1
EXHIBIT 10.1
ACQUISITION AGREEMENT
Dated as of October 31, 2000
By and Among
GEEG HOLDINGS, L.L.C.,
CFI HOLDINGS, INC.,
XXXX X. XxXXXXXXX,
and
XXXXXX X. XXXXXXX
2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS........................................................................................... 1
Section 1. Definitions................................................................................. 1
ARTICLE II SALE OF STOCK........................................................................................ 9
Section 2.1. Sale of Stock............................................................................. 9
Section 2.2. Closing Payment........................................................................... 9
Section 2.3. Determination of Purchase Price........................................................... 10
Section 2.4. Closing................................................................................... 12
ARTICLE III REPRESENTATIONS OF THE SELLERS...................................................................... 13
Section 3. Representations of the Sellers.............................................................. 13
Section 3.1. Existence and Good Standing............................................................... 13
Section 3.2. Power and Authority....................................................................... 13
Section 3.3. Ownership of Stock........................................................................ 13
Section 3.4. Capital Stock; Subsidiaries............................................................... 13
Section 3.5. Financial Statements...................................................................... 14
Section 3.6. Books and Records......................................................................... 14
Section 3.7. Personal Property......................................................................... 15
Section 3.8. Leases.................................................................................... 15
Section 3.9. Material Contracts........................................................................ 17
Section 3.10. Consents and Approvals; No Violations.................................................... 18
Section 3.11. Litigation............................................................................... 19
Section 3.12. Taxes.................................................................................... 19
Section 3.13. Liabilities.............................................................................. 21
Section 3.14. Insurance................................................................................ 21
Section 3.15. Intellectual Properties.................................................................. 21
Section 3.16. Accounts Receivable...................................................................... 22
Section 3.17. Employment Relations..................................................................... 22
Section 3.18. Employee Benefit Plans................................................................... 23
Section 3.19. Permits.................................................................................. 27
Section 3.20. Interests in Clients, Suppliers, etc..................................................... 27
Section 3.21. Bank Accounts, Powers of Attorney and Compensation of Employees.......................... 27
Section 3.22. No Changes............................................................................... 27
Section 3.23. Compliance with Laws..................................................................... 29
Section 3.24. Broker's or Finder's Fees, etc........................................................... 29
Section 3.25. Environmental Laws and Regulations....................................................... 29
Section 3.26. Customers................................................................................ 29
Section 3.27. Disclosure............................................................................... 30
Section 3.28. Copies of Documents...................................................................... 30
Section 3.29. CFI Holdings............................................................................. 30
Section 3.30. Trumac................................................................................... 30
(i)
3
Page
----
ARTICLE IV REPRESENTATIONS OF THE PURCHASER..................................................................... 30
Section 4. Representations of the Purchaser............................................................ 30
Section 4.1. Existence and Good Standing; Power and Authority.......................................... 30
Section 4.2. No Conflicts.............................................................................. 31
Section 4.3. Litigation................................................................................ 31
Section 4.4. Capitalization............................................................................ 31
Section 4.5. Material Adverse Changes.................................................................. 31
Section 4.6. Due Issuance.............................................................................. 31
Section 4.7. Broker's or Finder's Fees, etc............................................................ 32
ARTICLE V CONDUCT OF BUSINESS; EXCLUSIVE DEALING; REVIEW;
OTHER AGREEMENTS............................................................................. 32
Section 5.1. Access to Information Concerning Properties and Records................................... 32
Section 5.2. Conduct of Business of the Company and its Subsidiaries................................... 32
Section 5.3. Commercially Reasonable Efforts........................................................... 34
Section 5.4. Exclusive Dealing......................................................................... 34
ARTICLE VI TAX MATTERS.......................................................................................... 35
Section 6.1. Tax Returns............................................................................... 35
Section 6.2. Payment of Taxes.......................................................................... 35
Section 6.3. Amended Returns........................................................................... 36
Section 6.4. Prior Tax Agreements...................................................................... 36
Section 6.5. Non-foreign Person Affidavit.............................................................. 36
Section 6.6. Post-Closing Access and Cooperation....................................................... 36
Section 6.7. Tax Indemnification....................................................................... 37
Section 6.8. Tax Controversies......................................................................... 37
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND PARENT........................................... 38
Section 7. Conditions to the Purchaser's and Parent's Obligations...................................... 38
Section 7.1. Truth of Representations and Warranties................................................... 38
Section 7.2. Performance of Agreements................................................................. 38
Section 7.3. No Material Adverse Change................................................................ 38
Section 7.4. No Litigation Threatened.................................................................. 38
Section 7.5. Good Standing and Other Certificates...................................................... 38
Section 7.6. Approvals and Consents.................................................................... 39
Section 7.7. Resignation of Directors and Officers..................................................... 39
Section 7.8. Opinion of the Sellers' Counsel........................................................... 39
Section 7.9. Statutes.................................................................................. 39
Section 7.10. Transaction Documents.................................................................... 39
Section 7.11. Financing................................................................................ 39
Section 7.12. Trumac Sale.............................................................................. 39
Section 7.13. CFI Mexico............................................................................... 40
(ii)
4
Page
----
Section 7.14. CFI Preferred Stock...................................................................... 40
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE SELLERS....................................................... 40
Section 8. Conditions to the Obligations of the Sellers................................................ 40
Section 8.1. Truth of Representations and Warranties................................................... 40
Section 8.2. Performance of Agreements................................................................. 40
Section 8.3. Approvals and Consents.................................................................... 40
Section 8.4. Opinion of the Purchaser's Counsel........................................................ 40
ARTICLE IX SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION......................................................... 40
Section 9.1. Survival of Representations............................................................... 40
Section 9.2. General Indemnification................................................................... 41
Section 9.3. Indemnification Procedure................................................................. 42
Section 9.4. Third Party Claims........................................................................ 43
Section 9.5. Limitation on Indemnity................................................................... 44
ARTICLE X TERMINATION AND ABANDONMENT........................................................................... 44
Section 10.1. Termination.............................................................................. 44
Section 10.2. Effect of Termination.................................................................... 45
ARTICLE XI MISCELLANEOUS........................................................................................ 45
Section 11.1. Expenses................................................................................. 45
Section 11.2. Governing Law............................................................................ 45
Section 11.3. Captions................................................................................. 45
Section 11.4. Publicity................................................................................ 45
Section 11.5. Notices.................................................................................. 46
Section 11.6. Parties in Interest...................................................................... 47
Section 11.7. Counterparts............................................................................. 47
Section 11.8. Entire Agreement......................................................................... 47
Section 11.9. Amendments............................................................................... 47
Section 11.10. Severability............................................................................ 48
Section 11.11. Third Party Beneficiaries............................................................... 48
Section 11.12. Submission to Jurisdiction; Waiver of Jury Trial........................................ 48
EXHIBITS
Exhibit 1 Employment Agreement
Exhibit 2 Indemnity Escrow Agreement
Exhibit 3 Purchase Price Escrow Agreement
Exhibit 4 Seller Non-compete Agreement
Exhibit 5 Seller Note
Exhibit 6 Opinion of Sellers' Counsel
Exhibit 7 Opinion of Purchaser's Counsel
Exhibit 8 Claim Certificate
(iii)
5
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT (this "Agreement") dated as of October 31, 2000,
by and among GEEG Holdings, L.L.C. (the "Purchaser"), a Delaware limited
liability company, Xxxx X. XxXxxxxxx ("XxXxxxxxx"), an individual resident in
the State of Connecticut, Xxxxxx X. Xxxxxxx ("Xxxxxxx", and together with
XxXxxxxxx, the "Sellers" and each, a "Seller"), an individual resident in the
State of Connecticut and CFI Holdings, Inc., a Connecticut corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, XxXxxxxxx owns 1,262 shares of common stock (the "Common
Stock"), par value $0.01 per share, of the Company and Xxxxxxx owns 1,260 shares
of Common Stock, all of such Common Stock representing in the aggregate 100% of
the capital stock of the Company;
WHEREAS, the Company desires to redeem 1,108 shares of the Common Stock
held by each of XxXxxxxxx and Xxxxxxx; and
WHEREAS, each of the Sellers desires to sell, and the Purchaser desires
to purchase, each Seller's remaining shares of Common Stock pursuant to this
Agreement.
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS
Section 1. Definitions. When used in this Agreement, the following
terms shall have the respective meanings specified therefor below (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined).
"2000 Adjusted EBITDA" shall mean with respect to the Company and its
Subsidiaries (a) net income (or net loss) of the Company and its Subsidiaries
plus (b) the sum of (i) interest expense, (ii) income tax expense, (iii)
depreciation expense, (iv) amortization expense, (v) management fees paid by the
Company to Trumac and (vi) extraordinary or unusual losses deducted in
calculating net income (or net loss) less (c) the sum of (i) extraordinary or
unusual gains added in calculating net income (or net loss), (ii) interest
income, (iii) income tax benefit, in each case determined in accordance with
GAAP consistent with past practice for the twelve months ending on December 31,
2000 and (iv) $360,000; provided, however, that 2000 Adjusted EBITBA shall (x)
be calculated separately from any other business unit of the Purchaser and (y)
not include any corporate overhead charges of the Purchaser.
"Actual Value" shall have the meaning assigned to such term in Section
2.3(c).
6
"Affiliate" of any Person shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, such Person; provided
that, for the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean 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
or partnership interests, by contract or otherwise and provided further, that,
with respect to Sections 3.9(a)(xii), 3.20, 3.22(p) and 5.2(n), an Affiliate of
any Person shall also include (w) any Person that directly or indirectly owns
more than 5% of any class of capital stock or other interest of such Person, (x)
any officer, director, trustee or beneficiary of such Person, (y) any spouse,
parent, sibling or descendant of any Person described in clauses (w) or (x)
above, and (z) any trust for the benefit of any Person described in clauses (w)
through (y) above or for any spouse, issue or lineal descendant of any Person
described in clauses (w) through (y) above.
"Agreed Claims" shall have the meaning assigned to such term in Section
9.3(c).
"Agreement" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Arbitrator" shall have the meaning assigned to such term in Section
2.3(c).
"Xxxxxxx" shall have the meaning set forth in the preamble to this
Agreement.
