Exhibit 10.3
________________________________________________________________________________
STOCK PURCHASE AGREEMENT
BY AND AMONG
THE STOCKHOLDERS OF WELLESLEY CRANE SERVICE CO., INC.
AND
XXXXXXXXXXX XXXXX SERVICE, INC.
DATED AS OF MARCH 19, 1999
_______________________________________________________________________________
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS................................................... 1
1.1 Definitions.............................................. 1
1.2 Other Definitional Provisions............................ 5
1.3 Cross Reference of Other Definitions..................... 5
ARTICLE II
PURCHASE AND SALE OF STOCK................................... 6
2.1 Stock Purchase.......................................... 6
2.2 Purchase Price for Company Stock........................ 6
2.3 Purchase Price Adjustments.............................. 7
2.4 Distribution of Holdback................................ 8
2.5 Closing Transactions.................................... 9
ARTICLE III
CONDITIONS TO CLOSING........................................ 9
3.1 Conditions to the Purchaser's Obligations............... 9
3.2 Conditions to Each Sellers' Obligations................. 12
ARTICLE IV
COVENANTS PRIOR TO CLOSING................................... 13
4.1 Affirmative Covenants of the Company and Each Seller.... 13
4.2 Negative Covenants of the Company and Each Seller...... 14
4.3 Covenants of Purchaser.................................. 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY........ 15
5.1 Organization and Corporate Power........................ 15
5.2 Capitalization.......................................... 16
5.3 Subsidiaries; Investments............................... 16
5.4 Absence of Conflicts.................................... 16
5.5 Financial Statements and Related Matters................ 17
5.6 Absence of Undisclosed Liabilities...................... 17
5.7 Absence of Certain Developments......................... 17
5.8 Title to Properties..................................... 19
5.9 Taxes................................................... 20
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5.10 Contracts and Commitments............................... 21
5.11 Proprietary Rights...................................... 22
5.12 Litigation; Proceedings................................. 22
5.13 Brokerage............................................... 23
5.14 Governmental Licenses and Permits....................... 23
5.15 Employees............................................... 23
5.16 Employee Benefit Plans.................................. 23
5.17 Insurance............................................... 24
5.18 Officers and Directors; Bank Accounts................... 24
5.19 Affiliate Transactions.................................. 24
5.20 Compliance with Laws.................................... 25
5.21 Environmental Matters................................... 25
5.22 Disclosure.............................................. 26
5.23 Closing Date............................................ 26
ARTICLE VI
REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLERS........ 26
6.1 Authorization of Transactions........................... 26
6.2 Absence of Conflicts.................................... 27
6.3 Brokerage............................................... 27
6.4 Shares.................................................. 27
6.5 Closing Date............................................ 27
ARTICLE VII
REPRESENTATIONS AND WARRANTIES CONCERNING THE
PURCHASER.................................................... 27
7.1 Organization and Corporate Power........................ 28
7.2 Authorization of Transaction............................ 28
7.3 No Violation............................................ 28
7.4 Governmental Authorities and Consents................... 28
7.5 Litigation.............................................. 28
7.6 Brokerage............................................... 28
7.7 Closing Date............................................ 28
ARTICLE VIII
TERMINATION.................................................. 29
8.1 Termination............................................. 29
8.2 Effect of Termination................................... 29
ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS.......................... 30
9.1 Survival................................................ 30
9.2 Indemnification......................................... 30
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ARTICLE X
ADDITIONAL AGREEMENTS......................................... 34
10.1 Continuing Assistance................................... 34
10.2 Tax Matters............................................. 34
10.3 Press Releases and Announcements........................ 34
10.4 Further Transfers....................................... 35
10.5 Specific Performance.................................... 35
10.6 Confidential Information................................ 35
10.7 Transition Assistance................................... 35
10.8 Expenses................................................ 35
10.9 Exclusivity............................................. 36
10.10 Books and Records....................................... 36
10.11 Appointment of Representative........................... 36
10.12 Noncompetition, Nonsolicitation and Confidentiality..... 38
ARTICLE XI
MISCELLANEOUS................................................. 40
11.1 Amendment and Waiver.................................... 40
11.2 Notices................................................. 40
11.3 Binding Agreement; Assignment........................... 40
11.4 Severability............................................ 41
11.5 No Strict Construction.................................. 41
11.6 Captions................................................ 41
11.7 Entire Agreement........................................ 41
11.8 Counterparts............................................ 41
11.9 Governing Law........................................... 41
11.10 Parties in Interest..................................... 42
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INDEX OF EXHIBITS
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Exhibit A Form of Employment Agreement
Exhibit B Form of Lease
Exhibit C Form of Opinion of Counsel to the Company and the Sellers
Exhibit D Form of Opinion of Counsel to the Purchaser
INDEX OF SCHEDULES
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Schedule of Stockholders
Organization Schedule
Conflicts Schedule
Financial Statements Schedule
Developments Schedule
Real Property Schedule
Liens Schedule
Taxes Schedule
Contracts Schedule
Proprietary Rights Schedule
Litigation Schedule
Brokerage Schedule
Permits Schedule
Employees Schedule
Benefit Plans Schedule
Insurance Schedule
Officers, Directors and Bank Accounts Schedule
Affiliated Transactions Schedule
Environmental Schedule
Tax Allocation Schedule
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of March 19, 1999, by and
among the stockholders listed on the Schedule of Stockholders attached hereto
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(collectively, the "Sellers" and individually, a "Seller"), and XXXXXXXXXXX
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CRANE SERVICE, INC., a Massachusetts corporation (the "Purchaser"). The Sellers
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and the Purchaser are referred to herein collectively as the "Parties" and
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individually as a "Party."
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WHEREAS, the authorized capital stock of the Wellesley Crane Service
Co., Inc., a Massachusetts corporation (the "Company") consists of 7,500 shares
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of Common Stock, no par value (the "Common Stock") and 500 shares of Preferred
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Stock, $5 par value (the "Preferred Stock");
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WHEREAS, the Sellers own beneficially and of record 100% of the issued
and outstanding Common Stock; and
WHEREAS, the Purchaser desires to acquire from each Seller, and each
Seller desires to sell to the Purchaser, all of the Common Stock owned by such
Seller (collectively, the "Acquired Stock").
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. For purposes hereof, the following terms, when used
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herein with initial capital letters, shall have the respective meanings set
forth herein:
"Affiliate" of any Person means any other Person controlling,
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controlled by or under common control with such first Person, where "control"
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means the possession, directly or indirectly, of the power to direct the
management and policies of a Person whether through the ownership of voting
securities or otherwise.
"Affiliated Group" means an affiliated group as defined in Section
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1504 of the Code (or any similar combined, consolidated or unitary group defined
under state, local or foreign income Tax law).
"Agreement" means this Stock Purchase Agreement, including all
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Exhibits and Schedules hereto, as it may be amended from time to time in
accordance with its terms.
"CERCLA" means the Comprehensive Environmental Response, Compensation
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and Liability Act of 1980, as amended.
"Code" means the United States Internal Revenue Code of 1986, as
----
amended.
"Environmental Affiliates" of any Person means, with respect to any
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particular matter, all other Persons whose liabilities or obligations with
respect to that particular matter have been assumed by, or are otherwise deemed
by law to be those of, such first Person.
"Environmental and Safety Requirements" means all federal, state,
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local and foreign statutes, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety and pollution or protection of the
environment, including all such standards of conduct and bases of obligations
relating to the presence, use, production, generation, handling, transport,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or by-products,
asbestos, polychlorinated biphenyls (or PCBs), noise or radiation.
"Environmental Lien" means any Lien, whether recorded or unrecorded,
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in favor of any governmental entity or any department, agency or political
subdivision thereof relating to any liability of the Company or any Seller or
any Environmental Affiliate of the Company or any Seller arising under any
Environmental and Safety Requirement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"GAAP" means United States generally accepted accounting principles,
----
consistently applied, as in effect on the date of this Agreement.
"Indebtedness" of any Person means, without duplication: (a)
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indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor or otherwise (other than trade payables and other current
liabilities incurred in the Ordinary Course of Business) and any commitment by
which such Person assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit; (b) indebtedness
guaranteed in any manner by such Person, including a guarantee in the form of an
agreement to repurchase or reimburse; (c) obligations under capitalized leases
in respect of which such Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which obligations such Person
assures a creditor against loss; and (d) any unsatisfied obligation of such
Person for "withdrawal liability" to a "multiemployer plan," as such terms are
defined under ERISA.
"Insider" means, any officer, director, employee, stockholder, partner
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or Affiliate, as applicable, of the Company or any of its Affiliates or any
immediate family member of such Person (including, without limitation, any
Person related by marriage or adoption to any such individual) or any entity in
which any such Person owns any beneficial interest.
"Licenses" means all permits, licenses, franchises, certificates,
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approvals and other authorizations of foreign, federal, state and local
governments or other similar rights.
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"Lien" means any mortgage, pledge, security interest, encumbrance,
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easement, restriction, charge, or other lien.
"Loss" means, with respect to any Person, any diminution in value,
----
consequential or other damage, liability, demand, claim, action, cause of
action, cost, damage, deficiency, Tax, penalty, fine or other loss or expense,
whether or not arising out of a third party claim, including all interest,
penalties, reasonable attorneys' fees and expenses and all amounts paid or
incurred in connection with any action, demand, proceeding, investigation or
claim by any third party (including any governmental entity or any department,
agency or political subdivision thereof) against or affecting such Person or
which, if determined adversely to such Person, would give rise to, evidence the
existence of, or relate to, any other Loss and the investigation, defense or
settlement of any of the foregoing.
"Material Adverse Effect" means any material adverse effect on the
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business, financial condition, operations, or results of operations of the
Company.
"Net Equity" means (i) the book value of the Company's assets minus
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(ii) the book value of the Company's liabilities (including, without limitation,
all Indebtedness of the Company and all fees, expenses and prepayment premiums
and penalties (if any) which are or would be incurred by the Company in
connection with the repayment of such Indebtedness and the release of any
guaranties related thereto), determined in accordance with GAAP.
"Ordinary Course of Business" means the ordinary course of the
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Company's business consistent with past practice (including, without
limitation, with respect to collection of accounts receivable, purchases of
inventory and supplies, repairs and maintenance, payment of accounts payable and
accrued expenses, levels of capital expenditures and operation of cash
management practices generally).
"Permitted Encumbrances" means: (A) statutory liens for current taxes
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or other governmental charges with respect to the Real Property not yet due and
payable or the amount or validity of which is being contested; (B) mechanics,
carriers, workers, repairers and similar statutory liens arising or incurred in
the ordinary course of business for amounts which are not delinquent and which
could not, individually or in the aggregate, have a Material Adverse Effect; (C)
zoning, entitlement, building and other land use regulations imposed by
governmental agencies having jurisdiction over the Real Property which are not
violated by the current use and operation of the Real Property; and (D)
covenants, conditions, restrictions, easements and other matters of record
affecting title to the Real Property which do not unreasonably interfere with
the current use, occupancy, or value, or the marketability of title, of the Real
Property.
"Person" means an individual, a partnership, a corporation, an
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association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof and any other entity.
"Proprietary Rights" means any and all patents, patent applications,
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trademarks, service marks, trademark or service xxxx applications and
registrations, trade and corporate names, copyrights, copyright applications and
registrations, trade secrets, know-how, technology,
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computer software and software systems, business and marketing plans, customer
and supplier lists, confidential information and all other proprietary property,
rights and interests.
"Release" shall have the meaning set forth in CERCLA.
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"Subsidiary" means, with respect to any Person, any corporation a
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majority of the total voting power of shares of stock of which is entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or any partnership, association or
other business entity a majority of the partnership or other similar ownership
interest of which is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes of this definition, a Person is deemed to have a majority ownership
interest in a partnership, association or other business entity if such Person
is allocated a majority of the gains or losses of such partnership, association
or other business entity or is or controls a managing director or general
partner of such partnership, association or other business entity.
"Tax Returns" means returns, declarations, reports, claims for refund,
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information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Taxes" means any federal, state, local, or foreign income, gross
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receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, or other tax, fee, assessment or charge of any
kind whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Transaction Documents" means this Agreement, and all other
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agreements, instruments, certificates and other documents to be entered into or
delivered by any Party in connection with the transactions contemplated to be
consummated pursuant to this Agreement.
"Treasury Regulations" means the United States Treasury Regulations
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promulgated pursuant to the Code.
1.2 OTHER DEFINITIONAL PROVISIONS.
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(a) Accounting Terms. Accounting terms which are not otherwise
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defined in this Agreement have the meanings given to them under GAAP. To the
extent that the definition of accounting term that is defined in this Agreement
is inconsistent with the meaning of such term under GAAP, the definition set
forth in this Agreement will control.
(b) "Hereof," etc. The terms "hereof," "herein" and "hereunder" and
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terms of similar import are references to this Agreement as a whole and not to
any particular provision
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of this Agreement. Section, clause, Schedule and Exhibit references contained in
this Agreement are references to Sections, clauses, Schedules and Exhibits in or
to this Agreement, unless otherwise specified.
