STOCK PURCHASE AGREEMENT
AMONG
XXXXXX XXXXXX, JR.,
XXXXXX X. XXXXXX, XX.,
XXXXX X. XXXXXX,
STANDARD CORPORATION
AND
UNION TRANSPORT (U.S.) HOLDINGS, INC.
DATED AS OF OCTOBER 11, 2002
TABLE OF CONTENTS
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ARTICLE I THE PURCHASE..............................................................1
1.1 Purchase and Sale............................................................1
1.2 Consideration................................................................1
1.3 Post-Closing Adjustment......................................................2
1.4 Earn-Out.....................................................................4
1.5 Closing......................................................................9
1.6 Taking of Necessary Action; Further Action..................................10
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS............................10
2.1 Organization of the Company and its Subsidiary..............................10
2.2 Company Capital Structure...................................................11
2.3 Subsidiaries................................................................12
2.4 Authority...................................................................12
2.5 No Conflict.................................................................12
2.6 Consents....................................................................13
2.7 Company Financial Statements................................................13
2.8 No Undisclosed Liabilities..................................................14
2.9 Absence of Changes..........................................................14
2.10 Tax Matters; Subchapter "S"; Distributions..................................16
2.11 Restrictions on Business Activities.........................................17
2.12 Title to Properties; Absence of Liens and Encumbrances; Condition of
Equipment...................................................................18
2.13 Intellectual Property.......................................................22
2.14 Agreements, Contracts and Commitments.......................................22
2.15 No Defaults.................................................................23
2.16 Interested Party Transactions...............................................23
2.17 Governmental Authorization..................................................24
2.18 Litigation..................................................................24
2.19 Accounts Receivable.........................................................24
2.20 Minute Books................................................................25
2.21 Environmental Matters.......................................................25
2.22 Employee Benefit Plans and Compensation.....................................26
2.23 Insurance...................................................................29
2.24 Compliance with Laws........................................................30
2.25 Complete Copies of Materials................................................30
2.26 Suppliers and Customers.....................................................30
2.27 Inventory...................................................................30
2.28 Disclosure..................................................................30
2.29 Disclaimer of Other Representations and Warranties..........................30
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TABLE OF CONTENTS
(continued)
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ARTICLE III FURTHER REPRESENTATIONS AND WARRANTIES OF THE SELLERS....................30
3.1 Investment Representations..................................................31
3.2 Company Capital Stock.......................................................32
3.3 Tax Matters.................................................................32
3.4 Absence of Claims by the Sellers............................................32
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER..............................33
4.1 Organization and Standing...................................................33
4.2 Authority...................................................................33
4.3 No Conflict.................................................................33
4.4 Consents....................................................................33
4.5 UTi Ordinary Shares.........................................................34
4.6 Disclaimer of Other Representations and Warranties..........................34
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME......................................34
5.1 Conduct of Business of the Company..........................................34
5.2 No Solicitation.............................................................37
5.3 Third Party Confidentiality Agreements......................................37
ARTICLE VI ADDITIONAL AGREEMENTS....................................................38
6.1 Access to Information.......................................................38
6.2 Confidentiality.............................................................38
6.3 Expenses....................................................................38
6.4 Consents....................................................................39
6.5 Reasonable Efforts..........................................................39
6.6 Notification of Certain Matters.............................................39
6.7 Additional Documents and Further Assurances.................................40
6.8 FIRPTA Compliance...........................................................40
6.9 Employment Matters..........................................................40
6.10 Broker's Fees...............................................................40
6.11 Outstanding Debt............................................................40
6.12 Restrictions Regarding Transfers of Shares..................................41
6.13 Long Term Incentive Plan Releases...........................................41
6.14 Short Term Incentive Plan...................................................42
6.15 Sellers' Representative.....................................................42
6.16 Advisory Council............................................................42
6.17 Sage Mill Releases..........................................................43
6.18 S Corporation Deposits......................................................44
6.19 Management Earn-Out Incentive Plan..........................................45
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TABLE OF CONTENTS
(continued)
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6.20 Payment of Costs............................................................45
6.21 Sellers' Certificates.......................................................45
ARTICLE VII CONDITIONS TO THE PURCHASE...............................................45
7.1 Conditions to Obligations of Each Party to Effect the Purchase..............45
7.2 Conditions to Obligations of the Sellers....................................46
7.3 Conditions to the Obligations of Purchaser..................................47
ARTICLE VIII TAX MATTERS..............................................................49
8.1 Taxes.......................................................................49
8.2 Returns.....................................................................50
8.3 Conduct of Audits and Other Procedural Matters..............................51
8.4 Assistance and Cooperation..................................................52
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION AND
ESCROW; SELLERS..........................................................52
9.1 Survival of Representations and Warranties..................................52
9.2 Indemnification and Escrow Arrangements.....................................53
ARTICLE X TERMINATION, AMENDMENT AND WAIVER........................................55
10.1 Termination.................................................................55
10.2 Effect of Termination.......................................................56
10.3 Amendment...................................................................56
10.4 Extension; Waiver...........................................................56
ARTICLE XI GENERAL PROVISIONS.......................................................57
11.1 Notices.....................................................................57
11.2 Interpretation..............................................................57
11.3 Counterparts................................................................58
11.4 Entire Agreement; Assignment................................................58
11.5 Severability................................................................58
11.6 Other Remedies..............................................................58
11.7 Governing Law...............................................................58
11.8 Alternative Dispute Resolution..............................................58
11.9 Attorneys' Fees.............................................................59
11.10 Rules of Construction.......................................................59
ARTICLE XII DEFINITIONS..............................................................59
12.1 Definitions.................................................................59
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of October 11, 2002 by and among Union-Transport (U.S.) Holdings, Inc.,
a Delaware corporation ("Purchaser"), Standard Corporation, a South Carolina
corporation (the "Company") and Xxxxxx X. Xxxxxx, Xx., Xxxxx X. Xxxxxx and
Xxxxxx Xxxxxx, Jr. (collectively, the "Sellers").
RECITALS
A. The Boards of Directors of each of Purchaser and the Company believe
it is in the best interests of each company and its respective shareholders that
Purchaser acquire all issued and outstanding shares of capital stock of the
Company (the "Company Capital Stock").
X. Xxxxxxx own all of the issued and outstanding shares of Company
Capital Stock and Purchaser desires to acquire all of the issued and outstanding
Company Capital Stock (the "Purchase") from Sellers.
C. The Sellers and the Company, on the one hand, and Purchaser, on the
other hand, desire to make certain representations, warranties, covenants and
other agreements in connection with the Purchase.
NOW, THEREFORE, in consideration of the mutual agreements, covenants and
other promises set forth herein, the mutual benefits to be gained by the
performance thereof, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and accepted, the parties
hereby agree as follows:
ARTICLE I
THE PURCHASE
1.1 Purchase and Sale. At the Closing (as defined in Section 1.5) and
subject to and upon the terms and conditions of this Agreement, Purchaser shall
purchase for the Purchase Price (as defined in Section 1.2 and as adjusted as
provided for in this Agreement) from the Sellers and the Sellers shall sell,
convey, transfer, assign and deliver to Purchaser, free and clear of all Liens,
encumbrances or other defects of title, all of the issued and outstanding shares
of Company Capital Stock including all rights attached or accruing to the
Company Capital Stock as of the Closing.
1.2 Consideration. The purchase price (the "Purchase Price") for the
Company Capital Stock and for the Non-Competition Agreements (as defined below)
shall consist of the following:
(a) An amount in cash equal to $45,500,000 (the "Cash
Consideration"), subject to post-closing adjustment as set forth in Section 1.3
below, from which amount the Indemnity Escrow Amount (as defined below),
Sellers' Phase I Costs (as defined below),
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$7,294,537.04 to be paid to Bank of America on behalf of the Sellers, and
$1,041,213.32 to be paid to Xxxxxx Xxxxxx on behalf of Sellers shall be deducted
as provided for below in this Section 1.2;
(b) At the Closing, Purchaser shall withhold *** (the "Indemnity
Escrow Amount") from the Cash Consideration and deposit the Indemnity Escrow
Amount into escrow as collateral for the indemnification obligations of the
Sellers under Article IX hereof pursuant to the provisions of the Indemnity
Escrow Agreement substantially in the form of Exhibit A attached hereto (the
"Indemnity Escrow Agreement") to be entered into at the Closing by and among
Purchaser, the Sellers and the escrow agent named therein (the "Indemnity Escrow
Agent");
(c) At the Closing, Purchaser shall deposit $4,000,000 (the "EBITDA
Escrow Amount") into the EBITDA Escrow Amount into escrow pursuant to the
provisions of the EBITDA Escrow Agreement substantially in the form of Exhibit B
attached hereto (the "EBITDA Escrow Agreement") to be entered into at the
Closing by and among Purchaser, the Sellers and the escrow agent named in the
EBITDA Escrow Agreement (the "EBITDA Escrow Agent");
(d) The Contingent Earn-Out Payments (as defined below), subject to
the fulfillment of the conditions specified in Section 1.4 hereof; and
(e) The number of restricted UTi Ordinary Shares (the "Earn-Out
Advance Shares") valued at $3,000,000 at the Closing based on the Trading Price
(the "Earn-Out Advance") as a non-refundable advance to be applied against the
Contingent Earn-Out Payments. The stock certificates for the Earn-Out Advance
Shares are to be held in pledge as provided for in Section 6.17(g) below.
1.3 Post-Closing Adjustment. The Cash Consideration paid according to
Section 1.2(b), (and accordingly, the resulting Purchase Price) shall be subject
to adjustment as provided for in this Section 1.3.
(a) After the Closing, the Cash Consideration payable to Sellers
shall be subject to an adjustment to the extent that the "Net Tangible Assets"
(as defined in Section 1.3(b) below) of the Company as of the Effective Time is
greater or less than *** (the "Minimum Amount").
(b) As used herein, the term "Net Tangible Assets" means the
stockholders' equity in the Company as of the Effective Time determined in
accordance with GAAP and the written accounting policies of the Company
identified in Exhibit C hereto (the "Company's Accounting Policies").
(c) Not later than forty-five (45) days after the Closing Date,
Purchaser shall furnish the Sellers and Xxxxx Xxxxxxxx LLP ("Xxxxx Xxxxxxxx") a
statement of the Company's Net Tangible Assets as of the Effective Time (the
"Effective Time Balance Sheet") and a schedule setting forth the amount by which
the Company's Net Tangible Assets as of the
-----------------
*** Information omitted and filed separately with the Commission for
confidential treatment.
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Effective Time equals, is greater than or is less than, the Minimum Amount. The
result is referred to herein as the "Adjustment Amount." At the request of
Sellers, Purchaser shall provide Xxxxx Xxxxxxxx with reasonable access during
normal business hours to the Company's work papers and accounting records
supporting Purchaser's calculations of the Effective Time Balance Sheet and the
Adjustment Amount calculations. In reviewing the Effective Time Balance Sheet
and the Adjustment Amount, Xxxxx Xxxxxxxx shall make a determination that such
calculations were prepared in accordance with GAAP and the Company's Accounting
Policies. At the request of Purchaser, Sellers shall cause Xxxxx Xxxxxxxx to
respond to any of Purchaser's questions and comments regarding the application
of the policies and procedures used by Xxxxx Xxxxxxxx. The parties agree that
the cost and expense of Xxxxx Xxxxxxxx'x review of the Effective Time Balance
Sheet and Adjustment Amount shall be the sole responsibility of Sellers.
(d) Within thirty (30) days of Sellers' receipt of the Effective
Time Balance Sheet and the calculation of the Adjustment Amount, Sellers shall
cause Xxxxx Xxxxxxxx to complete its review and indicate in writing to both
Purchaser and the Sellers whether Xxxxx Xxxxxxxx agrees with Purchaser's
calculations of the Effective Time Balance Sheet and the Adjustment Amount or,
if they disagree, indicate such disagreement stating the facts and circumstances
which support the reasonableness of their disagreement (such findings are
referred to herein as the "Xxxxx Xxxxxxxx Findings"). Within thirty (30) days of
Purchaser's receipt of the Xxxxx Xxxxxxxx Findings, Purchaser shall deliver to
Sellers a written statement indicating whether Purchaser agrees with the Xxxxx
Xxxxxxxx Findings or if Purchaser disagrees, a description of Purchaser's
reasons for disagreement, including the amounts of any proposed modifications,
the items to which such modifications relate and the facts and circumstances
supporting the reasonableness and propriety of such modifications (an "Effective
Time Statement of Objection"). If Purchaser does not deliver to Sellers an
Effective Time Statement of Objection to the calculations set forth in the Xxxxx
Xxxxxxxx Findings within such period, then the calculations set forth in the
Xxxxx Xxxxxxxx Findings shall be final, conclusive and binding on the parties.
Within ten (10) days of Sellers' receipt of an Effective Time Statement of
Objection, Sellers shall ask Xxxxx Xxxxxxxx to review the Xxxxx Xxxxxxxx
Findings, the Effective Time Balance Sheet and the calculation of the Adjustment
Amount which is the subject of the Effective Time Statement of Objection, and
such statement and the relevant calculations, as so reviewed by Xxxxx Xxxxxxxx
(the "Reviewed Adjustment Amount"), shall be redelivered to Purchaser within
thirty (30) days. If Purchaser continues to have objections to the Reviewed
Adjustment Amount, Purchaser must state such objections in a writing including
the amounts of any proposed modifications, the items to which such modifications
relate and the facts and circumstances supporting the reasonableness and
propriety of such modifications (an "Effective Time Objection Confirmation").
The Effective Time Objection Confirmation must be delivered by Purchaser to
Sellers within thirty (30) days of receipt by Purchaser of the Reviewed
Adjustment Amount. Sellers and Purchaser shall use reasonable efforts to resolve
any disputes regarding the Effective Time Balance Sheet and the calculation of
the Adjustment Amount in question that are timely raised by Purchaser in an
Effective Time Closing Statement of Objection and in an Effective Time Objection
Confirmation.
(e) The parties are unable to resolve their disagreements regarding
the Effective Time Balance Sheet and the calculation of the Adjustment Amount,
then within
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thirty (30) days after Sellers' receipt of the Effective Time Objection
Confirmation, either party may within five (5) business days of the end of that
thirty (30) day period provide written notice to the other that they desire to
submit the dispute for resolution to an office in Charlotte, North Carolina of
one of the four largest firms of independent certified public accountants, other
than Purchaser's or Sellers' accountants (the "Accountant"). If Sellers and
Purchaser do not agree upon the selection of the Accountant, the selection will
be made by the Charlotte office of the American Arbitration Association ("AAA")
in accordance with the criteria specified above or, if no such Accountant is
available or willing to resolve the dispute, the AAA shall select the next
largest accounting firm from which a qualified accountant is available from an
office of such firm in Charlotte, North Carolina; provided, however, that such
firm cannot be Xxxxx Xxxxxxxx. Each of Purchaser and Sellers may submit such
information to the Accountant as such party deems relevant. The Accountant
shall, as soon as reasonably possible after appointment as provided herein,
render its determination as to the Effective Time Balance Sheet and the
calculation of the Adjustment Amount in question, and the amounts as so
determined shall be final and binding on the Purchaser and Sellers. The fees and
expenses of AAA and of the Accountant shall be split equally between Sellers on
the one hand and the Purchaser on the other hand. The dispute resolution
mechanism contained in Sections 1.3(d) and 1.3(e) shall be the exclusive
mechanism for resolving disputes regarding the determination of the Effective
Time Balance Sheet and the calculation of the Adjustment Amount.
(f) Within thirty (30) days after Sellers receive Purchaser's
confirmation that Purchaser agrees with the determination of the Effective Time
Balance Sheet and the calculation of the Adjustment Amount or upon the
expiration of the period of time Purchaser may deliver an Effective Time
Statement of Objection if no such statement is delivered or, within thirty (30)
days of the resolution of any dispute regarding such calculation, whichever is
later, Sellers shall pay to Purchaser the Adjustment Amount if such amount is
negative or Purchaser shall pay to Sellers the Adjustment Amount if such amount
is positive. Such payments shall be paid by wire transfer.
1.4 Earn-Out. As adjusted pursuant to Section 1.3 above, Sellers may be
entitled to receive additional earn-out payments as set forth in this Section
1.4.
(a) For purposes of this Section 1.4, the following terms shall have
the following meanings:
"Contingent Earn-Out Payment" means the First Period Earn-Out Amount
and/or the Second Period Earn-Out Amount to the extent the applicable requisite
thresholds are exceeded, as the context requires. The total amount of Contingent
Earn-Out Payments that can ever be paid to Sellers shall be subject to the
limitations set forth in Section 1.4(h) below.
"Earn-Out EBITDA" shall mean the result of the Company's EBITDA
including Qualified Expenses. The following items will be excluded from the
calculations of the Earn-Out EBITDA: ***
-----------------
*** Information omitted and filed separately with the Commission for
confidential treatment.
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"Earn-Out Multiplier" shall mean ***.
"EBITDA" shall mean the Company's earnings before interest, taxes,
depreciation and amortization expenses, determined in accordance with GAAP and
the Company's Accounting Policies.
"Extraordinary Expenses or Income" shall mean material expenses or
income arising outside of the ordinary course of business which are not
consistent with the Company's current business plans or recent conduct of
business (the parties agree that such recent conduct of business includes the
expansion of business by opening new facilities).
"First Period" shall mean the 12-month period commencing October 1, 2002
through September 30, 2003.
"First Period Earn-Out Amount" shall mean (i) the extent by which the
Earn-Out EBITDA calculated for the First Period exceeds the First Period EBITDA
Baseline, multiplied by (ii) the applicable Earn-Out Multiplier; provided,
however, that no First Period Earn-Out Amount shall be due or owing to Sellers
unless the Earn-Out EBITDA calculated for the First Period exceeds the First
Period EBITDA Threshold.
"First Period EBITDA Baseline" shall mean ***.
"First Period EBITDA Threshold" shall mean ***.
"Qualified Expenses" means the costs for services and other benefits
provided to the Company by the Group after the Closing to the extent that (a)
similar services were previously provided to the Company either by the Company's
own personnel or third parties, and such services are provided to the Company by
the Group after the Closing at a cost which is consistent with the costs and
expenses incurred by the Company in the ordinary course of its business prior to
the Closing, or (b) for services and benefits which do not qualify under (a),
such services and other benefits are approved in advance by the Council.
"Second Period" shall mean the 12-month period commencing October 1,
2003 through September 30, 2004.
"Second Period Earn-Out Amount" shall mean (i) the extent by which the
Earn-Out EBITDA calculated for the Second Period exceeds the Second Period
EBITDA Baseline, multiplied by (ii) the applicable Earn-Out Multiplier;
provided, however, that no Second Period Earn-Out Amount shall be due or owing
to Sellers unless the Earn-Out EBITDA calculated for the Second Period exceeds
the Second Period Threshold.
"Second Period EBITDA Baseline" means the greater of either (i) the
First Period EBITDA Threshold or (ii) the Company's Earn-Out EBITDA calculated
for the First Period.
-----------------
*** Information omitted and filed separately with the Commission for
confidential treatment.
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"Second Period EBITDA Threshold" shall mean ***.
(b) Purchaser shall use its reasonable efforts to provide to Sellers
and Xxxxx Xxxxxxxx, not later than sixty (60) days following the end of the each
of the First Period and the Second Period, a statement for such period (each
statement an "EBITDA Settlement Statement"). The EBITDA Settlement Statement for
the First Period shall set forth in reasonable detail (i) the Earn-Out EBITDA
calculated for the First Period and (ii) if the Earn-Out EBITDA calculated for
the First Period exceeds the First Period EBITDA Threshold, the First Period
Earn-Out Amount (it being understood that no First Period Earn-Out Amount shall
be due or owing to Sellers unless the Earn-Out EBITDA calculated for the First
Period exceeds the First Period EBITDA Threshold). The EBITDA Settlement
Statement for the Second Period shall set forth in reasonable detail (i) the
Earn-Out EBITDA calculated for the Second Period and (ii) if the Earn-Out EBITDA
calculated for the Second Period exceeds the Second Period EBITDA Threshold, the
Second Period Earn-Out Amount (it being understood that no Second Period
Earn-Out Amount shall be due or owing to Sellers unless the Earn-Out EBITDA
Calculated for the Second Period exceeds the Second Period EBITDA Threshold). At
the request of Sellers, Purchaser shall provide Xxxxx Xxxxxxxx with reasonable
access during normal business hours to the Company's work papers and accounting
records supporting Purchaser's calculations set forth in the EBITDA Settlement
Statement. In reviewing the EBITDA Settlement Statement, Xxxxx Xxxxxxxx shall
make a determination that such calculations were prepared in accordance with
GAAP and the Company's Accounting Policies. At the request of Purchaser, Sellers
shall cause Xxxxx Xxxxxxxx to respond to any of Purchaser's questions and
comments regarding the application of the policies and procedures used by Xxxxx
Xxxxxxxx. The parties agree that the cost and expense of Xxxxx Xxxxxxxx'x review
of the EBITDA Settlement Statement shall be the sole responsibility of Sellers.