"Xxxxxxx Cash Payment" shall mean Two Million Two Hundred Fifty
Thousand Dollars ($2,250,000), (i) minus one-half of the Estimated Indebtedness
and (ii) minus one-half of the amount, if any, by which $5,800,000 exceeds the
amount of the Estimated Working Capital or plus one-half of the amount, if any,
by which the amount of the Estimated Working Capital exceeds $5,800,000.
"Xxxxxxx Closing Payment" shall have the meaning assigned to such term
in Section 2.2(b).
"Xxxxxxx Note Payment" shall have the meaning assigned to such term in
Section 2.2(b).
"Xxxxxxx Purchase Price" shall mean the sum of (i) the Xxxxxxx Closing
Payment, as adjusted pursuant to Section 2.3(d) and (ii) one-half of the Earnout
Payment.
A "business day" shall mean any day, other than a Saturday, Sunday or a
day on which banks located in New York City shall be authorized or required by
law to close.
"Certificate" shall have the meaning assigned to such term in Section
9.3(a).
"CFI" shall mean Consolidated Fabricators, Inc., a Delaware corporation
and wholly-owned subsidiary of the Company.
"Closing" shall have the meaning assigned to such term in Section 2.4.
"Closing Date" shall have the meaning assigned to such term in Section
2.4.
-2-
7
"Closing Date Indebtedness" shall have the meaning assigned to such
term in Section 2.3(b).
"Closing Date Working Capital" shall have the meaning assigned to such
term in Section 2.3(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
"Common Stock" shall have the meaning assigned to such term in the
first recital of this Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement.
"Company Property" shall mean any real property and improvements owned
(directly, indirectly or beneficially), leased, used, operated or occupied by
the Company and/or any of its Subsidiaries.
"Condition" shall have the meaning assigned to such term in Section
7.3.
"Confidentiality Agreement" shall have the meaning assigned to such
term in Section 5.1.
"Contingent Obligation" shall mean, as to any Person, any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations (the "primary obligations") of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of any such primary obligation or (y) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the holder of such primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonable anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Current Assets", with respect to any Person, shall include, without
limitation, accounts receivable, prepaid expenses and other prepaid items,
inventory and other current assets (except deferred tax assets) of such Person
and shall be determined in accordance with GAAP consistent with past practice of
such Person.
"Current Liabilities", with respect to any Person, shall include,
without limitation, accounts payable and other current liabilities (including
Tax liabilities other than deferred tax
-3-
8
liabilities) of such Person, shall not include the current portion of any
long-term debt of and shall be determined in accordance with GAAP consistent
with past practice of such Person.
"Earnout Amount" shall have the meaning assigned to such term in
Section 2.3(a).
"Employee Benefit Plan" shall have the meaning assigned to such term in
Section 3.18(a).
"Employment Agreement" shall mean the employment agreement to be
entered into by XxXxxxxxx on the one hand and the Purchaser on the other,
substantially in the form attached hereto as Exhibit 1.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law or any permit issued under any such
Environmental Law (for purposes of this definition, "Claims") including, without
limitation (i) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law and (ii) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, policy or rule of
common law in effect and in each case as amended as of the date hereof and the
Closing Date, and any judicial or administrative interpretation thereof as of
the date hereof and the Closing Date, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health safety or
Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq.; the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et seq.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1251 et seq.; the Toxic Substances Control
Act, 15 U.S.C.Section2601 et seq.; the Clean Air Act, 42 U.S.C.Section7401 et
seq.; the Safe Drinking Water Act, 42 U.S.C.Section300f et seq.; the Oil
Pollution Act of 1990, 33 U.S.C.Section2701 et seq.; and their state and local
counterparts and equivalents.
"Equityholders Agreement" shall mean the equityholders agreement, dated
as of August 1, 2000, by and among the Parent and the other parties thereto.
"ERISA" shall have the meaning assigned to such term in Section
3.18(a).
"Escrow Agent" shall have the meaning assigned to such term in Section
2.2(c).
"Escrow Agreements" shall mean the Indemnity Escrow Agreement and the
Purchase Price Escrow Agreement.
"Estimated Indebtedness" shall have the meaning assigned to such term
in Section 2.2(a).
-4-
9
"Estimated Working Capital" shall have the meaning assigned to such
term in Section 2.2(a).
"Financial Statements" shall have the meaning assigned to such term in
Section 3.5.
"GAAP" shall mean generally accepted accounting principles in the
United States of America applied on a consistent basis.
"Hazardous Materials" shall mean (i) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; (ii) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," or words of similar import, under any
applicable Environmental Law; and (iii) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
governmental authority.
"High Value" shall have the meaning assigned to such term in Section
2.3(c).
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services other than trade payables and accrued expenses arising in the ordinary
course of business in accordance with customary trade terms, (ii) the maximum
amount available to be drawn under all letters of credit issued for the account
of such Person and all unpaid drawings in respect of such letters of credit,
(iii) all Indebtedness of the types described in clause (i), (ii), (iv), (v),
(vi), (vii) and (viii) of this definition secured by any Lien on any property
owned by such Person, whether or not such Indebtedness has been assumed by such
Person, (iv) all capitalized lease obligations of such Person, (v) all
obligations of such Person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, (vi) all Contingent Obligations of such Person, (vii) all
obligations under any interest rate protection agreements, currency protection
agreements, interest rate swaps, control disbursement accounts, repurchase
agreements, reverse repurchase agreements, caps, collars, derivatives, currency
hedge agreements or other similar types of agreements and (viii) the greater of
(x) any premiums and other amounts payable to any third party pursuant to any
mandatory prepayment obligations under the terms of any Indebtedness as a result
of the consummation of the transactions contemplated hereby and (y) any premiums
and other amounts payable to any third party pursuant to any voluntary
prepayment provision under the terms of any Indebtedness, assuming the Closing
Date occurs on or before October 31, 2000 and notice of any such voluntary
prepayment is given by such Person on the Closing Date.
"Indemnified Party" shall have the meaning assigned to such term in
Section 9.3(a).
"Indemnifying Party" shall have the meaning assigned to such term in
Section 9.3(a).
-5-
10
"Indemnity Escrow Agreement" shall mean the Indemnity Escrow Agreement,
dated as of the date hereof, by and among the Sellers, the Purchaser and the
Escrow Agent attached hereto as Exhibit 2.
"Indemnity Escrow Amount" shall mean two million seven hundred fifty
thousand dollars ($2,750,000).
"Intellectual Property" shall mean domestic and foreign patents, patent
applications, registered and unregistered trademarks, applications for trademark
registrations, design and trade names, corporate names, internet domain names
and service marks, trade dress, brand names, registered and unregistered
copyrights, applications for copyright registrations, computer programs, data
bases, inventions, methods, designs, processes, procedures, improvements
thereon, refinements thereof, trade secrets and proprietary know-how, formulae
and recipes and information of any type.
"Leased Property" shall have the meaning assigned to such term in
Section 3.8.
"Leases" shall have the meaning assigned to such term in Section 3.8.
"Liens" shall mean liens, security interests, options, rights of first
refusal, easements, mortgages, charges, indentures, deeds of trust, rights of
way, restrictions on the use of real property, encroachments, licenses to third
parties, leases to third parties, security agreements, or any other encumbrances
and other restrictions or limitations on use of real or personal property or
irregularities in title thereto.
"Listed Intellectual Property" shall have the meaning assigned to such
term in Section 3.15(a).
"Loss" shall have the meaning assigned to such term in Section 9.2(a).
"Low Value" shall have the meaning assigned to such term in Section
2.3(c).
"XxXxxxxxx" shall have the meaning assigned to such term in the
preamble to this Agreement.
"XxXxxxxxx Cash Payment" shall mean Two Million Two Hundred Fifty
Thousand Dollars ($2,250,000), (i) minus one-half of the Estimated Indebtedness
and (ii) minus one-half of the amount, if any, by which $5,800,000 exceeds the
amount of the Estimated Working Capital or plus one-half of the amount, if any,
by which the amount of the Estimated Working Capital exceeds $5,800,000.
"XxXxxxxxx Closing Payment" shall have the meaning assigned to such
term in Section 2.2(b).
"XxXxxxxxx Equity Payment" shall have the meaning assigned to such term
in Section 2.2(c).
-6-
11
"XxXxxxxxx Note Payment" shall have the meaning assigned to such term
in Section 2.2(b).
"XxXxxxxxx Purchase Price" shall mean the sum of (i) the XxXxxxxxx
Closing Payment, as adjusted pursuant to Section 2.3(d) and (ii) one-half of the
Earnout Payment.
"Non-Disclosure Agreement" shall have the meaning assigned to such term
in Section 5.1.
"Notice of Objection" shall have the meaning assigned to such term in
Section 2.3(c).
"Overlap Period" shall mean taxable periods beginning before the
Closing Date and ending after the Closing Date.
"Parent" shall mean GEEG Holdings, LLC, a Delaware limited liability
company.
"Parent LLC Agreement" shall mean the limited liability company
agreement of the Parent, as amended from time to time.
"Permits" shall have the meaning assigned to such term in Section 3.19.
"Permitted Liens" shall mean (i) Liens reflected on the Financial
Statements, (ii) Liens arising by operation of law, (iii) Liens for current
taxes, assessments or governmental charges or levies on property not yet due and
delinquent and (iv) Liens set forth on Schedule 1.1.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an incorporated organization and a government or other
department or agency thereof.
"Pre-Closing Periods" shall mean all taxable years or periods that end
on or before the Closing Date and, with respect to any taxable year or period
beginning before and ending after the Closing Date, the portion of such taxable
year or period ending on and including the Closing Date.
"Purchase Price" shall mean the aggregate of the XxXxxxxxx Purchase
Price and the Xxxxxxx Purchase Price.
"Purchase Price Escrow Amount" shall mean five hundred thousand dollars
($500,000).
"Purchase Price Escrow Agreement" shall mean the Purchase Price Escrow
Agreement, dated as of the date hereof, by and among the Sellers, the Purchaser
and the Escrow Agent attached hereto as Exhibit 3.
"Purchased Stock" shall have the meaning assigned to such term in
Section 2.1.
"Purchaser" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Purchaser Indemnitee" shall have the meaning assigned to such term in
Section 9.2(a).
-7-
12
"Repurchase Agreement" shall mean the repurchase agreement to be
entered into by XxXxxxxxx, on the one hand, and the Purchaser, on the other.
"Release" shall mean the active or passive disposing, discharging,
injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying,
seeping, placing and the like, into or upon any land or water or air, or
otherwise entering into the environment.