(c) Successor Laws. Any reference to any particular Code section or
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any other law or regulation will be interpreted to include any revision of or
successor to that section regardless of how it is numbered or classified.
1.3 CROSS REFERENCE OF OTHER DEFINITIONS. Each capitalized term
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listed below is defined in the corresponding Section of this Agreement:
Term Section
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338(h)(10) Elections 10.2(c)
Acquired Stock Recitals
Actual Net Equity 2.3(b)
Applicable Limitation Date 9.1
Authorized Action 10.10(d)
Cap 9.2(b)(ii)
Cash Portion 2.2
Closing 2.5(a)
Closing Date 2.5(a)
Closing Review 2.3(b)
Closing Transactions 2.5(b)
COBRA 5.16(a)
Common Stock Recitals
Company Preface
Confidential Information 10.11(c)
Draft Computation 2.3(b)
Employment Agreement 3.1(g)
ERISA 5.16(a)
Financial Statements 5.5(a)
Finder's Fee Agreement 2.5(h)
Firm 2.3(b)
Indemnified Party 9.2(e)
Indemnifying Party 9.2(e)
Holdback 2.2
HSR Act 3.1(d)
HSR Filing 5.4
Latest Balance Sheet 5.5(a)
Leased Properties 5.8(b)
Leases 3.1(i)
NES Securities 6.5
Net Equity Shortfall 2.3(b)
Net Stockholders Equity 2.3(c)
Noncompete Period 10.11(a)
Noncompete Payment 10.11(a)
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Noncompeting Parties 10.11(a)
Objection Notice 2.3(b)
Owned Real Property 5.8(a)
Party Preface
Pending Claim 2.4
Purchase Price 2.2
Purchased Equipment Item 2.3(c)
Purchaser Preface
Purchaser Parties 9.2(a)
Real Property 5.8(b)
Remaining Holdback 2.4
Representative 10.10(a)
Seller Preface
Seller Parties 9.2(c)
Surveys 3.1(k)
Title Company 3.1(j)
Title Policies 3.1(j)
Transaction Expenses 10.7
ARTICLE II
PURCHASE AND SALE OF STOCK
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2.1 STOCK PURCHASE. On and subject to the terms and conditions set
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forth in this Agreement, on the Closing Date, the Purchaser shall purchase from
each Seller, and each Seller shall sell and transfer to the Purchaser, all of
the shares of Common Stock owned by such Seller as such ownership is set forth
on the Schedule of Stockholders attached hereto, free and clear of any Liens.
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2.2 PURCHASE PRICE FOR COMPANY STOCK. The aggregate purchase price
--------------------------------
to be paid to Sellers for the Acquired Stock (the "Purchase Price") is
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$12,098,000, which amount shall be paid as follows: (a) the Purchaser shall
deliver to the Sellers $11,598,000 in cash (the "Cash Portion"); and (b) the
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Purchaser shall maintain $500,000 in a book entry account of the Purchaser (the
"Holdback"). The Holdback shall be available to satisfy any amounts owing to
--------
the Purchaser pursuant to Section 2.3 and/or Section 9.2. In addition, the
Purchaser shall make the $325,000 Noncompete Payment described in Section
10.11(a). The Purchase Price will be allocated among the Sellers in the manner
set forth in Schedule of Stockholders attached hereto. The Purchase Price is
------------------------
subject to adjustment pursuant to Section 2.3.
2.3 PURCHASE PRICE ADJUSTMENTS.
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(a) Post-Closing Adjustment for Net Equity. Within 90 days after the
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Closing Date, the Purchaser and its auditors will conduct a review (the "Closing
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Review") of the Net Equity as of the close of business on the day before the
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Closing Date and will prepare and deliver to the Representative a computation of
the Net Equity as of the close of business on the day before the Closing Date
(the "Draft Computation"). The Purchaser and its auditors will give the
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Representative and its auditors an opportunity to observe the Closing Review and
will make available to such Persons all records and work papers used in
preparing the Draft Computation. If the Representative disagrees with the
computation of the Net Equity reflected on the Draft Computation, the
Representative may, within thirty (30) days after receipt of the Draft
Computation, deliver a notice (an "Objection Notice") to the Purchaser setting
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forth the Representative's calculation of the amount of the Net Equity as of the
close of business on the day before the Closing Date. The Purchaser and the
Representative will use reasonable efforts to resolve any disagreements as to
the computation of the Net Equity, but if they do not obtain a final resolution
within 30 days after the Purchaser has received the Objection Notice, the
Purchaser and the Representative will jointly retain an independent accounting
firm of recognized national or regional standing (the "Firm") to resolve any
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remaining disagreements. If the Purchaser and the Representative are unable to
agree on the choice of the Firm, the Firm will be a "big-five" accounting firm
selected by lot (after excluding one firm designated by the Purchaser and one
firm designated by the Representative). The Purchaser and the Representative
will direct the Firm to render a determination within 15 days of its retention
and the Purchaser, the Representative and their respective agents will cooperate
with the Firm during its engagement. The Firm will consider only those items
and amounts in the Draft Computation set forth in the Objection Notice which the
Purchaser and the Representative are unable to resolve. The Firm's
determination will be based on the definition of Net Equity included herein.
The determination of the Firm will be conclusive and binding upon the
Purchaser and the Sellers. The Purchaser and the Sellers shall bear the costs
and expenses of the Firm based on the percentage which the portion of the
contested amount not awarded to each Party bears to the amount actually
contested by such Party. The amount of the Net Equity, as finally determined
pursuant to this Section 2.3(a), is referred to herein as the "Actual Net
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Equity." If the Actual Net Equity is less than $3,473,000, the Purchaser shall
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be entitled to receive from the Holdback, within two (2) business days after the
determination thereof, the amount of such shortfall (the "Net Equity
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Shortfall"); provided, however, that if the amount then left in the Holdback is
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less than the amount of the Net Equity Shortfall, the Representative shall pay
to the Purchaser, within two (2) business days after the determination of the
Actual Net Equity, the amount by which the Holdback is less than Net Equity
Shortfall by wire transfer or delivery of other immediately available funds.
Additionally, if the Actual Net Equity is greater than $3,473,000, the Purchaser
shall pay to the Sellers, within two (2) business days after the determination
of the Actual Net Equity, the amount of such excess by wire transfer or delivery
of other immediately available funds.
(b) Accounts Receivable Adjustment. Notwithstanding anything herein
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to the contrary, and in addition to any other adjustments set forth in this
Agreement, the Purchase Price will be reduced dollar-for-dollar by the aggregate
amount of the accounts receivable of the Company (net of any allowance for
doubtful accounts receivable utilized for purposes of determining the Actual Net
Equity), in existence as of the Closing (the "Accounts Receivable"), which are
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uncollected by the Company (the "Uncollected Receivables Amount") as of the
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120th day following the Closing Date (the "Receivables Determination Date"). If
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there is an Uncollected Receivables Amount, the Purchaser shall be entitled to
receive the Uncollected Receivables Amount from the Holdback within two (2)
business days after the Receivables Determination Date; provided, however, that
if the amount then left in the Holdback is less than the amount of the
Uncollected Receivables Amount, the Representative shall pay, or cause to be
paid, to the Purchaser, within two (2) business days after the Receivables
Determination Date, the amount by which the Holdback is less than Uncollected
Receivables Amount by wire transfer
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or delivery of other immediately available funds. Additionally, if the amount of
accounts receivable actually collected as of the 120th day following the Closing
Date exceeds the Accounts Receivable, the Purchaser shall pay to the
Representative, within two (2) business days after the Receivables Determination
Date, the amount of such excess by wire transfer or delivery of other
immediately available funds. The Company shall not be required to retain a
collection agency, bring any suit, or take any other action out of the ordinary
course of business to collect any of the Accounts Receivable. To the extent that
the Company has not collected the full amount of the Accounts Receivable and the
Purchaser has been compensated therefor in accordance with this Section 2.3, the
Company shall assign any such uncollected Accounts Receivable to the Sellers. In
the event any such assigned uncollected Accounts Receivable is subsequently
received by the Company, the Company shall promptly remit such payment to the
Representative.
2.4 DISTRIBUTION OF HOLDBACK. On the 180th day after the Closing
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Date, the Purchaser shall pay to the Representative an amount equal to the
amount of the Holdback, if any, remaining after (i) all amounts owing to the
Purchaser pursuant to Section 2.3 have been satisfied and (ii) all claims of the
Purchaser under Section 9.2 which have theretofore been finally resolved have
been satisfied (the "Remaining Holdback") less any amount for which the
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Purchaser claims, prior to such 180th day, that it is entitled to receive
indemnification pursuant to Section 9.2 (each, a "Pending Claim"). As soon as
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practicable following final resolution of all Pending Claims, the Purchaser
shall pay to the Representative an aggregate amount equal to the portion, if
any, of the Holdback which remains after payment of the Remaining Holdback and
final resolution of all Pending Claims. In addition, payments of the Holdback to
the Representative pursuant to this Section 2.4 shall include accrued interest
from the Closing Date through the actual payment date at a per annum rate equal
to 5%, calculated on the basis of a 365-day year and the actual number of days
elapsed.
2.5 CLOSING TRANSACTIONS.
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(a) Closing. The closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place at the offices of Xxxxxxxx & Xxxxx,
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000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, commencing at 10:00 a.m. on
the second business day following the satisfaction or waiver of all conditions
to the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) are accomplished or obtained, or at such other
place or on such other date as may be mutually agreeable to the Purchaser and
the Representative, or at such other place or on such other date as may be
mutually agreeable to the Purchaser and the Representative. The date and time
of the Closing are herein referred to as the "Closing Date."
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(b) Closing Transactions. Subject to the conditions set forth in
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this Agreement, the Parties shall consummate the following transactions (the
"Closing Transactions") on the Closing Date:
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(i) each Seller shall deliver to the Purchaser certificates
representing the Acquired Stock owned by such Seller, duly endorsed for
transfer or accompanied by duly executed stock powers;
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(ii) The Purchaser shall deliver to Sellers the Cash Portion in the
manner set forth on the Schedule of Stockholders in immediately available
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funds;
(iii) The Purchaser shall deliver to the Sellers the Noncompete
Payment in the manner set forth on the Schedule of Stockholders; and
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(iv) the Company, the Sellers and the Purchaser, as applicable, shall
deliver the opinions, certificates and other documents and instruments
required to be delivered by or on behalf of such Party under Article III.
ARTICLE III
CONDITIONS TO CLOSING
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3.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The obligation of the
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Purchaser to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following conditions as of the Closing Date:
(a) The representations and warranties set forth in Article V and
Article VI hereof shall be true and correct in all material respects at and as
of the Closing Date as though then made and as though the Closing Date were
substituted for the date of this Agreement throughout such representations and
warranties (without taking into account any disclosures made by the Company or
the Sellers to the Purchaser pursuant to Sections 4.1(g), 5.23 and 6.5 hereof);
(b) The Company and each Seller shall have performed and complied
with all of the covenants and agreements required to be performed by each of
them under this Agreement on or prior to the Closing;
(c) All consents by third parties that are required for the transfer
of the Acquired Stock to the Purchaser, and the consummation of the other
transactions contemplated hereby or that are required in order to prevent a
breach of, a default under, a termination or modification of, or any
acceleration of, any obligations under any material contract to which the
Company is a party shall have been obtained, and payoff letters with respect to
all of the Company's Indebtedness outstanding as of the Closing and releases of
any and all Liens held by third parties against property of the Company shall
have been obtained, all on terms reasonably satisfactory to the Purchaser (which
payoff letters and releases shall only be effective if the amounts owing
thereunder are paid by the Purchaser or the Company at the Closing).