(c) Within thirty (30) days of Sellers' receipt of an EBITDA
Settlement Statement, Sellers shall cause Xxxxx Xxxxxxxx to complete its review
and indicate in writing to both the Purchaser and Sellers whether Xxxxx Xxxxxxxx
agrees with Purchaser's calculation of the Contingent Earn-Out Payment (if any)
as set forth in the EBITDA Settlement Statement or, if they disagree, indicate
such disagreement stating the facts and circumstances which support the
reasonableness of their disagreement (such findings are referred to herein as
the "Xxxxx Xxxxxxxx Earn-Out Findings"). Within thirty (30) days of Purchaser's
receipt of the Xxxxx Xxxxxxxx Earn-Out Findings, Purchaser shall deliver to
Sellers a written statement indicating whether Purchaser agrees with the Xxxxx
Xxxxxxxx Earn-Out Findings or if Purchaser disagrees, a description of
Purchaser's reasons for disagreement, including the amounts of any proposed
modifications, the items to which such modifications relate and the facts and
circumstances supporting the reasonableness and propriety of such modifications
(an "Earn-Out Statement of Objection"). If Purchaser does not deliver to Sellers
an Earn-Out Statement of Objection to the Xxxxx Xxxxxxxx Earn-Out Findings
within such period, then the calculations set forth in the Xxxxx Xxxxxxxx
Earn-Out Findings shall be deemed final, conclusive and binding on the parties.
Within ten (10) days of Sellers' receipt of an Earn-Out Statement of Objection,
Sellers shall ask Xxxxx Xxxxxxxx to review the calculations on the EBITDA
Settlement Statement which is the subject of the Earn-Out Statement of Objection
and such statement and the relevant calculations, as so reviewed by
-----------------
*** Information omitted and filed separately with the Commission for
confidential treatment.
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Xxxxx Xxxxxxxx (the "Reviewed EBITDA Settlement Statement"), shall be
redelivered to Purchaser within thirty (30) days. If Purchaser continues to have
objections to the Reviewed EBITDA Settlement Statement and the calculations of
the relevant Contingent Earn-Out Payment, Purchaser must state such objections
in a writing including the amounts of any proposed modifications, the items to
which such modifications relate and the facts and circumstances supporting the
reasonableness and propriety of such modifications (an "Earn-Out Objection
Confirmation"). The Earn-Out Objection Confirmation must be delivered by
Purchaser to Sellers within thirty (30) days of receipt of the Reviewed EBITDA
Settlement Statement. Sellers and Purchaser shall use reasonable efforts to
resolve any disputes regarding the calculations set forth in the Reviewed EBITDA
Settlement Statement in question that are timely raised by Purchaser in an
Earn-Out Statement of Objection and confirmed in an Earn-Out Objection
Confirmation.
(d) If the parties are unable to resolve their disagreements
regarding the calculations set forth in an EBITDA Settlement Statement and the
resulting Contingent Earn-Out Payment (if any) within thirty (30) business days
after Sellers' receipt of the Earn-Out Objection Confirmation, either party may,
within five (5) business days after the end of that thirty (30) business-day
period, provide written notice to the other that they desire to submit the
dispute for resolution to an office in Charlotte, North Carolina of an
Accountant. If Sellers and Purchaser do not agree upon the selection of the
Accountant, the selection will be made by the Charlotte office of the AAA or, if
no such Accountant is available or willing to resolve the dispute, the AAA shall
select the next largest accounting firm from which a qualified accountant is
available from an office of such firm in Charlotte, North Carolina; provided,
however, that such firm cannot be Xxxxx Xxxxxxxx. Each of Purchaser and Sellers
may submit such information to the Accountant as such party deems relevant. The
Accountant shall, as soon as reasonably possible after appointment as provided
herein, render its determination as to the amount of the calculations set forth
in the EBITDA Settlement Statement and the resulting calculation of Contingent
Earn-Out Amount (if any) in question, and the amounts as so determined shall be
final and binding on the parties. The fees and expenses of AAA and of the
Accountant shall be paid by Purchaser if the Contingent Earn-Out Amount which is
the subject of the dispute as finally determined by the Accountant is greater
than twenty percent (20%) of the amount determined by Purchaser. Otherwise,
Sellers shall be responsible for all of the fees and expenses of AAA and the
Accountant. The dispute resolution mechanism contained in Sections 1.4(c) and
1.4(d) shall be the exclusive mechanism for resolving disputes regarding the
calculations contained in an EBITDA Settlement Statement or of any Contingent
Earn-Out Payment.
(e) The Contingent Earn-Out Payment (if any) for the First Period
shall not be paid until all disputes regarding the calculations regarding the
First Period Earn-Out Amount have been resolved in the manner described in this
Section 1.4 and the Contingent Earn-Out Payment (if any) for the Second Period
shall not be paid until all disputes regarding the calculations of the Second
Period Earn-Out Amount have been resolved in the manner described in this
Section 1.4. In the event a Contingent Earn-Out Payment for the First Period is
payable to Sellers as provided for in this Section 1.4, then the Earn-Out
Advance shall be applied in full to such Contingent Earn-Out Payment and no
Contingent Earn-Out Payment for the First Period shall be due and owing unless
the Contingent Earn-Out Payment for the First Period exceeds the
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Earn-Out Advance. In the event the Earn-Out Advance exceeds the Contingent
Earn-Out Payment for the First Period, then the remainder of the Earn-Out
Advance shall be applied against the Contingent Earn-Out Payment for the Second
Period until used in full. Thereafter, any remaining Contingent Earn-Out Payment
for the Second Period shall be due and owing to Sellers. Regardless of the
amounts of the First Period Earn-Out Amount and the Second Period Earn-Out
Amount, the Earn-Out Advance shall not be required to be repaid by the Sellers
to Purchaser. Subject to the terms of this Agreement, any Contingent Earn-Out
Payment for the First Period or the Second Period which is due and owing by
Purchaser to Sellers shall be paid within thirty (30) days after Purchaser
receives Sellers' confirmation that they agree with the calculations set forth
in the EBITDA Settlement Statement or upon the expiration of the period of time
Sellers may deliver a Statement of Objection if no such statement is delivered
or, within thirty (30) days of the resolution of any dispute regarding such
calculations, whichever is later.
(f) In the event of a breach of any of the Non-Competition
Agreements by Sellers, then Purchaser shall have no obligation to make any
Contingent Earn-Out Payment which might otherwise be due and payable under the
terms of this Agreement.
(g) Purchaser may make the Contingent Earn-Out Payment for the First
Period or the Second Period in any combination of funds transferred by wire
transfer or in restricted UTi Ordinary Shares ("Payment Shares").
Notwithstanding the foregoing, the total number of Earn-Out Advance Shares and
Payment Shares shall not exceed 10% of the total number of UTi Ordinary Shares
issued and outstanding as of the Closing Date.
(h) The total value of the Contingent Earn-Out Payments that might
be due under this Section 1.4 shall not under any circumstances exceed ***
(subject to offsets or reductions as provided for in this Agreement), which
amount includes the $3,000,000 Earn-Out Advance. This limitation means that
regardless of how large the calculations of the Earn-Out EBITDA for the First
Period and Second Period turn out to be, the maximum amount of the Contingent
Earn-Out Payments for both periods that may be payable to Sellers under any
circumstances in addition to the Earn-Out Advance already paid to Sellers is ***
(subject to offsets or reductions as provided for in this Agreement).
(i) After the Earn-Out EBITDA for the Company has been calculated
for the First Period and either Purchaser and Sellers have agreed as to the
calculation of the Earn-Out EBITDA for the First Period or such calculation has
otherwise been finally determined upon the completion of the process set forth
in paragraphs (b), (c) and (d) of this Section 1.4, then Purchaser shall deliver
to the EBITDA Escrow Agent with instructions as to the disbursements of the
EBITDA Escrow Amount (and related remaining interest) as provided for in this
Section 1.4(i) (the "EBITDA Escrow Notice"). The EBITDA Escrow Notice shall
instruct Escrow Agent to act in accordance with one of the following three
alternatives:
-----------------
*** Information omitted and filed separately with the Commission for
confidential treatment.
-8-
(x) If the Earn-Out EBITDA for the First Period is *** or less, then
Purchaser shall instruct the EBITDA Escrow Agent to release to Purchaser the
entire EBITDA Escrow Amount together with interest remaining thereon (after
payment to the EBITDA Escrow Agent of its costs and fees as provided for in the
EBITDA Escrow Agreement) shall be returned to Purchaser; or
(y) If the Earn-Out EBITDA for the First Period is over *** and less
than ***, then Purchaser shall instruct the EBITDA Escrow Agent to:
(1) Release to Sellers *** of the EBITDA Escrow Amount together
with one-half the interest remaining in the EBITDA Escrow Account (after payment
of to the EBITDA Escrow Agent of its costs and fees as provided for in the
EBITDA Escrow Agreement) to Seller; and
(2) Release to Sellers that portion of the remaining *** of the
EBITDA Escrow Amount together with the interest remaining thereon which equals a
pro rata portion calculated as follows:
the Earn-Out EBITDA for the First Period - ***
***
and
(3) Release to Purchaser the remaining amount of the EBITDA
Escrow Amount together with the remaining interest earned thereon; or
(z) If the Earn-Out EBITDA for the First Period is at or above ***,
then Purchaser shall instruct the EBITDA Escrow Agent to release to Sellers the
entire EBITDA Escrow Amount together with any interest remaining thereon (after
payment to the EBITDA Escrow Agent of its costs and fees as provided for in the
EBITDA Escrow Agreement).
1.5 Closing. Unless this Agreement is earlier terminated pursuant to
Section 10.1 hereof, the closing of the sale and purchase of the Company Capital
Stock under this Agreement (the "Closing") shall take place at 6:00 a.m. on
October 11, 2002, at the office of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 000
Xxxx Xxxxxx Xxxxx, Xxxxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000-0000 or at
such other time or place as the Company, Purchaser and the Sellers may mutually
agree (the "Closing Date").
(a) Deliveries at the Closing. At the Closing, the following parties
shall deliver or cause to be delivered the following:
(i) The Sellers shall deliver to Purchaser certificates,
representing all of the issued and outstanding Company Capital Stock, duly
endorsed for transfer to Purchaser or with stock assignments duly endorsed in
blank;
-----------------
*** Information omitted and filed separately with the Commission for
confidential treatment.
-9-
(ii) Purchaser shall deliver to Sellers the Cash Consideration
by check or wire transfer of immediately available funds less the Indemnity
Escrow Amount, Sellers' Phase I Costs, $7,294,537.04 to be paid to Bank of
America on behalf of the Sellers, $1,041,213.32 be paid to Xxxxxx Xxxxxx on
behalf of Sellers and other amounts to be withhold therefrom as agreed to by the
parties;
(iii) Purchaser shall deliver to Sellers a copy of a letter from
UTi to UTi's transfer agent instructing the transfer agent to issue certificates
representing the Earn-Out Advance Shares;
(iv) The Sellers shall reimburse the Company for the Releases as
provided for in Section 6.13; and
(v) All of the documents, payments, instruments and opinions
required to be delivered under Sections 6, 7.1, 7.2 and 7.3 or reasonably
required by each Seller, Purchaser or their counsel.
(b) Deliveries Post-Closing. After the Closing, the certificates
representing the Earn-Out Advance Shares are to be retained by Purchaser
pursuant to the Stock Pledge Agreement in accordance with Section 6.17(g) below.
Such certificates will be stamped with the legends required by this Agreement.
1.6 Taking of Necessary Action; Further Action. If at any time after the
Closing, any further action is necessary or desirable to carry out the purposes
of this Agreement or to ensure that the Company retains full right, title and
possession to any and all assets, property, rights, privileges, powers and
franchises of the Company, Purchaser and the officers and directors of the
Company after the Closing are fully authorized in the name of their respective
corporations to take all such lawful and necessary action. The Company and each
of the Sellers agree to take all actions reasonably requested by Purchaser to
transfer the Company Capital Stock to Purchaser as contemplated by Section 1.1
of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers, jointly and severally, hereby represent and warrant
to Purchaser that the statements contained in this Article II are true and
correct, subject to those exceptions set forth in the disclosure schedules
attached hereto and delivered by the Sellers (the "Company Disclosure
Schedule"), which disclosure shall provide an exception to or otherwise qualify
the representations and warranties of the Sellers contained in the section of
this Agreement corresponding by number to such specific disclosure.
2.1 Organization of the Company and its Subsidiary. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of South Carolina. The Company has the corporate power to own its properties and
to carry on its business as currently conducted. The Company is duly qualified
or licensed to do business and in good standing as a
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foreign corporation in each jurisdiction where the properties owned, leased or
operated by it, or the business conducted by it, require such qualification or
license. The Company has delivered a true and correct copy of each of its
certificate of incorporation and bylaws and true and correct copies of
certificates of incorporation and bylaws for all of its Subsidiaries
(collectively, the "Company Charter Documents"), each as amended to date and in
full force and effect on the date hereof, to Purchaser. Section 2.1 of the
Company Disclosure Schedule lists the directors and officers of the Company. The
operations now being conducted by the Company are not now and have never been
conducted by the Company under any other name except those names listed on
Section 2.1 of the Company Disclosure Schedule.
2.2 Company Capital Structure
(a) The authorized capital stock of the Company consists of 10,000
shares of Company common stock, of which 7,000 shares are issued and
outstanding. All issued and outstanding Company Capital Stock is held by the
Sellers. All outstanding shares of Company Capital Stock are duly authorized,
validly issued, fully paid and non assessable and are currently subject to
preemptive rights, though such preemptive rights will be eliminated prior to
Closing through appropriate amendments to the Company Charter Documents. All
such shares have been issued in compliance with applicable federal, state and
foreign securities laws. Since 1986, the Company has not repurchased any shares
of Company Capital Stock except in compliance with all applicable federal,
state, foreign, or local statues, laws, rules, or regulations, including
federal, state and foreign securities laws and any agreements applicable
thereto. There are no declared or accrued but unpaid dividends with respect to
any shares of Company Capital Stock. The Company has no other capital stock
authorized, issued or outstanding.
(b) The Company does not have any stock option plan or other plan
providing for equity compensation of any person or granted any options to
purchase Company Capital Stock. There are no options, warrants, calls, rights,
commitments or agreements of any character, written or oral, to which the
Company is a party or by which it is bound, obligating the Company to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of the Company or
obligating the Company to grant, any such option, warrant, call, right,
commitment or agreement. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or other similar rights with
respect to the Company.
(c) There are no other voting trusts, proxies, or other agreements
or understandings with respect to the voting stock of the Company. As a result
of the Purchase, Purchaser will be the sole record and beneficial holder of all
issued and outstanding Company Capital Stock, free and clear of any Liens or
other encumbrances of any sort or other restrictions on transfer.
(d) As of the Closing, there shall be no preemptive rights or
agreements, arrangements or understandings to issue preemptive rights with
respect to the issuance or sale of any Company stock created by statute, the
Company Charter Documents, or any agreement or other arrangement to which the
Company is a party (written or oral) or to which it is bound and there are no
agreements, arrangements or understandings to which the Company is a party
-11-
(written or oral) pursuant to which the Company has the right to elect to
satisfy any liability of the Company by issuing any capital stock.
2.3 Subsidiaries. Effective September 30, 2002, the Company disposed of
all of its interests in Standard Properties, LLC, a limited liability company
duly organized under the laws of South Carolina ("Standard Properties"). All
consents required for such disposition were obtained by the Company and such
disposition did not constitute a default of or a violation under any loan
agreement, mortgage, contract or obligation. The Company is no longer a member
or a manager of Standard Properties, and the Company has no obligations or
liabilities whatsoever arising out of its prior ownership or management of
Standard Properties. The Company owns no interests in any other corporation,
limited liability company, partnership, limited partnership or other similar
entity (each individually a "Subsidiary" and in the plural "Subsidiaries") and
the Company is not a participant in any joint venture, partnership or other
similar arrangement.
2.4 Authority. Each of the Company and the Sellers has all requisite
power and authority to enter into this Agreement, the Non-Competition
Agreements, the Stock Pledge Agreement, the Indemnity Escrow Agreement and the
EBITDA Escrow Agreement to which they are a party (the "Transaction Agreements")
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of the Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company and no further action is
required on the part of the Company to authorize the Transaction Agreements and
the transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by the Company and the Sellers and, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes
the valid and binding obligation of the Company and the Sellers, enforceable
against the Company and the Sellers in accordance with its terms, except as such
enforceability may be subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies. At the
Closing, the Escrow Agreement will be duly executed and delivered by the Sellers
and each Seller will duly execute and deliver such Seller's respective
Non-Competition Agreement and, assuming the due authorization, execution and
delivery by the other parties thereto, such agreements will constitute the valid
and binding obligations of the Sellers, enforceable in accordance with their
terms, except as such enforceability may be limited by principles of public
policy and subject to the laws of general application relating to bankruptcy,
insolvency and the relief of debtors and to rules of law governing specific
performance, injunctive relief or other equitable remedies.
2.5 No Conflict. The execution and delivery by the Company and the
Sellers of the Transaction Agreements, and the consummation of the transactions
contemplated hereby and thereby, will not conflict with or result in any
violation of or default under (with or without notice or lapse of time, or both)
or give rise to a right of termination, cancellation, modification or
acceleration of any obligation, payment of any benefit, or loss of any benefit
under (any such event, a "Conflict") (i) any provision of the Company Charter
Documents or the organizational documents of any Subsidiary, (ii) any material
mortgage, indenture, lease, contract, covenant or other agreement, instrument or
commitment, permit, concession, franchise or license (each a "Contract" and
collectively the "Contracts") to which the Company, any Subsidiary or any Seller
-12-
is a party or by which the Company, any Subsidiary or any Seller or any of their
respective properties or assets (whether tangible or intangible) may be bound
(other than Contracts requiring third-party consents as disclosed in Section 2.5
of the Company Disclosure Schedule, which consents will be obtained prior to
Closing), or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company, any Subsidiary or any Seller or any of
their respective properties or assets (whether tangible or intangible). As a
result of the consummation of the transactions contemplated by this Agreement,
neither the Company nor any Subsidiary will be prohibited from exercising any of
their respective rights under the Contracts, and neither Purchaser, the Company
nor any Subsidiary will be required to pay any additional amounts or
consideration had the transactions contemplated by this Agreement not occurred.
2.6 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission (each, a "Governmental Entity")
or any third party, including a party to any agreement with the Company or any
Seller or any Subsidiary (so as not to trigger any Conflict), is required by or
with respect to the Company, any Subsidiary or the Sellers in connection with
the execution and delivery of the Transaction Agreements or the consummation of
the transactions contemplated hereby or thereby, except as disclosed in Section
2.5 or Section 2.6 of the Company Disclosure Schedule all of which consents will
be obtained prior to Closing.
2.7 Company Financial Statements.
(a) Section 2.7(a) of the Company Disclosure Schedule sets forth (i)
the Company's consolidated audited balance sheets as of July 31, 2002, July 31,
2001 and July 31, 2000, and the related audited statements of income, cash flows
and shareholders equity for the 12-month periods ended on July 31, 2002, July
31, 2001 and July 31, 2000 (the "Company Financial Statements"), and (ii) the
Company's consolidated unaudited balance sheet as of August 31, 2002 and the
related unaudited statements of income, cash flows and shareholders equity for
the one-month period ended August 31, 2002, such statements being prepared on a
consistent basis with the Company's prior unaudited statements. The Company
Financial Statements are true, correct and complete in all material respects and
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated and consistent with each other. The Company
Financial Statements present fairly and accurately the Company's financial
condition and operating results as of the dates and during the periods indicated
therein. The Company's audited balance sheet as of July 31, 2002 is referred to
hereinafter as the "Current Balance Sheet." Since July 31, 2000, there has been
no material change in any accounting policies, principles, methods or practices,
including any change with respect to reserves (whether for bad debts, contingent
liabilities or otherwise), of the Company or any Subsidiary, other than
disclosed in the notes to the Company Financial Statements.
(b) Section 2.7(b) of the Company Disclosure Schedule sets forth
financial projections for each month in the period from August 31, 2002 to July
31, 2003 (the "Financial Projections"). The Financial Projections have been
prepared in good faith by the Company and the Sellers based upon reasonable
assumptions and represent the Company's and the Sellers' best good faith
estimates as to the Company's future results of operations during the applicable
-13-
period; however, the Financial Projections are not a promise, warranty, or
guarantee by the Sellers or the Company of the Company's results for such
period.
(c) Section 2.7(c) of the Company Disclosure Schedule sets forth the
approximate percentage of the Company's gross revenues for the 11-month period
ended July 30, 2002 which was derived from warehousing activities either (i)
identified by the Company as relating principally to warehousing activities or
(ii) at facilities at which at least 80% of the total revenue generated by such
facility was attributable to warehousing activities.
2.8 No Undisclosed Liabilities. The Company has no obligation, expense,
claim, deficiency, guarantee or endorsement of any type, whether accrued,
absolute, contingent, matured, unmatured or other, except liabilities which (i)
have been reflected in the Current Balance Sheet or disclosed in the notes
thereto (to the extent of such reflection or disclosure), or (ii) have arisen in
the ordinary course of business consistent with past practices since July 31,
2002, and individually or in the aggregate, have not had and could not be
reasonably expected to have a Company Material Adverse Effect. Section 2.8 of
the Company Disclosure Schedule contains an accurate and complete list of each
outstanding loan to the Company or any Subsidiary by any person or entity or the
incurrence by the Company or any Subsidiary of any indebtedness (the
"Outstanding Debt"). From the Effective Time until the Closing, the Company has
not taken any actions outside the ordinary course of business. Except for
specific actions expressly contemplated by this Agreement or consented to in
writing by Purchaser from the Effective Time until Closing, neither the Company
nor any of the Sellers has taken any of the actions or caused to be done any of
the things or acts specified in Section 5.1 below.
