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EXHIBIT 10.39
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STOCK PURCHASE AGREEMENT,
DATED AS OF OCTOBER 1, 1996,
BETWEEN AND AMONG
CROWN NORTHCORP, INC.;
CNC HOLDING CORP.;
XXXXXX AND XXXXX HOLDING, INC.;
XXXXXX X. XXXXX;
XXXXX X. XXXX;
XXXXXXX X. XXXXXXXX;
XXXXXXX X. NORTH;
XXX X. XXXXXXX;
XXXXXXX X. XXXXXX, XX.;
EASTERN REALTY CORPORATION;
EASTERN BALTIMORE, INC.;
AND
EASTERN REALTY L.L.C.
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TABLE OF CONTENTS
ARTICLE PAGE
ARTICLE I
The Purchase and Sale.................................. 2
1.1. Terms of the Purchase and Sale............................................... 2
1.2. The Closing.................................................................. 3
ARTICLE II
Representations and Warranties of Stockholders............... 3
2.1. Organization and Qualification............................................... 3
2.2. Capitalization............................................................... 6
2.3. Authorizations............................................................... 6
2.4. Accreditation and Non-Distributive Intent.................................... 7
2.5. Completeness of Disclosure................................................... 8
2.6. Validity of Issuance......................................................... 8
2.7. Several Representations...................................................... 8
ARTICLE III
Representations and Warranties of Active Stockholder............ 8
3.1. Financial Condition.......................................................... 8
3.2. Taxes........................................................................ 9
3.3. Litigation and Claims........................................................ 10
3.4. Properties................................................................... 11
3.5. Contracts and Other Instruments.............................................. 12
3.6. Employees.................................................................... 13
3.7. Patents, Trademarks, Et Cetera............................................... 14
3.8. Questionable Payments........................................................ 14
3.9. Consents..................................................................... 14
3.10. Specific Representations and Warranties With Respect To the Controlled
Entities..................................................................... 15
3.11. Qualification as to Controlled Entity Representations and Warranties......... 16
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ARTICLE PAGE
ARTICLE IV
Representations and Warranties of the Purchaser...... 17
4.1. Organization......................................................... 17
4.2. Validity of Shares................................................... 17
4.3. Authority to Buy..................................................... 17
4.4. Non-Distributive Intent.............................................. 17
4.5. Validity of Issuance................................................. 18
4.6. Capitalization....................................................... 18
ARTICLE V
Covenants and Agreements.................. 18
5.1. Covenants and Agreements of the Acquired Corporations and the
Stockholders......................................................... 18
5.2. Covenants and Agreements of the Purchaser and CNC.................... 19
ARTICLE VI
Indemnification...................... 20
6.1. Indemnification by Active Stockholders............................... 20
6.2. Indemnification By The Stockholders.................................. 20
6.3. Indemnification By The Purchaser and CNC............................. 21
6.4. Method of Asserting Claims........................................... 21
6.5. Payment.............................................................. 23
6.6. Arbitration.......................................................... 23
6.7. Other Rights and Remedies Not Affected............................... 23
ARTICLE VII
Miscellaneous....................... 24
7.1. Actual Knowledge..................................................... 24
7.2. Brokerage Fees....................................................... 24
7.3. Further Actions...................................................... 24
7.4. Availability of Equitable Remedies................................... 24
7.5. Survival............................................................. 25
7.6. Modification......................................................... 25
7.7. Notices.............................................................. 25
7.8. Waiver............................................................... 27
7.9. Acquired Entity Obligations.......................................... 27
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ARTICLE PAGE
7.10. Binding Effect....................................................... 27
7.11. No Third Party Beneficiaries......................................... 27
7.12. Separability......................................................... 27
7.13. Headings............................................................. 27
7.14. Counterparts; Governing Law.......................................... 28
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LIST OF SCHEDULES
Schedule 1.1(c) - Shares of Series A Convertible Preferred Stock to be
Issued
Schedule 2.1(a) - List Of ERC Subsidiaries, ERC Interests, and Controlled
ERC Entities And Information About Them And ERC
Schedule 2.1(b) - List Of Baltimore Subsidiaries, Baltimore Interests, and
Controlled Baltimore Entities And Information About Them
And Baltimore
Schedule 2.1(c) - List Of ELLC Subsidiaries, ELLC Interests, and Controlled
ELLC Entities And Information About Them And ELLC
Schedule 2.1(d) - Organizational Chart of the Acquired Corporations, the
Subsidiaries, the Controlled Entities, and the Interests
Schedule 2.2 - Ownership of the Acquired Corporations, the Subsidiaries,
and the Controlled Entities
Schedule 2.4(d) - Information about the Purchaser
Schedule 3.1(a) - Delivered Financial Statements
Schedule 3.2 - Taxes
Schedule 3.3 - Litigation
Schedule 3.4(b) - List Of Property Owned, Leased, And Licensed
Schedule 3.4(d) - Environmental Laws
Schedule 3.5 - List Of Contracts, Agreements, Instruments, And
Arrangements
Schedule 3.6 - Employee Benefits
Schedule 3.7 - List Of Intangibles Owned And Licensed
Schedule 3.9(a) - Governmental Consents
Schedule 3.9(b) - Contractual Consents
Schedule 3.10 - Representations and Warranties with respect to Controlled
Entities as to delinquent taxes or assessments
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of October
1, 1996, is between and among CROWN NORTHCORP, INC., a Delaware corporation with
offices at 0000 Xxxxxx Xxxx, Xxxxxxxx, Xxxx 00000 (the "Purchaser"); CNC HOLDING
CORP., a Delaware corporation and a wholly-owned subsidiary of the Purchaser
with offices at 0000 Xxxxxx Xxxx, Xxxxxxxx, Xxxx 00000 ("CNC"); XXXXXX AND XXXXX
HOLDING, INC., a Virginia corporation with offices at 0000 Xxxxxxxxxx Xxxx,
Xxxxx 000, XxXxxx, Xxxxxxxx 00000 ("M&S"); XXXXXX X. XXXXX, an individual
residing at 0000 Xxxxxx Xxxxx Xxx, Xxxxxxx, Xxxxxxxx 00000 ("Xxxxx"); XXXXX X.
XXXX, an individual residing at 00000 Xxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx
00000 ("Hall"); XXXXXXX X. XXXXXXXX, an individual residing at 0000 Xxxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 ("Xxxxxxxx"); XXXXXXX X. NORTH, an individual
residing at 0000 Xxxxxxxxxx Xxxx, XxXxxx, Xxxxxxxx 00000 ("North"); XXX X.
XXXXXXX, an individual residing at 0000 Xxxxxx Xxx, Xxxxxxxx, Xxxxxxxx 00000
("Xxxxxxx"); XXXXXXX X. XXXXXX, XX., an individual residing at 0000 Xxxxxxxx
Xxxxxx, Xxxxx Xxxxx, Xxxxxxxx 00000 ("Stuart"; each of Smith, Hall, Xxxxxxxx,
North, Xxxxxxx, and Stuart are generically referred to herein as an
"ELLC/Baltimore Stockholder," and are collectively referred to herein as the
"ELLC/Baltimore Stockholders"; and the ELLC/Baltimore Stockholders and M&S are
collectively referred to herein as the "Stockholders"); EASTERN REALTY
CORPORATION, a Virginia corporation and a wholly-owned subsidiary of M&S with
offices at 0000 Xxxxxxxxxx Xxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000 ("ERC");
EASTERN BALTIMORE, INC., a Virginia S corporation with offices at 0000
Xxxxxxxxxx Xxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000 ("Baltimore"); and EASTERN
REALTY L.L.C., a Virginia limited liability company with offices at 0000
Xxxxxxxxxx Xxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000 ("ELLC"; ERC, Baltimore, and
ELLC are collectively referred to herein as the "Acquired Corporations" and are
individually referred to herein as an "Acquired Corporation").
WHEREAS, the Purchaser desires to acquire, through CNC, all of the
issued and outstanding capital stock or membership interests, as the case may
be, of each of the Acquired Corporations from the Stockholders for consideration
of shares of the Series A Convertible Preferred Stock, par value $.01 per share,
of the Purchaser (the "Preferred Stock") and Warrants for the issuance of Common
Stock of Purchaser at a purchase price equal to $0.75 per share, exercisable for
a period of three (3) years from the date of this Agreement (the "Warrants"; the
Preferred Stock, the Warrants and the securities issuable upon conversion of the
Warrants are sometimes referred to herein collectively as the "Securities"); and
WHEREAS, M&S owns all of the issued and outstanding capital stock of
ERC and desires to effect such purchase and sale; and
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WHEREAS, the ELLC/Baltimore Stockholders own all of the issued and
outstanding capital stock of Baltimore and desire to effect such purchase and
sale; and
WHEREAS, the ELLC/Baltimore Stockholders own all of the issued and
outstanding membership interests in ELLC, and desire to effect such purchase and
sale;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the adequacy, sufficiency, and receipt of which is
hereby acknowledged by the parties, the parties hereto agree as follows:
ARTICLE I
THE PURCHASE AND SALE
SECTION 1.1. TERMS OF THE PURCHASE AND SALE. On the basis of the
representations, warranties, covenants, and agreements contained in this
Agreement and subject to the terms and conditions of this Agreement:
(a) (i) M&S shall sell, assign, transfer, and convey to CNC at
the consummation of the transactions contemplated by Sections 1.1(a) and 1.1(b)
hereby (the "Closing") all of the issued and outstanding capital stock of ERC
(the "ERC Shares").
(ii) Each of the ELLC/Baltimore Stockholders shall sell,
assign, transfer, and convey to CNC at the Closing all of the issued and
outstanding shares of capital stock of Baltimore owned by him, which shares
shall collectively constitute all of the issued and outstanding shares of
capital stock of Baltimore (the "Baltimore Shares").
