right to seek monetary damages). If any
provision of this SECTION 6.10, as applied to any party or to any circumstance,
is adjudged by a court to be invalid or unenforceable, the same will in no way
affect any other circumstance or the validity or enforceability of the remainder
of this Agreement. If any such provision, or any part thereof, is held to be
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unenforceable because of the duration of such provision, the scope of activity
or the area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration, scope and/or area of
such provision, and/or to delete specific words or phrases, and in its reduced
form, such provision shall then be enforceable and shall be enforced. In
addition to any other remedies which the Wackenhut Subsidiaries and Wackenhut
may have pursuant to applicable law or this Agreement, any compensation,
remuneration or benefit which a Shareholder may receive or derive in connection
with a violation of the covenants set forth above in this section are hereby
assigned to Wackenhut.
6.11 DUE DILIGENCE REVIEW. Wackenhut shall be entitled to conduct prior
to Closing a due diligence review of (i) the assets, properties, books and
records of the Companies, and (ii) the relationship and any transactions between
the Companies and AIA, Inc. and compliance by the Companies and AIA, Inc. with
any Legal Requirements relating thereto (the "AIA Due Diligence Review"). From
the date hereof to the Closing Date, each Company shall, and shall cause its
directors, officers, employees, auditors, counsel and agents to, afford
Wackenhut and Wackenhut's officers, employees, auditors, counsel and agents
access after reasonable notice at all reasonable times to its properties,
offices and other facilities, to its officers and employees and to all books and
records, and shall furnish such persons with all financial, operating and other
data and information as may be reasonably requested. Prior to the Closing Date,
each Company shall, and Xxxxxxx shall cause AIA, Inc. to, provide Wackenhut
access after reasonable notice at all reasonable times to all books, records,
information, legal opinions and any correspondence with or findings of any
Governmental Agency relating to the relationship and any transactions between
the Companies and AIA, Inc. and compliance by the Companies and AIA, Inc. with
any Legal Requirements relating thereto. No information provided to or obtained
by Wackenhut shall affect any representation or warranty in this Agreement.
6.12 TRADING IN WACKENHUT COMMON STOCK. Except as otherwise expressly
consented to by Wackenhut, from the date of this Agreement until the Closing
Date, none of the Companies, Shareholders or any of their Affiliates will
directly or indirectly purchase or sell (including short sales) any shares of
Wackenhut common stock or any other class of Wackenhut securities in any
transactions effected on the NYSE or otherwise.
6.13 DELIVERY OF PROPERTY RECEIVED BY THE COMPANIES AFTER CLOSING. From
and after the Closing, the Wackenhut Subsidiaries shall have the right and
authority to collect, for the account of the Wackenhut Subsidiaries, all
Receivables and other items which shall be transferred or are intended to be
transferred to the Wackenhut Subsidiaries as part of the Purchased Assets as
provided in this Agreement, and to endorse with the name of the applicable
Company any checks or drafts received on account of any such Receivables or
other items of the Purchased Assets. Each Company and Shareholder agrees that it
will transfer or deliver to the Wackenhut Subsidiaries, promptly after the
receipt thereof, any cash or other property which any Company or Shareholder
receives after the Closing Date in respect of any claims, contracts, licenses,
leases, commitments, sales orders, purchase orders, receivables of any character
or any other items transferred or intended to be transferred to the Wackenhut
Subsidiaries as part of the Purchased Assets under this Agreement.
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6.14 WACKENHUT AND WACKENHUT SUBSIDIARIES APPOINTED ATTORNEY FOR THE
COMPANIES. Effective at the Closing Date, each Company hereby constitutes and
appoints Wackenhut and each of the Wackenhut Subsidiaries and their respective
successors and assigns, its true and lawful attorney, in the name of either
Wackenhut, any of the Wackenhut Subsidiaries or such Company (as Wackenhut or
the Wackenhut Subsidiaries shall determine in its sole discretion) but for the
benefit and at the expense of Wackenhut and the Wackenhut Subsidiaries (except
as otherwise herein provided), (a) to institute and prosecute all proceedings
which Wackenhut or the Wackenhut Subsidiaries may deem proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
Purchased Assets as provided for in this Agreement; (b) to defend or compromise
any and all actions, suits or proceedings in respect of any of the Purchased
Assets, and to do all such acts and things in relation thereto as Wackenhut or
the Wackenhut Subsidiaries shall deem advisable; and (c) to take all action
which Wackenhut or the Wackenhut Subsidiaries may reasonably deem proper in
order to provide for the Wackenhut Subsidiaries the benefits under any of the
Purchased Assets where any required consent of another party to the sale or
assignment thereof to the Wackenhut Subsidiaries pursuant to this Agreement
shall not have been obtained. Each Company acknowledges that the foregoing
powers are coupled with an interest and shall be irrevocable. The Wackenhut
Subsidiaries shall be entitled to retain for their own account any amounts
collected pursuant to the foregoing powers, including any amounts payable as
interest and penalties in respect thereof. Wackenhut shall indemnify and hold
harmless the Companies and the Shareholders for any liabilities, losses or
damages of any nature (including legal fees and expenses) resulting directly or
indirectly from actions taken by Wackenhut or the Wackenhut Subsidiaries
pursuant to this SECTION 6.14 (except if such liabilities, losses or damages
constitute Excluded Liabilities or Wackenhut Indemnifiable Damages under the
terms of this Agreement).
6.15 EXECUTION OF FURTHER DOCUMENTS. Each Company and Shareholder shall
from and after the Closing execute, acknowledge and deliver all such further
deeds, bills of sale, assignments, transfers, conveyances, powers of attorney
and assurances as may be reasonably requested by Wackenhut or the Wackenhut
Subsidiaries to convey and transfer to and vest in the Wackenhut Subsidiaries
and protect its right, title and interest in all of the Purchased Assets and to
carry out the transactions contemplated by this Agreement.
6.16 EMPLOYMENT AGREEMENTS. At the Closing, (a) each of Xxxxxxx and
Xxxxxx shall terminate any and all employment agreements which he or she may
have with any of the Companies (collectively, the "Existing Employment
Agreement") and shall release each of the Companies from any and all claims that
he or she may have against any of the Companies thereunder, (b) the Wackenhut
Subsidiaries and Xxxxxxx shall enter into an Employment Agreement in the form
attached hereto as EXHIBIT A (the "Xxxxxxx Employment Agreement"), and (c) the
Wackenhut Subsidiaries and Xxxxxx shall enter into an Employment Agreement in
the form attached hereto as EXHIBIT B (the "Xxxxxx Employment Agreement", and
together with the Xxxxxxx Employment Agreement, the "Employment Agreements").
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6.17 PAYOFF AND ESTOPPEL LETTERS. Prior to Closing, each Company shall
request payoff and estoppel letters with respect to any indebtedness for money
owed which are included in the Assumed Liabilities, in each case, setting forth
the payoff amount, per diem, wire transfer instructions and an agreement to
deliver to the Wackenhut Subsidiaries upon full payment, UCC-3 termination
statements, satisfactions of mortgage or other appropriate releases and any
original promissory notes or other evidences of indebtedness marked canceled.
6.18 SHAREHOLDER AND DIRECTOR VOTE. Each of the Shareholders, in
executing this Agreement, consents as a director and shareholder of each of the
Companies to the execution and delivery of this Agreement by each of the
Companies and the consummation by each of them of the transaction hereunder and
waives notice of any meeting in connection therewith.
6.19 CLOSING DATE WORKING CAPITAL, LONG TERM LIABILITIES AND NET WORTH.
The Shareholders and the Companies each covenant and agree that (a) the
aggregate Working Capital of the Companies on the Closing Date shall equal or
exceed One Million One Hundred Fifty-Two Thousand Five Hundred Seventy-One
Dollars ($1,152,571); (b) the aggregate outstanding balance (including principal
and accrued but unpaid interest) of the Long Term Liabilities (as such term is
used in the Financial Statements) of the Companies will not exceed Forty-Three
Thousand Five Hundred Eighty-Six Dollars ($43,586) on the Closing Date; and (c)
the Closing Date Net Worth shall equal or exceed One Million Five Hundred
Eighteen Thousand Eight Hundred Thirty-Four Dollars ($1,518,834). "Working
Capital" shall mean the amount, if any, by which the aggregate of the Current
Assets of the Companies exceeds the aggregate of the Current Liabilities of the
Companies; "Current Assets" shall mean on a combined basis all current assets of
the Companies determined in accordance with GAAP (but only to the extent they
constitute Purchased Assets); "Current Liabilities" shall mean on a combined
basis the current liabilities of the Companies determined in accordance with
GAAP (but only to the extent they constitute Assumed Liabilities).
6.20 CONDUCT OF THE BUSINESS FOLLOWING THE CLOSING. The Shareholders
acknowledge that the Board of Directors of each of the Wackenhut Subsidiaries
shall have ultimate managerial authority over the business and operations of
each of the Wackenhut Subsidiaries following the Closing Date, and shall, by way
of example, have control over such decisions as the incurrence of indebtedness,
making of any capital expenditures, entering into any long-term arrangements and
making any long-term commitments and shall have the right to impose restrictions
on the geographic areas in which the Wackenhut Subsidiaries may solicit business
or establish offices or sales representative arrangements. Notwithstanding
anything to the contrary set forth herein, the Wackenhut Subsidiaries shall not
open any new offices on or prior to the earlier of December 31, 2000 or the
payment in full of any Accelerated Earnout Payments required to be paid pursuant
to SECTION 2.4(H) without the prior written consent of Wackenhut and both of the
Shareholders (PROVIDED, HOWEVER, that the consent of the Shareholders shall not
be required for the opening of a new office by any other Affiliate of
Wackenhut).
6.21 TRANSFER OF INSURANCE RATING. The Companies and the Shareholders
shall, at the request of Wackenhut, take or cause to be taken, and do or cause
to be done, all things reasonably
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necessary, proper or advisable to transfer to the Wackenhut Subsidiaries the
state unemployment insurance experience rating of any Companies designed by
Wackenhut (including, without limitation, the execution of any consent required
therefor).
6.22 NAME CHANGES. The Companies and the Shareholders shall at Closing
take or cause to be taken, or do or cause to be done, all things reasonably
necessary, proper or advisable to change the name of each Company and terminate
all fictitious name filings made on behalf of each Company so as to permit the
Wackenhut Subsidiaries to change their names to the names presently used by the
Companies and to permit the Wackenhut Subsidiaries to file fictitious name
filings for the use of such names.
6.23 REPAYMENT OF SHAREHOLDERS INDEBTEDNESS. The Shareholders shall at
or prior to Closing repay in full any indebtedness owed by any Shareholder or
any Affiliate of any Shareholder to any Company or CMC.
6.24 TAX TREATMENT. Taxes of the Companies paid, accrued or incurred
through the Closing Date are Excluded Liabilities, whether or not such Taxes are
payable on, before or after the Closing Date. Any such Taxes shall be paid by
the Companies and shall not be reflected on the Closing Date Balance Sheet, but
shall be reflected in the notes thereto.