2.9 Absence of Changes.
(a) Since July 31, 2002, there (i) has or have not been, occurred or
arisen any event or condition of any character that has had or could reasonably
be expected to have a Company Material Adverse Effect or any other change in the
financial condition, assets, liabilities, earnings or business of the Company,
except for changes which have been in the ordinary course of business consistent
with past practice, or (ii) any change in any accounting policies, principles,
methods or practices, including any change with respect to reserves of the
Company or any Subsidiary.
(b) Except as set forth in Section 2.9(b) of the Company Disclosure
Schedule, since July 31, 2002, there has or have not been, occurred or arisen
any:
(i) transaction by the Company or any Subsidiary which is
material to the Company or any Subsidiary, except in the ordinary course of
business as conducted on that date and consistent with past practices;
(ii) capital expenditure or commitment by the Company or any
Subsidiary exceeding $50,000 individually or $150,000 in the aggregate other
than any capital expenditures or commitments incurred after the date of this
Agreement as permitted by Section 5.1(a) hereof;
-14-
(iii) payment, discharge or satisfaction, in any amount in
excess of $50,000 in any one case, or $150,000 in the aggregate, of any claim,
liability or obligation (absolute, accrued, asserted, unasserted, contingent or
otherwise), other than payment, discharge or satisfaction of claims, liabilities
and obligations in the ordinary course of business or of liabilities reflected
or reserved against in the Current Balance Sheet;
(iv) destruction of, damage to, or loss of any assets (whether
tangible or intangible) of the Company or any Subsidiary (whether or not covered
by insurance) with a value in excess of $50,000 in any one case, or $150,000 in
the aggregate;
(v) labor disputes or claim of wrongful discharge or other
unlawful labor practice or action with respect to the Company or any Subsidiary;
(vi) change in any material election in respect of Taxes,
adoption or change in any accounting method in respect of Taxes, agreement or
settlement of any claim or assessment in respect of Taxes, or extension or
waiver of the limitation period applicable to any claim or assessment in respect
of Taxes;
(vii) revaluation by the Company or any Subsidiary of any of its
assets (whether tangible or intangible), other than any changes after the date
of this Agreement as permitted by Section 5.1(n) hereof;
(viii) declaration, setting aside or payment of a dividend or
other distribution (whether in cash, stock or property) in respect of any
Company Capital Stock, other than in the ordinary course of business;
(ix) an increase (whether in cash, stock or property) in the
base salary or other compensation payable or to become payable by the Company or
any Subsidiary to any of their respective officers, directors, employees or
consultants, or the declaration, payment or commitment or obligation of any kind
for the payment by the Company or any Subsidiary of a severance payment,
termination payment, bonus or other additional salary or compensation to any
such person (other than payments to be made by the Company pursuant to the
Releases as contemplated by Section 6.13 of this Agreement, which payments and
all related tax withholdings shall be solely the responsibility of Sellers as
Sellers shall reimburse the Company concurrently with the Closing for all such
payments, costs and withholdings as required by Section 6.13 below);
(x) except as required by this Agreement, entering into of any
agreement, contract, covenant, instrument, lease, license or commitment with
obligations in excess of $50,000 in any one case, or $150,000 in the aggregate,
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any of their respective assets (whether tangible or intangible)
are bound, or any termination, extension, amendment or modification of the terms
of any such agreement, contract, covenant, instrument, lease, license or
commitment;
-15-
(xi) sale, lease, license, transfer or other disposition of (or
the creation of any security interest in) any of the assets (whether tangible or
intangible) or properties of the Company or any Subsidiary, outside of the
ordinary course of business consistent with past practices;
(xii) loan by the Company or any Subsidiary to any person or
entity, the incurring by the Company or any Subsidiary of any indebtedness, or
the guaranteeing by the Company or any Subsidiary of any indebtedness, except
for advances to employees for travel and business expenses in the ordinary
course of business consistent with past practices;
(xiii) the granting of any waiver or release by the Company or
any Subsidiary of any right or claim of the Company, including any write-off or
other compromise of any account receivable of the Company;
(xiv) the settlement of any lawsuit or proceeding or other
investigation against the Company or any Subsidiary;
(xv) (i) sale or license of any Company Intellectual Property or
execution of any agreement with respect to the Company Intellectual Property
with any person or entity or with respect to the Intellectual Property of any
person or entity, or (ii) purchase or license of any Intellectual Property or
execution of any agreement with respect to the Intellectual Property of any
person or entity, (iii) agreement with respect to the development of any
Intellectual Property with a third party, or (iv) significant change in pricing
or royalties set or charged by the Company to its customers or licensees or in
pricing or royalties set or charged by persons who have licensed Intellectual
Property to the Company, except in the case of clause (i) or (ii), with respect
to non exclusive end user licenses in the ordinary course of business and on
terms and conditions substantially similar to the Company's standard terms and
conditions; or
(xvi) agreement by the Company, the Sellers or any Subsidiary,
or any officer or employee on behalf of the Company or any Subsidiary, to do any
of the things described in the preceding clauses of this Section 2.9(b) (other
than negotiations with Purchaser and its representatives and the transactions
contemplated by this Agreement).
(c) The Company's interest rate swap agreement with its bank will be
cancelled effective with the Closing.
2.10 Tax Matters; Subchapter "S"; Distributions.
(a) The Company has timely filed all Tax returns (federal, state and
local) required to be filed by it. All Taxes shown to be due and payable on such
returns, any assessments imposed, including without limitation, all sales or use
Taxes, due and payable by the Company on or before the Closing, have been paid
or will be paid prior to the time they become delinquent. There is no liability
for any Tax to be imposed upon the Company's properties or assets as of the date
of this Agreement for which adequate provision has not been made. Other than as
disclosed in Section 2.10 of the Company Disclosure Schedule, since 1986 (i) the
Company has never had any Tax deficiency proposed or assessed against it and has
not executed
-16-
any waiver of any statute of limitations on the assessment or collection of any
Tax or governmental charge and (ii) none of the Company's federal income Tax
returns and none of its state income or franchise Tax or sales or use Tax
returns has ever been audited by governmental authorities. Since the date of the
Company Financial Statements, the Company has not incurred any Taxes,
assessments or governmental charges other than in the ordinary course of
business and the Company has made adequate provisions on its books of account
for all Taxes, assessments and governmental charges with respect to its
business, properties and operations for such period. The Company has withheld or
collected from each payment made to each of its employees, the amount of all
Taxes (including, but not limited to, federal income Taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act Taxes) required to be
withheld or collected therefrom, and has paid the same to the proper Tax
receiving officers or authorized depositories. No return of the Company is being
audited by any taxing authority, nor do the Sellers have Knowledge of any
impending audit. The Company did not incur any Tax or other liability in
connection with the disposition of Standard Properties which will not be the
responsibility of Sellers.
(b) The Company has made an election under section 1362(a) of the
Code to be an "S" corporation, as defined therein, and all persons who were
shareholders of the Company on the day on which such election was made validly
consented to such election. Such election was effective on the election date and
has remained in effect continuously from such election date to and including the
Closing Date, and such election has not been terminated, whether by revocation,
disqualification or any other reason, at any time during the period beginning on
the election date and ending as of the Closing Date. No actions have been taken
and no omissions have occurred which would cause such election to terminate or
to be revoked at any time. Since the Company's election to be an "S"
corporation, all the shareholders of the Company have been eligible shareholders
under section 1361 of the Code. The Company has applied for and received
permission from the Internal Revenue Service to use a fiscal year ending July
31. In addition, the Company and its shareholders have complied with any
requirements with respect to the use of a fiscal year, including but not limited
to the making of interest deposits.
2.11 Restrictions on Business Activities. There is no agreement
(non-competition or otherwise), commitment, judgment, injunction, order or
decree to which the Company or any Subsidiary is a party or otherwise binding
upon the Company, the Sellers or any Subsidiary which has or may reasonably be
expected to have the effect of prohibiting or impairing any material present
business practice of the Company or any Subsidiary or prohibiting or impairing
any Purchase of property (tangible or intangible) by the Company or any
Subsidiary, the conduct of business by the Company or any Subsidiary, or
otherwise limiting the freedom of the Company and its Subsidiaries to engage in
any line of business or to compete with any person, other than usual and
customary confidentiality and nonsolicitation provisions of agreements with
customers and vendors (none of which such agreements would prohibit UTi nor its
operating subsidiaries from engaging in their line of business). Without
limiting the generality of the foregoing, the Company, the Sellers and the
Subsidiaries have not entered into any agreement under which the Company or any
Subsidiary is restricted from selling, licensing or otherwise distributing any
of its technology or products or from providing services to customers or
-17-
potential customers or any class of customers, in any geographic area, during
any period of time, or in any segment of the market.
2.12 Title to Properties; Absence of Liens and Encumbrances; Condition
of Equipment.
(a) Section 2.12(a) of the Company Disclosure Schedule lists all
real property currently owned by the Company or any Subsidiary and any real
property in which the Company or any of its Subsidiaries has any interest (the
"Owned Real Property") and the name of the owner of each Owned Real Property.
Section 2.12(a) of the Company Disclosure Schedule lists all real property
currently leased or subleased by or from the Company, any Subsidiary or
otherwise used or occupied by the Company or any Subsidiary for the operation of
the Company's and any Subsidiary's businesses (the "Leased Real Property"), the
name of the lessor, the master lessor and/or lessee, the date of each lease or
sublease, and, with respect to any current lease or sublease, the aggregate
annual payable (base rent and expense pass through to be listed separately).
(b) The Company and each Subsidiary has good and marketable fee
simple title to the Owned Real Property which such Company or Subsidiary is
listed as the owner of on Section 2.12(a) of the Company Disclosure Schedule,
free and clear of all Liens and encumbrances, except as disclosed on Section
2.12(b) of the Company Disclosure Schedule. There are no agreements with any
Governmental Entity or quasi-governmental entity which affect any of the Owned
Real Property, except as disclosed on Section 2.12(b) of the Company Disclosure
Schedule. There are no outstanding rights of first refusal, rights of reverter
or options relating to the Owned Real Property or any interest therein, except
as disclosed on Section 2.12(b) of the Company Disclosure Schedule. To the
Knowledge of Sellers, there are no unrecorded or undisclosed documents or other
matters which affect title to the Owned Real Property. Since 1986, the Company
or a Subsidiary has enjoyed the continuous and uninterrupted quiet possession,
use and operation of the Owned Real Property, without material complaint or
objection by any person. The Company has provided Purchaser true, correct and
complete copies of any and all information in its possession related to
entitlements for the Owned Real Properties, including, without limitation,
copies of all title policies, deeds of trust, surveys, entitlement studies,
approvals and all information in its possession related to construction on any
of the Owned Real Properties within the last three (3) years, including, without
limitation, proof of payments for all work performed within the last year and
signed lien releases for all such work. All maintenance and other fees required
to be paid by the CC&R's applicable to the Owned Real Properties have been paid.
The Company has provided Purchaser with preliminary title reports or copies of
the Company's owner's title insurance policies for each of the Owned Real
Properties.
(c) The Company has provided Purchaser true, correct and complete
copies of all real property leases, real property lease guarantees, subleases,
subordination, non-disturbance and/or attornment agreements, agreements for the
leasing, use or occupancy of, or otherwise granting a right in or relating to
the Owned Real Property or the Leased Real Property currently in effect,
including all amendments, terminations and modifications thereof and all other
documents and agreements listed on Section 2.12(c) of the Company Disclosure
Schedule with
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respect to each Owned Real Property and Leased Real Property (the "Lease
Agreements"); and there are no other Lease Agreements for real property
affecting the real property or to which the Company or any Subsidiary is bound,
other than those identified in Section 2.12(a) of the Company Disclosure
Schedule. All such Lease Agreements are in full force and effect, valid and
enforceable in accordance with their terms, and there is not, under any of such
Lease Agreements, any existing default, no rentals are past due, and no
circumstance exists, which, with notice, the passage of time or both, could
constitute a default under any such Lease Agreement by the Company, or to the
Knowledge of the Sellers, by any other party thereto. To the Knowledge of
Sellers, the Company has complied in all material respects with the maintenance
obligations under each Lease Agreement for each Leased Real Property. Neither
the operations of the Company and its Subsidiaries on the Owned Real Property
or, to, the Knowledge of the Sellers, on the Leased Real Property, violate in
any manner any applicable building code, zoning requirement, or classification
or statute relating to the particular property or such operations, and such
non-violation is not dependent, in any instance, on so called non-conforming use
exceptions. There are no other parties occupying, or with a right to occupy, the
Owned Real Property or the Leased Real Property, except as identified in Section
2.12(a) of the Company Disclosure Schedule. The Company has not received any
notice of a default, alleged failure to perform, or any offset or counterclaim
with respect to any such Lease Agreement, which, to the Knowledge of the
Sellers, has not been fully remedied and withdrawn. The Closing will not affect
the enforceability against any person of any such Lease Agreement or the rights
of the Company or its Subsidiaries to the continued use and possession of the
real property for the conduct of business as presently conducted.
(d) The Owned Real Properties are in good operating condition and
repair in all material respects, free from structural, physical and mechanical
defects, except for such defects which, in the aggregate, would not cost more
than $50,000 to repair, and are maintained in a manner consistent with standards
generally followed with respect to similar properties, and are structurally
sufficient and otherwise suitable for the conduct of the business as presently
conducted. Except as disclosed in Section 2.12(d) of the Company Disclosure
Schedule, to the Knowledge of Sellers the Leased Real Properties are in good
operating condition and repair in all material respects, free from structural,
physical and mechanical defects, are maintained in a manner consistent with
standards generally followed with respect to similar properties or as required
by applicable leases, and, to the Knowledge of the Sellers, are structurally
sufficient and otherwise suitable for the conduct of the business as presently
conducted. All of the Owned Real Property and the Leased Real Property have
plumbing, electrical, air conditioning/heating, sprinkler, storm water, process
water and storm water sewer systems, fire suppression, security, safety and
other building systems which are in good working order and reasonably sufficient
for the continued legal use of such Owned Real Property and the Leased Real
Property and for the conduct of the business as currently conducted. All water,
sewer, gas, electric, telephone and drainage facilities, and all of the
utilities required by law or the normal operation of the Owned Real Property and
Leased Real Property are (i) adequate to permit full compliance with all
requirements of law, (ii) installed to the property lines of such properties,
(iii) connected to such properties with valid permits, and (iv) to the Knowledge
of the Sellers, adequate to service said properties in their present use and as
currently contemplated and to permit normal usage of such properties and are in
good working order and repair. All such utilities and storm and sanitary
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sewers required for the operation of the Owned Real Property enter said
properties through adjoining public streets or through adjoining private lands
in accordance with valid public or private easements. To the Knowledge of the
Sellers, all such utilities and storm and sanitary sewers required for the
operation of the Leased Real Property enter said properties through adjoining
public streets or through adjoining private lands in accordance with valid
public or private easements.
(e) All necessary environmental impact statements relating to any
facility, building, plant, factory, office, warehouse structure or other
improvements (collectively, "Structures") located on any of the Owned Real
Properties or the construction thereof have been prepared and filed with and
favorably and finally acted upon by all Government Entities and/or officials
having jurisdiction thereof. To the Knowledge of Sellers, all necessary
environmental impact statements relating to any Structures located on any of the
Leased Real Properties or the construction thereof have been prepared and filed
with and favorably and finally acted upon by all Government Entities and/or
officials having jurisdiction thereof. The Structures located on the Owned Real
Properties, and to the Knowledge of Sellers in the Leased Real Properties, are
free from any material latent or patent design, construction, physical or
mechanical defects and there is no actual or, to the Sellers' Knowledge,
threatened settlement, earth movement, termite infestation or damage affecting
any of the Structures. The parking spaces, including handicapped spaces, on each
of the Owned Real Properties and, to the Knowledge of the Sellers, on the Leased
Real Properties, are all of the parking spaces required by any legal
requirement. No Structure on any Owned Real Property or, to the Knowledge of
Sellers, on any Leased Real Property nor the operations of the Company or a
Subsidiary, as the case may be, thereon, (i) is located outside the boundary
lines of the described parcel of land on which it is located, (ii) is in
violation of applicable setback requirements, (iii) is subject to "permitted
non-conforming use" or "permitted non-conforming structure" classifications, or
(iv) encroaches on any property owned by, or easement granted in favor of, any
person. Each Structure on any Owned Real Property, and to the Knowledge of
Sellers on the Leased Real Properties, has valid legal access to public streets
and, as applicable, to railroad spurs, as currently operated by the Company or a
Subsidiary, as the case may be, and Sellers have no Knowledge of any matters,
claims or actions which might disrupt or challenge such access.
(f) The Company and its Subsidiaries have received no notice that a
condemnation is pending, and, to the Knowledge of the Sellers, no condemnation
is threatened affecting the Owned Real Property or the Leased Real Property.
(g) The Company and its Subsidiaries have good and valid title to,
or, in the case of leased properties and assets, valid leasehold interests in,
all of its tangible properties and assets, real, personal and mixed, used or
held for use in their business, free and clear of any Liens, except as
specifically disclosed in the Current Balance Sheet or the notes thereto, or
otherwise disclosed in Section 2.12(g) of the Company Disclosure Schedule.
(h) All material items of equipment, machinery, furniture, fixtures,
and tangible personal property (the "Equipment") owned or leased by the Company
or a Subsidiary are (i) adequate for the conduct of the business of the Company
or a Subsidiary as currently conducted, and (ii) to the Knowledge of the
Sellers, in good operating condition, regularly and
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properly maintained, subject to normal wear and tear, and reasonably fit and
usable for the purposes for which they are being used.
(i) The Company and its Subsidiaries have either (i) sole and
exclusive ownership, free and clear of any Liens, or (ii) the valid right to use
unrestricted by contract, all customer lists, customer contact information,
customer correspondence and customer licensing and purchasing histories relating
to its current and former customers (the "Customer Information"). No person
other than the Company or a Subsidiary possesses any licenses, claims or rights
with respect to the use of the Customer Information owned by the Company and its
Subsidiaries.
(j) The Co-Tenancy Agreement between Standard Properties, AJC, Inc.
("AJC"), Xxxxxxxx Investments, LLC ("Xxxxxxxx") and MD Properties, LLC ("MD"),
(the "Co-Tenancy Agreement"), the Lease Agreement between the Company as tenant
and AJC, Xxxxxxxx and MD as landlord dated June 10, 1999 (the "Sage Mill Lease")
and the Management Agreement between Standard Properties, AJC, Xxxxxxxx, MD, the
Company and PDC Properties, LLC, (the "Management Agreement"), are in full force
and effect and constitute legal, valid and binding agreements enforceable in
accordance with their terms. The Company and Standard Properties are in
compliance with and have not breached, violated or defaulted under, or received
notice that any one of them has breached, violated or defaulted under, any of
the terms or conditions of the Co-Tenancy Agreement, the Sage Mill Lease, or the
Management Agreement, and the Sellers have no Knowledge of any event that would
constitute such a breach, violation or default with the lapse of time, giving of
notice or both. The Warehouse Sublease Agreement between SouthStar Holdings,
LLC, a South Carolina limited liability company ("SouthStar"), and
Xxxxxxxx-Xxxxx Corporation (the "SouthStar Lease") is in full force and effect
and constitutes a legal, valid and binding agreement, enforceable in accordance
with its terms SouthStar is in compliance with and has not breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted
under, any of the terms or conditions of the SouthStar Lease and the Sellers
have no Knowledge of any event that would constitute a breach, violation or
default with the lapse of timing, giving of notice or both. To the Knowledge of
the Sellers, Xxxxxxxx-Xxxxx Corporation has not violated, breached or defaulted
under, any of the terms or conditions of the SouthStar Lease. The Company is in
compliance with and has not breached, violated or defaulted under, or received
notice that it has breached, violated or defaulted under, any of the terms of
conditions of (a) the Guarantee Agreement between Xxxx X. Xxxxxxxxx and MONY
Life Insurance Company ("MONY") dated October 4, 1999, (b) the Completion and
Performance Guaranty between Xxxx X. Xxxxxxxxx and MONY dated October 4, 1999,
and (c) the Certificate and Indemnity Regarding Hazardous Substances between
Xxxx X. Xxxxxxxxx and MONY dated October 4, 1999, all as assumed by the Company
pursuant to that certain Loan Assumption Agreement between MONY and the Company
dated March 31, 2000 (collectively, the "MONY Loan Documents"). Sellers have no
Knowledge of any event that would constitute a breach, violation or default
under, with the lapse of time, giving of notice or otherwise, any of the terms
and conditions of the MONY Loan Documents. The maximum amount of liability the
Company could have under the MONY Loan Documents is limited to ten percent of
the principal and interest outstanding thereunder and as of the Closing was less
than $750,000. There are no documents other than the Management Agreement, the
Sage Mill Lease
-21-
and MONY Loan Documents pursuant to which the Company may have any liability or
obligation whatsoever relating to the Sage Mill Facility (as defined below). To
the Knowledge of the Sellers, no other party has breached, violated or defaulted
under, any of the terms or conditions of the Co-Tenancy Agreement, the Sage Mill
Lease, Management Agreement, the SouthStar Lease or the MONY Loan Documents.