(iii) Each of the ELLC/Baltimore Stockholders shall sell,
assign, transfer, and convey to CNC at the Closing all of the issued and
outstanding membership interests in ELLC owned by him, which membership
interests shall collectively constitute all of the issued and outstanding
membership interests in ELLC as of the Closing (the "ELLC Membership
Interests").
(b) (i) M&S shall deliver at the Closing certificates
representing all of the ERC Shares duly endorsed in blank or accompanied by
stock powers duly endorsed in blank, in each case in proper form for transfer,
and with all stock transfer and any other required documentary stamps affixed
thereto.
(ii) The ELLC/Baltimore Stockholders shall deliver at the
Closing certificates representing all of the Baltimore Shares duly endorsed in
blank or accompanied by stock powers duly endorsed in blank, in each case in
proper form for transfer, and with all stock transfer and any other required
documentary stamps affixed thereto.
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(iii) Each of the ELLC/Baltimore Stockholders shall deliver at
the Closing to CNC and Crown Revenue Services, Inc., an Ohio corporation, a
transfer and assignment of all of his membership interest in ELLC, which
transfer and assignment shall be in form and substance satisfactory to the
Purchaser.
(c) As consideration for the ERC Shares, the Baltimore Shares, and
the ELLC Membership Interests delivered to the Purchaser pursuant to this
Agreement, CNC shall deliver at the Closing (i) certificates registered in the
names and for the number of shares of the Preferred Stock as set forth in
Schedule 1.1(c), and (ii) Warrants registered in the names and for the number of
shares of Common Stock of the Purchaser as set forth on Schedule 1.1(c).
SECTION 1.2. THE CLOSING. The Closing shall take place at the offices
of Powell, Goldstein, Xxxxxx & Xxxxxx, 0000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxx,
X.X. 00000, and shall be effective as of October 1, 1996.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
The Stockholders, jointly and severally, hereby make the following
representations and warranties to the Purchaser and CNC as of the Closing.
SECTION 2.1. ORGANIZATION AND QUALIFICATION.
(a) (i) ERC owns, either directly or through one or more ERC
Subsidiaries (as hereinafter defined), the equity interests in the entities
listed on Schedule 2.1(a) (collectively, the "ERC Interests").
(ii) Schedule 2.1(a) correctly lists all entities which
should be consolidated in the financial statements of ERC in accordance with
generally accepted accounting principles (collectively, the "ERC Subsidiaries").
(iii) Schedule 2.1(a) correctly lists each of the ERC
Interests which are general partner interests, managing membership interests, or
other Control Securities (as hereinafter defined) along with the issuer thereof
(such issuers, which shall be deemed to include, without limitation, all
enterprises in which ERC directly or indirectly possesses an interest which are
involved in land development or model home programs, being referred to herein as
the "Controlled ERC Entities"). As used herein, "Control Securities" means
securities which, through voting rights, by or in tandem with contractual
rights, or otherwise (alone or in conjunction with other elements), confer upon
the holder thereof the power to influence the management, policies, or direction
of the issuer thereof.
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(iv) Schedule 2.1(a) correctly sets forth as to ERC, each ERC
Subsidiary, the issuer of each ERC Interest, and each Controlled ERC Entity (A)
its place of incorporation or organization, (B) its principal place of business,
(C) the jurisdictions in which it is qualified to do business, (D) a description
of the business which it currently conducts, (E) its authorized capitalization,
(F) the equity interests therein currently outstanding, and (G) the record owner
of such equity interests.
(v) Other than the ERC Subsidiaries and the ERC Interests,
neither ERC nor any of the ERC Subsidiaries or Controlled ERC Entities has a
Subsidiary or affiliate or owns any interest in any enterprise (whether or not
such enterprise is a corporation) that is not listed on Schedule 2.1(a).
(b) (i) Baltimore owns, either directly or through one or more
Baltimore Subsidiaries (as hereinafter defined), the equity interests in the
entities listed on Schedule 2.1(b) (collectively, the "Baltimore Interests").
(ii) Schedule 2.1(b) correctly lists all entities which
should be consolidated in the financial statements of Baltimore in accordance
with generally accepted accounting principles (collectively, the "Baltimore
Subsidiaries").
(iii) Schedule 2.1(b) correctly lists each of the Baltimore
Interests which are general partner interests, managing membership interests, or
other Control Securities along with the issuer thereof (such issuers, which
shall be deemed to include, without limitation, all enterprises in which
Baltimore directly or indirectly possesses an interest which are involved in
land development or model home programs, being referred to herein as the
"Controlled Baltimore Entities").
(iv) Schedule 2.1(b) correctly sets forth as to Baltimore,
each Baltimore Subsidiary, the issuer of each Baltimore Interest, and each
Controlled Baltimore Entity (A) its place of incorporation or organization, (B)
its principal place of business, (C) the jurisdictions in which it is qualified
to do business, (D) a description of the business which it currently conducts,
(E) its authorized capitalization, (F) the equity interests therein currently
outstanding, and (G) the record owner of such equity interests.
(v) Other than the Baltimore Subsidiaries and the Baltimore
Interests, neither Baltimore nor any of the Baltimore Subsidiaries or Controlled
Baltimore Entities has a Subsidiary or affiliate or owns any interest in any
enterprise (whether or not such enterprise is a corporation) that is not listed
on Schedule 2.1(b).
(c) (i) ELLC owns, either directly or through one or more ELLC
Subsidiaries (as hereinafter defined), the equity interests in the entities
listed on Schedule 2.1(c) (collectively, the "ELLC Interests").
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(ii) Schedule 2.1(c) correctly lists all entities which
should be consolidated in the financial statements of ELLC in accordance with
generally accepted accounting principles (collectively, the "ELLC
Subsidiaries").
(iii) Schedule 2.1(c) correctly lists each of the ELLC
Interests which are general partner interests, managing membership interests, or
other Control Securities along with the issuer thereof (such issuers, which
shall be deemed to include, without limitation, all enterprises in which ELLC
directly or indirectly possesses an interest which are involved in land
development or model home programs, being referred to herein as the "Controlled
ELLC Entities").
(iv) Schedule 2.1(c) correctly sets forth as to ELLC, each
ELLC Subsidiary, the issuer of each ELLC Interest, and each Controlled ELLC
Entity (A) its place of incorporation or organization, (B) its principal place
of business, (C) the jurisdictions in which it is qualified to do business, (D)
a description of the business which it currently conducts, (E) its authorized
capitalization, (F) the equity interests therein currently outstanding, and (G)
the record owner of such equity interests.
(v) Other than the ELLC Subsidiaries and the ELLC Interests,
neither ELLC nor any of the ELLC Subsidiaries or Controlled ELLC Entities has a
Subsidiary or affiliate or owns any interest in any enterprise (whether or not
such enterprise is a corporation) that is not listed on Schedule 2.1(c).
(d) Schedule 2.1(d) contains an accurate and complete
organizational chart accurately depicting (i) each of the Acquired Corporations,
(ii) each of the ERC Subsidiaries, the Baltimore Subsidiaries, and the ELLC
Subsidiaries (each, a "Subsidiary," and collectively, the "Subsidiaries"), (iii)
each of the Controlled ERC Entities, the Controlled Baltimore Entities, and the
Controlled ELLC Entities (each, a "Controlled Entity," and collectively, the
"Controlled Entities"), and (iv) the ownership of each of the ERC Interests, the
Baltimore Interests, and the ELLC Interests (each, an "Interest", and
collectively, the "Interests"). The Acquired Corporations, the Subsidiaries and
the Controlled Entities are sometimes referred to herein as the "Acquired
Entities".
(e) Each of the Acquired Entities is a corporation, partnership,
or limited liability company, as the case may be, duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation or organization, with all requisite power and authority, and all
necessary consents, authorizations, approvals, orders, licenses, certificates,
and permits of and from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and other tribunals, to
own, lease, license, and use its material properties and assets and to carry on
the business in which it is now engaged. For the purpose of this Section 2.1(e),
the term "material properties and assets" means those assets with a value in
excess of $10,000. Each of the Acquired Entities is duly qualified to transact
the business in which it is engaged and is in good standing as a foreign
corporation, partnership, or limited liability
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company, as the case may be, in every jurisdiction in which its ownership,
leasing, licensing, or use of property or assets or the conduct of its business
makes such qualification necessary.
SECTION 2.2. CAPITALIZATION.
(a) (i) The authorized capital stock of ERC consists of 1,000 shares
of common stock, of which 200 shares are outstanding and comprise the ERC Stock.
(ii) The authorized capital stock of Baltimore consists of 1,000
shares of common stock, of which 100 shares are outstanding and comprise the
Baltimore Stock.
(iii) All of the authorized membership interests of ELLC are
outstanding and comprise the ELLC Membership Interests.
(b) Each of the outstanding shares of ERC Stock and Baltimore Stock,
each of the ELLC Membership Interests, and each of the Interests is duly
authorized, validly issued, fully paid, and nonassessable, has not been issued
and is not owned or held in violation of any preemptive right of any person or
entity, and is owned of record and beneficially as set forth in Schedule 2.1(a),
Schedule 2.1(b), or Schedule 2.1(c) in the case of the Interests, and otherwise
as set forth in Schedule 2.2, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements, and voting
trusts.
(c) There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance of, any
equity interest in any Acquired Entity or any security or other instrument
convertible into, exercisable for, or exchangeable for any equity interest in
any Acquired Entity. There is outstanding no security or other instrument
convertible into or exchangeable for any equity interest in any of the Acquired
Entities.
SECTION 2.3. AUTHORIZATIONS.
