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EXHIBIT 2.1
EXECUTION COPY
PURCHASE AGREEMENT
DATED AS OF JUNE 17, 1998
BETWEEN AND AMONG
ADISTRA, LLC
GAGE MARKETING GROUP, LLC
THE SELLING MEMBERS
AND
AHL SERVICES, INC.
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EXHIBIT 2.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") dated as of this 17th
day of June, 1998 (the "Agreement"), between and among Gage Marketing Group,
LLC, a Minnesota limited liability company ("Gage"), Adistra, LLC, a Minnesota
limited liability company ("Adistra" or the "Company"), the members of Adistra
named in SCHEDULE 2.1 hereto (collectively, "the Selling Members"), and AHL
Services, Inc., a Georgia corporation ("Buyer").
WHEREAS, the Selling Members own all of the outstanding
membership units of the Company;
WHEREAS, upon the terms and conditions hereinafter set forth,
the parties desire that the following transactions be consummated simultaneously
on the Closing Date (except as otherwise noted) as part of an integrated and
contractually interdependent plan (hereinafter, such transactions shall be
referred to collectively as the "Consolidation Transactions") (capitalized terms
shall have the meaning given to them hereinafter in this Agreement):
1. Transfer of Gage Assets. Gage will transfer to the Company
all of the assets and liabilities, contracts, employees and operations relating
to the Executional Businesses (as defined below) of Gage in the manner and on
the terms as set forth in Section 10.2 hereto; and
2. Transfer of Gage, Inc. Certain Selling Members will cause
all of the outstanding equity interests in Gage, Inc., a Minnesota corporation
and an affiliate of the Company ("Gage-Texas") (which owns, together with Gage,
all of the outstanding equity interests in Gage Marketing Group De Mexico, S.A.
De C.V. ("Gage-Mexico")), to be transferred to the Company;
WHEREAS, upon completion of the Consolidation Transactions,
Buyer desires to purchase from the Selling Members, and the Selling Members
desire to sell to Buyer, all of the membership units of the Company held by the
Selling Members, all upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
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ARTICLE 1
DEFINITIONS
1.1 Defined Terms. The following terms shall have the
meanings set forth below:
"Affiliate" shall mean a Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common
control with the Person specified. For purposes of this definition, the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, direct or indirect, of the power to (i) vote 50% or more
of the voting securities of such Person or (ii) direct or cause the direction of
the management and policies of such Person, whether by contract or otherwise.
"Antitrust Laws" shall mean all Applicable Laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or the restraint of trade including, without
limitation, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended, the HSR
Act, and the Federal Trade Commission Act, as amended.
"Applicable Laws" shall mean all federal, state, local and
foreign statutes, laws, ordinances, regulations, rules, permits, orders,
judgments, decrees, injunctions, and writs of any Governmental Entity having
jurisdiction over the parties, as may be in effect on or prior to the Closing.
"Closing Balance Sheet Principles" shall mean the accounting
principles and procedures set forth in SCHEDULE 3.2(B).
"Closing Incentive Payments" shall mean the payment
obligations of the Company, or Gage, as the case may be, arising under the terms
of those agreements listed on SCHEDULE 1.1(A), in the amounts set forth thereon,
net of all applicable federal and state income, social security, Medicare and
payroll tax and other amounts required to be withheld.
"Consulting Agreement" shall mean that certain Consulting
Agreement between Xxxxx X. Xxxx and Buyer attached hereto as Exhibit G.
"Company" shall mean, unless otherwise stated herein, Adistra,
as such entity shall exist after giving effect to the transfers contemplated in
connection with the Consolidation Transactions and including the Subsidiaries.
"Damages" shall mean any liabilities or Expenses, judgments,
fines, losses, claims, damages and amounts paid in settlement to a third party
or another party to this Agreement, including, without limitation, (i)
consequential damages incurred by such third party or other party to this
Agreement and (ii) special, incidental and punitive damages paid in settlement
or satisfaction of a claim by a third party. Notwithstanding anything to the
contrary set forth in this Agreement, no party to this Agreement shall be liable
to another party to this
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Agreement for special, incidental and punitive damages except to the extent paid
by such other party in settlement or satisfaction of a claim by a third party.
"EBITDA" shall mean, with respect to the Company (after giving
effect to the Consolidation Transactions) for any period, an amount equal to the
gross revenues in the ordinary course of business (including slippage income and
postal savings) minus (i) the refund items, postage and freight, minus (ii) the
cost of revenues (but excluding, in all events, all depreciation and
amortization expense), minus (iii) the selling and general and administrative
expenses (including allocation charges), minus (or plus) (iv) the other expenses
(or income) (but excluding in all events, non-operating gains or losses, all
interest expense and interest income and income taxes), and all of which shall
be determined based on the books and records of the Company maintained in a
manner consistent with past accounting methods and practices and in accordance
with GAAP.
"Encumbrance" shall mean any lien, encumbrance, security
interest, charge, claim, mortgage, option, pledge or restriction on transfer of
any nature whatsoever.
"Environmental Claim" shall mean any claim, action, cause of
action, suit, summons, citation, demand, judgment, order, lien, investigation or
written notice by any Person alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from the
presence or Release of any Hazardous Material at any location, owned, leased or
operated by the Company or based on or related to Environmental Laws.
"Environmental Laws" shall mean all Applicable Laws relating
to pollution or protection of human health or the environment or to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, transport, or
handling of Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act, the
Resource Conservation and Recovery Act, the Clean Air Act and the Clean Water
Act.
"Equipment" shall mean any and all machinery, equipment,
tools, computers, furniture and all other personal property (other than the
supplies described in Section 6.2(r)) owned or leased by the Company and used in
the Company's business and operations.
"Escrow Agreement" shall mean that certain Escrow Agreement
between the Selling Members, Buyer and the Escrow Agent dated as of the Closing
Date, substantially identical to Exhibit A attached hereto.
"Excluded Equipment" shall mean those assets and services set
forth on SCHEDULE 1.1(B), certain of which assets are the subject of the
Transition Agreement.
"Excluded Businesses" shall mean the operations of and the
services historically provided by the Marketing Communications, Sweepstakes and
Internet and Database
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Development divisions of Gage, including, without limitation, the following
locations and services: (i) the marketing communications agency of Gage located
in Newport Beach, California, (ii) the marketing communications agency,
sweepstakes administration, database development and management services,
Internet site development and hosting services operated at the Gage corporate
headquarters in Plymouth Minnesota, each of which provide, among other things,
creative/production services, strategic data services, account services and
custom fulfillment and merchandise services. The Excluded Businesses shall also
include all of the operations, assets and liabilities of Gage In-Store
Marketing, LLC, a majority owned subsidiary of Gage.
"Executional Businesses" shall mean the operations of and
services traditionally provided by the Consumer Fulfillment, Trade Support
Services, Lettershop, Teleservices and Automotive divisions of the Company or
Gage, including, but not limited to those operations of the Company or Gage
located in Juarez, Mexico, El Paso, Texas, Maple Plain, Minnesota, Litchfield,
Minnesota, Champlain, Minnesota, Xxxxxx Lake, Minnesota, Roseville, Minnesota,
Kankakee, Illinois, Romulus, Michigan, and Plymouth, Michigan, but specifically
excluding the Excluded Businesses.
"Expenses" shall mean all reasonable attorneys' fees and all
other costs, charges and expenses paid or incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness in or participate in any
Indemnifiable Claim.
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date or for the period with respect to which such
principles are applied, consistently applied.
"Governmental Entity" shall mean any government, executive
official thereof, governmental or regulatory authority, agency, bureau or
commission, including courts of competent jurisdiction, federal, state, local or
foreign.
"Hazardous Material" shall mean all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss.300.5, or defined
as such by, or regulated as such under, any Environmental Law.
"Indemnifiable Claim" shall mean any threatened, pending or
completed claim, action, suit or proceeding, whether criminal, civil,
administrative or investigative based on, or arising out of or relating to the
fact that a person is or was a director, officer or employee of the Company and
arising out of acts or omissions occurring on or prior to the Closing Date.
"International Option Agreement" shall mean that certain
Option Agreement between Gage and Buyer dated as of the Closing, substantially
identical to Exhibit C attached hereto.
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"Lease Agreement" shall mean that certain Lease Agreement
between Gage and Buyer dated as of the Closing Date, substantially identical to
Exhibit B attached hereto.
"Marquette Agreements" shall mean the Marquette/Adistra
Agreement, the Marquette/Gage Agreement and the Marquette/Gage In-Store
Agreement.
"Marquette/Adistra Agreement" shall mean that certain
Revolving Credit and Term Loan Agreement dated August 12, 1997, by and among
Adistra , Marquette Capital Bank, N.A. and LaSalle National Bank (including all
exhibits, schedules and other agreements referenced therein or contemplated
thereby).
"Marquette/Gage Agreement" shall mean that certain Revolving
Credit and Term Loan Agreement dated August 12, 1997, by and among Gage
Marketing Group, LLC, Marquette Capital Bank, N.A. and LaSalle National Bank
(including all exhibits, schedules and other agreements referenced therein or
contemplated thereby).
"Marquette/Gage In-Store Agreement" shall mean that certain
Revolving Credit and Term Loan Agreement dated August 12, 1997, by and among
Gage In-Store Marketing, LLC, Marquette Capital Bank, N.A. and LaSalle National
Bank (including all exhibits, schedules and other agreements referenced therein
or contemplated thereby).
"Material Adverse Effect" shall mean any events, changes or
effects which, individually or in the aggregate, would reasonably be expected to
result in a reduction of recurring EBITDA in excess of $625,000; provided that,
in any event, (i) the loss of any customers of the Company solely as a result of
the fact that Buyer is the party entering into the transactions described herein
and (ii) any events, changes or effects resulting from changes in laws affecting
the marketing support services generally shall not be included in any
calculation or determination of whether a Material Adverse Effect has occurred
with respect to the Company.
"Noncompetition and Co-Marketing Agreement" shall mean that
certain Noncompetition and Co-Marketing Agreement dated as of the Closing Date
between the Buyer, Gage and the Selling Members substantially identical to
Exhibit D attached hereto.
"Ordinary Course of Business" shall mean the operation of a
business in the ordinary and usual course of business consistent with past
custom and practice (including, without limitation, with respect to quantity and
frequency).
"Permitted Encumbrances" means any Encumbrance (i)
specifically disclosed in the Disclosure Schedule, the Annual Financial
Statements or the Interim Financial Statements, (ii) liens for real estate Taxes
not yet due and payable, (iii) mechanics', xxxxxxx'x, repairman's,
warehouseman's, carriers' or other like liens arising or incurred in the
ordinary course of business, (iv) liens arising under equipment leases with
third parties entered into in the Ordinary Course of Business, the obligation
secured by which is specifically disclosed in the Disclosure Schedules (or not
required to be disclosed thereon due to dollar amount or term limits), the
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Annual Financial Statements or the Interim Financial Statements, (v) with
respect to real property (A) easements, quasi-easements, licenses, rights-of-way
and other similar restrictions, including, without limitation, any other
agreements, conditions or restrictions, in each case which are a matter of
public record, (B) any conditions that are shown by any survey which has been
made available for Buyer's review prior to the date hereof or by physical
inspection, and (C) zoning, building, or similar restrictions pursuant to
Applicable Laws, in each case, to the extent such matters do not, individually
or in the aggregate, interfere in any material respect with the use made of such
property by the owner thereof on the date of this Agreement, (vi) related to the
Third Party Debt, and (vii) other Encumbrances which, individually or in the
aggregate, are not material in amount.
"Person" shall mean an individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization,
government or any department or agency thereof or any other entity.
"Principal Members" shall mean Gage Marketing Group, LLC,
Xxxxx X. Xxxx and Xxxxxxx X. Xxxx.
"Prudential Agreement" shall mean that certain 8.85% Senior
Note Agreement dated July 24, 1992, by and between Gage Marketing Group, LLC,
Adistra and The Prudential Insurance Company of America, as amended on January
4, 1993.
"Registration Rights Agreement" shall mean that certain
Registration Rights Agreement to be dated as of the Closing Date between the
Selling Members and Buyer substantially identical to Exhibit E attached hereto.
"Release" shall mean any generation, release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching
or migration into the environment (including, without limitation, ambient air,
surface water, groundwater and surface or subsurface strata) or into or out of
any property, including the movement of Hazardous Materials through or into the
air, soil, surface water, groundwater or property.
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross receipts,
sales, use, ad valorem, transfer, profits, license, withholding, payroll,
employment, social security, unemployment, excise, estimated, severance,
property or other taxes, fees, assessments or charges of any kind whatsoever,
including, without limitation, all interest and penalties thereon, and additions
to tax or additional amounts imposed by any Governmental Entity.
"Third Party Debt" shall mean any amounts outstanding under
the Prudential Agreement or the Marquette Agreements.
"Transaction Documents" shall mean this Agreement, all of the
documents executed or to be executed in substantial conformity with the Exhibits
attached hereto and all other documents and agreements executed in connection
with the Closing.
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"Transition Agreement" shall mean that certain Transition
Agreement dated as of the Closing Date between the Buyer and Gage substantially
identical to EXHIBIT F.
"Transfer" shall mean any sale, transfer, offer for sale,
exchange, pledge, mortgage, assignment or other disposition or conveyance.
"Trust Member" shall mean the Revocable Trust of Xxxxx X. Xxxx
dated April 28, 1988, and the Revocable Trust of Xxxxxxx X. Xxxx dated April 28,
1988.
1.2 Other Defined Terms. The following terms shall have
the meanings set forth in the sections referred to below:
DEFINED TERM SECTION
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"AAA" 15.12
"Aggrieved Party" 14.6(a)
"Agreement" Recitals
"Annual Financial Statements" 6.2(d)(i)
"Assets" 10.2(a)
"Buyer" Recitals
"Buyer Basket" 14.5
"Buyer SEC Reports" 7.9
"Closing" 5.1
"Closing Cash Payment" 3.2(b)
"Closing Date" 5.1
"Code" 6.2(h)(i)
"Company's Plans" 6.2(m)
"Consolidation Transactions" Recitals
"Confidential Information" 9.1
"Confidentiality Agreement" 8.1
"Disclosure Schedule" 6.1
"ERISA" 6.2(m)
"Escrow Agent" 4.1
"Escrow Deposit" 4.1
"Excluded Assets" 10.2(b)
"Final Closing Adjustment" 3.3(d)
"Final Closing Balance Sheet" 3.3(b)
"Final Shareholders Equity" 3.3(a)
"Government Antitrust Entity" 10.1(b)(ii)
"HSR Act" 10.1(a)
"Indemnifying Party" 14.6(a)
"Independent Accounting Firm" 3.3(c)
"Initial Bonus" 10.6
"Intellectual Property" 6.2(k)
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"Material Contract" 6.2(i)
"Members' Representative" 15.15
"Obligations" 10.2(c)
"Permits" 6.2(l)
"Preliminary Closing Balance Sheet" 3.3(a)
"Purchase Price" 3.1
"Purchased Units" 2.1
"Selling Members" Recitals
"Selling Members Basket" 14.3(a)
"Stay Bonus" 10.6
"Subsidiaries" 6.2(a)
"Tax Returns" 6.2(h)(i)
"Interim Financial Statements" 6.2(d)(ii)
"Updated Disclosure Schedule" 8.5
ARTICLE 2
PURCHASE AND SALE OF MEMBERSHIP UNITS
2.1 Transfer. Upon the terms and provisions of this
Agreement, Buyer agrees to purchase and accept delivery from each Selling
Member, and each Selling Member, severally and not jointly, agrees to sell,
assign, transfer and deliver to Buyer, at the Closing, that number of membership
units of the Company set forth opposite the name of the Selling Member on
SCHEDULE 2.1 (which Schedule will be supplemented prior to the Closing Date to
reflect the issuance of additional membership units to Gage in connection with
the Consolidation Transactions), free and clear of all Encumbrances, other than
restrictions on Transfer pursuant to applicable securities laws. Such membership
units, which represent 100% of the outstanding membership units of the Company
as of the date hereof and will represent 100% of the outstanding membership
units of the Company as of the Closing Date, are hereinafter referred to
collectively as the "Purchased Units".
ARTICLE 3
CONSIDERATION
3.1 Purchase Price. The total purchase price for the
Purchased Units shall be $81,100,000, as such amount may be adjusted pursuant to
Section 3.2 and Section 3.3 ("Purchase Price").
3.2 Manner of Payment. The Purchase Price shall be
payable as follows:
(a) At Closing, Buyer shall deliver the Escrow Deposit to
the Escrow Agent pursuant to Section 4.1.