"Returns" shall have the meaning assigned to such term in Section
3.12(a).
"Seller" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Seller Non-Compete Agreement" shall mean the non-competition agreement
to be entered into by each Seller on the one hand and the Purchaser on the
other, substantially in the form attached hereto as Exhibit 4.
"Subscription Agreement" shall mean the subscription agreement to be
entered into by XxXxxxxxx, on the one hand, and the Purchaser, on the other.
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is owned by such Person directly or indirectly
through one or more Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person directly or
indirectly through one or more Subsidiaries of such Person has more than a 50%
equity interest.
"Tax" or "Taxes" shall mean all taxes, assessments, charges, duties,
fees, levies or other governmental charges including, without limitation, all
Federal, state, local, foreign and other income, franchise, profits, capital
gains, capital stock, transfer, sales, use, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, withholding and other
taxes, assessments, charges, duties, fees, levies or other governmental charges
of any kind whatsoever (whether payable directly or by withholding and whether
or not requiring the filing of a Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall include any
liability for any such amounts as a result either of being a member of a
combined, consolidated, unitary or affiliated group or of a contractual
obligation to indemnify any Person or other entity.
"Tax Matter" shall have the meaning assigned to such term in Section
6.3(a).
"Transaction Documents" shall mean, collectively, this Agreement, the
Employment Agreement, Seller Non-Compete Agreements, the Equityholders
Agreement, the Parent LLC Agreement, the Repurchase Agreement and the Escrow
Agreements.
"Trumac" shall have the meaning assigned to such term in Section
5.2(f).
"Trumac Sale" shall have the meaning assigned to such term in Section
5.2(f).
-8-
13
"VEBA" shall have the meaning assigned to such term in Section 3.18(a).
"WARN" shall have the meaning assigned to such term in Section 3.17(j).
"Working Capital" shall mean, with respect to any Person, the Current
Assets of such Person less the Current Liabilities of such Person.
ARTICLE II
SALE OF STOCK
Section 2.1. Sale of Stock. Upon the terms and subject to the
conditions set forth in this Agreement, (i) XxXxxxxxx shall sell, assign,
transfer and deliver to the Purchaser at the Closing, and the Purchaser shall
purchase at the Closing, 154 shares of Common Stock and (ii) Xxxxxxx shall sell,
assign, transfer and deliver to the Purchaser at the Closing, and the Purchaser
shall purchase at the Closing, 152 shares of Common Stock (the Common Stock
referred to in clauses (i) and (ii), the "Purchased Stock"). The certificates
representing the Purchased Stock shall be duly endorsed in blank, or accompanied
by stock powers duly executed in blank, by the Sellers, with all necessary
transfer tax and other revenue stamps, acquired equally at the expense of the
Sellers, on the one hand, and the Purchaser, on the other, affixed and canceled.
The Sellers agree to cure any deficiencies with respect to the endorsement of
the certificates representing the Purchased Stock owned by the Sellers or with
respect to the stock powers accompanying any such certificates.
Section 2.2. Closing Payment. (a) At least three (3) business days
prior to the Closing Date, the Sellers shall cause the Company to prepare and
deliver to the Purchaser an estimate of the aggregate Working Capital of the
Company and its Subsidiaries (the "Estimated Working Capital") and an estimate
of the amount by which the aggregate Indebtedness of the Company and its
Subsidiaries exceeds the amount of cash owned by the Company and its
Subsidiaries (the "Estimated Indebtedness"), in each case as of the Closing
Date, which shall quantify in reasonable detail the items constituting such
Working Capital or, as the case may be, such Indebtedness or cash. The
statements of Estimated Working Capital and Estimated Indebtedness shall be
prepared in accordance with GAAP.
(b) On the Closing Date, the Company shall (i) redeem 1,108 shares of
the Common Stock owned by XxXxxxxxx (the "XxXxxxxxx Redeemed Stock") and, in
consideration for such redemption, (x) issue to XxXxxxxxx a promissory note in
the aggregate principal amount of Two Million Seven Hundred Fifty Thousand
Dollars ($2,750,000) substantially in the form of Exhibit 5 attached hereto (the
"XxXxxxxxx Note and, collectively with the XxXxxxxxx Cash Payment, the XxXxxxxxx
Equity Payment and the amount payable pursuant to clause (b)(i)(y), the
"XxXxxxxxx Closing Payment") and (y) pay to XxXxxxxxx, by wire transfer of
immediately available funds, Six Million Five Hundred Thousand Dollars
($6,500,000) and (ii) redeem 1,108 shares of the Common Stock owned by Xxxxxxx
and, in consideration for such redemption, (x) issue to Xxxxxxx a promissory
note in the aggregate principal amount of Two Million Seven Hundred Fifty
Thousand Dollars ($2,750,000) substantially in the form of Exhibit 5 attached
hereto (the "Xxxxxxx Note" and, collectively with the Xxxxxxx Cash Payment and
the amount
-9-
14
payable pursuant to clause (b)(ii)(y), the "Xxxxxxx Closing Payment") and (y)
pay to Xxxxxxx, by wire transfer of immediately available funds, Six Million
Five Hundred Thousand ($6,500,000), provided that each of XxXxxxxxx and Xxxxxxx
hereby direct the Company to pay to United States Trust Company of New York (the
"Escrow Agent") an amount equal to one-half of the aggregate of the Indemnity
Escrow Amount and the Purchase Price Escrow Amount, to be held in escrow
accounts pursuant to the provisions of the Escrow Agreements.
(c) On the Closing Date, the Purchaser shall, in consideration for sale
by the Sellers of the Purchased Stock, (i)(x) pay to XxXxxxxxx, by wire transfer
of immediately available funds, the XxXxxxxxx Cash Payment and (y) issue to
XxXxxxxxx 18,000 preferred units of the Purchaser and 20,000 Class A common
units of the Purchaser (the "XxXxxxxxx Equity Payment") and (ii) pay to Xxxxxxx,
by wire transfer of immediately available funds, the Xxxxxxx Cash Payment.
Section 2.3. Determination of Purchase Price. (a) (i) In addition to
the amounts set forth in Section 2.2 above, one-half of the following amount
(the "Earnout Amount") shall be payable by the Purchaser to each Seller pursuant
to Section 2.3(a)(iii) upon the fulfillment of any one of the following
conditions:
(x) Two Million Five Hundred Thousand Dollars ($2,500,000) if
the 2000 Adjusted EBITDA for the year ended December 31, 2000 equals or
exceeds Six Million Two Hundred Fifty Thousand Dollars ($6,250,000);
(y) if the 2000 Adjusted EBITDA for the year ended December
31, 2000 is greater than Five Million Seven Hundred Fifty Thousand
Dollars ($5,750,000) and less than Six Million Two Hundred Fifty
Thousand Dollars ($6,250,000), an amount determined according to the
following formula:
2000 Adjusted EBITDA - $5,750,000 X $2,500,000
---------------------------------
$500,000;
or (z) zero ($0.00) if the 2000 Adjusted EBITDA for the year ended
December 31, 2000 equals or is less than Five Million Seven Hundred Fifty
Thousand Dollars ($5,750,000).
(ii) Calculation of 2000 Adjusted EBITDA. Not later than March 1, 2001,
the Purchaser shall provide the Sellers with a statement setting forth the
calculation of the 2000 Adjusted EBITDA. With respect to such calculation,
transactions between the Company and the Purchaser shall be accounted for on an
arm's-length basis.
(iii) Payment. The Purchaser shall pay to each Seller one half of the
Earnout Amount, if any, by wire transfer of immediately available funds to the
account designated in writing by such Seller, within 5 business days after the
2000 Adjusted EBITDA calculation shall have become final and binding on the
parties.
(b) Promptly after the Closing Date, and in any event not later than
sixty (60) days following the Closing Date, the Purchaser shall cause the
Company to prepare and deliver to the Sellers a statement of the aggregate
Working Capital of the Company and its Subsidiaries (the
-10-
15
"Closing Date Working Capital") and a statement of the amount by which the
aggregate Indebtedness of the Company and its Subsidiaries exceeds the amount of
cash owned by the Company and its Subsidiaries (the "Closing Date
Indebtedness"), in each case as of the Closing Date. The Closing Date Working
Capital and the Closing Date Indebtedness shall each be prepared in accordance
with GAAP. The Purchaser shall provide each of the Sellers and their
representatives with reasonable access during business hours to those books and
records of the Company used by the Purchaser in preparing such statements
(c) (i) In the event that the Sellers do not object to the
determination by the Purchaser of the 2000 Adjusted EBITDA, the Closing Date
Working Capital or the Closing Date Indebtedness by written notice of objection
(the "Notice of Objection") delivered to the Purchaser within fifteen (15)
business days after the Seller's receipt of such determinations, such Notice of
Objection to describe in reasonable detail each of the Sellers' proposed
adjustments to the proposed 2000 Adjusted EBITDA, the Closing Date Working
Capital or, as the case may be, the Closing Date Indebtedness, the proposed 2000
Adjusted EBITDA, the Closing Date Working Capital and the Closing Date
Indebtedness shall each be deemed final and binding.
(ii) If the Sellers deliver a Notice of Objection to the Purchaser,
then any dispute shall be resolved as follows:
(x) The Sellers and the Purchaser shall promptly endeavor to
agree upon the calculation of the 2000 Adjusted EBITDA, the Closing
Date Working Capital or, as the case may be, the Closing Date
Indebtedness. In the event that a written agreement determining the
amount of the 2000 Adjusted EBITDA, the Closing Date Working Capital
or, as the case may be, the Closing Date Indebtedness has not been
reached within ten (10) business days after the date of receipt by the
Purchaser from the Sellers of the Sellers' Notice of Objection thereto,
then the Purchaser's determination of the 2000 Adjusted EBITDA, the
Closing Date Working Capital or, as the case may be, the Closing Date
Indebtedness shall be submitted to Ernst & Young LLP (the
"Arbitrator").
(y) Within thirty (30) days of the submission of any dispute
concerning the determination of the 2000 Adjusted EBITDA, the Closing
Date Working Capital or, as the case may be, the Closing Date
Indebtedness to the Arbitrator, the Arbitrator shall render a decision
in accordance with this Section 2.3 along with a statement of reasons
therefor. The decision of the Arbitrator shall be final and binding
upon each party hereto.
