EXHIBIT 10.24
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
X.X. XXXXXX COMPANY,
A PENNSYLVANIA CORPORATION
AND
THE REINFORCED EARTH COMPANY,
A DELAWARE CORPORATION
DATED AS OF FEBRUARY 15, 2006
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS................................................. 1
1.1. Definitions................................................. 1
1.2. Construction................................................ 7
ARTICLE II THE ACQUISITION............................................. 8
2.1. Agreement to Purchase and Sell.............................. 8
2.2. Excluded Assets............................................. 8
2.3. Excluded Liabilities........................................ 9
2.4. Total Consideration......................................... 9
2.5. Adjustment.................................................. 10
2.6. Net Assets.................................................. 10
2.7. Allocation of Total Consideration........................... 11
2.8. Receipts After Closing...................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.................... 12
3.1. Corporate Existence and Qualification....................... 12
3.2. Power and Authority; Enforceability......................... 12
3.3. No Conflict................................................. 12
3.4. Consents, Approvals and Permits............................. 12
3.5. Statements.................................................. 13
3.6. Absence of Changes.......................................... 13
3.7. Title to Properties......................................... 13
3.8. Litigation, Judgments, Etc.................................. 13
3.9. Intellectual Property and IT................................ 14
3.10. Contractual Obligations..................................... 15
3.11. Taxes....................................................... 16
3.12. Employment Matters.......................................... 16
3.13. Insurance................................................... 17
3.14. Environmental Matters....................................... 17
3.15. Condition of Assets......................................... 17
3.16. Accurate and Complete Records; Customer Information......... 17
3.17. Brokerage Arrangements...................................... 18
3.18. No Misleading Statements.................................... 18
3.19. Sufficiency of Properties, Assets and Employees............. 18
3.20. Compliance With Laws........................................ 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER..................... 18
4.1. Organization................................................ 18
4.2. Power and Authority; Enforceability......................... 18
4.3. No Conflict................................................. 19
4.4. Consents, Approvals and Permits............................. 19
4.5. Financing................................................... 19
ARTICLE V CLOSING..................................................... 19
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TABLE OF CONTENTS
(Countinued)
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5.1. Closing..................................................... 19
5.2. Deliveries by Seller at Closing............................. 19
5.3. Deliveries by Buyer at Closing.............................. 20
ARTICLE VI ACTIONS PRIOR TO CLOSING.................................... 21
6.1. Conduct and Preservation of Business........................ 21
6.2. Restrictions on Certain Actions............................. 21
ARTICLE VII ADDITIONAL AGREEMENTS....................................... 21
7.1. Cooperation................................................. 21
7.2. Regulatory Issues and Other Authorizations and Consents..... 22
7.3. Public Announcements........................................ 23
7.4. Amendment of Schedules...................................... 23
7.5. Fees and Expenses........................................... 23
7.6. Transfer Taxes.............................................. 23
7.7. Casualty Loss............................................... 24
7.8. Insurance................................................... 24
7.9. Confidentiality............................................. 24
7.10. Consents.................................................... 25
7.11. Maintenance of Guaranties and Insurance..................... 26
7.12. Employees................................................... 26
7.13. Seller's Warranty Work...................................... 28
7.14. Accounts Payable............................................ 28
ARTICLE VIII CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.................. 28
8.1. Representations and Warranties True......................... 28
8.2. Covenants and Agreements Performed.......................... 28
8.3. Consents.................................................... 29
8.4. Legal Proceedings........................................... 29
ARTICLE IX CONDITIONS TO BUYER'S OBLIGATION TO CLOSE................... 29
9.1. Representations and Warranties True......................... 29
9.2. Covenants and Agreements Performed.......................... 29
9.3. Consents and Permits........................................ 29
9.4. Legal Proceedings........................................... 29
ARTICLE X TERMINATION................................................. 29
10.1. Termination................................................. 30
10.2. Effect of Termination....................................... 30
10.3. Liabilities in Event of Termination......................... 30
ARTICLE XI INDEMNITY AND SURVIVAL...................................... 30
11.1. Buyer's Indemnity........................................... 30
11.2. Seller's Indemnity.......................................... 31
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TABLE OF CONTENTS
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11.3. Claim Notice................................................ 32
11.4. DAMAGES..................................................... 33
11.5. Survival and Time Limitation................................ 34
11.6. Limitation on Indemnity..................................... 34
11.7. Sole Remedy................................................. 34
ARTICLE XII TAX MATTERS................................................. 35
12.1. Liability for Taxes......................................... 35
12.2. Audits or Assessments....................................... 35
ARTICLE XIII RESOLUTION OF DISPUTES...................................... 36
13.1. Agreement to Arbitrate...................................... 36
13.2. Appointment of Arbitrator................................... 36
13.3. Authority of the Arbitrators................................ 37
13.4. Place and Conduct of Arbitration............................ 37
13.5. Payment and Finality of Award............................... 37
13.6. Use of the Courts........................................... 37
13.7. Arbitration Provision Enforceable........................... 38
ARTICLE XIV MISCELLANEOUS............................................... 38
14.1. Notice...................................................... 38
14.2. Governing Law............................................... 39
14.3. Entire Agreement; Amendments and Waivers.................... 39
14.4. Severability................................................ 39
14.5. Exhibits and Schedules...................................... 39
14.6. Successors Bound; Third Parties............................. 39
14.7. Multiple Counterparts....................................... 40
14.8. Mutual Drafting............................................. 40
14.9. Further Assurances.......................................... 40
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EXHIBITS:
Exhibit A - Noncompetition Agreement
Exhibit B - Press Release
Exhibit C - Form of Subcontract
SCHEDULES:
Schedule 1.1 - Exclusions from Data
Schedule 2.7 - Allocation of Total Consideration
Schedule 3.1 - Jurisdictions
Schedule 3.3 - No Conflict
Schedule 3.4 - Seller's Consents, Approvals And Permits
Schedule 3.5(A) - Specified Assets And Liabilities
Schedule 3.6 - Absence Of Changes
Schedule 3.7 - Title To Properties
Schedule 3.8 - Litigation, Judgments, Etc.
Schedule 3.9(A) - Specified IP Rights
Schedule 3.9(B) - IT Specified Assets
Schedule 3.9(D) - Claims
Schedule 3.10(A) - Confidentiality and Noncompetition Agreements
Schedule 3.10(B)(I) - Specified Contracts
Schedule 3.10(B)(II) - Specified Contracts - Breach
Schedules 3.11 - Taxes
Schedules 3.12 - Business Employees
Schedules 3.13 - Insurance
Schedule 3.14 - Environmental Matters
Schedule 3.20 - Compliance with Laws
Schedule 6.1. - Conduct and Preservation of the Business
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement"), dated and effective as of
February 15, 2006, is by and between X.X. Xxxxxx Company, a Pennsylvania
corporation ("Seller"), and The Reinforced Earth Company, a Delaware corporation
("Buyer").
RECITALS:
A. Seller is the owner of certain assets comprising the Business (as
defined in Section 1.1).
B. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Specified Assets (as defined in Section 1.1), upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, Seller and Buyer agree as follow:
ARTICLE I
DEFINITIONS
1.1. Definitions. In this Agreement:
"AAA" shall have the meaning set out in Section 13.2(a);
"Accounts Payable" shall mean all accounts payable (excluding all accounts
payable in respect of Taxes accruing during the Pre-Closing Date Period),
accrued expenses and other current liabilities (including prepaid sales and
accrued freight) arising under the Specified Contracts and existing as of the
Closing Date;
"Adjustment Amount" shall have the meaning set out in Section 2.5;
"Affiliate" of a Person shall mean a Person directly or indirectly
controlled by, controlling or under common control with the other Person. For
the purposes of this definition, "control" means, when used with respect to any
Person, the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract, or otherwise, and the terms
"controlling" and "controlled" have correlative meanings;
"Allocation of Total Consideration" shall have the meaning set out in
Section 2.7;
"Alternative Arrangement" shall have the meaning set out in Section 7.10;
"Applicable Law" shall mean any statute, law, rule, or regulation, or any
judgment, order, ordinance, writ, injunction, or decree of, any Governmental
Entity to which a specified Person or property is subject;
"Award" shall have the meaning set out in Section 13.5;
"Benefit Plan" shall have the meaning set out in Section 3.12;
"Business" shall mean the mechanical stabilized earth business of Seller's
Geotech/Retained Earth Division, excluding its soundwall business, and the
products and services related thereto;
"Business Day" shall mean any day other than a Saturday, Sunday or day on
which banks located in the Commonwealth of Virginia are authorized or obligated
to close.
"Business Employees" shall have the meaning set out in Section 3.12;
"Buyer Benefit Plans" shall have the meaning set out in Section 7.12(d);
"Buyer Indemnified Parties" shall have the meaning set out in Section 11.2;
"Buyer's Closing Conditions" shall have the meaning set out in Article IX;
"Buyer's Consents and Approvals" shall mean all consents, approvals,
authorizations, licenses, actions, filings, notifications and other items listed
in Schedule 4.4;
"Claim" shall have the meaning set out in Section 11.1;
"Claim Notice" shall have the meaning set out in Section 11.3;
"Closing" shall have the meaning set out in Section 5.1;
"Closing Conditions" shall mean, collectively, Seller's Closing Conditions
and Buyer's Closing Conditions;
"Closing Date" shall mean the date on which the Closing occurs;
"Closing Date Net Asset Value" means the Net Asset Value as of the Closing
Date;
"Code" shall mean the Internal Revenue Code of 1986, as amended;
"Confidential Information" shall have the meaning set out in Section
7.9(a);
"Consents and Approvals" shall mean, collectively, Seller's Consents and
Approvals and Buyer's Consents and Approvals;
"Customer Information" shall have the meaning set out in Section 3.16;
"Customers" shall mean all customers party to the Specified Contracts, a
current list of which, together with certain other information about such
customers and their Specified Contracts, is set forth in Schedule 3.10(B)(I);
"Data" shall mean all data to the extent comprising or primarily related to
the Specified Assets, including, without limitation, data generated, processed,
computed, stored, created or otherwise manipulated by or a derivative of the
Specified Assets, to the extent primarily related to the Specified Assets and of
significance to the continued operation of the Business, except for
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data specifically excluded pursuant to Schedule 1.1 and not otherwise provided
by Seller to Buyer;
"Deferred Contract" shall have the meaning set out in Section 7.10;
"Direct Claim" shall mean a Claim against an Indemnifying Party that does
not involve damages being asserted against it or sought to be collected from it
by a Third Party;
"Dispute Deadline Date" shall have the meaning set out in Section 2.6(b);
"Disputes" shall have the meaning set out in Section 13.1;
"Disputing Party" shall have the meaning set out in Section 13.1;
"Effective Date" shall mean the date first set forth above;
"Encumbrances" shall mean liens, charges, pledges, options and other rights
of ownership, mortgages, deeds of trust, security interests, restrictions
(whether on voting, sale, transfer, disposition, or otherwise), easements,
claims, licenses and other rights of usage, and other encumbrances of every type
and description, whether imposed by law, agreement, understanding, or otherwise;
"Environmental Claim" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or other adversarial proceedings
relating to any Environmental Law or Environmental Permit including, without
limitation (i) any and all claims by governmental, territorial or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
similar actions or damages pursuant to any applicable Environmental Law and (ii)
any and all claims by a third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Substances or arising from alleged injury or threat of injury to human
health, property, or the environment resulting from exposures to or Releases of
Hazardous Substances. An "Environmental Claim" includes, but is not limited to,
a common law action, as well as a proceeding to issue, modify, terminate or
enforce the provisions of an Environmental Permit or requirement of
Environmental Law, or to adopt or amend a regulation to the extent that such a
proceeding attempts to redress violations or alleged violations of the
applicable permit, license, or regulation;
"Environmental Law" shall mean any federal, state, territorial, or local
statute, law, rule, regulation, ordinance, code, policy or rule of common law in
effect and in each case as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment or Hazardous Substances,
including, without limitation: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. ' 9601 et seq.; the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. ' 11001 et seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. ' 6901 et seq.; the Federal
Water Pollution Control Act, 33 U.S.C. ' 1251 et seq.; the Clean Air Act, 42
U.S.C. ' 7401 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. ' 136 et seq.; the Safe Drinking Water Act, 42 U.S.C. ' 300f et seq.; the
Toxic Substance Control Act, 15 U.S.C.
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' 2601 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. ' 2701 et seq.; the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. ' 5101 et seq.;
the Atomic Energy Act, as amended, 42 U.S.C. ' 2011 et seq.; any laws regulating
the use of biological agents or substances including medical or infectious
wastes; and any corresponding or analogous foreign, territorial, state or local
laws, regulations or ordinances, which may be applicable, as any such acts may
be amended;
"Environmental Permits" shall mean all permits, approvals, identification
numbers, licenses and other authorizations required under any applicable
Environmental Law;
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended;
"Estimated Net Asset Value" shall mean $2,691,000.
"Estimated Total Consideration" shall have the meaning set out in Section
2.4(b).
"Excluded Assets" shall have the meaning set out in Section 2.2;
"Excluded Liabilities" shall have the meaning set out in Section 2.3;
"Fosmart" shall mean Fosmart, Inc., an Affiliate of Seller that holds title
to and has rights associated with certain trademarks used by Seller in its
operation of the Business;
"Fosmart Marks" means certain trademarks owned by Fosmart and used in
Seller's operation of the Business, including the Trademark;
"GAAP" shall mean generally accepted accounting principles in the United
States of America as consistently applied by Seller and as promulgated by the
Financial Accounting Standards Board from time to time, with such exceptions to
such generally accepted accounting principles as may be noted or otherwise
referred to on any individual financial statement or schedule;
"Governmental Entity" shall mean any court or tribunal in any jurisdiction
(domestic or foreign) or any federal, state, municipal or local government or
other governmental body, agency, authority, department, commission, board,
bureau, instrumentality, arbitrator or arbitral body (domestic or foreign);
"Hazardous Substances" shall mean (i) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "hazardous air pollutants," "pollutants,"
"contaminants," "toxic chemicals," "toxics," "hazardous chemicals," "extremely
hazardous substances," "regulated substances" or "pesticides" as defined as such
in any applicable Environmental Law, (ii) any radioactive materials,
asbestos-containing materials, urea formaldehyde foam insulation, and radon in
harmful quantities or concentration that are regulated by any Governmental
Entity having jurisdiction in the location of such materials, and (iii) any
other chemical, material or substance, exposure to which is prohibited, limited
or
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regulated by any Governmental Entity having jurisdiction in the location of such
substances on the basis of potential hazards;
"Hired Business Employees" shall have the meaning set out in Section
7.12(a);
"Indemnified Party" shall have the meaning set out in Section 11.3(a);
"Indemnifying Party" shall have the meaning set out in Section 11.3(a);
"IT Specified Assets" shall have the meaning set out in Section 3.9(b);
"Knowledge" shall mean the actual knowledge (unless otherwise provided for
hereunder), of the applicable Person's executive officers and current division
managers engaged in the Business, unless other individual(s) are specifically
referenced.