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(b) At Closing, Buyer shall pay to the Selling Members an
aggregate of (A) $50,100,000 in cash (such cash, and all other forms of
consideration described herein to be divided among the Selling Members as they
may direct), as the same may be adjusted pursuant to this Section 3.2 (as so
adjusted, the "Closing Cash Payment"), payable by wire transfer in immediately
available funds, (B) that number of fully paid and nonassessable shares of the
Buyer's common stock, $.01 par value per share ("Buyer Common Stock") equal to
the number obtained by dividing (i) $17,000,000 by (ii) the average closing
price per share of the Buyer Common Stock on the NASDAQ National Market for the
trading days during the period commencing on the date hereof and ending on the
date three business days prior to the Closing Date and (C) a convertible
subordinated note in an amount of $10,000,000 and with other terms in accordance
with the term sheet attached hereto as Exhibit H. Notwithstanding the foregoing,
however, the parties agree that if the Company has not been released from any
and all obligations to third parties pursuant to the Prudential Agreement and
the Marquette Agreements on or before the Closing Date, the amount of the
Closing Cash Payment shall be reduced, and the amount of the Escrow Deposit
shall be increased, by an amount equal to the maximum principal amount of
indebtedness that may be incurred by the Company under such agreements on the
Closing Date
(c) The Final Closing Adjustment shall be paid by Buyer
or the Selling Members, as the case may be, pursuant to Section 3.3.
3.3 Post Closing Adjustments.
(a) As promptly as practicable after the Closing, the
Selling Members and Buyer shall cause the Company to prepare, in accordance with
the Closing Balance Sheet Principles and otherwise in conformity with GAAP,
applied on a basis consistent with the Annual Financial Statements, and deliver
to the Selling Members and Buyer, a balance sheet of the Company (which shall
give effect to the Consolidation Transactions at book value) as of the close of
business on the date immediately preceding the Closing Date (the "Preliminary
Closing Balance Sheet") and its calculation of the total shareholders equity as
of the close of business on the date immediately preceding the Closing Date
("Final Shareholders Equity"); provided, however, that in determining Final
Shareholders Equity there shall be no reserve or accrual for any of the
liabilities not assumed by the Company pursuant to Section 10.2(d). The cost of
preparing the Preliminary Closing Balance Sheet shall be borne by the Company
and shall not be accrued as a liability in determining Final Shareholders
Equity.
(b) Buyer and Gage shall each have thirty (30) days
following delivery of the Preliminary Closing Balance Sheet during which to
notify the other of any dispute of any item contained in the Preliminary Closing
Balance Sheet, which notice shall set forth in reasonable detail the basis for
such dispute. If either party fails to notify the other of any dispute within
such 30-day period, the Preliminary Closing Balance Sheet shall be deemed to be
the "Final Closing Balance Sheet." Buyer and the Selling Members shall cooperate
in good faith to resolve any dispute as promptly as possible, and upon such
resolution, the Final Closing Balance Sheet shall be prepared in accordance with
the agreement of Buyer and the Selling Members.
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(c) If Buyer and the Selling Members are unable to
resolve any such dispute within fifteen (15) days (or such longer period as
Buyer and the Selling Members shall mutually agree in writing) of delivery of
such notice, such dispute shall be resolved by a mutually agreeable nationally
recognized, independent accounting firm ("Independent Accounting Firm"), and
such determination shall be final and binding on the parties. If the Selling
Members and Buyer cannot mutually agree on the identity of the Independent
Accounting Firm, then the Selling Members and Buyer shall each submit to the
other party's independent auditor the name of a national accounting firm, and
the Independent Accounting Firm shall be selected by lot from those two firms by
the independent auditors of the two parties. (If no national accounting firm
shall be willing to serve as the Independent Accounting Firm, then an arbitrator
shall be selected to serve as such, such selection to be according to the above
procedures.) Any expenses relating to the engagement of the Independent
Accounting Firm shall be shared equally by Buyer and the Selling Members. The
Independent Accounting Firm shall be instructed to use every reasonable effort
to perform its services within fifteen (15) days of submission of the
Preliminary Closing Balance Sheet to it and, in any case, as promptly as
practicable after such submission. The Final Closing Balance Sheet and the
calculation of Final Shareholders Equity shall then be prepared by Buyer and the
Selling Members based on the determination of the Independent Accounting Firm.
(d) The Purchase Price shall be equal to (i) $81,100,000,
plus (ii) the amount, if any, by which the Final Shareholders Equity exceeds
$21,923,000 (which excess amount shall be payable by Buyer to the Selling
Members in accordance with this Section 3.3(d)), or minus (iii) the amount, if
any, by which $21,923,000 exceeds the Final Shareholders Equity (which excess
amount shall be payable by the Selling Members to Buyer in accordance with this
Section 3.3(d)) (such amount referred to in either clause (ii) or clause (iii)
shall be referred to as the "Final Closing Adjustment"). Buyer or the Selling
Members, as the case may be, shall, within 10 days after the final determination
of the Final Closing Balance Sheet pursuant to Sections 3.3(b) and (c), make
payment to the other by wire transfer in immediately available funds of the
amount of the Final Closing Adjustment as determined pursuant to the preceding
sentence, together with interest thereon at the reference rate per annum quoted
from time to time by Norwest Bank, Minnesota from the Closing Date to the date
of payment.
ARTICLE 4
ESCROW
4.1 Escrow. Buyer shall deposit in escrow with Norwest
Bank, Minnesota (the "Escrow Agent") $4,000,000 cash, plus, under the
circumstances described in the final sentence of Section 3.2(b), an amount equal
to the maximum principal amount of the indebtedness that may be incurred by the
Company under the Prudential Agreement and the Marquette Agreements on the
Closing Date (the "Escrow Deposit") to be held for twelve (12) months and
disbursed by the Escrow Agent in accordance with the terms and provisions of the
Escrow Agreement.
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ARTICLE 5
CLOSING
5.1 Closing Date. The closing of the purchase and sale of
the Purchased Units (the "Closing") shall take place at the office of Xxxxxx &
Xxxxxxx LLP, Xxxxxxxxx Center South, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, XX
00000 (or at such other place as the parties may mutually agree) at 10:00
o'clock a.m., local time, as soon as practicable after the date hereof or such
date upon which the parties shall mutually agree, but in no event later than the
first Friday which is at least three business days after the expiration of the
HSR Act waiting period (the "Closing Date"); provided, however, that the Closing
Date will be extended in the event a Government Antitrust Entity requires
further information from the parties in lieu of either issuing a termination
letter or permitting the expiration of the HSR Act waiting period, to such time
as the parties are legally permitted to consummate the Agreement subject to
Article 10.
5.2 Documents To Be Delivered by Selling Members. At the
Closing, the Selling Members will deliver or cause to be delivered to Buyer:
(a) a xxxx of sale or other evidence of the transfer of
the Purchased Units, free and clear of Encumbrances, other than restrictions on
Transfer pursuant to applicable securities laws, together with the certificates,
if any, representing the Purchased Units;
(b) a certificate of the Principal Members, in form
reasonably satisfactory to Buyer, certifying (i) as to the accuracy, in all
material respects, of the representations and warranties set forth in Sections
6.1 and 6.2 herein at and as of the Closing (unless limited by their term to a
prior date), other than those changes not reasonably expected to have a Material
Adverse Effect, with the aforementioned determined without regard to any
materiality qualifications set forth in the representations and warranties, (ii)
that the Selling Members have performed and complied with, in all material
respects, all of the terms, provisions and conditions to be performed and
complied with by the Company and the Selling Members, respectively, at or before
the Closing, and (iii) that the conditions precedent set forth in Article 11
have been satisfied or waived;
(c) resignations (effective as of the Closing Date) of
(i) the members of the board of governors of the Company and (ii) the officers
of the Company as directed by Buyer;
(d) the organizational record books and minute books of
the Company;
(e) an executed copy of each of the Transaction
Documents;
(f) a copy of the Articles of Organization of the
Company, Gage and each of the Subsidiaries, certified by the Secretary of State
of the state of incorporation or organization, as the case may be, of each such
entity, and a Certificate of Good Standing from the Secretary of State
evidencing the good standing of such entity, each dated within ten (10) days of
the Closing Date;
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(g) a copy of each of (i) the text of the resolutions
adopted by the Board of Governors and Members of the Company and Gage
authorizing the execution, delivery and performance of this Agreement and the
other Transaction Documents and the consummation of all of the transactions
contemplated by this Agreement and the other Transaction Documents, and (ii) the
Member Control Agreement and the Operating Agreement of the Company; along with
certificates executed on behalf of the Company by its corporate secretary
certifying to Buyer that such copies are true, correct and complete copies of
such documents and that such documents were duly adopted and have not been
amended or rescinded; and
(h) such other documents, in form and substance
reasonably satisfactory to Buyer, as may be reasonably necessary to effect the
Closing.
5.3 Documents To Be Delivered by Buyer. At the Closing,
Buyer will deliver or cause to be delivered to the Selling Members:
(a) the Closing Cash Payment to be paid to the Selling
Members in accordance with Section 3.2(b); the Escrow Deposit to be made with
the Escrow Agent in accordance with Section 4.1, and certificates representing
that number of fully paid and nonassessable shares of Buyer Common Stock as
determined under Section 3.2(b) registered in such names and denominations as
the Selling Members shall request;
(b) a certificate of the Buyer, in form reasonably
satisfactory to the Principal Members, certifying (i) as to the accuracy, in all
material respects, of the representations and warranties of Buyer at and as of
the Closing (unless limited by their term to a prior date), other than those
changes not reasonably expected to have a Material Adverse Effect, with the
aforementioned determined without regard to any materiality qualifications set
forth in the representations and warranties, (ii) that Buyer has performed and
complied with, in all material respects, all of the terms, provisions and
conditions to be performed and complied with by the Company and the Selling
Members, respectively, at or before the Closing, and (iii) that the conditions
precedent set forth in Article 12 have been satisfied or waived;
(c) a certificate of Buyer certifying as to certain
corporate matters, together with all of the attachments referred to therein;
(d) an executed copy of each of the Transaction
Documents;
(e) a copy of each of (i) the text of the resolutions
adopted by the Board of Directors of the Buyer authorizing the execution,
delivery and performance of this Agreement and the other Transaction Documents
and the consummation of all of the transactions contemplated by this Agreement
and the other Transaction Documents, and (ii) the By-laws of the Buyer; along
with certificates executed on behalf of the Buyer by its corporate secretary
certifying to Buyer that such copies are true, correct and complete copies of
such Resolutions and By-laws, respectively, and that such Resolutions and
By-laws were duly adopted and have not been amended or rescinded;
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(f) Certificate of Good Standing of Buyer dated no
earlier than ten (10) days prior to the Closing Date; and
(g) such other documents, in form and substance
reasonably satisfactory to the Selling Members, as may be reasonably necessary
to effect the Closing.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Representations of the Selling Members. Except as
otherwise listed in the Disclosure Schedule to this Agreement (as such
Disclosure Schedule may be supplemented prior to the Closing Date) ("Disclosure
Schedule"), the Selling Members, jointly and severally, hereby represent and
warrant to Buyer that:
(a) Authority. Each Selling Member has all requisite
authority and power to execute and deliver this Agreement and the other
Transaction Documents to which each Selling Member is a party and to consummate
the transactions contemplated hereby and thereby. With respect to any Selling
Member which is a trust, such Selling Member has taken all necessary trust
action to authorize the execution and delivery of this Agreement and the other
Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby and no other trust action is
necessary in connection therewith. This Agreement and such other Transaction
Documents have been or will be duly and validly executed and delivered by each
Selling Member and, assuming this Agreement and such other Transaction Documents
have been duly authorized, executed and delivered by each of the other parties
hereto, this Agreement and such other Transaction Documents constitute a valid
and binding agreement of such Selling Member, enforceable against such Selling
Member in accordance with its terms, except as such enforceability may be
limited or affected by (i) bankruptcy, insolvency, reorganization, moratorium,
liquidation, arrangement, fraudulent transfer, fraudulent conveyance and other
similar laws (including, without limitation, court decisions) now or hereafter
in effect and affecting the rights and remedies of creditors generally or
providing for the relief of debtors, (ii) the refusal of a particular court to
grant equitable remedies, including, without limitation, specific performance
and injunctive relief, and (iii) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law).
(b) Purchased Units Ownership. Each Selling Member owns,
beneficially and of record, that number of Purchased Units set forth opposite
its name on SCHEDULE 2.1, free and clear of all Encumbrances other than
restrictions on Transfer pursuant to applicable securities laws, and has,
subject to compliance with such securities laws, full power and legal right to
sell, assign, transfer and deliver the same to Buyer. The delivery to Buyer of
the Purchased Units pursuant to the provisions of this Agreement will transfer
to Buyer good and valid title thereto, free and clear of all Encumbrances, other
than restrictions on Transfer pursuant to applicable securities laws and any
Encumbrances created by Buyer. The Purchased Units set forth on SCHEDULE 2.1 are
all of the issued and outstanding membership interests of the Company. Each
Selling Member has the full power, right and authority to vote the Purchased
Units in the manner as set forth in SCHEDULE 2.1.
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(c) Investment Representation. The Selling Members are
acquiring Buyer's Common Stock for their own account for the purpose of
investment and not with a view to the distribution thereof or dividing all or
any part of their interest therein with any other Person. Selling Members
acknowledge that the issuance of Buyer's Common Stock has not been registered
under Applicable Laws (including the Securities Act of 1933, as amended, and any
state, local or foreign securities law) and that the Buyer's Common Stock may
not be Transferred without registration under, pursuant to an exemption from or
in a transaction not subject to, all Applicable Laws. Each Selling Member is an
"accredited investor" as such term is defined for purposes of the Securities Act
of 1933, as amended.
6.2 Representations by the Principal Members. Except as otherwise
listed in the Disclosure Schedule, the Principal Members, jointly and severally,
hereby represent and warrant to Buyer that:
(a) Corporate Organization. The Company is a limited
liability company validly existing and in good standing under the laws of
Minnesota. The Company has the company power and authority to carry on its
business as now being conducted, to own, lease and operate the properties and
assets now owned and being operated by it and to enter into and perform this
Agreement. The Company has delivered or caused to be delivered to Buyer complete
and correct copies of the Company's articles of organization, member control
agreement and operating agreement as in effect on the date hereof. The member
control agreement of the Company, as amended, delivered to the Buyer reflects
the record ownership of all outstanding membership interests. The Principal
Members are not aware of any actions having been taken by the Company or its
members that are inconsistent with the proceedings described in the minute
books. The Company is duly qualified or licensed to do business as a foreign
corporation in each of the jurisdictions set forth in SECTION 6.2(A) of the
Disclosure Schedule. The Company is not required to be qualified or licensed to
do business as a foreign corporation in any other jurisdiction, except such
jurisdictions, if any, in which the failure to be so qualified or licensed would
not reasonably be expected to result in a Material Adverse Effect and except as
a result of the Consolidation Transactions. The Disclosure Schedule sets forth a
true and complete list of the names and titles of the directors and executive
officers of the Company. Except for Gage-Texas, and Gage-Mexico (the
"Subsidiaries"), which will become wholly owned direct or indirect subsidiaries
of the Company as a result of the Consolidation Transactions, the Company does
not own any interest in any corporation, partnership, limited liability company,
joint venture, trust or other entity with any third party. Prior to the
Consolidation Transactions, all outstanding equity interests of the Subsidiaries
were owned entirely, directly or indirectly, by one or more of the Selling
Members, free and clear of all Encumbrances.
(b) No Violation; No Consent. Except as set forth in
SECTION 6.2(B) of the Disclosure Schedule, the execution and delivery of this
Agreement and the other Transaction Documents does not, and the performance of
this Agreement and other Transaction Documents and the consummation of the
transactions contemplated hereby will not, (i) to the extent that a
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Selling Member is a trust, violate any provision of the trust agreement under
which the trust was created, or (ii) conflict with or violate any Applicable
Laws by which the Company or any of its properties are bound or affected,
conflict with, result in any breach of or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or impair
the rights of the Company or alter the rights or obligations of any other person
under, or give to any other person any right of termination, amendment,
acceleration or cancellation of, or result in the creation of any Encumbrance on
any of the properties or assets of the Company pursuant to, any contract or
agreement of any kind to which the Company or the Selling Members is a party or
by which the Company or any of its respective properties are bound or affected
or to which any of its assets are subject, including the charter documents,
bylaws, member control agreements or operating agreements of the Company or any
of the Subsidiaries. Other than in connection with the provisions of the HSR
Act, neither the Company, nor any Selling Member nor Gage needs to give any
notice to, make any filing with or obtain any authorization, consent, or
approval of any Governmental Entity to consummate the transaction contemplated
by this Agreement.