(a) Each of the Acquired Corporations and each of the Stockholders have
all requisite power and authority to execute, deliver, and perform this
Agreement and each of the other agreements, instruments, and other documents
executed and delivered pursuant hereto or in connection herewith (collectively,
the "Operative Documents") to which it is a party. All necessary corporate or
other proceedings of each of the Acquired Corporations and the Stockholders have
been duly taken to authorize the execution, delivery, and performance of this
Agreement and each of the Operative Documents to which it is a party by such
Acquired Corporation and such Stockholders. This Agreement and each of the
Operative Documents have been duly authorized, executed, and delivered by each
of the Acquired Corporations, has been duly authorized, executed and delivered
by each of the Stockholders, constitutes the legal, valid, and binding
obligation of Acquired Corporation and Stockholders, and is enforceable as to
them in accordance with its terms.
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(b) Upon the Closing, CNC will have good title to all the issued and
outstanding capital stock or membership interests, as the case may be, of each
Acquired Corporation, free and clear of all liens, security interests, pledges,
charges, encumbrances, pre-emptive rights, stockholders' agreements, and voting
trusts.
SECTION 2.4. ACCREDITATION AND NON-DISTRIBUTIVE INTENT.
(a) Each of Xxxxxxx and Xxxxx represent and warrant that they are an
"accredited investor," as such term is defined in Rule 501(a) under the
Securities Act of 1933, as amended (the "Securities Act"), and that they have
executed and delivered to the Purchaser an accredited investor questionnaire
prior to the date of this Agreement.
(b) Each Stockholder represents and warrants that he or it is acquiring
the Securities to be issued hereunder to him or it for his or its own account
(and not for the account of others), for investment purposes only, and not with
a view toward the resale or distribution thereof.
(c) Each Stockholder understands that the Securities have not been
registered under the Securities Act, and may not be resold, transferred, or
otherwise disposed of absent such registration or the availability of an
exemption therefrom. Each Stockholder acknowledges that the Purchaser advised it
in writing of such resale restrictions a reasonable time prior to the Closing.
Each Stockholder agrees that he or it will not resell, transfer, or otherwise
dispose of any of the Securities without registration of such Securities under
the Securities Act or the availability of an exemption therefrom, and that each
Security or certificate representing one or more Securities may contain a legend
to the foregoing effect.
(d) Each Stockholder acknowledges that he or it has received the
information about the Purchaser listed on Schedule 2.4(d) a reasonable time
prior to the Closing.
(e) Each Stockholder acknowledges that the Purchaser has made available
to such Stockholder and his or its purchaser representative a reasonable time
prior to the Closing the opportunity to ask questions and receive answers
concerning the terms and conditions of the transactions contemplated hereby and
to obtain any additional information which such Stockholder or such purchaser
representative has requested.
(f) Each Stockholder acknowledges that he or it has not been offered
the Securities by any form of general solicitation or general advertising,
including but not limited to any advertisement, article, notice, or other
communication published in any newspaper, magazine, or similar media or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(g) Each Stockholder represents and warrants that he or it does not
constitute more than one stockholder pursuant to Rule 501(e) under the
Securities Act with respect to the offering of the Securities contemplated
hereby.
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(h) Each Stockholder represents and warrants that he or it, either
alone or with his or its purchaser representative, has such knowledge and
experience in financial and business matters that he or it is capable of
evaluating the merits and risks of his or its prospective investment in the
Securities.
(i) Each Stockholder resides at the address listed opposite its name in
the introductory paragraph of the Agreement.
(j) Each Stockholder has consulted with counsel with respect to each of
the representations and warranties in this Section 2.4.
SECTION 2.5. COMPLETENESS OF DISCLOSURE. No representation or warranty
by any Stockholder in this Agreement contains an untrue statement of material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading.
SECTION 2.6. VALIDITY OF ISSUANCE. Assuming the truth of the
representations and warranties made by the Purchaser in Section 4.4, the offer,
sale, and delivery of the ERC Shares, the Baltimore Shares, and the ELLC
Membership Interests under the circumstances contemplated by this Agreement
constitute exempted transactions under the Securities Act, and registration of
such shares under the Securities Act is not required in connection with any such
offer, sale, or delivery of such shares.
SECTION 2.7. SEVERAL REPRESENTATIONS. Notwithstanding any other
provision of this Agreement, the representations and warranties of each
Stockholder contained in Section 2.5 are deemed to be made severally and not
jointly.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACTIVE STOCKHOLDER
Xxxxxxx and Xxxxx (the "Active Stockholders"), jointly and severally,
hereby make the following representations and warranties to the Purchaser and
CNC as of the Closing.
SECTION 3.1. FINANCIAL CONDITION.
(a) The Stockholders have delivered to the Purchaser true and correct
copies of the unaudited consolidated balance sheets, statements of income,
statements of retained earnings, and statements of sources and uses of cash for
each of the Acquired Corporations and each of the Controlled Entities listed on
Schedule 3.1(a). Each such consolidated balance sheet presents fairly the
financial condition, assets, liabilities, and stockholders' equity of the
subject thereof as of its
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date; each such consolidated statement of income and consolidated statement of
retained earnings presents fairly the results of operations of the subject
thereof for the period indicated; and each such consolidated statement of
sources and uses of cash (excluding future projections) presents fairly the
information purported to be shown therein. Except as indicated on Schedule
3.1(a), such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved. All of such financial statements are in accordance with the
books and records of the subject thereof. Except as disclosed on Schedule
3.1(a), since the end of the last fiscal year of each such entity:
(i) there has not been a material adverse change in the
financial condition, results of operations, business, properties, assets or
liabilities of any of the Acquired Entities.
(ii) Except as disclosed on Schedule 3.1(a), none of the
Acquired Entities has authorized, declared, paid, or effected any dividend or
other distribution in respect of any of its equity interests or any direct or
indirect redemption, purchase, or other acquisition of any equity interest in
any of the Acquired Entities.
(iii) The operations and business of each of the Acquired
Entities have been conducted in all respects in the ordinary course.
(iv) None of the Acquired Entities has suffered an
extraordinary loss (whether or not covered by insurance) or waived any right of
substantial value which could have a material adverse effect on any Acquired
Entity.
(v) Except as disclosed on Schedule 3.1(a), none of the
Acquired Entities has paid or incurred any tax, or other liability or expense to
any third party, from the preparation of, or the transactions contemplated by,
this Agreement, it being understood that Stockholders shall have paid or will
pay all such taxes (including stock transfer taxes resulting from this Agreement
or the transactions contemplated hereby), liabilities and expenses.
(b) Except as and to the extent reflected on the balance sheets
delivered to Purchaser pursuant to Section 3.1(a) (including the footnotes
thereto) (the "Last Balance Sheets" for each Acquired Entity) or in this
Agreement (including the Schedules hereto), the Acquired Entities do not have
any liabilities, commitments or obligations of any nature (whether absolute,
accrued, contingent or otherwise) which could have a material adverse effect on
any Acquired Entity or which, under generally accepted accounting principles or
the terms of this Agreement, are required to be disclosed, other than those
incurred in the ordinary course of business consistent with past practice since
the dates of the Last Balance Sheets.
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SECTION 3.2. TAXES. Except as set forth on Schedule 3.2:
(a) All tax returns (including federal, state, local and foreign)
required to be filed with respect to the business and assets of the Acquired
Entities have been duly and timely (within any applicable extension periods)
filed with the appropriate authorities in all jurisdictions in which such
returns are required to be filed; and all taxes, penalties and interest
("Taxes") due thereon have been paid.
(b) The provisions for Taxes on the Last Balance Sheets are sufficient
for the payment of all Taxes for which the Acquired Entities may be liable for
the periods covered thereby that were not yet due and payable as of the date
thereof.
(c) There is no claim or assessment pending or, to the actual knowledge
of the Active Stockholders, threatened against the Acquired Entities for any
alleged deficiency in Taxes. There are no pending audits of any tax returns of
the Acquired Entities and no federal or state income tax return of the Acquired
Entities has been audited by any tax authority.
(d) No Acquired Entity is a party to any written agreement providing
for the allocation or sharing of Taxes.
(e) Each Acquired Entity has complied in all material respects with all
applicable laws relating to the payment and withholding of Taxes and has
withheld all amounts required by law to be withheld from the wages or salaries
of employees, and no Acquired Entity is liable for any Taxes (other than Taxes
not yet due and payable) for failure to comply with such laws.
(f) Baltimore has elected (with the consent of all of its
shareholders), in compliance with all applicable legal requirements, to be taxed
under Subchapter S of the Internal Revenue Code of 1986, as amended (the
"Code"), and corresponding provisions under any applicable state and local laws,
and such elections are in effect for Baltimore. Baltimore's election to be taxed
under Subchapter S of the Code is and has been in effect since its organization,
and no action has been taken by Baltimore or any shareholder of Baltimore that
may result in the revocation of any such elections. Baltimore has no liability,
absolute or contingent, for the payment of any income Taxes under the Code or
under the laws of such states or localities which afford tax treatment similar
to that under Subchapter S of the Code.
SECTION 3.3. LITIGATION AND CLAIMS. Except as set forth on Schedule
3.3, no Acquired Entity has received notice of any litigation, arbitration,
claim, governmental or other proceeding (formal or informal), or investigation
pending or to the actual knowledge of the Active Stockholders threatened or
contingent (or any basis therefor to the actual knowledge of the Active
Stockholders) with respect to any of the Acquired Entities, or any of their
respective businesses, properties, or assets, which would have a material
adverse effect on the business, properties or assets of any Acquired Entity or
which under generally accepted accounting principles are required to be
disclosed. None of the Acquired Entities is affected by any current or
threatened
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strike or other labor disturbance nor to the actual knowledge of the
Stockholders is any union attempting to represent any employee of any of the
Acquired Entities as collective bargaining agent. None of the Acquired Entities
is in violation of, or in default with respect to, any law, rule, regulation,
order, judgment, or decree; nor are any of the Acquired Entities, or any
Stockholder required to take any action in order to avoid such violation or
default, the result of which would have a material adverse impact on the
business, properties or assets of any Acquired Entity.