"Material Adverse Effect" shall mean, with respect to the Specified Assets,
the Business, Seller or Buyer, respectively, any material adverse change or
material adverse condition in or relating to the financial condition, results of
operations, or business of the Specified Assets, Business, Seller or Buyer,
respectively, or that impedes the ability of Seller or Buyer, respectively, to
consummate the transactions contemplated hereby, or perform its obligations
hereunder;
"Net Asset Value" means the book value of the following Specified Assets
determined in accordance with GAAP: (a) fixed assets primarily related to the
Business but excluding the Excluded Assets, (b) work in progress, valued using
the percentage of completion method employed by Seller consisting of costs
incurred plus profit minus billing, (c) inventory related to the Business (but
excluding the Excluded Assets), and (d) Miscellaneous Assets (as defined in
Schedule 3.5(A)(v)), all as of 10 a.m. (EST) on the Closing Date with respect to
determination of the Closing Date Net Asset Value;
"Neutral Accountants" means a nationally-recognized independent firm of
certified public accountants mutually selected by Seller and Buyer or, if the
parties fail to agree within thirty (30) days after the 30-day negotiation
period set forth in Section 2.6(c), KPMG, or if KPMG is not available,
PriceWaterhouse Coopers;
"Noncompetition Agreement" shall mean a Noncompetition Agreement between
Seller and Buyer as of the Closing Date, substantially in the form of Exhibit A;
"Notice" shall have the meaning set out in Section 14.1;
"Notice Period" shall have the meaning set out in Section 11.3(b);
"Permits" shall mean any licenses, permits, consents, approvals, variances,
exemptions, franchises, registrations and other authorizations of or from
Governmental Entities, and shall include, without limitation, the Environmental
Permits;
"Person" shall mean any individual, corporation, partnership, joint
venture, trust, limited liability company, unincorporated organization,
Governmental Entity or other entity;
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"Pre-Closing Date Period" shall have the meaning set out in Section
12.1(a);
"Proceedings" shall mean all proceedings, actions, claims, suits,
investigations, and inquiries by or before any Governmental Entity;
"Real Property" shall have the meaning set out in Section 2.2(b).
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of any
Hazardous Substance into the environment or into or out of any property,
including the movement of any Hazardous Substance through or in the air, soil,
surface water, groundwater or property;
"Returns" shall mean all reports, estimates, declarations of estimated tax,
information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties;
"Seller Indemnified Parties" shall have the meaning set out in Section
11.1;
"Seller's Closing Conditions" shall have the meaning set out in Article
VIII;
"Seller's Consents and Approvals" shall mean all consents, approvals,
authorizations, licenses, actions, filings, notifications and other items listed
on Schedule 3.4;
"Seller's Credit Agreement" shall have the meaning set out in Section 3.6;
"Seller Tax Matter" shall have the meaning set out in Section 12.2;
"Specified Assets" shall mean only the assets set forth or described on
Schedule 3.5(A) hereto, as may be modified at Closing by the agreement of the
parties hereto;
"Specified Contracts" shall mean the contracts, agreements, commitments and
instruments with customers, suppliers, vendors, lessors, lessees, providers of
others listed on Schedule 3.10(B)(I);
"Specified IP Rights" shall have the meaning set out in Section 3.9(a);
"Specified Liabilities" shall mean (i) the obligations arising or to be
performed from and after the Closing under and with respect to the Specified
Contracts; (ii) liabilities arising in connection with the operation of the
Specified Assets after the Closing Date, and (iii) liability identified in
Schedule 3.5(A) as Specified Liabilities. The term "Specified Liabilities" shall
not include, and hereby expressly excludes, the Excluded Liabilities;
"Statement" shall have the meaning set out in Section 2.6(a);
"Taxes" shall mean all taxes, however denominated, including any interest,
penalties or other additions to tax that may become payable in respect thereof,
imposed by any Governmental Entity, which taxes shall include, without limiting
the generality of the foregoing, all income or
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profits taxes (including, but not limited to, federal income taxes, state income
taxes and any liability for the payment of any combined or consolidated tax,
including liability imposed pursuant to Treasury Regulations Section 1.1502-6),
gross receipts taxes, sales taxes, use taxes, real property gains or transfer
taxes, ad valorem taxes, property taxes, value-added taxes, franchise taxes,
production taxes, severance taxes, windfall profit taxes, withholding taxes,
payroll taxes, employment taxes, social security, excise taxes and other
obligations of the same or similar nature to any of the foregoing, whether
disputed or not;
"Third Party" shall have the meaning set out in Section 11.3(a);
"Total Consideration" shall have the meaning set out in Section 2.4(a);
"Trademark" shall mean the trademark "Retained Earth", as described in
Schedule 3.9(A), which shall be included in the Specified Assets.
1.2. Construction. In construing this Agreement, the following principles
shall be followed:
(a) the terms "herein," "hereof," "hereby," and "hereunder," or other
similar terms, refer to this Agreement as a whole and not only to the
particular Article, Section or other subdivision in which any such terms
may be employed;
(b) references to Articles, Sections, and other subdivisions refer to
the Articles, Sections, and other subdivisions of this Agreement;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) no consideration shall be given to the captions of the articles,
sections, subsections, or clauses, which are inserted for convenience in
locating the provisions of this Agreement and not as an aid in its
construction;
(e) examples shall not be construed to limit, expressly or by
implication, the matter they illustrate;
(f) the word "includes" and its syntactical variants mean "includes,
but is not limited to" and corresponding syntactical variant expressions;
(g) a defined term has its defined meaning throughout this Agreement,
regardless of whether it appears before or after the place in this
Agreement where it is defined;
(h) the plural shall be deemed to include the singular, and vice
versa;
(i) each exhibit, attachment, and schedule to this Agreement is a part
of this Agreement, but if there is any conflict or inconsistency between
the main body of this Agreement and any exhibit, attachment, or schedule,
the provisions of the main body of this Agreement shall prevail; and
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(j) the phrases "set forth in", "described in" and "included in" an
identified Schedule means expressly referred to or contained in the
identified Schedule.
ARTICLE II
THE ACQUISITION
2.1. Agreement to Purchase and Sell. Upon the terms and subject to the
conditions of this Agreement, Seller hereby agrees to sell, convey, transfer,
assign and deliver to Buyer, and Buyer hereby agrees to purchase from Seller, at
the Closing, all of the Specified Assets, free and clear of all Encumbrances,
and to assume the Specified Liabilities. Buyer shall not assume and shall have
no liability for the Excluded Liabilities, which Excluded Liabilities shall be
retained by Seller.
2.2. Excluded Assets. Other than the assets of Seller expressly defined
herein as Specified Assets, the assets of Seller (collectively, the "Excluded
Assets") are not part of the sale and purchase contemplated hereunder, are
excluded from the Specified Assets and shall remain the property of Seller after
the Closing. Without limiting the generality of the foregoing, the following
assets shall be specifically excluded from the transactions contemplated hereby
and shall be considered part of the Excluded Assets:
(a) Soundwall forms and other assets utilized in the soundwall
business;
(b) Any right, title or interest of Seller in any real property,
including but not limited to such real property located in the state of
Colorado ("Real Property");
(c) All cash in Seller's possession as of the Closing Date, including
without limitation all such cash attributable to the Business;
(d) Seller's accounts receivable as of the Closing Date;
(e) (i) All assets held under any "employee benefit plan" (as defined
in section 3(3) of ERISA) currently or heretofore maintained or contributed
to by Seller or any Affiliates of Seller; and (ii) contracts and
obligations requiring the maintenance of or contribution to any such
employee benefit plan;
(f) All current or deferred income Taxes and all Seller's claims for
refunds of Taxes and other similar governmental charges or assessments
pertaining to the Pre-Closing Date Period or which do not relate to the
Specified Assets;
(g) Any books and records of Seller that Seller is required by law to
retain; provided that Seller shall provide Buyer with copies of such
retained books and records that relate to the Business or any of the
Specified Assets;
(h) All of Seller's right, title and interest in and to any contract
exclusively associated with, as well as the assets (including associated
books and records) exclusively used in connection with, the T-Xxx I-25
Project (Seller's Project Reference No. G70012 and No. G70042), in Denver,
Colorado;
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(i) Seller's books and records associated with the Project Ref. No.
STP-1482(1)(2), Clearfield 200 South, Utah Department of Transportation, in
Clearfield, UT;
(j) All of Seller's rights, title and interest in and to any bonds
issued on Seller's behalf, including but not limited to bid, performance
and payment bonds;
(k) All of Seller's rights pursuant to this Agreement and the
instruments delivered hereunder; and
(l) Any names or marks utilized by Seller in the conduct of its
business, other than the Trademark.
2.3. Excluded Liabilities. For purposes of this Agreement, the term
"Excluded Liabilities" shall mean all liabilities and obligations of Seller
(other than the Specified Liabilities), known or unknown, direct or contingent,
xxxxxx or inchoate, arising out of, based upon, or relating to any event,
condition, circumstance, act or omission occurring or existing before, on or
after the Closing Date. Without limiting the generality of the foregoing, the
Excluded Liabilities shall include:
(a) subject to Buyer's obligation to mitigate liabilities arising out
of the Specified Contracts by Buyer's commercially reasonable efforts, all
liabilities and obligations of Seller arising out of, based upon or
resulting from, (i) any Environmental Law or any Environmental Claim
against Seller or the Business, (ii) Seller's operations of the Business
(including Seller's operation of the Business on or at third-party sites),
and (iii) any act, omission, occurrence, event, condition or circumstance
occurring or existing at any time on or before the Closing Date and
involving or related to the Specified Assets or the Business;
(b) all liabilities and obligations arising out of the Excluded
Assets;
(c) subject to Buyer's obligation to mitigate liabilities arising out
of the Specified Contracts by Buyer's commercially reasonable actions, all
liabilities and obligations attributable to Seller's errors, omissions and
misrepresentations prior to the Closing Date which directly relate to the
Specified Assets or the Specified Contracts, subject to the last sentence
of this Section 2.3.
Notwithstanding anything to the contrary in this Agreement, Seller shall have no
liability with respect to any variance between job cost estimates with respect
to any of the Specified Contracts and the actual cost of performing any of the
Specified Contracts, except to the extent Seller's job cost estimates (as
reflected in the Geotech job-by-job analysis included in Schedule 3.10 (B)(I) as
of the date of its preparation) are patently unreasonable (as proven by Buyer
through clear and convincing evidence) or intentionally inaccurate.
2.4. Total Consideration.
(a) Amount. Subject to adjustment in accordance with Section 2.5, the
amount payable in consideration of the sale, transfer, conveyance,
assignment and delivery by Seller of the Specified Assets, and payment for
Seller's assumption of obligations under the Noncompetition Agreement (in
addition to Buyer's assumption of
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the Specified Liabilities) (the "Total Consideration") shall be equal to
the sum of (i) Four Million United States dollars (U.S.$ 4,000,000), and
(ii) the Closing Date Net Asset Value.
(b) Payment Terms. At the Closing, Buyer will pay to Seller, in
immediately available funds in accordance with wiring instructions to be
provided by Seller to Buyer at least five (5) Business Days prior to the
Closing Date, an amount (the "Estimated Total Consideration") equal to the
sum of (i) Four Million United States dollars (U.S.$4,000,000) and (ii) the
Estimated Net Asset Value.
2.5. Adjustment. The Estimated Total Consideration paid to Seller pursuant
to Section 2.4(b) shall be adjusted to equal the Total Consideration payable to
Seller pursuant to Section 2.4(a) as follows: (a) If the Closing Date Net Asset
Value shall be less than the Estimated Net Asset Value, the amount paid as
Estimated Total Consideration shall be reduced by such deficit, on a
dollar-for-dollar basis, and Seller shall pay such amount as set forth in
Section 2.6. (b) If the Closing Date Net Asset Value shall be greater than the
Estimated Net Asset Value, the amount paid as Estimated Total Consideration
shall be increased by such excess, on a dollar-for-dollar basis, and Buyer shall
pay such amount as set forth in Section 2.6. The amount by which the amount paid
as Estimated Total Consideration shall be increased or decreased pursuant to
this Section 2.5 shall be the "Adjustment Amount".
2.6. Net Assets.
(a) As promptly as practical after the Closing Date and receipt by
Buyer of the necessary information, books and accounts, but in no event
later than twenty (20) days thereafter, Buyer shall cause the preparation
of, and deliver to Seller, a statement of the Closing Date Net Asset Value
(the "Statement"), together with Buyer's calculations of the Adjustment
Amount, and shall be accompanied by the payment of any portion of the
Adjustment Amount which Seller (or Buyer) does not dispute is owed to Buyer
(or Seller). Seller shall have the right to cause the preparation of the
Statement in the event of Buyer's failure to perform its obligation under
this Section 2.6(a).
(b) The Statement and Buyer's (or Seller's) calculation of the
Adjustment Amount shall become final and binding on Seller and Buyer on the
20th day following the date Buyer (or Seller) delivers the Statement and
Buyer's (or Seller's) calculation of the Adjustment Amount (the "Dispute
Deadline Date"), unless prior to the Dispute Deadline Date Seller (or
Buyer) delivers notice to Buyer (or Seller) of its disagreement. Such
notice shall set forth all of the disputed items together with proposed
changes thereto, including an explanation in reasonable detail of the basis
of proposed changes, and shall be accompanied by the payment of any portion
of the Adjustment Amount which Seller (or Buyer) does not dispute is owed
to Buyer (or Seller).
(c) If Seller (or Buyer) has delivered a timely notice of
disagreement, then Buyer and Seller shall use their good faith efforts to
reach written agreement on the disputed items (in which case, such mutual
agreement shall be conclusive as to the value of the Adjustment Amount). If
all of the disputed items have not been resolved by Buyer and Seller by the
30th day following receipt by Buyer (or Seller) of the notice of
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disagreement, then the disputed items shall be submitted to the Neutral
Accountants for binding arbitration within twenty (20) days after the end
of the foregoing 20-day period. The Neutral Accountants shall complete
their determination of the Adjustment Amount within fifteen (15) days from
submission of the dispute, unless Buyer and Seller agree otherwise. The
fees and expenses of such arbitration shall be borne 50% by Seller and 50%
by Buyer, except that if the arbitrators determine that either party
proceeded to arbitration in bad faith, or acted in bad faith during the
course of the arbitration proceeding, then all expenses of such
arbitration, plus interest at a rate of 1 1/2% per month on such unpaid
portion of the Adjustment Amount, calculated from the Closing Date until
the date of actual payment, shall be paid by the party that is determined
to have acted in bad faith. For purposes of this provision, a party's
failure to remit any portion of the Adjustment Amount which such party does
not, in good faith, dispute is owed to the other party shall be considered
"bad faith". The determination of the Closing Date Net Asset Value and the
Adjustment Amount by such arbitration shall be final and binding upon the
parties. Seller (or Buyer) shall pay the balance of the Adjustment Amount
not yet paid within five (5) Business Days from the date of determination
of the Adjustment Amount either by agreement of the parties or by the
Neutral Accountants.
(d) The Statement shall be prepared from Seller's books and records in
accordance with GAAP, applied on a consistent basis.
2.7. Allocation of Total Consideration. Seller and Buyer agree to allocate
the Total Consideration (together with the Specified Liabilities) for the
Specified Assets and the obligations under the Noncompetition Agreement, as set
forth on Schedule 2.7 (the "Allocation of Total Consideration"). The Allocation
of Total Consideration shall be completed in the manner required by Code Section
1060. Seller and Buyer further agree to comply with all filing, notice and
reporting requirements described in Code Section 1060 and the Treasury
Regulations promulgated thereunder, including the timely preparation and filing
of Forms 8594 based on the Allocation of Total Consideration. Seller and Buyer
hereby agree that they will report the federal, state, foreign and other tax
consequences of the transactions contemplated by this Agreement in a manner
consistent with the Allocation of Total Consideration.