(d) All governmental filings, authorizations and approvals that are
required for the transfer of the Acquired Stock to the Purchaser and the
consummation of the other transactions contemplated hereby shall have been duly
made and obtained on terms reasonably satisfactory to the Purchaser;
(e) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable judgment, decree, injunction, order or ruling would prevent the
performance of this Agreement or any of the transactions contemplated
-9-
hereby, declare unlawful the transactions contemplated by this Agreement, cause
such transactions to be rescinded or materially and adversely affect the right
of the Purchaser to own, operate or control the Company and no judgment, decree,
injunction, order or ruling shall have been entered which has any of the
foregoing effects;
(f) Except as otherwise specified in writing by the Purchaser to the
Representative, all of the Company's directors and officers shall have resigned
and such resignations shall be effective as of the Closing Date;
(g) The Company and each of Xxxx Xxxxxxx and Xxxxx Xxxxxxx shall
have entered into an agreement relating to his employment with the Company (the
"Employment Agreements"), substantially in the form of Exhibit A attached
---------------------- ---------
hereto, and the Employment Agreements shall be in full force and effect;
(h) The Purchaser shall have received an opinion, dated the Closing
Date, of Xxxxxx X. Xxxxxx, counsel to the Company and the Sellers, substantially
in the form of Exhibit C attached hereto;
---------
(i) The Sellers shall have caused the Company to enter into a lease
agreement with Xxxxx and Xxxx Limited Liability Company, with respect to the
facility from which the Company now conducts its business (the "Lease"),
-----
substantially in the form of Exhibit B attached hereto, and the Lease shall be
---------
in full force and effect;
(j) On or prior to the Closing Date, the Sellers shall have
delivered to Purchaser all of the following:
(i) a certificate from the Sellers in a form reasonably satisfactory
to the Purchaser, dated the Closing Date, stating that the preconditions
specified in Sections 3.1(a) through (j) have been satisfied;
(ii) copies of all third party and governmental consents, approvals,
filings, releases and terminations required in connection with the
consummation of the transactions contemplated herein;
(iii) certified copies of the resolutions of the landlord approving
the Lease;
(iv) with respect to the Company, certificates of the secretary of
state of the Commonwealth of Massachusetts and each state where such
company is required to qualify to do business providing that such company
is in good standing in such jurisdiction;
(v) copies of the resignations described in Section 3.1(f);
(vi) all documents and records relating to the business of the
Company that are in any Seller's possession;
-10-
(vii) a landlord consent and estoppel certificate from the Company's
landlord in form and substance satisfactory to the Purchaser; and
(viii) such other documents or instruments as the Purchaser may
reasonably request to effect the transactions contemplated hereby;
(k) The Purchaser shall have obtained on terms and conditions
satisfactory to it all of the debt and equity financing required in order to
consummate the transactions contemplated hereby, and to fund the working capital
requirements of the Company after the Closing;
(l) The Purchaser shall be satisfied in its sole discretion with
the results of its business, accounting, insurance, environmental and legal due
diligence review of the Company; and
(m) All proceedings to be taken by the Company and each Seller in
connection with the consummation of the Closing Transactions and the other
transactions contemplated hereby and all certificates, opinions, instruments and
other documents required to be delivered by the Company and each Seller to
effect the transactions contemplated hereby reasonably requested by the
Purchaser shall be reasonably satisfactory in form and substance to the
Purchaser.
Any condition specified in this Section 3.1 may be waived by the Purchaser;
provided that no such waiver shall be effective unless it is set forth in a
writing executed by the Purchaser.
3.2 CONDITIONS TO EACH SELLERS' OBLIGATIONS. The obligation of
---------------------------------------
each Seller to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following conditions as of the Closing Date:
(a) The representations and warranties set forth in Article VII
shall be true and correct in all material respects at and as of the Closing Date
as though then made and as though the Closing Date were substituted for the date
of this Agreement throughout such representations and warranties (without taking
into account any disclosures made by the Purchaser to Sellers pursuant to
Sections 4.3(a) and 7.7 hereof);
(b) The Purchaser shall have performed and complied with all of the
covenants and agreements required to be performed by it under this Agreement on
or prior to the Closing;
(c) All governmental filings, authorizations and approvals that are
required for the transfer of the Acquired Stock to the Purchaser and the
consummation of the other transactions contemplated hereby shall have been duly
made and obtained on terms reasonably satisfactory to the Representative;
(d) No action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavorable
judgment, decree, injunction, order or ruling would prevent the performance of
this Agreement or any of the transactions contemplated hereby, declare unlawful
-11-
the transactions contemplated by this Agreement, cause such transactions to be
rescinded or materially and adversely affect the right of the Purchaser to own,
operate or control the Company and no judgment, decree, injunction, order or
ruling shall have been entered which has any of the foregoing effects;
(e) The Sellers shall have received an opinion, dated the Closing
Date, of Xxxxxxxx & Xxxxx, counsel to the Purchaser, substantially in the form
of Exhibit D attached hereto;
---------
(e) The Company and each of Xxxx Xxxxxxx and Xxxxx Xxxxxxx shall
have entered into the Employment Agreements, and the Employment Agreements shall
be in full force and effect;
(f) The Company and Xxxxx and Xxxx Limited Liability Company shall
have entered into the Lease, and the Lease shall be in full force and effect;
(g) On or prior to the Closing Date, the Purchaser shall have
delivered to the Representative all of the following:
(i) a certificate from the Purchaser in a form reasonably
satisfactory to the Representative, dated the Closing Date, stating that
the preconditions specified in Sections 3.2(a) through (d), inclusive, have
been satisfied;
(ii) certified copies of the resolutions of the Purchaser's board of
directors approving the transactions contemplated by this Agreement; and
(iii) such other documents or instruments as the Sellers may
reasonably request to effect the transactions contemplated hereby; and
(h) All proceedings to be taken by the Purchaser in connection with
the consummation of the Closing Transactions and the other transactions
contemplated hereby and all certificates, opinions, instruments and other
documents required to be delivered by the Purchaser to effect the transactions
contemplated hereby reasonably requested by the Representative shall be
reasonably satisfactory in form and substance to the Representative.
Any condition specified in this Section 3.2 may be waived by the Representative;
provided that no such waiver shall be effective unless it is set forth in a
writing executed by the Representative.
ARTICLE IV
COVENANTS PRIOR TO CLOSING
4.1 AFFIRMATIVE COVENANTS OF THE COMPANY AND EACH SELLER. Prior to
----------------------------------------------------
the Closing, unless the Purchaser otherwise agrees in writing, each Seller shall
cause the Company, and in the case of Sections 4.1(f), (g), (h) and (i) each
Seller also shall:
-12-
(a) conduct its business and operations only in the Ordinary Course
of Business;
(b) keep in full force and effect its corporate existence and all
rights, franchises and intellectual property relating or pertaining to its
business and use its best efforts to cause its current insurance (or
reinsurance) policies not to be canceled or terminated or any of the coverage
thereunder to lapse;
(c) use its best efforts to carry on the business of the Company in
the same manner as presently conducted and to keep the Company's business
organization and properties intact, including its present business operations,
physical facilities, working conditions and employees and its present
relationships with lessors, licensors, suppliers and customers and others having
business relations with it;
(d) maintain the material assets of the Company in good repair, order
and condition (normal wear and tear excepted) consistent with current needs,
replace in accordance with prudent practices its inoperable, worn out or
obsolete assets with assets of good quality consistent with prudent practices
and current needs and, in the event of a casualty, loss or damage to any of such
assets or properties prior to the Closing Date, whether or not the Company is
insured, either repair or replace such damaged property or use the proceeds of
such insurance in such other manner as mutually agreed upon by the
Representative and the Purchaser;
(e) maintain the books, accounts and records of the Company in
accordance with past custom and practice as used in the preparation of the
Financial Statements;
(f) encourage employees to continue their employment with the Company
after the Closing;
(g) promptly (once any Seller obtains knowledge thereof) inform
Purchaser in writing of any variances from the representations and warranties
contained in Article V or Article VI hereof or any breach of any covenant
hereunder;
(h) cooperate with the Purchaser and use best efforts to cause the
conditions to the Purchaser's obligation to close to be satisfied (including,
without limitation, the execution and delivery of all agreements contemplated
hereunder to be so executed and delivered and the making and obtaining of all
third party and governmental notices, filings, authorizations, approvals,
consents, releases and terminations);
(i) cooperate with the Purchaser in the Purchaser's investigation of
the business and properties of the Company, to permit the Purchaser and its
employees, agents, accounting, legal and other authorized representatives to (i)
have full access to the premises, books and records of the Company at reasonable
hours, (ii) visit and inspect any of the properties of the Company, (iii)
discuss the affairs, finances and accounts of the Company with the respective
directors, officers, partners, key employees, key customers, key sales
representatives, key suppliers and independent accountants of the Company, (iv)
perform a rental fleet count and evaluation, (v) perform a physical inventory
count, (vi) review contracts, (vii) perform a detailed financial review, and
(viii) perform site environmental studies at the expense of Purchaser; and
-13-
(j) terminate the Medical and Dental Reimbursement Plan.
4.2 NEGATIVE COVENANTS OF THE COMPANY AND EACH SELLER. Prior to the
--------------------------------------------------
Closing, unless the Purchaser otherwise agrees in writing, each Seller shall
cause the Company to not:
(a) take any action that would require disclosure under Section 5.7;
(b) make any loans, enter into any transaction with any Insider or
make or grant any increase in any employee's, officer's or director's
compensation or make or grant any increase in any employee benefit plan,
incentive arrangement or other benefit covering any of the employees of the
Company;
(c) establish or, except in accordance with past practice, contribute
to any pension, retirement, profit sharing or stock bonus plan or multiemployer
plan covering the employees of the Company;
(d) except as specifically contemplated by this Agreement, enter into
any contract, agreement or transaction, other than in the Ordinary Course of
Business and at arm's length with unaffiliated Persons;
(e) declare, pay, make or otherwise effectuate any dividends,
distributions, redemptions, equity repurchases or other transactions involving
the Company's capital stock or equity securities, other than distributions to
the Sellers in amounts sufficient to pay federal and state income taxes of the
Company allocable to the Sellers (as a result of the Company's election under
section 1362 of the Code) for the taxable period ending on the Closing Date;
(f) sell, transfer, contribute, distribute, or otherwise dispose of
any securities or assets of the Company to any Person;
(g) incur any indebtedness for borrowed money other than indebtedness
necessary to finance the Company's working capital needs;
(h) agree to do any of the foregoing, or negotiate or have any
discussions with any Person with respect to any of the foregoing, other than in
the Ordinary Course of Business.
4.3 COVENANTS OF PURCHASER. Prior to the Closing, the Purchaser
----------------------
shall:
(a) promptly (once it obtains knowledge thereof) inform the
Representative in writing of any variances from the representations and
warranties contained in Article VII or any breach of any covenant hereunder by
Purchaser;
(b) cooperate with Sellers and use its best efforts to cause the
conditions to each Seller's obligation to close to be satisfied (including,
without limitation, the execution and delivery of all agreements contemplated
hereunder to be so executed and delivered and the making and obtaining of all
third party and governmental filings, authorizations, approvals, consents,
releases and terminations); and
-14-
(c) not take any action which would reasonably be expected to
unreasonably interfere with the business or operations of the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
----------------------
As a material inducement to Purchaser to enter into this Agreement,
each Seller hereby jointly and severally represents and warrants that:
5.1 ORGANIZATION AND CORPORATE POWER. The Company is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and is qualified to do business in every
jurisdiction in which it is required to be qualified. All jurisdictions in which
the Company is qualified to do business are set forth on the "Organization
------------
Schedule" attached hereto. The Company has full power and authority and all
--------
licenses, permits and authorizations necessary to own and operate its properties
and to carry on its business as now conducted. Correct and complete copies of
the Company's Articles of Organization and by-laws have been furnished to the
Purchaser, which documents reflect all amendments made thereto at any time prior
to the date of this Agreement. Correct and complete copies of the minute books
containing the records of meetings of the stockholders and board of directors,
the stock certificate books and the stock record books of the Company have been
furnished to the Purchaser.
5.2 CAPITALIZATION. The authorized, issued and outstanding stock of
--------------
the Company consists of 7,500 shares of Common Stock, no par value, of which
113 shares are issued and outstanding and 500 shares of Preferred Stock, $5 par
value, of which no shares are issued and outstanding. All of the issued and
outstanding shares of the Company's capital stock have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record and
beneficially by the Sellers in the amounts set forth on the Schedule of
-----------
Stockholders and are not subject to, nor were they issued in violation of, any
------------
preemptive rights or rights of first refusal, and are owned of record and
beneficially by the respective Sellers as set forth on the Schedule of
-----------
Stockholders free and clear of all Liens. There are no outstanding or
------------
authorized options, warrants, rights, contracts, calls, puts, rights to
subscribe, conversion rights or other agreements or commitments to which the
Company is a party or which are binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital stock (other than
this Agreement). There are no outstanding or authorized stock appreciation,
phantom stock or similar rights with respect to the Company. There are no
voting trusts, proxies or any other agreements or understandings with respect to
the voting of the capital stock of the Company. The Company is not subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock.
5.3 SUBSIDIARIES; INVESTMENTS. The Company does not own or hold and
-------------------------
has never owned or held any shares of stock or any other security or interest in
any other Person or any rights to acquire any such stock or other security or
interest and the Company has no Subsidiaries.
-15-
5.4 ABSENCE OF CONFLICTS. Except as set forth on the "Conflicts
-------------------- ---------
Schedule" attached hereto, the execution, delivery and performance of the
--------
Transaction Documents and the consummation of the transactions contemplated
thereby by the Company and the Sellers do not and shall not (a) conflict with or
result in any breach of any of the terms, conditions or provisions of, (b)
constitute a default under, (c) result in a violation of, (d) give any third
party the right to modify, terminate or accelerate any obligation under, (e)
result in the creation of any Lien upon the Acquired Stock or the assets of the
Company, or (f) require any authorization, consent, approval, exemption or other
action by or notice or declaration to, or filing with, any court or
administrative or other governmental body or agency, under the provisions of the
Articles of Organization or by-laws of the Company or any indenture, mortgage,
lease, loan agreement or other agreement or instrument to which the Company is
bound or affected, or any law, statute, rule or regulation to which the Company
is subject or any judgment, order or decree to which the Company is subject.