2.13 Intellectual Property. Section 2.13 of the Company Disclosure
Schedule accurately lists all patents, patent applications, patent and know-how
licenses, proprietary formulae, trademarks, service marks, trademark
registrations and applications, trade names, fictitious business names,
proprietary computer software and other intellectual property rights
(collectively, "Business Rights") used by the Company or any Subsidiary. Section
2.13 of the Company Disclosure Schedule discloses the identity of each other
person which owns any right, title or interest in and to the Business Rights. No
Business Rights conflict with, infringe on or otherwise violate any rights of
others, or require payments to be made to any Person, or are subject to any
pending or, to the Knowledge of Sellers, overtly threatened, litigation or other
adverse claims or infringement by other Persons. There has been no written or
other claim of infringement by the Company of any domestic or foreign patents,
trademarks, service marks or copyrights of any other Person.
2.14 Agreements, Contracts and Commitments. Except as described in
Section 2.14 of the Company Disclosure Schedule, the Company and its
Subsidiaries are not a party to, nor are the Company and its Subsidiaries or any
of their assets or properties bound by:
(a) any collective bargaining agreements,
(b) any agreements or arrangements that contain any severance pay or
post-employment liabilities or obligations,
(c) any bonus, deferred compensation, pension, profit sharing or
retirement plans, or any other employee benefit plans or arrangements,
(d) any employment or consulting agreement, contract or commitment
with an employee or individual consultant or salesperson or consulting or sales
agreement, contract or commitment with a firm or other organization,
(e) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation rights plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement,
(f) any fidelity or surety bond or completion bond,
(g) any lease of personal property having a value individually in
excess of $50,000,
-22-
(h) any agreement of indemnification or guarantee,
(i) any agreement, contract or commitment containing any covenant
limiting the freedom of the Company or a Subsidiary to engage in any line of
business or to compete with any person,
(j) any agreement, contract or commitment relating to capital
expenditures and involving future payments in excess of $50,000,
(k) any agreement, contract or commitment relating to the
disposition or purchase of assets or any interest in any business enterprise
outside the ordinary course of business,
(l) any mortgages, indentures, letters of credit, loans or credit
agreements, security agreements, guarantees or other agreements or instruments
relating to the borrowing of money or extension of credit,
(m) any purchase order or contract for the purchase of raw materials
involving $20,000 or more,
(n) any construction contracts,
(o) any distribution, joint marketing or development agreement, or
(p) any other agreement, contract or commitment that involves
$50,000 or more and is not cancelable without penalty within thirty (30) days.
2.15 No Defaults. Each contract required to be disclosed or referenced
under Section 2.13 or 2.14 hereof is in full force and effect and constitutes a
legal, valid and binding agreement enforceable in accordance with its terms. The
Company and its Subsidiaries are in compliance with and have not breached,
violated or defaulted under, or received notice that any one of them has
breached, violated or defaulted under, any of the terms or conditions of any
contract required to be disclosed under Section 2.13 or 2.14 hereof, and the
Sellers have no Knowledge of any event that would constitute such a breach,
violation or default with the lapse of time, giving of notice or both. To the
Knowledge of the Sellers, no other party has breached, violated or defaulted any
material terms or conditions of any such contracts or agreements.
2.16 Interested Party Transactions. Except for the leases relating to
Leased Real Property where Richfair Holdings, Inc., Forest Hills Partners, L.P.,
SouthStar Holdings, LLC and Xxxxxxx Holding Corporation are noted as the owner,
lessor or landlord on Section 2.12(a) of the Company Disclosure Schedule, no
officer, director of the Company or Sellers (nor any ancestor, sibling,
descendant or spouse of any of such persons, or any trust, partnership,
corporation or other entity in which any of such persons has or has had an
interest, an "Interested Person"), has or has had, since August 1, 2001,
directly or indirectly, (i) an economic interest in any entity which furnished
or sold, or furnishes or sells, services, products or technology that the
Company or any Subsidiary furnishes or sells, or proposes to furnish or sell, or
(ii) any economic interest in
-23-
any entity that purchases from or sells or furnishes to the Company or any
Subsidiary, any services, products or technology, or (iii) a beneficial interest
in any Contract to which the Company or any Subsidiary is a party, except in the
case of clause (iii) in any such person's capacity as an officer, director or
Sellers of the Company; provided, however, that ownership of no more than one
percent (1%) of the outstanding voting stock of a publicly traded corporation,
shall not be deemed to be an "interest in any entity" for purposes of this
Section 2.16.
2.17 Governmental Authorization. Each material consent, license, permit,
grant or other authorization (i) pursuant to which the Company or any Subsidiary
currently operates or holds any interest in any of its properties, or (ii) which
is required for the operation of the Company's and its Subsidiaries' business as
currently conducted or the holding of any interest (collectively, "Company
Authorizations") has been issued or granted to the Company and its Subsidiaries
and is in full force and effect. This Agreement and the transactions
contemplated thereby will not result in any breach, default or violation of any
Company Authorization.
2.18 Litigation. Except as disclosed on Section 2.18 of the Company
Disclosure Schedule, there is no action, suit, claim or proceeding of any nature
pending, or, to the Knowledge of the Sellers, threatened, against the Company,
its Subsidiaries or their properties (tangible or intangible) or any of their
officers or directors (the "Claims"). The Company has properly notified the
Company's insurance companies about the Claims, and such insurance companies are
currently defending the Company against such Claims as described in Section 2.18
of the Company Disclosure Schedule. No such insurance company has informed the
Company that it intends to deny coverage of such Claims or reserve rights. To
the Knowledge of Sellers, the settlement amounts currently being negotiated for
such Claims are within the policy limits of the insurance policies covering such
Claims. There is no investigation or other proceeding pending or, to the
Knowledge of the Sellers, threatened, against the Company, its Subsidiaries,
their properties (tangible or intangible) or their officers or directors in
their respective capacities as such by or before any Governmental Entity. No
Governmental Entity has provided the Company with written notice challenging or
questioning the legal right of the Company or any Subsidiary to conduct its
operations as conducted at that time or as presently conducted. The Company has
made all payments required by it and performed all of its obligations under that
certain Agreement and Joint and Mutual Release and Dismissal of Claims and
Counterclaims with Prejudice between the Company and Xxxxxxxx-Xxxxx Corporation,
dated as of July 16, 2002 (the "Xxxxxxxx-Xxxxx Release"). The Xxxxxxxx-Xxxxx
Release is in full force and effect.
2.19 Accounts Receivable.
(a) The Company has made available to Purchaser a list of all
accounts receivable of the Company and its Subsidiaries as of July 31, 2002,
together with a range of days elapsed since invoice.
(b) All of the Company's and its Subsidiaries' accounts receivable
arose from bona fide sales and deliveries of goods or performance of services in
the ordinary course of business. None of such receivables are subject to any
performance obligations by the Company or any Subsidiary prior to collection.
All such receivables have been accounted for in the
-24-
Current Balance Sheet in accordance with the Company's Accounting Policies and,
to the Knowledge of Sellers, are free of any defenses, setoffs, or counterclaims
(other than returns in the ordinary course of business consistent with past
practices). Except as has been reserved against in the Current Balance Sheet,
there is no dispute with respect to the amount or validity of any accounts
receivable for the Company and its Subsidiaries. As set forth in Section 2.19 of
the Company Disclosure Schedule, one Company customer is currently in
bankruptcy.
2.20 Minute Books. The minutes of the Company provided to Purchaser are
the only minutes of the Company Known to Sellers as of the date of this
Agreement and contain accurate summaries of all meetings and actions by written
consent of the board of directors (or committees thereof) of the Company and
contain accurate summaries of all Company shareholder meetings and all Company
shareholder actions by written consent since the time of incorporation of the
Company. The Company has delivered to Purchaser true and complete copies of the
Company Charter Documents, as amended through the date hereof. The Company is
not in violation of any provisions of the Company Charter Documents.
2.21 Environmental Matters.
(a) Condition of Property. Except as set forth on Section 2.21(a) of
the Company's Disclosure Schedule, as of the Closing, no Hazardous Materials are
present as a result of the actions or omissions of the Company or its
Subsidiaries, or, to the Knowledge of Sellers, as a result of any actions of any
third party or otherwise, in, on, or under any Business Facility that could
reasonably be expected to result in liability to the Company or its Subsidiaries
for investigation, monitoring, abatement, removal or remediation of such
Hazardous Materials. In the ordinary course of business, the Company handles in
some of its warehouses materials which might be deemed to be Hazardous Materials
and copies of the MSDS are kept and are available at the warehouses in
compliance with law. The Company does not permit storage of hazardous waste in
violation of any law. Except as set forth in Section 2.21(a) of the Company
Disclosure Schedule, there are no underground storage tanks, asbestos which is
friable or likely to become friable, or PCBs present on any Business Facility
located on any Owned Real Property, or to the Knowledge of the Sellers, located
in any Leased Real Property, or as a consequence of the acts of the Company, its
Subsidiaries, or its agents.
(b) Hazardous Materials Activities. Except as set forth in Section
2.21(b), the Company and its Subsidiaries have conducted all Hazardous Material
Activities relating to its business in compliance in all material respects with
all applicable Environmental Laws. The Hazardous Materials Activities of the
Company and its Subsidiaries prior to the Closing have not resulted in the
exposure of any person to a Hazardous Material in a manner which has caused or
could reasonably be expected to cause an adverse health effect to any such
person.
(c) Permits. Section 2.21(c) of the Company Disclosure Schedule
accurately describes all of the Environmental Permits currently held by the
Company or its Subsidiaries and relating to its business and the listed
Environmental Permits are all of the Environmental Permits necessary for the
continued conduct of any Hazardous Material Activity of the Company or its
Subsidiaries relating to its business as such activities are currently being
conducted. All such Environmental Permits are valid and in full force and
effect. The Company and its Subsidiaries
-25-
have complied in all material respects with all covenants and conditions of any
Environmental Permit which is or has been in force with respect to its Hazardous
Materials Activities. To the Knowledge of the Sellers, no circumstances exist
which could cause any Environmental Permit to be revoked, modified, or rendered
non-renewable upon payment of the permit fee. All Environmental Permits and all
other consent and clearances required by any Environmental Law or any agreement
to which the Company or its Subsidiaries are bound as a condition to the
performance and enforcement of this Agreement, have been obtained or will be
obtained prior to the Closing at no cost to Purchaser.
(d) Environmental Litigation. Except as set forth in Section 2.21(d)
of the Company Disclosure Schedule, no action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or, to
the Knowledge of the Sellers, threatened, concerning or relating to any
Environmental Permit or any Hazardous Materials Activity of the Company or its
Subsidiaries relating to its business, or any Business Facility.
(e) Offsite Hazardous Material Disposal. The Company and its
Subsidiaries have transferred or released Hazardous Materials only to those
Disposal Sites set forth in Section 2.21(e) of the Company Disclosure Schedule;
and no action, proceeding, liability or claim exists or, to the Knowledge of the
Sellers, is threatened against any Disposal Site or against the Company or its
Subsidiaries with respect to any transfer or release of Hazardous Materials or
to a Disposal Site which could reasonably be expected to subject the Company or
its Subsidiaries to liability.
(f) Environmental Liabilities. The Sellers have no Knowledge of any
fact or circumstance, which could result in any environmental liability which
could reasonably be expected to result in a Company Material Adverse Effect.
(g) Reports and Records. The Company and its Subsidiaries have
delivered to Purchaser or made available for inspection by Purchaser and its
agents, representatives and employees all records in the Company's or its
Subsidiaries' possession concerning the Hazardous Materials Activities of the
Company or its Subsidiaries relating to its business and all environmental
audits, environmental assessments, and environmental investigations of any
Business Facility conducted at the request of, or otherwise in the possession of
the Company or its Subsidiaries.
2.22 Employee Benefit Plans and Compensation.
(a) Schedule. Section 2.22(a) of the Company Disclosure Schedule
contains an accurate and complete list of each Company Employee Plan, each
Employee Agreement under each Company Employee Plan, and each Employee
Agreement. The Company has not made any plan or commitment to establish any new
Company Employee Plan or Employee Agreement, to modify any Company Employee Plan
or Employee Agreement (except to the extent required by law or to conform any
such Company Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to Purchaser in writing, or
as required by this Agreement), or to enter into any Company Employee Plan or
Employee Agreement.
-26-
(b) Documents. The Company has provided to Purchaser (i) correct and
complete copies of all documents embodying each Company Employee Plan and each
Employee Agreement including all amendments thereto and all related trust
documents, (ii) the three (3) most recent annual reports (Form Series 5500 and
all schedules and financial statements attached thereto), if any, required under
ERISA or the Code in connection with each Company Employee Plan, (iii) if the
Company Employee Plan is funded, the most recent annual and periodic accounting
of Company Employee Plan assets, (iv) the most recent summary plan description
together with the summary(ies) of material modifications thereto, if any,
required under ERISA with respect to each Company Employee Plan, (v) all
material written agreements and contracts relating to each Company Employee
Plan, including administrative service agreements and group insurance contracts,
(vi) all communications material to any Employee or Employees relating to any
Company Employee Plan and any proposed Company Employee Plans, in each case,
relating to any material amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any liability to the Company, (vii) all
correspondence to or from any governmental agency relating to any Company
Employee Plan, (viii) all COBRA forms and related notices, (ix) all policies
pertaining to fiduciary liability insurance covering the fiduciaries for each
Company Employee Plan, (x) all discrimination tests for each Company Employee
Plan for the three (3) most recent plan years, (xi) all registration statements,
annual reports (Form 11-K and all attachments thereto) and prospectuses prepared
in connection with each Company Employee Plan, and (xii) the most recent IRS
determination or opinion letter issued with respect to each Company Employee
Plan.
(c) Employee Plan Compliance. The Company has performed all material
obligations required to be performed by it under, is not in default or violation
of, and the Sellers have Knowledge of any default or violation by any other
party to, any Company Employee Plan, and each Company Employee Plan has been
established and maintained in accordance with its terms and in substantial
compliance with all applicable laws, statutes, orders, rules and regulations,
including but not limited to ERISA or the Code. Each Company Employee Plan
intended to be qualified under section 401(a) of the Code has obtained a
favorable determination letter (or opinion letter, if applicable) as to its
qualified status under the Code including all amendments to the Code effected by
the Tax Reform Act of 1986 and subsequent legislation. No "prohibited
transaction," within the meaning of section 4975 of the Code or sections 406 and
407 of ERISA, and not otherwise exempt under section 408 of ERISA, has occurred
with respect to any Company Employee Plan. There are no actions, suits or claims
pending or, to the Knowledge of the Sellers, threatened or reasonably
anticipated (other than routine claims for benefits) against any Company
Employee Plan or against the assets of any Company Employee Plan. Each Company
Employee Plan that is not an Employee Agreement can be amended, terminated or
otherwise discontinued in accordance with its terms, without liability to
Purchaser, the Company or any ERISA Affiliate (other than ordinary
administration expenses). There are no audits, inquiries or proceedings pending
or, to the Knowledge of the Sellers, threatened by the IRS, DOL or any other
Governmental Entity with respect to any Company Employee Plan. The Company and
its ERISA Affiliates are not subject to any penalty or tax with respect to any
Company Employee Plan under section 502(i) of ERISA or sections 4975 through
4980 of the
-27-
Code. The Company has timely made all contributions and other payments required
by and due under the terms of each Company Employee Plan.
(d) No Pension Plans. The Company and its ERISA Affiliates have
never maintained, established, sponsored, participated in, or contributed to,
any (i) Pension Plans subject to Title IV of ERISA, (ii) "multiemployer plan"
within the meaning of section (3)(37) of ERISA, or (iii) to any plan described
in section 413(c) of the Code.
(e) No Post-Employment Obligations. No Company Employee Plan
provides, or reflects or represents any liability to provide, retiree life
insurance, retiree health or other retiree employee welfare benefits to any
person for any reason, except as may be required by COBRA or other applicable
statute, and the Company has never represented, promised or contracted (whether
in oral or written form) to any Employee (either individually or to Employees as
a group) or any other person that such Employee(s) or other person would be
provided with retiree life insurance, retiree health or other retiree employee
welfare benefit, except to the extent required by statute. Except as
specifically set forth in Section 2.22(e) of the Disclosure Schedule no Company
Employee Plan provides health benefits that are not fully insured through an
insurance contract.
(f) COBRA; FMLA; HIPAA. The Company and each ERISA Affiliate has,
prior to the Effective Time, complied with (i) the health care continuation
requirements of COBRA, (ii) FMLA, (iii) HIPAA, (iv) the Women's Health and
Cancer Rights Act of 1998, (v) the Newborns' and Mothers' Health Protection Act
of 1996, and (vi) any similar provisions of state law applicable to its
Employees. The Company has no unsatisfied obligations to any Employees or
qualified beneficiaries pursuant to COBRA, HIPAA or any state law governing
health care coverage or extension.
(g) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employee Agreement, trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee, except for payments
made pursuant to the Releases. The Long Term Incentive Plan was never formally
adopted or implemented by the Company and neither the Company, Purchaser, nor
any of Purchaser's affiliates will have any liability or obligations of any
nature thereunder.
(h) Employment Matters. The Company: (i) is in compliance with all
applicable material foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Employees, (ii)
has withheld and reported all amounts required by law or by agreement to be
withheld and reported with respect to wages, salaries and other payments to
Employees, (iii) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing, except for any such
liability that would not, individually or in the aggregate, be material, and
(iv) is not liable for any payment to any trust or other fund governed by or
maintained by or on behalf of any governmental authority, with
-28-
respect to unemployment compensation benefits, social security or other benefits
or obligations for Employees (other than routine payments to be made in the
normal course of business and consistent with past practice). There are no
pending, or, to the Knowledge of the Sellers, threatened, or reasonably
anticipated claims or actions against the Company under any worker's
compensation policy or long term disability policy. Each current Employee is an
"at-will" employee whose employment can be terminated by the Company at any
time, with or without cause.
(i) Labor. No work stoppage or labor strike against the Company is
pending, or, to the Knowledge of the Sellers, threatened, or reasonably
anticipated. The Sellers do not Know of any current activities or proceedings of
any labor union to organize any Employees nor do Sellers Know of any such
activities or proceedings within the past two (2) years. There are no material
actions, suits, claims, labor disputes or grievances pending, or, to the
Knowledge of the Sellers, threatened, or reasonably anticipated relating to any
labor, safety or discrimination matters involving any Employee, including
charges of unfair labor practices or discrimination complaints. To the Knowledge
of the Sellers, the Company has not engaged in any unfair labor practices within
the meaning of the National Labor Relations Act. The Company presently is not,
nor has it been in the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Employees and no collective
bargaining agreement is being negotiated by the Company.
(j) No Interference or Conflict. To the Knowledge of the Sellers, no
Employee of the Company is obligated under any contract or agreement, subject to
any judgment, decree, or order of any court or administrative agency that would
interfere with such Employee's efforts to promote the interests of the Company
or that would, in the case of any Employee, interfere with the Company's
businesses as presently conducted.
2.23 Insurance. Section 2.23 of the Company Disclosure Schedule lists
all insurance policies and fidelity bonds covering the assets, business,
equipment, properties, operations, employees, officers and directors (in their
respective capacities as such) of the Company or any Affiliate. To the Knowledge
of the Sellers, there is no claim reported by the Company or any Affiliate
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
Such policies are valid and binding and are in full force and effect, and will
not terminate or lapse by reason of any of the transactions contemplated by this
Agreement. All premiums due and payable under all such policies and bonds have
been paid, and the Company and is otherwise in compliance with the terms of such
policies and bonds (or other policies and bonds providing substantially similar
insurance coverage). The Sellers have no Knowledge of threatened termination of,
or premium increase with respect to, any of such policies. The insurance
policies listed in Section 2.23 of the Company Disclosure Schedule, (i) in light
of the business, operations, assets and properties of the Company are in amounts
and have coverages that are reasonable for the business of the Company as
currently conducted and (ii) are in amounts and have coverages required by any
Contract to which the Company is a party or by which any of its assets and
properties is bound.
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2.24 Compliance with Laws. To the Knowledge of Sellers, the Company and
its Subsidiaries have complied with, are not in material violation of, and have
not received any notices of violation with respect to, any foreign, federal,
state or local statute, law or regulation.
2.25 Complete Copies of Materials. The Company has delivered or made
available true and complete copies of each document (or summaries of same) that
has been requested by Purchaser or its counsel.
2.26 Suppliers and Customers. Since December 31, 2001, no material
licensor, vendor, supplier, licensee or customer of the Company or any
Subsidiary has cancelled or otherwise materially modified its relationship with
the Company or any Subsidiary in a manner adverse to the Company, and (i) no
such person has communicated (orally or in writing) to the Sellers or the
officers, directors or other senior managers of the Company any intention to do
so, and (ii) to the Knowledge of the Sellers, the consummation of the
transactions contemplated hereby will not adversely affect any of such
relationships.
2.27 Inventory. To the Knowledge of the Sellers, all inventory of the
Company and its Subsidiaries reflected on the Current Balance Sheet consisted,
and all such inventory acquired since consists, of a quality and quantity usable
and salable in the ordinary course of business.
2.28 Disclosure. No representation or warranty made by the Sellers
contained in this Agreement, and no statement contained in the Company
Disclosure Schedule or in any certificate, list or other writing furnished to
Purchaser in connection with this Agreement (including the Company Financial
Statements and the notes thereto) contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
herein or therein, in the light of the circumstances under which they were made,
not misleading.
2.29 Disclaimer of Other Representations and Warranties. Except as
expressly set forth in this Agreement or in any of the other Transaction
Agreements or in any of the schedules, exhibits and instruments delivered in
connection herewith or therewith, the Sellers are not making any other
representation or warranty, express or implied, with respect to Sellers, the
Company or any of their respective assets, liabilities or operations, including
without limitation, with respect to merchantability or fitness for any
particular purpose and any such other representations or warranties are
expressly disclaimed.