(z) In the event the Sellers and the Purchaser submit any
unresolved objections to the Arbitrator for resolution, the Sellers and
the Purchaser will share responsibility for the fees and expenses of
the Arbitrator as follows:
(A) if the Arbitrator resolves all of the remaining
objections in favor of the Purchaser's position (the 2000
Adjusted EBITDA, the Closing Date Working Capital or, as the
case may be, the Closing Date Indebtedness so determined is
referred to herein as the "Low Value"), then the Sellers will
be responsible for all of the fees and expenses of the
Arbitrator;
-11-
16
(B) if the Arbitrator resolves all of the remaining
objections in favor of the Sellers' position (the 2000
Adjusted EBITDA, the Closing Date Working Capital or, as the
case may be, the Closing Date Indebtedness so determined is
referred to herein as the "High Value"), then the Purchaser
will be responsible for all of the fees and expenses of the
Arbitrator; and
(C) if the Arbitrator neither resolves all of the
remaining objections in favor of the Purchaser's position nor
resolves all of the remaining objections in favor of Sellers'
position (the 2000 Adjusted EBITDA, the Closing Date Working
Capital or, as the case may be, the Closing Date Indebtedness
so determined is referred to herein as the "Actual Value"),
the Sellers will be responsible for that fraction of the fees
and expenses of the Arbitrator for each of 2000 Adjusted
EBITDA, Closing Date Working Capital or, as the case may be,
Closing Date Indebtedness equal to (x) the difference between
the High Value and the Actual Value over (y) the difference
between the High Value and the Low Value, for each of 2000
Adjusted EBITDA, Closing Date Working Capital and Closing Date
Indebtedness and the Purchaser will be responsible for the
remainder of the fees and expenses of the Arbitrator.
(d) (i) If Closing Date Working Capital is less than the amount of the
Estimated Working Capital, then each Seller shall be obligated to pay to the
Purchaser one-half of the amount of any such deficiency within three (3)
business days after the determination of Closing Date Working Capital by wire
transfer of immediately available funds to an account designated in writing by
the Purchaser. If Closing Date Working Capital exceeds the amount of the
Estimated Working Capital, then the Purchaser shall be obligated to pay to each
Seller one-half of the amount of any such excess within three (3) business days
after the determination of Closing Date Working Capital by wire transfer of
immediately available funds to the account designated in writing by such
Sellers.
(ii) If Closing Date Indebtedness exceeds the amount of the Estimated
Indebtedness, then each Seller shall be obligated to pay to the Purchaser
one-half of the amount of any such excess within three (3) business days after
the determination of the Closing Date Indebtedness by wire transfer of
immediately available funds to an account designated in writing by the
Purchaser. If the Closing Date Indebtedness is less than the amount of the
Estimated Indebtedness, then the Purchaser shall be obligated to pay to each
Seller one-half of the amount of any such deficiency within three (3) business
days after the determination of Closing Date Indebtedness by wire transfer of
immediately available funds to the account designated in writing by such
Sellers.
(iii) The parties hereto each acknowledge that the Purchase Price
Escrow Amount is established to secure the obligations, if any, of the Sellers
pursuant to Section 2.3(d)(i) and (ii).
Section 2.4. Closing. The sale referred to in Section 2.1 (the
"Closing") shall take place at 10:00 a.m. at the offices of White & Case LLP,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the date hereof. Such
date is herein referred to as the "Closing Date".
-12-
17
ARTICLE III
REPRESENTATIONS OF THE SELLERS
Section 3. Representations of the Sellers. The Sellers jointly and
severally represent and warrant to the Purchaser as follows:
Section 3.1. Existence and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Connecticut. The Company has the requisite corporate power and
authority to own, lease, operate its properties and to carry on its business as
now being conducted. The Company is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the character or location
of the properties owned, leased or operated by the Company or the nature of the
business conducted by the Company makes such qualification or license necessary
except where the failure to be so qualified or to have such license has not had,
or could not reasonably be expected to have, a material adverse effect on the
Condition of the Company.
Section 3.2. Power and Authority. Other than as set forth on Schedule
3.2 attached hereto, each Seller and the Company has all legal capacity to enter
into the Transaction Documents to which he or it is a party, and to consummate
the transactions contemplated thereby. Each of the Transaction Documents has
been duly executed and delivered by each Seller or, as the case may be, and the
Company to the extent he or it is a party thereto and, assuming due execution of
such Transaction Document by the other parties thereto and except as set forth
on Schedule 3.2 attached hereto, constitutes the valid and binding obligation of
such Seller and the Company, enforceable against such Seller, or as the case may
be, and the Company in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general equitable principles (regardless of whether the issue
of enforceability is considered in a proceeding in equity or at law).
Section 3.3. Ownership of Stock. Each Seller is the lawful owner,
beneficially and of record, of the Stock opposite the name of such Seller on
Schedule 3.3 attached hereto, free and clear of all Liens. Each Seller has full
legal right, power and authority to enter into this Agreement and to sell,
assign, transfer and convey the Stock owned by such Seller pursuant to this
Agreement and the delivery to the Purchaser of the Stock pursuant to the
provisions of this Agreement will transfer to the Purchaser good and marketable
title thereto, free and clear of all Liens.
Section 3.4. Capital Stock; Subsidiaries. (a) The Company has an
authorized capitalization consisting of 10,000 shares of Common Stock of which
2,522 shares are issued and outstanding. All issued and outstanding shares of
capital stock of the Company has been duly authorized and validly issued and is
fully paid and nonassessable, and is not subject to, nor was issued in violation
of, any preemptive rights. No shares of capital stock of the Company are
reserved for issuance and there are no outstanding or authorized options,
warrants, rights, subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities, or other commitments,
contingent or otherwise, relating to the capital stock of the
-13-
18
Company, or pursuant to which the Company is or may become obligated to issue
shares of its capital stock or any securities convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of the capital stock
of the Company. The Company does not have authorized or outstanding bonds,
debentures, notes or other indebtedness the holders of which have the right to
vote (or convertible or exchangeable into or exercisable for securities having
the right to vote) with the stockholders of the Company on any matter. Except as
set forth on Schedule 3.4(a), the Company does not own, directly or indirectly,
any capital stock or other equity, ownership or proprietary interest in any
Person. There are no restrictions of any kind which prevent or restrict the
payment of dividends by the Company.
(b) Each Subsidiary of the Company is a corporation duly incorporated,
validly existing and in good standing under the laws of its incorporation or
formation and has all requisite corporate power and authority to own its
property and to carry on its business as now being conducted. Set forth on
Schedule 3.4(b) is a list of jurisdictions in which each Subsidiary of the
Company is qualified to do business as a foreign corporation. All of the
outstanding shares of capital stock of each Subsidiary of the Company have been
duly authorized and validly issued, are fully paid and nonassessable, and are
owned, of record and beneficially by the Company, free and clear of all Liens.
No shares of capital stock of any Subsidiary of the Company are reserved for
issuance and there are no outstanding options, warrants, rights, subscriptions,
claims, agreements, obligations, convertible or exchangeable securities or other
commitments, contingent or otherwise, relating to the capital stock of any
Subsidiary of the Company or pursuant to which any Subsidiary of the Company is
or may become obligated to issue or exchange any shares of capital stock. No
Subsidiary of the Company owns, directly or indirectly, any capital stock or
other equity or ownership or proprietary interest in any corporation,
partnership, association, trust, joint venture or other entity.
Section 3.5. Financial Statements. The Sellers have heretofore
furnished the Purchaser with the audited consolidated financial statements
(comprising of the Consolidated Balance Sheet, Consolidated Statement of Income,
Consolidated Statement of Equity, Consolidated Statement of Cash Flows, Notes to
Financial Statements and Supplementary Information) of CFI as of December 31,
1997, December 31, 1998 and December 31, 1999 and an unaudited consolidated
balance sheet of CFI as of August 31, 2000 and the related consolidated
statements of income equity and cash flows for the fiscal years then ended or,
as the case may be, the eight-month period then ended (collectively, the
"Financial Statements"). The Financial Statements, including the footnotes
thereto, have been prepared in accordance with GAAP consistently followed
throughout the period indicated, and fairly present in all material respects the
financial position of the Company and its Subsidiaries at its date thereof, and
the results of operations and cash flows of the Company and its Subsidiaries for
the periods indicated.
Section 3.6. Books and Records. The respective minute books of the
Company and its Subsidiaries as previously made available to the Purchaser and
its representatives contain accurate records of all meetings of, and corporate
actions taken by (including action taken by written consent), the shareholders
and the Board of Directors of the Company and each of its Subsidiaries. Neither
the Company nor any of its Subsidiaries has any of its records, systems,
controls, data or information recorded, stored, maintained, operated or
otherwise wholly or partly dependent upon or held by any means (including any
electronic, mechanical or photographic process, whether
-14-
19
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of the Company or, as
the case may be, such Subsidiary of the Company, except for any records or data
maintained by the Company's accountants, payroll company and attorneys.
Section 3.7. Personal Property. Except for properties and assets
reflected in the Financial Statements, or acquired since December 31, 1999,
which have been sold or otherwise disposed of in the ordinary course of
business, the Company and its Subsidiaries have good, valid and marketable title
to (a) all of their respective personal properties and assets (tangible and
intangible), including, without limitation, all of the personal properties and
assets reflected in the Financial Statements, and (b) all of the personal
properties and assets (tangible or intangible) purchased by such entities since
December 31, 1999, in each case free and clear of all Liens, except for
Permitted Liens.
Section 3.8. Leases and Owned Real Property. (a) Schedule 3.8(a)
attached hereto contains an accurate and complete list of all (a) real property
leased (directly or indirectly, beneficially, or otherwise), to or from the
Company or any of its Subsidiaries ("Leased Property") and (b) leases ("Leases")
(including, without limitation, any amendments or modifications thereto) to
which the Company or any of its Subsidiaries is a party (as lessee, sublessee,
sublessor or lessor), and a reference to any title policies and surveys relating
thereto which are in the possession of the Company or any of its Subsidiaries.