SECTION 3.4. PROPERTIES.
(a) Each of the Acquired Entities has insurable title in fee simple
absolute to all real properties and title to all other properties and assets
owned by it (except such real and other properties and assets as are held
pursuant to leases or licenses described in Schedule 3.4(b) and Schedule 3.7),
free and clear of all liens, mortgages, security interests, pledges, charges,
and encumbrances (except such as are listed in Schedule 3.4(b) and Schedule
3.7). The Acquired Entities have delivered or made available to the Purchaser
copies of the deeds and other instruments (as recorded) by which the Acquired
Entities acquired such real properties, and copies of all title insurance
policies, opinions, abstracts and surveys in the possession of the Acquired
Entities and relating to such real property.
(b) Attached as Schedule 3.4(b) is a true and complete list of all real
and other properties and assets (i) with a book value in excess of $10,000 owned
by any of the Acquired Entities or (ii) leased or licensed by any of the
Acquired Entities from or to a third party with an annual lease or license cost
in excess of $10,000 (including inventory but not including Intangibles, as
defined in Section 3.7), including with respect to such properties and assets
owned by any of the Acquired Entities a statement of cost, book value and
(except for land) reserve for depreciation of each item for tax purposes, and
net book value of each item for financial reporting purposes, and, with respect
to such properties and assets leased or licensed by any of the Acquired
Entities, a description of such lease or license. All such real and other
properties and assets (including Intangibles) owned by any of the Acquired
Entities are reflected on the Last Balance Sheet of such entity (except for
acquisitions and sales subsequent to the Last Balance Sheet Date for such entity
and prior to the Closing which are either noted in Schedule 3.4(b) or Schedule
3.7 or are approved in writing by the Purchaser). Except as set forth on
Schedule 3.4(b), all real and other tangible properties and assets owned,
leased, or licensed by any of the Acquired Entities are to the actual knowledge
of the Active Stockholders in good and usable condition (reasonable wear and
tear which is not such as to affect adversely the operation of the business of
any Acquired Entity excepted).
(c) To the actual knowledge of the Active Stockholders, no real
property owned, leased, or licensed by any of the Acquired Entities lies in an
area which is or will be subject to zoning, use, or building code restrictions
which would prohibit, and to the actual knowledge of the Active Shareholders no
state of facts relating to the actions or inaction of another person or
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entity or his or its ownership, leasing, licensing, or use of any real or
personal property exists which would prevent the continued use of such asset as
currently used.
(d) Except as set forth on Schedule 3.4(d):
(i) To the actual knowledge of the Active Stockholders, each
Acquired Entity is, and at all times has been, in full compliance with, and has
not been and is not in violation of or liable under, any law relating to the
protection of the environment, including laws related to releases and discharge
of pollutants and hazardous substances or materials.
(ii) No Acquired Entity has received any actual or threatened
order, notice or other communication from any governmental or administrative
authority of any actual or potential violation or failure to comply with any
environmental law.
(iii) To the actual knowledge of the Active Stockholders, no
officer, employee or agent of an Acquired Entity, or any other person or entity
for whose conduct an Acquired Entity may be held responsible, has Released any
Hazardous Substances at or from the properties of the Acquired Entities or
properties in which the Acquired Entities had an interest. The term "Hazardous
Substance" means any hazardous waste, as defined by 42 U.S.C. Section6903(5),
any Hazardous Substance, as defined by 42 U.S.C. Section9601 (14), any pollutant
or contaminant, as defined by 42 U.S.C. 9601(33), and all toxic substances,
hazardous materials, or other chemical substances regulated by any other law,
rule or regulation. The term "Release" shall have the meaning set forth in 42
U.S.C. Section9601(22).
(iv) The Acquired Entities have delivered to Purchaser true and
complete copies and results of any reports, studies, analyses, tests, or
monitoring possessed or initiated by the Acquired Entities pertaining to
Hazardous Substances in, on, or under the properties now or previously owned by
the Acquired Entities, or concerning compliance by the Acquired Entities, or any
other person or entity for whose conduct they are or may be held responsible,
with environmental laws.
SECTION 3.5. CONTRACTS AND OTHER INSTRUMENTS.
(a) Schedule 3.5 accurately and completely sets forth the information
required to be contained therein regarding contracts, agreements, instruments,
leases, licenses, arrangements, or understandings with respect to each Acquired
Entity, identifying whether the matter disclosed therein relates to an Acquired
Corporation, to a Subsidiary named therein, or to a Controlled Entity named
therein. The Stockholders have furnished to the Purchaser (a) the certificate of
incorporation (or other organizational document) and by-laws (or other governing
document) of each Acquired Entity and all amendments thereto, as currently in
effect, and (b) the following:
(i) true and correct copies of all contracts, agreements, and
instruments referred to in Schedule 3.5;
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(ii) true and correct copies of all leases and licenses referred
to in Schedule 3.4(b) or Schedule 3.7; and
(iii) to the actual knowledge of the Active Shareholders, true and
correct written descriptions of all material arrangements or understandings
referred to in Schedule 3.5 which have a material effect on the business of any
Acquired Entity.
(b) None of the Acquired Entities, or to the actual knowledge of the
Active Stockholders, any other party to any material contract, agreement,
instrument, lease, or license referred to in Schedule 3.4(b), Schedule 3.5 or
Schedule 3.7 (the "Material Contracts"), is now in violation or breach of, or in
default with respect to complying with, any material term of any Material
Contract, and each such Material Contract is in full force and is the legal,
valid, and binding obligation of the parties thereto and (subject to applicable
bankruptcy, insolvency, and other laws affecting the enforceability of
creditors' rights generally) is enforceable as to them in accordance with its
terms.
(c) Each material arrangement or understanding described on Schedule
3.5 is a valid and continuing arrangement or understanding; none of the Acquired
Entities has, nor to the actual knowledge of the Active Shareholders, has any
other party to any such material arrangement or understanding, given notice of
termination or taken any action inconsistent with the continuance of such
material arrangement or understanding; and the execution, delivery, and
performance of this Agreement will not prejudice any such material arrangement
or understanding in any way. Each of the Acquired Entities enjoys peaceful and
undisturbed possession under all material leases and licenses described on
Schedule 3.4(b), Schedule 3.5 and Schedule 3.7.
(d) None of the Acquired Entities has engaged within the last two years
in, is engaging in, or intends to engage in any transaction with, or has had
within the last two years, now has, or intends to have any contract, agreement,
instrument, lease, license, arrangement, or understanding with, any Stockholder,
any director, officer, or employee of any of the Acquired Entities, any relative
or affiliate of any Stockholder or of any such director, officer, or employee,
or any other corporation or enterprise in which any Stockholder, any such
director, officer, or employee, or any such relative or affiliate then had or
now has a 5% or greater equity or voting or other substantial interest
(collectively, "Affiliated Transaction Persons"), other than as listed and so
specified in Schedule 3.5.
(e) The stock or other equity interest ledgers and stock or other
equity interest transfer books and the minute book records of each of the
Acquired Entities relating to all issuances and transfers of stock or other
equity interests by such Acquired Entities and all proceedings of the
stockholders, members and the Board of Directors (or similar governing bodies)
and committees thereof of each of the Acquired Entities since their respective
organization made available to the Purchaser are true and complete copies of the
original ledgers and transfer books and minute book records of such Acquired
Entities. None of the Acquired Entities is in violation or breach of, or
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in default with respect to, any term of its certificate of incorporation (or
other organizational documents) or by-laws (or other governing documents).
SECTION 3.6. EMPLOYEES.
(a) Except as set forth on Schedule 3.6, none of the Acquired Entities
has, or contributes to, any pension, profit-sharing, option, other incentive
plan, or any other type of Employee Benefit Plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or
has any obligation to or customary arrangement with employees for bonuses,
incentive compensation, vacations, severance pay, insurance, or other benefits.
(b) Nothing contained in this Agreement or otherwise shall obligate the
Purchaser, any Acquired Entity, or CNC to employ any person who is now or in the
future may be employed by any of the Acquired Entities.
SECTION 3.7. PATENTS, TRADEMARKS, ET CETERA.
(a) No Acquired Entity owns or has pending, or is licensed under, any
patent, patent application, trademark, trademark application, trade name,
service xxxx, copyright, franchise, or other intangible property or asset (all
of the foregoing being herein called "Intangibles"), other than as described in
Schedule 3.7, all of which are in good standing and uncontested. Schedule 3.7
accurately sets forth with respect to Intangibles owned by any of the Acquired
Entities, where appropriate, a statement of cost, book value and reserve for
depreciation of each item for tax purposes, and net book value of each item for
financial reporting purposes, and with respect to Intangibles licensed by any of
the Acquired Entities from or to a third party, a description of such license.
No Affiliated Transaction Person possesses any Intangible which relates to the
business of any of the Acquired Entities.
(b) No Acquired Entity has infringed, has received notice of
infringement, or to the actual knowledge of the Active Stockholders is
infringing, with asserted Intangibles of others. To the actual knowledge of the
Active Stockholders, there is no infringement by others of Intangibles of any of
the Acquired Entities.
SECTION 3.8. QUESTIONABLE PAYMENTS. None of the Acquired Entities, any
director, officer, agent, employee, or other person associated with or acting on
behalf of any of the Acquired Entities, nor any Stockholder has, directly or
indirectly: used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended;
established or maintained any unlawful or unrecorded fund of corporate monies or
other assets; made any false or fictitious entry on the books or records of any
of the Acquired Entities; made any bribe, rebate, payoff,
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influence payment, kickback, or other unlawful payment; given any favor or gift
which is not deductible for federal income tax purposes; or made any bribe,
kickback, or other payment of a similar or comparable nature, whether lawful or
not, to any person or entity, private or public, regardless of form, whether in
money, property, or services, to obtain favorable treatment in securing business
or to obtain special concessions, or to pay for favorable treatment for business
secured or for special concessions already obtained.