5.5 FINANCIAL STATEMENTS AND RELATED MATTERS.
----------------------------------------
(a) Financial Statements. Attached hereto as the "Financial
-------------------- ---------
Statements Schedule" are copies of the Company's (i) unaudited balance sheet as
-------------------
of December 31, 1998 (the "Latest Balance Sheet") and the related statements of
--------------------
income and cash flows for the 12-month period then ended and (ii) unaudited
balance sheets and statements of income and cash flows for the fiscal years
ended September 30, 1997 and 1996. Each of the foregoing financial statements
(including in all cases the notes thereto, if any) (the "Financial Statements")
--------------------
is accurate and complete, is consistent with the Company's books and records
(which, in turn, are accurate and complete), present fairly the Company's
financial condition and results of operations as of the times and for the
periods referred to therein, and has been prepared in accordance with GAAP,
subject in the case of unaudited financial statements to changes resulting from
normal year-end adjustments for recurring accruals (which shall not be material
individually or in the aggregate) and to the absence of footnote disclosure.
(b) Receivables. The Company's notes and accounts receivable are
-----------
valid receivables, current, and are subject to no valid counterclaims or
setoffs, at the aggregate amount recorded on the Company's books and records as
of the Closing, net of an amount of allowances for doubtful accounts which
relate to those receivables computed in a manner consistent with GAAP and the
accounting practices used in the preparation of the Latest Balance Sheet.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no
----------------------------------
obligations or liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise, whether or not known, whether due or to become due and regardless
of when asserted) arising out of transactions entered into at or prior to the
Closing, or any action or inaction at or prior to the Closing, or any state of
facts existing at or prior to the Closing, except (i) obligations under
contracts or commitments described on the Contracts Schedule attached hereto or
------------------
under contracts and commitments which are not required to be disclosed thereon
(but not liabilities for breaches thereof), (ii) liabilities reflected on the
liabilities side of the Latest Balance Sheet, and (iii) liabilities which have
arisen after the date of the Latest Balance Sheet in the Ordinary Course of
Business or otherwise in accordance with the terms and conditions of this
Agreement (none of which is a liability for breach of contract, breach of
warranty, tort or infringement or a claim or lawsuit or an environmental
liability).
-16-
5.7 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth on the
"Developments Schedule" attached hereto and except as expressly contemplated by
---------------------
this Agreement, since December 31, 1998, the Company has not:
(a) suffered any change that has had or could reasonably be expected
to have a Material Adverse Effect or suffered any theft, damage, destruction or
casualty loss in excess of $10,000, to its assets, whether or not covered by
insurance or suffered any substantial destruction of its books and records;
(b) redeemed or repurchased, directly or indirectly, any shares of
capital stock or other equity security or declared, set aside or paid any
dividends or made any other distributions (whether in cash or in kind) with
respect to any shares of its capital stock or other equity security;
(c) issued, sold or transferred any equity securities, any securities
convertible, exchangeable or exercisable into shares of its capital stock or
other equity securities, or warrants, options or other rights to acquire shares
of its capital stock or other equity securities;
(d) incurred or become subject to any liabilities, except liabilities
incurred in the Ordinary Course of Business;
(e) subjected any portion of its properties or assets to any Lien;
(f) sold, leased, assigned or transferred (including, without
limitation, transfers to any Seller or any Insider) a portion of its tangible
assets, except for sales of inventory in the Ordinary Course of Business, or
canceled without fair consideration any material debts or claims owing to or
held by it;
(g) sold, assigned, licensed or transferred (including, without
limitation, transfers to any Seller or any Insider) any Proprietary Rights owned
by, issued to or licensed to the Company or disclosed any confidential
information (other than pursuant to agreements requiring the disclosure to
maintain the confidentiality of and preserving all rights of the Company in such
confidential information) or received any confidential information of any third
party in violation of any obligation of confidentiality;
(h) suffered any extraordinary losses or waived any rights of
material value;
(i) incurred any indebtedness for borrowed money (other than
indebtedness to finance its working capital needs);
(j) entered into, amended or terminated any material lease, contract,
agreement or commitment, or taken any other action or entered into any other
transaction other than in the Ordinary Course of Business;
(k) entered into any other material transaction, or materially
changed any business practice;
-17-
(l) made or granted any bonus or any wage, salary or compensation
increase to any director, officer, employee or sales representative, group of
employees or consultant or made or granted any increase in any employee benefit
plan or arrangement, or amended or terminated any existing employee benefit plan
or arrangement or adopted any new employee benefit plan or arrangement;
(m) made any other change in employment terms for any of its
directors, officers, and employees outside the Ordinary Course of Business;
(n) incurred intercompany charges or conducted its cash management
customs and practices other than in the Ordinary Course of Business (including,
without limitation, with respect to collection of accounts receivable, purchases
of inventory and supplies, repairs and maintenance, and payment of accounts
payable and accrued expenses);
(o) made any capital expenditures or commitments for capital
expenditures that aggregate in excess of $20,000;
(p) made any loans or advances to, or guarantees for the benefit of,
any Persons;
(q) made charitable contributions, pledges, association fees or dues;
(r) changed (or authorized any change) in its Articles of
Organization or by-laws; or
(s) agreed or committed to do any of the foregoing.
5.8 TITLE TO PROPERTIES.
-------------------
(a) Owned Properties. The Company does not own and has never owned
----------------
any real property.
(b) The leases and subleases described on the "Real Property
-------------
Schedule" attached hereto (the "Leased Properties") constitute all of the leases
-------- -----------------
and subleases under which the Company holds leasehold or subleasehold interests
in real property. The real property leases and subleases described on the Real
----
Property Schedule are valid, binding, enforceable and in full force and effect
-----------------
and have not been modified (except to the extent disclosed in the documents
delivered to the Purchaser), and the Company holds a valid and existing
leasehold interest under such leases or subleases to which it is a party for the
term set forth on the Real Property Schedule. The Company has delivered to the
----------------------
Purchaser complete and accurate copies of each of the leases or subleases
described on the Real Property Schedule. With respect to each lease and
----------------------
sublease listed on the Real Property Schedule:
----------------------
(i) the lease or sublease shall continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms immediately
following the Closing;
-18-
(ii) neither the Company nor any other party to the lease or sublease
is in breach or default, and no event has occurred which, with notice or
lapse of time, would constitute such a breach or default or permit
termination, modification or acceleration under the lease or sublease;
(iii) no party to the lease or sublease has repudiated any provision
thereof and there are no disputes, oral agreements or forbearance programs
in effect as to the lease or sublease;
(iv) the Company has not assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any interest in the leasehold or
subleasehold;
(v) all buildings, improvements or other property leased or
subleased thereunder have received all approvals of governmental
authorities required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules and
regulations; and
(vi) the owner of the building, improvements or other real property
leased or subleased has good and marketable title to the parcel of real
property, free and clear of all Liens, other than (A) installments of
special assessments and taxes not yet due and payable and (B) recorded
easements, covenants and restrictions of record which do not impair the
current use, occupancy or value, or the marketability of title, of the
property subject thereto.
(c) The real property described on the Real Property Schedule
----------------------
constitutes all of the real property used or occupied by the Company.
(d) Except as set forth on the "Liens Schedule" attached hereto, the
--------------
Company owns good and marketable title to, or a valid leasehold interest in,
free and clear of all Liens, all of the personal property and assets which are
shown on the Latest Balance Sheet or acquired thereafter or located on the Real
Property or used by the Company.
(e) The buildings, machinery, equipment, personal properties,
vehicles and other tangible assets of the Company located upon or used in
connection with the Leased Properties are operated in conformity with all
applicable laws and regulations, are in good condition and repair, reasonable
wear and tear excepted, and are usable in the Ordinary Course of Business. The
Company owns or leases under valid leases all buildings, machinery, equipment
and other tangible assets necessary for the conduct of the business of the
Company.
-19-
5.9 TAXES. Except as set forth on the "Taxes Schedule" attached
----- --------------
hereto, (i) the Company has timely filed or shall timely file all Tax Returns
which are required to be filed on or before the Closing Date, and all such Tax
Returns are true, complete and accurate, (ii) all Taxes due and payable by the
Company have been paid or shall be paid by the Company or the Sellers on or
before the Closing Date and all Taxes accrued but not yet due are shown on the
Latest Balance Sheet or are set forth on the Taxes Schedule and no Taxes are
--------------
delinquent, (iii) no deficiency for any amount of Tax has been asserted or
assessed by a taxing authority against the Company and neither the Company nor
any Seller reasonably expects that any such assertion or assessment of Tax
liability will be made, (iv) the Company has not consented to extend the time in
which any Tax may be assessed or collected by any taxing authority, (v) the
Company has not been a member of an Affiliated Group, (vi) no claim has ever
been made by a taxing authority in a jurisdiction where the Company does not
file Tax Returns that the Company is or may be subject to Taxes assessed by such
jurisdiction, (vii) the Company has no liability for Taxes of any other Person
under Treasury Regulations Section 1.1502-6 (or any similar provision or state,
local or foreign Tax law), as a transferee, by contract, or otherwise, and
(viii) the Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party.
Notwithstanding anything in this Agreement to the contrary, no Seller shall be
responsible for or required to pay on or behalf of the Company any taxes imposed
upon the Company pursuant to Section 1374 of the Code ("Built-In Gains Tax") and
------------------
any corresponding Taxes imposed upon the Company by any state or local taxing
authority. The Taxes Schedule contains a list of states, territories and
--------------
jurisdictions (whether foreign or domestic) in which the Company has filed Tax
Returns.
5.10 CONTRACTS AND COMMITMENTS.
-------------------------
(a) Except as specifically contemplated by this Agreement and except
as set forth on the "Contracts Schedule" attached hereto, the Company is not a
------------------
party to or bound by, whether written or oral, any:
(i) collective bargaining agreement or contract with any labor union
or any bonus, pension, profit sharing, retirement or any other form of
deferred compensation plan or any stock purchase, stock option,
hospitalization insurance or similar plan or practice, whether formal or
informal;
(ii) any contract for the employment of any officer, individual
employee or other person on a full-time or consulting basis or any
severance agreements;
(iii) agreement or indenture relating to the borrowing of money or to
mortgaging, pledging or otherwise placing a Lien on any of its assets;
(iv) agreements with respect to the lending or investing of funds;
(v) license or royalty agreements;
(vi) guaranty of any obligation, other than endorsements made for
collection;
-20-
(vii) lease or agreement under which it is lessee of, or holds or
operates, any personal property owned by any other party calling for
payments in excess of $10,000 annually;
(viii) lease or agreement under which it is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by it (other than leases of equipment in the Ordinary Course of
Business);
(ix) contract or group of related contracts with the same party
continuing over a period of more than six months from the date or dates
thereof, not terminable by it on 30 days or less notice without penalties
or involving more than $10,000;
(x) contract which prohibits it from freely engaging in business
anywhere in the world; or
(xi) other agreement material to it whether or not entered into in
the Ordinary Course of Business.
(b) Except as disclosed on the Contracts Schedule, (i) no contract
------------------
or commitment required to be disclosed on the Contracts Schedule has been
------------------
breached or cancelled by the other party and the Sellers have no knowledge of
any anticipated breach by any other party to any contract required to be set
forth on the Contracts Schedule, (ii) no customer or supplier has indicated in
------------------
writing or orally to the Company or any Seller that it shall stop or decrease
the rate of business done with the Company or that it desires to renegotiate its
contract or current arrangement with the Company, (iii) the Company has
performed all the obligations required to be performed by it in connection with
the contracts or commitments required to be disclosed on the Contracts Schedule
------------------
and is not in default under or in breach of any contract or commitment required
to be disclosed on the Contracts Schedule, and no event has occurred which with
------------------
the passage of time or the giving of notice or both would result in a default or
breach thereunder, (iv) the Company has no present expectation or intention of
not fully performing any obligation pursuant to any contract required to be set
forth on the Contracts Schedule, and (vi) each agreement required to be set
------------------
forth on the Contracts Schedule is legal, valid, binding, enforceable and in
------------------
full force and effect and will continue as such following the consummation of
the transactions contemplated hereby.
(c) The Sellers have provided the Purchaser with a true and correct
copy of all written contracts which are required to be disclosed on the
Contracts Schedule, in each case together with all amendments, waivers or other
------------------
changes thereto (all of which are disclosed on the Contracts Schedule). The
------------------
Contracts Schedule contains an accurate and complete description of all material
------------------
terms of all oral contracts required to be set forth thereon.
5.11 PROPRIETARY RIGHTS.
------------------
(a) The "Proprietary Rights Schedule" attached hereto sets forth a
---------------------------
complete and correct list of: (i) all patented, registered or applied for
Proprietary Rights owned or used by the Company; (ii) all trade names,
unregistered trademarks and material unregistered copyrights
-21-
owned or used by the Company; (iii) all licenses or other agreements to which
the Company is a party, either as licensee or licensor, for any Proprietary
Rights.