The term "Leases" includes, without limitation, occupancy and similar
agreements. Each Lease set forth on Schedule 3.8(a) (or required to be set forth
on Schedule 3.8(a)) is in full force and effect and is valid and binding and is
enforceable against the Company or, as the case may be, the applicable
Subsidiary and, to the Sellers' best knowledge, the other parties thereto,
except to the extent that such enforcement may be affected by applicable
bankruptcy, reorganization, insolvency and similar laws affecting creditors'
rights generally and by general equitable principles (regardless of whether
enforcement is sought at law or in equity); all rents and additional rents due
to date on each such Lease have been paid and no rent has been paid more than
one (1) month in advance, and all other material obligations of the lessees
thereunder required to have been performed to date have been performed by the
Company or, as the case may be, the applicable Subsidiary and, to the best of
the Sellers' best knowledge, the other parities thereto in accordance with the
provisions of the applicable Lease; in each case, with respect to Leases where
the Company or a Subsidiary of the Company is the lessee, such entity has been
in peaceable possession since it became the lessee under such Lease and is not
in default thereunder, and there are no uncured notices of default under any of
such Leases, and no waiver, indulgence or postponement of the lessee's
obligations thereunder has been granted by the lessor; and there exists no (and
neither of the execution of the Transaction Documents or the purchase of the
Stock hereunder or will give rise to any) event of default or event, occurrence,
condition or act which, with the giving of notice, the lapse of time or the
happening of any further event or condition, would become a default or give
rise, whether by the exercise by the holder of the landlord interest in the
Lease or by express provision of the Lease without exercise by such holder, to
so-called "recapture", termination or cancellation of, or have a material
adverse effect on, any Lease set forth on Schedule 3.8(a) (or required to be set
forth on Schedule 3.8(a)). Except as set forth on Schedule 3.8(a), neither the
Company nor any of its Subsidiaries nor, any other Person party to any lease has
violated any of the terms or conditions under any such lease in any material
respect, and all of the covenants to be performed
-15-
20
by the Company or any of its Subsidiaries or, to the best knowledge of either
Seller, by any other party under any such Lease have been fully performed. The
Company or a Subsidiary of the Company has good clear record and marketable
leasehold interest in all Leased Property described in such Leases, free and
clear of any and all Liens, except for Permitted Liens. Except as set forth on
Schedule 3.8(a), neither the Company nor any of its Subsidiaries has assigned,
transferred, conveyed, mortgaged or encumbered any interest in any lease or in
any Leased Property subject thereto (or any portion thereof). Except as set
forth on Schedule 3.8(a), neither the Company nor any of its Subsidiaries has
been a party to a Lease with respect to which it has or may have any continuing
liability thereunder, notwithstanding that a third party has assumed, guaranteed
or otherwise agreed to pay and perform the obligations of the Company or, as the
case may be, such Subsidiary of the Company. Except as set forth on Schedule
3.8(a), neither the Company nor any of its Subsidiaries is currently negotiating
with respect to a Lease nor is it a party to a Lease with respect to Leased
Property with respect to which the term has not commenced. Neither the Company
nor any of its Subsidiaries has granted, nor has the benefit of, any options to
enter into any Leases or acquire any leasehold interest. No Leased Property
(including buildings, structures, improvements or appurtenances or any
equipment), nor the construction, operation or maintenance thereof, violates in
any respect any provision of any federal, state or local law, ordinance, rule or
regulation except where such violation has not had, or could not reasonably be
expected to have, a material adverse effect on the Condition of the Company, and
the Company and its Subsidiaries have valid certificates of occupancy with
respect to the Leased Property. Each Leased Property is served by water, sewer,
sanitary sewer, storm drain facilities and other utilities adequate to serve
such Leased Property for its intended use. All public utilities necessary for
the intended use and enjoyment of each Leased Property are located in the public
right-of-way or in private recorded easements or rights of way abutting such
Leased Property. The Sellers have delivered to the Purchaser true and complete
copies of each Lease including, in each case, all exhibits and schedules
thereto. The Sellers have delivered to the Purchaser true and complete rent
rolls with respect to each Leased Property.
(b) Schedule 3.8(b) attached hereto contains an accurate and complete
list of all Owned Real Property ("Owned Real Property") , in whole or in part,
by the Company or any of its Subsidiaries and includes a list of all
indebtedness secured by a lien, mortgage or deed of trust thereon and a
reference to any title policies and surveys relating thereto. The Company or a
Subsidiary of the Company has good, valid and marketable title in fee simple to
all the Owned Real Property, free of all Encumbrances other than Permitted
Encumbrances. Except as disclosed on Schedule 3.8(b), all of the buildings,
structures and appurtenances situated on the real property owned, in whole or in
part, by the Company or its Subsidiaries are in reasonable operating condition
and repair with no known material defects, are suitable for the purposes for
which they are presently being used and the Company or its Subsidiaries have
adequate rights of ingress and egress for operation of their respective
businesses in the ordinary course. To the best knowledge of the Sellers, none of
such buildings, structures or appurtenances, or the operation or maintenance
thereof, violates any restrictive covenant or, except for encroachments as set
forth on any survey set forth on Schedule 3.8(b) (which encroachments are not,
individually, or in the aggregate, material), encroaches on any property owned
by others. There are no encroachments or overlaps onto any of the real property
set forth on Schedule 3.8(b) or existing improvements located on adjoining land.
There are no easements or claims of easements burdening any of the
-16-
21
real property set forth on Schedule 3.8(b) not shown by the public records. To
the best knowledge of the Sellers, there are no boundary line disputes with
respect to any of the real property set forth on Schedule 3.8(b). The Sellers
have no knowledge, or have not received any notice that the operation or
maintenance of such buildings, structures, or appurtenances violates any
provision of any federal, state or local law, ordinance, rule or regulation or
any Permits necessary or required for the use of the real property set forth on
Schedule 3.8(b) by the Company or any of its Subsidiaries for the purpose for
which it is currently used. No condemnation proceeding is pending, or, to the
best knowledge of the Sellers, threatened which would preclude or impair the use
of any such real property by the Company or any of its Subsidiaries for the
purposes for which it is currently used. Neither the Company nor any of its
Subsidiaries has granted any options to acquire all or part of the real property
set forth on Schedule 3.8(b) to any third party. Except as shown on any survey
set forth on Schedule 3.8(b), the real property owned by the Company or any of
its Subsidiaries is served by a municipal water supply system, municipal sewers,
private sewer systems, municipal sanitary sewers and storm drain facilities, all
of which are adequate for the use of such real property for the purposes for
which it is currently being used by the Company or any of its Subsidiaries. All
public utilities necessary to the full use and enjoyment or the real property
owned by the Company or any of its Subsidiaries are located in the public
right-of-way or private recorded easements or rights of way abutting such real
property.
Section 3.9. Material Contracts. (a) Except as set forth on Schedule
3.9 attached hereto, neither the Company nor any of its Subsidiaries is a party
to, or is bound by:
(i) any agreement, contract or commitment relating to the
employment of any Person by the Company or, as the case may be, such
Subsidiary of the Company, or any bonus, deferred compensation,
pension, profit sharing, stock option, employee stock purchase,
retirement or other employee benefit plan;
(ii) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock;
(iii) any agreement, contract or commitment relating to
capital expenditures;
(iv) any loan (other than accounts receivable from trade debtors
arising in the ordinary course of business) or advance to (other than
travel or entertainment advances to employees made in the ordinary
course of business), or investment in, any Person or any agreement,
contract or commitment relating to the making of any such loan, advance
or investment;
(v) any agreement relating to Indebtedness;
(vi) any guarantee or other contingent liability in respect of
any Indebtedness or obligation of any other Person (other than the
endorsement of negotiable instruments for collection in the ordinary
course of business);
-17-
22
(vii) any management service, consulting, financial advisory or
any other similar type of contract including, without limitation, any
contract with any investment or commercial bank;
(viii) any agreement, contract or commitment limiting the ability
of the Company or, as the case may be, such Subsidiary of the Company
to engage in any line of business or to compete with any Person;
(ix) any agreement, contract or commitment which involves
$50,000 or more and is not cancelable without penalty within thirty
(30) days;
(x) any other material agreement, contract or commitment;
(xi) any collective bargaining agreement, labor contract or
other written arrangement with any labor union or any employee
organization; or
(xii) any agreement, contract or commitment with any
Affiliate.
(b) Each contract or agreement set forth on Schedule 3.9 (or required
to be set forth on Schedule 3.9) is in full force and effect and there exists no
material default or event of default by the Company or any of its Subsidiaries
or, to the best knowledge of either Seller, any other Person party to such
contract or agreement or event, occurrence, condition or act (including the
consummation of the transactions contemplated hereby) which, with the giving of
notice, the lapse of time or the happening of any other event or condition,
would become a material default or event of default by the Company or any of its
Subsidiaries or, to the best knowledge of either Seller, any other Person party
thereto.
Section 3.10. Consents and Approvals; No Violations. Other than as set
forth on Schedule 3.10 attached hereto, the execution and delivery of the
Transaction Documents by each Seller and the Company to the extent he or it are
a party thereto and the consummation by such Seller and the Company of the
transactions contemplated thereby will not: (1) violate any provision of the
certificate of incorporation or by-laws (or other organizational document) of
the Company or any of its Subsidiaries; (2) violate any statute, ordinance,
rule, regulation, order or decree of any court or of any governmental or
regulatory body, agency or authority applicable to the Company or any of its
Subsidiaries or by which any of their respective properties or assets may be
bound; (3) require any Person (other than the Purchaser or any of its
Affiliates) to make or obtain any filing with or permit, consent or approval or
give any notice to, any governmental or regulatory body, agency or authority; or
(4) result in a violation or breach of, conflict with, constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, payment or acceleration) under, or result in
the creation of any Lien upon any of the properties or assets of the Company or
any of its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, agreement, lease,
franchise agreement, collective bargaining agreement or other agreement,
instrument or obligation to which the Company or any of its Subsidiaries is a
party, or by which the Company or any of its Subsidiaries or any of their
respective properties or assets are bound.
-18-
23
Section 3.11. Litigation. (a) There is no action, suit, proceeding at
law or in equity, arbitration or administrative or other proceeding by or before
or, to the best knowledge of the Sellers, any investigation by any governmental
or other instrumentality or agency, pending, or, to the best knowledge of the
Sellers, threatened, against or affecting the Company or any of its Subsidiaries
or any of their respective properties or rights, and the Sellers do not know of
any valid basis for any such action, proceeding or investigation. In addition,
Schedule 3.11 attached hereto lists all actions, suits, proceedings at law or in
equity, arbitration or administrative or other proceedings by or before any
governmental or other instrumentality or agency demanding from the Company or
any of its Subsidiaries in excess of $50,000, including the parties thereto, the
venue, counsel and a reasonable description of the action.