2.8. Receipts After Closing. After the Closing, Seller may receive funds,
proceeds, contributions, refunds, rebates, payments or receipts that are
attributable to the Specified Assets and are properly allocable to Buyer under
the terms of this Agreement. Seller agrees to remit or cause to be remitted any
of the foregoing to Buyer, within five (5) Business Days of receipt thereof.
Buyer agrees to remit to Seller within five (5) Business Days of receipt
thereof, any funds, proceeds, contributions, rebates, payments or receipts that
are attributable to the Excluded Assets and are properly allocable to Seller
under the terms of this Agreement. If Seller receives any invoices (not used in
the determination of the Adjustment Amount) after Closing properly allocable to
work in progress included in the Specified Assets, Buyer shall either pay such
invoice directly or remit to Seller within five (5) Business Days of receipt
thereof, the amount of such invoices.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer the following:
3.1. Corporate Existence and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Pennsylvania and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction necessary to consummate the
transactions contemplated under this Agreement, as set forth in Schedule 3.1.
Seller has the corporate power to own, operate and lease its properties and to
carry on its business as presently conducted.
3.2. Power and Authority; Enforceability. Seller has all requisite
corporate power and authority to enter into this Agreement and all other
documents to be entered into by Seller in connection with the consummation of
the transactions contemplated hereby and to perform its obligations hereunder
and thereunder. This Agreement and all other documents entered into by Seller in
connection with the consummation of the transactions contemplated hereby have
been duly authorized, executed and delivered on behalf of Seller and, assuming
due authorization, execution and delivery by Buyer, constitute the legal, valid
and binding obligations of Seller enforceable in accordance with their
respective terms, except that (a) such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally and (b) the remedy of specific performance and
injunction and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefore may be brought.
3.3. No Conflict. The execution, delivery, and performance of this
Agreement by Seller and the consummation by it of the transactions contemplated
hereby do not and will not (a) violate or breach the certificate of
incorporation or by-laws (or equivalent organizational documents) of Seller, (b)
violate or breach any Applicable Law or Permit binding upon Seller, (c) except
as set forth in Schedule 3.3, result in any breach of, or constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under, or give to any other Person any rights of termination,
amendment, or cancellation of, any Specified Contract or any other contract to
which Seller is a party, or acceleration of any obligation of Seller thereunder,
or result in the creation of any Encumbrance on any of the Specified Assets
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, Permit, franchise or other instrument relating to the Specified Assets
to which Seller is a party or by which any of the Specified Assets is bound or
affected.
3.4. Consents, Approvals and Permits. No consent, approval, authorization,
license, order or permit of, or declaration, filing or registration with, or
notification to, any Governmental Entity, or any other Person (including without
limitation any Customer), is required to be made or obtained by Seller in
connection with the execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby, except as set forth on
Schedule 3.4. Seller holds all Permits listed on Schedule 3.4, and such Permits
are all Permits necessary or required for Seller's conduct of the Business,
except as indicated in Schedule 3.4. All of such Permits are in full force and
effect and Seller is in substantial compliance with each such Permit, except as
set forth in Schedule 3.4. Except as disclosed in Schedule 3.4, no notice
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has been received by Seller and no Proceeding is pending or threatened with
respect to any alleged failure by Seller to have any such Permit or not to be in
compliance therewith. Except as set forth on Schedule 3.4, no event has occurred
and is continuing which requires, or after notice or lapse of time or both would
require, any modification or termination of any such Permit held by Seller.
Notwithstanding the foregoing, all Environmental Permits shall be governed also
by Section 3.14.
3.5. Statements.
(a) Specified Assets and Liabilities. Schedule 3.5(A) sets forth the
Specified Assets and the Specified Liabilities.
(b) Financial Information. To Seller's knowledge, Seller has provided
to Buyer true and correct copies of all financial schedules requested by
Buyer relating to the Specified Assets.
3.6. Absence of Changes. Except as set forth in Schedule 3.6, since
December 31, 2005, there has been (a) no change in (i) the assets, liabilities
or financial condition of the Business or (ii) the condition (other than
financial) of the Specified Assets, other than, with respect to clauses (i) and
(ii) hereof, changes in the ordinary course of business the effect of which
changes has not caused, individually or in the aggregate, a Material Adverse
Effect with respect to the Business or the Specified Assets; (b) no damage,
destruction or loss, whether or not covered by insurance, having a Material
Adverse Effect with respect to the Business or the Specified Assets; (c) no
labor dispute that has caused, individually or in the aggregate, a Material
Adverse Effect with respect to the Business; (d) no transfer of any intellectual
property rights relevant to the Business: (e) no mortgage or pledge of any
assets of the Business other than pursuant to that certain Amended and Restated
Revolving Credit and Security Agreement, dated May 5, 2005, entered into by
Seller and certain of its Affiliates, as Borrowers, and PNC Bank, National
Association and other lenders party thereto, as subsequently amended ("Seller's
Credit Agreement"); (f) no motion, order, brief, settlement agreement or other
papers filed in any Proceeding; (g) no change in the manner in which the books
of account relating to the Business or the Specified Assets have been maintained
nor any change in any of its accounting methods or practices; (h) no claim has
been filed or reasonably anticipated to be filed which claims would have a
Material Adverse Effect with respect to the Business or the Specified Assets, or
(i) no agreement or commitment of do any of the foregoing.
3.7. Title to Properties. Seller has good and merchantable title to all of
the Specified Assets, free of any Encumbrances, subordination or adverse claim,
except as set forth in Schedule 3.7, or for such imperfections of title and
Encumbrances as do not individually or in the aggregate materially detract from
the value of the Specified Assets or have a Material Adverse Effect with respect
to the Business.
3.8. Litigation, Judgments, Etc. Except as set forth in Schedule 3.8, there
are no Proceedings pending or, to the Knowledge of Seller, threatened (excluding
any rulemaking, investigation or similar proceeding of general applicability and
any appeal or petition for review relating thereto) to which Seller is a party
that involves the Business or any of the Specified Assets, and Seller is not
subject to any judgment, order, writ, injunction, decree, consent,
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stipulation or award of or any agreement with any Governmental Entity or
arbitrator having jurisdiction over it which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect with respect to
the Business or the Specified Assets. Seller has not received any notice of
default or violation and, to its Knowledge, except as set forth in Schedule 3.8,
Seller is in substantial compliance with any judgment, order, writ, injunction,
decree, consent, stipulation, award or agreement applicable to it of any
Governmental Entity or arbitrator having jurisdiction over it with respect to
the Business or the Specified Assets.
3.9. Intellectual Property and IT.
(a) IP Rights. Schedule 3.9(A) sets forth a list of all patents,
patent applications, trademarks (whether registered or not), trademark
applications, trade names, copyrights, patent or know-how licenses (wherein
Seller is either licensee or licensor) or other intellectual property
rights exclusively used in the ordinary course of the Business (the
"Specified IP Rights").
(b) IT Assets. Schedule 3.9(B) sets forth a list of all hardware,
software, systems, licenses, agreements or other information technology
assets which are exclusively used in the ordinary course of the Business
(the "IT Specified Assets").
(c) Documents and Information. To Seller's Knowledge (including
Knowledge after having made diligent inquiry), Seller has delivered to
Buyer complete and accurate copies of all documents and information of
material significance related to rights of Seller in the Data, the
Specified IP Rights and the IT Specified Assets, or the use or exploitation
thereof.
(d) Claims. Except as set forth on Schedule 3.9(D) and to Seller's
Knowledge (including Knowledge after having made diligent inquiry): (i)
there is no unauthorized use, infringement, or misappropriation of any of
the Data, any of the Specified IP Rights or any of the IT Specified Assets
by any Person; and (ii) none of the Data, the Specified IP Rights or the IT
Specified Assets infringe or have infringed any intellectual property right
of any third party. Seller is not subject to any confidentiality obligation
with respect to trade secrets, know-how or other materials related to the
Data, the Specified IP Rights and the IT Specified Assets. Seller has not
received notice of breach or default with regard to, and to Seller's
Knowledge (including Knowledge after having made diligent inquiry), Seller
is not in breach in any material respect of, any agreement, commitment,
contractual understanding, license, sublicense, assignment, or
indemnification which relates to any of the Data, the Specified IP Rights
or the IT Specified Assets and have not taken, or failed to take, any
action that would preclude or hinder the protection or enforcement of the
Data, the Specified IP Rights or the IT Specified Assets.
(e) Validity, etc. Except as set forth in Schedule 3.9(E): (i) the
Specified IP Rights are in good standing and, to the Knowledge of Seller,
are valid and enforceable; (ii) all registrations for copyrights, patent
rights and trademarks identified in Schedule 3.9(A) are in full force and,
to the Knowledge of Seller (including Knowledge after having made diligent
inquiry), valid and all applications to register any unregistered
copyrights, patent rights or trademarks so identified are pending and in
good standing, all
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without challenge by any third party; and (iii) except for the Fosmart
Marks, Seller has the sole and exclusive right to bring actions for
infringement, misappropriation or unauthorized use of the Specified IP
Rights, and, to the Knowledge of Seller, there is no basis for any such
action. Copies of all registrations or current applications relating to the
Specified IP Rights identified in Schedule 3.9(A) have been made available
to Buyer.
(f) Right to Transfer. Without limiting the generality of other
provisions of this Agreement and except for the Fosmart Marks as indicated
in Schedule 3.9(E), Seller has good and merchantable title to, or the
unrestricted license to use the Specified IP Rights and IT Specified
Assets, free or any Encumbrances, subordination or adverse claims, and has
the right to assign, sell, transfer or convey such Specified IP Rights and
IT Specified Assets as contemplated in this Agreement, including but not
limited to the assignment of Specified IP Rights used by Seller in the
Business pursuant to a license granted to Seller.
3.10. Contractual Obligations.
(a) General. Except as set forth in Schedules 3.10(A), Seller is not a
party to any of the following, whether written or oral:
(i) confidentiality agreement related to the Business; or
(ii) agreement that purports to limit its freedom to compete with
respect to the Business in any line of business or in any geographic
area.
(b) Specified Contracts. With regard to the Specified Contracts:
(i) Set forth on Schedule 3.10(B)(I) is (x) a list of all
contracts, agreements, leases and instruments (including all
amendments, supplements, and modifications thereto) included in the
Specified Assets and to which Seller is a party or by which any of the
Specified Assets is otherwise bound or affected, and (y) with respect
to each Specified Contract with a Customer, such Customer's address,
the contract amount, job name and other information with respect to
such Specified Contract, including the Geotech job-by-job analysis
report.
(ii) Each Specified Contract is a legal and valid agreement,
arrangement or commitment of Seller to which it is a party,
enforceable against Seller in accordance with its terms and is a legal
and valid agreement, arrangement or commitment of each other party
thereto, enforceable against such party in accordance with its terms,
except in each case where enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally
and except where enforceability is subject to the application of
equitable principles or remedies or as would not have, individually or
in the aggregate, a Material Adverse Effect with respect to Seller or
the Business. Each Specified Contract with a Customer has been duly
entered into by such Customer. True and complete copies of the
Specified Contracts have been delivered to or otherwise made available
to Buyer, and the information regarding Customers and
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their Specified Contracts set forth in Schedule 3.10(B)(I) is true and
correct in all material respects.
(iii) Except as set forth in Schedule 3.10(B)(II), Seller has not
received any claim or notice of, and Seller otherwise has no Knowledge
(including Knowledge after diligent inquiry) of any threatened claim
or notice of, any breach, violation or default, and Seller is not in
breach, violation or default, or but for a requirement that notice be
given or that a period of time elapse or both, would be in breach,
violation or default, under any Specified Contract which defaults, in
each case, individually, or in the aggregate, would reasonably be
expected to have a Material Adverse Effect with respect to the
Business. Seller has complied in all material respects with all
commitments and obligations under each such Specified Contract to
which it is a party. Any designs, drawings and engineering work
performed by Seller under any Specified Contract are free from errors
or omissions.
(iv) Seller has no Knowledge (including Knowledge after diligent
inquiry) of any breach, violation or default of any obligation to be
performed by any other party to any Specified Contract to which Seller
is a party or any other contract pursuant to which any of the
Specified Assets is otherwise bound or affected.
3.11. Taxes. Except as set forth in Schedule 3.11, (i) all Returns required
to be filed by or on behalf of Seller on or before the Closing Date with respect
to the Business or the Specified Assets have been duly filed on a timely basis,
(ii) such Returns are true, complete and correct, (iii) all Taxes which were
shown to be due on such Returns or on subsequent assessments with respect
thereto have been paid in full on a timely basis, and (iv) no other Taxes, to
Seller's Knowledge (including Knowledge after diligent inquiry), are payable by
Seller with respect to items or periods covered by such Returns (whether or not
shown on or reportable on such Returns) or with respect to the Pre-Closing Date
Period; provided, however, that the representations and warranties set forth in
this Section 3.11 are made only to the extent that they relate to (i) Taxes that
are or may become liens on the Specified Assets or (ii) are Taxes for which
Buyer is or may be liable as a transferee, successor, purchaser or in a similar
capacity with respect to the Specified Assets. There are no liens for Taxes
(other than for Taxes not yet due and payable) upon the Specified Assets.
3.12. Employment Matters. Schedule 3.12(A) is a complete and accurate list,
as of the Effective Date, of all employees of Seller who devote their time and
effort exclusively to the operation of the Specified Assets and the conduct of
the Business, but excluding Xx. Xxxxx Xxxxxx, Xx. Xxxxx Xxxxx, Xx. Xxxxxxxx
Xxxxxxxx and Xx. Xxxx Xxxxx (the "Business Employees"), and such schedule lists
their respective names, positions, current compensation (including salaries,
wages, commissions, bonuses and other payments), and dates of employment. Seller
is not (i) a party to, or bound by, any collective bargaining agreement or any
other labor agreement covering or relating to any Business Employee, (ii) in
receipt of any demand for recognition by, and has not recognized, any labor
organization as the exclusive bargaining representation of any Business
Employee, (iii) a party to, or bound by, any contract for the employment of any
Business Employee, or (iv) the subject of any Proceeding asserting
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that Seller has committed an unfair labor practice or is seeking to compel it to
bargain with any labor organization as to wages or conditions of employment with
respect to any Business Employee. Each employee benefit plan program, policy or
other benefit ("Benefit Plan") maintained, sponsored, participated in or
contributed to by Seller for the benefit of any Business Employee has been
operated and administered in all material respects in accordance with its terms
and Applicable Laws, including but not limited to ERISA and the Code. There is
no current or pending investigation or audit by the Internal Revenue Service,
the Department of Labor or any other Governmental Entity of any such Benefit
Plan. There are no actions, suits or claims pending (other than routine claims
for benefits) or, to the Knowledge of Seller, threatened with respect to any
such Benefit Plan or against the assets of any such Benefit Plan.
3.13. Insurance. Schedule 3.13 sets forth a description (including without
limitation the issuers of and the amounts of coverage) of (a) all insurance
policies which are owned or maintained by Seller or its Affiliates with respect
to the Specified Assets or the Business and (b) all insurance certificates
issued on Seller's behalf or at Seller's request with respect to the Business.
All of such insurance policies are in full force and effect, and all premiums
therefore payable for periods prior to the Closing Date have been fully paid.
Except as set forth in Schedule 3.13, no notice of cancellation of, or
indication of an intention not to renew, any such insurance policy has been
received by Seller.