6.25 CERTAIN TAX MATTERS. The Shareholders shall duly prepare, or cause
to be prepared, and file, or cause to be filed, on a timely basis, all Tax
Returns for each Company. The Shareholders shall provide such Tax Returns to
Wackenhut for review at least 60 days prior to their due date (including
extensions where applicable). The Shareholders shall not file any amended Tax
Returns with respect to any of the Companies without seeking in good faith to
accommodate Wackenhut's reasonable requests relating to such Tax Returns. The
Companies and Wackenhut shall provide the other party with such information and
records and access to such of its officers, directors, employees and agents as
may be reasonably requested by the other party in connection with the
preparation of any Tax Return or any audit or other proceeding relating to any
of the Companies.
6.26 DISSOLUTION OF XXXXX, XXXXXXXX & COMPANY, INC. Prior to Closing,
the Shareholders shall (i) cause CMC to assign, transfer and convey to PEM all
right, title and interest in and to all of its assets (tangible and intangible)
(the "CMC Assets") pursuant to a Xxxx of Sale and Assignment and such other
documents of transfer reasonably requested by Wackenhut (each in form and
substance reasonably satisfactory to Wackenhut), and (ii) thereafter cause the
dissolution of CMC in accordance with the laws of the State of Florida.
6.27 EMPLOYEE TENURE CREDIT. The Wackenhut Subsidiaries shall provide
all Persons employed by the Companies after the Closing Date credit for any
period of time that such Person was employed by the Companies prior to the
Closing Date toward all employee benefit plans and programs offered to such
Persons following the Closing Date.
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6.28 EXECUTION OF AGREEMENTS WITH AIA , INC. Prior to Closing, the
Shareholders shall cause PEM (and Xxxxxxx shall cause AIA, Inc. ("AIA") to enter
into (1) a Sublease Agreement between PEM and AIA (a) covering the space
presently occupied by AIA at PEM's headquarters, (b) having a term beginning on
the Closing Date and ending on a date not later than December 31, 2000, (c)
providing for a fixed monthly rental of $800 through December 31, 2000, and (d)
containing such other terms and conditions as shall be acceptable to Wackenhut,
and (2) an Agreement for Services pursuant to which PEM will provide AIA with
employee leasing services on terms generally offered to its other clients (such
agreements being referred to as the "AIA Agreements"), and each such AIA
Agreement shall be assigned by PEM to the Wackenhut Subsidiaries at Closing.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF WACKENHUT
AND THE WACKENHUT SUBSIDIARIES
The obligations of Wackenhut and the Wackenhut Subsidiaries to effect
the transactions contemplated hereby shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions, any or all of which may
be waived in whole or in part in writing by Wackenhut and the Wackenhut
Subsidiaries:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Companies and the
Shareholders contained in this Agreement shall be true and correct at and as of
the Closing Date with the same force and effect as though made at and as of that
time except (a) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (b) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. Each Company and Shareholder shall have performed and complied with all of
their obligations required by this Agreement to be performed or complied with at
or prior to the Closing Date. Each Company and Shareholder shall have delivered
to Wackenhut a certificate, dated as of the Closing Date (which in case of each
Company shall be duly signed by its Chief Executive Officer and President)
certifying that such representations and warranties are true and correct and
that all such obligations have been performed and complied with.
7.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date (a) there shall have been no Material Adverse
Change to any Company, to any Company's Business or to the business prospects of
any Company, (b) there shall have been no adverse federal, state or local
legislative or regulatory change affecting in any material respect the services,
products or business of any Company, and (c) none of the Purchased Assets shall
have been damaged by fire, flood, casualty, act of God or the public enemy or
other cause (regardless of insurance coverage for such damage) which damages may
have a Material Adverse Effect thereon, and each Company and Shareholder shall
have delivered to Wackenhut a certificate, dated as of the
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Closing Date (which in the case of each Company shall be duly signed by its
Chief Executive Officer and Chief Financial Officer) to that effect.
7.3 CORPORATE CERTIFICATE. The Companies and the Shareholders shall
have delivered to Wackenhut (i) copies of the Articles of Incorporation and
Bylaws of each Company as in effect immediately prior to the Closing Date, (ii)
copies of resolutions adopted by the Board of Directors and shareholders of each
Company authorizing the transactions contemplated by this Agreement, and (iii) a
certificate of good standing of each Company issued by the Department of State
of Florida and each other state in which it is qualified to do business as of a
date not more ten (10) business days prior to the Closing Date, certified in the
case of (i) and (ii) as of the Closing Date by the Secretary of each Company as
being true, correct and complete.
7.4 OPINION OF COUNSEL. Wackenhut shall have received an opinion,
dated as of the Closing Date, from counsel for the Companies and the
Shareholders in the form attached hereto as EXHIBIT C.
7.5 CONSENTS. The Companies and Wackenhut shall have received consents
to the transactions contemplated hereby and waivers of rights to terminate or
modify any material rights or obligations of the Companies from any Person from
whom such consent or waiver is required, prior to the Closing Date.
7.6 LICENSES. Wackenhut shall have received all approvals, permits and
licenses that are reasonably necessary to own and operate the business to be
conducted with the Purchased Assets, and to operate the Business as currently
being conducted.
7.7 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the sole judgment of
Wackenhut, makes it inadvisable to proceed with the transactions contemplated
hereby.
7.8 BOARD APPROVAL.. The Board of Directors of Wackenhut shall have
authorized and approved this Agreement and the transactions contemplated hereby.
Wackenhut shall provide the Shareholders with notice of approval or disapproval
of this Agreement and the transactions contemplated herein within three (3)
business days following such action by its Board of Directors.
7.9 EMPLOYMENT AGREEMENTS. Xxxxxx shall have terminated any Existing
Employment Agreement to which he is a party and executed and delivered to
Wackenhut the Xxxxxx Employment Agreement. Xxxxxxx shall have terminated any
Existing Employment to which she is a party and executed and delivered to
Wackenhut the Xxxxxxx Employment Agreement.
7.10 DELIVERY OF PURCHASED ASSETS. At the Closing, the Companies shall
duly execute and deliver to the Wackenhut Subsidiaries a Xxxx of Sale and
Assignment and such other instruments
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of transfer of title as are reasonably necessary in the opinion of Wackenhut to
transfer to the Wackenhut Subsidiaries good and marketable title to the
Purchased Assets, in each case, in form and substance satisfactory to Wackenhut,
and shall deliver to the Wackenhut Subsidiaries immediate possession of the
Purchased Assets.
7.11 HSR ACT COMPLIANCE. Wackenhut shall obtain approval under the HSR
Act or early termination of any waiting period required thereby with respect to
the transactions contemplated hereby.
7.12 SHAREHOLDER INDEBTEDNESS. Any indebtedness owed by any Shareholder
or any Affiliate of any Shareholder to any of the Companies or CMC shall prior
to Closing have been repaid in full.
7.13 DISSOLUTION OF XXXXX, XXXXXXXX & COMPANY, INC. CMC shall have
assigned and transferred all of the CMC Assets to PEM in accordance with SECTION
6.26 and shall have been dissolved in accordance with the laws of the State of
Florida.
7.14 EXECUTION AND ASSIGNMENT OF AIA AGREEMENTS. PEM and AIA shall have
entered into the AIA Agreements and such Agreements shall have been assigned to
the Wackenhut Subsidiaries.
7.15 AIA DUE DILIGENCE REVIEW. Wackenhut shall be satisfied with the
results of its AIA Due Diligence Review, provided, however, that if Wackenhut is
not satisfied with the results of its AIA Due Diligence Review it shall so
inform the Companies no later than 5:00 p.m. on December 12, 1997.
7.16 PURCHASE PRICE ALLOCATION CERTIFICATE. The Companies and the
Shareholders shall have executed and delivered to Wackenhut a Purchase Price
Allocation Certificate which complies with SECTION 2.5 and is acceptable to
Wackenhut.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF
THE SHAREHOLDERS AND COMPANIES
The obligations of the Shareholders and the Companies to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part by the Shareholders and the Companies:
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8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Wackenhut contained in this
Agreement shall be true and correct at and as of the Closing Date with the same
force and effect as though made at and as of that time except (a) for changes
specifically permitted by or disclosed pursuant to this Agreement, and (b) that
those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date. Wackenhut shall
have performed and complied with all of its obligations required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date. Wackenhut shall have delivered to the Companies and Shareholders a
certificate, dated as of the Closing Date, and signed by an executive officer,
certifying that such representations and warranties are true and correct and
that all such obligations have been performed and complied with.
8.2 DELIVERY OF CLOSING DATE PAYMENT. At the Closing, Wackenhut shall
have delivered to the Shareholders the Closing Date Payment in accordance with
SECTION 2.4 of this Agreement.
8.3 NO ORDER OR INJUNCTION. There shall not be pending by or before any
court or other governmental body an order or injunction restraining or
prohibiting the transactions contemplated hereby.
8.4 EMPLOYMENT AGREEMENTS. The Wackenhut Subsidiaries shall have
executed and delivered to Xxxxxxx the Xxxxxxx Employment Agreement and shall
have executed and delivered to Xxxxxx the Xxxxxx Employment Agreement.
8.5 PAYMENT OF SOFTWARE NOTE. At Closing, the Wackenhut Subsidiaries
shall have paid the Software Note in full.
8.6 PURCHASE PRICE ALLOCATION CERTIFICATE. Wackenhut shall have
executed and delivered to the Companies and the Shareholders a Purchase Price
Allocation Certificate which complies with SECTION 2.5 and is acceptable to the
Companies and the Shareholders.
ARTICLE IX
REGISTRATION RIGHTS
The Shareholders shall have the following registration rights with
respect to any Wackenhut Shares which may be issued pursuant to this Agreement:
9.1 REGISTRATION RIGHTS FOR WACKENHUT SHARES; FILING OF REGISTRATION
STATEMENT. Wackenhut will utilize its reasonable efforts to cause, as soon as
practicable following the issuance, if any, by Wackenhut of Wackenhut Shares to
the Companies pursuant to SECTION 2.4 above (each such date referred to herein
as an "Applicable Issue Date") (but no later than 60 calendar days following the
Applicable Issue Date), a registration statement to be filed under the
Securities Act or
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an existing registration statement to be amended or supplemented for the purpose
of registering the Wackenhut Shares for resale by a Holder thereof (each such
registration statement referred to herein as an "Applicable Registration
Statement"). For purposes of this ARTICLE IX, a person is deemed to be a
"Holder" of Wackenhut Shares whenever such person is the record owner of
Wackenhut Shares. Wackenhut will use its best efforts to have the Applicable
Registration Statement become effective and cause the applicable Wackenhut
Shares to be registered under the Securities Act, and registered, qualified or
exempted under the state securities laws of such jurisdictions as any Holder
reasonably requests, as soon as reasonably practicable following the Applicable
Issue Date, PROVIDED, HOWEVER, that Wackenhut shall not be required to qualify
to do business in any state or to consent to general service of process in any
state where it is not otherwise required to be so qualified or subject.