(b) Neither the Company nor any of its Subsidiaries is subject to any
judgment, order or decree entered in any lawsuit or proceeding.
Section 3.12. Taxes. (a) Tax Returns. The Company and each of its
Subsidiaries have, after taking into consideration applicable extensions, timely
filed or caused to be timely filed with the appropriate taxing authorities all
returns, statements, forms and reports for Taxes ("Returns") that are required
by law to be filed by, or with respect to, the Company and its Subsidiaries on
or prior to the Closing Date. The Returns accurately reflect and will accurately
reflect all liability for Taxes of the Company and its Subsidiaries for the
periods covered thereby and all other information set forth on the Returns is
complete and accurate.
(b) Payment of Taxes. All Taxes and Tax liabilities of the Company and
each of its Subsidiaries for all taxable years or periods that end on or before
the Closing Date have been timely paid in full on or prior to the Closing Date
and all Taxes with respect to the portion of the Overlap Period that ends on and
includes the Closing Date have been timely paid in full prior to the Closing
Date or are set forth on Schedule 3.12(b).
(c) Other Tax Matters. (i) Neither the Company nor any of its
Subsidiaries has been the subject of an audit or other examination of Taxes by
any taxing authority and, except as set forth on Schedule 3.12(c)(i), neither
the Company nor any of its Subsidiaries has received any notices from any taxing
authority relating to any issue which could affect the Tax liability of the
Company or any of its Subsidiaries.
(ii) Except as set forth on Schedule 3.12(c)(ii) attached hereto, none
of the Sellers, the Company or any of its Subsidiaries, as of the Closing Date,
(A) has entered into an agreement or waiver or been requested to enter into an
agreement or waiver extending any statute of limitations relating to the payment
or collection of Taxes of the Company or any of its Subsidiaries, (B) has
applied for and/or received a ruling or determination from a taxing authority
regarding a past or prospective transaction of the Company or any of its
Subsidiaries, or (C) is presently contesting the Tax liability of the Company or
any of its Subsidiaries before any court, tribunal or agency.
(iii) Except as set forth on Schedule 3.12(c)(iii) attached hereto,
neither the Company nor any of its Subsidiaries has been included in any
"consolidated", "unitary" or "combined" Return provided for under the law of the
United States, any foreign jurisdiction or any state or
-19-
24
locality with respect to Taxes for any taxable period for which the statute of
limitations has not expired.
(iv) Neither the Company nor any of its Subsidiaries has applied for,
been granted, or agreed to any accounting method change for which it will be
required to take into account any adjustment under Section 481 of the Code or
any similar provision of the Code or the corresponding tax laws of any nation,
state or locality, and the Company will not be required to include any item in
income after the Closing Date for Tax purposes which has economically accrued
prior to the Closing Date.
(v) No election under Section 341(f) of the Code has been made or shall
be made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the Code.
(vi) All Taxes which the Sellers, Company or any of its Subsidiaries is
or was required by law to withhold or collect or which otherwise were required
to have been or to be withheld or collected with respect to services performed
for the Company or any of its Subsidiaries have been duly withheld or collected,
and have been timely paid over to the proper authorities to the extent due and
payable.
(vii) Neither the Company nor any of its Subsidiaries is a "United
States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
(viii) Except as set forth on Schedule 3.12(c)(viii) attached hereto,
there are no tax sharing, allocation, indemnification or similar agreements in
effect as between the Company, any Subsidiary of the Company or any predecessors
or Affiliates thereof and any other party (including the Sellers or the Company
or any of its Subsidiaries or any predecessors or Affiliates thereof) under
which the Purchaser or the Company or any of its Subsidiaries could be liable
for any Taxes or other claims of any party.
(ix) No indebtedness of the Company or any of its Subsidiaries consists
of "corporate acquisition indebtedness" within the meaning of Section 279 of the
Code or otherwise bears interest that is not deductible for Federal income tax
purposes.
(x) No claim has ever been made by any taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction.
(xi) Neither the Company nor any of its Subsidiaries is a party to any
agreement that would require the Company or any of its Subsidiaries or any
Affiliate thereof to make any payment that would constitute an "excess parachute
payment" for purposes of Sections 280G and 4999 of the Code.
(xii) None of the transactions contemplated by this (including, without
limitation, the Trumac Sale) will result in the realization of deferred income
or gain that will be recognized by the Company or any Subsidiary after the
Closing Date.
-20-
25
Section 3.13. Liabilities. Except as set forth on Schedule 3.13
attached hereto, neither the Company nor any of its Subsidiaries has any
outstanding claims, liabilities or Indebtedness, contingent or otherwise, except
as set forth on the Financial Statements or referred to in the footnotes thereto
or incurred subsequent to December 31, 1999 in the ordinary course of business
consistent with past practices not involving borrowings by the Company or any of
its Subsidiaries. Neither the Company nor any of its Subsidiaries is in default
in respect of the terms or conditions of any Indebtedness.
Section 3.14. Insurance. Set forth on Schedule 3.14 attached hereto is
a complete list of insurance policies which the Company and its Subsidiaries
maintain with respect to their respective businesses, properties or employees.
Such policies are in full force and effect (and will, after consummation of the
transactions contemplated by the Transaction Documents, remain in full force and
effect), and all premiums due have been paid in full and are free from any right
of termination on the part of the insurance carriers. Such policies, with
respect to their amounts and types of coverage, are, to the Sellers' best
knowledge, adequate to insure fully against risks that, to the Sellers' best
knowledge, should be insured against and, based on discussions with the
insurance broker of the Company and its Subsidiaries, such policies are adequate
to insure fully against risks customarily insured against and in amounts
customarily covered by companies which are similarly situated as the Company and
its Subsidiaries. Since December 31, 1999, there has not been any material
adverse change in the relationship of the Company and its Subsidiaries with
their respective insurers or in the premiums payable pursuant to such policies.
Section 3.15. Intellectual Properties. (a) Schedule 3.15 attached
hereto contains an accurate and complete list of Intellectual Property owned by,
licensed to or used by the Company or any of its Subsidiaries (other than
"shrink-wrap" licenses related to "off-the-shelf" software) (collectively, the
"Listed Intellectual Property"). The patents, registered copyrights, registered
trademarks and service marks, and domain names included in the Listed
Intellectual Property have been duly registered in, filed in or issued by the
United States Patent and Trademark Office, United States Copyright Office or a
duly accredited and appropriate domain name registrar, the appropriate offices
in the various states of the United States and the appropriate offices of other
jurisdictions, and each such registration, filing and issuance remains in full
force and effect as of the Closing Date. Except as set forth on Schedule 3.15,
true and complete copies of all license agreements to which reference is therein
made have been delivered by the Sellers to the Purchaser.
(b) Except as set forth on Schedule 3.15 (and other than "shrink-wrap"
licenses related to "off-the-shelf" software), neither the Company nor any of
its Subsidiaries is a party to any license or agreement, whether as licensor,
licensee, or otherwise with respect to any of the Intellectual Property. To the
extent any Intellectual Property is used under license by the Company or any of
its Subsidiaries, no notice of a material default has been sent or received by
any of the Sellers under any such license which remains uncured. Each such
license agreement is a legal, valid and binding obligation of each of the
Company or any such Subsidiary of the Company and, to the Sellers' best
knowledge, other Persons party thereto, enforceable in accordance with the terms
thereof.
-21-
26
(c) Except as set forth on Schedule 3.15, the Company and its
Subsidiaries own or are licensed to use, all of the Listed Intellectual
Property, free and clear of any Liens, without obligation to pay any royalty or
any other fees with respect thereto and the operation of their respective
businesses requires no rights under Intellectual Property other than the Listed
Intellectual Property. To the Sellers' best knowledge, neither the Company's nor
any of its Subsidiaries' use of any Intellectual Property infringes any
Intellectual Property rights of any third party. No Listed Intellectual Property
has been canceled, abandoned or otherwise terminated and all renewal and
maintenance fees in respect thereof have been duly paid.
(d) Except as set forth on Schedule 3.15, since January 1, 1996,
neither the Company nor any of its Subsidiaries has received any written notice
from any third party challenging the right of the Company or any of its
Subsidiaries to use any Intellectual Property. The Listed Intellectual Property
constitutes all the intellectual property necessary to operate the respective
businesses of the Company and its Subsidiaries as of the Closing Date in the
manner in which they were operated prior to the Closing Date. Immediately after
the Closing Date, the Purchaser will have all Intellectual Property rights
necessary to operate the businesses of the Company and its Subsidiaries in the
manner in which they were operated prior to the Closing Date.
(e) Except as set forth on Schedule 3.15, since January 1, 1996,
neither the Company nor any of its Subsidiaries has made any claim in writing of
a violation, infringement, misuse or misappropriation by any Person of any of
their rights to, or in connection with any Intellectual Property, which claim is
still pending.
(f) Except as set forth on Schedule 3.15, there are no pending or to
the best knowledge of any of the Sellers, as of the date hereof, threatened
claims of a violation, infringement, misuse or misappropriation by the Company
or any of its Subsidiaries of any Intellectual Property, or of the invalidity of
any patent or of the registration of a copyright, trademark, service xxxx,
domain name, or trade name included in the Listed Intellectual Property.
(g) Except as set forth on Schedule 3.15, as of the date hereof, there
are no interferences or other contested proceedings, either pending or, to the
best knowledge of any of the Sellers, threatened, in the United States Copyright
Office, the United States Patent and Trademark Office, or any governmental
authority relating to any pending application with respect to the Listed
Intellectual Property.
Section 3.16. Accounts Receivable. The reserve for doubtful accounts
reflected in the Financial Statements has been established in accordance with
GAAP, consistent with past practices, and no receivable which should have been
written down or reserved against in accordance with GAAP, consistent with past
practices, has not been written down or reserved against.