SECTION 3.9. CONSENTS.
(a) Except as set forth in Schedule 3.9(a), no consent, authorization,
approval, order, license, certificate, or permit of or from, or declaration or
filing with, any federal, state, local, or other governmental authority or any
court or other tribunal is required by any of the Acquired Entities or any
Stockholder for the execution, delivery, or performance of this Agreement or any
of the other Operative Documents by any Acquired Corporation or any Stockholder
or for any Acquired Corporation or any Subsidiary to continue to exercise all of
its rights as a partner, member, or other security holder of each issuer of each
Interest under the agreements and other documents governing such issuer without
penalty or dissolution of such issuer for any purpose. Each required consent set
forth on Schedule 3.9(a) has been obtained as of the date hereof.
(b) Except as set forth in Schedule 3.9(b), no consent of any party to
any contract, agreement, instrument, lease, license, arrangement, or
understanding to which any Acquired Entity, or any Stockholder is a party, or to
which it or he or any of its or his respective businesses, properties, or assets
are subject, is required for the execution, delivery, or performance of this
Agreement or any of the Operative Documents, the absence of which consent could
have a material adverse effect on any Acquired Entity; and the execution,
delivery, and performance of this Agreement and each of the Operative Documents
will not violate, result in a breach of, conflict with, or (with or without the
giving of notice or the passage of time or both) entitle any party to terminate
or call a default under, entitle any party to rights and privileges that such
party was not receiving or entitled to receive immediately before this Agreement
was executed under, or create any obligation on the part of any Acquired Entity
that it was not paying or obligated to pay immediately before this Agreement was
executed under, any term of any such contract, agreement, instrument, lease,
license, arrangement, or understanding, or violate or result in a breach of any
term of the certificate of incorporation (or other organizational document) or
by-laws (or other governing document of any Acquired Entity), or violate, result
in a breach of, or conflict with any law, rule, regulation, order, judgment, or
decree binding on any Acquired Entity, or any Stockholder or to which it or he
or any of its or his respective businesses, properties, or assets are subject,
the result of which could have a material adverse effect on any Acquired Entity.
Each required consent set forth on Schedule 3.9(b) has been obtained as of the
date hereof.
SECTION 3.10. SPECIFIC REPRESENTATIONS AND WARRANTIES WITH RESPECT TO
THE CONTROLLED ENTITIES. Except as set forth on Schedule 3.10:
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(a) There is no delinquent tax or assessment lien against any real
property owned at any time by any of the Controlled Entities ("Controlled Entity
Real Property").
(b) Each Controlled Entity is the beneficiary of an American Land Title
Association approved form title insurance policy covering each Controlled Entity
Real Property currently owned by it, in an amount in each instance at least
equal to the Controlled Entity's purchase price for such Controlled Entity Real
Property. Each such policy is valid and remains in full force and effect. No
claims have been made under any such title insurance policy and no person or
entity has done, by act or omission, anything which would impair the coverage of
such title insurance policy.
(c) All Controlled Entity Real Property and all owned improvements
comply in all material respects with all applicable environmental, zoning,
public safety, and building code laws, rules, and regulations. All inspections,
licenses, and certificates required to be made or issued with respect to all
such improvements upon any Controlled Entity Real Property have been made or
obtained from appropriate authorities and remain in full force and effect. None
of the building products utilized in the construction of any such improvements
currently are the subject of material products liability claims.
(d) None of the Controlled Entity Real Property is in an area (i) that
contains at any time any protected or endangered species, or (ii) identified in
the Federal Register by the Federal Emergency Management Agency as having
special flood hazards.
(e) All taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents which are or
previously became due with respect to any Controlled Entity Real Property
currently owned by any Controlled Entity have been paid, or an escrow of funds
has been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable.
(f) None of the Controlled Entities has any existing liability of any
kind or nature and no such liability of any kind or nature is pending or has
been threatened, in each case relating to (i) proffers made to or required by
local municipalities relating to the development of any Controlled Entity Real
Property, (ii) warranties made to builders or other land purchasers with respect
to improvements thereon, or (iii) owners of dwellings constructed upon any
Controlled Entity Real Property.
(g) Utilities are available to all of the Controlled Entity Real
Property currently owned by any of the Controlled Entities without necessity for
unusual or unduly expensive off-site improvements. There is no actual, pending,
or threatened moratorium, discontinuation, or interruption of services to any
such Controlled Entity Real Property or upon the availability of building
permits thereon.
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(h) There are no undisclosed conditions or other impediments with
respect to any of the Controlled Entity Real Property currently owned by any of
the Controlled Entities that cause unusual development or remediation costs with
respect thereto. There are no unusual soil conditions present on any of the
Controlled Entity Real Property.
(i) None of the Controlled Entities has made any loan of any kind or
nature to, or other investment of any kind in, any other Controlled Entity,
either directly or utilizing any other person or entity as a conduit. None of
the other issuers of any of the Interests has made any loan of any kind or
nature to, or other investment of any kind or nature in, any other issuer of any
Interest, either directly or utilizing any other person or entity as a conduit.
All investments or monetary transfers of any of the Controlled Entities, the
Acquired Corporations, or the Subsidiaries are, and all investments or monetary
transfers of any kind of any of such other issuers are, fully reflected upon the
books and records of such entity.
3.11. Qualification as to Controlled Entity Representations and
Warranties. Notwithstanding any other provision of this Agreement, all
representations and warranties contained in Article II and Article III regarding
the Controlled Entities are made to the actual knowledge of the Active
Stockholders.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to each of the
Stockholders as of the Closing as follows:
SECTION 4.1. ORGANIZATION. Each of the Purchaser and CNC is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, with all requisite power and authority to own,
lease, license, and use its properties and assets and to carry on the business
in which it is now engaged.
SECTION 4.2. VALIDITY OF SHARES. The shares of Preferred Stock to be
delivered to Stockholders pursuant to this Agreement, when issued in accordance
with the terms and provisions of this Agreement, will be duly authorized,
validly issued, fully paid, and nonassessable.
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SECTION 4.3. AUTHORITY TO BUY. The Purchaser and CNC have all requisite
power and authority to execute, deliver, and perform this Agreement and each of
the Operative Documents to which any is or is to be a party. All necessary
corporate proceedings of the Purchaser and CNC have been duly taken to authorize
the execution, delivery, and performance of this Agreement and each of the
Operative Documents by the Purchaser and CNC. This Agreement and each of the
Operative Documents have been duly authorized, executed, and delivered by the
Purchaser and CNC, are the legal, valid, and binding obligation of the Purchaser
and CNC, and are enforceable as to them in accordance with its terms.
SECTION 4.4. NON-DISTRIBUTIVE INTENT. The Purchaser is an accredited
investor, as defined in Rule 501(a) under the Act. The Purchaser, through CNC,
is acquiring the ERC Stock, the Baltimore Stock, and the ELLC Membership
Interests for its own account (and not for the account of others), for
investment purposes only, and not with a view toward the resale or distribution
thereof. The Purchaser will not sell or otherwise dispose of such shares
(whether pursuant to a liquidating dividend or otherwise) without registration
under the Securities Act or an exemption therefrom, and the certificate or
certificates representing such shares may contain a legend to the foregoing
effect. By virtue of its position, the Purchaser has access to the kind of
financial and other information about ERC, ELLC, and Baltimore as would be
contained in a registration statement filed under the Securities Act. The
Purchaser understands that it may not sell or otherwise dispose of such shares
in the absence of either a registration statement under the Securities Act or an
exemption from the registration provisions of the Securities Act.
SECTION 4.5. VALIDITY OF ISSUANCE. Assuming the truth of the
representations and warranties made by the Stockholders in Section 2.4, the
offer, sale, and delivery of the Securities under the circumstances contemplated
by this Agreement constitute exempted transactions under the Securities Act, and
registration of such shares under the Securities Act is not required in
connection with any such offer, sale, or delivery of such shares.
SECTION 4.6. CAPITALIZATION. The authorized capital stock of the
Purchaser consists of 30,000,000 shares of Common Stock, par value $.01 per
share (the "Purchaser Common Stock"), of which 8,199,799 shares were outstanding
as of September 30, 1996, and 1,000,000 shares of preferred stock, par value
$.01 per share, of which no shares were outstanding as of September 30, 1996. As
of September 30, 1996, 1,232,044 shares of the Purchaser Common Stock were
subject to the resale restrictions imposed by Rule 144 under the Securities Act
of 1933.
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ARTICLE V
COVENANTS AND AGREEMENTS
SECTION 5.1. COVENANTS AND AGREEMENTS OF THE ACQUIRED CORPORATIONS AND
THE STOCKHOLDERS. The Acquired Corporations and the Stockholders covenant and
agree as follows:
(a) Confidentiality. The Stockholders shall use due care to insure that
all confidential information which any Stockholder or any of his counsel,
agents, investment bankers, or accountants may now possess or may hereafter
create or obtain relating to the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of any Acquired
Entity, the Purchaser, or CNC, any affiliate of any of them, or any customer or
supplier of any of them or any such affiliate shall not be published, disclosed,
or made accessible by any of them to any other person or entity at any time or
used by any of them except in the business and for the benefit of the Acquired
Entities, in each case without the prior written consent of the Purchaser;
provided, however, that the restrictions of this sentence shall not apply (i) as
may otherwise be required by law, including, without limitation, federal
securities laws, (ii) as may be necessary or appropriate in connection with the
enforcement of this Agreement or any Operative Document, or (iii) to the extent
such information shall have otherwise become publicly available. Each Acquired
Corporation and Stockholder shall, and shall cause all other such persons and
entities to, deliver to the Purchaser all tangible evidence of such confidential
information to which the restrictions of the foregoing sentence apply at the
Closing.