3.14. Environmental Matters. Except as set forth in Schedule 3.14, (a)
Seller has obtained all Environmental Permits that have been or are required in
connection with the Business, (b) Seller has been, and Seller is, in substantial
compliance with all terms and conditions of all requirements of Environmental
Law and Environmental Permits applicable to or required in connection with the
Business, (c) Seller has not received any written notice from a Governmental
Entity of any actual or alleged violation or liability arising under any
requirements of such Environmental Law or Environmental Permits, (d) no
Environmental Claims are threatened or are presently pending against Seller
relating to the Specified Assets or to present or past operations of the
Business and (e) to the Knowledge of Seller no condition or set of facts or
circumstances exists that could reasonably be expected to give rise to an
Environmental Claim against Seller or Buyer relating to the Specified Assets or
to present or past operations of the Business. To Seller's Knowledge (including
Knowledge after having made diligent inquiry) and except as set forth in
Schedule 3.14, Seller has identified and made available to Buyer every
environmental investigation, study, audit, test and other analysis conducted by
or for or in the possession of Seller or the Business in relation to the
Specified Assets, the Business, or any existing or potential Environmental Claim
or liability under Environmental Law with respect to the Business or the
Specified Assets.
3.15. Condition of Assets. With respect to the physical condition and
location of the tangible Specified Assets, the tangible Specified Assets are
being sold on an "AS IS WHERE IS" basis.
3.16. Accurate and Complete Records; Customer Information. Copies of the
books, ledgers, and financial records of the Business for the period of time
which is not less than three years prior to the Effective Date or any such
longer period of maintenance or retention as may be required by Applicable Laws
have been made available or provided to Buyer. Without limiting the generality
of the foregoing, copies of all material written information and documentation
in
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Seller's possession or under Seller's control relating to the Specified
Contracts with Customers or the Business (collectively, "Customer Information")
have been made available to or provided to Buyer; and such Customer Information
is accurate and complete and does not contain any material discrepancies.
3.17. Brokerage Arrangements. Seller has not entered (directly or
indirectly) into any agreement with any person, firm or corporation that would
obligate Buyer to pay any commission, brokerage or "finder's fee" in connection
with the transactions contemplated herein.
3.18. No Misleading Statements. The representations and warranties of
Seller contained in this Agreement, the Schedules and all other certificates and
documents delivered at the Closing to Buyer and its representatives in
connection with the transactions contemplated by this Agreement do not and will
not include any untrue statement of a material fact and do not and will not omit
to state any material fact necessary to make the statements made not misleading.
3.19. Sufficiency of Properties, Assets and Employees. Except as set forth
in Schedule 3.19, the Specified Assets and the Business Employees constitute
substantially all of the properties, assets, rights, interests and employees
which are used in, and are necessary for, the operation of the Business as it is
conducted on the Effective Date and on the Closing Date. Notwithstanding the
above, Buyer acknowledges that the Business Employees do not perform Seller's
corporate functions. As of the Closing Date, there are no Persons other than
Seller who own or hold any right, title or interest in or to the Specified
Assets or the Business.
3.20. Compliance With Laws. Seller is in compliance with all Applicable
Laws with respect to the Business, except as disclosed on Schedule 3.20.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
4.1. Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware with corporate
power to carry on its business as now being conducted.
4.2. Power and Authority; Enforceability. Buyer has all requisite corporate
power and authority to enter into this Agreement and all other documents to be
entered into by Buyer in connection with the consummation of the transactions
contemplated hereby and to perform its obligations hereunder and thereunder.
This Agreement and all other documents entered into by Buyer in connection with
the consummation of the transaction contemplated hereby have been duly
authorized, executed and delivered on behalf of Buyer and, assuming due
authorization, execution and delivery by Seller, constitutes a legal, valid and
binding obligation of Buyer enforceable in accordance with its terms, except
that (a) such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally and (b) the remedy of specific performance and injunction and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefore may be brought.
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4.3. No Conflict. The execution, delivery and performance of this Agreement
by Buyer does not and will not (a) violate or breach the certificate of
incorporation or by-laws of Buyer, (b) violate or breach any Applicable Law
binding upon Buyer, or (c) result in any breach of, or constitute a default (or
event which with the giving of notice or lapse of time, or both, would become a
default) under, or give to any other Person any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on any of the assets or properties of Buyer pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, Permit,
franchise or other instrument relating to such assets or properties to which
Buyer is a party or by which any of such assets or properties is bound or
affected.
4.4. Consents, Approvals and Permits. No consent, approval, authorization,
license, order, or permit of, or declaration, filing, or registration with, or
notification to, any Governmental Entity, or any other Person, is required to be
made or obtained by Buyer or any of its Affiliates in connection with the
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated hereby, and (b) as may be necessary as a result of
any facts or circumstances relating solely to Seller.
4.5. Financing. Buyer has available sufficient funds to consummate the
transactions contemplated hereby, including payments under Article II hereof to
be made at the Closing.
ARTICLE V
CLOSING
5.1. Closing. The closing (the "Closing") shall be held on February 21,
2006 at Buyer's offices in Vienna, VA, at 10:00 a.m. (EST), or at such other
place and time, or on such other date, as the parties may agree.
5.2. Deliveries by Seller at Closing. At the Closing, Seller will deliver
the following documents to Buyer, each in form and substance reasonably
satisfactory to Buyer:
(a) A certificate executed on behalf of Seller by the president,
senior vice president, or vice president of Seller, dated the Closing Date,
representing and certifying as to the matters set forth in Sections 9.1 and
9.2.
(b) The certificates, instruments, and documents listed below, each in
form and substance reasonably satisfactory to Buyer.
(i) Assignments (including with respect to the Trademark, an
assignment duly executed by Seller's Affiliate Fosmart, Inc.), bills
of sale, certificates of title, documents and other instruments of
transfer and conveyance of the Specified Assets to be transferred,
each dated as of the Closing Date and in form and substance reasonably
satisfactory to Buyer and sufficient to vest in Buyer good and
marketable title to the Specified Assets to be transferred, free and
clear of all Encumbrances, including a Xxxx of Sale, Assignment and
Assumption Agreement.
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(ii) All books and records of Seller to the extent related to the
Specified Assets and Specified Liabilities to be transferred and
assumed, respectively, and all Customer Information existing as of the
Closing to the extent not delivered to Buyer prior to Closing.
(iii) Evidence of Seller's Consents and Approvals which have been
obtained regarding the Specified Assets and Specified Liabilities to
be transferred and assumed, respectively.
(iv) Such other certificates, instruments of conveyance, and
documents as may be reasonably requested by Buyer prior to the Closing
Date to carry out the intent and purposes of this Agreement.
(v) Documentation reasonably satisfactory to Buyer that Seller's
banks have released any Encumbrances relating to or arising out of
Seller's Credit Agreement in, to or with respect to the Specified
Assets.
(c) An original counterpart of the Noncompetition Agreement dated the
Closing Date fully executed by Seller.
(d) Evidence of Seller's Board of Directors' resolutions authorizing
Seller's execution, delivery and performance of this Agreement and the
transactions contemplated herein.
5.3. Deliveries by Buyer at Closing. At the Closing, Buyer will deliver the
following to Seller, each in form and substance reasonably satisfactory to
Seller:
(a) The Estimated Total Consideration payable to Seller pursuant to
Section 2.4(b), wired in immediately available funds to an account
designated by Seller as set forth in Section 2.4(b).
(b) A certificate executed by the president, senior vice president or
vice president of Buyer, dated the Closing Date, representing and
certifying as to the matters set forth in Sections 8.1 and 8.2.
(c) Evidence of the Consents and Approvals regarding the Specified
Assets and Specified Liabilities to be transferred and assumed,
respectively.
(d) Such other certificates, instruments, and documents as may be
reasonably requested by Seller prior to the Closing Date to carry out the
intent and purposes of this Agreement.
(e) An original counterpart of the Noncompetition Agreement dated the
Closing Date fully executed by Buyer.
(f) A Xxxx of Sale, Assignment and Assumption Agreement wherein Buyer
agrees to assume and duly perform all Specified Liabilities.
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(g) Evidence of Buyer's Board of Directors' resolutions authorizing
Buyer's execution, delivery and performance of this Agreement and the
transactions contemplated herein.
ARTICLE VI
ACTIONS PRIOR TO CLOSING
6.1. Conduct and Preservation of Business. During the period from the
Effective Date to the Closing Date, except as provided in Section 6.2, Seller
shall conduct its operations with respect to the Specified Assets and the
Specified Liabilities according to its ordinary course of business consistent
with past practice (including the performance of Seller's obligations under the
Specified Contracts) and in compliance with all Applicable Laws, except as set
forth in Schedule 6.1, and shall take all actions reasonably necessary to
preserve, maintain, and protect its assets, rights, and properties with respect
to the Specified Assets and the Specified Liabilities.
6.2. Restrictions on Certain Actions. Without limiting the generality of
Section 6.1, prior to the Closing Date Seller shall not, without the prior
written consent of Buyer:
(a) Except with respect to Encumbrances in Seller's inventory and
receivables created pursuant to Seller's Credit Agreement, mortgage, or
pledge any of the Specified Assets, tangible or intangible, or create or
suffer to exist any material lien thereupon;
(b) Other than within the ordinary course of business, acquire any
assets for or relating to the Business, or sell, lease, transfer, or
otherwise dispose of, directly or indirectly, any Specified Assets;
(c) terminate, amend, modify, or change any Specified Contract or
enter into any additional contract other than in the ordinary course of
business;
(d) settle or resolve any pending or threatened Proceeding, unless
such settlement or resolution creates no current or future obligation or
Encumbrance with respect to the Specified Assets;
(e) other than in the ordinary course of business, agree to any of the
foregoing.
In addition to the consent required from Buyer as set forth above, Seller
agrees, with respect to the actions described in clause (c) above, to notify
Buyer in writing at the earliest practicable date in the event Seller desires to
undertake any such action or in the event any such action is necessary for the
preservation and/or conduct of the Business, which notice in each case shall
include a reasonably detailed description of the action desired by Seller.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Cooperation. For a period of sixty (60) months commencing on the
Effective Date, each party agrees that it will cooperate with and make available
to the other party during normal business hours, all books and records,
information (including Customer Information),
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information technology systems and other facilities, and employees (to the
extent such employees are available without substantial disruption of
employment) of or relating to the Business retained and remaining in existence
after the Closing Date which are necessary or useful in connection with (i) any
Tax inquiry, audit, investigation, or dispute, (ii) any Proceeding or audit by a
Governmental Entity, or (iii) any other matter requiring any such books and
records, information, or employees for any reasonable business purpose,
including to allow Buyer or Seller to make inspections as reasonably required.
The party requesting any such books and records, information (including Customer
Information), or employees shall (x) bear all of the out-of-pocket costs and
expenses (including attorneys' fees and reimbursement for the salaries and
employee benefits for those employees who are made available) reasonably
incurred in connection with providing such books and records, information
(including Customer Information), or employees, except that Seller shall bear
all such out-of-pocket costs and expenses incurred by Seller, and shall
reimburse all such out-of-pocket costs and expenses incurred by Buyer promptly
on demand, with respect to the investigation of any complaint or dispute
initiated by any Customer or former Customer with respect to activities of
Seller or the Business prior to the Closing and Buyer shall bear all such
out-of-pocket costs and expenses incurred by Buyer, and shall reimburse all such
out-of-pocket costs and expenses incurred by Seller promptly on demand, with
respect to the investigation of any complaint or dispute initiated by any
Customer with respect to activities of Buyer or the Business after the Closing;
and (y) hold in strict confidence and shall not disclose to any Person any
Confidential Information in accordance with Section 7.9. For a period commencing
on the Closing Date and continuing as provided in Buyer's document retention
policy then in effect, Buyer agrees to maintain books and records transferred by
Seller as part of the Specified Assets; provided, however, that if Buyer elects
to destroy such books and records less then five (5) years after the Closing
Date, Buyer shall notify Seller of such election, and Seller shall have ten (10)
Business Days to request from Buyer a copy of such books and records, to be
provided by Buyer at Seller's expense.
7.2. Regulatory Issues and Other Authorizations and Consents.
(a) Filings. Each party shall use all commercially reasonable efforts
to obtain all authorizations, consents, orders, and approvals of, and to
give all notices to and make all filings with, all Governmental Entities
and other Persons that may be or become necessary for its execution and
delivery of, and the performance of its obligations under this Agreement
and will cooperate fully with the other party in promptly seeking to obtain
all such authorizations, consents, orders, and approvals, giving such
notices, and making such filings; provided that (i) promptly following
execution of this Agreement, Seller shall take the initiative to obtain
consents for assignment of Specified Contracts, but Seller shall not be
required to incur any material cost or liability to obtain any such
consents; (ii) Buyer shall not be required to incur any material cost or
liability with respect to any of Seller's Consents and Approvals and (iii)
Seller shall not be required to incur any material cost or liability with
respect to any of Buyer's Consents and Approvals. To the extent required by
Applicable Laws, each party shall, in each case after review of such filing
or information (as the case may be) by the other party hereto, (x) file or
cause to be filed with the appropriate Governmental Entities, as promptly
as practicable but in no event later than the fifth Business Day after the
Effective Date, all reports, applications and other documents required to
be filed by such party under Applicable Laws concerning the transactions
contemplated hereby and (y) promptly
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comply with or cause to be complied with any requests by such Governmental
Entities for additional information concerning such transactions, in each
case so that any such authorization, consent, order or approval shall be
granted as soon as practicable after the Effective Date. In the event (i)
any filing described in the immediately preceding sentence is made without
prior review by the non-filing party, or (ii) any such filing made is not
one of Seller's Consents and Approvals (if the filing is made by Seller) or
one of Buyer's Consents and Approvals (if the filing is made by Buyer) the
party making such filing shall reimburse the non-filing party promptly on
demand all out-of-pocket costs and expenses (including attorneys' fees)
reasonably incurred by the non-filing party in connection with monitoring
such filing and any Proceeding related thereto (including, if deemed
necessary or appropriate by the non-filing party, intervening with respect
to such Proceeding).
(b) Third Party Consents. Each party shall use its commercially
reasonable efforts (but shall not be required to incur any material cost or
liabilities) to assist the other party in obtaining any consent of third
parties necessary or advisable in connection with the transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, Seller shall use commercially reasonable efforts to assist Buyer
in obtaining any Permits necessary or advisable to assign to Buyer the
Specified Contracts and otherwise to consummate the transactions
contemplated hereby.
7.3. Public Announcements. Seller and Buyer agree that after the Effective
Date, each party shall have the right to issue a press release with respect to
this Agreement and the transactions contemplated hereby substantially in the
form of Exhibit B. Thereafter Buyer and Seller and their respective Affiliates
shall have the right from time to time to issue any press release or make any
public statement regarding the transactions contemplated hereby, subject (in
each case where the content of such the press release or public statement is not
substantially in the form of Exhibit B) to the prior approval of the other party
except as may be, in the sole judgment of the party desiring disclosure,
required or appropriate under Applicable Law.
7.4. Amendment of Schedules. Each party agrees that, with respect to the
representations and warranties of such party contained in this Agreement, such
party shall have the continuing obligation until the Closing to supplement or
amend promptly the Schedules with respect to any matter hereafter arising or
discovered which, if existing or known as the date of this Agreement, would have
been required to be set forth or described in the Schedules; provided, however,
that for the purposes of determining whether the Closing Conditions have been
fulfilled, the Schedules shall be deemed to include only that information
contained therein on the Effective Date and shall be deemed to exclude all
information contained in any supplement or amendment thereto.