(c) Ownership. SCHEDULE 2.1 sets forth the name of each
member of the Company and that number of Purchased Units and percentage
governance and financial interests of the Company owned by each such member (and
which schedule will be amended prior to Closing to give effect to the
Consolidation Transactions). There are no other units or other membership
interests of the Company outstanding. All of the Purchased Units are validly
issued, fully paid and nonassessable. None of the Purchased Units were issued in
violation of any preemptive right. Except for the transactions contemplated
hereunder, none of the Selling Members, the Company, the Subsidiaries or Gage
are a party to or bound by any contract, agreement or arrangement to issue, sell
or otherwise dispose of or redeem, purchase or otherwise acquire any membership
interest or any other security of the Company or any Subsidiary or any other
security exercisable or exchangeable for or convertible into any membership
interest or any other security of the Company, and, except for this Agreement,
there is no outstanding option, warrant or other right to subscribe for or
purchase, or contract, agreement or arrangement with respect to, any membership
interest or any other security of the Company or any other security exercisable
or exchangeable for or convertible into any membership interest or any other
security of the Company.
(d) Financial Statements.
(i) SCHEDULE 6.2(D)(I) contains true and
complete copies of the audited balance sheets of the Company as of December 31,
1996 and 1997 and related statements of income and cash flows for the fiscal
year ended on those dates (collectively, the "Annual Financial Statements"). The
Annual Financial Statements were prepared from the books and records of the
Company and present fairly, in all material respects, the financial position of
the Company as of the respective dates of said balance sheets and the results of
its operations and cash flows for the respective periods then ended in
conformity with GAAP.
(ii) SCHEDULE 6.2(D)(II) contains true and
complete copies of the unaudited balance sheet of the Company as of March 31,
1998 and the related statement of income for the three-month period then ended
(the "Interim Financial Statements"). The Interim
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Financial Statements were prepared from the books and records of the Company and
present fairly, in all material respects, the financial position of the Company
as of the date thereof and the results of its operations for the period
indicated in conformity with GAAP (subject to normal year-end adjustments and
the absence of footnotes).
(e) No Undisclosed Liabilities. The Company has no
liabilities or obligations whatsoever, whether contingent, accrued, absolute or
otherwise, except liabilities (i) in the aggregate adequately provided for in
the Annual Financial Statements or the Interim Financial Statements, (ii)
incurred in the Ordinary Course of Business since March 31, 1998, and provided
for in the Final Closing Balance Sheet, (iii) under any agreements of the
Company specifically disclosed in the Disclosure Schedule (or not required to be
disclosed because of the term or amount involved) that were not required under
GAAP to have been specifically disclosed or reserved for on the Interim
Financial Statements, or (iv) set forth on SCHEDULE 6.2(E) to the Disclosure
Schedule.
(f) Absence of Certain Changes. Except as set forth on
SECTION 6.2(F) of the Disclosure Schedule, since December 31, 1997, the Company,
taken as a whole, has conducted the Executional Businesses in the Ordinary
Course of Business, and the Company and Gage have used their respective
commercially reasonable efforts, consistent with past practices, to maintain,
protect and preserve the goodwill and to continue the employment of its
employees to the extent necessary to preserve the Executional Businesses and
there has not been:
(i) Any damage, destruction or loss (whether or
not covered by insurance) which had a Material Adverse Effect;
(ii) Any distribution, declaration, setting
aside, or payment of any dividend, or any other distribution with respect to the
membership interests of the Company (other than a distribution of an amount not
in excess of the federal and state income tax liability of the Selling Members
with respect to the income of the Company through the Closing Date) or any
direct or indirect redemption, purchase or other acquisition of any membership
interests in the Company by the Company;
(iii) Any increase in the fixed compensation
payable, or to become payable, by the Company to any Selling Member or any other
officer, employee or agent of the Company, other than in the Ordinary Course of
Business and the Closing Incentive Payments;
(iv) Any payment under any insurance, pension or
other benefit plan, program or arrangement made to, for or with any Selling
Member or any other officer, employee or agent of the Company other than in the
Ordinary Course of Business; or
(v) Any event or condition of any character
known to the Company (whether or not covered by insurance) that has or, in the
good faith judgment of the Principal Members, will have a Material Adverse
Effect.
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In addition, since December 31, 1997, except as shown in SECTION 6.2(F)
of the Disclosure Schedule, the Company has not:
(i) Mortgaged, pledged or subjected to a lien or
any other encumbrances any of its assets, tangible or intangible (except for
Permitted Encumbrances);
(ii) Purchased, sold or transferred any assets,
other than purchased, sold or transferred in the Ordinary Course of Business; or
(iii) Been the subject of or experienced any
strike or other concerted work stoppage or concerted slow-down by its employees
or, to the knowledge of the Principal Members, threat thereof, union election
or, to the knowledge of the Principal Members, attempted collective bargaining
of non-union employees.
(g) Properties and Assets.
(i) The Company has good and marketable title
to, or a valid and binding leasehold or licensed interest in, all of the
properties and assets of the Company (including all Intellectual Property), free
and clear of all Encumbrances (except Permitted Encumbrances and any liens
arising under the Third Party Debt), there are no pending or threatened
condemnation proceedings, lawsuits or administrative actions relating to the
property owned by the Company which could reasonably be expected to have a
Material Adverse Effect and the Company is in possession of all of its personal
property.
(ii) All Equipment reflected in the Financial
Statements is, in all material respects, in operating condition and there is no
extraordinary wear and tear to such property.
(iii) The Company owns no real property. SECTION
6.2(G)(III) of the Disclosure Schedule sets forth a list of all leases relating
to leased real property and leased personal property. The Company has made
available to Buyer or its representatives, copies of all leases for such leased
property. All such leases are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default), except for any defaults arising as a result
of the Consolidation Transactions.
(iv) Except for the Excluded Assets and any
assets used to provide the services described in Section 6.2(t) of the
Disclosure Schedule, the real or personal property owned, leased or licensed by
the Company, including the real or personal property transferred to the Company
by Gage as part of the Consolidation Transactions, constitutes all of the real
or personal property used prior to the date hereof to operate the Executional
Businesses. Except as set forth on Section 6.2(g)(iv) of the Disclosure
Schedule, (excluding cash, intercompany accounts and Third Party Debt), the
assets and properties now owned by the Company or to be transferred to the
Company as part of the Consolidation Transactions include all assets and
properties reflected on the Annual and Interim Financial Statements, other than
assets and
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properties disposed of by the Company or any Affiliate of the Company since the
respective dates of the Annual and Interim Financial Statements in the Ordinary
Course of Business, without violation of this Agreement, including Section 8.2
hereof.
(h) Tax Matters.
(i) Each of the Company and the Company's Plans
has: (A) properly and timely filed, or has had properly and timely filed on its
behalf, or will properly and timely file all federal, state, local and foreign
tax returns, reports, statements and other similar filings ("Tax Returns")
required to be filed by the Company or the Company's Plans with the appropriate
Governmental Entity for all periods ending on or before the Closing Date, and
has timely paid all Taxes shown thereon to be due; (B) timely and properly paid,
or has had paid on its behalf, or will timely and properly pay, all Taxes due
and payable on or prior to the Closing Date (whether or not shown to be due on
any Tax Return); and (C) complied with all applicable laws, rules and
regulations relating to the withholding of Taxes and the payment thereof
(including, without limitation, withholding of Taxes under Sections 1441 and
1442 of the Internal Revenue Code of 1986, as amended ("Code")), and timely and
properly withheld from individual employee wages and paid over to the proper
Governmental Entities all amounts required to be so withheld and paid over under
all applicable laws. The Company has not received any notice addressed to the
Company from an authority in any jurisdiction where it does not file Tax Returns
stating that the Company is or may be subject to taxation by that jurisdiction.
The Selling Members have made available to the Buyer correct and complete copies
of all federal income tax returns, examination reports and statement of
deficiencies assessed against or agreed to by the Company. The Company is not a
party to any Tax sharing or Tax allocation agreement and has not been included
as a member of any group of corporations filing a consolidated or combined Tax
Return.
(ii) The Company has made available to Buyer
true, correct and complete copies of all Tax Returns made to all Governmental
Entities with respect to Taxes during the calendar years 1994 through 1997 and
for any interim period in 1998 ending prior to the Closing Date. Each of the
Company and the Subsidiaries is taxed as a partnership under the Code.
(iii) Except as set forth on SECTION 6.2(H) of the
Disclosure Schedule, no Governmental Entity is now asserting or, to the
knowledge of Gage, has threatened to assert against the Company any deficiency
or claim for additional Taxes.
(iv) Except as set forth on SECTION 6.2(H) of the
Disclosure Schedule, there has been no Tax Audit or other administrative
proceeding or court proceeding with regard to any Taxes or Tax Returns, nor is
any such Tax Audit or other proceeding pending or, to the knowledge of Gage,
threatened regarding any such Tax Audit or other proceeding.
(v) The Company has no agreements or consents
which are now in force extending the period during which any Taxes may be
assessed or collected.
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(vi) For federal and all applicable state and
local income tax purposes, the Company satisfies all of the requirements
necessary to be taxed as a partnership (or "S" Corporation prior to December 31,
1996) and has satisfied such requirements since January 1, 1992.
(i) Contracts. SECTION 6.2(I) of the Disclosure Schedule
sets forth a list of (i) each executory contract or agreement by the Company for
delivery of its services, other than purchase orders entered into in the
Ordinary Course of Business and executory contracts or agreements pursuant to
which the Company will receive less than $100,000 of revenues; (ii) each
instrument or other agreement for borrowed money (including, without limitation,
any indenture, guarantee, loan agreement, factoring agreement, sale and
leaseback agreement, or purchase money obligation incurred in connection with
the acquisition of property other than in the Ordinary Course of Business and
intercompany indebtedness) executed by the Company; (iii) any agreement for any
acquisition or disposition (by merger, purchase or sale of assets or stock or
otherwise) of material assets entered into within the last two years, as to
which the transactions contemplated have been consummated or are currently
pending executed by the Company; (iv) any guarantee, suretyship, indemnification
or contribution agreement executed by the Company and currently in effect; (v)
any contract committing the Company to make future capital expenditures in
excess of $100,000 in any year; (vi) any contract preventing the Company from
carrying on its business anywhere in the world; (vii) any joint venture or other
agreement involving sharing of profits executed by the Company and currently in
effect, (viii) any outstanding power of attorney empowering any person, company
or other organization to act on behalf of the Company, any Subsidiary or Gage
(but, in the case of Gage, only to the extent related to the Executional
Businesses); (ix) any outstanding offer or bid that, if accepted, would result
in a contract requiring the Company, any Subsidiary or Gage (but, in the case of
Gage, only to the extent related to the Executional Businesses) to pay, or
requiring that there be paid to the Company, any Subsidiary or Gage (but, in the
case of Gage, only to the extent related to the Executional Businesses) in the
aggregate, $100,000 or more, other than in the Ordinary Course of Business; or
(x) any material purchase commitment for an amount that is in excess of the
normal, ordinary and usual requirements of its business, or purchase contract or
commitment providing for prices materially in excess of the current market
prices for comparable goods and services on the date of such contract or
commitment or sales contract and any other agreement not otherwise listed on the
Disclosure Schedule to which the Company is a party which has, or may have, a
material effect on the Company, taken as a whole. The Company has furnished true
and complete copies of the listed agreements to Buyer; provided, however, that
the Company is not obligated to deliver or make available to Buyer or its
counsel any written contract where the financial payment obligation of either
party is less than or reasonably expected to be less than $100,000 or where the
contract may be terminated by the Company without penalty on thirty (30) days or
less written notice unless otherwise specifically requested to do so by Buyer.
Except as set forth on Section 6.2(i) of the Disclosure Schedule, each contract
material to the business or financial condition of the Company, taken as a whole
(a "Material Contract"), is a valid and binding agreement of the Company. The
Company is not (and to the knowledge of Gage, the other party thereto is not) in
material breach or default under any Material Contract, other than defaults
arising as a result of the Consolidation Transactions or those which have been
cured or waived.
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(j) Litigation. Except as set forth in SECTION 6.2(J) of
the Disclosure Schedule, there is no claim, suit, action, proceeding or
investigation, either at law or in equity, or before any Governmental Entity
(other than worker's compensation claims) now pending or, to the knowledge of
the Principal Members, threatened against the Company or any of its business or
properties, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company, that would,
individually or in the aggregate, have a Material Adverse Effect or would
prevent the consummation of the transactions contemplated hereby, nor do Gage or
the Principal Members know of any ground for such suit, actions, proceedings or
investigations. Except as described in SECTION 6.2(J) of the Disclosure
Schedules, the Company has not commenced any claim, suit, action or other
proceeding of any kind against a third party nor do Gage or the Principal
Members know of any grounds for any such claim, suit, action or proceeding
(k) Intellectual Property. SECTION 6.2(K) of the
Disclosure Schedule sets forth a list of all patents, trademarks, trade names,
service marks, copyrights, and any applications therefor, that are owned or
licensed by the Company and used in the business of the Company, other than
commercially available "shrink-wrapped" licensed software products. The assets
referred to in the preceding sentence, together with all processes, concepts,
technical information, data, research records, proprietary computer software,
promotional literature, customer and supplier lists and similar data and
information and all other confidential or proprietary or technical and business
information of the Company shall be referred to collectively as the
"Intellectual Property." The patents, trademarks, trade names, service marks,
and copyrights included in the Intellectual Property Rights are valid,
subsisting and enforceable, and no aspect thereof has been adjudged invalid or
unenforceable or has been canceled or revoked. There are no actions or
proceedings pending or, to the knowledge of the Principal Members, threatened,
challenging the rights of the Company to use the Intellectual Property and the
Principal Members have no knowledge of any basis for any such actions or
proceedings. Except as set forth on Schedule 6.2(k), (a) to the knowledge of
Gage, no person or entity is infringing the Intellectual Property, (b) the
Company is not infringing any rights of any third party under any patent,
trademark, trade name, service xxxx or copyright, and (c) the Company either has
all right, title and interest in, or a valid and binding license to use, all
Intellectual Property.
(l) Compliance with Laws; Permits. Except as set forth on
SCHEDULE 6.2(L) of the Disclosure Schedule and except for matters relating to
Taxes which are addressed solely in Section 6.2(h) and for matters relating to
Environmental Laws which are addressed solely in Section 6.2(o), the Company is
and, upon consummation of the Consolidation Transactions, will be in compliance,
in all material respects, with all Applicable Laws relating to it or its
properties, assets, operations and the Executional Businesses. The Company holds
and, upon consummation of the Consolidation Transactions, will hold all permits,
licenses, easements, variances, exemptions, consents, certificates, orders and
approvals from Governmental Entities which are material to the business of the
Company, taken as a whole, as such businesses are now being conducted and will
be conducted following the consummation of the Consolidation Transactions
(collectively, the "Permits"). The Company is and, upon consummation of the
Consolidation
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Transactions, will be in compliance, in all material respects, with the terms of
the Permits applicable to it.
(m) Employee Benefit Matters. SECTION 6.2(M) of the
Disclosure Schedule lists (i) all management, employment and other contracts
providing for the employment or retention of employees of the Company, and any
arrangements which compensate Company employees to accept employment or remain
with the Company following the Closing Date, (ii) all collective bargaining
agreements, (iii) all pension and employee benefit plans, profit sharing plans,
bonus, deferred compensation, supplemental executive retirement plans, excess
benefit plans, phantom stock, stock options, stock appreciation or other forms
of incentive or other compensation plans programs and policies or arrangements
including, without limitation, all "employee pension benefit plans" as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and all welfare, severance, vacation and other employee
fringe benefit plans including, without limitation, all "employee welfare
benefit plans" as defined in Section 3(1) of ERISA, maintained by the Company
relating to the employees of the Company (collectively, the "Company's Plans").