ARTICLE III
FURTHER REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers, jointly and severally, hereby represent and warrant
to Purchaser as follows and Purchaser relies on such representations and
warranties:
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3.1 Investment Representations.
(a) Each of the Sellers is acquiring the Earn-Out Advance Shares and
the Payment Shares (if any) for his own account, not as nominee or agent, for
investment and not with a view to, or for resale in connection with any
distribution or public offering thereof within the meaning of the Securities
Act, except pursuant to an effective registration statement under the Securities
Act.
(b) Each of the Sellers understands that the Earn-Out Advance Shares
have not been and the Payment Shares (if any) will not be, registered under the
Securities Act by reason of a specific exemption therefrom and may not be
transferred or resold except as set forth below and that the Earn-Out Advance
Shares and the Payment Shares if and when issued, must be held by the Sellers
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from registration. Each of the Sellers further
understands that the Earn-Out Advance Shares and the Payment Shares (if any)
have not been and, upon their issuance, will not be, registered or qualified
under the blue sky laws of any state. Each certificate representing the Earn-Out
Advance Shares and the Payment Shares (if any) will be endorsed with the
following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING
SUCH SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE ACT.
In addition, the certificates representing the Earn-Out Advance Shares
will be endorsed with the following legend:
OWNERSHIP OF THIS CERTIFICATE AND THE SECURITIES EVIDENCED
HEREBY MAY BE SOLD, ASSIGNED, ENCUMBERED, HYPOTHECATED, PLEDGED OR
OTHERWISE TRANSFERRED OR ALIENATED ONLY UNDER AND SUBJECT TO CERTAIN
PROVISIONS OF A STOCK PURCHASE AGREEMENT DATED AS OF OCTOBER 11,
2002, A COPY OF WHICH IS ON FILE AT THIS CORPORATION'S PRINCIPAL
OFFICE.
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In addition, the certificates will contain any legend required to be
placed thereon by applicable federal or state securities laws.
(c) Each of the Sellers has been furnished with such materials and
has been given access to such information relating to UTi as it or its qualified
representative has requested and has been afforded the opportunity to ask
questions regarding UTi, the Earn-Out Advance Shares and the Payment Shares, all
as such Seller has found necessary to make an informed investment decision. Each
of the Sellers has the knowledge and experience in financial and business
matters and investments in general that they are capable of evaluating the
merits and risks of ownership of the Earn-Out Advance Shares and the Payment
Shares and each of the Sellers understands that the Earn-Out Advance Shares they
will receive, and the Payment Shares they may receive, cannot be readily sold
without compliance with applicable state and federal securities laws and the
terms of this Agreement.
(d) Each of the Sellers represents and warrants that they have been
provided with copies of UTi's Form 20-F for the year ended January 31, 2002 and
other documents filed or furnished by UTi with the Securities and Exchange
Commission since the filing of that Form 20-F.
(e) Each Seller is an "Accredited Investor" as that term is defined
in Rule 501 of Regulation D promulgated under the Securities Act and each Seller
is able to bear the economic risk of the purchase of the Earn-Out Advance Shares
and the Payment Shares pursuant to the terms of this Agreement, including a
complete loss of each Seller's investment in the Earn-Out Advance Shares and the
Payment Shares.
3.2 Company Capital Stock. The Sellers are the sole legal and beneficial
owner of all of the outstanding Company Capital Stock. Such Company Capital
Stock is not subject to any Liens or to any rights of first refusal of any kind.
The Sellers have the sole right to transfer such Company Capital Stock to
Purchaser. Such Company Capital Stock constitutes all of the Company Capital
Stock owned, beneficially or legally. Upon the Closing, Purchaser will receive
good title to such Company Capital Stock, subject to no Liens retained, granted
or permitted by the Sellers or the Company.
3.3 Tax Matters. The Sellers have had an opportunity to review with its
own tax advisors the tax consequences to the Sellers of the Purchase and the
transactions contemplated by this Agreement. The Sellers understand that they
must rely solely on their advisors and not on any statements or representations
made by Purchaser, the Company or any of their agents.
3.4 Absence of Claims by the Sellers. The Sellers do not have any
present claim against the Company or any Subsidiary and do not have Knowledge of
the basis for any future claim against the Company or any Subsidiary whether,
contingent or unconditional, fixed or variable under any contract or on any
other legal basis whatsoever.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company and the Sellers
that the statements contained in this Article IV are true and correct:
4.1 Organization and Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Purchaser has the corporate power to own its
properties and to carry on its business as now being conducted. Purchaser is
duly qualified or licensed to do business and in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated
by it, or the business conducted by it, require such qualification or license,
except in those jurisdictions where the failure to be so qualified or licensed
would not have a Purchaser Material Adverse Effect.
4.2 Authority. Purchaser has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Purchaser and no further action is required on
the part of Purchaser to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Purchaser and constitutes the valid and binding obligations of Purchaser,
enforceable in accordance with its terms, except as such enforceability may be
subject to the laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
4.3 No Conflict. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a Conflict under (i) any provision of
the certificate of incorporation and bylaws of Purchaser, (ii) any mortgage,
indenture, lease, contract, covenant or other agreement, instrument, commitment,
permit, concession, franchise or license to which Purchaser, or any of its
properties or assets (whether tangible or intangible) are subject or bound or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Purchaser or its respective properties or assets (whether tangible
or intangible), except in each case where such Conflict will not have a
Purchaser Material Adverse Effect.
4.4 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity, or any
third party is required by or with respect to Purchaser in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws and the HSR Act and other similar anti-trust
requirements of foreign governmental authorities, (ii) such consents, waivers,
approvals, orders, authorizations,
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registrations, declarations and filings which, if not obtained or made, would
not have a Purchaser Material Adverse Effect.
4.5 UTi Ordinary Shares. The UTi Ordinary Shares which constitute the
Earn-Out Advance Shares have been duly authorized, and upon consummation of the
transactions contemplated by this Agreement, will be validly issued, fully paid
and non assessable. The UTi Ordinary Shares which may constitute the Payment
Shares will be duly authorized and if issued pursuant to Section 1.4(g) hereof
will be validly issued, fully paid and nonassessable.
4.6 Disclaimer of Other Representations and Warranties. Except as
expressly set forth in this Agreement or in any of the other Transaction
Agreements or in any of the schedules, exhibits and instruments delivered in
connection herewith or therewith, the Purchaser is not making any other
representation or warranty, express or implied, with respect to Purchaser, or
any of its respective assets, liabilities or operations, including without
limitation, with respect to merchantability or fitness for any particular
purpose and any such other representations or warranties are expressly
disclaimed.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business of the Company. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Closing, the Company and the Sellers agree to operate the
business of the Company and its Subsidiaries, except to the extent that
Purchaser shall provide its prior written consent, in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted. The
Company and the Sellers further agree to pay the debts and Taxes of the Company
and its Subsidiaries when due, to pay or perform other obligations when due, and
use their best efforts to preserve intact the Company's and its Subsidiaries'
present business organizations, keep available the services of the Company's and
its Subsidiaries' present officers and key employees and preserve the Company's
and its Subsidiaries' relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it. The Company
and the Sellers shall promptly notify Purchaser of any event or occurrence or
emergency not in the ordinary course of business of the Company or any
Subsidiary and any material event involving the Company or any Subsidiary. The
Company, the Sellers and its Subsidiaries shall not, without the prior written
consent of Purchaser:
(a) make any expenditures or enter into any commitment or
transaction exceeding $50,000 individually or $150,000 in the aggregate or any
commitment or transaction of the type described in Section 2.9 hereof;
(b) enter into or materially amend any Contract pursuant to which
any other party is granted marketing, distribution, development or similar
rights of any type or scope with respect to any products or technology of the
Company or any Subsidiary or enter into any other Contract which would have been
required to have been disclosed on Section 2.14 of the
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Company Disclosure Schedule had such contract been entered into prior to the
date hereof, unless otherwise permitted by this Article V;
(c) materially amend or otherwise materially modify (or agree to do
so), or violate the terms of, any of the Contracts set forth or described in the
Company Disclosure Schedule;
(d) commence or settle any litigation (provided, that the Company
shall seek in good faith to resolve, subject to Purchaser's approval of any
settlement or other resolution, such pending litigation related to patent and
employment matters to which it is a party as of the date hereof) other than for
collection of debts in the ordinary course of business;
(e) declare, set aside, or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any Company
Capital Stock, or split, combine or reclassify any Company Capital Stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of Company Capital Stock, or repurchase, redeem
or otherwise acquire, directly or indirectly, any shares of Company Capital
Stock (or options, warrants or other rights exercisable therefore);
(f) issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase of,
any shares of capital stock of the Company or any securities convertible into,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue or purchase any such shares
or other convertible securities;
(g) cause or permit any amendments to the Company Charter Documents
(except to eliminate preemptive rights);
(h) acquire or agree to acquire by merging or consolidating with, or
by purchasing any assets or equity securities of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to the Company's
business;
(i) sell, lease, license or otherwise dispose of any of its
properties or assets, including the sale of any accounts receivable of the
Company or its Subsidiaries except for sales of products in the ordinary course
of business;
(j) incur any indebtedness or guarantee any indebtedness or issue or
sell any debt securities or guarantee any debt securities of others;
(k) grant any loans to others or purchase debt securities of others
or amend the terms of any outstanding loan agreement;
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(l) grant any severance or termination pay (in cash or otherwise) to
any Employee, including any officer, except pursuant to a contract or agreement
disclosed in Section 2.14 hereof and identified as a severance agreement;
(m) adopt or amend any Company Employee Plan, enter into any
employment contract, pay or agree to pay any special bonus or special
remuneration to any director or Employee, increase the salaries, wage rates, or
other compensation of its Employees, or grant any stock-related award (whether
payable in cash, shares or otherwise);
(n) revalue any of its assets (whether tangible or intangible),
including writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business;
(o) pay, discharge or satisfy, in an amount in excess of $20,000 in
any one case, or $50,000 in the aggregate, any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment (when due), discharge or satisfaction (when due) in the ordinary
course of business;
(p) make or change any material election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, enter into any closing
agreement, settle any material claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;
(q) enter into any licensing (other than non exclusive end user
licenses in the ordinary course of business and on standard terms and
conditions), distribution, joint venture, strategic alliance or joint marketing
or any similar arrangement or agreement;
(r) hire or terminate any Employees (other than the termination of
any Employee for cause after notice to and consultation with Purchaser), or
encourage any Employees to resign from the Company;
(s) enter into any new leases, including but not limited to real
estate and equipment leases;
(t) amend, otherwise modify or violate the terms of, any of the
agreements set forth or described in the Company Disclosure Schedule;
(u) enter into any transaction not in the ordinary course of
business without the express written approval of Purchaser; or
(v) take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.1(a) through Section 5.1(v) hereof, or any other
action that would (i) prevent the Company from performing, or cause the Company
not to perform, its covenants hereunder or (ii) cause or result in any of its
representations and warranties contained herein being untrue or incorrect.
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5.2 No Solicitation. Until the earlier of (a) the Closing Date, or (b)
the date of termination of this Agreement pursuant to the provisions of Section
10.1 hereof, the Company and the Sellers shall not, nor shall the Company
permit, encourage, authorize or direct, as applicable, any of its officers,
directors, employees, agents, representatives or affiliates (any of such persons
a "Representative") (or encourage, authorize or direct any of the Sellers), to,
directly or indirectly: (i) solicit, encourage, initiate or participate in any
inquiry, negotiations or discussions, or enter into any agreement, with respect
to any offer or proposal to acquire all or any part of the Company's or its
Subsidiaries' businesses, properties or technologies, or any amount of Company
Capital Stock (whether or not outstanding) or interests in its Subsidiaries,
whether by Purchase, purchase of assets, tender offer, license or otherwise, or
effect any such transaction, (ii) disclose any information to any person
concerning the Company's or its Subsidiaries' businesses, technologies or
properties, or afford to any person or entity access to its properties,
technologies, books or records, (iii) assist or cooperate with any person to
make any proposal to purchase all or any part of the Company Capital Stock,
interests in its Subsidiaries or assets of the Company or any Subsidiary, or
(iv) enter into any agreement with any person providing for the Purchase of the
Company or any Subsidiary, whether by Purchase, purchase of assets, license,
tender offer or otherwise. The Company is not, and will not be, in any
negotiations with any individual or entity relating to any such transaction or
business combination. In the event that the Company or any of the Company's
affiliates shall receive, prior to the Closing or the termination of this
Agreement in accordance with Section 10.1 hereof, any offer, proposal, or
request, directly or indirectly, of the type referenced in clause (i), (iii), or
(iv) above, or any request for disclosure or access as referenced in clause (ii)
above, the Company shall immediately notify Purchaser thereof, including
information as to the identity of the offeror or the party making any such offer
or proposal and the specific terms of such offer or proposal, as the case may
be, and such other information related thereto as Purchaser may reasonably
request. Any breach of this Section 5.2 by any Representative or Sellers shall
be deemed to be a breach of this Section 5.2 by the Company and the Sellers. The
parties hereto agree that irreparable damage would occur in the event that the
provisions of this Section 5.2 were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed by the
parties hereto that Purchaser shall be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Section 5.2 and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which Purchaser may be entitled at law or in equity.
5.3 Third Party Confidentiality Agreements. On or prior to the Closing
Date, the Company and the Sellers shall provide Purchaser with originals, or
true, correct and complete copies of all confidentiality agreements in the
possession of the Company or the Sellers pursuant to which, since July 31, 2000,
in connection with the proposed sale of the Company or any material portion
thereof, Company or any of its affiliates has disclosed on a confidential basis
any confidential or proprietary information of, or relating to, the Company to
any third party, to the extent such disclosure is permitted under the terms of
such agreements. Company shall request that all parties who received any such
confidential or proprietary information of or relating to the Company return
such confidential or proprietary information.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access to Information. The Company and the Sellers shall afford
Purchaser and its accountants, counsel and other representatives, reasonable
access during the period from the date hereof and prior to the Closing to (i)
all of the Company's and its Subsidiaries' properties, books, contracts,
commitments and records, including without limitation, access to any real
property (leased or owned) for the purpose of conducting such environmental
testing and investigations (including, without limitation, sampling of
subsurface soils, groundwater and building materials) that Purchaser, in its
sole discretion, deems necessary at any time prior to the Closing, (ii) other
information concerning the business, properties and personnel (subject to
restrictions imposed by applicable law) of the Company as Purchaser may
reasonably request, including but not limited to reports setting forth the
actual and forecasted sales of the Company, and (iii) all Employees of the
Company identified by Purchaser. The Company agrees to provide to Purchaser and
its accountants, counsel and other representatives copies of internal financial
statements (including Tax returns and supporting documentation) promptly upon
request. No information or knowledge obtained in any investigation pursuant to
this Section 6.1 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Purchase in accordance with the terms and provisions hereof. The
Sellers acknowledge and agree that even though Purchaser and its employees,
agents and representatives assisted in the preparation of the Schedules hereto,
it is the sole responsibility of the Sellers to insure the accuracy of the
information contained therein.
6.2 Confidentiality. The Company and the Sellers agree to keep the terms
and conditions contained in this Agreement confidential; provided, however, the
Company and the Sellers may disclose such information to their attorneys,
accountants and advisors who need to know such information for the purposes of
assisting the Company and the Sellers with the transactions contemplated by this
Agreement, as long as such attorneys, accountants and advisors agree to be bound
by the confidentiality obligations in this Agreement. Without the prior written
consent of UTi, the Company and the Sellers agree not to disclose any material,
nonpublic information which they may learn about UTi or its business operations
or use any such information for any purpose other than completing the
transactions contemplated by this Agreement; provided, however, such information
may be disclosed by the Company and the Sellers to their attorneys, accountants
and advisers who need to know such information solely for the purpose of
completing the transactions contemplated by this Agreement. The provisions of
this Section 6.2 shall continue indefinitely and survive the Closing or any
termination of this Agreement.
6.3 Expenses.
(a) "Third Party Expenses" shall mean all fees and expenses incurred
in connection with the Purchase including all legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties incurred
by a party in connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transactions contemplated hereby. Third
Party Expenses incurred by the Company, the Sellers or any Subsidiary shall be
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the obligation of the Sellers. Third Party Expenses incurred by Purchaser shall
be the obligation of Purchaser.
(b) The Company and the Sellers shall use their commercially
reasonable efforts to determine the amount of Third Party Expenses incurred by
the Company prior to the Closing. A reduction in the amount of the Cash
Consideration shall be made with respect to any such Third Party Expenses not
paid by the Sellers prior to or at the Closing. Any other Third Party Expenses
incurred by the Company, the Sellers or any Subsidiary shall be an indemnifiable
Loss pursuant to Section 9.2(a)(iv) hereof. All Third Party Expenses of the
Company, any Subsidiary and the Sellers that are incurred prior to the Closing
shall be paid by the Sellers prior to or in connection with the Closing.
(c) Sellers (and not Purchaser or the Company) shall be responsible
for their own tax liability that may arise as a result of the Purchase or the
transactions contemplated by this Agreement.
6.4 Consents. The Company and the Sellers shall obtain all necessary
consents, waivers and approvals with respect to the transactions contemplated by
this Agreement under any Contract. In the event that the lessor or sublessor of
any Lease Agreement conditions its grant of a required consent (including by
threatening to exercise a "recapture" or other termination right) upon the
payment of a consent fee, "profit sharing" payment or other consideration,
including increased rent payments (other than increased rent payments in
connection with the lease amendments contemplated by Section 7.3(r)). In the
event that the Company and Sellers fail to obtain any consent prior to the
Closing as required by Section 7.3(e) below and Purchaser, in its sole and
absolute discretion, chooses to proceed with the Closing, then Sellers shall use
their best efforts to obtain such consents within thirty (30) days of Closing.
Sellers shall be responsible for making all payments required to obtain such
consents and shall indemnify, defend, protect and hold harmless Purchaser and
the Company from all Losses, costs, fees, consent fees, recapture or termination
fees, claims, liabilities, increased rents and damages arising from the same.
The Basket Amount shall not apply to any claim for any Loss incurred by
Purchaser or the Company as a result of Sellers' breach of Sellers' covenants in
this Section 6.4.
6.5 Reasonable Efforts. Subject to the terms and conditions provided in
this Agreement, each of the parties shall use its reasonable efforts to take
promptly, or cause to be taken, all actions, and to do promptly, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
hereby, to obtain all necessary waivers, consents and approvals and to effect
all necessary registrations and filings and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the parties hereto the benefits contemplated by this Agreement
6.6 Notification of Certain Matters. Each party hereto shall give prompt
notice to the other party hereto (either Purchaser or the Company and the
Sellers, as appropriate) of: (a) the occurrence or non-occurrence of any event,
the occurrence or non-occurrence of which is likely to cause any representation
or warranty of such party contained in this Agreement to be untrue or
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inaccurate in any material respect at or prior to the Closing, and (b) any
failure of such party to comply with or satisfy, in any material respect, any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.6 shall not (i) limit or otherwise affect any remedies available to
the party receiving such notice or (ii) constitute an acknowledgment or
admission of a breach of this Agreement. No disclosure pursuant to this Section
6.6, however, shall be deemed to amend or supplement the Company Disclosure
Schedule or prevent or cure any misrepresentations, breach of warranty or breach
of covenant.
6.7 Additional Documents and Further Assurances. Each party hereto, at
the request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of the Purchase and the
transactions contemplated hereby.
6.8 FIRPTA Compliance. On or prior to the Closing Date, the Company
shall deliver to Purchaser a properly executed statement in a form reasonably
acceptable to Purchaser for purposes of satisfying Purchaser's obligations under
Treasury Regulation section 1.1445-2(c)(3).
6.9 Employment Matters. Employees of the Company that Purchaser deems
are necessary to ensure the smooth continued operation of the Company will
continue to be employed after the Closing. All employee costs relating to the
Company's employees, including, without limitation, any accrued vacation and
sick pay, unpaid benefits, and severance benefits payable to any of such
employees and any other costs associated with the termination of employees of
the Company are properly accrued on the Company Financial Statements and on the
financial statements for the Company for the period prior to the Closing in a
manner consistent with the Company's Accounting Policies.
6.10 Broker's Fees. The Company and the Sellers represent and warrant
that no agent, broker, investment banker, person or firm acting on behalf of or
under the authority of the Company or the Sellers is or will be entitled to any
broker's or finder's fee or any other commission directly or indirectly in
connection with the Agreement or any transaction contemplated thereby, except
that Lazard shall be entitled to a fee from Sellers, which fee shall be the sole
responsibility and liability of the Sellers and shall be paid by Sellers.
Sellers agree to indemnify Purchaser for any claims, losses or expenses incurred
as a result of representations in this Section 6.10 being untrue or the breach
of the covenants contained in this Section 6.10 from the first dollar without
regard to the Basket Amount.
6.11 Outstanding Debt. On the Closing Date, the Sellers shall have
satisfied all Outstanding Debt of the Company outstanding as of the Effective
Time and shall provide Purchaser with evidence of the same. Purchaser agrees to
indemnify and hold Sellers harmless from the recourse obligations to Bank of
America arising under the Company's revolving line of credit and lease financing
facilities with Bank of America and to Wachovia Bank in connection with the
Company's letters of credit with Wachovia Bank. Promptly after the Closing,
Purchaser will take all necessary steps to remove Sellers from their personal
guarantees to Bank of America in connection with the Company's revolving line of
credit and leasing facilities with Bank of
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America and to Wachovia Bank in connection with the Company's letters of credit
with Wachovia Bank.