(b) Except as set forth on the Proprietary Rights Schedule, (i) the
---------------------------
Company owns and possesses without restriction as to use, all right, title and
interest in and to the Proprietary Rights necessary for the operation of the
Company's businesses as currently conducted; (ii) the Company has not received
any notices of invalidity, infringement or misappropriation from any third party
with respect to any such Proprietary Rights; (iii) the Company has not
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Proprietary Rights of any third parties; and (iv) to the Sellers'
knowledge, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Proprietary Rights of the Company.
(c) The transactions contemplated by this Agreement shall have no
adverse effect on the Company's right, title and interest in and to any of its
Proprietary Rights. The Company has taken all necessary and desirable actions
to maintain and protect its Proprietary Rights and shall continue to maintain
and protect those rights prior to the Closing so as to not adversely affect the
validity or enforcement of such Proprietary Rights.
5.12 LITIGATION; PROCEEDINGS. Except as set forth on the "Litigation
----------------------- ----------
Schedule" attached hereto, there are no actions, suits, proceedings, orders,
--------
judgments, decrees or investigations pending or, to the Sellers' knowledge,
threatened against or affecting the Company at law or in equity, or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, and to the
knowledge of the Sellers there is no basis for any of the foregoing. The Company
is not subject to any outstanding order, judgment or decree issued by any court
or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or any arbitrator.
5.13 BROKERAGE. Except as set forth on the "Brokerage Schedule"
--------- ------------------
attached hereto, there are no claims for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of the
Company.
5.14 GOVERNMENTAL LICENSES AND PERMITS. The "Permits Schedule"
--------------------------------- ----------------
attached hereto contains a complete listing and summary description of all
Licenses owned or possessed by the Company or used by the Company in the conduct
of its businesses. Except as indicated on the Permits Schedule, the Company
----------------
owns or possesses all right, title and interest in and to all Licenses which are
necessary to conduct its business as presently conducted and as proposed to be
conducted and shall use its reasonable efforts to maintain all such Licenses.
No loss or expiration of any License is pending or, to the Sellers' knowledge,
threatened or reasonably foreseeable (including, without limitation, as a result
of the transactions contemplated hereby) other than expiration in accordance
with the terms thereof.
5.15 EMPLOYEES. Except as set forth on the "Employees Schedule"
--------- ------------------
attached hereto, to the knowledge of theSellers, no key executive employee and
no group of employees or independent contractors of the Company has any plans to
terminate his, her or its employment or relationship as an independent
contractor with the Company. The Company has complied with
-22-
all applicable laws relating to the employment of personnel and labor. The
Company has not experienced any strikes, grievances, unfair labor practices
claims or other material employee or labor disputes. The Company has not engaged
in any unfair labor practice. The Sellers have no knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company.
5.16 EMPLOYEE BENEFIT PLANS.
----------------------
(a) Except as set forth on the "Benefit Plans Schedule" attached
----------------------
hereto, with respect to current or former employees of the Company, the Company
does not maintain or contribute to or has any actual or potential liability with
respect to any (i) deferred compensation or bonus or retirement plans or
arrangements, (ii) qualified or nonqualified defined contribution or defined
benefit plans or arrangements which are employee pension benefit plans (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974
("ERISA")), or (iii) employee welfare benefit plans, (as defined in Section 3(1)
-----
of ERISA), stock option or stock purchase plans, or material fringe benefit
plans or programs whether in writing or oral and whether or not terminated.
Except as set forth on the Benefit Plans Schedule, the Company has never
----------------------
contributed to any multiemployer plan (as defined in Section 3(37) of ERISA),
and the Company has never maintained or contributed to any defined benefit plan
(as defined in Section 3(35) of ERISA). The Company does not maintain or
contribute to any employee welfare benefit plan which provides health, accident
or life insurance benefits to former employees, their spouses or dependents,
other than in accordance with Section 4980B of the Code ("COBRA").
-----
(b) The employee benefit plans (and related trusts and insurance
contracts) set forth on the Benefit Plans Schedule comply in form and in
----------------------
operation in all respects with the requirements of applicable laws and
regulations, including ERISA and the Code and the nondiscrimination rules
thereof. All contributions, premiums or payments under or with respect to each
employee benefit plan listed on the Benefit Plans Schedule which are due on or
----------------------
before the Closing Date have been paid on a timely basis.
(c) All required reports and descriptions (including Form 5500 Annual
Reports, Summary Annual Reports and Summary Plan Descriptions) with respect to
the employee benefit plans set forth on the Benefit Plans Schedule have been
----------------------
properly and timely filed with the appropriate government agency and distributed
to participants as required. The Company has complied with the requirements of
COBRA.
(d) With respect to each employee benefit plan set forth on the
Benefit Plans Schedule, (i) there have been no prohibited transactions as
----------------------
defined in Section 406 of ERISA or Section 4975 of the Code, (ii) no fiduciary
(as defined in Section 3(21) of ERISA) has any liability for breach of fiduciary
duty or any other failure to act or comply in connection with the administration
or investment of the assets of such plans, and (iii) no actions, investigations,
suits or claims with respect to the assets thereof (other than routine claims
for benefits) are pending or threatened, and Sellers have no knowledge of any
facts which would give rise to or could reasonably be expected to give rise to
any such actions, suits or claims.
(e) With respect to each of the employee benefit plans listed on the
Benefit Plans Schedule, the Sellers have furnished to the Purchaser true and
----------------------
complete copies of (i) the
-23-
plan documents, summary plan descriptions and summaries of material
modifications and other material employee communications, (ii) the Form 5500
Annual Report (including all schedules and other attachments for the most recent
three years), (iii) all related trust agreements, insurance contracts or other
funding agreements which implement such plans and (iv) all contracts relating to
each such plan, including, without limitation, service provider agreements,
insurance contracts, investment management agreements and recordkeeping
agreements.
(f) Each employee benefit plan listed on the Benefit Plans Schedule
----------------------
which is intended to be qualified under section 401(a) of the Code (i) has been
amended to reflect all requirements of the Tax Reform Act of 1986 and all
subsequent legislation which is required to be adopted prior to the end of the
applicable remedial amendment period and (ii) has received from the Internal
Revenue Service a favorable determination letter which considers the terms of
the Plan as amended for such changes in law.
(g) The Company has not incurred and has no reason to expect that it
will incur, any liability to the Pension Benefit Guaranty Corporation (other
than premium payments) or otherwise under Title IV of ERISA (including any
withdrawal liability) or under the Code with respect to any employee pension
benefit plan (as defined in Section 3(2) of ERISA) that the Company or any other
entity, that together with the Company is treated as a single employer under
section 414 of the Code, maintains or ever has maintained or to which any of
them contributes, ever has contributed, or ever has been required to contribute.
No actual or potential withdrawal liability exists with respect to any
multiemployer plan (as defined in Section 3(37) of ERISA, including without
limitation, any liability which would exist if the Company withdrew from all
multiemployer plans as of the Closing Date.
5.17 INSURANCE. The "Insurance Schedule" attached hereto lists and
--------- ------------------
briefly describes each insurance policy maintained by the Company with respect
to its properties, assets and business, together with a claims history for the
past five years. All of such insurance policies are in full force and effect,
and the Company is not in default with respect to its obligations under any such
insurance policies and the Company has not been denied insurance coverage.
Except as set forth on the Insurance Schedule, the Company has no self-insurance
------------------
or co-insurance programs, and the reserves set forth on the Latest Balance Sheet
are adequate to cover all anticipated liabilities with respect to self-insurance
or coinsurance programs.
5.18 OFFICERS AND DIRECTORS; BANK ACCOUNTS. The "Officers, Directors
------------------------------------- -------------------
and Bank Accounts Schedule" attached hereto lists all officers and directors of
--------------------------
the Company, and all bank accounts, safety deposit boxes and lock boxes
(designating each authorized signatory with respect thereto) for the Company.
5.19 AFFILIATE TRANSACTIONS. Except as disclosed on the "Affiliated
---------------------- ----------
Transactions Schedule" attached hereto, no Insider is a party to any agreement,
---------------------
contract, commitment or transaction with the Company or which is pertaining to
the business of the Company or has any interest in any property, real or
personal or mixed, tangible or intangible, used in or pertaining to the business
of the Company.
-24-
5.20 COMPLIANCE WITH LAWS. The Company, its respective officers,
--------------------
directors, partners, agents and employees have complied with and are in
compliance with all applicable laws, regulations and ordinances of foreign,
federal, state and local governments and all agencies thereof which are
applicable to the business, business practices (including, but not limited to,
the Company's marketing and sales of its products and services) or any owned or
leased properties of the Company and to which the Company may be subject, and no
claims have been filed against the Company alleging a violation of any such laws
or regulations, and the Company has not received notice of any such violations.
5.21 ENVIRONMENTAL MATTERS. Except as set forth on the
---------------------
"Environmental Schedule" attached hereto:
----------------------
(a) The Company has complied with and is currently in compliance
with all Environmental and Safety Requirements, and the Company has not received
any oral or written notice, report or information regarding any liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) or any
corrective, investigatory or remedial obligations arising under Environmental
and Safety Requirements which relate to the Company or to any of its properties
or facilities.
(b) Without limiting the generality of the foregoing, the Company
has obtained and complied with, and is currently in compliance with, all
permits, licenses and other authorizations that may be required pursuant to any
Environmental and Safety Requirements for the occupancy of its properties or
facilities or the operation of its businesses. A list of all such permits,
licenses and other authorizations which are material to the Company is set forth
on the Environmental Schedule.
----------------------
(c) Neither this Agreement or the other Transaction Documents nor
the consummation of the transactions contemplated hereby and thereby shall
impose any obligations on the Company or otherwise for site investigation or
cleanup, or notification to or consent of any government agencies or third
parties under any Environmental and Safety Requirements (including, without
limitation, any so called "transaction-triggered" or "responsible property
transfer" laws and regulations).
(d) None of the following exists at any property or facility owned,
occupied or operated by the Company: (i) underground storage tanks or surface
impoundments; (ii) asbestos-containing material in any form or condition; (iii)
materials or equipment containing polychlorinated biphenyls; or (iv) landfills.
(e) The Company has not treated, stored, disposed of, arranged for
or permitted the disposal of, transported, handled or Released any substance
(including, without limitation, any hazardous substance) or owned, occupied or
operated any facility or property, so as to give rise to liabilities of the
Company for response costs, natural resource damages or attorneys' fees pursuant
to CERCLA or any other Environmental and Safety Requirements.
(f) Without limiting the generality of the foregoing, no facts,
events or conditions relating to the past or present properties, facilities or
operations of the Company shall prevent, hinder or limit continued compliance
with Environmental and Safety Requirements, give
-25-
rise to any corrective, investigatory or remedial obligations pursuant to
Environmental and Safety Requirements or give rise to any other liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental and Safety Requirements, including, without limitation, those
liabilities relating to onsite or offsite Releases or threatened Releases of
hazardous materials, substances or wastes, personal injury, property damage or
natural resources damage.
(g) The Companyhas not, either expressly or by operation of law,
assumed or undertaken any liability or corrective investigatory or remedial
obligation of any other Person relating to any Environmental and Safety
Requirements.
(h) No Environmental Lien has attached to any property owned, leased
or operated by the Company.
5.22 DISCLOSURE. Neither this Agreement, the other Transaction
----------
Documents, nor any of the schedules, attachments or Exhibits hereto, contain any
untrue statement of a material fact or omit a material fact necessary to make
each statement contained herein or therein, not misleading; There is no fact
which has not been disclosed to the Purchaser of which the Sellers have
knowledge which has a Material Adverse Effect or could reasonably be anticipated
to have a Material Adverse Effect.
5.23 CLOSING DATE. All of the representations and warranties
------------
contained in this Article V and elsewhere in this Agreement and all information
delivered in any schedule, attachment or Exhibit hereto or in any writing
delivered to the Purchaser are true and correct on the date of this Agreement
and shall be true and correct on the Closing Date, except to the extent that the
Representative has advised the Purchaser otherwise in writing prior to the
Closing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLERS
As a material inducement to the Purchaser to enter into this
Agreement, each Seller severally represents and warrants to the Purchaser that:
6.1 AUTHORIZATION OF TRANSACTIONS.
-----------------------------
Each such Seller is an individual and has full power, authority and
legal capacity to execute and deliver the Transaction Documents to which he is a
party and to consummate the transactions contemplated thereby and hereby. Each
Seller has duly executed and delivered all of the Transaction Documents to which
he is a party, and such Transaction Documents constitute the valid an binding
agreements of such Seller, enforceable against such Seller in accordance with
their terms.
6.2 ABSENCE OF CONFLICTS. Neither the execution and the delivery of
--------------------
this Agreement and the other documents contemplated hereby to which such Seller
is a party, nor the consummation of the transactions contemplated hereby and
thereby, shall (a) conflict with, result
-26-
in a breach of any of the provisions of, (b) constitute a default under, (c)
result in the violation of, (d) give any third party the right to terminate or
to accelerate any obligation under, (e) result in the creation of any Lien upon
the Acquired Stock owned by such Seller, or (f) require any authorization,
consent, approval, execution or other action by or notice to any court or other
governmental body, under the provisions of any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which such Seller is bound or
affected, or any statute, regulation, rule, judgment, order, decree or other
restriction of any government, governmental agency or court to which such Seller
is subject. No notice to, filing with or authorization, consent or approval of
any government or governmental agency by such Seller is necessary for the
consummation of the transactions contemplated by this Agreement and the other
documents contemplated hereby to which such Seller is a party.