(b) Public Statements. The Purchaser and the Active Stockholders shall
jointly issue all communications with respect to the announcement of the
consummation of the transactions contemplated by this Agreement; provided,
however, the Purchaser may release any information to any governmental authority
if required to do so by law.
(c) Release by Stockholders. Each Stockholder fully and unconditionally
releases and discharges all claims and causes of action which he or his heirs,
personal representatives, successors, or assigns ever had, now have, or
hereafter may have against the Purchaser, CNC, each Acquired Entity and, when
acting as such, their respective officers, directors, employees, counsel,
agents, and stockholders, in each case past, current, or as they may exist at
any time after the date of this Agreement, and each person, if any, who
controls, controlled, or will control any of them within the meaning of Section
15 of the Securities Act or Section 20(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), except claims and causes of action
arising out of, based upon, or in connection with this Agreement or with their
ownership of securities issued by the Purchaser.
(d) File Tax Return. The Stockholders agree to file, within the time
allowed by law, all federal, state, local, and foreign tax returns with the
appropriate jurisdictions, for all periods
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prior to the Closing Date, to include therein all information required to be
contained therein relating to each of the Acquired Entities for such period, and
to pay all Taxes with respect to each Acquired Entity for such periods.
SECTION 5.2. COVENANTS AND AGREEMENTS OF THE PURCHASER AND CNC. The
Purchaser and CNC covenant and agree as follows:
(a) Confidentiality. Each of the Purchaser and CNC shall use due care
to insure that all confidential information which the Purchaser, CNC, or any of
their respective officers, directors, employees, counsel, agents, investment
bankers, or accountants may now possess or may hereafter create or obtain
relating to the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of any Acquired Entity, any
Interest, any affiliate of any of them, or any customer or supplier of any of
them or any such affiliate shall not be published, disclosed, or made accessible
by any of them to any other person or entity at any time or used by any of them
except pending the Closing in the business and for the benefit of the Acquired
Corporations and the Subsidiaries and Controlled Entities, in each case without
the prior written consent of the Stockholders; provided, however, that the
restrictions of this sentence shall not apply (i) with respect to the
obligations of the Purchaser and CNC after the Closing takes place, (ii) as may
otherwise be required by law including, without limitation, the federal
securities laws, (iii) as may be necessary or appropriate in connection with the
enforcement of this Agreement or any Operative Document, or (iv) to the extent
such information shall have otherwise become publicly available. The Purchaser
and CNC shall, and shall cause all other such persons and entities to, deliver
to the Stockholders all tangible evidence of such confidential information to
which the restrictions of the foregoing sentence apply at the Closing.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1. INDEMNIFICATION BY ACTIVE STOCKHOLDERS. The Active
Stockholders, jointly and severally, hereby agree to indemnify and hold harmless
the Purchaser, CNC, each of the Acquired Entities, and their respective past,
current, and future officers, directors, employee, counsel, agents, and equity
holders, in each case who are not a Stockholder, and each person, if any, who
controls, controlled, or will control any of them within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act (the "Purchaser
Indemnitees"), against any and all losses, liabilities, damages, and expenses
whatsoever (including but not limited to reasonable counsel fees and any and all
expenses whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), as and when incurred
arising out of, based upon, or in connection with (a) any material
misrepresentation or breach of any warranty of the Active
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Stockholders contained in this Agreement or any other Operative Document, and
(b) any act, alleged act, omission, or alleged omission occurring at or prior to
the Closing (including, without limitation, any which arise out of, are based
upon, or are in connection with any of the transactions contemplated hereby or
any of the Operative Documents), arising out of, based upon, or relating to the
Acquired Entities, the Acquired Entities' business, the assets owned or leased
by the Acquired Entities, the ERC Shares, the Baltimore Shares, the ELLC
Interests, the Subsidiaries, the Interests, the Controlled Entities, and all
other matters as they relate to the Acquired Entities, any of which have a
material adverse effect on any Acquired Corporation. The foregoing agreement to
indemnify shall be in addition to any liability the Active Stockholders may
otherwise have, including liabilities arising out of this Agreement or any of
the Operative Documents. The aggregate amount of the Active Stockholders' joint
and several indemnification pursuant to this Section 6.1 shall not exceed the
aggregate purchase price paid to the Stockholders pursuant to the Agreement at
Closing.
SECTION 6.2. INDEMNIFICATION BY THE STOCKHOLDERS. Each of the
Stockholders hereby agrees to indemnify and hold harmless each of the Purchaser
Indemnitees against any and all losses, liabilities, damages, and expenses
whatsoever (including but not limited to reasonable counsel fees and any and all
expenses whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), as and when incurred
arising out of, based upon, or in connection with any breach of any covenant or
agreement of any Stockholder contained in this Agreement or in any Operative
Document, any of which have a material adverse effect on any Acquired
Corporation. Notwithstanding the foregoing, the Stockholders shall have no
indemnification obligations with respect to the representations and warranties
of the Active Stockholders contained in Article III. The foregoing agreement to
indemnify shall be in addition to any liability the Stockholders may otherwise
have, including liabilities arising out of this Agreement or any of the
Operative Documents. The aggregate amount of any Stockholder's indemnification
pursuant to this Section 6.2 shall not exceed the purchase price paid to the
Stockholder pursuant to this Agreement at Closing.
SECTION 6.3. INDEMNIFICATION BY THE PURCHASER AND CNC. Each of the
Purchaser and CNC, jointly and not severally, hereby agrees to indemnify and
hold harmless each of the Stockholders and their respective successors, assigns,
heirs, legatees, executors, and administrators (collectively, the "Stockholder
Indemnitees") against any and all losses, liabilities, damages, and expenses
whatsoever (including but not limited to reasonable fees of one counsel and any
and all expenses whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), as and when
incurred arising out of, based upon, or in connection with any material
misrepresentation or breach of any warranty made by the Purchaser or CNC in this
Agreement or in any Operative Document or any breach of any covenant or
agreement of the Purchaser or CNC contained in this Agreement or in any
Operative Document, any of which have a material adverse effect on any
Stockholder.
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SECTION 6.4. METHOD OF ASSERTING CLAIMS. In the event that any claim or
demand for which one or more Stockholders (collectively, the "Liable
Stockholders") could be liable to a Purchaser Indemnitee hereunder is asserted
against or sought to be collected from a Purchaser Indemnitee by a third party,
the Purchaser Indemnitee shall promptly notify the Liable Stockholders of such
claim or demand, specifying the nature of such claim or demand and the amount or
the estimate amount thereof to the extent then feasible, which estimate shall
not be conclusive of the final amount of such claim and demand (the "Claim
Notice"). The Liable Stockholders shall have twenty (20) days from the personal
delivery or mailing of the Claim Notice (the "Notice Period") to notify the
Purchaser Indemnitee (A) whether or not they dispute their liability to the
Purchaser Indemnitee hereunder with respect to such claim or demand, and (B)
notwithstanding any such dispute, whether or not they desire, at their sole cost
and expense, to defend the Purchaser Indemnitee against such claim or demand.
(a) The Liable Stockholders shall not be entitled to act independently
under the procedures set forth in this Section 6.4, but must act in concert in
complying with the procedures set forth in this Section 6.4. If the Liable
Stockholders dispute their liability with respect to such claim or demand or the
amount thereof (whether or not the Liable Stockholders desire to defend the
Purchaser Indemnitee against such claim or demand as provided in subsections (b)
and (c) below), such dispute shall be resolved in compliance with Section 6.6.
Pending the resolution of any dispute by the Liable Stockholders of their
liability with respect to any claim or demand, such claim or demand shall not be
settled without the prior written consent of the Purchaser Indemnitee.
(b) In the event that the Liable Stockholders notify the Purchaser
Indemnitee within the Notice Period that they desire to defend the Purchaser
Indemnitee against such claim or demand then, except as hereinafter provided,
the Liable Stockholders shall have the right to defend the Purchaser Indemnitee
by appropriate proceedings, which proceeding shall be promptly settled or
prosecuted by it to a final conclusion in such a manner as to avoid any risk of
the Purchaser Indemnitee becoming subject to liability for any other matter;
provided, however, that the Liable Stockholders shall not, without the prior
written consent of the Purchaser Indemnitee, consent to the entry of any
judgment against the Purchaser Indemnitee or enter into any settlement or
compromise which does not include, as an unconditional term thereof, the giving
by the claimant or plaintiff to the Purchaser Indemnitee of a release, in form
and substance satisfactory to the Purchaser Indemnitee, from all liability in
respect of such claim or litigation. If any Purchaser Indemnitee desires to
participate in, but not control, any such defense or settlement, it may do so at
its sole cost and expense. If, in the reasonable opinion of the Purchaser
Indemnitee, any such claim or demand or the litigation or resolution of any such
claim or demand involves an issue or matter which could have a material adverse
effect on the business, operations, assets, properties, or prospects of the
Purchaser Indemnitee, including without limitation the administration of the tax
returns and the responsibilities under the tax laws of the Purchaser Indemnitee,
then the Purchaser Indemnitee shall have the right to control the defense or
settlement of any such claim or demand and its reasonable costs and expenses
shall be included as part of the indemnification obligation of the Stockholders
hereunder; provided, however, that the Purchaser Indemnitee shall
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not settle any such claim or demand without the prior written consent of the
Liable Stockholders, which consent shall not be unreasonably withheld or
delayed. If the Purchaser Indemnitee should elect to exercise such right, the
Liable Stockholders shall have the right to participate in, but not control, the
defense or settlement of such claim or demand at their sole cost and expense.
(c) (i) If the Liable Stockholders elect not to defend the Purchaser
Indemnitee against such claim or demand, whether by not giving the Purchaser
Indemnitee timely notice as provided above or otherwise, then the amount of any
such claim or demand, or if the same may be defended by the Liable Stockholders
or by the Purchaser Indemnitee (but the Purchaser Indemnitee shall not have any
obligation to defend any such claim or demand), then that portion thereof as to
which such defense is unsuccessful, in each case shall be conclusively deemed to
be a liability of the Liable Stockholders hereunder unless the Liable
Stockholders have disputed their liability to the Purchaser Indemnitee as
provided in subsection (a) above, in which event such dispute shall be resolved
as provided in Section 6.6.