6.12 Restrictions Regarding Transfers of Shares.
(a) Restriction on Transfer. Except as otherwise expressly provided
for herein, Sellers agree not to sell, pledge, assign, encumber, hypothecate,
option, hedge, or enter into any derivative transaction regarding, or otherwise
transfer or alienate (collectively, "Transfer") any of the Earn-Out Advance
Shares, or any right or interest therein, for a period of two (2) years from the
Closing Date, except to Purchaser pursuant to the Stock Pledge Agreement. UTi
shall not be required to (i) transfer on its books any securities which have
been sold, transferred, assigned or pledged in violation of any of the
provisions in this Section 6.12 or the Stock Pledge Agreement or (ii) treat as
owner of such securities or to accord the right to vote as owner or to pay
dividends to any transferee to whom such securities have been so sold,
transferred, assigned or pledged.
(b) Permitted Transfers. Notwithstanding any provision contained
herein to the contrary, if the share certificates for the Earn-Out Advance
Shares are released from the Stock Pledge Agreement any Seller may Transfer all
or any portion of his/her Earn-Out Advance Shares to any trust created solely
for the benefit of Seller or the Seller's direct descendants of which such
Seller is trustee or to another Seller. Any and all Earn-Out Advance Shares
transferred pursuant to this Section 6.12(b), shall at all times continue to be
subject to the provisions of this Agreement and any transferee of the Earn-Out
Advance Shares must agree in a written agreement, reasonably satisfactory to
Purchaser, to be bound by the provisions of this Section 6.12 of this Agreement.
At least 10 days prior to the transfer of Earn-Out Advance Shares, pursuant to
this Section 6.12(b), the Seller making such Transfer or his/her Legal
Representative shall deliver written notice to Purchaser stating the number of
Earn-Out Advance Shares to be Transferred, and the name, address and
relationship of the entity to whom the Earn-Out Advance Shares are to be
Transferred, and the transferee's written agreement required by the previous
sentence.
(c) Reclassification, Reorganization, Etc. In the event of the
reclassification of the UTi Ordinary Shares, or a reorganization,
recapitalization, stock split, stock dividend, combination of the UTi Ordinary
Shares, consolidation or any change in the capital structure of UTi, all UTi
Ordinary Shares obtained by a Seller as a result thereof, in addition to, in
exchange for or in respect of the Earn-Out Advance Shares subject to this
Agreement, shall also be subject to the covenants contained in this Section 6.12
and the Stock Pledge Agreement.
6.13 Long Term Incentive Plan Releases. On or prior to the Closing Date,
the Company and the Sellers shall have obtained releases (the "Releases"), in
the form of Exhibit D hereto, from all individuals who might have been deemed to
be participants in the Company's Long Term Incentive Plan or might otherwise
claim to be entitled to any payment or benefit thereunder. The Releases shall
release the Company, Purchaser, UTi and affiliates of UTi from any and all
liability arising out of or otherwise in connection with the Long Term Incentive
Plan and the Releases, the payments to individuals under the Releases and the
resulting accounting treatment must be reasonably acceptable to Purchaser. The
Company shall make all payments
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required under the Releases. Concurrently with the Closing, Sellers shall
reimburse the Company for all payments made pursuant to the Releases and all
related tax, employment and other related withholdings and other costs arising
in connection with the Releases, except for *** of such costs which shall not be
reimbursed by Sellers. Sellers and the Company represent and warrant that the
Company has properly accrued and recorded all costs, expenses and withholding
obligations associated with the Releases and the payments to be made thereunder
on the financial statements for the Company for the period ending prior to the
Effective Time. Sellers agree to indemnify and hold the Company and Purchaser
harmless from any and all liability arising out of the Long Term Incentive Plan
and Releases (including, but not limited to, any payment, tax and withholding
obligations (except for *** of such costs)) and the Basket Amount shall not
apply to this indemnification and hold harmless.
6.14 Short Term Incentive Plan. On or before the Closing Date, the
Company and the Sellers shall have revised the Company's Short Term Incentive
Plan to be substantially in the form of Exhibit E hereto and the Sellers
acknowledge that they agree with such revisions and that the Short Term
Incentive Plan may be in effect during the First and Second Earn-Out Periods and
shall apply against the Earn-Out EBITDA.
6.15 Sellers' Representative. Each Seller hereby irrevocably makes,
constitutes and appoints Xxxxx X. Xxxxxx, who is one of the Sellers, as his
agent and authorizes and empowers him to act as his representative for all
purposes under this Agreement and under the Escrow Agreement as set forth in
this Section 6.15 (the "Sellers' Representative"), and Xxxxx X. Xxxxxx hereby
agrees to act as the Sellers' Representative under this Agreement and under the
Escrow Agreement. In the event of the death or incapacity of the Sellers'
Representative, the Sellers shall promptly appoint a successor Sellers'
Representative either from among the Sellers or some other person who shall
otherwise be acceptable to Purchaser and who shall agree in writing to accept
such appointment. The Sellers' Representative shall be the agent for each Seller
for the following purposes: (a) to receive all notices and communications
directed to the Sellers under this Agreement and the Escrow Agreement and to act
as the Sellers' agent for service of process; (b) to furnish on behalf of the
Sellers all notices and communications required or permitted to be furnished by
the Sellers to Purchaser hereunder or by the Sellers to the Escrow Agent or to
Purchaser under the Escrow Agreement; (c) to deliver and receive all such
documents and instruments as may be expressly required or provided to be
delivered or received; (d) to designate such accounts as may be expressly
required or provided to be designated pursuant to Section 1.5 hereof or at any
other time provided herein or in the Escrow Agreement; and (e) to act on behalf
and bind the Sellers as provided for in this Agreement and in the Escrow
Agreement. The parties hereto acknowledge that any action by the Sellers'
Representative shall be legally effective and binding upon all the Sellers and
that Purchaser is expressly authorized to rely on the Sellers' Representative on
behalf of the Sellers.
6.16 Advisory Council. For the period commencing after the Closing Date
until the end of the Second Period, the Company agrees to establish a council of
advisors (the "Council") pursuant to the terms contained in this Section 6.16 to
provide advice to the Company and, if necessary, to consider and approve for
purposes of the Earn-Out EBITDA calculations certain Qualified Expenses and
certain Extraordinary Expenses or Income. The Council shall consist of the
Sellers, the Chief Executive Officer of the Company and three representatives
selected by
-----------------
*** Information omitted and filed separately with the Commission for
confidential treatment.
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Purchaser or UTi. Unless changed by the agreement of the Purchaser and Sellers,
the Council shall consist of seven (7) members and the Company agrees to provide
such members with copies of monthly management reports consistent with the
monthly management reports currently produced by the Company and copies of the
Company's annual budget. The Council shall meet periodically from time to time
to review the results of operations and business of the Company; provided,
however, the Council shall not have the liabilities, responsibilities or
authority of a statutory board of directors of a corporation. By signing this
Agreement, each of the Sellers agrees to hold in confidence and trust and not to
use or disclose any information provided to or learned by such Seller in
connection with the Council. The Company may discontinue the Council for all
purposes other than approving Qualified Expenses and Extraordinary Expenses or
Income for purposes of the Earn-Out EBITDA calculations upon any material breach
by the Sellers of any of their covenants and agreements contained in any of the
Transaction Agreements.
6.17 Sage Mill Releases.
(a) Sellers, at their sole cost and expense, shall use their best
efforts to obtain as soon as possible after the Closing Date the full and
complete release (collectively, the "Sage Mill Releases") of the Company from
any and all contractual obligations, guarantees, contingencies and other
liabilities of any kind (whether or not current or contingent) arising under or
in connection with the real property, facility and premises located in the Sage
Mill Industrial Park in Aiken County, South Carolina (the "Sage Mill Facility"),
including but not limited to:
(i) the Management Agreement;
(ii) the Sage Mill Lease;
(iii)the SouthStar Lease;
(iv) the MONY Loan Documents; and
(v) all amendments, modifications or extensions to any of the
foregoing.
The items listed above are referred to herein as the "Sage Mill
Contracts". Sellers' covenant to use their best efforts in this Section 6.17
shall include, but not be limited to, (i) Sellers offering their personal
guarantees in order to obtain the Sage Mill Releases, (ii) the active,
persistent and diligent pursuit of the Sage Mill Releases, and (iii) Sellers
offering alternative collateral to such parties as may be reasonably necessary
in order to obtain the Sage Mill Release. Sellers acknowledge that time is of
the essence.
(b) All deposits or advance payments made by the Company, if any, in
connection with any of the Sage Mill Contracts shall remain the property of the
Company. Promptly after the Closing, Sellers shall reimburse the Company for all
such deposits and advance payments.
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(c) Until such time as Sage Mill Releases acceptable to Purchaser
have been delivered to Purchaser, at the request of Purchaser Sellers agree to
inform Purchaser as to the status of the negotiations and discussions concerning
the Sage Mill Releases. In the event that Sellers have not obtained the Sage
Mill Releases with regard to any particular Sage Mill Contract within six months
from the Closing, then, at the request of Purchaser, Sellers agree to include
Purchaser in the negotiations and discussions concerning such releases.
(d) At the Closing, Sellers shall cause SouthStar to execute that
certain Indemnity and Guarantee Agreement attached hereto as Exhibit F (the
"SouthStar Guarantee"). Sellers represent and warrant that at the Closing the
SouthStar Guarantee will be duly and validly executed and delivered by SouthStar
and shall constitute the valid and binding obligation of SouthStar.
(e) At the Closing, Sellers shall cause Standard Properties to
execute the Indemnity and Guarantee in the form of Exhibit G hereto (the
"Standard Properties Guarantee"). Sellers represent and warrant that at the
Closing the Standard Properties Guarantee will be duly and validly executed and
delivered by Standard Properties and shall constitute the valid and binding
obligation of Standard Properties.
(f) Without limiting any of Sellers' other obligations and covenants
in this Agreement, Sellers agree to jointly and severally indemnify and hold the
Company and Purchaser harmless from any and all Losses (as defined below)
arising out of or related to the Sage Mill Facility or any of the Sage Mill
Contracts. Sellers' agreement to indemnify and hold harmless the Company and
Purchaser as provided for in the previous sentence shall be in addition to and
shall not limit any of Sellers' other covenants, representations, warranties, or
obligations provided for in this Agreement. Until such time as the Sage Mill
Releases are delivered to Purchaser, Sellers agree to take all actions as
reasonably necessary to mitigate any potential exposure or liability to the
Company, including but not limited to, causing each of SouthStar and Standard
Properties to take actions to mitigate the potential exposure or liability to
the Company and Purchaser.
(g) As non-exclusive security for the faithful performance of
Sellers' covenants, representations, warranties, agreements and indemnities
provided for in this Section 6.17, Sellers agree to execute the Stock Pledge
Agreement attached hereto in the form of Exhibit H (the "Stock Pledge
Agreement"). Sellers agree that the certificates evidencing the Earn-Out Advance
Shares together with stock assignments duly endorsed and separate from
certificate (with the date and number of shares left blank) shall be retained by
Purchaser to hold pursuant to the Stock Pledge Agreement. Sellers irrevocably
authorize Purchaser to retain pursuant to the Stock Pledge Agreement any and all
additions and substitutions to the Earn-Out Advance Shares as provided for in
the Stock Pledge Agreement.
6.18 S Corporation Deposits. The *** tax deposit made by the Company
pursuant to section 7519 of the Code to the Internal Revenue Service by virtue
of its election to utilize a fiscal year under section 444 of the Code shall
remain the property of the Company. In the event the Company fails to recover
the full *** amount of the tax deposit, then Sellers shall reimburse the Company
for *** of the amount of the deposit less than ***
-----------------
*** Information omitted and filed separately with the Commission for
confidential treatment.
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which is not returned to the Company. The Basket Amount shall not apply to this
reimbursement obligation, and Sellers agree that, if less than *** of the
deposit is recovered by the Company, then *** of the shortfall shall be released
from the Indemnity Escrow Agreement.
6.19 Management Earn-Out Incentive Plan. After the Closing, the Company
shall adopt an Earn-Out Incentive Plan (the "Incentive Plan") substantially
along the lines of the summary set forth in Exhibit I hereto. The specific terms
and provisions of the Incentive Plan shall be established by Purchaser and the
Company. Sellers acknowledge and agree that the Incentive Plan will be in effect
during the First and Second Earn-Out Periods and such amounts shall not be
applied against the Earn-Out EBITDA. Participation in the Incentive Plan shall
be limited to certain key employees of the Company selected by Purchaser and the
Company with the consent of Sellers. All such participants will be required to
execute non-disclosure and non-compete agreements acceptable to Purchaser. The
Company shall fund all payments required by the Incentive Plan.
6.20 Payment of Costs. Sellers shall pay, out of the proceeds received
at the Closing, *** of the costs incurred by Purchaser of the Phase I
Environmental Reports obtained by Purchaser for the Leased Real Properties and
the Owned Real Properties. (Seller's *** share of such costs are estimated to be
*** and are referred to herein as "Sellers' Phase I Costs".)
6.21 Sellers' Certificates. In the event that the Company and Sellers
fail to deliver an estoppel certificate required for each of the Leased Real
Properties as required by Section 7.3(n) below and Purchaser, in its sole and
absolute discretion, chooses to proceed with the Closing, then Sellers shall
deliver a certificate, in form and substance satisfactory to Purchaser,
certifying, representing and warranting for each property missing a landlord
estoppel certificate to all the matters set forth in the missing landlord
estoppel certificate. The certifications, representation and warranties made in
such certificates by Sellers are incorporated herein by reference and shall be
deemed to be joint and several certifications, representations and warranties of
the Sellers for all purposes hereunder and the Basket Amount shall not apply to
any claim for any Loss incurred by Purchaser as a result of any inaccuracy,
breach or omission in such certifications, representations and warranties.
ARTICLE VII
CONDITIONS TO THE PURCHASE
7.1 Conditions to Obligations of Each Party to Effect the Purchase. The
respective obligations of the Sellers, the Company and Purchaser to consummate
the transactions contemplated by this Agreement shall be subject to the
satisfaction, at or prior to the Closing, of the following conditions:
(a) Securities Compliance. The Earn-Out Advance Shares issued in
connection with the Purchase may be issued pursuant to valid exemptions from all
applicable federal and state securities laws.
-------------------
*** Information omitted and filed separately with the Commission for
confidential treatment.
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(b) HSR Act and Comparable Laws. All waiting periods, if any, under
the HSR Act relating to the transactions contemplated hereby shall have expired
or been terminated and clearance for such transactions shall have been obtained
under the comparable laws of any foreign countries where consummation of such
transactions prior to such clearance is required.
(c) No Injunctions or Restraints; Illegality. No Governmental Entity
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) and no other legal or regulatory restraint
or prohibition shall be in effect, in either case, which has the effect of
making the Purchase illegal or otherwise preventing the consummation of the
Purchase.
(d) Indemnity Escrow Agreement. The Indemnity Escrow Agent shall
have executed the Indemnity Escrow Agreement.
(e) EBITDA Escrow Agreement. The EBITDA Escrow Agent shall have
executed the EBITDA Escrow Agreement.
7.2 Conditions to Obligations of the Sellers. The obligations of the
Sellers to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, exclusively by the Sellers:
(a) Representations and Warranties. Each representation and warranty
of Purchaser contained in this Agreement shall be true and correct as of the
date of this Agreement and on and as of the Closing Date except for those
representations and warranties which address matters only as of a particular
date (which representations shall have been true and correct as of such
particular date).
(b) Covenants. Purchaser shall have performed and complied in all
material respects with each covenant and obligation under this Agreement
required to be performed and complied with by Purchaser prior to or as of the
Closing.
(c) Escrow Agreements. Purchaser shall have delivered a signed
counterpart to the Indemnity Escrow Agreement and to the EBITDA Escrow
Agreement.
(d) Letter Regarding Bidding. The Sellers shall have received the
letter executed by the Company regarding bidding opportunities in the form
attached hereto as Exhibit J.
(e) Certificate of Purchaser. The Sellers and the Company shall have
received a certificate, validly executed by Purchaser, to the effect that, as of
the Closing, the conditions to the obligations of Sellers and the Company set
forth in Sections 7.2(a) through 7.2(d) have been satisfied (unless otherwise
waived in accordance with the terms hereof).
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7.3 Conditions to the Obligations of Purchaser. The obligation of
Purchaser to effect the Purchase shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, exclusively by Purchaser:
(a) Representations and Warranties. Each representation and warranty
of the Sellers and the Company contained in this Agreement shall be true and
correct as of the date of this Agreement and on and as of the Closing Date with
the same force and effect as if made on and as of the Closing Date except for
those representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct as of
such particular date).
(b) Covenants. The Sellers and the Company shall have performed and
complied in all material respects with each covenant and obligation under this
Agreement required to be performed and complied with by the Sellers and the
Company prior to or as of the Closing.
(c) Litigation. There shall be no action, suit, claim or proceeding
of any nature pending or threatened against Purchaser, UTi, the Sellers or the
Company, their respective properties or any of their respective affiliates,
officers or directors, arising out of, or in any way connected with, the
Purchase or the other transactions contemplated by the terms of this Agreement
or that could reasonably be expected to have a Company Material Adverse Effect.
(d) Proceedings. No Governmental Entity shall have notified either
party to this Agreement that such Governmental Entity intends to commence
proceedings to restrain or prohibit the transactions contemplated hereby or
force rescission, unless such Governmental Entity shall have withdrawn such
notice and abandoned any such proceedings prior to the time which otherwise
would have been the Closing Date.
(e) Consents. The Sellers and the Company shall have received all
necessary consents, waivers and approvals with respect to the transactions
contemplated by this Agreement under any Contract in a form of consent, waiver
or approval (as the case may be) reasonably acceptable to Purchaser and shall
have received all necessary consents, waivers and approvals from any
Governmental Entity with respect to the transactions contemplated by this
Agreement.
(f) No Material Adverse Change. There shall not have occurred any
event or condition of any character that has had or could reasonably be expected
to have a Company Material Adverse Effect, or any loss or interference with the
Company's or any Subsidiary's business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, any change in the capital stock
or long-term debt of the Company or any of its Subsidiaries, or any change, or
any development involving a prospective Company Material Adverse Effect, except
that all Outstanding Debt as of the Effective Date shall be paid in full by the
Sellers prior to the Closing.
(g) Legal Opinion. Purchaser shall have received a legal opinion
from legal counsel to the Sellers and the Company, substantially in the form
attached hereto as Exhibit K.
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(h) No Key-Employee Termination. None of the Company's manager or
officers shall have terminated employment with the Company, or has indicated (in
writing, orally or otherwise) an intention to terminate, employment with
Purchaser and/or Company as of, or within one (1) year after, the Closing.
(i) Resignation of Directors and Officers. The Company shall have
delivered written resignations (1) from each of the directors of the Company and
(2) from Xxxxxx X. Xxxxxx, Xx., Xxxxxx Xxxxxx and Xxxxx X. Xxxxxx as officers of
the Company, in each case effective as of the Closing.
(j) Escrow Agreements. The Sellers shall have delivered a signed
counterpart to the Indemnity Escrow Agreement and to the EBITDA Escrow
Agreement.
(k) Non-Competition Agreements. The Sellers shall have delivered
signed counterparts to the non-competition agreements, in substantially the form
attached hereto as Exhibit L (collectively, the "Non-Competition Agreements").
(l) Standard Properties Guarantee. Sellers shall have delivered to
Purchaser the Standard Properties Guarantee.
(m) Outstanding Debt. All Outstanding Debt outstanding as of the
Effective Time shall have been satisfied in full.
(n) Estoppel Certificates for Leased Real Properties. The Company
and Sellers shall have delivered to Purchaser estoppel certificates, in the form
attached hereto as Exhibit M, for each of the Leased Real Properties. In the
event the Company and Sellers fail to deliver to Purchaser the estoppel
certificates required by the previous sentence and Purchaser decides to proceed
with the Closing in its sole and absolute discretion, then Sellers shall deliver
to Purchaser the certificates required by Section 6.21 above for each property
missing a landlord estoppel certificate.
(o) Title Reports. The Company shall have delivered to Purchaser
updated preliminary title reports for each of Owned Real Properties in form and
substance satisfactory to Purchaser, evidencing good and marketable fee simple
title to the Owned Real Property by the Company, free and clear of all Liens and
encumbrances.
(p) Phase I Environmental Reports. The Purchaser shall have received
Phase I Environmental Reports for all Leased Real Property and Owned Real
Property prepared by independent consultants approved by Purchaser. Purchaser,
shall be satisfied in its discretion with regard to the results of such reports
and have concluded, to its reasonable satisfaction, that no additional due
diligence, including, without limitation, Phase II Environmental Reports, is
necessary and no remediation is necessary with respect to the subject
properties.
(q) Due Diligence. UTi and Purchaser shall have concluded, to their
reasonable satisfaction, their due diligence review of the Company and it
business, including
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without limitation, the Company Financial Statements, Lease Agreements, and the
documents listed or referenced in Section 2.14 of the Company Disclosure
Schedule.
(r) New Lease Amendments. The Company shall have delivered to
Purchaser copies of lease amendments for the properties set forth on Exhibit N
hereto, which such amendments must be in form and substance acceptable to
Purchaser.
(s) Releases. The Company and the Sellers shall have delivered fully
executed Releases from all potential participants in the Company's Long Term
Incentive Plan, which Releases and the resulting accounting treatment must be
reasonably satisfactory to Purchaser. At Closing, Sellers shall reimburse the
Company for payments made pursuant to the Releases as required by Section 6.13.