7.5. Fees and Expenses. Except as otherwise expressly provided in this
Agreement, all fees and expenses, including fees and expenses of counsel,
financial advisors, and accountants incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fee or expense, whether or not the Closing shall have occurred.
7.6. Transfer Taxes. All sales, use, transfer, filing, recordation,
registration and similar Taxes and fees arising from or associated with the
transactions contemplated hereunder,
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whether levied on Buyer or Seller shall be borne by Buyer. Seller and Buyer
shall file all necessary documentation with respect to, and Buyer shall make all
payments of, such Taxes and fees on a timely basis or, if Seller makes such
payments, Buyer shall reimburse Seller within five (5) Business Days after
receipt of notification from Seller. Within thirty (30) Business Days after
Closing, Buyer shall provide to Seller appropriate state exemption certificates
that may be applicable to the transactions contemplated hereunder.
7.7. Casualty Loss. Notwithstanding anything to the contrary in this
Agreement, in the event of damage by fire or other casualty to the Specified
Assets prior to Closing, this Agreement shall remain in full force and effect,
there shall be no reduction in the Total Consideration and no failure of a
condition to Closing shall be deemed to exist by virtue of such event if, in any
such event Seller, at its option, (i) repairs such damage (which Seller shall
have no obligation to do), (ii) collects (and when collected pays over to Buyer)
any insurance claims related to such damage, or (iii) assigns to Buyer such
insurance claims; provided, however, that if such loss has a Material Adverse
Effect with respect to Seller or the Business, Buyer may elect, as its option,
to terminate this Agreement. In the event Buyer elects not to terminate this
Agreement as aforesaid, the foregoing provisions of this Section shall apply,
and the Closing Date shall be delayed until the date on which all necessary
operations have been restored in order that there is no longer a Material
Adverse Effect with respect to Seller or the Business, but such date shall not
be later than the relevant date set forth in Section 10.1(b).
7.8. Insurance. If any claims are made or losses occur prior to the Closing
Date that relate solely to the Specified Assets and such claims, or the claims
associated with such losses, may be made against or under the policies retained
by Seller or its Affiliates after the Closing, then Seller shall use its
reasonable commercial efforts so that Buyer can file, notice, and otherwise
continue to pursue these claims pursuant to the terms of such policies. Seller
and its Affiliates shall be reimbursed by Buyer (or otherwise indemnified and
held harmless) for any losses or other costs incurred by Seller or its
Affiliates (including by way of any reduction in, or loss of, available
insurance to cover other insurable losses or associated expenses of Seller or
its Affiliates) arising out of Buyer pursuing these claims under such policies.
7.9. Confidentiality.
(a) Seller has had access to, and has gained knowledge with respect to
the Business and the Specified Assets, and relating to Buyer and its
Affiliates, and the related trade secrets, financial results and
information, processes and techniques, plans, research, designs, concepts,
methods of doing business and information concerning customers and
suppliers, and other valuable and confidential information, which is not
generally known to the public (the "Confidential Information"). Seller and
Buyer acknowledge that unauthorized disclosure or misuse of the
Confidential Information following the date of this Agreement may cause
irreparable damage to Buyer. Accordingly, for a period of four (4) years
commencing on the Effective Date, Seller agrees to hold in strict
confidence and not disclose to any Person any Confidential Information
obtained by Seller while Seller was conducting the Business or while Seller
owned any of the Specified Assets.
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(b) Nothing in this Section 7.9 shall prevent Seller from using or
disclosing any such Confidential Information as counsel to Seller advises
should be used or disclosed in connection with litigation or pursuant to
Applicable Law or in the course of a defense of a claim assumed by Seller
as an Indemnifying Party pursuant to Section 11.3 or, to the extent
necessary, in the course of collecting any accounts receivable, or in
connection with a Deferred Contract or as permitted under Section 7.3
(c) Seller agrees to indemnify and hold harmless Buyer and its
representatives from and against any Claim arising out of any breach of
their obligations under this Section 7.9. Seller and Buyer agree that
because an award of money damages (whether pursuant to the foregoing
sentence or otherwise) would be inadequate for any breach of this Section
7.9, any such breach would cause Buyer irreparable harm. Seller also agrees
that in the event of any breach or threatened breach of this Section 7.9,
Buyer will also be entitled, without the requirement of posting a bond or
other security, to equitable relief, including injunctive relief and
specific performance. The Claim procedures set forth in Section 11.3 shall
apply with respect to any indemnification sought pursuant to this section.
If buyer asserts a Claim against Seller under this Section 7.9(c), the
prevailing party shall be entitled to recover its legal fees and costs from
the other party.
7.10. Consents. Without limiting Seller's and Buyer's respective rights
pursuant to Articles VIII or IX with respect to Seller's or Buyer's obligations
to close, in the event Seller or Buyer, as applicable, waives its rights under
Sections 8.3 or 9.3, respectively, and Seller and Buyer elect to proceed with
the Closing notwithstanding the fact that not all Consents and Approvals have
been obtained, the parties further agree that Seller shall retain, until such
time as all Consents or Approvals shall have been obtained, all rights to and
liabilities under any Specified Contract to which any required consent or
approval listed on Schedule 3.4 pertains if such consent or approval has not
been obtained prior to Closing (the "Deferred Contract"). Until the assignment
of the Deferred Contract, (a) Buyer shall continue to use all commercially
reasonable efforts and Seller shall fully cooperate with Buyer to obtain all
required consents or approvals to remove any other impediments to such
assignment, and (b) Seller shall cooperate with Buyer (and Buyer shall cooperate
with Seller) in any arrangement to provide (to the extent permitted without
breach of such Deferred Contract or Applicable Law) Buyer with the benefits and
burdens of such Deferred Contract after the Closing Date to the same extent as
if such Deferred Contract had been assigned to Buyer (such arrangement, an
"Alternative Arrangement"). Seller and Buyer shall agree in good faith as to the
terms of such Alternative Arrangement, which arrangement may consist of an
arrangement pursuant to which Seller subcontracts Buyer to perform under the
Deferred Contracts, substantially in the form of the Subcontract attached hereto
as Exhibit C. If, subsequent to the Closing, Seller shall obtain all required
consents or approvals required to assign any Deferred Contract, the Deferred
Contract for which consent or approval to assign has been obtained shall at that
time be deemed to be conveyed, granted, bargained, sold, transferred, setover,
assigned, released, delivered and confirmed to Buyer and assumed by Buyer,
without need of further action by Seller or of further documentation except for
notice from Seller to Buyer that such consent or approval has been obtained; and
from and after the effective date such Deferred Contract is assigned to Buyer,
(x) no party shall have any further liability under the Alternative Arrangement
related thereto, and (y) the Deferred Contract shall be deemed to be a Specified
Asset and Specified Liability. Seller's obligations pursuant to the
Non-competition Agreement with respect to any Deferred
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Contract shall be of no effect unless and until Buyer has assumed the benefits
and burdens of such Deferred Contract pursuant to an Alternative Arrangement or
until its assignment.
7.11. Maintenance of Guaranties and Insurance. Seller agrees that from the
Effective Date and until the earlier to occur of (a) the Closing and (b) the
termination of this Agreement, Seller agrees (i) to keep its insurance policies
described in Schedule 3.13 in force and (ii) not to cancel, and will cause its
Affiliates not to cancel, any of Seller's insurance policies without the prior
written consent of Buyer. Seller shall cause any and all guaranties of any
Affiliate or any other party on behalf of Seller, any insurance coverage or bid,
payment or performance bond, with regard to the Business to be and remain
unchanged and in full force and effect.
7.12. Employees.
(a) Promptly after the execution hereof by each of the parties, Buyer
will offer employment, to be effective on the day immediately succeeding
the Closing Date, to the Business Employees (as listed on Schedule 3.12
(A)). Not fewer than five (5) Business Days prior to the Closing Date,
Buyer will provide Seller with a list of Business Employees who have
accepted such offer of employment from Buyer as of that date. Effective on
the Closing Date, Seller will terminate the employment of all such Business
Employees who have accepted Buyer's offer of employment, and Buyer will
hire those Business Employees who report to work on the day immediately
succeeding the Closing Date (such Business Employees, the "Hired Business
Employees"). Buyer, in its sole discretion, shall set the terms and
conditions of employment for any Hired Business Employees, including but
not limited to employee benefits. To the extent permissible under Buyer's
Benefit Plans, Buyer will offer each Hired Business Employee credit for
years of service with Seller, in accordance with the terms of, and subject
to the limitations under, Buyer's Benefit Plans.
(b) Seller shall be solely liable for any costs or liabilities
incurred in connection with Seller's continued employment or termination of
Seller's employees, including any Business Employees who do not accept
Buyer's offer of employment, and in connection with the termination by
Seller of the employment of those Business Employees who have accepted
Buyer's offer of employment, including liabilities for incentive
compensation, bonus, severance and other benefits. Buyer shall be solely
liable for any costs or liabilities incurred in connection with the
employment or termination of Hired Business Employees, including
liabilities for severance and other benefits, from the day the Hired
Business Employees are hired by Buyer. Seller shall be fully and solely
responsible for any costs, expenses, obligations and liabilities, vested or
non-vested, arising out of the pension or retirement obligations
attributable to the Seller's employees relating to the period ending on or
prior to the Closing Date. Seller agrees to indemnify, defend and hold
Buyer Indemnified Parties harmless from and against all direct or indirect
costs, expenses or liabilities arising from or relating to claims made by
or on behalf of the Seller's employees with respect to termination of
employment by reason of the transactions contemplated by this Agreement,
including, but not limited to, any claims for improper termination or
severance payments. Seller agrees to indemnify defend and hold Buyer
Indemnified Parties harmless from and against, and Buyer agrees to
indemnify, defend and hold Seller Indemnified Parties harmless from and
against, any
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and all Claims arising out of the other party's employment practices that
are contrary to Applicable Law (including any unlawful practices by Buyer
which result in Buyer's failure to hire any Business Employee).
(c) Seller or, where applicable, Seller's appropriate employee benefit
plans shall be liable for any claims incurred by the Hired Business
Employees and their beneficiaries through the Closing Date under Seller's
employee benefit plans. Buyer or, where applicable, Buyer's appropriate
employee benefit plans, shall be liable for any claims incurred by the
Hired Business Employees and their beneficiaries after the Closing Date
under Buyer's employee benefit plans. For purposes of this Section 7.12(c),
a claim will be deemed incurred in accordance with the applicable rules
under each of Seller's and Buyer's benefit plans.
(d) Subject to the provisions of this Section 7.12, the Hired Business
Employees shall be eligible to participate in Buyer's medical and other
welfare plans, as defined in Section 3(1) of ERISA ("Buyer Benefit Plans"),
in accordance with the terms of such plans.
(e) Buyer shall be solely liable for any and all claims for severance
with respect to Hired Business Employees arising out of the termination of
a Hired Business Employee by Buyer.
(f) Seller and Buyer hereby agree to utilize the "Standard Procedure"
set forth in Revenue Procedure 2004-53,2004-34IRB 320, or a corresponding
future revenue procedure or other administrative pronouncement, with regard
to the reporting requirements attributable to wages paid or to be paid to
Business Employees.
(g) No Hired Business Employee including any beneficiary or dependent
thereof, or any other Person not a party to this Agreement, shall be
entitled to assert any claim hereunder.
(h) Except as otherwise provided in this Section 7.12 or in Article
XI, where this Section 7.12 requires a party to take any action or perform
any task, the party obligated to take such action or perform such task
shall be responsible for all fees, costs and other expenses incurred for,
and related to, such actions or tasks.
(i) For a period not to exceed thirty (30) days from the Closing Date,
Seller shall have the right to use a portion of the office located in the
city of San Diego, California, located at 0000 Xxxxx Xxxxxx Xxxxx, for one
(1) of its employees, in exchange for the payment of the sum of Five
Hundred and No/100 Dollars ($500) per month, provided, however, that rent
for partial months shall be prorated per the number of days in which such
office was used. Either party shall have the right to terminate, in whole
or in part, its use of such offices upon ten (10) days advance written
notice to the other party, provided, however, that Buyer shall have the
right to terminate such lease only in the event Seller's employee's
presence or behavior becomes detrimental to Buyer's activities, as
determined in Buyer's reasonable judgment.
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(j) Within thirty (30) days from the Closing Date, Buyer shall remove
certain inventory and forms, included within the Specified Assets,
currently located in Seller's plant in Hillsboro, Texas.
7.13. Seller's Warranty Work. At Seller's request and for a period of no
more than five (5) years commencing on the Closing Date, Buyer agrees to perform
Seller's warranty work arising out of Seller's conduct of the Business prior to
the Closing, subject to the conditions set forth below. Seller shall deliver to
Buyer a notice describing in reasonable detail the warranty work to be performed
by Buyer, which notice shall be delivered to Buyer no later than fifteen (15)
Business Days prior to the date any such work must be performed. In addition,
Buyer's obligations to provide such Seller's warranty work are subject to (i)
Buyer's other commitments and obligations (to be determined in Buyer's sole
discretion), or (ii) availability of personnel and material, and shall be
performed at Buyer's then prevailing prices, subject to site- or job-specific
conditions that may affect pricing for such work.
7.14. Accounts Payable. Seller shall pay its Accounts Payable in accordance
with Seller's normal and reasonable commercial practices. Subject to the final
sentence of Section 2.8, if Buyer receives invoices, bills, statements of other
claims that refer to goods and/or services supplied to Seller prior to the
Closing Date, Buyer will promptly forward them to Seller, and Seller agrees to
pay on a timely basis all such invoices, bills, statements and other claims
forwarded by Buyer. Subject to the final sentence of Section 2.8, after the
Closing Seller may receive invoices, bills, statements and other claims that
refer to goods and/or services supplied to Buyer, Seller shall promptly
forwarded them to Buyer, and Buyer agrees to pay on a timely basis all such
invoices, bills, statements and other claims forwarded by Seller.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
The obligation of Seller to consummate the transactions contemplated by
this Agreement is subject, at the option of Seller, to the satisfaction or
waiver of the conditions described in Sections 8.1, 8.2, 8.3 and 8.4
(collectively, the "Seller's Closing Conditions").
8.1. Representations and Warranties True. All the representation and
warranties of Buyer contained in this Agreement, and in any agreement,
instrument, or document delivered pursuant hereto or in connection herewith on
or prior to the Closing Date, shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of such date, (a) except to
the extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true and
correct as aforesaid as of such specified date, and (b) except in all cases
where the failure of such representations and warranties to be true and correct
would not, individually or in the aggregate, reasonably be expected to cause any
Material Adverse Effect with respect to Buyer.
8.2. Covenants and Agreements Performed. Buyer shall have performed and
complied with in all material respects all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date and all deliveries contemplated by Section 5.3 shall have been made.
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8.3. Consents. All Consents and Approvals necessary for the assignment and
transfer to Buyer of the Specified Assets and the assumption by Buyer of the
Specified Liabilities to be transferred to and assumed by Buyer at the Closing
shall have been obtained or made (and are effective), in form and substance
reasonably satisfactory to Seller.