The Company has made available to Buyer correct, current and complete copies of
each of the written Company's Plans as in effect on the date hereof, together
with any trust agreements or other contracts or agreements which are a part of
such Plan, all Internal Revenue Service, Department of Labor or Pension Benefit
Guaranty Corporation rulings or determinations, annual reports, summary plan
descriptions and actuarial and other financial reports filed with such
Governmental Entities relating to the Company's Plans for all periods ending on
or after December 31, 1994, a complete written description of each unwritten
Company's Plan, and such other documentation with respect to any Company's Plan
as reasonably requested by Buyer. The Company's Plans have been established,
maintained and administered in all material respects in accordance with their
respective terms and conditions and Applicable Laws and all applicable reporting
and disclosure requirements have been satisfied in all material respects on a
timely basis. All contributions to the Company's Plans that have been required
to be made in accordance with Section 302 of ERISA or Section 412 of the Code
have been made. No non-exempt "prohibited transaction" (as defined in Section
4975 of the Code or Section 406 of ERISA) has occurred which could subject the
Company to Taxes. At no time during the five-year period preceding the Closing
Date has the Company been required to contribute to any "multi-employer plan"
(as defined in Section 4001(a)(3) of ERISA) for the benefit of the employees of
the Company. Each of the Company's Plans which is intended to be "qualified"
within the meaning of Section 401(a) of the Code is the subject of a current
favorable determination letter from the Internal Revenue Service stating that it
is so qualified. All of the assets that have been set aside in a trust or
account (other than an account that is part of the general assets of the
Company) to satisfy any obligations under any of the Company's Plans are shown
on the books and records of such trust or account at their current fair market
value, and any unfunded liabilities for all other obligations under any of the
Company's Plans are accurately set forth in the most recent financial statements
of the Company. There are no pending or, to the knowledge of the Principal
Members, threatened claims with respect to an Company's Plan (other than routine
and reasonable claims made in the ordinary course of plan or contract
operations) or with respect to the terms and conditions of employment or
termination of employment of any employee or former employee of the Company,
which claims could reasonably be expected to result in liability to the Company,
and no audit or investigation by any
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Governmental Entity is pending or, to the knowledge of the Principal Members,
has been proposed with respect to any of the Company's Plan. The Company has the
right pursuant to the terms of each of the Company's Plan and all agreements
related to such plan unilaterally to terminate such plan (or its participation
in such plan) or to amend the terms of such plan at any time without triggering
a penalty or an obligation to make any additional contributions to such plan
(except (i) where such termination or amendment reduces or eliminates accrued
benefits, and (ii) where such amendment increases benefits under such plan), and
Buyer immediately after the Closing shall have exactly the same rights as the
Company unilaterally to take such action without triggering any penalty or any
obligation to make any additional contributions to such plan (except (i) where
such termination or amendment reduces or eliminates accrued benefits, and (ii)
where such amendment increases benefits under such plan). Except for the Closing
Incentive Payments and other than the transactions contemplated by Section
10.3(b) (the costs of which will be borne by Gage), the transactions
contemplated by this Agreement will not result in any additional payments to, or
increase the vested interest of, any current or former officer, employee or
director or their dependents under any Company's Plan and will not result in any
payments to any current or former officer, employee or director of the Company
which will be subject to Section 280(G) of the Code.
(n) Insurance. SECTION 6.2(N) of the Disclosure Schedule
sets forth a list of the insurance policies maintained by the Company from
January 1, 1998 to the Closing Date. Each such policy is in full force and
effect and will terminate as to the Company as of the Closing Date. The Company
has not been notified as of the date hereof of any default by the Company under,
or a threatened cancellation of, any of such policies of insurance.
(o) Environmental Matters.
(i) The Company is in substantial compliance
with all Environmental Laws with respect to its properties, assets, operations
and business;
(ii) The Company has obtained and adhered, in all
material respects, to all necessary permits and other approvals, necessary to
conduct its business as presently conducted and to store, dispose of and
otherwise handle Hazardous Material and has reported, to the extent required by
Environmental Laws, all past and present sites owned, leased or operated by the
Company where Hazardous Material has been treated, stored or disposed of;
(iii) No Hazardous Material has been Released by
the Company at or on any of the property owned, leased or operated by the
Company;
(iv) The Company has not received any written
notice, claim or request for information relating to any on-site or off-site
locations to which the Company has transported Hazardous Material or arranged
for the transportation of Hazardous Material, alleging that the Company is
liable for any clean-up cost, remedial work, damage to natural resources or
personal injury; and
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(v) There is no Environmental Claim pending or
to the knowledge of the Principal Members threatened against the Company which
would have a Material Adverse Effect.
(vi) The Company has made available to Buyer
true, accurate and complete information in its possession or under its control
pertaining to all of the matters described in paragraphs (i)-(v) of this Section
6.2(o), including all documents and information pertaining to all environmental
audits or assessments prepared by and for the Company, any Governmental Entity
or any third party (including any financial institution) and including all
reports of environmental audits or assessments.
The representations and warranties contained in this Section 6.2(o) are the
exclusive representations and warranties of Gage with respect to compliance with
and liability under Environmental Laws.
(p) Labor and Employment Law Matters.
(i) Except as otherwise set forth in SECTION
6.2(P) of the Disclosure Schedule, since June 15, 1997, (i) the Company has not
conducted negotiations with respect to any future contract with or commitment to
any union or labor association and there are no current or, to the knowledge of
the Principal Members, threatened attempts to organize or establish any union or
labor association; (ii) no NLRB unfair labor practice claims have been filed or
are presently pending or, to the knowledge of the Principal Members, have been
threatened against the Company or Gage or any Subsidiary or any labor
organization representing its employees; (iii) no grievance or arbitration
demand, whether or not filed pursuant to a collective bargaining agreement, has
been filed or is pending or, to the knowledge of the Principal Members, has been
threatened against the Company or Gage or any Subsidiary; (iv) no labor dispute,
walkout, strike, slowdown, handbilling, picketing, work stoppage (sympathetic or
otherwise), or other "concerted action" involving the employees of the Company
or Gage or any Subsidiary has occurred, is in progress or, to the knowledge of
the Principal Members, has been threatened; (v) no breach of contract and/or
denial of fair representation claim has been filed or is pending against the
Company or Gage or any Subsidiary and/or any labor organization representing its
employees; (vi) no claim for unpaid wages or overtime or for child labor or
recordkeeping violations has been filed, or is pending or, to the knowledge of
the Principal Members, has been threatened against the Company or Gage or any
Subsidiary under the Fair Labor Standards Act, Xxxxx-Xxxxx Act, Xxxxx-Xxxxxx
Act, or Service Contract Act or any other Federal, state, local or foreign law,
regulation, or ordinance; (vii) no discrimination and/or retaliation claim has
been filed, or is pending or, to the knowledge of the Principal Members, has
been threatened against the Company or Gage or any Subsidiary under the 1866,
1877, 1964 or 1991 Civil Rights Acts, the Equal Pay Act, the Age Discrimination
in Employment Act, as amended, the Americans with Disabilities Act, the Family
and Medical Leave Act, the Fair Labor Standards Act, ERISA or any other Federal
law or any comparable state fair employment practices act or foreign law
regulating discrimination in the workplace and no wrongful discharge, libel,
slander or other claim under any state law has been filed, or is pending or, to
the knowledge of the Principal Members, threatened which arises out of the
employment relationship with respect to any person or the termination of any
such relationship; (viii) if the Company or Gage or any Subsidiary is a
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Federal, state or provincial contractor obligated to develop and maintain an
affirmative action plan, no discrimination claim, show cause notice,
conciliation proceeding, sanctions or debarment proceeding has been filed, or is
pending or, to the knowledge of the Principal Members, has been threatened
against the Company or Gage or any Subsidiary with the Office of Federal
Contract Compliance Programs ("OFCCP") or any other Federal agency or any
comparable state or foreign agency or court and no desk audit or on-site review
is in progress; (ix) no citation has been issued by the Occupational Safety and
Health Administration ("OSHA") against the Company or Gage or any Subsidiary,
and no notice of contest or OSHA administrative enforcement proceeding involving
the Company or Gage or any Subsidiary has been filed or is pending; (x) no
workers' compensation or retaliation claim has been filed, or is pending or, to
the knowledge of the Principal Members, has been threatened against the Company
or Gage or any Subsidiary; (xi) no citation of the Company or Gage or any
Subsidiary has occurred and no enforcement proceeding has been initiated or is
pending under Federal or foreign immigration law; and (xii) the Company and Gage
and each Subsidiary has not taken any action that would constitute a "mass
layoff" or "plant closing" within the meaning of the Worker Adjustment and
Retraining Notification ("WARN") Act or would otherwise trigger notice
requirements or liability under any state, provincial, local or foreign plant
closing notice law, regulation or ordinance. The Company and Gage and each
Subsidiary has been and is in compliance with all federal, state, provincial,
local and foreign laws respecting employment and employment practices, terms and
conditions of employment, wages and hours, and has not and is not engaged in any
unfair labor or unlawful employment practice.
(q) [LEFT BLANK INTENTIONALLY]
(r) Supplies and Inventory. The supplies and inventory of
the Company used in the conduct of the Executional Business, including the
supplies and inventory to be conveyed to the Company in connection with the
Consolidation Transactions are undamaged, not obsolete and consist of items of a
quality and quantity readily useable in Ordinary Course of Business. The value
at which such supplies and inventory are carried on the Company's financial
statements is in accordance with GAAP.
(s) Customers. SECTION 6.2(S) of the Disclosure Schedule
lists the customers of the Executional Businesses as of the date hereof that (i)
are parties to written contracts with the Company which have a remaining term in
excess of one year and which do not permit the customer to terminate its
obligations to the Company without cause upon the provision of notice to the
Company or (ii) the Company's 25 largest customers (measured in terms of fees
paid to the Company during the 12 months ended on May 31, 1998). The Company has
delivered to Buyer true, correct and complete copies of the contracts referred
to in the preceding sentence. Except as set forth in SECTION 6.2(S) of the
Disclosure Schedule, (i) the Company has not received notice of termination of
its agreement or the occurrence of an event of default under its agreement which
would allow such customer to terminate such agreement, (ii) there has not been,
to the knowledge of the Company, Gage or the Principal Members, with respect to
any such customer, a material adverse change in the business relationship with
any such customer, and (iii) to the knowledge of the Company and the Principal
Members, the Executional Business entity that is a party to each such contract
is not in material default in the performance of its obligations
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to the customer under any such agreement. Without limiting the generality of the
foregoing, the Company and the Principal Members hereby represent and warrant to
Buyer that they have no reason to believe that the agreement dated September 22,
1994 between Gage and Kraft-General Foods, Inc. will not be renewed, it being
acknowledged that Kraft has the right to send such agreement out for bid at its
termination.
(t) Related Party Transactions.
(i) Except as set forth on SECTION 6.2(T)(I) of
the Disclosure Schedule, none of the Selling Members, directors or officers of
the Company or their Affiliates (i) have borrowed any monies from or has
outstanding any indebtedness or other similar obligations to the Company, or
(ii) is otherwise a party to any contract, arrangement or understanding with the
Company (other than any contract or arrangement relating solely to the
employment of such individual by the Company). The Assets to be transferred to
the Company upon consummation of the Consolidation Transactions will not include
any note or other evidence of indebtedness of any of the Selling Members,
directors or officers of Gage or any of their Affiliates. Except as set forth in
SECTION 6.2(T) of the Disclosure Schedule, the obligations to be assumed by the
Company pursuant to the Consolidation Transactions will not include any
contract, arrangement or understanding with any of the Selling Members,
directors or officers of Gage or any of their Affiliates (other than any
contract or arrangement relating solely to the employment of such individual by
the Company).
(ii) Section 6.2(t)(ii) of the Disclosure
Schedule sets forth, in respect of the Executional Business, (i) all management,
computer, telephone or other services, and all space, facilities and services,
provided by Gage or any of its Affiliates to the Company, or by the Company to
Gage or any of its Affiliates at any time since December 31, 1997, but only to
the extent such services exceeded $20,000 in value to the Company on an annual
basis, and (ii) all other contracts and transactions (including the purchase and
sale of inventories, supplies and other goods) between the Company, on the one
hand, and Gage or any of its Affiliates, on the other hand, currently in effect
or which were in effect or occurred since December 31, 1997, but only to the
extent such services exceeded $20,000 in value to the Company, and in each case
setting forth the terms thereof if not effected on an arm's length basis.
(u) Brokers. Except for the fee of Xxxxxxxxx, Agio, Xxxxx
& Company (for which the Selling Members hereby agree to be solely responsible),
no third party shall be entitled to receive any brokerage commissions, finder's
fees, fees for financial advisory services or similar compensation from the
Company in connection with the transactions contemplated by this Agreement based
on any arrangement or agreement made by or on behalf of the Selling Members or
Gage.
(v) Bank Accounts. SECTION 6.2(V) of the Disclosure
Schedule contains a true and complete list of each bank in which the Company
maintains an account, a safe deposit box or any borrowing privilege and the
names of persons authorized to draw thereon, to withdraw therefrom or to borrow
thereupon, as the case may be.
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(w) Warranty of Year 2000 Performance & Compatibility. To
the knowledge of the Principal Members, assuming the successful implementation
and completion of the planned conversions and upgrades of the Company's IT
resources, all hardware and software used by the Company in the Ordinary Course
of Business are Substantially Year 2000 Compatible. For purposes of this
Agreement, Substantially Year 2000 Compatible means that, in all substantial
respects, neither performance nor functionality is affected by dates prior to,
during, spanning, or after January 1, 2000, and shall include, but not be
limited to: (a) accurately processing (including, but not limited to,
calculating, comparing, and sequencing) date/time data from, into, and between
the twentieth and twenty-first centuries and the years 1999 and 2000 and leap
year calculations; (b) functioning without error, interruption, or decreased
performance relating to such date/time data; (c) accurately processing such
date/time data when used in combination with other technology; (d) accurate
date/time data century recognition; (e) calculations that accurately use same
century and multi-century formulas and date/time values; (f) date/time data
interface values that reflect the correct century; and (g) processing, storing,
receiving, and outputting all date/time data in a format that accurately
indicates the century of the date/time data.
(x) [LEFT BLANK INTENTIONALLY]
(y) No Transferee Liability. The Company has no, and will
have no, transferee liability for any Taxes with respect to any transfer of
property made to the Company on or before the Closing Date.
(z) No Other Representations or Warranties. Except for
the representations and warranties contained in this Article 6, none of the
Selling Members nor any other Person makes any other express or implied
representation or warranty on behalf of the Selling Members or otherwise in
respect of the Company or the Purchased Units.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each of the Selling Members
and Gage as follows:
7.1 Corporate Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia and has the corporate power and authority to carry on its business as
now being conducted by it and to acquire and own the Purchased Units.
7.2 Authority. The execution and delivery of this
Agreement, the purchase of the Purchased Units and the consummation of the other
transactions provided for hereby have been duly and validly authorized by all
necessary corporate action of Buyer. This Agreement has been duly and validly
executed and delivered by Buyer and, assuming the due authorization, execution
and delivery by the Selling Members, constitutes a legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms,
except as such enforceability
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may be limited or affected by (i) bankruptcy, insolvency, reorganization,
moratorium, liquidation, arrangement, fraudulent transfer, fraudulent conveyance
and other similar laws (including, without limitation, court decisions) now or
hereafter in effect and affecting the rights and remedies of creditors generally
or providing for the relief of debtors, (ii) the refusal of a particular court
to grant equitable remedies, including, without limitation, specific performance
and injunctive relief, and (iii) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law).
7.3 No Violation; No Consent. The execution and delivery
of this Agreement by Buyer does not, and the performance of this Agreement by
Buyer will not, (i) violate or conflict with any provision of the certificate of
incorporation or bylaws of Buyer, (ii) to the knowledge of Buyer, conflict with
or violate any Applicable Law or (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under any provision of any contract or agreement of any kind to which
Buyer is a party or by which Buyer or any of its properties is bound or
affected, except in the case of clauses (ii) and (iii) for any such conflicts,
violations, breaches, defaults or other occurrences which would not reasonably
be expected to materially impair or delay the ability of Buyer to effect the
Closing. The execution, delivery and performance by Buyer of this Agreement and
the other Transaction Documents will not require any notice to, filing with, or
the consent, approval or authorization of any Person or Governmental Entity,
except as contemplated in Section 10.1(b), except for such consents, approvals
or authorizations a failure of which to obtain or make, individually or in the
aggregate, would not be reasonably expected to have a Material Adverse Effect.
7.4 Litigation. There is no claim, suit, action,
proceeding or investigation, either at law or in equity, or before any
Governmental Entity (other than claims covered by worker's compensation or
similar insurance) now pending or, to the knowledge of Buyer, threatened against
Buyer or any of its Affiliates, business or properties, nor is there any
material judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against Buyer or any of its Affiliates, business or
properties, that would, individually or in the aggregate, have a Material
Adverse Effect or would prevent the consummation of the transactions
contemplated hereby.
7.5 Brokers. Except for the fee of the Xxxxxxxx-Xxxxxxxx
Company, LLC (for which Buyer hereby agrees to be solely responsible), no third
party shall be entitled to receive any brokerage commissions, finder's fees,
fees for financial advisory services or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Buyer.
7.6 Investment Representation. Buyer is acquiring the
Purchased Units for its own account for the purpose of investment and not with a
view to the distribution thereof or dividing all or any part of its interest
therein with any other Person. Buyer acknowledges that the sale of the Purchased
Units has not been registered under Applicable Laws (including the Securities
Act of 1933, as amended, and any state, local or foreign securities law) and
that the
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Purchased Units may not be Transferred without registration under, pursuant to
an exemption from or in a transaction not subject to, all Applicable Laws.
7.7 Available Funds. As of the date hereof and as of the
Closing Date, Buyer has and will have sufficient funds available to satisfy the
obligation of Buyer to pay the Purchase Price and to pay all expenses incurred
by Buyer in connection with the transactions contemplated hereby.