6.3 BROKERAGE. Except as set forth on the Brokerage Schedule, there
--------- ------------------
are no claims for brokerage commissions, finders' fees or similar compensation
in connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of such Seller.
6.4 SHARES. Such Seller holds of record and owns beneficially the
------
shares of Acquired Stock as indicated on the Schedule of Stockholders, free and
------------------------
clear of any Liens. Such Seller is not a party to any option, warrant, right,
contract, call, put or other agreement or commitment providing for the
disposition or acquisition of any capital stock of the Company (other than this
Agreement). Such Seller is not a party to any voting trust, proxy or other
agreement or understanding with respect to the voting of any capital stock of
the Company.
6.5 CLOSING DATE. All of the representations and warranties
------------
concerning such Seller contained in this Article VI and elsewhere in this
Agreement and all information delivered in any schedule, attachment or Exhibit
hereto or in any writing delivered to the Purchaser are true and correct on the
date of this Agreement and shall be true and correct on the Closing Date except
to the extent that such Seller has advised the Purchaser otherwise in writing
prior to the Closing.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES CONCERNING THE PURCHASER
-------------------------------------------------------
As a material inducement to Sellers to enter into this Agreement, the
Purchaser hereby represents and warrants to Sellers that:
7.1 ORGANIZATION AND CORPORATE POWER. The Purchaser is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, with full corporate power and authority to enter
into this Agreement and the other agreements contemplated hereby to which the
Purchaser is a party and perform its obligations hereunder and thereunder.
7.2 AUTHORIZATION OF TRANSACTION. The execution, delivery and
----------------------------
performance of this Agreement and the other agreements contemplated hereby to
which the Purchaser is a
-27-
party have been duly and validly authorized by all requisite corporate action on
the part of the Purchaser, and no other corporate proceedings on its part are
necessary to authorize the execution, delivery or performance of this Agreement.
This Agreement constitutes, and each of the other agreements contemplated hereby
to which the Purchaser is a party shall when executed constitute, a valid and
binding obligation of the Purchaser, enforceable in accordance with their terms.
7.3 NO VIOLATION. The Purchaser is not subject to or obligated under
------------
its certificate of incorporation, its by-laws, any applicable law, or rule or
regulation of any governmental authority, or any agreement or instrument, or any
license, franchise or permit, or subject to any order, writ, injunction or
decree, which would be breached or violated by its execution, delivery or
performance of this Agreement and the other agreements contemplated hereby to
which the Purchaser is a party.
7.4 GOVERNMENTAL AUTHORITIES AND CONSENTS. The Purchaser is not
-------------------------------------
required to submit any notice, report or other filing with any governmental
authority in connection with the execution or delivery by it of this Agreement
and the other agreements contemplated hereby to which the Purchaser is a party
or the consummation of the transactions contemplated hereby or thereby. No
consent, approval or authorization of any governmental or regulatory authority
or any other party or person is required to be obtained by the Purchaser in
connection with its execution, delivery and performance of this Agreement and
the other agreements contemplated hereby to which the Purchaser is a party or
the transactions contemplated hereby or thereby.
7.5 LITIGATION. There are no actions, suits, proceedings or orders
----------
pending or, to the Purchaser's knowledge, threatened against or affecting the
Purchaser at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would adversely affect the
Purchaser's performance under this Agreement and the other agreements
contemplated hereby to which the Purchaser is a party or the consummation of the
transactions contemplated hereby or thereby.
7.6 BROKERAGE. There are no claims for brokerage commissions,
---------
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Purchaser.
7.7 CLOSING DATE. All of the representations and warranties
------------
contained in this Article VII and elsewhere in this Agreement and all
information delivered in any schedule, attachment or Exhibit hereto or in any
writing delivered to Sellers are true and correct on the date of this Agreement
and shall be true and correct on the Closing Date, except to the extent that the
Purchaser has advised Sellers otherwise in writing prior to the Closing.
ARTICLE VIII
TERMINATION
-----------
8.1 TERMINATION. This Agreement may be terminated at any time prior
-----------
to the Closing:
-28-
(a) by mutual written consent of the Representative and the
Purchaser;
(b) by the Representative if there has been a material
misrepresentation or breach on the part of the Purchaser of the representations,
warranties or covenants set forth in this Agreement or if events have occurred
which have made it impossible to satisfy a condition precedent to the Sellers'
obligations to consummate the transactions contemplated hereby unless the
Sellers' willful or knowing breach of this Agreement has caused the condition to
be unsatisfied;
(c) by the Purchaser if there has been a material misrepresentation
or breach on the part of any of the Sellers or the Company of the
representations, warranties or covenants set forth in this Agreement or if
events have occurred which have made it impossible to satisfy a condition
precedent to the Purchaser's obligations to consummate the transactions
contemplated hereby unless the Purchaser's willful or knowing breach of this
Agreement has caused the condition to be unsatisfied; or
(d) by the Representative or the Purchaser if the Closing has not
occurred on or prior to March 31, 1999; provided, however, that neither the
Purchaser nor the Representative shall be entitled to terminate this Agreement
pursuant to this Section 8.1(d) if such Party's willful or knowing breach of
this Agreement has prevented the consummation of the transactions contemplated
hereby at or prior to such time.
8.2 EFFECT OF TERMINATION. In the event of termination of this
---------------------
Agreement by either the Representative or the Purchaser as provided in Section
8.1, this Agreement shall forthwith become void and there shall be no liability
on the part of any Party to any other Party under this Agreement, except that
the provisions of Sections 10.4, 10.5 and 10.8 shall continue in full force and
effect and except that nothing herein shall relieve any Party from liability for
any breach of this Agreement prior to such termination.
-29-
ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS
-----------------------------------
9.1 SURVIVAL. All representations, warranties, covenants and
--------
agreements set forth in this Agreement or in any writing or certificate
delivered in connection with this Agreement shall survive the Closing Date and
the consummation of the transactions contemplated hereby and shall not be
affected by any examination made for or on behalf of any Party the knowledge of
any of such Party's officers, directors, stockholders, employees or agents, or
the acceptance of any certificate or opinion. Notwithstanding the foregoing, no
Party shall be entitled to recover for any Loss pursuant to Section 9.2(a)(i) or
Section 9.2(c)(i) unless written notice of a claim thereof is delivered to the
other Party prior to the Applicable Limitation Date. For purposes of this
Agreement, the term "Applicable Limitation Date" shall mean the third
--------------------------
anniversary of the Closing Date; provided that the Applicable Limitation Date
with respect to the following Losses shall be as follows: (i) with respect to
any Loss arising from or related to a breach of the representations and
warranties set forth in Section 5.10 (Taxes) and Section 5.16 (Employee
Benefits), the Applicable Limitation Date shall be the 30th day after expiration
of the statute of limitations (including any extensions thereto to the extent
that such statute of limitations may be tolled) applicable to the Tax or other
event which gave rise to such Loss, (ii) with respect to any Loss arising from
or related to a breach of the representations and warranties set forth in
Section 5.22 (Environmental), the Applicable Limitation Date shall be the fifth
anniversary of the Closing Date, and (iii) with respect to any Loss arising from
or related to a breach of the representations and warranties set forth in
Section 5.1 (Organization and Corporate Power), Section 5.2 (Authorization of
Transactions), Section 5.3 (Capitalization), Section 5.5 (Absence of Conflicts),
Section 5.14 (Brokerage) or Article VI (Representations and Warranties with
Respect to Sellers) and with respect to any Loss arising from or related to a
breach of the representations and warranties of Purchaser set forth inArticle
VII (Representations and Warranties Concerning the Purchaser), there shall be no
Applicable Limitation Date (i.e., such representations and warranties shall
survive forever).
9.2 INDEMNIFICATION.
---------------
(a) Each Seller shall jointly and severally indemnify the Purchaser,
and the Company and each of their respective officers, directors, stockholders,
employees, agents, representatives, affiliates, successors and assigns
(collectively, the "Purchaser Parties") and hold each of them harmless from and
-----------------
against and pay on behalf of or reimburse such Purchaser Parties in respect of
any Loss which any such Purchaser Party may suffer, sustain or become subject
to, as a result of or relating to:
(i) the breach of any representation or warranty made by the Company
or any Seller contained in Article V of this Agreement or any certificate
delivered by the Company or any Seller to the Purchaser with respect
thereto in connection with the Closing ;
(ii) the breach of any representation or warranty made by such Seller
contained in Article VI of this Agreement or any certificate delivered by
such Seller to Purchaser with respect thereto in connection with the
Closing; or
-30-
(iii) the breach of any representation, warranty (other than
representations or warranties set forth in Articles V and VI), covenant or
agreement made by the Company or any Seller contained in this Agreement,
the other Transaction Documents, any Exhibit hereto or any certificate
delivered by the Company or any Seller to the Purchaser with respect
thereto in connection with the Closing.
The Purchaser Party's remedy for any indemnification of Losses hereunder may be
satisfied by proceeding against one or more Sellers individually for all or any
portion of any such Loss; provided that no Seller shall be liable hereunder for
Losses in excess of such Seller's pro rata portion of the Cap based on such
Seller's proportionate ownership of the Acquired Stock as set forth on the
Schedule of Stockholders. Notwithstanding the foregoing, if any such Loss
------------------------
arises from a breach of such Seller's representation or warranty contained in
Article VI, the Purchaser Party shall proceed solely against such breaching
Seller for the entire amount of such Loss.
(b) The indemnification provided for in Section 9.2(a)(i) above is
subject to the following limitations:
(i) Sellers will be liable to the Purchaser Parties with respect to
claims referred to in Section 9.2(a)(i) only if the Purchaser Party gives
the Representative written notice thereof within the Applicable Limitation
Date;
(ii) The Sellers shall not be liable to indemnify any Purchaser
Parties pursuant to Section 9(a)(i) unless and until the Purchaser Parties
have collectively suffered Losses pursuant to such Section in excess of a
$50,000 aggregate threshold ("Threshold") (at which point, subject to the
---------
other limitations herein, the Sellers will be liable to the Purchaser
Parties for all Losses in excess of such Threshold); and
(iii) The aggregate amount of all payments made by the Sellers in
satisfaction of claims for indemnification pursuant to Section 9.2(a)(i)
shall not exceed the Purchase Price (the "Cap").
---
Notwithstanding any implication to the contrary contained in this Agreement, so
long as the Purchaser Party delivers written notice of a claim to the
Representative no later than the Applicable Limitation Date, the Sellers shall
be required to indemnify the Purchaser Parties for all Losses (which exceed the
Threshold, but not in excess of the Cap) which the Purchaser Parties may incur
in respect of the matters which are the subject of such claim, regardless of
when incurred.
(c) The Purchaser shall indemnify the Sellers and hold each Seller
and its officers, directors, stockholders, employees, agents, representatives,
affiliates, successors and assigns (collectively, the "Seller Parties") harmless
--------------
from and against and pay on behalf of or reimburse such Seller Party in respect
of any Loss which any Seller Party may suffer, sustain or become subject to, as
a result of or relating to:
(i) the breach of any representation or warranty made by the
Purchaser contained in Article VII of this Agreement or any certificate
delivered by the Purchaser to the Sellers with respect thereto in
connection with the Closing; or
-31-
(ii) the breach of any representation, warranty (other than
representations or warranties set forth in Article VII), covenant or
agreement made by the Purchaser contained in this Agreement, the other
Transaction Documents, any Exhibit hereto or any certificate delivered by
the Purchaser to the Sellers with respect thereto in connection with the
Closing.
(d) The indemnification provided for in Section 9.2(c)(i) above is
subject to the following limitations:
(i) The Purchaser will be liable to the Seller Parties with respect
to claims referred to in Section 9.2(c)(i) only if the Representative gives
the Purchaser written notice thereof within the Applicable Limitation Date;
and
(ii) The aggregate amount of all payments made by the Purchaser in
satisfaction of claims for indemnification pursuant to Section 9.2(c)(i)
shall not exceed the Cap.
Notwithstanding any implication to the contrary contained in this Agreement, so
long as the Representative delivers written notice of a claim to the Purchaser
no later than the Applicable Limitation Date, the Purchaser shall be required to
indemnify the Seller Parties for all Losses (up to the Cap) which the Seller
Parties may incur in respect of the matters which are the subject of such claim,
regardless of when incurred.