Section 3.17. Employment Relations. Except as set forth on Schedule
3.17 attached hereto:
(a) each of the Company and its Subsidiaries is in substantial
compliance with all federal, state or other domestic applicable laws, respecting
employment and employment prac-
-22-
27
tices, terms and conditions of employment and wages and hours, and has not and
is not engaged in any unfair labor practice;
(b) no unfair labor practice complaint against the Company or any of
its Subsidiaries is pending or, to the best knowledge of the Sellers, threatened
before the National Labor Relations Board;
(c) there is no labor strike, dispute, slowdown or stoppage actually
pending or, to the best knowledge of the Sellers, threatened against or
involving the Company or any of its Subsidiaries;
(d) no representation question exists respecting the employees of the
Company or any of its Subsidiaries;
(e) no grievance which might have an adverse effect upon the Company or
any of its Subsidiaries or the conduct of their respective businesses, and no
arbitration proceeding arising out of or under any collective bargaining
agreement with respect to employees of the Company or any of its Subsidiaries is
pending and no claim therefor has been asserted;
(f) no collective bargaining agreement is currently applicable to the
Company or any of its Subsidiaries or is being negotiated by the Company or any
of its Subsidiaries with respect to employees of any such entity;
(g) neither the Company nor any of its Subsidiaries has experienced any
material labor difficulty during the last three (3) years;
(h) none of the Company or any of its Subsidiaries or either Seller has
received any notice of the termination of employment from any employee of the
Company or any of its Subsidiaries nor any notification of intent to leave by
any employee of the Company or any of its Subsidiaries as a result of any
announcement of the transactions contemplated by this Agreement;
(i) there exists no written or oral employment, consulting, severance
or indemnification agreements with respect to employees of the Company or any of
its Subsidiaries or any agreement that would give any Person the right to
receive any payment from the Company or any of its Subsidiaries as a result of
this Agreement; and
(j) the Company and its Subsidiaries are in compliance with the
requirements of the Federal Workers' Adjustment and Retraining Notification Act
(hereinafter referred to as "WARN") and neither the Company nor any of its
Subsidiaries has liabilities pursuant to WARN.
Section 3.18. Employee Benefit Plans.
(a) List of Plans. Set forth on Schedule 3.18(a) attached hereto is an
accurate and complete list of all written and material unwritten domestic and
foreign (i) "employee benefit plans," within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations thereunder ("ERISA"); (ii) bonus, stock option, stock purchase,
restricted stock, incentive, fringe benefit, "voluntary employees' beneficiary
-23-
28
associations" ("VEBA") under Section 501(c)(9) of the Code, profit-sharing,
pension or retirement, deferred compensation, medical, life insurance,
disability, accident, salary continuation, severance, accrued leave, vacation,
sick pay, sick leave, supplemental retirement and unemployment benefit plans,
programs, arrangements, commitments and/or practices (whether or not insured);
and (iii) employment, consulting, termination, and severance contracts or
agreements; in each case for active, retired or former employees or directors,
whether or not any such plans, programs, arrangements, commitments, contracts,
agreements and/or practices (referred to in (i), (ii) or (iii) above) are
otherwise exempt from the provisions of ERISA; that have been established,
maintained or contributed to (or with respect to which an obligation to
contribute has been undertaken) or with respect to which any potential liability
is borne by the Company or any of its Subsidiaries (including, for this purpose
and for the purpose of all of the representations in this Section 3.18, any
predecessors to the Company or to any of its Subsidiaries and all employers
(whether or not incorporated) that would be treated together with the Company,
any of its Subsidiaries and/or the Sellers as a single employer (1) within the
meaning of Section 414 of the Code, or (2) as a result of the Company or any
Subsidiary and/or the Sellers being or having been a general partner of any such
employer), since January 1, 1997 ("Employee Benefit Plans").
(b) Status of Plans. Each Employee Benefit Plan (including any related
trust) complies in form with the requirements of all applicable laws, including,
without limitation, ERISA and the Code, and has at all times been maintained and
operated in substantial compliance with its terms and the requirements of all
applicable laws, including, without limitation, ERISA and the Code. No complete
or partial termination of any Employee Benefit Plan has occurred or is expected
to occur. Neither the Company nor any of its Subsidiaries has any commitment,
intention or understanding to create, modify or terminate any Employee Benefit
Plan. Except as required to maintain the tax-qualified status of any Employee
Benefit Plan intended to qualify under Section 401(a) of the Code, no condition
or circumstance exists that would prevent the amendment or termination of any
Employee Benefit Plan. No event has occurred and no condition or circumstance
has existed that could result in a material increase in the benefits under or
the expense of maintaining any Employee Benefit Plan from the level of benefits
or expense incurred for the most recent fiscal year ended thereof.
(c) No Pension Plans. No Employee Benefit Plan is an "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA) subject to Section
412 of the Code or Section 302 or Title IV of ERISA. Neither the Company nor any
of its Subsidiaries has ever maintained or contributed to, or had any obligation
to contribute to (or borne any liability with respect to) any "multiple employer
plan" (within the meaning of the Code or ERISA) or any "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA).
(d) Liabilities. Neither the Company nor any of its Subsidiaries
maintains any Employee Benefit Plan which is a "group health plan" (as such term
is defined in Section 607(1) of ERISA or Section 5000(b)(1) of the Code) that
has not been administered and operated in all respects in compliance with the
applicable requirements of Part 6 of Subtitle B of Title I of ERISA and Section
4980B of the Code and neither the Company nor any of its Subsidiaries is subject
to any material liability, including, without limitation, additional
contributions, fines, taxes, penalties or loss of tax deduction as a result of
such administration and operation. No Employee
-24-
29
Benefit Plan which is such a group health plan is a "multiple employer welfare
arrangement," within the meaning of Section 3(40) of ERISA. Each Employee
Benefit Plan that is intended to meet the requirements of Section 125 of the
Code meets such requirements, and each program of benefits for which employee
contributions are provided pursuant to elections under any Employee Benefit Plan
meets the requirements of the Code applicable thereto. Neither the Company nor
any of its Subsidiaries maintains any Employee Benefit Plan which is an
"employee welfare benefit plan" (as such term is defined in Section 3(1) of
ERISA) that has provided any "disqualified benefit" (as such term is defined in
Section 4976(b) of the Code) with respect to which an excise tax could be
imposed.
Neither the Company nor any of its Subsidiaries maintains any Employee
Benefit Plan (whether qualified or non-qualified under Section 401(a) of the
Code) providing for post-employment or retiree health, life insurance and/or
other welfare benefits and having unfunded liabilities, and neither the Company
nor any of its Subsidiaries have any obligation to provide any such benefits to
any retired or former employees or active employees following such employees'
retirement or termination of service. Neither the Company nor any of its
Subsidiaries has any unfunded liabilities pursuant to any Employee Benefit Plan
that is not intended to be qualified under Section 401(a) of the Code. No
Employee Benefit Plan holds as an asset any interest in any annuity contract,
guaranteed investment contract or any other investment or insurance contract,
policy or instrument issued by an insurance company that, to the best knowledge
of the Sellers, the Company or any Subsidiary of the Company, is or may be the
subject of bankruptcy, conservatorship, insolvency, liquidation, rehabilitation
or similar proceedings.
Neither the Company nor any of its Subsidiaries has incurred any
liability for any tax or excise tax arising under Chapter 43 of the Code, and no
event has occurred and no condition or circumstance has existed that could give
rise to any such liability.
There are no actions, suits, claims or disputes pending, or, to the
best knowledge of the Company, the Sellers or any Subsidiary of the Company,
threatened, anticipated or expected to be asserted against or with respect to
any Employee Benefit Plan or the assets of any such plan (other than routine
claims for benefits and appeals of denied routine claims). No civil or criminal
action brought pursuant to the provisions of Title I, Subtitle B, Part 5 of
ERISA is pending, threatened, anticipated, or expected to be asserted against
the Company or any of its Subsidiaries or any fiduciary of any Employee Benefit
Plan, in any case with respect to any Employee Benefit Plan. No Employee Benefit
Plan or any fiduciary thereof has been the direct or indirect subject of an
audit, investigation or examination by any governmental or quasi-governmental
agency.
(e) Contributions. Full payment has been timely made of all amounts
which the Company or any of its Subsidiaries is required, under applicable law
or under any Employee Benefit Plan or any agreement relating to any Employee
Benefit Plan to which the Company or any of its Subsidiaries is a party, to have
paid as contributions or premiums thereto as of the last day of the most recent
fiscal year of such Employee Benefit Plan ended prior to the date hereof. All
such contributions and/or premiums have been fully deducted for income tax
purposes and no such deduction has been challenged or disallowed by any
governmental entity, and to the best knowledge of the Sellers and the Company
and its Subsidiaries, no event has occurred and no condition or circumstance has
existed that could give rise to any such challenge or disallowance. The
-25-
30
Company and each of its Subsidiaries has made adequate provision for reserves
to meet contributions and premiums and any other liabilities that have not been
paid or satisfied because they are not yet due under the terms of any Employee
Benefit Plan, applicable law or related agreements. Benefits under all Employee
Benefit Plans are as represented and have not been increased subsequent to the
date as of which documents have been provided.
(f) Tax Qualification. Each Employee Benefit Plan intended to be
qualified under Section 401(a) of the Code has, as currently in effect, been
determined to be so qualified by the Internal Revenue Service. Each trust
established in connection with any Employee Benefit Plan which is intended to be
exempt from Federal income taxation under Section 501(a) of the Code has, as
currently in effect, been determined to be so exempt by the Internal Revenue
Service. Each VEBA has been determined by the Internal Revenue Service to be
exempt from Federal income tax under Section 501(c)(9) of the Code. Since the
date of each most recent determination referred to in this paragraph (f), no
event has occurred and no condition or circumstance has existed that resulted or
is likely to result in the revocation of any such determination or that could
adversely affect the qualified status of any such Employee Benefit Plan or the
exempt status of any such trust or VEBA.
(g) Transactions. Neither the Company nor any of its Subsidiaries nor
any of their respective directors, officers, employees or, to the best knowledge
of the Sellers, the Company and its Subsidiaries, other persons who participate
in the operation of any Employee Benefit Plan or related trust or funding
vehicle, has engaged in any transaction with respect to any Employee Benefit
Plan or breached any applicable fiduciary responsibilities or obligations under
Title I of ERISA that would subject any of them to a tax, penalty or liability
for prohibited transactions or breach of any obligations under ERISA or the Code
or would result in any claim being made under, by or on behalf of any such
Employee Benefit Plan by any party with standing to make such claim.
(h) Triggering Events. The execution of this Agreement and the
consummation of the transactions contemplated hereby, do not constitute a
triggering event under any Employee Benefit Plan, policy, arrangement,
statement, commitment or agreement, whether or not legally enforceable, which
(either alone or upon the occurrence of any additional or subsequent event) will
or may result in any payment (whether of severance pay or otherwise), "parachute
payment" (as such term is defined in Section 280G of the Code), acceleration,
vesting or increase in benefits to any employee or former employee or director
of the Company or any of its Subsidiaries. No Employee Benefit Plan provides for
the payment of severance, termination, change in control or similar-type
payments or benefits.