Notwithstanding the foregoing, Wackenhut may delay filing an Applicable
Registration Statement, and may withhold efforts to cause the Applicable
Registration Statement to become effective, if Wackenhut determines in good
faith that such registration might interfere with or affect the negotiation or
completion of any transaction that is being contemplated by Wackenhut (whether
or not a final decision has been made to undertake such transaction) at the time
the right to delay is exercised.
9.2 EXPENSES OF REGISTRATION. Wackenhut shall pay all expenses incurred
by Wackenhut in connection with the registration, qualification and/or exemption
of the Wackenhut Shares, including any SEC and state securities law registration
and filing fees, printing expenses, fees and disbursements of Wackenhut's
counsel and accountants, transfer agents' and registrars' fees, fees and
disbursements of experts used by Wackenhut in connection with such registration,
qualification and/or exemption, and expenses incidental to any amendment or
supplement to the Applicable Registration Statement or prospectuses contained
therein. Wackenhut shall not, however, be liable for any sales, broker's or
underwriting commissions upon sale by any Holder of any of the Wackenhut Shares.
9.3 FURNISHING OF DOCUMENTS. Wackenhut shall furnish to the Holders
such reasonable number of copies of the Applicable Registration Statement, such
prospectuses as are contained in the Applicable Registration Statement and such
other documents as the Holders may reasonably request in order to facilitate the
offering of the Wackenhut Shares.
9.4 AMENDMENTS AND SUPPLEMENTS. Wackenhut shall prepare and promptly
file with the SEC and promptly notify the Holders of the filing of such
amendments or supplements to the Applicable Registration Statement or
prospectuses contained therein as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to the Wackenhut Shares is
required to be delivered under the Securities Act, any event shall have occurred
as a result of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Wackenhut shall also
advise the Holders promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of the Applicable Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its reasonable
best
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efforts to prevent the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued.
9.5 DURATION. Wackenhut shall use best efforts to maintain the
effectiveness of any Applicable Registration Statement filed hereunder for a
period of two years following the last issuance of Wackenhut Shares covered by
such Applicable Registration Statement. Wackenhut's obligations contained in
SECTIONS 9.1, 9.3 AND 9.4 with respect to any Wackenhut Shares issued hereunder
shall terminate on the second anniversary of the date on which such Wackenhut
Shares were issued.
9.6 FURTHER INFORMATION. If Wackenhut Shares owned by a Holder are
included in any registration, such Holder shall furnish Wackenhut such
information regarding itself as Wackenhut may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
9.7 INDEMNIFICATION.
(a) Wackenhut will indemnify and hold harmless the Holders and
each person, if any, who controls a Holder within the meaning of the
Securities Act, from and against any and all losses, damages,
liabilities, costs and expenses to which the Holders or any such
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue
statement of any material fact contained in the Applicable Registration
Statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that, Wackenhut will not be liable in any such case to the
extent that any such loss, claim, damage, liability, cost or expense
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with
information furnished by or on behalf of any Holder or such controlling
person in writing specifically for use in the preparation thereof.
(b) Each of the Holders, jointly and severally, will indemnify
and hold harmless Wackenhut and each person, if any, who controls
Wackenhut within the meaning of the Securities Act, from and against
any and all losses, damages, liabilities, costs and expenses to which
Wackenhut or any such controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in the
Applicable Registration Statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, to the
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extent that such untrue statement or alleged untrue statement or
omission or alleged omission was so made in reliance upon and in strict
conformity with written information furnished by or on behalf of any
Holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this SECTION 9.7 of notice of
the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the
provisions of said paragraph (a) or (b), promptly notify the
indemnifying party of the commencement thereof; but the omission to so
notify the indemnifying party will not relieve it from any liability
which it may have hereunder unless the indemnifying party has been
materially prejudiced thereby and such failure to so notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than hereunder. In case such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party; PROVIDED, HOWEVER, if the defendants in any action
include both the indemnified party and the indemnifying party and there
is a conflict of interest which would prevent counsel for the
indemnifying party from also representing the indemnified party, the
indemnified party or parties shall have the right to select separate
counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of said paragraph (a) or (b) for any
legal or other expense subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence,
(ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the notice of the commencement of
the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party.
(d) In the event any of the Wackenhut Shares are sold by any
Holder or Holders in an underwritten public offering consented to by
Wackenhut, Wackenhut shall provide indemnification to the underwriters
of such offering and any person controlling any such underwriter on
behalf of the Holder or Holders making the offering; PROVIDED, HOWEVER,
that Wackenhut shall not be required to consent to any such
underwriting or to provide such indemnification in respect of the
matters described in the proviso to the first sentence of SECTION
9.7(A).
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ARTICLE X
INDEMNIFICATION
10.1 AGREEMENT BY THE COMPANIES AND THE SHAREHOLDERS TO INDEMNIFY. Each
Company and Shareholder, jointly and severally, agrees to indemnify and hold
Wackenhut and each of the Wackenhut Subsidiaries and each of their respective
shareholders, directors, officers, employees, attorneys and Affiliates (each a
"Wackenhut Indemnified Party" and together the "Wackenhut Indemnified Parties")
harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by any of the
Wackenhut Indemnified Parties arising out of or resulting from (i) any breach of
a representation or warranty made by any Company or Shareholder in or pursuant
to this Agreement, (ii) any breach of a covenant or agreement made by any
Company or Shareholder in or pursuant to this Agreement, (iii) any inaccuracy in
any certificate, instrument or other document delivered by any Company or
Shareholder pursuant to or in connection with this Agreement, (iv) the
Companies' ownership of the Purchased Assets and operation of the Business prior
to the Closing, (v) any Excluded Liabilities paid by Wackenhut, any of the
Wackenhut Subsidiaries or any of their Affiliates, (vi) the failure of any of
the Companies' 401(k) plans to qualify and be exempt from federal income taxes,
(vii) any claims of a franchisee of any Company arising from or related to (a)
the offering or sale of the franchise to any Person, (b) the transactions
contemplated by this Agreement, (c) the termination or attempted termination or
modification or attempted modification of any franchise rights or (d) any facts,
circumstances, events, actions, or failures to act occurring on or prior to the
Closing Date, (viii) any liability or obligation of any Company or Shareholder
for Taxes arising from or relating to any period occurring on or prior to the
Closing Date, (ix) any costs, penalties and expenses associated with regulatory
and licensing obligations arising on or prior to the Closing Date, (x) any
claims of any third parties arising from or relating to any facts, circumstances
or events occurring on or prior to the Closing Date, (xi) any obligations,
duties and liabilities of CMC, PEM II or PEM III, (xii) any obligations, duties
or liabilities relating to or arising under the Retrospective Policy, or (xiii)
any obligations, duties or liabilities arising out of or relating to the
relationship and any transaction between any of the Companies and AIA and the
failure of such relationship or transaction to comply with all Legal
Requirements (collectively, "Wackenhut Indemnifiable Damages"). Without limiting
the generality of the foregoing, with respect to the measurement of the
Wackenhut Indemnifiable Damages, each of the Wackenhut Indemnified Parties shall
have the right to be put in the same pre-tax consolidated financial position as
it would have been in had each of the representations and warranties of each
Company and Shareholder hereunder been true and correct and had each of the
covenants and agreements of each Company and Shareholder hereunder been
performed in full. Notwithstanding the foregoing provisions, no claim for the
Wackenhut Indemnifiable Damages shall be asserted by the Wackenhut Indemnified
Parties until the aggregate of all Wackenhut Indemnifiable Damages exceeds One
Hundred Thousand Dollars ($100,000) (the "Wackenhut Indemnification Threshold"),
at which time the Wackenhut Indemnified Parties may assert claims for the full
amount of the Wackenhut Indemnifiable Damages. Notwithstanding anything to the
contrary set forth herein, the total Wackenhut Indemnifiable Damages for which
the Companies and the Shareholders, in the
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aggregate, shall be liable hereunder shall not exceed Five Million Dollars
($5,000,000) (the "Wackenhut Indemnification Cap"). Notwithstanding anything to
the contrary set forth herein, the Wackenhut Indemnification Cap and the
Wackenhut Indemnification Threshold shall not apply to and there shall be no
limitation or restriction whatsoever on the liability of any Company or
Shareholder under this ARTICLE X for Wackenhut Indemnifiable Damages with
respect to any claim relating to or arising from any one or more of the
following: (a) a breach of any one or more of the representations and warranties
set forth in the first or last sentence of SECTION 4.1, or in SECTION 4.2,
SECTION 4.3, SECTION 4.13, SECTION 4.15 and SECTION 4.19; (b) any wilful or
intentional breach (made with the knowledge of the Companies or the
Shareholders) of any representation, warranty, covenant or agreement made in or
pursuant to this Agreement (including, without limitation, in the Schedules and
Exhibits attached hereto) or in any certificate, instrument or other document
delivered by any of the Companies or Shareholders pursuant to this Agreement,
(c) any act of fraud or statutory violation in the nature of fraud in connection
with the execution, delivery and performance of this Agreement, including
without limitation, any fraudulent representation or warranty made in or
pursuant to this Agreement (including, without limitation, in the Schedules and
Exhibits attached hereto) or in any certificate, instrument or other document
delivered by any of the Companies or Shareholders pursuant to or in connection
with this Agreement, (d) the payment by Wackenhut, the Wackenhut Subsidiaries or
any other Affiliate of Wackenhut of any Excluded Liabilities and (e) any
obligations, duties and liabilities of CMC, PEM II and PEM III. Without limiting
any other rights or remedies available to the Wackenhut Indemnified Parties, the
Wackenhut Indemnified Parties shall have the right to set off any claim for
Wackenhut Indemnifiable Damages (subject to the Wackenhut Indemnification
Threshold and Wackenhut Indemnification Cap, if applicable) against any Earnout
Payments otherwise payable pursuant to SECTION 2.4 of this Agreement, or any
other amounts which may be payable by Wackenhut, any of the Wackenhut
Subsidiaries or any other Affiliate of Wackenhut to any of the Companies or
Shareholders. If any of the Companies or Shareholders shall breach SECTION 6.9
of this Agreement, Wackenhut shall be entitled to receive, in addition to any
Wackenhut Indemnifiable Damages, reimbursement in full of all costs and expenses
incurred in connection with the transactions contemplated hereby (including
without limitation, any due diligence review and preparation and negotiation of
any documents and agreements).