8.4. Legal Proceedings. No preliminary or permanent injunction or other
order, decree, or ruling issued by a Governmental Entity, and no statute, rule,
regulation, or executive order promulgated or enacted by a Governmental Entity
since the Effective Date shall be in effect which restrains, enjoins, prohibits,
or otherwise makes illegal the consummation of the transactions contemplated
hereby.
ARTICLE IX
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
The obligation of Buyer to consummate the transactions contemplated by this
Agreement is subject, at the option of Buyer, to the satisfaction or waiver of
the conditions described in Sections 9.1, 9.2, 9.3 and 9.4 (collectively, the
"Buyer's Closing Conditions").
9.1. Representations and Warranties True. All the representations and
warranties of Seller contained in this Agreement, and in any agreement,
instrument, or document delivered pursuant hereto or in connection herewith on
or prior to the Closing Date, shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of such date, (a) except to
the extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true and
correct as aforesaid as of such specified date, and (b) except in all cases
where the failure of such representations and warranties to be true and correct
would not, individually or in the aggregate, reasonably be expected to cause a
Material Adverse Effect with respect to Seller, the Business or the Specified
Assets.
9.2. Covenants and Agreements Performed. Seller shall have performed and
complied with in all material respects all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date, and all deliveries contemplated by Section 5.2 shall have been made.
9.3. Consents and Permits. All Consents and Approvals necessary for the
assignment and transfer to Buyer of the Specified Assets to be transferred and
the assumption by Buyer of the Specified Liabilities at the Closing shall have
been obtained or made in each case in form and substance reasonably satisfactory
to Buyer.
9.4. Legal Proceedings. No preliminary or permanent injunction or other
order, decree or ruling issued by a Governmental Entity, and no statute, rule,
regulation or executive order promulgated or enacted by a Governmental Entity
since the Effective Date, shall be in effect which restrains, enjoins,
prohibits, or otherwise makes illegal the consummation of the transactions
contemplated hereby.
ARTICLE X
TERMINATION
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10.1. Termination. This Agreement may be terminated at any time prior to
the Closing Date solely:
(a) by mutual consent of Seller and Buyer;
(b) by Seller or by Buyer, if the transactions contemplated by this
Agreement to take place at the Closing shall not have been consummated by
February 28, 2006, unless the failure of such transactions to be
consummated is due to the willful failure of the party seeking to terminate
this Agreement to perform any of its obligations under this Agreement to
the extent required to be performed by it prior to or on the Closing Date;
(c) by Seller or by Buyer, if a material breach or default shall be
made by the other party in the observance or in the due and timely
performance of any of the covenants or agreements contained herein, and the
curing of such default shall not have been made within ten days after
written notice thereof is delivered to the breaching or defaulting party by
the other party; or
(d) by Buyer pursuant to Section 7.7.
10.2. Effect of Termination. If a party terminates this Agreement under
Section 10.1, then such party shall promptly give notice to the other party
specifying the provision hereof pursuant to which such termination is made, and
upon delivery of such notice this Agreement shall become void and have no
effect; provided, that the agreements contained in this Article X, in Article XI
and in Article XIII, and Sections 7.2(a), 7.4 and 7.8 shall survive the
termination hereof.
10.3. Liabilities in Event of Termination. The termination of this
Agreement will in no way limit any obligation or liability of any party based on
or arising from a breach or default by such party with respect to any of its
representations, warranties, covenants or agreements contained in this Agreement
including, but not limited to, legal and audit costs and out-of-pocket expenses.
ARTICLE XI
INDEMNITY AND SURVIVAL
11.1. Buyer's Indemnity. From and after the Closing, Buyer shall indemnify
and hold harmless Seller, its Affiliates, and its respective officers,
directors, shareholders, employees, agents, successors and permitted assigns
("Seller Indemnified Parties") from and against any claim, liability, loss,
cost, damage or expense (including, without limitation, court costs and
reasonable attorneys' fees and expenses) (a "Claim") arising out of or resulting
from (a) the breach of, or the failure to perform or satisfy any of, the
representations, warranties and covenants made by Buyer in this Agreement or in
any certificate delivered in connection with this Agreement pursuant to Article
V, (b) the Specified Liabilities, (c) any act, omission, occurrence, event,
condition or circumstance first occurring at any time after the Closing Date and
involving or related to the Specified Assets, the Specified Contracts or the
Business, or (d) without limitation, any (i) violation or claimed violation of
any Environmental Laws or Environmental Permits alleged by any party to the
extent related in any way to Buyer's ownership, use or operation of the
Specified Assets, or conditions of the Specified Assets
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resulting therefrom after the Closing Date; (ii) Environmental Claim to the
extent related in any way to the ownership, use, operation, or conditions of the
Specified Assets after the Closing Date; or (iii) cleanup or remediation
requirement or liability respecting a Release or threatened Release of any
Hazardous Substances to the extent related to the Specified Assets and occurring
after the Closing Date; provided, however that, the right of a Seller
Indemnified Party to be indemnified for a Direct Claim under this Section
11.2(d) is limited to circumstances or events where Seller or any Seller
Indemnified Party is required to undertake the activities giving rise to such
Direct Claim in order to comply with an Environmental Law or, in Seller's
reasonable judgment, to respond to an Environmental Claim; and Buyer shall
reimburse Seller Indemnified Parties for any legal or other expenses reasonably
incurred by Seller Indemnified Parties in connection with investigating or
defending any such Claim which is the Claim of a third party as such expenses
are incurred.
11.2. Seller's Indemnity. From and after the Closing, Seller shall
indemnify and hold harmless Buyer, its Affiliates and its and their respective
officers, directors, shareholders, employees, agents, successors and permitted
assigns (the "Buyer Indemnified Parties") from and against any Claim arising out
of or resulting from:
(a) the breach of, or the failure to perform or satisfy any of, the
representations, warranties and covenants made by Seller in this Agreement
or in any certificate delivered in connection with this Agreement pursuant
to Article V;
(b) any of the Excluded Assets or the Excluded Liabilities;
(c) any (i) violation or claimed violation of any Environmental Laws
or Environmental Permits alleged by any Person to the extent related in any
way to Seller's ownership, use or operation of the Business or the
Specified Assets, or condition of the Specified Assets resulting therefrom
on or before the Closing Date; (ii) Environmental Claim to the extent
related in any way to the ownership, use, operation, or conditions of the
Business or the Specified Assets on or before the Closing Date; or (iii)
cleanup or remediation requirement or liability respecting a Release or
threatened Release of any Hazardous Substances to the extent related to the
Specified Assets or to the Business and occurring on or before the Closing
Date; provided, however that, the right of a Buyer Indemnified Party to be
indemnified for a Direct Claim under this Section 11.2(c) is limited to
circumstances or events where Buyer or any Buyer Indemnified Party is
required to undertake the activities giving rise to such Direct Claim in
order to comply with an Environmental Law or, in Buyer's reasonable
judgment, to respond to an Environmental Claim;
(d) any Taxes for which Seller is liable under Article XII or any
breach of, failure to perform or satisfy any of the representations,
warranties or covenants made by Seller involving or related to Tax matters;
and
(e) all matters disclosed on Schedule 3.8, 3.10(B) and 3.20 (including
without limitation any liability arising out of Seller's performance of the
SR-60 Memorial Interchange Project (Seller's Project Reference No.
G60035)).
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Seller shall reimburse Buyer Indemnified Parties for any legal or other expenses
incurred by Buyer Indemnified Parties in connection with investigating or
defending any such Claim which is the Claim of a third party as such expenses
are incurred.
11.3. Claim Notice.
(a) Indemnified Parties. As used in this Article, the term
"Indemnified Party" shall mean any Seller Indemnified Party or any Buyer
Indemnified Party, as the case may be, which is asserting a claim for
indemnity hereunder. Any party against whom a claim for indemnification is
asserted by an Indemnified Party pursuant to this Article is referred to
herein as an "Indemnifying Party." In the event that any Claims are
asserted against or sought to be collected from an Indemnified Party by a
Person who is not a Buyer Indemnified Party or a Seller Indemnified Party
(a "Third Party"), such Indemnified Party shall give prompt written notice
to the Indemnifying Party of such event ("Claim Notice"). A Claim Notice
shall specify, to the extent known by the Indemnified Party, the nature of
and specific basis for any Claims or the nature of and specific basis of
any suit, action, investigation or proceeding set forth therein and the
amount or the good faith estimated amount thereof to the extent then
practicable. Any failure on the part of any Indemnified Party promptly to
provide a Claim Notice to the Indemnifying Party shall relieve the
Indemnifying Party of such party's obligation under this Article only to
the extent that the Indemnifying Party shall have been prejudiced by the
lack of timely and adequate notice to the Indemnifying Party.
(b) Notice Required. The Indemnifying Party shall have thirty (30)
days from the delivery or receipt of a Claim Notice ("Notice Period") to
notify the Indemnified Party (i) whether or not it disputes the liability
of the Indemnifying Party to the Indemnified Party hereunder with respect
to the Claims identified in the Claim Notice, and (ii) whether or not it
desires to assume the defense of the Third Party Claim identified in the
Claim Notice; provided, however, that any Indemnified Party is hereby
authorized during the Notice Period to file any motion, answer or other
pleading that shall be necessary or appropriate to protect its interest or
those of the Indemnifying Party. In the event that the Indemnifying Party
notifies the Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against the Claims identified in the Claims
Notice, the Indemnifying Party shall have the right and obligation, at its
sole cost and expense, to defend with counsel of its own choosing by all
appropriate proceedings, which proceedings shall be properly and diligently
settled or prosecuted to a final non-appealable order of a court of
competent jurisdiction; provided, however, that (a) the Indemnified Party
shall at all times have the right, at its sole option and expense, to
employ separate counsel and to participate fully in the defense, compromise
or settlement thereof, and (b) if the Indemnifying Party does not proceed
diligently to defend the Claim within thirty (30) days after personal
delivery or receipt of a Claim Notice, the Indemnified Party shall have the
right, but not the obligation, to undertake the defense of any such Claim
and the Indemnifying Party shall be bound by any defense or settlement that
the Indemnified Party may make as to such Claim. Upon its assumption of the
defense of any such Claim, the Indemnifying Party shall have full control
of such defense and proceedings including any compromise or settlement
thereof. If there is more than one Indemnifying Party, then all
Indemnifying Parties must coordinate the defense of the
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Indemnified Party against any Claims so as not adversely to affect the
Indemnified Party's right to a proper defense.
(c) Cooperation. The parties agree reasonably to cooperate with one
another and their respective counsel in contesting and defending any Claim
by a Third Party (including granting reasonable access to the pertinent
books, records and personnel (to the extent such personnel are available)
in their possession or control) or, if appropriate and related to the Claim
in question, in making (i) any counterclaim against the Third Party
asserting the Claims, or (ii) any cross complaint against any Person.
(d) No Settlement. Notwithstanding anything in this Section to the
contrary, the Indemnifying Party shall not, without the written consent of
the Indemnified Party (i) settle or compromise any Claim or consent to the
entry of any judgment with respect to such Claim that does not include as
an unconditional term thereof the delivery by the claimant or plaintiff to
the Indemnified Party of a written release from all liability in respect to
such Claim, (ii) settle or compromise any Claim in any manner that may
materially and adversely affect the Indemnified Party, or (iii) settle or
compromise any Claim in a manner that will require the Indemnified Party to
pay any money.
(e) Rights of Indemnified Party to Defend. If the Indemnifying Party
fails to notify the Indemnified Party within the Notice Period that the
Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 11.3(b), or if the Indemnifying Party elects to defend the
Indemnified Party pursuant to Section 11.3(b), but fails diligently and
promptly to prosecute, defend or settle any Claim by a Third Party, then
the Indemnified Party shall have the right to defend, or compromise and
settle at the sole cost and expense of the Indemnifying Party, such Claim
by a Third Party by all appropriate proceedings, which proceedings may be
prosecuted by the Indemnified Party to a final non-appealable order of a
court of competent jurisdiction or settled without the consent of the
Indemnifying Party. The Indemnified Party shall have full control of such
defense and proceedings.
(f) Direct Claims. In the event any Indemnified Party should have a
Claim against any Indemnifying Party hereunder that does not involve
damages being asserted against or sought to be collected from it by a Third
Party, the Indemnified Party shall send a Claim Notice containing the same
type of information required by Section 11.3(a) with respect to such Claim
to the Indemnifying Party. If the Indemnifying Party does not notify the
Indemnified Party within the Notice Period that it disputes such Claim, the
amount of such damages shall be conclusively deemed a liability of the
Indemnifying Party hereunder.
11.4. DAMAGES. THE PARTIES AGREE THAT SUBJECT TO THE SECOND SENTENCE OF
THIS SECTION, IT IS THEIR INTENT THAT NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT, NEITHER SELLER NOR BUYER SHALL BE LIABLE TO ANY
OTHER PARTY HERETO OR TO ITS AFFILIATES, OR ITS OR THEIR OFFICERS, DIRECTORS,
SHAREHOLDERS SUCCESSORS OR PERMITTED ASSIGNS, FOR CLAIMS FOR CONSEQUENTIAL,
SPECIAL, TREBLE, EXEMPLARY, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES
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OF ANY NATURE UNDER OR PURSUANT TO THIS AGREEMENT OR IN CONNECTION WITH OR
RESULTING FORM THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING CLAIMS IN THE
NATURE OF LOSS OF VALUE (INCLUDING, WITHOUT LIMITATION, ADVERSE EFFECTS ON CASH
FLOW OR EARNINGS) IRRESPECTIVE OF WHETHER SUCH CLAIMS ARE BASED UPON NEGLIGENCE,
STRICT LIABILITY, CONTRACT, OPERATION OF LAW OR OTHERWISE. NOTWITHSTANDING THE
FOREGOING, IT IS SPECIFICALLY INTENDED BY THE PARTIES THAT AN INDEMNIFIED PARTY
SHALL BE ENTITLED TO INDEMNIFICATION BY THE INDEMNIFYING PARTY PURSUANT TO THIS
ARTICLE FOR ANY AND ALL CONSEQUENTIAL, SPECIAL, TREBLE, EXEMPLARY, INCIDENTAL,
INDIRECT OR PUNITIVE DAMAGES INCLUDED IN, ARISING OUT OF OR RESULTING FROM ANY
CLAIMS ASSERTED AGAINST OR SOUGHT TO BE COLLECTED FROM ANY INDEMNIFIED PARTY BY
A THIRD PARTY.
11.5. Survival and Time Limitation. All of the representations, warranties,
covenants, obligations and agreements of the parties set forth in this Agreement
shall survive the Closing. Except as provided in the following sentence, any
assertion by any Indemnified Party that an Indemnifying Party is liable for
indemnification under the terms of this Agreement must be made in writing and
must be given to the Indemnifying Party on or prior to the date that is
thirty-six (36) months after the Closing Date. Claims asserted by any Buyer
Indemnified Party pursuant to Section 11.2(b), 11.2(c), or 11.2(e), or Claims
asserted by any Seller Indemnified Party pursuant to Sections 11.1(b), 11.1(c)
or Section 11.1(d)may be brought at any time, irrespective of any limits
otherwise imposed by contract or under Applicable Law; Claims asserted by any
Buyer Indemnified Party pursuant to Section 11.2(d) may be brought at any time
prior to ninety (90) days after the date on which the applicable statute of
limitations expires with respect to such matter and Seller hereby agrees not to
assert as a defense any statute of limitations, statute of repose, laches or
other defense.