(ii) In the event that a Purchaser Indemnitee should have a claim
or demand against the Liable Stockholders that does not involve a claim or
demand being asserted against or sought to be collected from it by a third
party, the Purchaser Indemnitee shall promptly send a Claim Notice with respect
to such claim to the Liable Stockholders. If the Liable Stockholders dispute
their liability with respect to such claim or demand, such dispute shall be
resolved in accordance with Section 6.6; if the Liable Stockholders do not
notify the Purchaser Indemnitee within the Notice Period that they dispute such
claim, the amount of such claim shall be conclusively deemed a liability of the
Liable Stockholders hereunder.
(d) All claims for indemnification by a Stockholder Indemnitee
hereunder shall be asserted and resolved utilizing the procedures set forth
above substituting in the appropriate place "Stockholder Indemnitee" for
"Purchaser Indemnitee" and variations thereof an "Purchaser" for "Stockholder."
SECTION 6.5. PAYMENT. Upon the determination of the liability under
Section 6.1, Section 6.2, Section 6.3, or Section 6.4, the appropriate party
shall pay to the other, as the case may be, within ten (10) days after such
determination, the amount of any claim for indemnification made hereunder. In
the event that the indemnified party is not paid in full for any such claim
pursuant to the foregoing provisions promptly after the other party's obligation
to indemnify has been determined in accordance herewith, it shall have the
right, notwithstanding any other rights that it may have against any other
person or entity, to setoff the unpaid amount of any such claim against any
amounts owed by it under this Agreement or any of the Operative Documents. Upon
the payment in full of any claim, either by setoff or otherwise, the entity
making payment shall be subrogated to the rights of the indemnified party
against any person or entity with respect to the subject matter of such claim.
SECTION 6.6. ARBITRATION.
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(a) All disputes under this Article VI shall be settled by arbitration
in McLean, Virginia before a single arbitrator pursuant to the rules of the
American Arbitration Association. Arbitration may be commenced at any time by
any party hereto giving written notice to each other party to a dispute that
such dispute has been referred to arbitration under this Section 6.6. The
arbitrator shall be selected by the agreement of the Stockholders, the
Purchaser, and CNC, but if they do not so agree within 20 days after the date of
the notice referred to above, the selection shall be made pursuant to such rules
from the panel of arbitrators maintained by such Association. Any award rendered
by the arbitrator shall be conclusive and binding upon the parties hereto;
provided, however, that any such award shall be accompanied by a written opinion
of the arbitrator giving the reasons for the award. This provision shall be
specifically enforceable by the parties and the decision of the arbitrator in
accordance herewith shall be final and binding, and there shall be no right of
appeal therefrom. Each party shall pay its own expenses of arbitration and the
expenses of the arbitrator shall be equally shared; provided, however, that if
in the opinion of the arbitrator any party to such arbitration has raised an
unreasonable claim, defense, or objection, then the arbitrator may assess, as
part of his award, all or any part of the arbitration expenses of the other
party (including reasonable attorneys' fees) against the party raising such
unreasonable claim, defense, or objection.
(b) To the extent that arbitration may not be legally permitted
hereunder and the parties to any dispute hereunder may not at the time of such
dispute mutually agree to submit such dispute to arbitration, any party may
commence a civil action in a court of appropriate jurisdiction to resolve
disputes hereunder. Nothing contained in this Section 6.6 shall prevent the
parties from settling any dispute by mutual agreement at any time.
SECTION 6.7. OTHER RIGHTS AND REMEDIES NOT AFFECTED. The
indemnification rights of the parties hereunder are independent of and in
addition to such rights and remedies as the parties may have at law or in equity
or otherwise for any misrepresentation, breach of warranty, or failure to
fulfill any agreement or covenant hereunder on the party of any party hereto,
including without limitation the right to seek specific performance, recision,
or restitution, none of which rights or remedies shall be affected or diminished
hereby.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.1. ACTUAL KNOWLEDGE. As used herein, the term "actual
knowledge" means the actual knowledge as of the date hereof of the appropriate
party.
SECTION 7.2. BROKERAGE FEES. The Purchaser hereby agrees to pay to
Xxxxxxxxx Investment Corporation such brokerage fee in connection with the
transactions contemplated hereby as may be agreed to by the Purchaser and
Xxxxxxxxx Investment Corporation. Each of the Stockholders, jointly and not
severally, hereby represents and warrants to the Purchaser and CNC that neither
such Stockholder nor any Acquired Corporation, Subsidiary, or Controlled Entity
has in any manner created any other liability of any person or entity for any
other brokerage or finders fee in connection with the transactions contemplated
hereby and by the Operative Documents. Each of the Purchaser and CNC, jointly
and not severally, hereby represents and warrants to each of the Stockholders
that it has not in any manner created any other liability of any person or
entity for any other brokerage or finders fee in connection with the
transactions contemplated hereby and by the Operative Documents.
SECTION 7.3. FURTHER ACTIONS.
(a) At any time and from time to time, each party agrees, at its or his
expense, to take such actions and to execute and deliver such documents as may
be reasonably necessary to effectuate the purposes of this Agreement and each of
the Operative Documents.
(b) After the Closing, each party shall from time to time, at the
reasonable request of any other party, and without cost or expense to the
requesting party, execute and deliver such other instruments of conveyance and
transfer and take such other actions as the requesting party may reasonably
require, in order to effectuate the purposes of this Agreement and each of the
Operative Documents.
SECTION 7.4. AVAILABILITY OF EQUITABLE REMEDIES. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, any party shall be entitled, either before or after the Closing, in
addition to any other right or remedy available to it, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement, and in either case no bond or other
security shall be required in connection therewith, and the parties hereby
consent to the issuance of such an injunction and to the ordering of specific
performance.
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SECTION 7.5. SURVIVAL.
(a) The covenants, agreements, representations, and warranties
contained in or made pursuant to this Agreement shall survive the Closing and
any delivery of Securities by Purchaser or CNC, irrespective of any
investigation made by or on behalf of any party, as follows:
(i) the representations and warranties contained in Articles II
and IV shall survive indefinitely;
(ii) the representations and warranties contained in Sections 3.2,
3.4(d) and 3.6 shall survive through the date of the expiration of the
applicable statutes of limitations (including any extensions thereof); and
(iii) all other representations and warranties contained in this
Agreement shall survive for a period of two (2) years from the date of Closing.
(b) The statements contained in any of the Operative Documents or
delivered to the Purchaser or CNC in connection with the transactions
contemplated hereby or thereby, or in any statement, certificate, or other
instrument delivered by or on behalf of any Acquired Entity, or any Stockholder
pursuant hereto or thereto or delivered to the Purchaser or CNC in connection
with the transactions contemplated hereby or thereby shall be deemed
representations and warranties, covenants and agreements, or conditions, as the
case may be, of Stockholders (jointly and not severally except as otherwise
expressly set forth herein or therein) hereunder for all purposes of this
Agreement (including all statements, certificates, or other instruments
delivered pursuant hereto or thereto or delivered in connection with the
transactions contemplated hereby or thereby).
SECTION 7.6. MODIFICATION. This Agreement, the Exhibits and Schedules
hereto, and the Operative Documents set forth the entire understanding of the
parties with respect to the subject matter hereof, supersede all existing
agreements among them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.
SECTION 7.7. NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested or by Federal Express, Express Mail, or
similar overnight delivery or courier service or delivered (in person or by
telecopy, telex, or similar telecommunications equipment) against receipt to the
party to whom it is to be given at the address of such party set forth below (or
to such other address as the party shall have furnished in writing in accordance
with the provisions of this Section 7.7):
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If to the Purchaser:
Crown NorthCorp, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx
Chairman
Telecopy: (000) 000-0000
With copies to:
Crown NorthCorp, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
Powell, Goldstein, Xxxxxx & Xxxxxx
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
If to the Stockholders or the Acquired Corporations:
Eastern Realty Corporation
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attn: Xxx X. Xxxxxxx, President
Telecopy: (000) 000-0000
With copies to:
Xxxxxx and Xxxxx Holding, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Xx., Esq.
Telecopy: (000) 000-0000
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Xxxxxx, Flyer & Xxxxx
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx X.X. 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Notice to the estate of any party shall be sufficient if addressed to the party
as provided in this Section 7.7. Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which will be deemed given at the
time of receipt thereof. Any notice given by other means permitted by this
Section 7.7 shall be deemed given at the time of receipt thereof.
SECTION 7.8. WAIVER. Any waiver by any party of a breach of any term of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of that term or of any breach of any other term of this Agreement. The
failure of a party to insist upon strict adherence to any term of this Agreement
on one or more occasions will not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. Any waiver must be in writing.
SECTION 7.9. ACQUIRED ENTITY OBLIGATIONS. No Stockholder shall have any
rights against any Acquired Entity if a remedy is sought or obtained against any
Stockholder because both such Acquired Entity and one or more Stockholders
breach a representation, warranty, covenant, or agreement.
SECTION 7.10. BINDING EFFECT. The provisions of this Agreement shall be
binding upon and inure to the benefit of each Acquired Entity, the Purchaser,
and CNC and their respective successors and assigns and each Stockholder and his
heirs, executors, and administrators, and shall inure to the benefit of each
Purchaser Indemnitee and Stockholder Indemnitee and its successors and assigns
(if not a natural person) and his heirs, executors, and administrators (if a
natural person).
SECTION 7.11. NO THIRD PARTY BENEFICIARIES. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement (except as provided in Section 7.10).
SECTION 7.12. SEPARABILITY. If any provision of this Agreement is
invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances.