10.2 AGREEMENT BY WACKENHUT TO INDEMNIFY. Wackenhut agrees to indemnify
and hold each Company and Shareholder and its respective shareholders,
directors, officers, employees, attorneys and Affiliates (each a "Company
Indemnified Party" and together the "Company Indemnified Parties") harmless from
and against the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including, without limitation, related counsel and
paralegal fees and expenses) incurred or suffered by such parties or any of them
arising out of or resulting from (i) any breach of a representation or warranty
made by Wackenhut in or pursuant to this Agreement, (ii) any breach of the
covenants or agreements made by Wackenhut in or pursuant to this Agreement,
(iii) any inaccuracy in any certificate, instrument or other document delivered
by Wackenhut pursuant to or in connection with this Agreement, (iv) the
Wackenhut Subsidiaries' ownership of the Purchased Assets and operation of the
Business following the Closing, and (v) any Assumed Liabilities (collectively,
"Company Indemnifiable Damages"). Without limiting the generality of the
foregoing, with respect to the measurement of Company Indemnifiable Damages,
each of the
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Company Indemnified Parties shall have the right to be put in the same pre-tax
consolidated financial position as it would have been in had each of the
representations and warranties of Wackenhut hereunder been true and correct and
had each of the covenants and agreements of Wackenhut hereunder been performed
in full. Notwithstanding the foregoing provisions, no claim for Company
Indemnifiable Damages shall be asserted by the foregoing Company Indemnified
Parties until the aggregate of all Company Indemnifiable Damages exceeds One
Hundred Thousand Dollars ($100,000) (the "Company Indemnifiable Threshold"), at
which time the foregoing Company Indemnified Parties may assert claims for the
full amount of the Company Indemnifiable Damages, and (iii) the total Company
Indemnifiable Damages for which Wackenhut shall be liable hereunder shall not
exceed Five Million Dollars ($5,000,000) (the "Company Indemnification Cap").
Notwithstanding anything else to the contrary set forth herein, the Company
Indemnification Cap and the Company Indemnification Threshold shall not apply to
and there shall be no limitation or restriction whatsoever on the liability of
Wackenhut under this ARTICLE X for Company Indemnifiable Damages with respect to
any claim relating to or arising from any one or more of the following: (a) a
breach of any one or more of the representations and warranties set forth in
SECTION 3.1, SECTION 3.2 and SECTION 3.3; (b) any wilful or intentional breach
(made with the knowledge of Wackenhut) of any representation, warranty, covenant
or agreement made in or pursuant to this Agreement (including, without
limitation, in the Schedules attached hereto) or in any certificate, instrument
or other document delivered by Wackenhut pursuant to this Agreement or (c) any
act of fraud or statutory violation in the nature of fraud in connection with
the execution, delivery and performance of this Agreement, including without
limitation, any fraudulent representation or warranty made in or pursuant to
this Agreement (including, without limitation, in the Schedules attached hereto)
or in any certificate, instrument or other document delivered by Wackenhut
pursuant to or in connection with this Agreement.
10.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Companies, the Shareholders and
Wackenhut in this Agreement or pursuant hereto shall survive the closing of the
transactions contemplated hereby as follows: (i) the representations and
warranties made by the Companies and the Shareholders in the first and last
sentence of SECTION 4.1 and in SECTIONS 4.2, 4.3 and 4.15 shall survive
indefinitely, (ii) the representations and warranties made by Wackenhut in
SECTIONS 3.1, 3.2 and 3.3 shall survive indefinitely, and (iii) all other
representations and warranties shall expire at the time the latest applicable
statute of limitations expires for the enforcement by an applicable Governmental
Authority or any other Person of any remedy with respect to a violation of the
subject matter covered by such representations and warranties. Notwithstanding
any knowledge of facts determined or determinable by any party by investigation,
each party shall have the right to fully rely on the representations,
warranties, covenants and agreements of the other parties contained in this
Agreement or in any other documents or papers delivered in connection herewith.
Each representation, warranty, covenant and agreement of the parties contained
in this Agreement is independent of each other representation, warranty,
covenant and agreement. No claim for the recovery of any Wackenhut Indemnifiable
Damages or Company Indemnifiable Damages with respect to the representations and
warranties in this Agreement may be asserted by any of the parties after such
representations and warranties shall expire in accordance with the terms of this
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Agreement; PROVIDED, HOWEVER, that claims for Wackenhut Indemnifiable Damages or
Company Indemnifiable Damages first asserted within the applicable period shall
not thereafter be barred.
10.4 REMEDIES CUMULATIVE. The remedies provided herein shall be
cumulative and shall not preclude any indemnified party from asserting any other
right, or seeking any other remedies against any indemnifying party.
ARTICLE XI
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the Issue Date of the Wackenhut Shares:
11.1 DISPOSITION OF SHARES. Each Company and Shareholder, jointly and
severally, represent and warrant that any shares of Wackenhut Series B Common
Stock being acquired hereunder are being acquired and will be acquired for
distribution to the Shareholders in connection with a plan of distribution,
which distribution shall be exempt from the registration requirements under the
Securities Act and any applicable state securities laws, and in connection
therewith the Shareholders each agree that they will not sell, transfer or
otherwise dispose of any Wackenhut Shares distributed to them, except pursuant
to (a) an exemption from the registration requirements under the Securities Act,
which does not require the filing by Wackenhut with the SEC of any registration
statement, offering circular or other document, in which case, each such
Shareholder shall first supply to Wackenhut an opinion of counsel (which counsel
and opinions shall be satisfactory to Wackenhut) that such exemption is
available, or (b) an effective registration statement filed by Wackenhut with
the SEC under the Securities Act.
11.2 LEGENDS. The certificates representing any Wackenhut Shares shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IN
COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE WITH
RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND ALSO MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER
EXCEPT IN COMPLIANCE WITH ANY APPLICABLE RULES OF THE
SECURITIES AND EXCHANGE COMMISSION.
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Wackenhut may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent of all of the parties hereto at
any time prior to the Closing; or
(b) by Wackenhut in the event of a material breach by any
Company or Shareholder of any provision of this Agreement; or
(c) by the Companies and the Shareholders in the event of a
material breach by Wackenhut of any provision of this Agreement; or
(d) by either Wackenhut or the Shareholders and the Companies,
if the Closing shall not have occurred by December 31, 1997; provided
that if the Closing shall not have occurred by December 31, 1997 due to
Wackenhut's failure to receive any permit, license, lender consent,
governmental authorization, third party consent or the like necessary
or appropriate to consummate the transactions contemplated hereunder
and to operate the Companies' business following the Closing
(including, without limitation, approval under the HSR Act, if
required), then, at Wackenhut's election, such date shall be extended
until such failure has been cured to Wackenhut's satisfaction or until
Wackenhut determines that such extension should terminate; provided,
however, that either Wackenhut, or the Shareholders and the Companies,
shall have the right to terminate this Agreement upon written notice to
the other parties if (i) such failure has not been cured on or prior to
January 31, 1998, and (ii) such failure is not waived by Wackenhut in
writing within 5 business days of receipt of a notice of termination
from the Shareholders and the Companies; or
(e) by either Wackenhut or the Shareholders and the Companies,
if the Closing shall not have occurred by December 31, 1997; provided
that if the Closing shall not have occurred by December 31, 1997 due to
a breach of our representation, warranty, covenant or obligation
hereunder by any of the Companies or the Shareholders (including,
without limitation, the failure of the Companies or the Shareholders to
cause the fulfillment of a condition to close which is within the
control of the Companies or the Shareholders), then, at Wackenhut's
election, such date shall be extended until such breach has been cured
to
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Wackenhut's satisfaction or until Wackenhut determines that such
extension should terminate; or
(f) by the Companies and the Shareholders in the event that
the Board of Directors of Wackenhut shall not have authorized and
approved of this Agreement and the transactions contemplated hereby on
or before December 15, 1997.
12.2 EFFECT OF TERMINATION. Except for the provisions of ARTICLE X
hereof, which shall survive any termination of this Agreement, in the event of
termination of this Agreement pursuant to SECTION 12.1, this Agreement shall
forthwith become void and of no further force and effect, and the parties shall
be released from any and all obligations hereunder; PROVIDED, HOWEVER, that
nothing herein shall relieve any party from liability for the willful breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims and other
communications delivered pursuant to or in connection with this Agreement or any
other agreement entered into pursuant hereto or in connection herewith, shall be
in writing and shall be deemed given if delivered by certified or registered
mail (first class postage pre-paid), guaranteed overnight delivery or facsimile
transmission if such transmission is confirmed by delivery by certified or
registered mail (first class postage pre-paid) or guaranteed overnight delivery,
to the following addresses and telecopy numbers (or to such other addresses or
telecopy numbers which such party shall designate in writing to the other
parties in accordance with this Section):
(a) IF TO WACKENHUT TO:
The Wackenhut Corporation
0000 Xxxxxxxxx Xxxxx, #000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
WITH A COPY TO:
The Wackenhut Corporation
0000 Xxxxxxxxx Xxxxx, #000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
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AND WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. March, Esq.
Telecopy: (000) 000-0000
(b) IF TO THE COMPANIES OR TO THE SHAREHOLDERS TO:
Professional Employee Management, Inc.
Sarasota City Center
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
WITH A COPY TO:
Holland & Knight LLP
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
13.2 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits attached hereto) and the other documents delivered at the Closing
pursuant hereto or in connection herewith, contains the entire understanding of
the parties in respect of their subject matter and supersedes all prior
agreements and understandings (oral or written) between or among the parties
with respect to such subject matter. The Schedules and Exhibits attached hereto
constitute a part of this Agreement as though set forth in full herein.
13.3 EXPENSES. Except as otherwise provided herein, the parties shall
pay their own fees and expenses, including their own counsel fees and expenses,
incurred in connection with this Agreement or any transaction contemplated
hereby. The parties agree that Wackenhut shall at Closing pay all sales,
transfer or similar Taxes, if any, required be paid by reason of the sale,
transfer or assignment by the Companies to Wackenhut of the Purchased Assets
pursuant to this Agreement. The Companies and the Shareholders hereby represent
and warrant that they are eligible for the sales and use tax exemption (relating
to occasional or isolated sales) arising from the transactions contemplated by
this Agreement as set forth in Rule 12A-1.037 of the Florida Administrative
Code.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No
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failure to exercise, and no delay in exercising, any right, power or privilege
under this Agreement shall operate as a waiver, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude the exercise of any
other right, power or privilege. No waiver of any breach of any provision shall
be deemed to be a waiver of any preceding or succeeding breach of the same or
any other provision, nor shall any waiver be implied from any course of dealing
between the parties. No extension of time for performance of any obligations or
other acts hereunder or under any other agreement shall be deemed to be an
extension of the time for performance of any other obligations or any other
acts. The rights and remedies of the parties under this Agreement are in
addition to all other rights and remedies, at law or equity, that they may have
against each other. Times shall be of the essence in this Agreement.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any person other than the parties to this Agreement and their
permitted assigns any legal or equitable rights hereunder. Except as expressly
provided herein, the rights and obligations of this Agreement may not be
assigned or delegated by any Company or Shareholder without the prior written
consent of Wackenhut. The parties acknowledge that Wackenhut will assign its
rights under this Agreement to one or more Wackenhut Subsidiaries, and upon such
assignment, the Wackenhut Subsidiaries shall have full rights under this
Agreement as if they were parties hereto. Wackenhut and the Wackenhut
Subsidiaries shall each be third party beneficiaries of the others with respect
to all rights and remedies provided hereunder or otherwise provided at law or in
equity.
13.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
13.7 GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by
and construed in accordance with the laws of the State of Florida applicable to
contracts executed and to be wholly performed within such State.