7.8 SEC Reports and Financial Statements.
(a) Since March 1, 1997, Buyer has filed all material
forms, reports and documents with the SEC required to be filed by it pursuant to
the Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "Buyer SEC Reports"), and all of such filings complied in all
material respects with all applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations promulgated thereunder. None of the
Buyer SEC Reports, at the time filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated balance sheets included in
the Buyer SEC Reports (including any related notes thereto) fairly presents, in
all material respects, the consolidated financial position of Buyer and its
consolidated subsidiaries as of its date, and the related consolidated
statements of income and cash flows included in the Buyer SEC Reports (including
any related notes) fairly present, in all material respects, the consolidated
results of operations and changes in consolidated financial position of Buyer
and its consolidated subsidiaries for the periods presented therein, all in
conformity with GAAP, except as otherwise noted therein and subject, in the case
of quarterly financial statements, (i) to normal year-end audit adjustments, and
(ii) to the fact that Forms 10-Q do not contain all of the footnotes required by
GAAP.
7.9 No Undisclosed Liabilities. Buyer has no material
liabilities or obligations whatsoever, whether contingent, accrued, absolute or
otherwise, except liabilities (i) in the aggregate adequately provided for in
the Buyer SEC Reports, (ii) incurred in the Ordinary Course of Business since
Xxxxx 00, 0000, (xxx) set forth in any Schedule to this Agreement or (iv)
incurred in relation to acquisitions consummated subsequent to March 31, 1998.
7.10 Capital Stock. The authorized capital stock of Buyer
consists of 50,000,000 shares of Common Stock, par value $.01 per share, of
which, as of the date hereof, 13,610,500 shares are issued and outstanding, and,
10,000,000 shares of Preferred Stock, of which, as of the date hereof, no shares
are issued and outstanding. All of such outstanding shares of Buyer Common Stock
have been duly authorized and are validly issued, fully paid and nonassessable.
Buyer has no other equity securities or securities containing any equity
features authorized, issued or outstanding. Other than pursuant to Buyer's stock
option and other similar compensation plans, there are no agreements or other
rights or arrangements existing which provide for the sale or issuance of
capital stock by Buyer and there are no rights, subscriptions,
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warrants, options, conversion rights or agreements of any kind outstanding to
purchase or otherwise acquire from Buyer any shares of capital stock or other
securities of Buyer of any kind. There are no agreements or other obligations
(contingent or otherwise) which may require Buyer to repurchase or otherwise
acquire any shares of its capital stock, or register any of its equity
securities with the Securities and Exchange Commission.
7.11 Absence of Certain Changes. Since December 31, 1997,
Buyer has conducted its business in the Ordinary Course of Business and has used
its best efforts, consistent with past practices, to maintain, protect and
preserve its goodwill and to continue the employment of its employees to the
extent necessary to preserve its ongoing business and there has not been any
event or condition of any character known to Buyer (whether or not covered by
insurance) which has had or, in the good faith judgment of Buyer, will have a
Material Adverse Effect on Buyer.
7.12 No Other Representations or Warranties. Except for
the representations and warranties contained in this Article 7, neither Buyer
nor any other person makes any other express or implied representation or
warranty on behalf of Buyer.
ARTICLE 8
COVENANTS OF GAGE
8.1 Access to Information and Documents. Prior to the
Closing, Gage and the Company will (i) give to Buyer and its prospective
lenders, and their respective agents and representatives (including, but not
limited to, accountants, lawyers, environmental consultants (subject to Section
8.8) and appraisers) access during normal working hours to any and all of the
properties, assets, books, records and other documents of the Company and Gage
as Buyer may reasonably request, and Gage and the Company will furnish to Buyer
such information and copies of such documents and records pertaining to the
Company as Buyer shall reasonably request and (ii) cause its officers to provide
to Buyer and its prospective lenders, and their respective agents and
representatives any and all financial, technical and operating data and other
information pertaining to its business as Buyer shall from time to time
reasonably request. All such information and access shall be subject to the
terms and conditions of the Confidentiality Agreement dated February 27, 1998
between Buyer and the Company (the "Confidentiality Agreement"). In connection
with such access, Buyer shall, and shall cause its agents and representatives
to, use all commercially reasonable efforts to minimize any disruption of the
Company.
8.2 Conduct of Business Pending Closing. From the date
hereof until the Closing, except with the prior written consent of Buyer (which
shall not be unreasonably withheld, conditioned or delayed) or as otherwise
contemplated by this Agreement, the Principal Members will:
(a) Cause the Company to use all commercially reasonable
efforts to maintain itself at all times as a limited liability company validly
existing under the laws of the State of Minnesota;
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(b) Cause the Company to use all commercially reasonable
efforts to carry on its business and operations substantially in the manner
carried on as of the date hereof and to preserve its business organization
intact by retaining the services of its present employees and by preserving the
goodwill of its suppliers and customers and will not permit the Company to
engage in any activity or transaction or make any commitment to purchase or
spend money other than in the Ordinary Course of Business;
(c) Not permit the Company to declare, authorize or pay
any distribution or dividend to the Selling Members (other than (i)
distributions made to the Selling Members to fund their federal and state income
taxes payable with respect to their distributive share of the Company's taxable
income, loss, gain, deduction and other tax items under Sections 702 and 704 of
the Code, determined in a manner consistent with prior periods and (ii)
distributions of cash);
(d) Other than the Closing Incentive Payments, not permit
the Company to increase any compensation, commission, bonus or employee benefit
to any director, officer, employee or independent contractor as such other than
in the Ordinary Course of Business, and not permit the Company to create any
additional employee benefit plan or amend any existing employee benefit plan;
(e) Cause the Company to use all commercially reasonable
efforts to continue to maintain its existing level of insurance;
(f) Not permit the Company to, or to obligate itself to,
sell or otherwise dispose of or pledge or otherwise encumber, any material
portion of its properties other than in the Ordinary Course of Business;
(g) Not permit the Company to amend its articles of
organization, member control agreement or operating agreement;
(h) Cause the Company and the Subsidiaries to (i) file
any Tax Returns and elections with respect to any liabilities for Taxes of the
Company or other matters relating to Taxes of the Company which pursuant to
Applicable Laws must be filed with respect to the period ending on or prior to
the Closing Date; (ii) promptly upon filing provide copies of any such Tax
Returns or elections to Buyer; (iii) not amend any Tax Return filed prior to the
date hereof without the prior consent of Buyer, which consent shall not be
unreasonably withheld or delayed; and (iv) file, on or before the applicable due
date, the short period Tax Return of the Company. The Company shall bear all of
the expenses associated with filing the Tax Returns described in this Section
8.2(h) and any Tax liability due and payable by the Company in connection with
such Tax Returns shall be accrued as a liability on the Closing Date Balance
Sheet;
(i) Not permit the Company to issue any membership
interests or other securities or options or rights to purchase membership
interests or other securities or purchase
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any outstanding membership interests, other than in connection with the
Consolidation Transactions;
(j) Not permit the Company to organize any new
subsidiary, or acquire or enter into an agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity;
(k) Not permit the Company to (i) create, incur or assume
any long-term debt (including obligations in respect of capital leases except
those set forth on SCHEDULE 8.2) or, except in the Ordinary Course of Business
under the Third Party Debt, create, incur or assume any short-term debt for
borrowed money, (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person (except in the Ordinary Course of Business), (iii) except in
the Ordinary Course of Business, make any loans or advances to any other person,
or (iv) make any capital contributions to, or investments in, any Person.
8.3 Consents and Approvals. Gage shall cooperate with
Buyer to obtain prior to the Closing, those consents, authorizations and
approvals required under the agreements set forth on SCHEDULE 8.3, it being
acknowledged and agreed that Buyer shall bear any cost or expense of obtaining
such consents, authorizations and approvals and any failure to obtain any or all
of such consents shall not constitute a failure of the condition to Closing set
forth in Section 12.2.
8.4 Resignation of Officers and Directors. Prior to or at
the Closing, the Selling Members will cause each officer and director of the
Company and the Subsidiaries (other than those set forth on SCHEDULE 8.4) to
resign as an officer or director of the Company effective at the Closing.
8.5 Amendments to Disclosure Schedule. From time to time
prior to the consummation of the transactions contemplated by this Agreement,
Gage will promptly supplement or amend the Disclosure Schedule which it has
delivered pursuant to this Agreement with respect to any matter arising which,
if existing or occurring at the date of this Agreement, would have been required
to be set forth or described in such Disclosure Schedule or which is necessary
to correct any information in such Disclosure Schedule which has been rendered
inaccurate. The delivery of any written supplement or amendment to the
Disclosure Schedule pursuant to this Section shall constitute a waiver by Buyer
of any of the conditions contained in Article XII below with respect to the
information in such supplemented or amended Disclosure Schedule unless, (i) such
disclosure, when aggregated with all other such disclosures, constitutes a
Material Adverse Effect (other than a Material Adverse Effect that results from
the occurrence of a nonrecurring event), and (ii) within ten days after Buyer's
receipt of such disclosure, Buyer informs Gage that it is exercising its right
to terminate the Agreement pursuant to Article 13.1(b); provided, however, that
the disclosure in any such supplement or amendment of any matter arising or
occurring after the date hereof (which did not exist on the date hereof) shall
not form the basis of a claim against the Principal Members for
misrepresentation or breach of a representation, warranty, covenant or
agreement.
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8.6 Buyer Visits to Customers. Between the date of this
Agreement and the Closing Date, and subject to such reasonable limitations as
Gage shall deem necessary, Gage shall permit Buyer to discuss and meet, and
cooperate in discussions and meetings, with any customer of the Company the
Buyer so requests. Xxxxx X. Xxxx, or such other officer of Gage or the Company
acceptable to Buyer, shall participate in such discussions.
8.7 Conditions. The Selling Members and Gage shall take
all commercially reasonable actions necessary or desirable to cause the
conditions set forth in Article 12 to be satisfied and to consummate the
transactions contemplated herein as soon as reasonably possible after the
satisfaction thereof (but in any event within three business days of such date).
The Selling Members shall give prompt written notice to Buyer of (i) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date of
this Agreement until the consummation of the transactions contemplated by this
Agreement or that will or may result in the failure to satisfy any of the
conditions set forth in Article 12 below and (ii) any failure of the Selling
Members or Gage, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to this
Agreement. Delivery of such notice shall not constitute a waiver by Buyer of the
conditions contained in Article XII below.
8.8 No Negotiations. The Selling Members and Gage shall
not, and shall cause the Company not to, directly or indirectly, through any
officer, director, agent or otherwise, solicit, initiate or encourage submission
of any proposal or offer from any person or entity (including any of its or
their officers or employees) relating to any liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or purchase of all or a
material portion of the assets of, or any equity interest in, the Company or
other similar transaction or business combination involving the Company, or
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person or entity to do or seek any of the foregoing. The Selling Members and
Gage shall, and shall cause the Company to, promptly notify Buyer if any such
proposal or offer, or any inquiry from or contact with any person with respect
thereto, is made and shall promptly provide Buyer with such information
regarding such proposal, offer, inquiry or contact as Buyer may request.
8.9 Environmental Matters.
(a) The Selling Members shall cause the Company or Gage
to allow Buyer and its representatives and agents access to the real property
leased or operated by the Company as of the date hereof or included in the
Assets and all maintenance records, licenses, permits, reports, certificates,
correspondence with Governmental Entities or other items to which the Selling
Members, the Company or Gage have access relating to the construction, operation
and environmental condition of such real property or the business of the Company
or the Executional Businesses, as the case may be, as such documentation may be
kept in the ordinary course of business for the purpose of reviewing and making
photocopies of the same. The
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Selling Members shall furthermore cause Company and Gage, as the case may be, to
make available for the purpose of interviews with Buyer and its representatives
and agents such employees and representatives of the Company or Gage as may have
knowledge useful in environmental matters. The Selling Members shall be
obligated to comply with the Section 8.8(a) only to the extent necessary to
enable Buyer to complete a Phase I environmental audit. The extent, timing and
performance of any work beyond a Phase I environmental audit shall be in the
sole discretion of Gage.
(b) Buyer shall, in any case, pay the expense of
performing any environmental audit or environmental testing (including, without
limitation, soil borings, soil samples and ground water samples), and preparing
any written report in connection therewith.
8.10 Audited Financial Statements. Gage and the Company shall use
all commercially reasonable efforts to deliver to Buyer no later than June 30,
1998, audited financial statements for three years of operations of the Company,
the Subsidiaries, and the Executional Business ended December 31, 1997 (audited
balance sheets required only for the two years then ended); provided, however,
that Buyer shall bear the cost of preparing the audited income statements for
the year ended December 31, 1995.
8.11 WARN Act. All obligations to the employees or former employees
of the Company under WARN arising out of, or relating to, any actions taken by
the Company on or prior to the Closing Date shall be the sole obligation of
Gage.
ARTICLE 9
COVENANTS OF BUYER
Buyer covenants and agrees with the Selling Members as
follows:
9.1 Confidentiality. Buyer shall, and shall use all
commercially reasonable efforts to cause its Affiliates, associates, employees,
agents and representatives to, (i) hold in strict confidence and not disclose to
any person any and all documents and information containing proprietary
information or trade secrets of the Selling Members furnished to, obtained by or
learned by Buyer in connection with this Agreement and the transactions
contemplated hereby ("Confidential Information") and (ii) refrain from using any
such Confidential Information for any personal advantage, except that Buyer
shall be free to disclose and use all or any of such Confidential Information
which can be shown to have been (a) already in Buyer's possession without
restrictions of confidentiality at the time of disclosure to Buyer; (b) a matter
of public knowledge other than as a result of any action or omission by or on
behalf of Buyer; (c) published other than as a result of any action or omission
by or on behalf of Buyer in any publication for public distribution or filed as
public information with any governmental authority; or (d) lawfully obtained by
Buyer from a third person without restrictions of confidentiality. The covenants
of Buyer contained in this Section 9.1 and the terms and conditions of that
certain Confidentiality Agreement dated February 27, 1998 between Buyer and
Xxxxxxxxx, Agio, Xxxxx & Co. (which are incorporated herein by reference) (i)
shall survive any
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termination of this Agreement prior to Closing, (ii) shall survive the Closing
with respect to Confidential Information of the Selling Members and the Excluded
Businesses and (iii) shall terminate at the Closing with respect to Confidential
Information of the Company.
9.2 Consents and Approvals. Buyer shall, at its expense,
obtain prior to the Closing all consents, authorizations and approvals of any
Person required to be obtained by Buyer in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions provided for hereby.
9.3 No Unreasonable Interference. Prior to the Closing,
Buyer will not take any action which could reasonably be expected to interfere
unreasonably with the business or operations of the Selling Members or the
Company.
9.4 Tax Returns.
(a) Buyer shall file, or cause to be filed, all Tax
Returns of the Company (i) for Tax periods which begin before the Closing Date
and end after the Closing Date, and (ii) for Tax periods which begin after the
Closing Date. After the Closing Date, Buyer may, to the extent permitted by
Applicable Laws, amend, modify or otherwise change any Tax Return of the Company
for any Tax period; provided, however, that the Selling Members shall have the
right to approve any amended, modified or otherwise changed Tax Return of the
Company for a Tax period ending on or before the Closing Date where an increase
in the taxable income of the Company is reported on such amended Tax Return,
which approval may be withheld or granted by the Selling Members in their sole
and absolute discretion;
(b) Buyer shall promptly notify the Selling Members in
writing upon receipt by Buyer, the Company or its Subsidiaries of notice of any
pending or threatened federal, state, local or foreign income or franchise Tax
audits or assessments which may materially affect the Tax liabilities for which
the Selling Members would be required to indemnify Buyer hereunder or for which
the Selling Members may otherwise be liable, provided that failure to comply
with this provision shall not, so long as the Selling Members are not
unreasonably prejudiced thereby, affect Buyer's right to indemnification
hereunder. The Selling Members shall have the sole right to represent the
interests of the Company and the Subsidiaries in any Tax audit or administrative
or court proceeding relating to taxable periods ending on or before the Closing
Date, and to employ counsel of its choice at its expense. Notwithstanding the
foregoing, the Selling Members shall not be entitled to settle, either
administratively or after commencement of litigation, any claim for Taxes which
would adversely affect the liability for Taxes of the Company or the Buyer for
any period after the Closing Date to any material extent (including, but not
limited to, the imposition of income tax deficiencies, the reduction of asset
basis or cost adjustments, the lengthening of any amortization or depreciation
periods, the denial of amortization or depreciation deductions or the reduction
of loss or credit carryforwards) without the prior written consent of Buyer.