(t) Short Term Incentive Plan. The Company shall have delivered to
Purchaser the Short Term Incentive Plan, as amended, pursuant to Section 6.14
above.
(u) SouthStar Guarantee. Sellers shall have delivered to Purchaser
the SouthStar Guarantee.
(v) Stock Pledge Agreement. Sellers shall have delivered the Stock
Pledge Agreement and stock assignments separate from certificates.
(w) Certificates of the Company. Purchaser shall have received (i) a
certificate, validly executed by the Sellers and the Chief Operating Officer of
the Company for and on its behalf, to the effect that, as of the Closing, the
conditions to the obligations of Purchaser set forth in Sections 7.3(a) through
7.3(v) have been satisfied (unless otherwise waived in accordance with the terms
hereof) and (ii) a certificate, validly executed by the Company, providing as
attachments copies of resolutions approved by the shareholders and the board of
directors of the Company, certifying that the attached resolutions were duly
adopted by the shareholders and the board of directors of the Company and that
such resolutions remain in full force and effect, authorizing and approving the
execution by the Company of this Agreement and the other documents related to
this transaction and approving the consummation by the Company of the
transactions contemplated by such agreements and documents.
ARTICLE VIII
TAX MATTERS
8.1 Taxes.
(a) In connection with the Purchase, the Company and the Sellers
shall join with Purchaser in filing a timely election under 338(h)(10) of the
Code on Form 8023 (to be prepared by Purchaser) and any corresponding elections
available under applicable state laws (collectively, the "338 Election"). The
Company and the Sellers shall cooperate with Purchaser to promptly take all
actions necessary and appropriate (including, without limitation, filing all
forms, Returns, elections, schedules and documents as may be required) to effect
and preserve a
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timely 338 Election in accordance with 338(h)(10) of the Code or any successor
statute thereto (and all corresponding state and local tax laws). The Sellers
shall be solely and exclusively responsible and liable for, and shall pay when
due, and indemnify Purchaser against, all income or similar taxes incurred by
the Company in connection with the 338 Election. The Sellers shall be entitled
to any refund or credit becoming due the Sellers as a result of the 338
Election. Sellers agree that all tax deposits made by the Company shall remain
the sole and exclusive property of the Company.
(b) Following the Closing, Purchaser shall provide to the Sellers a
copy of Internal Revenue Form 8023 and any required exhibits thereto with
Purchaser's proposed allocations stated thereon. The allocations for the
non-competition agreements shall be for the amounts stated for in such
agreements and the other allocations shall be made in a manner consistent with
the Internal Revenue Code and applicable regulations thereunder. Within 30 days
after receipt of such Form 8023, Sellers shall propose to Purchaser any changes
or shall indicate their concurrence therewith. The failure by Sellers to propose
any changes within such 30 days shall be deemed to be an indication of the
Sellers' concurrence with the Form 8023 as proposed by Purchaser. Purchaser and
Sellers shall endeavor in good faith to resolve any differences with respect to
the items on Form 8023. Notwithstanding the foregoing, if they are unable to
resolve such differences, then such differences shall be resolved pursuant to
Section 11.8 below, except that such mediation and arbitration services shall be
at the offices of AAA in Charlotte, North Carolina, or in such other location as
is mutually agreed to by Purchaser and Sellers. The allocation as agreed upon by
the parties or as resolved in accordance with the previous sentence shall be
deemed to be the "Price Allocation". The parties hereto agree to allocate the
Purchase Price for purposes of 338(h)(10) in accordance with the Price
Allocation. The parties hereto shall adopt and utilize the Price Allocation for
purposes of all Returns and reports filed by any of them with any state or
federal taxing authority, and such parties shall not voluntarily take any
position inconsistent therewith in connection with the examination of any Return
of any such parties, any refund claim, any litigation proceeding or otherwise,
unless required by the IRS or any state taxing authority.
(c) The purchase of the Company Capital Stock by Purchaser will
result in a conversion of the Company to a C corporation by virtue of
Purchaser's status as a disqualifying shareholder for the S corporation. The
Sellers shall be solely and exclusively responsible and liable for, and shall
pay when due, and indemnify Purchaser against all taxes incurred by virtue of
the conversion of the Company from S corporation status as a result of the
Purchase.
(d) Without the consent of Purchaser, the Sellers agree that they
will not file a return or amend an existing return, which includes any items of
income, gain, loss or deduction of the Company and which treats any such item in
a manner inconsistent with the manner in which such item is treated by the
Company in its return for the applicable period.
8.2 Returns.
(a) The Sellers shall prepare or cause to be prepared and file or
cause to be filed, at their sole cost and expense, all Tax returns of the
Company for all taxable periods ending on or before the Closing Date that are
filed after the Closing Date, and the Sellers shall be
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responsible for, and indemnify Purchaser against, the payment of all Taxes of
the Company for such periods, if any, whenever incurred or assessed. Such
returns shall be made available to Purchaser and the Company no fewer than 21
calendar days prior to the filing thereof with the appropriate governmental
authority for review by Purchaser and the Company. From and after the Closing
Date, Purchaser and the Company on the one hand, and the Sellers on the other
hand, shall make available to the other, as reasonably requested, all
information, records or documents relating to the Tax liabilities of the Company
for all periods ending on or prior to the Closing Date, and will preserve such
information, records or documents until the expiration of any applicable statute
of limitations or extensions thereof. For purposes of the Agreement, in the case
of any taxable period commencing before the Closing Date and ending after the
Closing Date (a "Straddle Period"), the portion of any Tax that is attributable
to the portion of the Straddle Period prior to and including the Closing Date
(the "Pre-Closing Period") shall be (i) in the case of a Tax that is not based
on net income, gross income, sales, premiums or gross receipts, the total amount
of such Tax for the period in question multiplied by a fraction, the numerator
of which is the number of days in the Pre-Closing Period and the denominator of
which is the total number of days in such Straddle Period, and (ii) in the case
of a Tax that is based on any of net income, gross income, sales, premiums or
gross receipts, the Tax that would be due with respect to the Pre-Closing Period
if such Pre-Closing Period were a separate taxable period, except that
exemptions, allowances, deductions or credits that are calculated on an annual
basis (such as the deduction for depreciation or capital allowances) shall be
apportioned on a per diem basis. For purposes hereof, all Taxes that are the
subject of Article VIII arising from the Purchase, including Taxes resulting
from the transactions contemplated by this Agreement, any agreements executed in
connection herewith and the 338 Election, shall be deemed to be Taxes
attributable to the Pre-Closing Period and shall be the responsibility of the
Company and the Sellers.
(b) Purchaser shall prepare and file (or cause to be prepared and
filed) on a timely basis all Tax returns of Company relating to periods ending
after the Closing Date and shall pay, and shall indemnify and hold the Sellers
harmless against and from (i) all Taxes of the Company for any taxable year or
period commencing after the Closing Date; and (ii) all Taxes of the Company for
any Straddle Period (other than Taxes attributable to the Pre Closing Period,
which if paid by Purchaser pursuant to this Section 8.2(b) shall be promptly
reimbursed by the Sellers).
8.3 Conduct of Audits and Other Procedural Matters. Each party shall, at
its own expense, control any audit or examination by any taxing authority, and
have the right to initiate any claim for refund or amended return, and contest,
resolve and defend against any assessment, notice of deficiency or other
adjustment or proposed adjustment of Taxes ("Proceedings") for any taxable
period for which that party is charged with payment or indemnification
responsibility under this Agreement. Each party shall promptly forward to the
other in accordance with Section 11.1 all written notifications and other
written communications, including if available the original envelope showing any
postmark, from any taxing authority received by such party or its affiliates
relating to any liability for Taxes for any taxable period for which such other
party or any of its affiliates is charged with payment or indemnification
responsibility under this Agreement and each indemnifying party shall promptly
notify, and consult with, each
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indemnified party as to any action it proposes to take with respect to any
liability for Taxes for which it is required to indemnify another party and
shall not enter into any closing agreement or final settlement with any taxing
authority with respect to any such liability without the written consent of the
indemnified parties, which consent shall not be unreasonably withheld. In the
case of any Proceedings relating to any Straddle Period, Purchaser shall control
such Proceedings and shall consult in good faith with the Sellers as to the
conduct of such Proceedings. The Sellers shall reimburse Purchaser for such
portion of the costs, including legal costs, of conducting such Proceedings as
is represented by the portion of the Tax with respect to such Straddle Period
for which the Sellers is liable pursuant to this Agreement. Each party shall, at
the expense of the requesting party, execute or cause to be executed any powers
of attorney or other documents reasonably requested by such requesting party to
enable it to take any and all actions such party reasonably requests with
respect to any Proceedings which the requesting party controls. The failure by a
party to provide timely notice under this subsection shall relieve the other
party from its obligations under this Article VIII with respect to the subject
matter of any notification not timely forwarded, to the extent the other party
has suffered a loss or other economic detriment because of such failure to
provide notification in a timely fashion.
8.4 Assistance and Cooperation. After the Closing Date, each of the
Sellers and Purchaser shall:
(a) assist the other party in preparing any Tax Returns that such
other party is responsible for preparing and filing in accordance with Section
8.2 hereof;
(b) cooperate fully in preparing for any audits of or disputes with
taxing authorities regarding any Tax Returns of the Company;
(c) make available to the other and to any taxing authority as
reasonably requested all information, records and documents relating to Taxes of
the Company;
(d) provide timely notice to the other in writing of any pending or
threatened Tax audits or assessments of the Company for taxable periods for
which the other may have liability under this Article VIII; and
(e) furnish the other with copies of all correspondence received
from any taxing authority in connection with any Tax audit with respect to any
taxable period for which the other may have a liability under this Article VIII.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
AND ESCROW; SELLERS
9.1 Survival of Representations and Warranties. The representations and
warranties of the Sellers and the Company contained in this Agreement (including
in the Company Disclosure Schedule), or in any certificate or other instrument
delivered pursuant to this Agreement, shall survive the Closing and the
consummation of the transactions contemplated
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hereby (and any examination or investigation by or on behalf of any party
hereto), until the three-year anniversary of the Closing Date (the "Expiration
Date"). Notwithstanding the foregoing, any Indemnified Party (as defined below)
may seek recovery of Special Losses (as defined below) at any time prior to the
expiration of the applicable statute of limitations and may seek discovery of
Indefinite Losses (as defined below) indefinitely. The representations and
warranties of Purchaser contained in this Agreement, or in any certificate or
other instrument delivered pursuant to this Agreement, shall survive the Closing
until the Expiration Date.
9.2 Indemnification and Escrow Arrangements.
(a) Indemnification by the Sellers. The Sellers shall indemnify,
defend and hold harmless Purchaser and its employees, directors, officers,
representatives and affiliates, including the Company after the Closing (each an
"Indemnified Party" and collectively, the "Indemnified Parties") from and
against, and pay or reimburse, as the case may be, the Indemnified Parties for,
any and all losses, claims, liabilities, damages, deficiencies, costs and
expenses, including the fees and expenses of attorneys, accountants and other
professionals, (each a "Loss" and collectively "Losses") paid, incurred, accrued
or sustained by the Indemnified Parties, or any one of them, directly or
indirectly, as a result of:
(i) any breach or inaccuracy of a representation or warranty of
the Sellers or the Company contained in (A) this Agreement (including the
Company Disclosure Schedule) as of the date of this Agreement or on and as of
the Closing Date with the same force and effect as if made on and as of the
Closing Date, except for those representations and warranties which address
matters only as of a particular date (which representations shall be deemed to
have been made only as of such particular date) (B) in the certificate delivered
pursuant to Section 7.3(r) of this Agreement or (C) any other agreement executed
by the Sellers or the Company in connection with this Agreement;
(ii) any failure by the Sellers or the Company to perform or
comply with any covenant or other agreement applicable to it contained in this
Agreement or any other agreement executed by the Sellers or the Company in
connection with this Agreement;
(iii) the Company's Retained Environmental Liabilities;
(iv) any Third Party Expenses of the Company or Sellers incurred
prior to the Closing;
(v) any failure by Sellers to obtain the Sage Mill Releases
pursuant to Section 6.17 hereto; or
(vi) any U.S. federal or state income Tax liability (including
interest and penalties), resulting from the Company failing to qualify as an S
corporation under section 1361(a)(1) of the Code (or state counterpart) for
every taxable year on or before the Closing Date as to which the Company filed
or files Tax Returns claiming status as an S corporation;
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There shall be no right of contribution from the Company or Purchaser
with respect to any Loss claimed by an Indemnified Party.
(b) Limitations on Indemnification. The Indemnified Parties shall
not be entitled to make a claim for indemnification based on Section 9.2(a)(i)
or Section 9.2(a)(ii) until the Losses claimed exceed *** in the aggregate (the
"Basket Amount"). Notwithstanding the foregoing:
(i) the Indemnified Parties shall be entitled to recover for,
and the Basket Amount shall not apply to any claim for indemnification for (A)
any Special Losses or Indefinite Losses, or (B) any breach or inaccuracy of any
representation, warranty, agreement or covenant contained in 6.3 (Expenses) or
6.11 (Broker's Fees);
(ii) this section shall not limit the liability of the Company
for any breach of any representation, warranty or covenant if the Purchase does
not close; and
(iii) this section shall not prohibit Purchaser from seeking and
obtaining recourse against the Sellers in the event that Purchaser issues to the
Sellers more than the number of Earn-Out Advance Shares or more than the amount
of Cash Consideration to which such Sellers are entitled pursuant to Article I
of this Agreement (and the Basket Amount shall not apply to any such claim).
(c) Special Losses; Indefinite Losses. As used herein, "Special
Losses" means Losses paid, incurred, accrued or sustained by the Indemnified
Parties, or any one of them, directly or indirectly, as a result of any breach
of any covenant contained in, or failure, inaccuracy or misrepresentation in the
representations and warranties of the Company and the Sellers, set forth in
Section 2.10 and Section 2.21 and Article VIII. As used herein, "Indefinite
Losses" means losses paid, incurred, accrued or sustained by the Indemnified
Parties, or any one of them, directly or indirectly, as a result of (i) any
breach of any covenant contained in, or failure, inaccuracy or misrepresentation
in the representations and warranties of the Company and the Sellers set forth
in Section 2.1, or Section 2.2, or Section 2.3 or Section 2.12(j), or Article
III or Section 6.13 or Section 6.15 or Section 6.17 or Section 6.19 or (ii) any
fraudulent conduct, fraudulent misrepresentation or other willful misconduct on
the part of the Company or any officer, director or key manager of the Company
or any Seller in connection with the transactions contemplated by this
Agreement.
(d) Sources of Remedy. In addition to any other remedies available
to Purchaser, Purchaser may satisfy any claim for Losses incurred by an
Indemnified Party pursuant to this Article IX, by seeking indemnification
pursuant to the terms of the Indemnity Escrow Agreement, which shall not be the
exclusive basis to satisfy any claim for Losses.
(e) Termination of the Escrow Fund. Subject to the following
requirements, the Escrow Fund shall be in existence immediately following the
Closing and shall terminate as provided for in the Escrow Agreement.
-----------------
*** Information omitted and filed separately with the Commission for
confidential treatment.
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ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. Except as provided in Section 10.2 hereof, this
Agreement may be terminated and the Purchase abandoned at any time prior to the
Closing:
(a) by mutual consent of the Sellers and Purchaser;
(b) by Purchaser or the Sellers if: (i) the Closing has not occurred
before 5:00 p.m. (Pacific time) on October 30, 2002; provided, however, that the
right to terminate this Agreement under this Section 10.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Closing to occur on or before such date and
such action or failure to act constitutes a material breach of this Agreement;
(c) by Purchaser or the Sellers if: (i) there shall be a final
non-appealable order of a court of competent jurisdiction in effect preventing
consummation of the Purchase, or (ii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Purchase by any Governmental Entity that would make consummation of the Purchase
illegal;
(d) by Purchaser, upon a breach of any representation, warranty,
covenant or agreement on the part of the Sellers or the Company set forth in
this Agreement, or if any representation or warranty of the Sellers or the
Company shall have become untrue, in either case such that the conditions set
forth in Section 7.3(a) would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become untrue,
provided that if any such inaccuracy in the Sellers' or the Company's
representations and warranties or breach by the Sellers or the Company is
curable by the Sellers or the Company through the exercise of reasonable
efforts, then Purchaser may not terminate this Agreement under this Section
10.1(d) prior to the end of a 3 day period following such breach (or inaccuracy
arising), provided the Sellers or the Company continues to exercise reasonable
efforts to cure such breach (it being understood that Purchaser may not
terminate this Agreement pursuant to this Section 10.1(d) if such breach by the
Sellers or the Company is cured prior to the end of such period);
(e) by the Sellers, upon a breach of any representation, warranty,
covenant or agreement on the part of Purchaser set forth in this Agreement, or
if any representation or warranty of Purchaser shall have become untrue, in
either case such that the conditions set forth in Section 7.2(a) would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become untrue, provided that if any such inaccuracy in
Purchaser's representations and warranties or breach by Purchaser is curable by
Purchaser through the exercise of its reasonable efforts, then the Sellers may
not terminate this Agreement under this Section 10.1(e) prior to the end of a 3
day period following such breach (or inaccuracy arising), provided Purchaser
continues to exercise reasonable efforts to cure such breach (it being
understood that the Sellers may not terminate this Agreement pursuant to this
Section 10.1(e) if such breach by Purchaser is cured prior to the end of such
period);
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(f) by Purchaser, if an event or change discussed in Section 7.3(f)
shall have occurred after the date of this Agreement.
10.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 10.1 hereof, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Purchaser, the Sellers or the Company or their respective officers, directors,
employees, agents, consultants, representatives or Sellers (in its respective
capacities as such), if applicable; provided that each party hereto shall remain
liable for any willful breach of this Agreement prior to its termination; and
provided further, that, the provisions of Sections 6.3 and 6.4 hereof, Article
XI hereof and this Section 10.2 shall remain in full force and effect and
survive any termination of this Agreement pursuant to the terms of this Article
X.
10.3 Amendment. Prior to the Closing, the parties hereto may amend this
Agreement at any time by execution of an instrument in writing signed on behalf
of the party against whom enforcement is sought. On or after the Closing,
Purchaser, the Company and the Sellers may amend this Agreement at any time by
execution of an instrument in writing signed on behalf of the party against whom
enforcement is sought.
10.4 Extension; Waiver. At any time prior to the Closing, Purchaser, on
the one hand, and the Company and the Sellers, on the other hand, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. At any
time on or after the Closing, Purchaser and the Company, on the one hand, and
the Sellers, on the other hand, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations of the other party
hereto, (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto, and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service to the appropriate address, or mailed by registered or
certified mail (return receipt requested) or sent via facsimile (with
acknowledgment of complete transmission) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice); provided, however, that notices sent by mail will not be deemed given
until the date and time of acknowledged receipt at the appropriate address:
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(a) if to Purchaser, to:
Union-Transport (U.S.) Holdings, Inc.
00000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
Seventeenth Floor
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to the Company, to:
Standard Corporation
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, CFO
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx, Xxxxxxxx & Xxxx, P.A.
X.X. Xxx 0000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq. and Xxxxxxx X. XxXxxxxx, Esq.
Facsimile No.: (000) 000-0000
(c) if to the Sellers, to:
Xxxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
11.2 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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11.3 Counterparts. This Agreement may be executed in one or more
counterparts and may be delivered by facsimile transmission, all of which shall
be considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other party, it being understood that all parties need not sign the same
counterpart and that the Escrow Agent need not sign this Agreement for it to be
effective among the other parties.
11.4 Entire Agreement; Assignment. This Agreement and the documents and
instruments and other agreements among the parties hereto referenced herein: (i)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings both written
and oral, among the parties with respect to the subject matter hereof,
including, without limitation, the LOI, (ii) are not intended to confer upon any
other person any rights or remedies hereunder, and (iii) shall not be assigned
by operation of law or otherwise, except that Purchaser may assign its rights
and delegate its obligations hereunder to its affiliates so long as Purchaser
remains obligated to perform those obligations required to be performed by
Purchaser hereunder.
11.5 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
11.6 Other Remedies. Except as specifically set forth herein to the
contrary, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy.
11.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
11.8 Alternative Dispute Resolution. Purchaser, Company and Sellers
agree to the following as their sole and exclusive means of resolving any
disputes arising from or in any way relating to this Agreement, except with
regard to disputes arising under Sections 1.3 and 1.4, which shall be resolved
under the dispute resolution provisions of such sections. For a period of 25
days after notice from either party, the parties shall attempt in good faith to
resolve the dispute by direct negotiation of non-lawyer representatives of the
parties. If the parties do not resolve the dispute within such 25-day period,
either party may submit the matter to mediation with a professional mediation
service selected by the parties. If the parties do not resolve the dispute
through mediation within an additional 25-day period, either party may submit
the dispute to binding arbitration with a professional arbitration service
selected by the parties. If the parties do not otherwise agree on a mediation or
arbitration service, such services shall be
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resolved through the AAA pursuant to its rules and procedures at their office in
Los Angeles, California, or such other location as is mutually agreed to by
Purchaser and Sellers. The costs of mediation and arbitration, including the
fees and expenses of the mediator and arbitrator, shall be paid equally by the
parties unless the arbitration award provides otherwise. Each party shall bear
the cost of preparing and presenting its case. The parties agree that the
arbitrator shall have no power or authority to make any award that provides for
punitive or exemplary damages. In the case of any "Contested Claim" (as defined
in the Escrow Agreement), the arbitrator shall comply with the provisions of the
Escrow Agreement. The arbitrator's decision shall be final and binding. The
award may be confirmed and enforced in any court of competent jurisdiction.