(e) If a party hereto seeks indemnification under this Article IX,
such party (the "Indemnified Party") shall give written notice to the other
-----------------
party (the "Indemnifying Party") after receiving notice of any action, lawsuit,
------------------
proceeding, investigation or other claim against it (if by a third party) or
discovering the liability, obligation or facts giving rise to such claim for
indemnification, describing the claim, the amount thereof (if known and
quantifiable), and the basis thereof; provided that the failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of its or his
obligations hereunder except to the extent such failure shall have harmed the
Indemnifying Party. In that regard, if any action, lawsuit, proceeding,
investigation or other claim shall be brought or asserted by any third party
which, if adversely determined, would entitle the Indemnified Party to indemnity
pursuant to this Article IX, the Indemnified Party shall promptly notify the
Indemnifying Party of the same in writing, specifying in detail the basis of
such claim and the facts pertaining thereto and the Indemnifying Party shall be
entitled to participate in the defense of such action, lawsuit, proceeding,
investigation or other claim giving rise to the Indemnified Party's claim for
indemnification at its expense, and at its option (subject to the limitations
set forth below) shall be entitled to appoint lead counsel of such defense with
reputable counsel reasonably acceptable to the Indemnified Party; provided that,
if the Indemnifying Party assumes control of such defense, the Indemnifying
Party will be fully responsible for all Losses relating to such claims and that
it will provide full indemnification to the Indemnified Party for all Losses
relating to such claim, and, provided further that, the Indemnifying Party shall
not have the right to assume control of such defense and shall pay the fees and
expenses of counsel retained by the Indemnified Party, if the claim over which
the Indemnifying Party seeks to assume control (i) seeks non-monetary relief,
(ii) involves criminal or quasi-criminal allegations, (iii) involves a claim to
which the Indemnified Party reasonably believes an adverse determination would
be detrimental to or injure the Indemnified Party's
-32-
reputation or future business prospects, or (iv) involves a claim which, upon
petition by the Indemnified Party, the appropriate court rules that the
Indemnifying Party failed or is failing to vigorously prosecute or defend.
If the Indemnifying Party is permitted to assume and control the
defense and elects to do so, the Indemnified Party shall have the right to
employ counsel separate from counsel employed by the Indemnifying Party in any
such action and to participate in the defense thereof, but the fees and expenses
of such counsel employed by the Indemnified Party shall be at the expense of the
Indemnified Party unless (i) the employment thereof has been specifically
authorized by the Indemnifying Party in writing, or (ii) the Indemnifying Party
has been advised by counsel that a reasonable likelihood exists of a conflict of
interest between the Indemnifying Party and the Indemnified Party.
If the Indemnifying Party shall control the defense of any such claim,
the Indemnifying Party shall obtain the prior written consent of the Indemnified
Party (which shall not be unreasonably withheld) before entering into any
settlement of a claim or ceasing to defend such claim, if pursuant to or as a
result of such settlement or cessation, injunction or other equitable relief
will be imposed against the Indemnified Party or if such settlement does not
expressly unconditionally release the Indemnified Party from all liabilities and
obligations with respect to such claim, without prejudice.
(f) The Indemnifying Party shall pay the Indemnified Party in
immediately available funds promptly after the Indemnified Party provides the
Indemnifying Party with written notice of a claim hereunder and the Parties
reasonably agree that there is a reasonable basis for such claim.
(g) Amounts paid to or on behalf of Sellers or Purchaser as
indemnification shall be treated as adjustments to the Purchase Price.
(h) Except for liabilities and obligations arising after the Closing
in their capacity as employees of the Company, effective upon the Closing, each
Seller hereby irrevocably waives, releases and discharges the Company from any
and all liabilities and obligations to such Seller of any kind or nature
whatsoever, whether in his capacity as Seller hereunder, as a stockholder,
officer or director of the Company or otherwise (including, without limitation,
in respect of rights of contribution or indemnification other than compensation
as an employee of the Company), in each case whether absolute or contingent,
liquidated or unliquidated, and whether arising hereunder or under any other
agreement or understanding or otherwise at law or equity, and each Seller shall
not seek to recover any amounts in connection therewith or thereunder from the
Company.
ARTICLE X
ADDITIONAL AGREEMENTS
---------------------
10.1 CONTINUING ASSISTANCE. Subsequent to the Closing, each Seller
---------------------
and the Purchaser (at their own cost) shall assist each other (including making
records available) in the
-33-
preparation of their respective Tax Returns and the filing and execution of Tax
elections, if required, as well as any audits or litigation that ensue as a
result of the filing thereof, to the extent that such assistance is reasonably
requested.
10.2 TAX MATTERS.
-----------
(a) All transfer, documentary, sales, use, stamp, registration and
other such Taxes and fees (including any penalties and interest thereon)
incurred in connection with this Agreement shall be paid by the Sellers when
due, and each Seller shall, at his or its own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and if required by
applicable law, the Purchaser shall, and shall cause its affiliates to, join in
the execution of any such Tax Returns and other documentation.
(b) The Sellers shall reimburse the Purchaser for all Taxes of the
Company with respect to any period (or portion thereof) ending on or before the
Closing Date within ten days of payment by the Purchaser or a Company of such
Taxes. For purposes of this Section 10.2(b), in the case of any Taxes that are
imposed on a periodic basis and are payable for a Taxable period that includes
(but does not end on) the Closing Date, the portion of such Tax which is respect
to the portion of such Taxable period ending on the Closing Date shall (x) in
the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days in the
Taxable period ending on the Closing Date and the denominator of which is the
number of days in the entire Taxable period, and (y) in the case of any Tax
based upon or related to income or receipts be deemed equal to the amount which
would be payable if the relevant Taxable period ended on the Closing Date.
(c) The Sellers and the Purchaser shall jointly make a timely
election under Section 338(h)(10) of the Code, and any applicable corresponding
or similar provisions of state or local law (the "338(h)(10) Elections"), with
--------------------
respect to the acquisition of the Company. The Sellers and the Purchaser shall
jointly prepare Internal Revenue Service Form 8023 with respect to the Company,
and such other forms and schedules as are necessary or required to make the
338(h)(10) Elections, and the Company and the Purchaser shall execute such Form
8023, and shall take all such other acts as are necessary to make or perfect
such 338(h)(10) Elections. The allocation of the purchase price among the
Company's assets shall be made in accordance with the "Tax Allocation Schedule"
-----------------------
attached hereto. Such allocation shall be used in preparing (a) Form 8023 and
the schedules attached thereto for each of the Purchaser and the Sellers, and
(b) all Tax Returns. Notwithstanding anything in this Agreement to the contrary,
no Seller shall be responsible for or required to pay on or behalf of the
Company any taxes imposed upon the Company pursuant to Section 1374 of the Code
("Built-In Gains Tax") and any corresponding Taxes imposed upon the Company by
------------------
any state or local taxing authority.
10.3 PRESS RELEASES AND ANNOUNCEMENTS. Prior to the Closing Date, no
--------------------------------
press releases related to this Agreement and the transactions contemplated
herein, or other announcements by the Sellers to the employees, customers or
suppliers of the Company shall be issued without the mutual approval of all
Parties, except for any public disclosure which any Party in good faith believes
is required by law or regulation (in which case the disclosure shall
-34-
be prepared jointly by the Sellers and the Purchaser); provided that in the
event the Purchaser files a registration statement with the Securities and
Exchange Commission, the Purchaser shall be entitled to adequately disclose the
transactions contemplated hereby in such registration agreement. After the
Closing Date, no press releases related to this Agreement and the transactions
contemplated herein, or other announcements to the employees, customers or
suppliers of the Company shall be issued without the Purchaser's consent (which
shall not be unreasonably withheld).
10.4 FURTHER TRANSFERS. Each Seller shall execute and deliver such
-----------------
further instruments of conveyance and transfer and take such additional action
as the Purchaser may reasonably request to effect, consummate, confirm or
evidence the transfer to the Purchaser of the Acquired Stock and any other
transactions contemplated hereby.
10.5 SPECIFIC PERFORMANCE. Each Seller acknowledges that the
--------------------
Company's and each of its Subsidiaries' businesses is unique and recognizes and
affirms that in the event of a breach of this Agreement by such Seller, money
damages may be inadequate and Purchaser may have no adequate remedy at law.
Accordingly, each Seller agrees that Purchaser shall have the right, in addition
to any other rights and remedies existing in its favor, to enforce its rights
and such Seller's obligations hereunder not only by an action or actions for
damages but also by an action or actions for specific performance, injunctive
and/or other equitable relief.
10.6 CONFIDENTIAL INFORMATION. Until the Closing, the Purchaser will,
------------------------
and will cause its employees and agents, to hold in strict confidence, unless
compelled to disclose by judicial or administrative process or, in the opinion
of its counsel, by other requirements of law, all Confidential Information (as
hereinafter defined) and will not disclose the same to any person. If this
Agreement is terminated, the Purchaser will promptly return to the Sellers, all
documents received containing such Confidential Information. For purposes
hereto, "Confidential Information" shall mean all information of any kind
------------------------
concerning the Sellers or the Company, wherever obtained, except information (i)
ascertainable or obtained from public or published information, (ii) received
from a third party not known to the Purchaser to be under an obligation to keep
such information confidential, (iii) which is or becomes known to the public
(other than through a breach of this Agreement), (iv) which the Purchaser can
demonstrate was in its possession prior to the disclosure thereof in connection
with this Agreement, or (v) which the Purchaser can demonstrate was
independently developed by it.
10.7 TRANSITION ASSISTANCE. Each Seller shall not in any manner take
---------------------
any action which is designed, intended, or might be reasonably anticipated to
have the effect of discouraging customers, suppliers, lessors, licensors and
other business associates from maintaining the same business relationships with
the Company after the date of this Agreement as were maintained with the Company
prior to the date of this Agreement.
10.8 EXPENSES. Except as otherwise provided herein, each Seller and
--------
the Purchaser shall pay all of their own fees, costs and expenses (including,
without limitation, fees, costs and expenses of legal counsel, investment
bankers, brokers or other representatives and consultants and appraisal fees,
costs and expenses) incurred in connection with the negotiation of the this
Agreement and the other agreements contemplated hereby, the performance of its
obligations hereunder and thereunder, and the consummation of the transactions
contemplated
-35-
hereby and thereby (collectively, the "Transaction Expenses"); it being
--------------------
understood that the Sellers shall pay the fees, costs and expenses of the
Company and that the Company shall pay any of the Sellers' fees, costs and
expenses (including, without limitation, legal and accounting fees, costs and
expenses) arising in connection with the transactions contemplated hereby if the
transactions are not consummated. At the request of the Sellers, the fees, costs
and expenses for which they are liable pursuant to this Section 10.7 may be
deducted from the Cash Portion and paid directly to the Sellers' legal counsel,
investment bankers and other agents and representatives. To the extent that the
Company pays or becomes liable with respect to any Transaction Expenses of the
Company or the Sellers, the Cash Portion shall be reduced dollar-for-dollar.
10.9 EXCLUSIVITY. Until this Agreement is terminated by its terms,
-----------
the Sellers (and the Sellers shall cause or permit any Insider or agent or any
other Person acting on behalf of any Seller, the Company, or its Affiliates to),
(a) solicit, initiate or encourage the submission of any proposal or offer from
any Person (including any of them) relating to any (i) liquidation, dissolution
or recapitalization of, (ii) merger or consolidation with or into, (iii)
acquisition or purchase of assets of or any equity interest in or (iv) similar
transaction or business combination involving the Company or (b) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any other Person to do or seek any of the foregoing. The Company and
each Seller agrees that it will discontinue immediately (and will cause any
Insider or agent or any other Person acting on behalf of any Seller, the
Company, or its Affiliates to discontinue immediately) any negotiations or
discussion with respect to any of the foregoing. Until this Agreement is
terminated by its terms, the Sellers and the Company shall notify the Purchaser
immediately if any Person makes any proposal, offer, inquiry or contact with
respect to any of the foregoing.
10.10 BOOKS AND RECORDS. Unless otherwise consented to in writing by
-----------------
the Representative and the Purchaser, the Purchaser and the Sellers will not,
for a period of seven years following the date hereof, destroy, alter or
otherwise dispose of any of the books and records of the Company acquired by the
Purchaser hereunder or retained by any Seller without first offering to
surrender to the other Party such books and records or any portion thereof of
which the Sellers or the Purchaser may intend to destroy, alter or dispose. The
Purchaser and the Sellers will allow the other party's representatives,
attorneys and accountants access to such books and records, upon reasonable
request during such party's normal business hours, for the purpose of examining
and copying the same in connection with any matter whether or not related to or
arising out of this Agreement or the transactions contemplated hereby.