13.8 JURISDICTION. Any suit, action or proceeding against any Company
or Shareholder arising out of, or with respect to, this Agreement or any
judgment entered by any court in respect thereof may be brought in the courts of
Orange County, Florida or in the U.S. District Court for the Middle District of
Florida and each party hereby irrevocably accepts and consents to the
nonexclusive personal jurisdiction of those courts for the purpose of any suit,
action or proceeding. In addition, each party hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any judgment entered by any court in respect
thereof brought in Orange County, Florida or the U.S. District Court for the
Middle District of Florida and hereby further irrevocably waives any claim that
any suit, action or proceedings brought in Orange County, Florida or in such
District Court has been brought in an inconvenient forum.
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13.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents
and warrants to all other parties hereto that (a) before executing this
Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
THE WACKENHUT CORPORATION
a Florida corporation
By:
------------------------------------
Xxxxxx X. Xxxxx
Senior Vice President
-----------------------------------------
Xxxxxxx X. Xxxxxxx, individually
-----------------------------------------
Xxxxxx X. Xxxxxx, individually
PROFESSIONAL EMPLOYMENT
MANAGEMENT, INC.
a Florida corporation
By:
------------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
By:
------------------------------------
Xxxxxx X. Xxxxxx
President
69
PROFESSIONAL EMPLOYMENT
MANAGEMENT II, INC.
a Florida corporation
By:
------------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
By:
------------------------------------
Xxxxxx X. Xxxxxx
President
PROFESSIONAL EMPLOYMENT
MANAGEMENT III, INC.
a Florida corporation
By:
------------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
By:
------------------------------------
Xxxxxx X. Xxxxxx
President
PROFESSIONAL EMPLOYMENT
MANAGEMENT IV, INC.
a Florida corporation
By:
------------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
By:
------------------------------------
Xxxxxx X. Xxxxxx
President
70
SCHEDULES
4.1 Foreign Qualification; Corporate Names
4.4 Capitalization
4.5 Shareholders
4.6 Consents and Approvals
4.7 Records
4.9 Financial Statements
4.10 Changes since Current Balance Sheet Date
4.12 Litigation
4.13 Environmental
4.14(b) Real Estate Leases
4.15 Liens on Purchased Assets
4.17 Employees
4.18 Employee Benefits
4.19 Tax Matters
4.20 Insurance
4.22 Licenses and Permits
4.23 Related Party Transactions
4.24 Intellectual Property
4.25 Contracts
4.26 Wackenhut SEC Filings
4.27 Bank Accounts
6.6 Assets Not to be Contributed
EXHIBITS
Exhibit A Xxxxxxx Employment Agreement
Exhibit B Xxxxxx Employment Agreement
Exhibit C Opinion of Seller's Counsel
71
EXHIBIT A
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
December ___, 1997, between Professional Employee Management, Inc. (f/k/a WRI A,
Inc.), Professional Employee Management II, Inc. (f/k/a WRI B, Inc.),
Professional Employee Management III, Inc. (f/k/a WRI C, Inc.) and Professional
Employee Management IV, Inc. (f/k/a WRI D, Inc.) (collectively, the
"Companies"), each a Florida corporation and indirect wholly-owned subsidiary of
The Wackenhut Corporation ("Wackenhut"), also a Florida corporation, and Xxxxxxx
X. Xxxxxxx (the "Executive"), a resident of the State of Florida, whose address
is 000 Xxxxxxxx Xxxxx Xxxxx, Xxxxxxxx, Xxxxxxx 00000.
RECITALS
Pursuant to that certain Asset Purchase Agreement dated as of November
24, 1997 (the "Purchase Agreement") among Professional Employee Management,
Inc., Professional Employee Management II, Inc., Professional Employee
Management III, Inc., and Professional Employee Management IV, Inc. (together,
the "PEM Companies"), the Executive, Xxxxxx X. Xxxxxx and Wackenhut, Wackenhut
has agreed to acquire (through the Companies) substantially all of the business,
operations and assets of the PEM Companies, subject to the terms and conditions
set forth therein. As a condition to the closing of those transactions, the
Executive has agreed to enter into this Agreement and to serve as the Chief
Executive Officer of the Companies following consummation of the transactions.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained in this Agreement, the parties hereto agree as follows:
1. EMPLOYMENT. The Companies agree to employ the Executive as the Chief
Executive Officer of each of the Companies, and the Executive agrees to accept
such employment and serve in such position, subject to the terms and conditions
set forth in this Agreement. The period during which the Executive shall serve
as an employee of the Companies (the "Employment Period") shall commence on the
date hereof and, unless extended by mutual written agreement of the parties or
unless earlier terminated pursuant to this Agreement, shall expire on December
31, 2000.
2. DUTIES AND RESPONSIBILITIES. During the Employment Period, the
Executive shall have such authority and responsibility and perform such duties
as may be assigned to her from time to time at the direction of the respective
Boards of Directors of the Companies (or their designee). In the absence of such
assignment, the Executive shall perform such duties as are customary to the
Executive's office as are necessary to conduct the business and operations of
the Companies. During the Employment Period, the Executive's employment shall be
full time and the Executive shall
72
perform her duties honestly, diligently, competently, in good faith and in the
best interests of the Companies, and shall use her best efforts to promote the
interests of the Companies.
3. COMPENSATION. In consideration for the Executive's services
hereunder on behalf of the Companies and the restrictive covenants contained
herein, the Executive shall be paid during each year of the Employment Period an
annual salary (the "Salary") of One Hundred Eighty-Five Thousand Dollars
($185,000), payable in accordance with the Companies' customary payroll
practices and prorated for any partial year, as applicable, arising during the
Employment Period.
4. BENEFITS. During the Employment Period, the Executive shall be
entitled to participate in any insurance programs and fringe benefit plans and
programs as are established and maintained from time to time for the benefit of
the Companies' employees, subject to the provisions of such plans and programs
(the "Benefits"). The Executive shall receive credit toward benefits for any
period of time that the Executive was employed by the PEM Companies prior to the
date hereof.
5. EXPENSES. In addition to the Salary and benefits described above,
the Executive shall be reimbursed for all out-of-pocket costs and expenses
reasonably incurred by her on behalf of or in connection with the business of
the Companies, pursuant to the Companies' policies established from time to
time.
6. TERMINATION.
(a) TERMINATION FOR CAUSE. At any time during the Employment
Period, the Companies shall have the right to terminate the Employment Period
and to discharge the Executive for "cause". Termination for "cause" shall mean
termination because of (i) the Executive's breach of her covenants contained in
Section 7 of this Agreement, (ii) the Executive's breach of her covenants
contained in any provision of this Agreement other than Section 7 or failure to
perform her duties and responsibilities required to be performed under the terms
of this Agreement, provided such breach or failure is not cured within thirty
(30) calender days following written notice from the Companies, (iii) the
Executive's commission of an act of dishonesty, fraud, embezzlement or similar
act affecting the Companies or their clients, or commission of an act (other
than the good faith exercise of her business judgment in the performance of her
duties) resulting in material damage to the Companies, (iv) the Executive's
conviction by any county, state or federal court of any crime punishable by
incarceration, or (v) any action by the Executive which disqualifies her from
serving as a "controlling person" of a licensed "employee leasing company" under
the laws of the State of Florida. If the Executive shall resign or otherwise
terminate her employment with any of the Companies, the Executive shall be
deemed for purposes of this Agreement to have been terminated for "cause;"
provided, however, if the Executive shall resign within thirty (30) days
following written notification by the Company of a permanent transfer of the
Executive to an office of the Company which is located more than 50 miles from
0000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxx, then such resignation shall be deemed to be
a termination of the Employment Period by the Company without cause and shall be
governed by SECTION 6(B) below. If the Executive's employment shall be
terminated for cause, the Executive shall be entitled to that portion of her
Salary and Benefits
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prorated through the date of termination and the Companies shall have no further
obligations hereunder from and after the date of termination.
(b) TERMINATION WITHOUT CAUSE. At any time during the
Employment Period, the Companies shall have the right to terminate the
Employment Period and to discharge the Executive without cause, effective upon
delivery of written notice to the Executive. If the Executive's employment shall
be terminated without cause, the Executive shall be entitled to continue to
receive the Salary and Benefits when and as the same would have otherwise been
due and payable hereunder during the Employment Period but for such termination,
PROVIDED, HOWEVER, that the Executive shall only be entitled to such payments
and benefits as long as she is in compliance with the provisions of Section 7 of
this Agreement.
(c) TERMINATION UPON DEATH OR DISABILITY. At any time during
the Employment Period, the Companies shall have the right to terminate the
Employment Period and to discharge the Executive if the Executive is unable to
perform her duties and responsibilities as provided herein due to her death,
physical or mental disability or sickness extending for, or reasonably expected
to extend for, greater than ninety (90) days ("Death or Disability"). If the
Executive's employment shall be terminated as a result of her Death or
Disability, the Executive (or her estate) shall be entitled to receive that
portion of the Salary and Benefits prorated through the date of termination, and
the Companies shall have no further obligations under this Agreement from and
after the date of termination.
7. RESTRICTIVE COVENANT. The Executive agrees with the Companies that
she will not:
(a) for the longer of (i) a period of five (5) years from the
date hereof (the "Commencement Date") and (ii) a period of two (2) years
following the termination of the Executive's employment with Wackenhut and any
of its Affiliates (including, without limitation, the Companies), directly or
indirectly, alone or as a partner, joint venturer, officer, director, employee,
consultant, agent, independent contractor or shareholder of, or lender to, any
company or business, engage in the temporary help, employee placement, employee
leasing or any related business in any state in which Wackenhut or any of its
Affiliates (including, without limitation, the Companies) are then engaging in
the temporary help, employee placement, employee leasing or related businesses;
PROVIDED, HOWEVER, that the beneficial ownership of less than two percent (2%)
of the shares of stock of any other corporation having a class of equity
securities actively traded on a national securities exchange or over-the-counter
market shall not be deemed, in and of itself, to violate the prohibitions of
this Section 7;
(b) for the longer of (i) a period of five (5) years from the
date of this Agreement and (ii) a period of two (2) years following the
termination of the Executive's employment with Wackenhut and any of its
Affiliates (including, without limitation, the Companies), directly or
indirectly (i) induce any Client of Wackenhut or any of its Affiliates
(including the Companies) to patronize any business, directly or indirectly, in
competition with the temporary help, employee placement, employee leasing or any
related business conducted by Wackenhut or any of its Affiliates
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(including, without limitation, the Companies); (ii) canvass, solicit or accept
from any Client of Wackenhut or any of its Affiliates (including, without
limitation, the Companies), any such competitive business; or (iii) request or
advise any person or entity which has a business relationship with Wackenhut or
any of its Affiliates (including, without limitation, the Companies) to
withdraw, curtail or cancel any business with Wackenhut or any of its Affiliates
(including, without limitation, the Companies);
(c) for the longer of (i) a period of five (5) years from the
date of this Agreement and (ii) a period of two (2) years following the
termination of the Executive's employment by Wackenhut and any of its Affiliates
(including, without limitation, the Companies), directly or indirectly employ,
or knowingly permit any company or business directly or indirectly controlled by
her to employ, any person who was employed by Wackenhut or any of its Affiliates
(including, without limitation, the Companies), at or within the then prior six
months or in any manner seek to induce any such person to leave her employment;
or
(d) at any time following the date of this Agreement, directly
or indirectly, in any way utilize, disclose, copy, reproduce or retain in her
possession any confidential or proprietary information or records of Wackenhut
or any of its Affiliates (including, without limitation, the Companies),
including but not limited to, any of its Client and employee lists, except
during the period of employment by Wackenhut and its Affiliates (including,
without limitation, the Companies) as appropriate for the purpose of rendering
services to Wackenhut, the Companies and their Affiliates.