11.6. Limitation on Indemnity. Notwithstanding any other provision of this
Agreement to the contrary or otherwise, Buyer acknowledges and agrees that
Seller shall not be liable to Buyer in respect of any indemnification hereunder
until and except to the extent the amount of Claims of the Buyer Indemnified
Parties under this Agreement (other than Claims (i) asserted pursuant to
Sections 2.4, 2.5, 2.6, 2.8, 7.1, 7.14 or payment obligations to Buyer under an
Alternative Arrangement, (ii) asserted pursuant to Section 12.1(a) or (iii)
arising out of Seller's fraud or willful misconduct, for which the following
deductible shall not apply), individually or in the aggregate, exceeds One
Hundred Thousand and No/100 Dollars ($100,000). Notwithstanding any other
provision of this Agreement to the contrary or otherwise, Seller acknowledges
and agrees that Buyer shall not be liable to Seller in respect of any
indemnification hereunder until and except to the extent the amount of Claims of
the Seller Indemnified Parties under this Agreement (other than Claims (i)
asserted pursuant to Sections 2.4, 2.5, 2.6, 2.8, 7.1, 7.14 or payment
obligations to Seller under an Alternative Arrangement, or (ii) arising out of
Buyer's fraud or willful misconduct, for which the following deductible shall
not apply), individually or in the aggregate, exceeds Fifty Thousand and No/100
Dollars ($50,000).
11.7. Sole Remedy. Except for the remedies of specific performance,
injunctive relief and other equitable rights and remedies expressly permitted or
allowed pursuant to the other
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provisions of this Agreement, the respective indemnification and rights to
recover provided in this Article XI shall be the sole and exclusive remedy for
any and all damages, liabilities, losses, loss of value, claims, deficiencies,
penalties, interest, expenses, fines assessments, charges and costs, including
without limitation attorneys fees and court cost, resulting from, arising out of
or in any way connected with or based on this Agreement or the sale of the
Specified Assets to Buyer, including any breaches of or inaccuracies in any
representation or warranty contained in this Agreement or any certificates
delivered pursuant to Article V or any breach, non-fulfillment or default in the
performance of any of the covenants or agreements contained in this Agreement;
provided, however, that this section shall not in anyway limit, impair or
otherwise affect the rights and remedies of the parties (a) for breach of the
confidentiality obligations set forth in Section 7.9 of this Agreement, (b) in
the event of a breach or default under the Noncompetition Agreement or (c) in
the event of fraud or willful misconduct.
ARTICLE XII
TAX MATTERS
12.1. Liability for Taxes.
(a) Seller's Liability. Seller shall be solely liable for (i) any
Taxes attributable to the Specified Assets or the Business, with respect to
any taxable periods or portions thereof ending on or before the Closing
Date (or the portion, as determined in accordance with Section 12.1(b), of
any such Taxes attributable to the Specified Assets or the Business for
taxable periods beginning before and ending after the Closing Date which is
allocable to the portions of such period occurring on or before the Closing
Date) (the "Pre-Closing Date Period"), and (ii) any Taxes attributable to a
breach by Seller of any representation, warranty, or covenant with respect
to Taxes in this Agreement.
(b) Pre-Closing Date Period Allocation. Whenever it is necessary for
purposes of Section 12.1(a) to determine the portion of any Taxes
attributable to the Specified Assets or the Business for a taxable period
beginning before and ending after the Closing Date, which is allocable to
the Pre-Closing Date Period, the determination shall be made, in the case
of property or ad valorem taxes, on a per diem basis and, in the case of
other Taxes, by assuming that the Pre-Closing Date Period constitutes a
separate taxable period and by taking into account actual taxable events
occurring during such period (except that exemptions, allowances and
deductions for a taxable period beginning before and ending after the
Closing Date that are calculated on an annual or periodic basis, such as
the deduction for depreciation, shall be apportioned to the Pre-Closing
Date Period ratably on a per diem basis).
12.2. Audits or Assessments. Buyer shall promptly notify Seller in writing
upon receipt by Buyer of notice of any pending or threatened tax audits or
assessments that could reasonably affect the tax liabilities for which Seller
would be liable under Section 12.1(a) ("Seller Tax Matter"). Notwithstanding
anything to the contrary set forth in this Agreement, Seller shall have the sole
right to represent the interests of Seller in connection with any Seller Tax
Matter (including the right to choose Seller's representation in any audit,
contest or administrative or judicial proceeding involving a Seller Tax Matter,
the right to choose the manner in which Seller contest any assessment or
proposed disallowance or claim in any Seller Tax Matter and the right
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to settle or otherwise compromise any Seller Tax Matter), but Buyer (a) shall
have the right to participate therein and to approve any settlement that would
affect any Tax liabilities of Buyer after the Closing Date and (b) shall have
the right to participate jointly with Seller in any Seller Tax Matters that
could give rise to any Tax liens on the assets of Buyer, or any of its
Affiliates.
ARTICLE XIII
RESOLUTION OF DISPUTES
13.1. Agreement to Arbitrate. Any and all claims, counterclaims, demands,
causes of action, disputes, controversies, and other matters in question arising
out of or relating to this Agreement, or the alleged breach hereof, or in any
way relating to the subject matter of this Agreement or the relationship between
the parties created by this Agreement (all of which are referred to herein as
"Disputes"), between the parties (each a "Disputing Party") shall be resolved by
final and binding arbitration, regardless of whether such Disputes (a) allegedly
are extra-contractual in nature, (b) sound in contract, tort, or otherwise, (c)
are provided for by statute or otherwise, or (d) seek damages or any other
relief, whether at law, in equity or otherwise; provided, however, that no
Dispute shall be submitted to arbitration until sixty (60) days have passed
(without mutual agreement having been reached) following receipt of the first
written notice from a Disputing Party shall, if requested by the other Disputing
Party that sets forth the subject matter of the Dispute and that states that it
is being given pursuant to this Article XIII. During such 60-day period, each
Disputing Party shall, if requested by the other Disputing Party, select and
appoint a senior management representative to seek to reach mutual agreement
with respect to the applicable Dispute. Each such appointment shall be made by
the Disputing Party's giving of notice of the appointment to the other Disputing
Party with ten (10) Business Days of receipt of the request for the appointment.
The appointees shall meet and shall negotiate in good faith and endeavor to
reach such mutual agreement as soon as practicable.
13.2. Appointment of Arbitrator. If no such mutual agreement has been
reached within such 60-day period, then either Disputing Party may refer the
claim to arbitration under the following provisions:
(a) To refer a Dispute to arbitration, a Disputing Party must provide
notice to the American Arbitration Association ("AAA") and the other
Disputing Party stating (i) a general description of the Dispute and (ii)
that the Dispute is being referred to arbitration under this Article XIII.
(b) The arbitration tribunal shall consist of three arbitrators. Each
Disputing Party shall appoint one arbitrator. If, on the 30th day following
the notice described in Section 13.2(a), a Disputing Party has failed to
appoint its arbitrator, then the AAA shall promptly appoint an arbitrator
on such Disputing Party's behalf. Once two arbitrators have been appointed
by or on behalf of the Disputing Parties, such appointed arbitrators shall
jointly select and appoint the third arbitrator. If, on the 30th day
following the date of appointment of the second arbitrator, the two
appointed arbitrators have failed to jointly select and appoint the third
arbitrator, then the AAA shall promptly appoint the third arbitrator.
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13.3. Authority of the Arbitrators. The validity, construction, and
interpretation of the agreement to arbitrate in this Article XIII, and all
procedural aspects of the arbitration conducted pursuant to this agreement to
arbitrate, including, but not limited to, the determination of the issues that
are subject to arbitration (i.e., arbitrability), the scope of the arbitrable
issues, allegations of "fraud in the inducement" to enter into this agreement to
arbitrate, allegations of waiver, laches, delay or other defenses to
arbitrability, and the rules governing the conduct of the arbitration (including
the time for filing an answer, the time for the filing of counterclaims, the
times for amending the pleadings, the specificity of the pleadings, the extent
and scope of discovery, the issuance of subpoenas, the times for the designation
of experts, whether the arbitration is to be stayed pending resolution of
related litigation involving third parties not bound by this agreement to
arbitrate, the receipt of evidence, and the like) shall be decided by the
arbitrators. EXCEPT AS PROVIDED IN SECTION 11.4, THE ARBITRATORS SHALL HAVE
ABSOLUTELY NO AUTHORITY TO AWARD CONSEQUENTIAL, SPECIAL, TREBLE, EXEMPLARY,
INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES OF ANY TYPE UNDER ANY CIRCUMSTANCES,
REGARDLESS OF WHETHER SUCH DAMAGES MAY BE AVAILABLE UNDER APPLICABLE LAW. The
arbitrators shall have the authority to assess the costs and expenses of the
arbitration proceeding (including the arbitrators' fees and expenses) against
one or both of the Disputing Parties in whatever manner or allocation the
arbitrators deem appropriate, provided that each Disputing Party shall bear its
own attorneys' fees, and the arbitrators shall have no authority to award
attorneys' fees.
13.4. Place and Conduct of Arbitration. The arbitration proceeding shall be
conducted in Harrisburg, PA. The arbitration shall be conducted by the
arbitrators as expeditiously as possible. The arbitration shall be conducted
under the Rules of Arbitration of the AAA Commercial Arbitration Rules and
Procedures.
13.5. Payment and Finality of Award. Each Disputing Party against which the
award or decision of the arbitrators (the "Award") assesses a monetary
obligation shall pay that obligation on or before the 30th day following the
Award or such other date as the Award may provide, which Award shall be payable
in cash in US Dollars. The Award shall, as between the Disputing Parties and
those in privity with them, be final and binding and entitled to all of the
protections and benefits of a final judgment, e.g., res judicata (claim
preclusion) and collateral estoppel (issue preclusion), as to all Disputes,
including compulsory counterclaims, that were or could have been presented to
the arbitrators. The Award shall not be reviewable by or appealable to any
court.
13.6. Use of the Courts. It is the intent of the Parties that the
arbitration proceeding shall be conducted expeditiously, without initial
recourse to the courts and without interlocutory appeals of the arbitrators'
decisions to the courts. However, if a Disputing Party refuses to honor its
obligations under this agreement to arbitrate, the other Disputing Party may
obtain appropriate relief compelling arbitration in any court having
jurisdiction over the Disputing Parties; the order compelling arbitration shall
require that the arbitration proceedings take place in Harrisburg, Pennsylvania,
as specified above. The Disputing Parties may apply to any court having
jurisdiction for orders requiring witnesses to obey subpoenas issued by the
arbitrators. Moreover, any and all of the arbitrators' orders and decisions may
be enforced if necessary by any court having jurisdiction. The Award may be
confirmed in, and judgment upon the Award entered by, any court having
jurisdiction.
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13.7. Arbitration Provision Enforceable. A Disputing Party's breach of this
Agreement shall not affect the agreement to arbitrate set forth in this Article
XIII. Moreover, the Parties' obligations under this arbitration provision are
enforceable even after this Agreement has terminated. The invalidity or
unenforceability of any provision of the agreement to arbitrate set forth in
this Article XIII shall not affect the validity or enforceability of the
Disputing Parties' obligation to submit their Disputes to binding arbitration or
the other provisions of this agreement to arbitrate.
ARTICLE XIV
MISCELLANEOUS
14.1. Notice. Any notice, request, instruction, correspondence or other
document required to be given hereunder by any party to another (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of delivery or mailed by certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
If to Seller, addressed to:
X.X. Xxxxxx Company
000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telecopier No.: 000-000-0000
With a copy to:
X.X. Xxxxxx Company
000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Telecopier No.: 000-000-0000
If to Buyer, addressed to:
The Reinforced Earth Company
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000-0000
Attention: President
Telecopier No.: (000) 000-0000
With a copy to:
Xxxxxxxxx & Xxxxxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxx
Telecopier No.: (000) 000-0000
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Notice given by personal delivery or courier service shall be effective upon
actual receipt. Notice given by mail shall be effective five days after deposit
with the United States postal service. Notice given by telecopier shall be
confirmed by appropriate answer back and shall be effective upon actual receipt
if received during the recipient's normal business hours, or at the beginning of
the recipient's next Business Day after receipt if received before the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by regular mail or personal delivery. Any
party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
14.2. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to its conflict of laws rules or principles
14.3. Entire Agreement; Amendments and Waivers. This Agreement, the
Noncompetition Agreement, and the Confidentiality Agreement entered into by
Buyer for the benefit of Seller, dated September 6, 2005, together with all
schedules and exhibits attached hereto and thereto, constitute the entire
agreement between the parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No supplement, modification or waiver
of this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (regardless of
whether similar), nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.
14.4. Severability. If any one or more of the provisions contained in this
Agreement or in any other document delivered pursuant hereto shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Agreement or any other such document and such provision shall be
reformed so that it would be valid, legal and enforceable to the maximum extent
permitted by Applicable Law.
14.5. Exhibits and Schedules. The Exhibits and Schedules referred to herein
are attached hereto and incorporated herein by this reference.
14.6. Successors Bound; Third Parties. This Agreement may not be assigned
by any party (other than an assignment by Buyer to any Affiliate of Buyer,
subject to Buyer remaining obligated to Seller for all of Buyer's obligations
under this Agreement) without the consent of the other parties. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other than
the parties hereto and their respective successors and permitted assigns, any
liabilities, duties, rights, benefits or obligations hereunder, except as
specifically provided herein with respect to Buyer Indemnified Parties and
Seller Indemnified Parties. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
NOTHING CONTAINED IN THIS AGREEMENT SHALL BE DEEMED TO CREATE ANY RIGHT OR CLAIM
FOR THE BENEFIT OF, NOR SHALL THIS AGREEMENT BE ENFORCEABLE BY, ANY EMPLOYEE OF
THE SELLER
-39-
OR OTHER PERSON WHO IS NOT A PARTY TO THIS AGREEMENT, AND NOTHING CONTAINED IN
THIS AGREEMENT SHALL MAKE ANY SUCH EMPLOYEE OR PERSON A THIRD PARTY BENEFICIARY
OF THIS AGREEMENT.
14.7. Multiple Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.8. Mutual Drafting. This Agreement is the joint product of Buyer and
Seller and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of Buyer and Seller and shall not be construed for or
against any party hereto.
14.9. Further Assurances. From time to time following the Closing, at the
request of either party and without further consideration, the other party shall
execute and deliver to such requesting party such instruments and documents and
take such other actions (but without incurring any material financial
obligation) as such requesting party may reasonably request to consummate more
fully and effectively the transactions contemplated hereby.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
-40-
IN WITNESS WHEREOF, the parties have signed this Agreement in multiple
counterparts, all as of the Effective Date.
SELLER:
X.X. XXXXXX COMPANY
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Tile: President and CEO
BUYER:
THE REINFORCED EARTH COMPANY
By: /s/ Xxxxx Xxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxx
Tile: President
Exhibit A
NONCOMPETITION AGREEMENT
This Noncompetition Agreement ("Agreement"), is made this ____ day of
__________ 2006 (the "Effective Date"), by and between X.X. Xxxxxx Company, a
Pennsylvania corporation ("LB. Xxxxxx"), and The Reinforced Earth Company, a
Delaware corporation ("RECo").