10.11 APPOINTMENT OF REPRESENTATIVE.
-----------------------------
(a) Powers of Attorney. Each Seller irrevocably constitutes and
------------------
appoints XXXX X. XXXXXXX (the Representative") as such Seller's true and lawful
--------------
agent, proxy and attorney-in-fact and agent and authorizes the Representative
acting for such Seller and in such Seller's name, place and stead, in any and
all capacities to do and perform every act and thing required or permitted to be
done in connection with the transactions contemplated by this Agreement, as
fully to all intents and purposes as such Person might or could do in person,
including, without limitation:
-36-
(i) determine the presence (or absence) of claims for
indemnification against the Purchaser pursuant to Section 9.2 above;
(ii) deliver all notices required to be delivered by such Seller
under this Agreement, including, without limitation, any notice of a claim
for which indemnification is sought under Section 9.2 above;
(iii) receive all notices required to be delivered to such Seller
under this Agreement, including, without limitation, any notice of a claim
for which indemnification is sought under Section 9.2 above;
(iv) take any and all action on behalf of such Seller from time to
time as the Representative may deem necessary or desirable to defend,
pursue, resolve and/or settle claims under this Agreement, including,
without limitation, indemnification under Section 9.2; and
(v) to engage and employ agents and representatives (including
accountants, legal counsel and other professionals) and to incur such other
expenses as he deems necessary or prudent in connection with the
administration of the foregoing.
Each Seller grants unto said attorney-in-fact and agent full power and authority
to do and perform each and every act and thing necessary or desirable to be done
in connection with the transactions contemplated by this Agreement, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that the Representative may lawfully do or cause to
be done by virtue hereof. Each Seller will, by executing this Agreement agree
that such agency, proxy and power of attorney are coupled with an interest, and
are therefore irrevocable without the consent of the Representative and shall
survive the death, incapacity, or bankruptcy of such Seller. Each Seller
acknowledges and agrees that upon execution of this Agreement, any delivery by
the Representative of any waiver, amendment, agreement, opinion, certificate or
other documents executed by the Representative or any decisions made by the
Representative pursuant to this Section 10.10, such Seller shall be bound by
such documents or decision as fully as if such Seller had executed and delivered
such documents or made such decisions.
(b) The Representative shall not have by reason of this Agreement a
fiduciary relationship in respect of any Seller, except in respect of amounts
received on behalf of such Seller. The Representative shall not be liable to any
Seller for any action taken or omitted by him or any agent employed by him
hereunder or under any other Transaction Document, or in connection therewith,
except that the Representative shall not be relieved of any liability imposed by
law for gross negligence or willful misconduct. The Representative shall not be
liable to Sellers for any apportionment or distribution of payments made by him
in good faith, and if any such apportionment or distribution is subsequently
determined to have been made in error the sole recourse of any Seller to whom
payment was due, but not made, shall be to recover from other Sellers any
payment in excess of the amount to which they are determined to have been
entitled. The Representative shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement.
-37-
(c) Replacement of the Representative. Upon the death, disability or
---------------------------------
capacity of the initial Representative appointed pursuant to Section 10.10(a)
above, each Seller acknowledges and agrees that such Representative's executor,
guardian or legal representative, as the case may be, shall (in consultation
with Sellers) appoint a replacement reasonably believed by such person as
capable of carrying out the duties and performing the obligations of the
Representative hereunder within thirty (30) days. In the event that the
Representative resigns for any reason, the Representative shall (in consultation
with Sellers) select another representative to fill such vacancy. Any
substituted representative shall be deemed the Representative for all purposes
of this Agreement and the other Transaction Documents.
(d) Actions of the Representative; Liability of the Representative.
--------------------------------------------------------------
Each Seller agrees that Purchaser shall be entitled to rely on any action taken
by the Representative, on behalf of the Sellers, pursuant to Section 10.10(a)
above (each, an "Authorized Action"), and that each Authorized Action shall be
-----------------
binding on each Seller as fully as if such Seller had taken such Authorized
Action. The Purchaser agrees that the Representative shall have no liability to
the Purchaser for any Authorized Action, except to the extent that such
Authorized Action is found by a final order of a court of competent jurisdiction
to have constituted fraud or willful misconduct. The Sellers jointly and
severally agree to pay, and to indemnify and hold harmless the Purchaser from
and against any losses which it may suffer, sustain, or become subject to, as
the result of any claim by any Person that an Authorized Action is not binding
on, or enforceable against, the Sellers. In addition, the Sellers hereby release
and discharge the Purchaser from and against any liability arising out of or in
connection with the Representative's failure to distribute any amounts received
by the Representative on the Sellers' behalf to the Sellers.
(e) Payments to be Made to the Representative. Any payments to be
-----------------------------------------
made by the Purchaser to the Representative pursuant to the terms of this
Agreement shall, at the request of the Representative, be made by the Purchaser
to the Sellers. Any such request by the Representative shall be made in writing
to the Purchaser 1 business day prior to the date such payment is to be made and
shall indicate the apportionment between of the Sellers of such payment.
10.12 NONCOMPETITION, NONSOLICITATION AND CONFIDENTIALITY.
---------------------------------------------------
(a) Noncompetition. In consideration of the mutual covenants
--------------
provided for herein to the Sellers at the Closing, during the period beginning
on the Closing Date and ending on the fifth anniversary of the Closing Date (the
"Noncompete Period"), none of the Sellers (and none of the beneficiaries of any
-----------------
Seller that is a trust) (collectively, the "Noncompeting Parties") shall engage,
--------------------
and each of the Sellers shall cause the Noncompeting Parties that are not
themselves Sellers to not engage, (whether as an owner, operator, manager,
employee, officer, director, consultant, advisor, representative or otherwise)
directly or indirectly in any business that the Company conducts or proposes to
conduct as of the Closing Date in any geographic area in which the Company
conducts its business as of the Closing Date, except as expressly permitted
under any employment agreement with the Company executed at the Closing as
contemplated hereunder; provided that ownership of less than 2% of the
outstanding stock of any publicly-traded corporation shall not be deemed to be
engaging solely by reason thereof in any of its businesses. The parties hereto
agree that the covenant set forth in this Section 10.11 is reasonable with
respect to its duration, geographical area and scope. If the final judgment of a
court of
-38-
competent jurisdiction declares that any term or provision of this Section
10.11(a) is invalid or unenforceable, the Parties agree that the court making
the determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed. As further consideration for the
obligations of the Sellers pursuant to this Section 10.11, the Purchaser shall
pay to the Sellers $325,000 in cash on the Closing Date, allocated among the
Sellers in accordance with the Schedule of Stockholders (the "Noncompete
------------------------ ----------
Payment").
-------
(b) Nonsolicitation. Each Seller agrees that, during the Noncompete
---------------
Period, such Seller (i) shall not, shall cause the other Noncompeting Parties to
not, and shall use his best efforts not to permit such Seller's affiliates to,
directly or indirectly contact, approach or solicit for the purpose of offering
employment to or hiring (whether as an employee, consultant, agent, independent
contractor or otherwise) or actually hire any person employed by the Company at
any time prior to the Closing Date or during the Noncompete Period, without the
prior written consent of the Company and (ii) shall not induce or attempt to
induce, and shall cause the other Noncompeting Parties to not induce or attempt
to induce, any customer or other business relation of the Company into any
business relationship which might materially harm the Company. The term
indirectly" as used in this Section 10.11 is intended to mean any acts
authorized or directed by or on behalf of any Seller or any person controlled by
such Seller.
(c) Confidentiality. Each Seller shall, and shall cause the other
---------------
Noncompeting Parties to, treat and hold as confidential any information
concerning the business and affairs of the Company that is not already generally
available to the public (the "Confidential Information"), refrain from using any
------------------------
of the Confidential Information except in connection with this Agreement, and
deliver promptly to the Purchaser or destroy, at the request and option of the
Purchaser, all tangible embodiments (and all copies) of the Confidential
Information which are in his possession or under his control. In the event that
any Noncompeting Party is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, the Sellers shall cause such Noncompeting Party to notify the
Purchaser promptly of the request or requirement so that the Purchaser may seek
an appropriate protective order or waive compliance with the provisions of this
Section 10.11(c). If, in the absence of a protective order or the receipt of a
waiver hereunder, any Noncompeting Party is, on the advice of counsel, compelled
to disclose any Confidential Information to any tribunal or else stand liable
for contempt, such Noncompeting Party may disclose the Confidential Information
to the tribunal; provided that the Sellers shall cause such disclosing
Noncompeting Party shall use his best efforts to obtain, at the request of the
Purchaser, an order or other assurance that confidential treatment shall be
accorded to such portion of the Confidential Information required to be
disclosed as the Purchaser shall designate.
(d) Trade Names. No Seller shall use or permit any of his affiliates
-----------
to use the "Wellesley Crane Service," name or any name confusingly similar
thereto in any manner anywhere in the world after Closing.
-39-
(e) Remedy for Breach. Each Seller acknowledges and agrees that in
-----------------
the event of a breach by any Seller of any of the provisions of this Section
10.11, monetary damages shall not constitute a sufficient remedy. Consequently,
in the event of any such breach, the Company, the Purchaser and/or their
respective Subsidiaries, successors or assigns may, in addition to other rights
and remedies existing in their favor, apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violations of the provisions hereof,
in each case without the requirement of posting a bond or proving actual
damages.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 AMENDMENT AND WAIVER. This Agreement may be amended and any
--------------------
provision of this Agreement may be waived, provided that any such amendment or
waiver shall be binding upon a Party only if such amendment or waiver is set
forth in a writing executed by the Purchaser and the Representative. No course
of dealing between or among any persons having any interest in this Agreement
shall be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any Party under or by reason of this
Agreement.
11.2 NOTICES. All notices, demands and other communications
-------
given or delivered under this Agreement shall be in writing and shall be deemed
to have been given when personally delivered, mailed by first class mail, return
receipt requested, or delivered by express courier service or telecopied (with
hard copy to follow). Notices, demands and communications to each Seller shall,
unless another address is specified in writing, or unless receipt of notice has
been specifically delegated to the Representatives under this Agreement, be sent
to the address or telecopy number indicated on the signature page attached
hereto, and notices, demands and communications to the Representative, the
Company and the Purchaser shall, unless another address is specified in writing,
be sent to the address or telecopy number indicated below:
NOTICE TO THE REPRESENTATIVE: WITH A COPY TO:
---------------------------- --------------
Xxxx Xxxxxxx Xxxxxx X. Xxxxxx, Esq.
Wellesley Crane Service Co., Inc. Xxx Xxxxxxx Xxxxx, Xxxxx 000
251 Boston Road Portsmouth, NH 03801
Xxxxxxxxxxxx, XX 00000 Telecopy: (000) 000-0000
Telecopy: (000) 000-0000
NOTICES TO PURCHASER: WITH A COPY TO:
-------------------- --------------
Xxxxxxxxxxx Xxxxx Service, Inc. Xxxxxxxx & Xxxxx
c/o National Equipment Services, Inc. 000 Xxxx Xxxxxxxx Xxxxx
0000 Xxxxxxx Xxx., Xxxxx 000 Xxxxxxx, XX 00000
Xxxxxxxx, XX 00000 Telecopy: (000) 000-0000
Telecopy: (000) 000-0000 Attn.: Xxxxxxx X. Perl, Esq.
-40-
Attention: Chief Executive Officer
11.3 BINDING AGREEMENT; ASSIGNMENT. This Agreement and all of the
-----------------------------
provisions hereof shall be binding upon and inure to the benefit of the Parties
and their respective successors and permitted assigns; provided that neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any Seller without the prior written consent of Purchaser or by
Purchaser (except as otherwise provided in this Agreement) without the prior
written consent of each Seller. Without limiting the generality of the
foregoing:
(a) the Purchaser may at any time prior to the Closing, at its sole
discretion, assign, in whole or in part, its rights and obligations pursuant to
this Agreement to one or more of its wholly-owned Subsidiaries. The Purchaser's
"wholly-owned Subsidiaries" include Subsidiaries which may be organized
subsequent to the date hereof;
(b) the Purchaser may assign its rights under this Agreement for
collateral security purposes to any lender providing financing to the Purchaser,
the Company, or any of their Affiliates and any such lender may exercise all of
the rights and remedies of the Purchaser hereunder; and
(c) the Purchaser may assign its rights under this Agreement, in
whole or in part, to any subsequent purchaser of the Company or any material
portion of its assets (whether such sale is structured as a sale of stock, a
sale of assets, a merger or otherwise).
11.4 SEVERABILITY. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
11.5 NO STRICT CONSTRUCTION. The language used in this Agreement
----------------------
shall be deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any Person.
11.6 CAPTIONS. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
shall not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement shall be enforced and
construed as if no captions had been used in this Agreement.
11.7 ENTIRE AGREEMENT. This Agreement and the documents referred to
----------------
herein contain the entire agreement between the Parties and supersede any prior
understandings, agreements or representations by or between the Parties, written
or oral, which may have related to the subject matter hereof in any way.
11.8 COUNTERPARTS. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.
-41-
11.9 GOVERNING LAW. All questions concerning the construction,
-------------
validity and interpretation of this Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision (whether of the State
of Illinois or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Illinois.
11.10 PARTIES IN INTEREST. Nothing in this Agreement, express or
-------------------
implied, is intended to confer on any person other than the Parties and their
respective successors and assigns any rights or remedies under or by virtue of
this Agreement.
* * * * *
-42-
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase
Agreement as of the date first written above.
XXXXXXXXXXX XXXXX SERVICE, INC.
By: /s/Xxxx X. Xxxxxxxxx
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Its: Vice President
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/s/Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
/s/Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