Such consent shall not be unreasonably withheld, conditioned or delayed, and
shall not be necessary to the extent that the Selling Members have indemnified
Buyer against the effects of any such settlement; and
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(c) upon Buyer's request, the Selling Members shall cause
the Company and the Subsidiaries to make an election under Section 754 of the
Code.
9.5 Conditions. Buyer shall take all commercially
reasonable actions necessary or desirable to cause the conditions set forth in
Article 11 to be satisfied. Buyer shall give prompt written notice to Gage of
(i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement until the consummation of the transactions
contemplated by this Agreement or that will or may result in the failure to
satisfy any of the conditions set forth in Article 11 below and (ii) any failure
of the Buyer or the Company, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it pursuant
to this Agreement.
9.6 Books and Records. For a reasonable period of time
after the Closing Date (which for any tax-related matters shall mean at least
seven (7) years after the Closing Date), Buyer will allow the Selling Members
and their agents reasonable access to the relevant portions of the Company's
books and records for legitimate business reasons, such as the preparation of
tax returns or the defense of litigation. Copies of such books and records may
be made in accordance with this section, at the cost of the Selling Members. The
Selling Members will not use and will hold in confidence all confidential
information identified as such by, and obtained from, Buyer and any of its
officers, agents, representatives or employees; provided, however, that
information which (a) was in the public domain, (b) was in fact known to the
Selling Members prior to disclosure by Buyer, its officers, agents,
representatives or employees, or (c) becomes known to the Selling Members from
or through a third party who has the legal right to disclose such information,
shall not be deemed to be confidential information.
9.7 Xxxxxxxx Employment Agreement. Gage will use its
commercially reasonable efforts to cause Xxxxx Xxxxxxxx to enter into an
Employment Agreement in form and substance reasonably satisfactory to Buyer.
9.8 WARN Act. All obligations to the employees or former
employees of the Company under WARN arising out of, or relating to, any actions
taken by the Company after the Closing Date shall be the sole obligation of
Buyer.
ARTICLE 10
OTHER AGREEMENTS
10.1 Governmental Consents and Approvals.
(a) Except as otherwise provided in subsection (b) below,
each of the parties hereto shall use commercially reasonable efforts to (i)
effect all necessary registrations, filings, notifications and submissions of
information required under Applicable Laws to any Governmental Entity including,
but not limited to, filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
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Improvements Act of 1976, as amended, and the regulations promulgated thereunder
(the "HSR Act"), (ii) use commercially reasonable efforts to obtain as promptly
as practicable all consents, authorizations, approvals and waivers required in
connection with the consummation of the transactions contemplated by this
Agreement under any Applicable Laws from any Governmental Entity, and (iii)
furnish to the other parties such necessary information and reasonable
assistance as such other parties may reasonably request in connection with the
foregoing.
(b) Without limiting the generality of the undertakings
pursuant to this Section 10.1, Buyer and the Selling Members agree to take or
cause to be taken the following actions:
(i) Use all commercially reasonable efforts to
file any notification and report form and related materials required under the
HSR Act prior to the close of business on the next business day after the date
hereof;
(ii) Provide promptly to Governmental Entities
with regulatory jurisdiction over enforcement of any Antitrust Laws ("Government
Antitrust Entity") information and documents requested by any Government
Antitrust Entity or necessary, proper or advisable to permit consummation of the
transactions contemplated by this Agreement. If any party hereto receives such a
request for additional information or documents, then such party shall promptly
provide to the other copies of such request and endeavor in good faith to make,
or cause to be made, as soon as reasonably practicable and after consultation
with the other party, an appropriate response in compliance with such request,
and thereafter use its commercially reasonable efforts to certify as soon as
practicable its substantial compliance with any such request; and
(iii) In the event of any pending or threatened
preliminary injunction or other order, decree, ruling, executive order or
Applicable Laws that would make unlawful, prevent, delay or otherwise adversely
affect the ability of the parties hereto to consummate the transactions
contemplated hereby, each party shall promptly use their commercially reasonable
efforts to take any and all steps (including the posting of a bond) necessary to
lift, rescind, vacate, modify or suspend such action so as to permit such
consummation prior to the deadline specified in Section 13.1 (including, without
limitation, negotiating in good faith with any and all Government Antitrust
Entities and litigating, contesting or otherwise challenging in good faith any
such actions). Notwithstanding the forgoing sentence, neither party shall be
obligated to appeal the decision of a court of competent jurisdiction which
enters a preliminary injunction enjoining the consummation of the transactions
contemplated by this Agreement.
(c) Each party hereto shall promptly inform the other of
any material communication from any Government Antitrust Entity regarding any of
the transactions contemplated hereby. Buyer shall advise the Company promptly in
respect of any understandings, undertakings or agreements (oral or written) that
Buyer proposes to make or enter into with any Government Entity in connection
with the transactions contemplated hereby. Buyer and the Selling Members agree
that all telephonic calls and meetings with a Government Antitrust Entity
regarding the transactions contemplated hereby or any of the matters described
in this Section 10.1(b) shall include representatives of each of Buyer and the
Selling Members.
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10.2 The Consolidation Transactions.
(a) Transferred Assets. On or prior to the Closing Date,
the Selling Members shall cause Gage to assign and transfer to the Company, and
the Company hereby agrees to accept and assume from Gage, on the terms and
subject to the conditions set forth in this Section, all of Gage's right, title
and interest in and to the following specific assets (hereinafter collectively
referred to as the "Assets"):
(i) All of the equipment, machinery, furniture,
fixtures, furnishings, leasehold improvements and other tangible personal
property owned by Gage and used by Gage in the operation of the Executional
Businesses, including, without limitation, those items listed on SCHEDULE 10.2
to this Agreement, but excluding the Excluded Equipment.
(ii) The real and personal property leases of
Gage relating to the Executional Businesses, including those listed on SECTION
6.2(G)(III) of the Disclosure Schedule;
(iii) All inventories of supplies, raw materials,
parts, finished goods, work-in-process, product labels and packaging materials
that are usable or salable by Gage in the Executional Businesses and are owned
by Gage on the Closing Date, and all orders or contracts for the purchase of
inventories, raw materials, parts, or supplies ordered by Gage in the Ordinary
Course of the Business prior to the Closing Date;
(iv) Gage's interest in all rights and incidents
of interest of Gage as of the Closing in and to all leases, licenses,
agreements, proposals or other contracts or contractual rights or obligations of
Gage which relate to the Executional Businesses, including without limitation
those which are listed on Schedule 10.2;
(v) All rights to the Intellectual Property;
provided, however, that the use of the Gage name and logo shall be used only on
the terms as set forth in Section 10.4 hereto;
(vi) All books, records and other documents and
information relating to the Assets and the Executional Businesses (other than
employee personnel and payroll records), including, without limitation, all
customer, prospect, dealer and distributor lists, sales literature, inventory
records, purchase orders and invoices, sales orders and sales order log books,
customer information, commission records, correspondence, product data, material
safety data sheets, price lists, product demonstrations, quotes and bids,
catalogues and brochures of every kind and nature;
(vii) Seller's right to use the telephone number
currently being used at any office of the Executional Business;
(viii) All assignable permits, licenses and other
third party approvals necessary to operate the Executional Businesses;
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(ix) All prepaid expenses and deposits relating
to the operation of the Executional Businesses or relating to the Assets;
(x) Except as set forth in Section 10.2(b)(ii),
all accounts receivable and notes receivable of Gage arising in the Ordinary
Course of Business of the Executional Businesses;
(b) Excluded Assets. Gage shall not transfer and the
Company shall not assume or obtain any rights to any of the other assets of Gage
(the "Excluded Assets") including, without limitation, the following:
(i) all cash or cash equivalents of Gage on hand or on
deposit at any bank;
(ii) all accounts receivable and notes receivable of Gage
from Affiliates of Gage;
(iii) Gage's minute book and other corporate records
relating to internal governance of Gage, qualifications to conduct business as a
foreign company, taxpayer and other identification numbers and other documents
relating to the organization, maintenance and existence of Gage as a limited
liability company;
(iv) the Excluded Equipment;
(v) any of the rights of Gage under this Agreement or
any of the Transaction Documents; and
(vi) Tax refunds relating to Tax periods ending on or
before the Closing Date.
(c) Assumed Liabilities. The Company agrees to assume and
to pay and/or perform, in accordance with their respective terms and from and
after the Closing Date, each of the following liabilities, executory obligations
or commitments of Gage (collectively, the "Obligations"):
(i) all liabilities of Gage relating to the
Executional Businesses that are set forth on the face of the Interim Financial
Statements or the Final Closing Balance Sheet or disclosed in the Schedules
hereto;
(ii) all liabilities of Gage relating to the
Executional Businesses which have arisen after the date of the Interim Financial
Statements in the Ordinary Course of Business (other than any liability
resulting from, arising out of, relating to, in the nature of, or caused by any
breach of contract, breach of warranty, tort, infringement, or violation of law
not accrued on the Final Closing Balance Sheet or disclosed in the Schedules
hereto);
(iii) Gage's executory obligations under all
leases, licenses, agreements, proposals or other contracts of Gage which relate
to the Executional Businesses; including
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without limitation, the agreements and real property leases listed in Sections
10.2 and 6.2(g)(iii) of the Disclosure Schedule other than the Marquette
Agreements and the Prudential Agreement;
(iv) Gage's executory obligations under any
unfilled customer contracts, commitments or purchase or sales orders relating to
the Executional Businesses;
(v) all other liabilities and obligations of
Gage set forth in SCHEDULE 10.2(C)(V).
The Company shall not assume, and nothing contained in this Agreement shall be
construed as an assumption by the Company of, any liabilities, obligations or
undertakings of Gage of any nature whatsoever, whether fixed or contingent,
known or unknown, other than the Obligations. Gage shall be responsible for all
of the liabilities, obligations and undertakings not specifically assumed by
Company hereunder. Without limiting the generality of the foregoing, the Company
shall not assume, and nothing contained in this Agreement shall be construed as
an assumption by the Company of, any liabilities of Gage for Taxes resulting
from any audit of the Tax Returns of Gage described in SECTION 6.2(H) of the
Disclosure Schedule.
(d) Other than as set forth above, Company shall not
assume, and nothing contained in this Agreement shall be construed as an
assumption by Company of, any liabilities, obligations or undertakings of Gage
not relating to the Executional Businesses. Without limiting the foregoing,
Buyer will assume no liability with respect to (i) any deferred compensation
arrangement for executives of any component of the Executional Businesses; (ii)
any preclosing employee benefit liability including, without limitation, any
claim, deductible or incurred-but-not-reported expense associated with any
employee benefit plan (specifically including worker's compensation and medical
programs) of the Executional Businesses, to the extent the liability relates to
any period prior to the Closing that is not reflected in the Final Closing
Balance Sheet, (iii) any stay bonuses or closing incentive payments; (iv) any
preclosing tax liability that is not reflected in the Final Closing Balance
Sheet; (v) liabilities associated with pending litigation; (vi) liabilities of
any component of the Executional Businesses to any related entity or Affiliate
(other than Xxxxxxx Companies Inc.), including, without limitation, guarantee
obligations; or (vii) liabilities of Gage International, L.L.C., Gage U.K. or
Gage GmbH.
(e) Notwithstanding the foregoing, to the extent any law
or the terms of any contract to be assigned by Gage to the Company pursuant to
this Section 10.2 prohibits the assignment or novation of such contract on the
Closing Date, the performance obligations of Gage thereunder shall, unless not
permitted by such contract, be subcontracted or subleased to the Company until
such contract has been fully performed by the Company or assigned or novated.
Gage shall cooperate with the Company and the Buyer to obtain all necessary
consents and the Company shall take all necessary actions to perform and
complete all such contracts in accordance with their terms even if neither
assignment, novation, subcontracting nor subleasing is permitted by the other
party.
(f) To the extent that any transfers and assumptions
contemplated by this Section 10.2 shall not have been consummated on or prior to
the Closing Date, the parties shall
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cooperate to effect such transfers and assumptions as promptly following the
Closing Date as shall be practicable, it nonetheless being agreed and understood
by the parties that the Selling Members shall not be liable in any manner to any
other party for any failure of any of the transfers contemplated by this Section
10.2 to be consummated on or prior to the Closing Date. Subject to the
provisions of Section 10.2(e), nothing herein shall be deemed to require the
transfer of any assets or the assumption of any liabilities which by their terms
or by operation of law cannot be transferred or assumed; provided that if any of
the transfers contemplated under this Section 10.2 have not been consummated,
effective as of or after the Closing Date (i) Gage shall thereafter hold such
assets for the benefit of the Company (at the expense of the Company) and retain
any such liabilities for the account of the Company, and take such other action
as may be reasonably requested by the Company, at the Company's expense, in
order to place the Company, insofar as reasonably possible, in the same position
as would have existed had such asset or liability been transferred as of the
Closing Date, (ii) unless not permitted by law, the Company shall pay, perform
and discharge fully all obligations of Gage thereunder from and after the
Closing Date, (iii) Gage shall, without further consideration therefor, pay and
remit to the Company promptly all monies, rights and other considerations
received in respect of any such performance. As and when any such asset or
liability becomes transferable, such transfer shall be effected forthwith.
10.3 Employee Matters.
(a) Effective as of the Closing Date, Gage, in connection
with the Consolidation Transactions, intends to transfer to the Company and the
Company shall hire (at no expense to Gage) all employees of Gage directly
engaged in performing services for the Executional Businesses other than those
employees set forth on SCHEDULE 10.3. Immediately after the Closing, the Company
will continue the employment of all employees of the Company. The Company shall
provide its employees (including such transferred employees) with compensation
and employee benefits after the Closing which, in the aggregate, are no less
favorable than those provided to other employees of Buyer and its subsidiaries
with similar title and responsibilities.
(b) Gage shall 100% vest the account balances in the Gage
Marketing Group Employees' Savings and Investment Plan of all participating Gage
employees transferred to the Company as part of such transfer. At the written
request of the Buyer, Gage shall transfer such fully vested account balances to
a Code Section 401(k) plan of the Company or of the Buyer as directed by Buyer.
On or prior to the Closing Date, Gage shall pay any and all compensation, pay in
lieu of vacation and severance pay that may be due and payable to Gage employees
transferred to the Company to the extent such amounts are not reflected in the
Final Closing Balance Sheet. In addition, Gage shall be responsible for paying
all claims for other benefits of any kind or description whatsoever relating to
employment, or claims incurred, prior to the Closing Date, of Gage employees
transferred to the Company to the extent such amounts are not reflected on the
Final Closing Balance Sheet. All Gage employees transferred, effective as of the
Closing Date, to the Company shall be entitled to participate in the Company's
Plans on the same basis as similarly situated Company employees.
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(c) This Section 10.3 is an agreement solely between the
Selling Members and Buyer. Nothing herein, whether expressed or implied confers
upon any Employee or any other person any rights or remedies including without
limitation, (i) any right to employment or recall, (ii) any right to continued
employment for a specified period, or (iii) any right to claim any particular
compensation, benefit or aggregation of benefits of any kind or nature
whatsoever. Except as otherwise provided in this Section 10.3 and in Section
12.5, the Company and Buyer make no representations, warranties or covenants
with respect to any compensation or benefits to be offered or provided to
employees of Gage subsequent to the Closing Date.
10.4 Use of Gage Name and Logos. After the Closing Date
and until the later to occur of (i) the third anniversary date of the
termination of the Non Competition and Co-Marketing Agreement and (ii) the third
anniversary of the date on which Xxxxx X. Xxxx ceases to be affiliated in any
capacity with the Buyer (other than as a shareholder), the Company shall have
the right to use, and to authorize others to use on the product labels,
packaging materials and marketing materials used by the Company at and after the
Closing Date all of the trade names, trademarks and logos owned by Gage (the
"Gage Intellectual Property") and currently used in the operation of the
Executional Businesses; provided, however, that Buyer shall use the Gage
Intellectual Property in such manner until the third anniversary of the Closing
Date. No royalty or other fees shall be payable by the Company for the right to
use such trade names, trademarks and logos. Buyer agrees that for the term of
the Consulting Agreement, the name of Buyer's Marketing Support Services
Division, which is acquired as a part of this transaction, shall be "Gage
Marketing Support Services," and may also be referred to as "A division of AHL,"
and Buyer shall not, in any case, use the name "Gage Marketing Group."
10.5 Release of the Company from Gage Debt Instruments.
The Selling Members shall use all reasonable efforts to cause the third parties
under the Prudential Agreement and the Marquette Agreements to release the
Company from any obligations under said agreements.
10.6 Board Seat. Buyer shall cause Xxxxx X. Xxxx to be
added to its Board of Directors as soon as practicable after the Closing, and,
in any event, Buyer shall nominate Xx. Xxxx to be elected or reelected, as the
case may be, to its Board of Directors at its next annual meeting and shall
recommend to the shareholders of Buyer that Xx. Xxxx be elected to the Board of
Directors of Buyer at such meeting.