The Executive agrees and acknowledges that the restrictions contained in this
Section 7 are reasonable in scope, duration and area, and are necessary to
protect Wackenhut and its Affiliates (including, without limitation, the
Companies) after the date of this Agreement. The parties agree and acknowledge
that the breach of this Section 7 will cause irreparable damage to Wackenhut and
its Affiliates (including, without limitation, the Companies) for which monetary
damages will not be adequate and upon breach (or threatened breach) of any
provision of this Section 7, Wackenhut and its Affiliates (including, without
limitation, the Companies) shall be entitled to injunctive relief, specific
performance or other equitable relief; PROVIDED, HOWEVER, that this shall in no
way limit any other remedies which Wackenhut and its Affiliates (including,
without limitation, the Companies) may have (including, without limitation, the
right to seek monetary damages). If any provision of this Section 7 as applied
to any party or to any circumstance is adjudged by a court to be invalid or
unenforceable, the same will in no way affect any other circumstance or the
validity or enforceability of the remainder of this Agreement. If any such
provision, or any part thereof, is held to be unenforceable because of the
duration of such provision, the scope of activity or the area covered thereby,
the parties agree that the court making such determination shall have the power
to reduce the duration, scope and/or area of such provision, and/or to delete
specific words or phrases, and in its reduced form, such provision shall then be
enforceable and shall be enforced. In addition to any other remedies which the
Companies may have pursuant to applicable law or this Agreement, any
compensation, remuneration or benefit which the Executive may receive or derive
in connection with a violation of the covenants set forth in this Section 7 are
hereby assigned to the Companies.
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8. GENERAL PROVISIONS.
(a) DEFINED TERMS. Any terms used in this Agreement without
definition shall have the meanings ascribed to them in the Purchase Agreement.
(b) NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified or registered mail (first class postage pre-paid),
guaranteed overnight delivery or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class postage
pre-paid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which such
party shall designate in writing to the other parties in accordance with this
Section):
(i) IF TO THE COMPANIES TO:
The Wackenhut Corporation
0000 Xxxxxxxxx Xxxxx, #000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
WITH A COPY TO:
The Wackenhut Corporation
0000 Xxxxxxxxx Xxxxx, #000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
AND WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. March, Esq.
Telecopy: (000) 000-0000
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(ii) IF TO THE EXECUTIVE TO:
Xxxxxxx X. Xxxxxxx
000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
WITH A COPY TO:
Holland & Knight, LLP
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
(c) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties in respect of its subject matter and supersedes all
prior agreements and understandings (oral or written) between or among the
parties with respect to such subject matter.
(d) EXPENSES. Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
(e) AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising, any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor shall any waiver be
implied from any course of dealing between the parties. No extension of time for
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts. The rights and remedies of the parties
under this Agreement are in addition to all other rights and remedies, at law or
equity, that they may have against each other.
(f) BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder,
except that Wackenhut and its Affiliates shall be third party beneficiaries
hereunder. Except as expressly provided herein, the rights and obligations of
this Agreement may not be assigned or delegated by the Executive without the
prior written consent of the Companies. The Companies may assign all or any
portion of its rights hereunder to Wackenhut or one or more of its Affiliates.
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(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
(h) INTERPRETATION. When a reference is made in this Agreement
to an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
Schedules. Whenever the words "include,""includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
(i) GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State.
(j) JURISDICTION. Any suit, action or proceeding against the
Executive arising out of, or with respect to, this Agreement or any judgment
entered by any court in respect thereof may be brought in the courts of Orange
County, Florida or in the U.S. District Court for the Middle District of Florida
and each party hereby irrevocably accepts and consents to the nonexclusive
personal jurisdiction of those courts for the purpose of any suit, action or
proceeding. In addition, each party hereby irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any judgment entered by any court in respect thereof brought
in Orange County, Florida or the U.S. District Court for the Middle District of
Florida and hereby further irrevocably waives any claim that any suit, action or
proceedings brought in Orange County, Florida or in such District Court has been
brought in an inconvenient forum.
(k) ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PROFESSIONAL EMPLOYEE MANAGEMENT, INC.
(F/K/A WRI A, INC.)
By
---------------------------------------
Xxxxxx X. Xxxxx
President
PROFESSIONAL EMPLOYEE MANAGEMENT II, INC.
(F/K/A WRI B, INC.)
By
---------------------------------------
Xxxxxx X. Xxxxx
President
PROFESSIONAL EMPLOYEE MANAGEMENT III, INC.
(F/K/A WRI C, INC.)
By
---------------------------------------
Xxxxxx X. Xxxxx
President
PROFESSIONAL EMPLOYEE MANAGEMENT IV, INC.
(F/K/A WRI D, INC.)
By
---------------------------------------
Xxxxxx X. Xxxxx
President
-----------------------------------------
Xxxxxxx X. Xxxxxxx, individually
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EXHIBIT B
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
December ___, 1997, between Professional Employee Management, Inc. (f/k/a WRI A,
Inc.), Professional Employee Management II, Inc. (f/k/a WRI B, Inc.),
Professional Employee Management, III, Inc. (f/k/a WRI C, Inc.) and Professional
Employee Management IV, Inc. (f/k/a WRI D, Inc.) (collectively, the
"Companies"), each a Florida corporation and indirect wholly-owned subsidiary of
The Wackenhut Corporation ("Wackenhut"), also a Florida corporation, and Xxxxxx
X. Xxxxxx (the "Executive"), a resident of the State of Florida, whose address
is 000 Xxxxxx Xxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000.
RECITALS
Pursuant to that certain Asset Purchase Agreement dated as of November
24, 1997 (the "Purchase Agreement") among Professional Employee Management,
Inc., Professional Employee Management II, Inc., Professional Employee
Management III, Inc., and Professional Employee Management IV, Inc. (together,
the "PEM Companies"), the Executive, Xxxxxxx X. Xxxxxxx and Wackenhut, Wackenhut
has agreed to acquire (through the Companies) substantially all of the business,
operations and assets of the PEM Companies, subject to the terms and conditions
set forth therein. As a condition to the closing of those transactions, the
Executive has agreed to enter into this Agreement and to serve as the President
of the Companies following consummation of the transactions.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained in this Agreement, the parties hereto agree as follows:
1. EMPLOYMENT. The Companies agree to employ the Executive as the
President of each of the Companies, and the Executive agrees to accept such
employment and serve in such position, subject to the terms and conditions set
forth in this Agreement. The period during which the Executive shall serve as an
employee of the Companies (the "Employment Period") shall commence on the date
hereof and, unless extended by mutual written agreement of the parties or unless
earlier terminated pursuant to this Agreement, shall expire on December 31,
2000.
2. DUTIES AND RESPONSIBILITIES. During the Employment Period, the
Executive shall have such authority and responsibility and perform such duties
as may be assigned to him from time to time at the direction of the respective
Boards of Directors of the Companies (or their designee). In the absence of such
assignment, the Executive shall perform such duties as are customary to the
Executive's office as are necessary to conduct the business and operations of
the Companies. During the Employment Period, the Executive's employment shall be
full time and the Executive shall
80
perform his duties honestly, diligently, competently, in good faith and in the
best interests of the Companies, and shall use his best efforts to promote the
interests of the Companies.
3. COMPENSATION. In consideration for the Executive's services
hereunder on behalf of the Companies and the restrictive covenants contained
herein, the Executive shall be paid during each year of the Employment Period an
annual salary (the "Salary") of One Hundred Eighty-Five Thousand Dollars
($185,000), payable in accordance with the Companies' customary payroll
practices and prorated for any partial year, as applicable, arising during the
Employment Period.
4. BENEFITS. During the Employment Period, the Executive shall be
entitled to participate in any insurance programs and fringe benefit plans and
programs as are established and maintained from time to time for the benefit of
the Companies' employees, subject to the provisions of such plans and programs
(the "Benefits"). The Executive shall receive credit toward benefits for any
period of time that the Executive was employed by the PEM Companies prior to the
date hereof.
5. EXPENSES. In addition to the Salary and benefits described above,
the Executive shall be reimbursed for all out-of-pocket costs and expenses
reasonably incurred by him on behalf of or in connection with the business of
the Companies, pursuant to the Companies' policies established from time to
time.
6. TERMINATION.
(a) TERMINATION FOR CAUSE. At any time during the Employment
Period, the Companies shall have the right to terminate the Employment Period
and to discharge the Executive for "cause". Termination for "cause" shall mean
termination because of (i) the Executive's breach of his covenants contained in
Section 7 of this Agreement, (ii) the Executive's breach of his covenants
contained in any provision of this Agreement other than Section 7 or failure to
perform his duties and responsibilities required to be performed under the terms
of this Agreement, provided such breach or failure is not cured within thirty
(30) calender days following written notice from the Companies, (iii) the
Executive's commission of an act of dishonesty, fraud, embezzlement or similar
act affecting the Companies or their clients, or commission of an act (other
than the good faith exercise of his business judgment in the performance of his
duties) resulting in material damage to the Companies, (iv) the Executive's
conviction by any county, state or federal court of any crime punishable by
incarceration, or (v) any action by the Executive which disqualifies him from
serving as a "controlling person" of a licensed "employee leasing company" under
the laws of the State of Florida. If the Executive shall resign or otherwise
terminate his employment with any of the Companies, the Executive shall be
deemed for purposes of this Agreement to have been terminated for "cause;"
provided, however, if the Executive shall resign within thirty (30) days
following written notification by the Company of a permanent transfer of the
Executive to an office of the Company which is located more than 50 miles from
0000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxx, then such resignation shall be deemed to be
a termination of the Employment Period by the Company without cause and shall be
governed by SECTION 6(B) below. If the Executive's employment shall be
terminated for cause, the Executive shall be entitled to that portion of his
Salary and Benefits
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81
prorated through the date of termination and the Companies shall have no further
obligations hereunder from and after the date of termination.
(b) TERMINATION WITHOUT CAUSE. At any time during the
Employment Period, the Companies shall have the right to terminate the
Employment Period and to discharge the Executive without cause, effective upon
delivery of written notice to the Executive. If the Executive's employment shall
be terminated without cause, the Executive shall be entitled to continue to
receive the Salary and Benefits when and as the same would have otherwise been
due and payable hereunder during the Employment Period but for such termination,
PROVIDED, HOWEVER, that the Executive shall only be entitled to such payments
and benefits as long as he is in compliance with the provisions of Section 7 of
this Agreement.