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SECTION 7.13. HEADINGS. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
SECTION 7.14. COUNTERPARTS; GOVERNING LAW. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. This Agreement shall be governed by and construed in accordance with
the laws of Delaware, without giving effect to the conflict of law principles
thereof.
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[Signatures on following page]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
CROWN NORTHCORP, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
CNC HOLDING CORP.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
XXXXXX AND XXXXX HOLDING, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
---------------------------------------------
XXXXXX X. XXXXX
---------------------------------------------
XXXXX X. XXXX
---------------------------------------------
XXXXXXX X. XXXXXXXX
38
---------------------------------------------
XXXXXXX X. NORTH
---------------------------------------------
XXX X. XXXXXXX
---------------------------------------------
XXXXXXX X. XXXXXX, XX.
EASTERN REALTY CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
EASTERN BALTIMORE, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
EASTERN REALTY L.L.C.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
39
SCHEDULE 1.1(C)
NUMBER OF SHARES OF
STOCKHOLDER AND SECURITIES TO BE SOLD OF
FOR SUCH PREFERRED STOCK PREFERRED STOCK
M&S
- ERC Shares
Xxxxx
- Baltimore Shares
- ELLC Membership Interest
Hall
- Baltimore Shares
- ELLC Membership Interest
Xxxxxxxx
- Baltimore Shares
- ELLC Membership Interest
North
- Baltimore Shares
- ELLC Membership Interest
Xxxxxxx
- Baltimore Shares
- ELLC Membership Interest
Stuart
- Baltimore Shares
- ELLC Membership Interest
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SCHEDULE 2.1(A)
LIST OF ERC SUBSIDIARIES, ERC INTERESTS,
AND CONTROLLED ERC ENTITIES AND INFORMATION
ABOUT THEM AND ERC
1. THE ERC INTERESTS:
Name of Issuer Type of Equity Interest Quantum of Equity Interest
Jurisdiction Principal Business Qualif. Cap. Ownership
Form of of Place of
Organization Organization Business
2. ERC SUBSIDIARIES:
Jurisdiction Principal
Form of of Place of
Name Organization Organization Business Business Qualif. Cap. Ownership
3. CONTROLLED ERC ENTITIES:
Jurisdiction Principal
Form of of Place of
Name Organization Organization Business Business Qualif. Cap. Ownership
4. OTHER OWNERSHIP INTERESTS:
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SCHEDULE 2.1(B)
LIST OF BALTIMORE SUBSIDIARIES,
BALTIMORE INTERESTS, AND CONTROLLED BALTIMORE ENTITIES
AND INFORMATION ABOUT THEM AND BALTIMORE
1. THE BALTIMORE INTERESTS:
Name of Issuer Type of Equity Interest Quantum of Equity Interest
Jurisdiction Principal
Form of of Place of
Organization Organization Business Business Qualif. Cap. Ownership
2. BALTIMORE SUBSIDIARIES:
Jurisdiction Principal
Form of of Place of
Name Organization Organization Business Business Qualif. Cap. Ownership
3. CONTROLLED BALTIMORE ENTITIES:
Jurisdiction Principal
Form of of Place of
Name Organization Organization Business Business Qualif. Cap. Ownership
4. OTHER OWNERSHIP INTERESTS:
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SCHEDULE 2.1(C)
LIST OF ELLC SUBSIDIARIES, ELLC INTERESTS,
AND CONTROLLED ELLC ENTITIES AND INFORMATION
ABOUT THEM AND ELLC
1. THE ELLC INTERESTS:
Name of Issuer Type of Equity Interest Quantum of Equity Interest
Jurisdiction Principal
Form of of Place of
Organization Organization Business Business Qualif. Cap. Ownership
2. ELLC SUBSIDIARIES:
Jurisdiction Principal
Form of of Place of
Name Organization Organization Business Business Qualif. Cap. Ownership
3. CONTROLLED ELLC ENTITIES:
Jurisdiction Principal
Form of of Place of
Name Organization Organization Business Business Qualif. Cap. Ownership
4. OTHER OWNERSHIP INTERESTS:
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SCHEDULE 2.1(D)
ORGANIZATIONAL CHART OF THE ACQUIRED CORPORATIONS,
THE SUBSIDIARIES, THE CONTROLLED ENTITIES,
AND THE INTERESTS
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SCHEDULE 2.2
OWNERSHIP OF THE ACQUIRED CORPORATIONS
-x-
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SCHEDULE 2.4(D)
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46
SCHEDULE 3.1
DELIVERED FINANCIAL STATEMENTS
-xii-
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SCHEDULE 3.3
LITIGATION
-xiii-
48
SCHEDULE 3.4(B)
LIST OF PROPERTY OWNED, LEASED, OR LICENSED
Net Book
Tax Reserve for Value Acquired Since
Description of Depreciation for Financial Last Balance
Property Owned Cost Tax Book Value (Except for Land) Reporting Sheet Date
----------------------- ---- -------------- ----------------- ------------- --------------
Description of Property Description of Lease or License
Leased or Licensed
-xiv-
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SCHEDULE 3.4
ENVIRONMENTAL LAWS
-xv-
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SCHEDULE 3.5
LIST OF CONTRACTS, AGREEMENTS, INSTRUMENTS, AND ARRANGEMENTS
Where no such instrument exists, the Stockholders have inserted the word "none."
(a) Specimen copies of standard transaction terms and warranties.
(b) Sale, purchase, and lease agreements with an aggregate sale, purchase, or
lease price in excess of $1,000.
(c) Agreements for the acquisition of businesses and joint venture agreements.
(d) Brokerage agreements, model home conversion agreements, agreements with
finders and brokers, and other agency agreements.
(e) Bank credit, factoring, and loan agreements, indentures, promissory notes,
and other evidences of indebtedness (excluding invoices and like evidences of
regular trade indebtedness), and letters of credit; and all consents or waivers
relating to any of the foregoing.
(f) Liens, mortgages, security interests, pledges, charges, easements, and other
encumbrances; and all documents purporting to create any of the foregoing.
(g) Insurance policies (including all under which any Acquired Corporation, any
Subsidiary, any Controlled Entity, or any Stockholder is a beneficiary).
(h) Consent decrees, judgments, orders, settlement agreements, or agreements
relating to competitive activities which require or prohibit any future action
by any Acquired Corporation, any Subsidiary, any Controlled Entity, or any
Stockholder or to which any of them or any of their respective businesses,
properties, or assets are or may be subject.
(i) Contracts, agreements, instruments, leases, licenses, arrangements, or
understandings with any Affiliated Transaction Person.
(j) Rights of way, proffers, PUD plans, market studies, appraisals,
environmental studies, and soil reports.
(k) Government contracts, permits, franchises, and inspection reports.
(l) Powers of attorney and letters of authorization.
(m) Bank accounts, escrows, and safe deposit boxes, and persons authorized to
draw thereon or having access thereto.
-xvi-
51
(n) Deeds.
(o) Consents necessary for the execution, delivery, or performance of this
Agreement or any Operative Document by any Acquired Corporation, any Subsidiary,
any Controlled Entity, or any Stockholder, or for the transfer of the owner of
any Interest to the Purchaser or CNC contemplated by this Agreement or any of
the Operative Documents.
(p) Guarantees or undertakings.
(q) Any management, advisory, consulting, engineering, designing, utility, or
other agreement not listed above.
(r) Contracts, agreements, and instruments not listed above which are of
material importance in the conduct of the business of any Acquired Corporation,
any Subsidiary, or any Controlled Entity as currently conducted.
(s) Reports or memoranda relating to broad aspects of the financial condition,
results of operations, business, properties, assets, liabilities, or future
prospects of any Acquired Corporation or of any Subsidiary or Controlled Entity
made within the last five years.
(t) Other reports, opinions, or appraisals of any property or asset of any
Acquired Corporation or any Subsidiary or Controlled Entity made in the last ten
years.
(u) Any agreements, instruments, or other documents through which any of the
Acquired Corporations or the Subsidiaries exercises control over any Controlled
Entity.
The following is a list of arrangements and understandings relating to financial
matters, regardless in each case of whether or not such arrangements or
understandings are in contractual or written form:
The following are other material contracts to which any of the Acquired
Corporations, the Subsidiaries, or the Controlled Entities are parties or to
which any of their respective properties or assets are subject:
-xvii-
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SCHEDULE 3.6
EMPLOYEE BENEFITS
-xviii-
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SCHEDULE 3.7
LIST OF INTANGIBLES OWNED AND LICENSED
Description of
Intangible Owned
or for Which Net Book Value Acquired Since
Application is Tax Reserve for for Financial Last Balance
Pending Cost Tax Book Value Depreciation Reporting Sheet Date
---------------- ---- -------------- --------------- -------------- --------------
Description of Intangible Licensed Description of License
The following rights under Intangibles are necessary to the business of any
Acquired Corporation or of any Subsidiary or Controlled Entity:
-xix-
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SCHEDULE 3.9(A)
GOVERNMENTAL CONSENTS
-xx-
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SCHEDULE 3.9(B)
CONTRACTUAL CONSENTS
-xxi-
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SCHEDULE 3.10
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO CONTROLLED
ENTITIES AS TO DELINQUENT TAXES, ASSESSMENTS, ETC.
-xxii-
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CROSS REFERENCES -- PLEASE DO NOT DELETE!!!
1.1 Terms
2.1 organization
2.2 capitalization
2.3 financialcondition
2.6 Properties
2.7 contracts
2.9 Patents
2.11 authoritytosell
2.14 Validityofissuance
3.5 Validity
4.16 employmentagreement
7.1 indemnification
7.2 indemnificationellc
7.3 indemnificationstockholders
7.4 indemnificationpurchaser
7.5 assertingclaims
7.7 arbitration
8.6 appointmentagent
8.8 notices
8.11 bindingeffect
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