10.7 Accounts Receivable. After the Closing, Buyer shall
cause the Company to collect its accounts receivable existing as of the Closing
Date in the Ordinary Course of Business. To the extent that the total amount of
the Accounts Receivable of the Company on the Closing Date, which shall be
listed on a schedule delivered by the Selling Members to the Buyer at Closing,
(the "Transferred Receivables"), net of any reserve relating thereto, has not
been collected as of six months from the Closing Date, Buyer shall have the
right, exercisable upon delivery of written notice to Gage within one year of
the Closing Date, to cause Gage to indemnify Buyer for any such shortfall,
subject to the limitations on indemnification set forth in Article 10 hereto,
including the Principal Members Basket. In the event that Gage must make any
such shortfall payment, Buyer agrees to transfer to Gage any uncollected
Transferred
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Receivables and to cooperate with Gage in any attempt by Gage to collect such
Transferred Receivables. Buyer acknowledges and agrees that Gage shall have the
right to exercise any and all remedies Gage may have, at law or in equity, to
collect such Transferred Receivables. Buyer agrees that it shall not, without
Gage's consent, agree to any reduction, offset or concession relating to the
Transferred Receivables.
ARTICLE 11
CONDITIONS TO SELLING MEMBERS' OBLIGATION
The obligations of the Selling Members to sell the Purchased
Units is subject to the fulfillment, or written waiver by the Selling Members,
prior to or at the Closing of the following conditions:
11.1 Buyer Performance. All representations and warranties
by Buyer contained in this Agreement shall be true and correct in all material
respects at and as of the Closing as though such representations and warranties
were made at and as of said time (unless limited by their term to a prior date)
other than breaches of such representations and warranties which would not be
reasonably expected to have a Material Adverse Effect. Buyer shall have
performed and complied with, in all material respects, all covenants,
obligations and agreements of this Agreement to be performed and complied with
by Buyer at or before the Closing. The Selling Members shall have received on
the Closing Date a certificate executed by Buyer affirming the matters discussed
in this Section 11.1.
11.2 Consents and Approvals. The Selling Members and Buyer
shall have obtained all consents, authorizations and approvals under all
statutes, laws, ordinances, regulations, rules, judgments, decrees and orders of
any Governmental Entity or of any other person required to be obtained by the
Selling Members or Buyer, as the case may be, in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (including, without limitation, expiration or
termination of the waiting period applicable to the consummation of the sale of
the Purchased Units under the HSR Act).
11.3 No Litigation. There shall not be threatened,
instituted or pending any action or proceeding, before any Governmental Entity,
(a) challenging or seeking to make illegal, or to delay or otherwise directly or
indirectly restrain or prohibit, the consummation of the transactions
contemplated hereby or seeking to obtain material damages in connection with
such transactions, (b) seeking to prohibit direct or indirect ownership or
operation by Buyer of all or a material portion of the business or assets of the
Company, or to compel Buyer or any of its Affiliates or the Company to dispose
of or to hold separately all or a material portion of the business or assets of
Buyer and its Affiliates or of the Company, as a result of the transactions
contemplated hereby, (c) seeking to invalidate or render unenforceable any
material provision of this Agreement or any of the other Transaction Documents,
or (d) otherwise relating to and materially adversely affecting the transactions
contemplated hereby.
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11.4 Delivery of Documents. Gage shall have received from
the Company an executed copy of the Transaction Documents.
ARTICLE 12
CONDITIONS TO BUYER'S OBLIGATION
The obligation of Buyer to purchase the Purchased Units is
subject to the fulfillment, or written waiver by Buyer, prior to or at the
Closing of the following conditions:
12.1 The Selling Members' Performance. All representations
and warranties by the Selling Members contained in this Agreement shall be true
and correct in all material respects and as of the Closing as though such
representations and warranties were made at and as of said time (unless limited
by their term to a prior date) other than breaches of such representations and
warranties which would not reasonably be expected to have a Material Adverse
Effect with the aforementioned determined without regard to any materiality
qualifications set forth in the representations and warranties. The Selling
Members shall have performed and complied with, in all material respects, all
covenants, obligations and agreements of this Agreement to be performed and
complied with by the Principal Members at or before the Closing. The Buyer shall
have received on the Closing Date a certificate executed by the Principal
Members affirming the matters discussed in this Section 12.1.
12.2 Consents and Approvals. The Selling Members and Buyer
shall have obtained all consents, authorizations and approvals under all
statutes, laws, ordinances, regulations, rules, judgments, decrees and orders of
any Governmental Entity required to be obtained by the Selling Members or Buyer,
as the case may be, in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, expiration or termination of the waiting period
applicable to the consummation of the sale of the Purchased Units under the HSR
Act) and any consents required under the agreements set forth under SCHEDULE
8.3.
12.3 No Litigation. There shall not be threatened,
instituted or pending any action or proceeding, before any Governmental Entity,
(a) challenging or seeking to make illegal, or to delay or otherwise directly or
indirectly restrain or prohibit, the consummation of the transactions
contemplated hereby or seeking to obtain material damages in connection with
such transactions, (b) seeking to prohibit direct or indirect ownership or
operation by Buyer of all or a material portion of the business or assets of the
Company or the Executional Businesses, or to compel Buyer or any of its
Affiliates or the Company to dispose of or to hold separately all or a material
portion of the business or assets of Buyer and its Affiliates or of the Company,
as a result of the transactions contemplated hereby, (c) seeking to invalidate
or render unenforceable any material provision of this Agreement or any of the
other Transaction Documents, or (d) otherwise relating to and materially
adversely affecting the transactions contemplated hereby.
12.4 No Material Adverse Effect. There shall not have
occurred, since the date of this Agreement, any event, change or circumstance
constituting a Material Adverse Effect other than a Material Adverse Effect
caused by a nonrecurring event.
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12.5 Delivery of Documents. Buyer and/or the Company shall
have received from Gage an executed copy of the Transaction Documents. Xxxxx
Xxxxx, Xxxxxx X. Xxxxxx, Xxxxx Xxxxx and at least one out of Xxx Xxxxxxxx or
Xxxx Xxxxx shall have entered into Employment Agreements, which shall have total
compensation and employee benefits comparable to those in place as of the date
hereof.. Gage shall not have offered employment to, or agreed to employ after
the Closing Date, any of the persons named in the previous sentence. Xxxxx Xxxx
shall have entered into a Consulting Agreement with the Buyer substantially in
the form attached hereto as Exhibit G.
12.6 Completion of Consolidation Transactions. The
Consolidation Transactions shall have been consummated in form and substance
reasonably satisfactory to Buyer.
12.7 Materiality of Conditions. Notwithstanding anything
contained herein to the contrary, any condition involving the accuracy of
representations and warranties made by any of the Selling Members hereunder, or
the performance of covenants, obligations and agreements by any of the Selling
Members shall be deemed fulfilled, and Buyer shall not be entitled to fail to
consummate the transactions contemplated by this Agreement or terminate the
Agreement on such basis, if the respects in which such conditions have not been
performed or such representations and warranties are untrue, in the aggregate,
do not constitute a Material Adverse Effect.
12.8 Opinion of Counsel. The Buyer shall have received an
opinion of counsel to Gage, Company and Selling Members, dated the Closing Date,
in form and substance reasonably satisfactory to Buyer's counsel, with regard to
the transactions contemplated by this Agreement.
ARTICLE 13
TERMINATION
13.1 Termination. This Agreement may be terminated at any
time prior to the Closing as follows:
(a) Either Buyer, on the one hand, or the Selling Members
and Gage, on the other hand, may, without liability to the other party,
terminate this Agreement by notice to the other party:
(i) subject to Sections 8.7 and 9.5 hereto, if
the Closing shall not have occurred on or before August 31, 1998;
(ii) subject to Section 10.1, if any court of
competent jurisdiction shall have issued a preliminary injunction which
restrains or enjoins any of the transactions
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contemplated hereby; provided, however, that no such termination shall be
permitted by any party hereto unless it shall have complied with Section
10.1(b);
(iii) if any of the conditions precedent to the
performance of such party's obligations at the Closing can not be fulfilled.
(b) By Buyer if the Updated Disclosure Schedule discloses
an event or condition which would reasonably be expected to result in a Material
Adverse Effect.
(c) Buyer, on the one hand, and Gage and the Selling
Members, on the other hand, may terminate this Agreement by their mutual written
consent.
(d) By Buyer if Buyer reasonably determines following the
visits with customers of the Executional Businesses contemplated by Section 8.6
that there will be any change in the Company's relationships with its customers
after the date of this Agreement that would have a Material Adverse Effect on
the Executional Businesses.
13.2 Effect of Termination. If this Agreement is
terminated in accordance with Section 13.1, this Agreement (except for Sections
9.1 and 15.2 which shall survive such termination), shall no longer be of any
force or effect and there shall be no liability on the part of any party or any
of its directors, officers, shareholders or agents, except in the case of
termination because of a material default or material breach resulting from the
intentional or willful fault of another party, in which case the aggrieved party
or parties may obtain its available remedies at law (including suit for damages)
and in equity (including suit for specific performance) and may recover from the
defaulting party the amount of out-of-pocket expenses incurred by such aggrieved
party in connection with this Agreement or the transactions contemplated hereby.
If this Agreement shall be terminated, each party will (i) redeliver all
documents, work papers and other materials of any other party relating to this
Agreement or the transactions contemplated hereby, whether obtained before or
after the execution of this Agreement, to the party furnishing the same, and
(ii) destroy all documents, work papers and other materials developed by its
accountants, agents and employees in connection with the transactions
contemplated hereby which embody any proprietary information or trade secrets
furnished by any party hereto or deliver such documents, work papers and other
materials to the party furnishing such proprietary information or trade secrets
or excise such proprietary information or trade secrets therefrom and all
information received by any party hereto with respect to the business of any
other party or any of its subsidiaries (other than information which is a matter
of public knowledge or which has heretofore been or is hereafter published in
any publication for public distribution or filed as public information with any
governmental authority) shall not at any time be used for any personal advantage
or disclosed by such party to any third person to the detriment of the party
furnishing such information.
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ARTICLE 14
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
14.1 Survival of Representations, Warranties. All
representations and warranties contained in Article 6 and in Article 7 and the
indemnification obligation hereunder with respect thereto, shall survive the
Closing and until April 30, 2000; provided, however that (i) the representations
and warranties set forth in Sections 6.2(h) and 6.2(m) shall survive until the
expiration of the applicable statute of limitations; (ii) the indemnity
obligation set forth in Section 14.2(d) shall survive until the first
anniversary of the Closing Date; (iii) the indemnity obligations set forth in
Section 14.2(e) shall survive until the Company is released from any and all
obligations it may have pursuant to the agreements described in such Section;
and (iv) the indemnity obligations set forth in Sections 14.2(c), (f), (g) and
(h) and the representations and warranties set forth in Sections 6.1(a), 6.1(b),
and 6.2(c) shall survive indefinitely. This Section 14.1 shall not limit any
covenant or agreement of the parties that by its terms contemplates performance
after the Closing Date.
14.2 Indemnification Obligations of the Principal Members.
Subject to the terms and conditions of this Article 14, the Principal Members,
jointly and severally, agree to indemnify and hold Buyer harmless against any
and all Damages, except as expressly limited by the terms of Section 14.3,
resulting from or relating to:
(a) any breach of any representation or warranty
contained in Article 6 of this Agreement; provided that any claim by Buyer for
indemnification under this paragraph (a) shall be made within the survival
period for said breach as provided in Section 14.1 and no later;
(b) any breach of any covenant of the Selling Members or
Gage, as the case may be, contained in this Agreement; provided that any claim
for indemnification by Buyer under this paragraph (b) for the breach of any
covenant of the Selling Members contained in this Agreement may be made no later
than April 30, 2000;
(c) any liabilities for (i) Taxes levied on or calculated
based upon the revenues or income of the Company (including for such purpose
sales and use taxes and the Michigan Single Business Tax) and payable by the
Company on or after the Closing Date with respect to any taxable period ending
on or prior to the Closing Date (treating any taxable period that begins before
and ends after the Closing Date as if such taxable period had ended on the
Closing Date), to the extent such liabilities exceed any reserves for Tax
liabilities on the Final Closing Balance Sheet and (ii) Taxes resulting from any
audit of the Tax Returns of the Company or Gage described in Section 6.2(h) of
the Disclosure Schedule;
(d) the shortfall in collections of the Transferred
Receivables to the extent set forth in Section 10.7;
(e) any liabilities with respect to the Prudential
Agreement and the Marquette Agreements;
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(f) any liabilities with respect to events, changes or
circumstances of a non-recurring nature occurring after the date of this
Agreement and prior to the Closing, to the extent the same would, if recurring,
result in a Material Adverse Effect;
(g) any liabilities with respect to worker's compensation
claims that have been incurred but not reported, occurring on or prior to the
Closing Date; and
(h) any liability of Gage relating to the Excluded
Businesses other than the Obligations.
14.3 Limitations on the Principal Members' Indemnification
Obligations.
(a) The Principal Members shall have no obligation to
provide indemnification pursuant to Section 14.2(a) or Section 14.2(d) except to
the extent that the aggregate amount of indemnification to which Buyer, but for
this Section 14.3, otherwise shall have become entitled hereunder shall exceed
$650,000 (the "Principal Members Basket"), in which event the Principal Members
shall be obligated, subject to the limitations set forth in this Section 14.3,
to provide indemnification only with respect to all amounts in excess of the
Principal Members Basket. It is specifically acknowledged and agreed that,
notwithstanding the foregoing sentence, that the "Principal Members Basket" of
$650,000 provided for in this Section 14.3(a) shall not be applicable to any
claim for indemnity by the Buyer pursuant to Section 14.2(a) that is based upon
a breach of, or inaccuracy in, any warranty or representation, of the Selling
Members or Gage contained in Sections 6.1(a), 6.1(b), 6.2(c), or 6.2(u). Except
as otherwise provided in this sentence, in no event shall the Principal Members
have an indemnification obligation hereunder to Buyer in connection with any
individual claim where the Damages are less than $7,500 ("Small Claim") and any
Small Claim shall not count towards the determination of the Principal Members
Basket; provided, however, that such limitation shall not apply to claims for
indemnity pursuant to subparagraphs (c), (e), (f) or (g) of Section 14.2.
(b) Notwithstanding anything contained in this Agreement
to the contrary, the Principal Members shall have no liability for
indemnification pursuant to Section 14.2 with respect to any claim for
indemnification (i) arising directly or indirectly as a result of an act,
omission or transaction of Buyer where the principal purpose thereof is to
precipitate a claim for indemnification hereunder, (ii) to the extent provision
for such claim or for claims of the same general nature (including, without
limitation, bad debts or litigation claims) have been made, or the matter has
otherwise been taken into account, in the Final Closing Balance Sheet, (iii)
arising solely from a change by Buyer in accounting principles relating to the
Company after the Closing Date, (iv) arising from a change in law or regulation
(including Taxes and Environmental Laws) having a retroactive effect, and (v)
where such claim involves the loss or reduction of a tax benefit or right to
repayment of Taxes, prior to the date on which such tax benefit would have
otherwise been utilized or such repayment would have been due (but for such
claim for Taxes), such claim to be subject to indemnification as of such date.
Any indemnification to which Buyer, but for the immediately preceding sentence,
otherwise would have become entitled hereunder, shall not be taken into account
in calculating the Principal Members Basket.
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(c) Subject to the exceptions described in this clause
(c), notwithstanding any other provision contained in this Agreement or the
other Transaction Documents to the contrary, in no event shall the Principal
Members have any liability for indemnification pursuant to Section 14.2(a), the
other terms of this Agreement or the other Transaction Documents in an aggregate
amount in excess of $8,110,000; provided, however, that any claim for
indemnification made by Buyer with respect to (i) a breach of the
representations or warranties contained in Sections 6.1(a), 6.1(b), and 6.2(c),
(ii) a claim for indemnity pursuant to subparagraphs (c), (e) and (g) of Section
14.2, and (iii) any action or proceeding brought on the basis of fraud shall not
be subject to such liability limitation nor in any manner be applied toward such
liability limitation.