(c) TERMINATION UPON DEATH OR DISABILITY. At any time during
the Employment Period, the Companies shall have the right to terminate the
Employment Period and to discharge the Executive if the Executive is unable to
perform his duties and responsibilities as provided herein due to his death,
physical or mental disability or sickness extending for, or reasonably expected
to extend for, greater than ninety (90) days ("Death or Disability"). If the
Executive's employment shall be terminated as a result of his Death or
Disability, the Executive (or his estate) shall be entitled to receive that
portion of the Salary and Benefits prorated through the date of termination, and
the Companies shall have no further obligations under this Agreement from and
after the date of termination.
7. RESTRICTIVE COVENANT. The Executive agrees with the Companies that
he will not:
(a) for the longer of (i) a period of five (5) years from the
date hereof (the "Commencement Date") and (ii) a period of two (2) years
following the termination of the Executive's employment with Wackenhut and any
of its Affiliates (including, without limitation, the Companies), directly or
indirectly, alone or as a partner, joint venturer, officer, director, employee,
consultant, agent, independent contractor or shareholder of, or lender to, any
company or business, engage in the temporary help, employee placement, employee
leasing or any related business in any state in which Wackenhut or any of its
Affiliates (including, without limitation, the Companies) are then engaging in
the temporary help, employee placement, employee leasing or related businesses;
PROVIDED, HOWEVER, that the beneficial ownership of less than two percent (2%)
of the shares of stock of any other corporation having a class of equity
securities actively traded on a national securities exchange or over-the-counter
market shall not be deemed, in and of itself, to violate the prohibitions of
this Section 7;
(b) for the longer of (i) a period of five (5) years from the
date of this Agreement and (ii) a period of two (2) years following the
termination of the Executive's employment with Wackenhut and any of its
Affiliates (including, without limitation, the Companies), directly or
indirectly (i) induce any Client of Wackenhut or any of its Affiliates
(including the Companies) to patronize any business, directly or indirectly, in
competition with the temporary help, employee placement, employee leasing or any
related business conducted by Wackenhut or any of its Affiliates
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(including, without limitation, the Companies); (ii) canvass, solicit or accept
from any Client of Wackenhut or any of its Affiliates (including, without
limitation, the Companies), any such competitive business; or (iii) request or
advise any person or entity which has a business relationship with Wackenhut or
any of its Affiliates (including, without limitation, the Companies) to
withdraw, curtail or cancel any business with Wackenhut or any of its Affiliates
(including, without limitation, the Companies);
(c) for the longer of (i) a period of five (5) years from the
date of this Agreement and (ii) a period of two (2) years following the
termination of the Executive's employment by Wackenhut and any of its Affiliates
(including, without limitation, the Companies), directly or indirectly employ,
or knowingly permit any company or business directly or indirectly controlled by
him to employ, any person who was employed by Wackenhut or any of its Affiliates
(including, without limitation, the Companies), at or within the then prior six
months or in any manner seek to induce any such person to leave his employment;
or
(d) at any time following the date of this Agreement, directly
or indirectly, in any way utilize, disclose, copy, reproduce or retain in his
possession any confidential or proprietary information or records of Wackenhut
or any of its Affiliates (including, without limitation, the Companies),
including but not limited to, any of its Client and employee lists, except
during the period of employment by Wackenhut and its Affiliates (including,
without limitation, the Companies) as appropriate for the purpose of rendering
services to Wackenhut, the Companies and their Affiliates.
The Executive agrees and acknowledges that the restrictions contained in this
Section 7 are reasonable in scope, duration and area, and are necessary to
protect Wackenhut and its Affiliates (including, without limitation, the
Companies) after the date of this Agreement. The parties agree and acknowledge
that the breach of this Section 7 will cause irreparable damage to Wackenhut and
its Affiliates (including, without limitation, the Companies) for which monetary
damages will not be adequate and upon breach (or threatened breach) of any
provision of this Section 7, Wackenhut and its Affiliates (including, without
limitation, the Companies) shall be entitled to injunctive relief, specific
performance or other equitable relief; PROVIDED, HOWEVER, that this shall in no
way limit any other remedies which Wackenhut and its Affiliates (including,
without limitation, the Companies) may have (including, without limitation, the
right to seek monetary damages). If any provision of this Section 7 as applied
to any party or to any circumstance is adjudged by a court to be invalid or
unenforceable, the same will in no way affect any other circumstance or the
validity or enforceability of the remainder of this Agreement. If any such
provision, or any part thereof, is held to be unenforceable because of the
duration of such provision, the scope of activity or the area covered thereby,
the parties agree that the court making such determination shall have the power
to reduce the duration, scope and/or area of such provision, and/or to delete
specific words or phrases, and in its reduced form, such provision shall then be
enforceable and shall be enforced. In addition to any other remedies which the
Companies may have pursuant to applicable law or this Agreement, any
compensation, remuneration or benefit which the Executive may receive or derive
in connection with a violation of the covenants set forth in this Section 7 are
hereby assigned to the Companies.
4
83
8. GENERAL PROVISIONS.
(a) DEFINED TERMS. Any terms used in this Agreement without
definition shall have the meanings ascribed to them in the Purchase Agreement.
(b) NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified or registered mail (first class postage pre-paid),
guaranteed overnight delivery or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class postage
pre-paid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to such other addresses or telecopy numbers which such
party shall designate in writing to the other parties in accordance with this
Section):
(i) IF TO THE COMPANIES TO:
The Wackenhut Corporation
0000 Xxxxxxxxx Xxxxx, #000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
WITH A COPY TO:
The Wackenhut Corporation
0000 Xxxxxxxxx Xxxxx, #000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
AND WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. March, Esq.
Telecopy: (000) 000-0000
5
84
(ii) IF TO THE EXECUTIVE TO:
Xxxxxx X. Xxxxxx
000 Xxxxxx Xxx Xxxxxx
Xxxxxxxx, XX 00000
Telecopy: (000) 000-0000
WITH A COPY TO:
Holland & Knight, LLP
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
(c) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties in respect of its subject matter and supersedes all
prior agreements and understandings (oral or written) between or among the
parties with respect to such subject matter.
(d) EXPENSES. Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel fees,
incurred in connection with this Agreement or any transaction contemplated
hereby.
(e) AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising, any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor shall any waiver be
implied from any course of dealing between the parties. No extension of time for
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts. The rights and remedies of the parties
under this Agreement are in addition to all other rights and remedies, at law or
equity, that they may have against each other.
(f) BINDING EFFECT; ASSIGNMENT. The rights and obligations of
this Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder,
except that Wackenhut and its Affiliates shall be third party beneficiaries
hereunder. Except as expressly provided herein, the rights and obligations of
this Agreement may not be assigned or delegated by the Executive without the
prior written consent of the Companies. The Companies may assign all or any
portion of its rights hereunder to Wackenhut or one or more of its Affiliates.
6
85
(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.
(h) INTERPRETATION. When a reference is made in this Agreement
to an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
Schedules. Whenever the words "include,""includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
(i) GOVERNING LAW; INTERPRETATION. This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of Florida applicable to contracts executed and to be wholly performed
within such State.
(j) JURISDICTION. Any suit, action or proceeding against the
Executive arising out of, or with respect to, this Agreement or any judgment
entered by any court in respect thereof may be brought in the courts of Orange
County, Florida or in the U.S. District Court for the Middle District of Florida
and each party hereby irrevocably accepts and consents to the nonexclusive
personal jurisdiction of those courts for the purpose of any suit, action or
proceeding. In addition, each party hereby irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any judgment entered by any court in respect thereof brought
in Orange County, Florida or the U.S. District Court for the Middle District of
Florida and hereby further irrevocably waives any claim that any suit, action or
proceedings brought in Orange County, Florida or in such District Court has been
brought in an inconvenient forum.
(k) ARM'S LENGTH NEGOTIATIONS. Each party herein expressly
represents and warrants to all other parties hereto that (a) before executing
this Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) said party has acted voluntarily and of its own
free will in executing this Agreement; (e) said party is not acting under
duress, whether economic or physical, in executing this Agreement; and (f) this
Agreement is the result of arm's length negotiations conducted by and among the
parties and their respective counsel.
7
86
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PROFESSIONAL EMPLOYEE MANAGEMENT, INC.
(F/K/A WRI A, INC.)
By
---------------------------------------
Xxxxxx X. Xxxxx
President
PROFESSIONAL EMPLOYEE MANAGEMENT II, INC.
(F/K/A WRI B, INC.)
By
---------------------------------------
Xxxxxx X. Xxxxx
President
PROFESSIONAL EMPLOYEE MANAGEMENT III, INC.
(F/K/A WRI C, INC.)
By
---------------------------------------
Xxxxxx X. Xxxxx
President
PROFESSIONAL EMPLOYEE MANAGEMENT IV, INC.
(F/K/A WRI D, INC.)
By
---------------------------------------
Xxxxxx X. Xxxxx
President
-----------------------------------------
Xxxxxx X. Xxxxxx, individually
8
87
EXHIBIT C
OPINION OF SELLER'S COUNSEL
1. Each Company is a corporation duly organized, validly existing
and with active status under the laws of the State of Florida
and is duly qualified to transact business as a foreign
corporation and in good standing under the laws of all other
jurisdictions where, to our knowledge, the ownership or
leasing of its properties or the conduct of its business
requires such qualifications.
2. Each Company has the corporate power and authority to execute
and deliver the Agreement and the agreements and instruments
to be entered into at the Closing (the "Closing Documents")
and to consummate the transactions contemplated thereby.
3. Each Company has taken all actions necessary to authorize the
execution and delivery of the Agreement and the Closing
Documents and the performance of its obligations thereunder.
4. Each Shareholder has the power and authority to execute,
deliver and perform their respective obligations under the
terms of the Agreement and the Closing Documents.
5. The Agreement and the Closing Documents have each been duly
executed and delivered by each Company and Shareholder and
constitute the legal, valid and binding obligation of each
Company and Shareholder, enforceable against each Company and
Shareholder in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or general
equitable principles.
6. The execution and delivery of the Agreement and the Closing
Documents by each Company and Shareholder, the performance by
each Company and Shareholder of their obligations thereunder
and the consummation by them of the transactions contemplated
by the Agreement and the Closing Documents will not (a)
contravene any provision of the Articles of Incorporation or
Bylaws of any Company, (b) violate or conflict with any law,
statute, ordinance, rule or regulation normally applicable to
transactions of this type, or to our knowledge (1) any other
law, statute, ordinance, rule or regulation, or (2) any
decree, writ, injunction, judgment or order of any
Governmental Authority or of any arbitration award which is
either applicable to, binding upon or enforceable against any
88
Company or Shareholder, (c) to our knowledge, conflict with,
result in any breach of, or constitute a default (or an event
which would, with the passage of time or the giving of notice
or both, constitute a default) under, or give rise to a right
of payment or right to terminate, amend, modify, abandon or
accelerate, any Contract which is applicable to, binding upon
or enforceable against any Company or Shareholder, (d) result
in or require the creation or imposition of any Lien upon or
with respect to any of the properties or assets of any
Company, (e) to our knowledge, give to any individual or
entity a right or claim against any Company or Shareholder or
(f) to our knowledge, require the consent, approval,
authorization or permit of, or filing with or notification to,
any Governmental Authority, any court or tribunal or any other
Person, except any SEC and other filings required to be made
by TWC and the HSR Act filings required to be made by the
parties or as set forth in Schedule 4.22 of the Agreement.