WITNESSETH:
WHEREAS, pursuant to the Asset Purchase Agreement, RECo is acquiring
certain assets from LB. Xxxxxx; and
WHEREAS, as a material condition to RECo's obligation to enter- into and to
consummate the transactions contemplated by the Asset Purchase Agreement, and
for the consideration described herein, X.X. Xxxxxx has agreed to enter into
this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the sufficiency
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions, In this Agreement:
"Affiliate(s)" of a Person shall mean a Person directly or indirectly
controlled by, controlling or under common control with the other Person. For
the purposes of this definition, 'control" means, when used with respect to any
Person, the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract, or otherwise, and the terms
"controlling" and "controlled" have correlative meanings; provided, however,
that for purposes of this Agreement a director of a Person shall not be
considered to have control of such Person merely because of its position as a
director.
"Asset Purchase Agreement" shall mean that certain Asset Purchase Agreement
dated February 10, 2006, by and between X.X. Xxxxxx, as Seller, and RECo, as
Buyer, for the acquisition of the certain assets by RECo.
"Closing" shall have the meaning set forth in the Asset Purchase Agreement.
"Competing Business" shall mean the mechanical stabilized earth business
(but excluding the soundwall business).
"Customer" shall mean all customers of the Competing Business;
"Non-Compete Period" shall have the meaning set out in Section 3 hereof.
"Notice" shall have the meaning set out in Section 10 hereof.
"Territory" shall mean the United States of America.
2. Consideration for Covenants. The consideration for the promises and
covenants contained herein is as set forth in the Asset Purchase Agreement and
other good and valuable consideration.
3. Covenant Not To Compete. X.X. Xxxxxx covenants and agrees that, for a
period of five (5) years following the Closing (said five (5) year period, the
"Non-Compete Period") it shall not engage, and it shall cause its Affiliates not
to engage, directly or indirectly, whether as principal or as agent, partner,
member, representative, shareholder or otherwise, alone or in association with
any other Person, in any Competing Business in the Territory; provided, however,
that notwithstanding the foregoing, X.X. Xxxxxx and any of its Affiliates may
own, directly or indirectly, solely as an investment, securities of any person,
firm, or entity which are publicly traded if X.X. Xxxxxx or the particular
Affiliate (a) is not a controlling person of, or a member of a group which
controls, such person, firm, or entity; (b) does not, directly or indirectly,
own five percent (5%) or more of any class of securities of such person, firm,
or entity; or (c) does not interfere with business relationships (whether formed
heretofore or hereafter) between such Competing Business and any customers or
suppliers of the Competing Business. This covenant not to compete is subject to
the terms of Section 7.10 of the Asset Purchase Agreement with respect to each
Deferred Contract (as such term is defined in the Asset Purchase Agreement).
4. Non-Solicitation of Employees. X.X. Xxxxxx agrees that during the
Non-Compete Period it shall not solicit or induce, or attempt to solicit or
induce, and it shall cause its Affiliates not to solicit or induce or attempt to
solicit or induce, directly or indirectly, any employee of RECo or any of its
Affiliates to leave such employ for any reason associated with a Competing
Business in the Territory. For the purposes of this section, the publication or
advertisement by X.X. Xxxxxx or any Affiliate of a general solicitation for
employment in a newspaper, trade journal or other publication or media of
general interest, and the employment of any employee of RECo or any of its
Affiliates who responds to a general solicitation for employment not targeted at
a specific employee, shall not be a breach hereof.
5. Severability. The covenants contained herein shall be construed as a
series of separate and severable covenants. LB. Xxxxxx agrees that if any court
of competent jurisdiction determines that any such separate covenant is not
fully enforceable pursuant to its terms, such covenant shall be deemed modified
or severed and that the remainder of such covenant and of this Agreement shall
be enforced to the fullest extent permitted by applicable law and consistent
with the intent of the parties expressed hereunder.
6. Injunctive Relief. The parties acknowledge and agree that the covenants
and obligations hereunder are of special and unique character and that any
breach of any such covenants or obligations would cause immediate and
irreparable harm for which remedies at law are inadequate. Such non-breaching
party shall have the right to injunctive or other equitable relief, in addition
to all of its other rights and remedies at law or in equity, to enforce the
provisions of this Agreement. All costs and expenses (including attorneys' fees
and costs incurred in arbitration proceedings) reasonably incurred in any
dispute concerning the enforcement of this Agreement shall be borne by the
non-prevailing party.
7. Binding Effect and Assignment. This Agreement shall be binding upon and
inure to the benefits of the parties hereto and their successors and permitted
assigns; but neither this Agreement nor any of the rights, benefits or
obligations hereunder shall be assigned by either party without the prior
written consent of the non-assigning party, such consent not to be unreasonably
withheld; provided, however, that this Agreement and all rights hereunder may be
assigned by either party without the prior written consent of the non-assigning
party to any corporation or other business entity that succeeds to all or
substantially all of the assigning party's business through merger,
consolidation, or corporate reorganization, or by acquisition of all or
substantially all of the assets of the assigning party, and assumes the
assigning party's obligations under this Agreement; and provided further, that
L.B~. Xxxxxx may assign this Agreement and all rights hereunder to an Affiliate
without the prior written consent of RECo provided that LB. Xxxxxx shall remain
principally liable for and shall not be released from any of its obligations
under this Agreement notwithstanding any such assignment.
8. Notices. Any notice, request, instruction, correspondence or other
document required to be given hereunder by any party to another (herein
collectively called "Notice") shall be in writing and delivered in person or by
courier service requiring acknowledgment of delivery or mailed by certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
If to X.X. Xxxxxx, addressed to:
LB. Xxxxxx Company
000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxxx, President & CEO
Telecopier No.: 000-000-0000
With a copy to:
LB. Xxxxxx Company
000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, General Counsel
Telecopier No.: 000-000-0000
If to RECo, addressed to:
The Reinforced Earth Company
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000-0000
Attention: Xx. Xxxxx Xxxxxxxxxx, President
Telecopier No.: (000) 000-0000
Notice given by personal delivery or courier service shall be effective upon
actual receipt. Notice given by mail shall be effective five days after deposit
with the United States postal service. Notice given by telecopier shall be
confirmed by appropriate answer back and shall be effective upon actual receipt
if received during the recipient's normal business hours, or at the beginning of
the recipient's next business day after receipt if received before the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by regular mail or personal delivery. Any
party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.
9. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
10. Dispute Resolution. Any controversy or claim arising out of or relating
to this Agreement or the breach, termination, validity or enforceability hereof
shall addressed and settled in the manner provided in Article XIII of the Asset
Purchase Agreement, the terms and conditions of which are hereby incorporated
herein in their entirety.
11. Entire Agreement. This Agreement supersedes all prior agreements
whether written or oral and constitutes the entire agreement between the parties
with respect to the subject matter hereof. There shall be no modification,
amendment, waiver or alteration of this Agreement, except in writing and signed
by duly authorized officers of the parties. Any waiver of any terms or
conditions hereof by either party shall not be construed as a continuing waiver
but shall only apply to the particular transaction involved.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with laws of the State of Virginia, without regard to its conflict of
laws rules or principles.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.
X.X. XXXXXX COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE REINFORCED EARTH COMPANY
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT B
THE REINFORCED EARTH COMPANY
FOR IMMEDIATE RELEASE
Contacts: Xxxx Xxxx
Marketing Manager
The Reinforced Earth Company
Tel: 000 000 0000
E-mail: xxxxx@xxxxxxxxxxxxxxxx.xxx
Xxxx Xxxxxxxxx
Communications Specialist
X.X. Xxxxxx Company
Tel: 000 000 0000
Email: jfuellhart@lbfosterco. corn
THE REINFORCED EARTH COMPANY(R) HAS PURCHASED CERTAIN ASSETS OF THE X.X. XXXXXX
COMPANY
Vienna, VA, February, 2006. The Reinforced Earth Company (RECo) has acquired
certain assets from the X.X. Xxxxxx Company (NASDAQ:FSTR), a 104 year old
American corporation involved in the manufacture, fabrication and distribution
of products for the transportation, construction, utility and energy industries.
X.X. Xxxxxx anticipates realizing a net gain of under $_,,. from this
transaction. The acquisition of the proprietary, patented Mechanical Stabilized
Earth (MSE) system, marketed and sold by X.X. Xxxxxx under the trade name
Retained Earth'~, positions RECo to offer a wider range of products,
reinforcement selections, engineering services and new innovative products to
the market.
REC0, the original inventor of MSE technology, with over 34 years of experience
in the United States and activity in every State Department of Transportation,
will continue to focus attention on service, training, quality and presenting an
unparalleled range of economic and operational benefits to its customers. In
addition, this acquisition will also lead to improved synergies with its sister
companies within the USA Freyssinet Group. Working with DGI-Xxxxxx, who has
significant expertise in ground improvement technologies, and Freyssinet LLC, an
established leader in post-tensioning and stay cable structures, will allow RECo
to center more energy on offering enhanced product solutions and improved
problem solving capabilities, as the industry moves more to a design build
project approach.
Exhibit C
SUBCONTRACT
THIS SUBCONTRACT, dated this __ of February, 2006, is by and between The
Reinforced Earth Company ("RECo") and X.X. Xxxxxx Company ("Xxxxxx").
Background: Xxxxxx and RECo entered into an Asset Purchase Agreement dated as of
__________, 2006 (the "Purchase Agreement") pursuant to which RECo agreed to
acquire the Specified Assets and assume the Specified Liabilities. Capitalized
terms used in this Subcontract and not otherwise defined herein shall have the
meaning assigned to such terms in the Purchase Agreement.
Pursuant to the Purchase Agreement Xxxxxx intends to assign and REC9 intends to
take assignment of the Specified Contracts, which assignment requires the
necessary third-party consents identified in the Purchase Agreement. As of the
Closing, not all required consents have been obtained. Since substantially all
the other Specified Assets of the Business will be transferred to RECo as of the
Closing, the parties desire to into this Subcontract pursuant to which REC0
agrees to perform the obligations (and receive the benefits) of the identified
Contracts and Xxxxxx agrees to retain the direct relationship with the Customers
under such Deferred Contracts and to take actions consistent with the direct
relationship retained by Xxxxxx.
NOW THEREFORE RECo and Xxxxxx agree as follows:
1. With respect to the Deferred Contracts identified in Attachment "A",
Xxxxxx and RECo enter into this subcontract, to be effective after the
Closing, and RECo agrees to perform all the work and obligations
required under such Deferred Contracts in accordance with their
respective terms and conditions. Xxxxxx and REC0 agree to assist each
other with the relationship with each customer or vendor under such
Deferred Contracts, including without limitation, assistance with
issuance of invoices to such Customer, assistance with collection of
amounts due under such Deferred Contracts and prompt payment with
respect to vendor invoices.
2. In return for RECo's performance of obligations under the Deferred
Contracts, RECo shall be entitled to receive all amounts payable to
Xxxxxx under each of the Deferred Contracts with respect to work
performed by RECo after the Closing. Xxxxxx shall immediately (but in
no event later than five (5) days after receipt from the Customer) pay
to RECo any amounts it receives under the Deferred Contracts for work
performed by RECo after the Closing. With respect to any invoices
from a vendor under a Deferred Contract, RECo shall either timely pay
such vendor directly (with instructions to apply such payment against
such invoice) or pay the invoiced amount to Xxxxxx at least 5 days
prior to such invoice's due date, and Xxxxxx in turn, shall pay such
invoice(s), with such funds received from RECo, within 5 days of its
receipt of such funds from RECo.
3. The parties will continue seeking consents for the assignment of the
Deferred Contracts in accordance with the terms of the Purchase
Agreement.
4. Upon receipt of a consent for assignment of any such Deferred
Contracts, the party receiving the consent shall provide the other
party with a copy of such consent(s) together with a revised version
of Attachment "A" excluding such Deferred Contract(s) for which
consent has been obtained. Upon the receiving party's acknowledgment
of such modified Attachment "A", it shall replace the Attachment "A"
then in force and this' Subcontract will terminate as to such Deferred
Contracts for which a consent has been obtained, and such Deferred
Contracts automatically will conclusively be deemed assumed by RECo as
a Specified Contract. Once consents are received for all Deferred
Contracts (and they are deemed Specified Contracts), this Subcontract
shall terminate. Termination of this Subcontract shall not affect
either party's obligation to make payments to the other.
5. This Subcontract is being executed to fulfill the obligations of the
parties pursuant to Section 2.1 and 7.9 of the Purchase Agreement and
is not meant to add to or subtract from the rights of the respective
parties under the Purchase Agreement. In the event of any conflict or
inconsistency between the terms of this Subcontract and the Purchase
Agreement, the Purchase Agreement shall prevail.
THE REINFORCED EARTH COMPANY X.X. XXXXXX COMPANY
By: By:
--------------------------------- ------------------------------------
Its: Its:
-------------------------------- -----------------------------------
Schedule 1.1
Exclusions from Data
A. Lotus Notes email must be forwarded to an email account outside of X.X.
Xxxxxx. Email access will be terminated at closing. Email will be forwarded
to a designated email account provided by the buyer for a period not to
exceed three months from closing.
B. The data from the Geotech ACT for Lotus Notes database will be exported to
an excel spreadsheet and forwarded to the buyer at closing. The following
fields will be exported: Contact, Company, Title, Department, Phone, Ext,
Fax, Salutation, E-mail, Address 1, Address 2, Address 3, City, State,
Zipcode, Country, URL. Please understand that not all fields are populated.
C. No data will be included from X.X. Xxxxxx'x Enterprise Resource Planning
application, XX Xxxxxxx.
D. Internet access will be terminated at closing.
E. Data residing on computers included in the sale will not be removed from
the computer.
F. Miscellaneous data and information residing in X.X. Xxxxxx corporate office
in Pittsburgh is excluded.
SCHEDULE 2.7
ALLOCATION OF TOTAL CONSIDERATION
In accordance with Section 2.7 of the Asset Purchase Agreement, Seller and
Buyer hereby agree that the consideration paid for the Specified Assets shall be
allocated as follows:
1. Company Non-Compete $1,000,000
2. Trademarks $ 500,000
3. Goodwill $2,500,000
----------
Subtotal $4,000,000
plus
Net Assets Closing Date Net Asset Value
SCHEDULE 3.1
JURISDICTIONS
LB. Xxxxxx Is qualified to do business in many states, including
California, Illinois, Florida and Virginia.
Schedule 3.3
NO CONFLICTS
Unless a consent is obtained from the other Person to the applicable
contract, Specified Contracts, other than Accounts Payable, could be subject to
termination or cancellation by such other Person.
In addition, Seller must obtain the consent of PNC Bank, on behalf of
itself and various other banks, under the Revolving Credit and Security
Agreement dated May 5, 2005, as amended.
SELLER'S CONSENTS, APPROVALS AND PERMITS
Unless a consent is obtained from the other Person to the applicable
contract, all Specified Contracts, other than Accounts Payable, could be subject
to termination or cancellation by such other Person.
In addition, Seller must obtain the consent of PNC Bank, on behalf of
itself and various other banks, under the Revolving Credit and Security
Agreement dated May 5, 2005, as amended.
Permits - Seller has the following Permits related to its conduct of the
Business:
JURISDICTION PERMIT TYPE PERIOD
------------ ----------- ------
California - San Diego Business License 3/1/05 to 2/28/06
Florida - City of Melbourne Occupancy Permit 10/1/05 to 9/30/06
(Melbourne office)
Florida - Brevard County Occupancy Permit 10/1/05 to 9/30/06
(Melbourne Office)
Florida - Polk County Occupancy Permit 10/1/05 to 9/30/06
(Lakeland facility)
Any consents required relating to matters disclosed in Schedule 3.14
relating to the Xxxxxx Property.