14.4 Buyer Indemnification Obligations. Subject to the
terms and conditions of this Article 14, Buyer agrees to indemnify and hold the
Selling Members harmless against any and all Damages, except as expressly
limited by the terms of Section 14.5, resulting from or relating to:
(a) any breach of a representation or warranty of Buyer
contained in this Agreement; provided that any claim by the Selling Members for
indemnification under this paragraph (a) shall be made no later than a date two
years from and after the Closing Date;
(b) any breach of any covenant of Buyer contained in this
Agreement; provided that any claim for indemnification by the Selling Members
under this paragraph (b) for breach of any covenant of Buyer contained in this
Agreement may be made no later than April 30, 2000;
(c) any action or proceeding, judicial or administrative,
instituted by any third party for Damages arising out of the actions or
inactions of Buyer or the Company with respect to the Company's business after
the Closing Date (including, but not limited to, any noncompliance by the
Company occurring after the Closing Date with any Environmental Laws, any
Release, threatened Release or presence of any Hazardous Material at the real
property owned, leased or occupied by the Company occurring after the Closing
Date or any disposal or arrangement therefor of any Hazardous Material or other
substance generated by the Company after the Closing Date);
and any and all actions, suits, demands, assessments or judgments with respect
to any claim arising out of or relating to the subject matter of the
indemnification.
14.5 Limitations on Buyer Indemnification Obligations.
Buyer shall have no obligation to provide indemnification pursuant to Section
14.4(a) except to the extent that the aggregate amount of indemnification to
which the Selling Members, but for this Section 14.5, otherwise shall have
become entitled hereunder shall exceed $650,000 (the "Buyer Basket"), in which
event Buyer shall be obligated, subject to the next succeeding sentence, to
provide indemnification with respect to all amounts in excess of the Buyer
Basket. It is specifically acknowledged and agreed that, notwithstanding the
foregoing sentence, that the "Buyer Basket"
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of $650,000 provided for in this Section 14.5 shall not be applicable to any
claim for indemnity by the Selling Members pursuant to Section 14.4(a) that is
based upon a breach of, or inaccuracy in, any warranty or representation of
Buyer contained in Section 7.5.
14.6 Procedure for Indemnification Claims. The respective
indemnification obligations of the Principal Members and Buyer pursuant to
Sections 14.2 and 14.4 shall be conditioned upon compliance by the Principal
Members and Buyer with the following procedures for indemnification claims based
upon or arising out of any claim, action or proceeding by any person not a party
to this Agreement:
(a) If at any time a claim shall be made or threatened,
or an action or proceeding shall be commenced or threatened, against a party
hereto (the "Aggrieved Party") which could reasonably result in liability of the
other party (the "Indemnifying Party") under its indemnification obligations
hereunder, the Aggrieved Party shall give to the Indemnifying Party prompt
notice of such claim, action or proceeding. Such notice shall state the basis
for the claim, action or proceeding and the amount thereof (to the extent such
amount is determinable at the time when such notice is given) and shall permit
the Indemnifying Party to assume the defense of any such claim, action or
proceeding (including any action or proceeding resulting from any such claim).
(b) If the Indemnifying Party assumes the defense of any
such claim, action or proceeding, the obligation of the Indemnifying Party as to
such claim, action or proceeding shall be limited to taking all steps necessary
in the defense or settlement thereof and, provided the Indemnifying Party is
held to be liable for indemnification hereunder and subject to the limitation on
the amount of indemnification set forth in this Article 14, to holding the
Aggrieved Party harmless from and against any and all Damages caused by or
arising out of any settlement approved by the Indemnifying Party or any judgment
or award rendered in connection with such claim, action or proceeding. The
Aggrieved Party may participate, at its expense, in the defense of such claim,
action or proceeding provided that the Indemnifying Party shall direct and
control the defense of such claim, action or proceeding. The Aggrieved Party
agrees to cooperate and make available to the Indemnified Party all books and
records and such officers, employees and agents of the Aggrieved Party as are
reasonably necessary and useful in connection with the defense. The Indemnifying
Party shall not, in the defense of such claim, action or proceeding, consent to
the entry of any judgment or award, or enter into any settlement, except in
either event with the prior consent of the Aggrieved Party, which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Aggrieved Party of a release from all liability in respect of
such claim, action or proceeding.
(c) If the Indemnifying Party does not assume the defense
of any such claim within thirty (30) days of its tender, action or proceeding,
the Aggrieved Party may defend against such claim, action or proceeding in such
manner as it may deem appropriate. The Indemnifying Party agrees to cooperate
and make available to the Aggrieved Party all books and records and such
officers, employees and agents of the Indemnifying Party as are reasonably
necessary and useful in connection with the defense.
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(d) In the event an Aggrieved Party or Indemnifying Party
shall cooperate in the defense or make available books, records, officers,
employees or agents, as required by the terms of paragraphs (b) and (c),
respectively, of this Section 14.6 the party to which such cooperation is
provided shall pay the out-of-pocket costs and expenses (including reasonable
legal fees and disbursements) of the party providing such cooperation and of its
officers, employees and agents reasonably incurred in connection with providing
such cooperation, but shall not be responsible to reimburse the party providing
such cooperation for such party's time or the salaries or costs of fringe
benefits or other similar expenses paid by the party providing such cooperation
to its officers and employees in connection therewith.
14.7 Other Indemnification Provisions.
(a) The indemnification obligations of the Principal
Members and Buyer under this Section 14 shall constitute the sole and exclusive
remedies of Buyer and the Selling Members, respectively, with respect to the
matters described in Sections 14.2 and 14.4, respectively; provided, however,
that no party's remedies shall be so limited with respect to any action or
proceeding brought on the basis of fraud.
(b) All amounts paid by the Indemnifying Party under this
Article 14 shall be treated as adjustments to the Purchase Price for all tax
purposes.
(c) The amount of any indemnification to be paid under
this Article 14 shall be computed after giving effect to any tax benefits and
any insurance proceeds received by the party entitled to such indemnification.
(d) Notwithstanding any provision herein to the contrary,
to the extent Buyer shall become entitled to any indemnification pursuant to
this Article 14, Buyer first must seek such indemnification from the Escrow
Deposit.
(e) An Aggrieved Party shall take all reasonable steps
necessary or appropriate to mitigate Damages upon becoming aware of any event
that could reasonably be expected to give rise thereto.
ARTICLE 15
MISCELLANEOUS
15.1 Assurance of Further Action. Subject to the terms and
conditions of this Agreement, from time to time prior to or after the Closing,
each of the parties hereto agrees to use commercially reasonable efforts to take
or cause to be taken all action, to do or cause to be done, and to assist and
cooperate with the other party hereto in doing, all things necessary, proper or
advisable under Applicable Laws to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement,
including, but not limited to, (a) the satisfaction of the conditions precedent
to the obligations of any of the parties hereto; (b) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the performance of the obligations hereunder or
thereunder; and
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(c) the execution and delivery of such instruments, and the taking of such other
actions as the other party hereto may reasonably require in order to carry out
the intent of this Agreement.
15.2 Expenses. Whether or not the Closing is consummated,
except as otherwise set forth in this Agreement, all fees and expenses incurred
in connection with the negotiation, preparation, execution and performance of
this Agreement (including without limitation fees and expenses of legal counsel,
accountants and other professionals) shall be paid by the party incurring such
expense; provided, however, that all filing fees, whether incurred by the
Selling Members or Buyer, in connection with the filing of notifications under
and in accordance with the HSR Act shall be borne equally by the parties.
15.3 Waiver. The parties hereto may by written agreement
(i) extend the time for or waive or modify the performance of any of the
obligations or other acts of the parties hereto or (ii) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement.
15.4 Notices. All notices, requests or other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered or mailed first class certified mail postage prepaid
addressed as follows: if to the Selling Members, to X.X. Xxxx, 00000 Xxxxxxx 00,
Xxxxxxxxxxx, Xxxxxxxxx 00000 (with a copy to Xxxxxxx X. XxXxxxxxx, Esq., Xxxxxx
& Xxxxxxx LLP, Xxxxxxxxx Center South, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 55402); if to Buyer, to AHL Services, Inc., Atlanta Financial Center,
3353 Peachtree Road, N.E., suite 0000, Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer (with a copy to Xxxxxxx X. Xxxxxxxx, King &
Spalding, Suite 4900, 191 Peachtree Street, Atlanta, Georgia 30303); or to such
other address as may have been furnished in writing to the party giving the
notice by the party to whom notice is to be given.
15.5 Entire Agreement. This Agreement embodies the entire
agreement among the parties and there have been and are no agreements,
representations or warranties, oral or written among the parties other than
those set forth or provided for in this Agreement. This Agreement may not be
modified or changed, in whole or in part, except by a supplemental agreement
signed by each of the parties.
15.6 Rights Under this Agreement; Nonassignability. This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns, but shall not be assignable by any party
without the prior written consent of the other parties; provided, however, that
Buyer may assign all or any part of its rights under this Agreement and delegate
all or any part of its obligations under this Agreement to one or more
corporations all or substantially all of the capital stock or equity interests
of which are owned by Buyer, in which event all of the rights and powers of
Buyer, and remedies available to it hereunder shall extend to and be enforceable
by each such corporation. Any such assignment and delegation shall not release
Buyer from its obligations hereunder, and Buyer guarantees to the Selling
Members the performance by each such corporation of its obligations hereunder
and under the agreement of such corporation referred to in the penultimate
sentence of this Section 15.6. In the event of any such assignment and
delegation the terms "Buyer" and "party" as used in this Agreement shall be
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deemed to refer to each such corporation where reference is made to actions to
be taken pursuant to this Agreement and the transactions contemplated hereby and
shall be deemed to include both Buyer and each such corporation where
appropriate. As a condition of the Closing, each such corporation shall execute
and deliver to the Selling Members an agreement, in form and substance
satisfactory to the Selling Members and its counsel, to be bound by the terms of
this Agreement, and irrevocably authorizing Buyer to act for it in all matters
pertaining to this Agreement, and representing and warranting to the Selling
Members as to the same matters, with appropriate modifications, set forth in
Section 7. The Selling Members shall be required to deal, and give notices to,
and shall be fully protected in dealing only with, and giving notices only to,
Buyer with respect to all matters pertaining to this Agreement.
Nothing contained in this Agreement is intended to confer upon
any person, other than the parties to this Agreement and their respective
permitted successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
15.7 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Minnesota applicable
to agreements made and to be performed in the State of Minnesota and shall be
construed without regard to (i) any choice of law or conflict of law provision
or rule (whether of the State of Minnesota or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Minnesota and (ii) any presumption or other rule requiring the construction of
an agreement against the party causing it to be drafted. Any legal action in a
proceeding brought in accordance with the terms of Section 15.13 (including for
enforcement of any arbitration award) shall be brought in Hennepin County,
Minnesota, in the Courts of the State of Minnesota or of the United States
District Court for the District of Minnesota or in Xxxxxx County, Georgia, in
the Superior Court of Xxxxxx County or in the United States District Court for
the Northern District of Georgia, as shall be selected by the party instituting
the legal action, and, by execution and delivery of this Agreement, the parties
hereby accept for themselves and in respect of their property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid Courts. The parties
irrevocably consent to the service of process out of any of the aforementioned
Courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the parties at their addresses
referenced in Section 15.4. The parties hereby irrevocably waive any objection
which they may now or hereafter have to laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement or
any of the other Transaction Documents, brought in the Courts referred to above
and hereby further irrevocably waive and agree, to the extent permitted by
Applicable Laws, not to plead or claim in any such Court that any such action or
proceeding brought in any such Court has been brought in an inconvenient forum.
15.8 Publicity. Without consultation with the other party,
no party to this Agreement shall issue any press release or otherwise make any
public statement with respect to this Agreement or the transactions contemplated
hereby, except for such press releases or other statements as the disclosing
party may reasonably determine are required by applicable law, including,
without limitation, a press release to be made by the Buyer and Selling Members
individually in connection with the execution of this Agreement.
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15.9 Headings; References to Sections, Exhibits and
Schedules. The headings of the Sections, paragraphs and subparagraphs of this
Agreement are solely for convenience and reference and shall not limit or
otherwise affect the meaning of any of the terms or provisions of this
Agreement. The references herein to Sections, Exhibits and Schedules, unless
otherwise indicated, are references to sections of and exhibits and schedules to
this Agreement.
15.10 Knowledge. When applied to any party to this
Agreement, the term "knowledge" and any derivatives thereof shall refer only to
the actual knowledge of the party (if a natural person), or in the case of Gage,
the persons set forth on SCHEDULE 15.10, after review of his or her official
files, and no information known by any other employee, or any attorney,
accountant or other representative, of such party shall be imputed to such
party.
15.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but which together
constitute one and the same instrument.
15.12 Dispute Resolution. The parties acknowledge and agree
that they shall cooperate in good faith to resolve promptly any disputes arising
under or related to this Agreement and the Transaction Documents. In the event
the parties are unable to resolve any such dispute on an amicable basis, the
parties agree that in some situations arbitration can be a quick, effective and
relatively inexpensive method of dispute resolution. With these principles in
mind, the parties agree to the following:
(a) Disputes involving a claim or claims that, in total,
seek less than Five Hundred Thousand Dollars ($500,000) in relief and do or does
not involve a claim for equitable relief, will be adjudicated exclusively
through use of the arbitration services provided by the American Arbitration
Association ("AAA"), using the AAA's Commercial Rules. Any such arbitration must
be conducted using the Minneapolis, Minnesota office of the AAA and must be
venued in Minneapolis, Minnesota. The parties agree that the arbitrator's power
to award relief shall be limited to an award of monetary damages (if any),
exclusive of any damages of a special, incidental, consequential or punitive
nature, however termed, and that the arbitrator shall not be entitled to grant
any form of equitable relief, except that the arbitrator shall have the
discretion to award the prevailing party its reasonable attorneys' fees and all
other costs and expenses of such arbitration. The parties further agree that any
award granted by the arbitrator shall not exceed Five Hundred Thousand Dollars
($500,000), exclusive of interest (if any). The parties agree that any attempt
by the arbitrator to exercise power other than as provided for herein, or to
issue an award that violates this Section 15.12(a), shall be null, void and
unenforceable in any forum.
(b) The parties agree that any dispute involving claims
seeking monetary relief exceeding Five Hundred Thousand Dollars ($500,000), or
any claims seeking any form or equitable relief, in whole or in part, shall be
adjudicated exclusively in a court of competent jurisdiction pursuant to Section
15.7 and shall not be subject to arbitration.
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15.13 Action By Selling Members. Each of the Selling Members
hereby agrees that the Selling Members, as a group, shall deal with the Buyer,
the Company and all other third parties in connection with all matters arising
under this Agreement and the other Transaction Documents through Xxxxx X. "Skip"
Gage, and Skip Gage is hereby appointed by each of the Selling Members to act in
such capacity (the "Members' Representative"). The Members' Representative shall
have the power to act on behalf of all of the Selling Members for all purposes,
including administering the post-closing adjustments, the indemnification
procedures and the Escrow Agreement, and the Company, Buyer and such third
parties, respectively, shall be entitled to rely upon, and shall be fully
protected in relying upon, the power and authority of the Members'
Representative to act on behalf of the Selling Members.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first above written.
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ADISTRA, LLC
By /s/ Xxxxx X. Xxxx
------------------------------------
Name: X. X. Xxxx
------------------------------
Title: Chief Executive Officer
-----------------------------
GAGE MARKETING GROUP, LLC
By /s/ Xxxxx X. Xxxx
------------------------------------
Name: X. X. Xxxx
------------------------------
Title: Chief Executive Officer
-----------------------------
SELLING MEMBERS
By /s/ X.X. Xxxx
--------------------------------------
Revocable Trust of Xxxxx X. Xxxx,
dated April 28, 1988
By /s/ Xxxxxxx X. Xxxx
--------------------------------------
Revocable Trust of Xxxxxxx X. Xxxx,
dated April 28, 1988
By /s/ X. X. Xxxx as power of attorney
for Xxxxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxxxx X. Xxxx
------------------------------
By /s/ Xxxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxxx X. Xxxx
------------------------------
By /s/ Xxxxx X. Xxxx
--------------------------------------
Name: Xxxxx X. Xxxx
------------------------------
By /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
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AHL SERVICES, INC.
By /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Co-Chief Executive Officer
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EXHIBITS
Exhibit A: Escrow Agreement
Exhibit B: Lease Agreement
Exhibit C: International Option Agreement
Exhibit D: Noncompetition and Co-Marketing Agreement
Exhibit E: Registration Rights Agreement
Exhibit F: Transition Agreement
Exhibit G: Consulting Agreement
Exhibit H: Terms of Convertible Note
SCHEDULES
TO BE UPDATED PRIOR TO SIGNING
Schedule 1.1(a) Closing Incentive Payments
Schedule 1.1(b) Excluded Equipment
Schedule 2.1 Record Ownership of Membership Units
Schedule 3.2(b) Closing Balance Sheet Principles
Schedule 3.3(a) Form of Preliminary Closing Balance Sheet Report of AALP
Schedule 8.3 Consents required by Buyer
Schedule 8.4 Non-resigning Officers and Directors
Schedule 10.2 Gage Equipment
Schedule 10.2(c)(v) Other Obligations
Schedule 10.3 Excluded Employees
Schedule 15.10 Knowledge
Disclosure Schedule
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