Notwithstanding the foregoing, nothing in this Section 11.8 shall be construed
to limit the rights and remedies of Purchaser with respect to a breach by any
Seller of the covenant contained in Sections 5.2 and 6.2, or of any provision of
the Noncompetition Agreements.
11.9 Attorneys' Fees. If any action or other proceeding relating to the
enforcement of any provision of this Agreement is brought by any party hereto,
the prevailing party shall be entitled to recover reasonable attorneys' fees,
costs, and disbursements (in addition to any other relief to which the
prevailing party may be entitled).
11.10 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
ARTICLE XII
DEFINITIONS
12.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the following respective meanings for
purposes of this Agreement:
"AAA" shall have the meaning set forth in Section 1.3(e) hereof.
"Accountant" shall have the meaning set forth in Section 1.3(e) hereof.
"Adjustment Amount" shall have the meaning set forth in Section 1.3(c)
hereof.
"Agreement" shall have the meaning set forth in the preamble hereof.
"Audited Financial Statements" shall have the meaning set forth in
Section 2.7(a) hereof.
"Basket Amount" shall have the meaning set forth in Section 9.2(b)
hereof.
"Business Facility" shall mean any property including the land, the
improvements thereon, the groundwater thereunder and the surface water thereon,
that is or at any time has been owned, operated, occupied, controlled or leased
by the Company or its Subsidiaries in connection with the operation of its
business.
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"Business Rights" shall have the meaning set forth in Section 2.13
hereof.
"Cash Consideration" shall have the meaning set forth in Section 1.2(a)
hereof.
"Claims" shall have the meaning set forth in Section 2.18 hereof.
"Closing" shall have the meaning set forth in Section 1.5 hereof.
"Closing Date" shall have the meaning set forth in Section 1.5 hereof.
"Effective Time Balance Sheet" shall have the meaning set forth in
Section 1.3(c) hereof.
"Closing Objection Confirmation" shall have the meaning set forth in
Section 1.3(d) hereof.
"Closing Statement of Objection" shall have the meaning set forth in
Section 1.3(d) hereof.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and as codified in section 4980B of the Code and sections 601
through 608 of ERISA.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Company" shall have the meaning set forth in the preamble hereof.
"Company Authorizations" shall have the meaning set forth in Section
2.17 hereof.
"Company Capital Stock" shall have the meaning set forth in Section A of
the Recitals.
"Company Charter Documents" shall have the meaning set forth in Section
2.1 hereof.
"Company Disclosure Schedule" shall have the meaning set forth in
Article II hereof.
"Company Employee Plan" shall mean any plan, program, policy, practice,
contract, agreement or other material arrangement providing for compensation,
severance, termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written, unwritten or otherwise, funded or unfunded,
including each "employee benefit plan," within the meaning of section 3(3) of
ERISA which is or has been maintained, contributed to, or required to be
contributed to, by the Company or any ERISA Affiliate for the benefit of any
Employee, or with respect to which the Company or any ERISA Affiliate has or may
have any liability or obligation.
"Company Financial Statements" shall have the meaning set forth in
Section 2.7(a) hereof.
"Company Material Adverse Effect" shall mean any change, event or effect
that is, or could reasonably be expected to be, materially adverse to (i) the
business, assets (whether
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tangible or intangible), liabilities, general affairs, management, financial
condition, prospects, operations or results of operations of the Company or its
Subsidiaries, or (ii) the Company's ability to consummate the transactions
contemplated by this Agreement.
"Company Options" shall mean all issued and outstanding options or other
rights (including commitments to grant options or other rights) to purchase or
otherwise acquire (by payment of consideration, conversion or otherwise) any
Company Capital Stock (whether or not vested) held by any person or entity.
"Company's Accounting Policies" shall have the meaning set forth in
Section 1.3(b) hereof.
"Company's Retained Environmental Liabilities" shall mean any liability,
obligation, judgment, penalty, fine, cost or expense, of any kind or nature, or
the duty to indemnify, defend or reimburse any Person with respect to: (i) the
presence on or before the Closing Date of any Hazardous Materials in the soil,
groundwater, surface water, air or building materials of any Building Facility
("Pre-Existing Contamination"); (ii) the migration at any time prior to or after
the Closing Date of Pre-Existing Contamination to any other real property, or
the soil, groundwater, surface water, air or building materials thereof; (iii)
any transportation, transfer, recycling, storage, use, handling, treatment,
manufacture, removal, investigation, remediation, release, emission, sale,
disposal or distribution of any Hazardous Materials, or any product or waste
containing Hazardous Materials conducted at or on any Building Facility prior to
the Closing Date or otherwise occurring prior to the Closing Date in connection
with or to benefit the business ("Pre-Closing Hazardous Materials Activities");
(iv) the exposure of any person to Pre-Existing Contamination or to Hazardous
Materials in the course of or as a consequence of any Pre-Closing Hazardous
Materials Activities, without regard to whether any health effect of the
exposure has been manifested as of the Closing Date; (v) the violation of any
Environmental Laws by the Company or any of its Subsidiaries, agents, employees,
predecessors in interest, contractors, invitees or licensees prior to the
Closing Date or in connection with any Pre-Closing Hazardous Materials
Activities prior to the Closing Date; (vi) any actions or proceedings brought or
threatened by any third party with respect to any of the foregoing; and (vii)
any of the foregoing to the extent they continue after the Closing Date.
"Confidentiality Agreement" shall have the meaning set forth in Section
6.3 hereof.
"Conflict" shall have the meaning set forth in Section 2.5 hereof.
"Contract(s)" shall have the meaning set forth in Section 2.5 hereof.
"Closing Date" shall have the meaning set forth in Section 1.5 hereof.
"Contingent Earn-Out Payment" shall have the meaning set forth in
Section 1.4(a) hereof.
"Copyrights" shall have the meaning set forth in the definition of
Intellectual Property Rights.
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"Co-Tenancy Agreement" shall have the meaning set forth in Section 6.17
hereof.
"Council" shall have the meaning set forth in Section 6.16 hereof.
"Customer Information" shall have the meaning set forth in Section
2.12(i) hereof.
"Current Balance Sheet" shall have the meaning set forth in Section
2.7(a) hereof.
"Disposal Site" shall mean a landfill, disposal agent, waste hauler or
recycler of Hazardous Materials or any real property other than a Business
Facility receiving Hazardous Materials used or generated by a Business Facility.
"DOL" shall mean the United States Department of Labor.
"Earn-Out Advance" shall have the meaning set forth in Section 1.2(f)
hereof.
"Earn-Out Advance Shares" shall have the meaning set forth in Section
1.2(f) hereof.
"Earn-Out EBITDA" shall have the meaning set forth in Section 1.4(a)
hereof.
"Earn-Out Multiplier" shall have the meaning set forth in Section 1.4(a)
hereof.
"EBITDA" shall have the meaning set forth in Section 1.4(a) hereof.
"EBITDA Escrow Agent" shall have the meaning set forth in Section 1.2(c)
hereof.
"EBITDA Escrow Agreement" shall have the meaning set forth in Section
1.2(c) hereof.
"EBITDA Escrow Amount" shall have the meaning set forth in Section
1.2(c) hereof.
"EBITDA Escrow Notice" shall have the meaning set forth in Section
1.4(i) hereof.
"EBITDA Settlement Statement" shall have the meaning set forth in
Section 1.4(b) hereof.
"Effective Time" shall mean 12:00 a.m. (Eastern standard time) on
October 1, 2002.
"Effective Time Balance Sheet" shall have the meaning set forth in
Section 1.3(c) hereof.
"Employee" shall mean any current or former employee, consultant or
director of the Company or any Affiliate of the Company.
"Employee Agreement" shall mean each management, employment, severance,
consulting, relocation, repatriation, expatriation, visas, work permit or other
agreement, or contract between the Company and any Employee.
"Environmental Laws" shall mean all applicable laws, rules, regulations,
orders, treaties, statutes, and codes promulgated by any Governmental Entity
which prohibit, regulate or control
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any Hazardous Material or any Hazardous Material Activity, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Resource Recovery and Conservation Act of 1976, the
Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, the Clean Water Act, the Occupational Safety and Health Act,
and all comparable laws, rules, regulations, ordinances, orders, treaties,
statutes, and codes of other Governmental Entities, the regulations promulgated
pursuant to any of the foregoing, and all amendments and modifications of any of
the foregoing.
"Environmental Permit" shall mean any approval, permit, license,
clearance or consent required to be obtained from any private person or any
Governmental Entity with respect to a Hazardous Materials Activity which is or
was conducted by the Company or its Subsidiaries.
"Equipment" shall have the meaning set forth in Section 2.12(h) hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any person or entity under common control
with the Company within the meaning of section 414(b), (c), (m) or (o) of the
Code, and the regulations issued thereunder.
"Escrow Fund" shall have the meaning set forth in the Escrow Agreement.
"Escrow Shares" shall have the meaning set forth in Section 1.3 hereof.
"Expiration Date" shall have the meaning set forth in Section 9.1
hereof.
"Extraordinary Expenses or Income" shall have the meaning set forth in
Section 1.4(a) hereof.
"FMLA" shall mean the Family Medical Leave Act of 1993, as amended.
"Financial Projections" shall have the meaning set forth in Section
2.7(b) hereof.
"FIRPTA" shall mean the Foreign Investment in Real Property Tax Act of
1980, as amended.
"First Period" shall have the meaning set forth in Section 1.4(a)
hereof.
"First Period Earn-Out Amount" shall have the meaning set forth in
Section 1.4(a) hereof.
"First Period EBITDA Baseline" shall have the meaning set forth in
Section 1.4(a) hereof.
"First Period EBITDA Threshold" shall have the meaning set forth in
Section 1.4(a) hereof.
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"XXXX" xxxxx xxxx Xxxxxx Xxxxxx generally accepted accounting principles
consistently applied.
"Governmental Entity" shall have the meaning set forth in Section 2.6
hereof.
"Xxxxx Xxxxxxxx" shall have the meaning set forth in Section 1.3(c).
"Group" shall mean the Purchaser and all other entities controlled by
UTi.
"Hazardous Material" shall mean any material, chemical, or substance
that is prohibited or regulated by any Environmental Law or that has been
designated by any Governmental Entity to be radioactive, toxic, hazardous or
otherwise a danger to health, reproduction or the environment.
"Hazardous Materials Activity" shall mean the transportation, transfer,
recycling, storage, use, treatment, manufacture, removal, remediation, release,
exposure of others to, sale, or distribution of any Hazardous Material or any
product or waste containing a Hazardous Material, or a product manufactured with
Ozone depleting substances.
"HIPAA" shall mean the Health Insurance Portability and Accountability
Act of 1996, as amended.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indefinite Losses" shall have the meaning set forth in Section 9.2(c)
hereof.
"Indemnified Party" shall have the meaning set forth in Section 9.2(a)
hereof.
"Indemnity Escrow Agent" shall have the meaning set forth in Section
1.2(b) hereof.
"Indemnity Escrow Agreement" shall have the meaning set forth in Section
1.2(b) hereof.
"Indemnity Escrow Amount" shall have the meaning set forth in Section
1.2(b) hereof.
"Intellectual Property" shall mean any or all of the following: (i)
works of authorship including, computer programs, algorithms, routines, source
code and executable code, whether embodied in software or otherwise,
documentation, designs, files, records and data; (ii) inventions (whether or not
patentable), improvements, and technology; (iii) proprietary and confidential
information, including technical data and customer and supplier lists, trade
secrets, show how, know how and techniques; (iv) databases, data compilations
and collections and technical data; (v) processes, devices, prototypes,
schematics, bread boards, net lists, mask works, test methodologies and hardware
development tools; (vi) logos, trade names, trade dress, trademarks, service
marks, World Wide Web addresses, uniform resource locators and domain names,
tools, methods and processes; and (vii) all instantiations of the foregoing in
any form and embodied in any media.
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"Intellectual Property Rights" shall mean any or all of the following
and all rights in, arising out of, or associated therewith: (i) all United
States and foreign patents and utility models and applications therefore and all
reissues, divisions, re-examinations, renewals, extensions, provisionals,
continuations and continuations in-part thereof, and equivalent or similar
rights anywhere in the world in inventions and discoveries including invention
disclosures ("Patents"); (ii) all trade secrets and similar rights in know how
and confidential or proprietary information; (iii) all copyrights, copyright
registrations and applications therefore and all other rights corresponding
thereto throughout the world ("Copyrights"); (iv) all industrial designs and any
registrations and applications therefore throughout the world; (v) mask works,
mask work registrations and applications therefore, and all other rights
corresponding thereto throughout the world ("Mask Works"); (vi) all rights in
World Wide Web addresses, uniform resource locators and domain names and
applications and registrations therefore; (vii) all rights in all trade names,
logos, common law trademarks and service marks, trademark and service xxxx
registrations and applications therefore and all goodwill associated therewith
throughout the world ("Trademarks"); and (viii) any similar, corresponding or
equivalent rights to any of the foregoing anywhere in the world.
"Interested Person" shall have the meaning set forth in Section 2.16
hereof.
"IRS" shall mean the United States Internal Revenue Service.
"Xxxxxxxx-Xxxxx Release" shall have the meaning set forth in Section
2.18 hereof.
"Knowledge," when used with reference to a Seller shall mean the
knowledge of such individual after reasonable inquiry and the collective
knowledge of the Company's directors and Xxxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxxx
Xxxxxx, Xxx Xxxxxx, Xxxx Xxxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxxx, Xxxxx XxXxxxx,
Xxx Xxxxxxx, Xxxxxx Xxx, Xxxxxx Xxxxxx, Xxxx Xxxxxx and Xxxxx Xxxxxx. A fact or
circumstance will be deemed to be "Known" by a Seller if it is known by any one
of the foregoing persons or should have been known by such persons in light of
their positions and responsibilities.
"LOI" shall mean the letter of intent dated June 20, 2002 among the
Company, Sellers and UTi.
"Lease Agreements" shall have the meaning set forth in Section 2.12(c)
hereof.
"Leased Real Property" shall have the meaning set forth in Section
2.12(a) hereof.
"Lien" shall mean all liens (including judgment and mechanics' liens,
regardless of whether liquidated), mortgages, assessments, security interests,
easements, claims, pledges, trusts (constructive or other), deeds of trust,
options or other charges, encumbrances or restrictions.
"Long Term Incentive Plan" shall mean the Standard Corporation Long Term
Incentive Plan, which plan was never formally adopted by the Company.
"Loss" shall have the meaning set forth in Section 9.2(a) hereof.
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"Management Agreement" shall have the meaning set forth in Section
2.12(j) hereof.
"Minimum Amount" shall have the meaning set forth in Section 1.3(a)
hereof.
"MONY" shall have the meaning set forth in Section 2.12(j) hereof.
"MONY Loan Documents" shall have the meaning set forth in Section
2.12(j) hereof.
"Net Tangible Assets" shall have the meaning set forth in Section 1.3(b)
hereof.
"Non-Competition Agreements" shall have the meaning set forth in Section
7.3(k) hereof.
"Objection" shall have the meaning set forth in Section 9.2(d) hereof.
"Objection Confirmation" shall have the meaning set forth in Section
1.4(c) hereof.
"Outstanding Debt" shall have the meaning set forth in Section 2.8
hereof.
"Owned Real Property" shall have the meaning set forth in Section
2.12(a) hereof.
"Patents" shall have the meaning set forth in the definition of
Intellectual Property Rights.
"Payment Shares" shall have the meaning set forth in Section 1.4(g)
hereof.
"Pension Plan" shall mean each Company Employee Plan which is an
"employee pension benefit plan," within the meaning of section 3(2) of ERISA.
"Permit" shall have the meaning specified in Section 2.21(c) hereof.
"Plan" shall have the meaning set forth in Section 2.2(b).
"Pre-Closing Period" shall have the meaning set forth in Section 8.2(a)
hereof.
"Pre-Closing Hazardous Materials Activities" shall have the meaning set
forth in Section 2.21(a)(vii) hereof.
"Pre-Existing Contamination" shall have the meaning set forth in Section
2.21(a)(vii) hereof.
"Price Allocation" shall have the meaning set forth in Section 8.1(b)
hereof.
"Proceedings" shall have the meaning set forth in Section 8.3 hereof.
"Purchase" shall have the meaning set forth in Section B of the
Recitals.
"Purchase Price" shall have the meaning set forth in Section 1.2 hereof.
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"Purchaser" shall have the meaning set forth in the preamble hereof.
"Purchaser Material Adverse Effect" shall mean any change, event or
effect that is, or would reasonably be expected to be, materially adverse to (i)
the business, assets (whether tangible or intangible), liabilities, financial
condition, operations or results of operations of Purchaser and its
subsidiaries, taken as a whole, or (ii) Purchaser's ability to consummate the
transactions contemplated by this Agreement, except, in each case, any such
change, event or effect resulting from (A) fluctuations in the trading price of
Purchaser Common Stock, or (B) any failure by Purchaser to meet or exceed
analyst projections or forecasts or published revenue or earnings expectations.
"Qualified Expenses" shall have the meaning set forth in Section 1.4(a)
hereof.
"Registered Intellectual Property Rights" shall mean all United States,
international and foreign: (i) Patents, including applications therefore; (ii)
registered Trademarks, applications to register Trademarks, including intent to
use applications, or other registrations or applications related to Trademarks;
(iii) Copyright registrations and applications to register Copyrights; (iv)
registered Mask Works and applications to register Mask Works; and (v) any other
Intellectual Property that is the subject of an application, certificate,
filing, registration or other document issued by, filed with, or recorded by,
any private, state, government or other public legal authority at any time.
"Releases" shall have the meaning set forth in Section 6.13 hereof.
"Representative" shall have the meaning set forth in Section 5.2 hereof.
"Reviewed Adjustment Amount" shall have the meaning set forth in Section
1.3(d) hereof.
"Reviewed EBITDA Settlement Statement" shall have the meaning set forth
in Section 1.4(c) hereof.
"Sage Mill Releases" shall have the meaning set forth in Section 6.17
hereof.
"Second Period" shall have the meaning set forth in Section 1.4(a)
hereof.
"Second Period Earn-Out Amount" shall have the meaning set forth in
Section 1.4(a) hereof.
"Second Period EBITDA Baseline" shall have the meaning set forth in
Section 1.4(a) hereof.
"Second Period EBITDA Threshold" shall have the meaning set forth in
Section 1.4(a) hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
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"Sellers" shall mean any holder of any Company Capital Stock immediately
prior to the Closing.
"Sellers' Conflict" shall have the meaning set forth in Section 3.6
hereof.
"Sellers' Representative" shall have the meaning set forth in Section
6.15 hereof.
"Special Losses" shall have the meaning set forth in Section 9.2(c)
hereof.
"Standard Properties" shall have the meaning set forth in Section 2.3
hereof.
"Statement of Objection" shall have the meaning set forth in Section
1.4(c) hereof.j
"Straddle Period" shall have the meaning set forth in Section 8.2(a)
hereof.
"Structures" shall have the meaning set forth in Section 2.12(e) hereof.
"Subsidiary" and "Subsidiaries" shall have the meaning set forth in
Section 2.3 hereof.
"Tax" For the purposes of this Agreement, the term "Tax" or,
collectively, "Taxes" shall mean (i) any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes as well as public imposts, fees and social security charges
(including but not limited to health, unemployment and pension insurance),
together with all interest, penalties and additions imposed with respect to such
amounts, (ii) any liability for the payment of any amounts of the type described
in clause (i) of this paragraph as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period, and (iii) any liability
for the payment of any amounts of the type described in clauses (i) or (ii) of
this paragraph as a result of any express or implied obligation to indemnify any
other person or as a result of any obligation under any agreement or arrangement
with any other person with respect to such amounts and including any liability
for taxes of a transferor or predecessor entity.
"Third Party Expenses" shall have the meaning set forth in Section 6.4
hereof.
"338 Election" shall have the meaning set forth in Section 8.1(a)
hereof.
"Trading Price" shall mean the average closing sale price of UTi
Ordinary Shares, as reported on the Nasdaq National Market, for the tenth
through the sixth trading day preceding (a) the Closing Date in the case of the
Earn-Out Advance Shares or (b) the date established for payment of any Payment
Shares (if any).
"Transaction Agreements" shall have the meaning set forth in Section 2.4
hereof.
"Transfer" shall have the meaning set forth in Section 6.12(a) hereof.
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"UTi" shall mean UTi Worldwide Inc., a British Virgin Islands company.
"UTi Ordinary Shares" shall mean the ordinary shares, no par value per
share, of UTi.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Purchaser, the Company and the Sellers have caused
this Agreement to be signed, all as of the date first written above.
"PURCHASER"
UNION-TRANSPORT (U.S.) HOLDINGS, INC.,
(a Delaware corporation)
By: /s/ Xxxxx X. XxxXxxxxxx
----------------------------------
Name: Xxxxx X. XxxXxxxxxx
Title: Chief Executive Officer
"COMPANY"
STANDARD CORPORATION,
(a South Carolina corporation)
By: /s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
Title: Chief Operating Officer
"SELLERS"
/s/ Xxxxxx Xxxxxx, Jr.
-------------------------------------
Xxxxxx Xxxxxx, Jr., Individual
/s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxxx X. Xxxxxx, Individual
/s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------------------
Xxxxxx X. Xxxxxx, Xx., Individual
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
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