7. To our knowledge, none of the Companies or the Shareholders is
subject to any unsatisfied judgment, order, decree or
injunction and there is no litigation, proceeding or
investigation pending or threatened which could reasonably be
expected to have a Material Adverse Effect on any of them, or
which questions the validity of the Agreement.
89
LIST OF DEFINITIONS
Agreement.........................................................................................................1
Wackenhut.........................................................................................................1
Companies.........................................................................................................1
Xxxxxxx .........................................................................................................1
Xxxxxx .........................................................................................................1
Shareholders......................................................................................................1
Business .........................................................................................................1
Affiliate.........................................................................................................1
Base EBIT.........................................................................................................1
Clients .........................................................................................................2
CMC .........................................................................................................2
Code .........................................................................................................2
EBIT .........................................................................................................2
ERISA .........................................................................................................3
Exchange Act......................................................................................................3
GAAP .........................................................................................................3
Governmental Authority............................................................................................3
HSR Act .........................................................................................................3
Incremental EBIT..................................................................................................3
Independent Accountants...........................................................................................3
IRS .........................................................................................................3
Knowledge.........................................................................................................4
Legal Requirement.................................................................................................4
Lien .........................................................................................................4
Material Adverse Change (or Effect)...............................................................................4
Person .........................................................................................................4
PEM .........................................................................................................4
PEM II .........................................................................................................4
PEM III .........................................................................................................4
PEM IV .........................................................................................................4
PEM Accountants...................................................................................................5
Register .........................................................................................................5
registered........................................................................................................5
registration......................................................................................................5
Retrospective Policy..............................................................................................5
SEC .........................................................................................................5
Securities Act....................................................................................................5
Special Cause.....................................................................................................5
Tax .........................................................................................................5
Taxes .........................................................................................................5
Tax Return........................................................................................................5
90
Wackenhut Accountants.............................................................................................6
Wackenhut Shares..................................................................................................6
Wackenhut Series B Common Stock...................................................................................6
Wackenhut Subsidiaries............................................................................................6
Purchased Assets..................................................................................................7
Receivables.......................................................................................................7
Contracts.........................................................................................................8
Intellectual Property.............................................................................................8
Excluded Assets...................................................................................................8
Purchase Price....................................................................................................9
Downward Net Worth Adjustment.....................................................................................9
Long Term Liability Adjustment....................................................................................9
Working Capital Adjustment........................................................................................9
Upward Net Worth Adjustment.......................................................................................9
Closing Date Payment Adjustment...................................................................................9
Closing Date Payment Reserve.....................................................................................10
Earnout Payment..................................................................................................10
Earnout Payments.................................................................................................10
Earnout Certificate..............................................................................................10
NYSE ........................................................................................................11
Breaching Shareholder............................................................................................12
Earnout Adjustment Certificate...................................................................................12
Disposition......................................................................................................14
Earnout Acceleration Notice......................................................................................14
Accelerated Earnout Certificate..................................................................................14
Closing Date Payment Certificate.................................................................................16
Actual Closing Date Payment......................................................................................16
Assumed Liabilities..............................................................................................18
Excluded Liabilities.............................................................................................18
Closing ........................................................................................................19
Closing Date.....................................................................................................19
Interim Financial Statements.....................................................................................22
Audited Financial Statements.....................................................................................22
Financial Statements.............................................................................................22
Current Balance Sheet............................................................................................23
Notices ........................................................................................................24
Proceedings......................................................................................................24
Aboveground Storage Tank.........................................................................................26
Company ........................................................................................................26
Companies........................................................................................................26
Discharge........................................................................................................26
Environmental Laws...............................................................................................26
CERCLA ........................................................................................................26
91
RCRA ........................................................................................................26
FIFRA ........................................................................................................26
EPCRA ........................................................................................................26
OSHA ........................................................................................................26
Handle ........................................................................................................27
Hazardous Substances.............................................................................................27
Licenses ........................................................................................................27
Underground Storage Tank.........................................................................................27
Leases ........................................................................................................27
Leased Premises..................................................................................................27
Labor Laws.......................................................................................................29
Employee Benefit Plans...........................................................................................29
MPPA Plan........................................................................................................31
Welfare Plan.....................................................................................................31
PBGC ........................................................................................................32
Employee Benefit Plans...........................................................................................33
MPPA Plan........................................................................................................33
Welfare Plan.....................................................................................................34
PBGC ........................................................................................................34
Insurance Policies...............................................................................................36
Permits ........................................................................................................36
Projections......................................................................................................39
Software Note....................................................................................................42
Existing Employment Agreement....................................................................................46
Xxxxxxx Employment Agreement.....................................................................................46
Xxxxxx Employment Agreement......................................................................................46
Employment Agreements............................................................................................46
Working Capital..................................................................................................47
Current Assets...................................................................................................47
Current Liabilities..............................................................................................47
CMC Assets.......................................................................................................48
Applicable Issue Date............................................................................................52
Applicable Registration Statement................................................................................52
Holder ........................................................................................................52
Wackenhut Indemnified Party......................................................................................55
Wackenhut Indemnified Parties....................................................................................55
Wackenhut Indemnifiable Damages..................................................................................56
Wackenhut Indemnification Threshold..............................................................................56
Wackenhut Indemnification Cap....................................................................................56
Company Indemnified Party........................................................................................57
Company Indemnified Parties......................................................................................57
Company Indemnifiable Damages....................................................................................57
Company Indemnifiable Threshold..................................................................................57
92
Company Indemnification Cap......................................................................................57
ACT ........................................................................................................59
Agreement.........................................................................................................1
Aboveground Storage Tank.........................................................................................24
Accelerated Earnout Certificate..................................................................................14
ACT ........................................................................................................54
Actual Closing Date Payment Adjustment...........................................................................15
Affiliate.........................................................................................................1
Assumed Liabilities..............................................................................................16
Audited Companies................................................................................................21
Audited Financial Statements.....................................................................................21
Base EBIT.........................................................................................................2
Breaching Shareholder............................................................................................11
Business .........................................................................................................1
CERCLA ........................................................................................................25
Clients .........................................................................................................2
Closing ........................................................................................................18
Closing Date.....................................................................................................18
Closing Date Payment..............................................................................................9
Closing Date Payment Adjustment...................................................................................9
Closing Date Payment Adjustment Reserve..........................................................................10
Closing Date Payment Certificate.................................................................................15
CMC .........................................................................................................2
CMC Assets.......................................................................................................44
Code .........................................................................................................2
Companies.........................................................................................................1
Company ........................................................................................................24
Company Indemnifiable Damages....................................................................................52
Company Indemnifiable Threshold..................................................................................53
Company Indemnification Cap......................................................................................53
Company Indemnified Parties......................................................................................52
Company Indemnified Party........................................................................................52
Contracts.........................................................................................................7
Current Assets...................................................................................................42
Current Balance Sheet............................................................................................21
Current Liabilities..............................................................................................43
Discharge........................................................................................................24
Disposition......................................................................................................13
Xxxxxxx .........................................................................................................1
Xxxxxxx Employment Agreement.....................................................................................42
Downward Net Worth Adjustment.....................................................................................9
Earnout Acceleration Notice......................................................................................13
Earnout Adjustment Certificate...................................................................................12
93
Earnout Certificate..............................................................................................10
Earnout Payment..................................................................................................10
Earnout Payments.................................................................................................10
EBIT .........................................................................................................2
Employee Benefit Plans...........................................................................................28
Employment Agreements............................................................................................42
Environmental Laws...............................................................................................25
EPCRA............................................................................................................25
ERISA.............................................................................................................3
Estimated Closing Date Payment Adjustment........................................................................15
Exchange Act......................................................................................................3
Excluded Assets...................................................................................................8
Excluded Liabilities.............................................................................................17
Existing Employment Agreement....................................................................................42
Xxxxxx............................................................................................................1
Xxxxxx Employment Agreement......................................................................................42
FIFRA............................................................................................................25
Financial Statements.............................................................................................21
GAAP..............................................................................................................3
Governmental Authority............................................................................................3
Handle...........................................................................................................25
Hazardous Substances.............................................................................................25
Holder...........................................................................................................48
HSR Act...........................................................................................................3
Incremental EBIT..................................................................................................3
Independent Accountants...........................................................................................3
Insurance Policies...............................................................................................31
Intellectual Property.............................................................................................8
Interim Financial Statements.....................................................................................21
IRS...............................................................................................................4
Issue Date.......................................................................................................48
Knowledge.........................................................................................................4
Labor Laws.......................................................................................................28
Leased Premises..................................................................................................26
Leases...........................................................................................................26
Legal Requirement.................................................................................................4
Licenses.........................................................................................................26
Lien..............................................................................................................4
Long Term Liability Adjustment....................................................................................9
Majority in Interest of the Shareholders..........................................................................4
Material Adverse Change (or Effect)...............................................................................4
MPPA Plan........................................................................................................29
Notices ........................................................................................................23
94
NYSE ........................................................................................................11
OSHA ........................................................................................................25
PBGC ........................................................................................................30
PEM .........................................................................................................4
PEM Accountants...................................................................................................5
PEM II .........................................................................................................5
PEM III .........................................................................................................5
Permits ........................................................................................................32
Person .........................................................................................................4
Proceedings......................................................................................................23
Projections......................................................................................................34
Purchase Price....................................................................................................9
Purchased Assets..................................................................................................7
RCRA ........................................................................................................25
Receivables.......................................................................................................7
Register .........................................................................................................5
registered........................................................................................................5
registration......................................................................................................5
Registration Statement...........................................................................................48
Retrospective Policy..............................................................................................5
SEC .........................................................................................................5
Securities Act....................................................................................................5
Shareholders......................................................................................................1
Special Cause.....................................................................................................5
Tax .........................................................................................................5
Tax Return........................................................................................................6
Taxes .........................................................................................................5
Underground Storage Tank.........................................................................................26
Upward Net Worth Adjustment.......................................................................................9
Wackenhut.........................................................................................................1
Wackenhut Accountants.............................................................................................6
Wackenhut Indemnifiable Damages..................................................................................51
Wackenhut Indemnification Cap....................................................................................51
Wackenhut Indemnification Threshold..............................................................................51
Wackenhut Indemnified Parties....................................................................................51
Wackenhut Indemnified Party......................................................................................51
Wackenhut Series B Common Stock...................................................................................6
Wackenhut Shares..................................................................................................6
Wackenhut Subsidiaries............................................................................................6
Welfare Plan.....................................................................................................29
Working Capital..................................................................................................42
Working Capital Adjustment........................................................................................9