(i) Documents. The Sellers have delivered or caused to be delivered to
the Purchaser and its counsel true and complete copies of all material documents
in connection with each Employee Benefit Plan, including, without limitation
(where applicable): (i) all Employee Benefit Plans as in effect on the date
hereof, together with all amendments thereto, including, in the case of any
Employee Benefit Plan not set forth in writing, a written description thereof;
(ii) all current summary plan descriptions, summaries of material modifications,
and material communications; (iii) all current trust agreements, declarations of
trust and other documents establishing other funding arrangements (and all
amendments thereto and the latest financial statements thereof); (iv)
-26-
31
the most recent Internal Revenue Service determination letter obtained with
respect to each Employee Benefit Plan intended to be qualified under Section
401(a) of the Code or exempt under Section 501(a) or 501(c)(9) of the Code; (v)
the annual report on Internal Revenue Service Form 5500-series or 990 for each
of the last three years for each Employee Benefit Plan required to file such
form; (vi) the most recently prepared financial statements for each Employee
Benefit Plan for which such statements are required; and (vii) all contracts and
agreements relating to each Employee Benefit Plan, including, without
limitation, service provider agreements, insurance contracts, annuity contracts,
investment management agreements, subscription agreements, participation
agreements, and recordkeeping agreements and collective bargaining agreements.
Section 3.19. Permits. The Company and its Subsidiaries have obtained
and possess all governmental licenses, permits, franchises and other
authorizations (collectively, "Permits") of and have made all required
registrations or filings with, any federal, state, local or foreign governmental
authority related to the ownership of their respective properties or the
operation of their respective assets and businesses as currently conducted
except where the failure to possess such Permit or make such registration or
filing has not had, and could not reasonably be expected to have, a material
adverse effect on the Condition of the Company; all such Permits are in full
force and effect. No proceedings against the Company or any of its Subsidiaries
is pending or, to the best knowledge of the Sellers, threatened, seeking the
revocation or the limitation of any Permits. Any applications for the renewal of
any such Permits which were due prior to the Closing Date have been or will be
timely filed prior to the Closing Date.
Section 3.20. Interests in Clients, Suppliers, etc. Except as set forth
on Schedule 3.20 attached hereto, neither the Company nor any of its
Subsidiaries or Affiliates or any of their respective directors or officers
possesses, directly or indirectly, any financial interest in, or is a director,
officer or employee of, any Person which is a client, supplier, customer,
lessor, lessee, or competitor or potential competitor of the Company or any of
its Subsidiaries. Ownership of 2% or less of any class of securities of a
company whose securities are registered under the Securities Exchange Act of
1934, as amended, shall not be deemed to be a financial interest for purposes of
this Section 3.20.
Section 3.21. Bank Accounts, Powers of Attorney and Compensation of
Employees. Set forth on Schedule 3.21 attached hereto is an accurate and
complete list showing (a) the name and address of each bank in which the Company
or any of its Subsidiaries has an account or safe deposit box, the number of any
such account or any such box and the names of all Persons authorized to draw
thereon or to have access thereto and (b) the names of all Persons, if any,
holding powers of attorney from the Company or any of its Subsidiaries. The
Sellers have provided the Purchaser with a true and correct list of the names of
all persons whose total compensation (including salary and bonus) from the
Company or any of its Subsidiaries for the fiscal year ended on December 31,
1999 exceeded an annualized rate of $50,000, together with a statement of the
full amount paid or payable to each such person for services rendered during
such fiscal year.
Section 3.22. No Changes. Since December 31, 1999, except as set forth
on Schedule 3.22 attached hereto, neither the Company nor any of its
Subsidiaries has:
-27-
32
(a) incurred any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise), except in the ordinary course of
business consistent with past practice;
(b) permitted any of its assets to be subjected to any Lien (other than
Permitted Liens);
(c) sold, transferred or otherwise disposed of any assets except
inventory in the ordinary course of business consistent with past practice;
(d) made any capital expenditure or commitment therefor;
(e) declared or paid any dividend or made any distribution on any
shares of its capital stock other than to the Company or any of its
Subsidiaries;
(f) redeemed, purchased or otherwise acquired any shares of its capital
stock;
(g) granted or issued any options, warrants, rights, subscriptions,
claims of any character, obligations, convertible or exchangeable securities, or
other commitments, contingent or otherwise, relating to any of its capital
stock;
(h) made any bonus, pension, retirement or profit sharing distribution
or payment of any kind except in the ordinary course of business consistent with
past practice;
(i) increased its Indebtedness or made any loan to any Person;
(j) written off as uncollectible any notes or accounts receivable,
except write-offs in the ordinary course of business charged to applicable
reserves;
(k) granted any increase in the rate of wages, salaries, bonuses or
other remuneration of any executive employee or other employees, except in the
ordinary course of business consistent with past practice;
(l) canceled or waived any claims or rights of substantial value;
(m) made any change in any method of accounting or auditing practice;
(n) otherwise conducted its business or entered into any transaction,
except in the usual and ordinary manner and in the ordinary course of business
consistent with past practice;
(o) agreed, whether or not in writing, to do any of the foregoing;
(p) made any payments to or entered into any agreements with any
Affiliate; or
(q) done anything which would be restricted by Section 5.2.
No fact or condition exists or is contemplated or threatened which
might cause any change described in clauses (a)-(q) hereof in the future.
-28-
33
Section 3.23. Compliance with Laws. Each of the Company and its
Subsidiaries is in compliance with all material laws, regulations, orders,
judgments and decrees applicable to such entity except where the failure to be
in compliance has not had, or could not reasonably be expected to have, a
material adverse effect on the Condition of the Company.
Section 3.24. Broker's or Finder's Fees, etc. No agent, broker, person
or firm acting on behalf of any of the Sellers or the Company or any of its
Subsidiaries is, or will be, entitled to any commission or broker's or finder's
fees from any of the parties hereto, or from any Affiliate of any of the parties
hereto, in connection with any of the transactions contemplated by this
Agreement. All engagement letters from all professionals (including, without
limitation, accountants, financial advisors and attorneys) utilized by the
Company or any of its Subsidiaries in connection with the transactions
contemplated hereby provide that such Persons shall look only to the Sellers for
payment of their fees and expenses.
Section 3.25. Environmental Laws and Regulations. Except as set forth
on Schedule 3.25:
(a) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Company Property or any
property adjoining, adjacent to or in the vicinity of any Company Property;
(b) Hazardous Materials have not at any time been released on any
Company Property or any property adjoining, adjacent to or in the vicinity of
any Company Property;
(c) The Company and its subsidiaries are in compliance with all
Environmental Laws and the requirements of any permits issued under such
Environmental Laws with respect to any Company Property except where the failure
to be in compliance has not had, or could not reasonably be expected to have, a
material adverse effect on Condition of the Company;
(d) There are no past, pending or threatened material Environmental
Claims against the Company, any of its subsidiaries or any Company Property;
(e) There are no facts, circumstances, conditions or occurrences
regarding any Company Property or any property adjoining or in the vicinity of
any Company Property, that could reasonably be anticipated (i) to form the basis
of a material Environmental Claim against the Company, any of its subsidiaries
or any Company Property or assets or (ii) to cause such Company Property or
assets to be subject to any restrictions on its ownership, occupancy, use or
transferability under any Environmental Law.
(f) There are not now and never have been any underground storage tanks
located on any Company Property or on any property adjoining or adjacent to any
Company Property.
Section 3.26. Customers. Since December 31, 1999 and except as set
forth on Schedule 3.26, no Person who is a customer of the Company or any of its
Subsidiaries or has been a customer of the Company or any of its Subsidiaries at
any time during the aggregate period of calendar years 1998, 1999 and year to
date 2000 has expressly informed (orally or in writing) either Seller, the
Company or any of its Subsidiaries that it intends to cease to do business with
-29-
34
the Company or any of its Subsidiaries, or materially alter the amount of
business presently done with the Company or any of its Subsidiaries.
Section 3.27. Disclosure. None of this Agreement, any Schedule, Exhibit
or certificate attached hereto or delivered pursuant to this Agreement or any
other document or statement in writing which has been supplied by or on behalf
of the Sellers or by directors or officers of the Company or any of its
Subsidiaries in connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact, or omits any statement of a
material fact necessary in order to make the statements contained herein or
therein not misleading.
Section 3.28. Copies of Documents. The Sellers have caused to be made
available for inspection and copying by the Purchaser and their advisers, true,
complete and correct copies of all documents referred to in this Article III or
in any Schedule to this Agreement.
Section 3.29. CFI Holdings. The Company has had no activities other
than holding the outstanding capital stock of CFI.
Section 3.30. Trumac. Trumac does not provide any services or hold any
assets which are necessary for the Company and its Subsidiaries (other than
Trumac) to conduct their business as such business is, and is planned to be,
conducted as of the date hereof other than services which can be obtained by the
Company from other Persons in the ordinary course of business on terms not
materially less favorable to the Company than the terms upon which such services
were provided to the Company by Trumac.
ARTICLE IV
REPRESENTATIONS OF THE PURCHASER
Section 4. Representations of the Purchaser. The Purchaser represents
and warrants to the Sellers as follows:
Section 4.1. Existence and Good Standing; Power and Authority. (a) The
Purchaser is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Purchaser has the
requisite limited liability company power and authority to own, lease, operate
its properties and to carry on its business as now being conducted. The
Purchaser is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the character or location of the properties owned,
leased or operated or the nature of the business conducted by it makes such
qualification or license necessary except where the failure to be so qualified
or to have such license has not had, or could not reasonably be expected to
have, a material adverse effect on the Condition of the Purchaser.
(b) The Purchaser has all requisite limited liability company power and
authority to enter into the Transaction Documents to which it is a party and to
consummate the transactions contemplated thereby. The execution, delivery and
performance by the Purchaser of the Transaction Documents to which it is a party
and the consummation by the Purchaser of the transactions contemplated thereby
have been duly authorized by all necessary limited liability company
-30-
35
action on the part of the Purchaser and no other action on the part of the
Purchaser is necessary. Each Transaction Document to which the Purchaser is a
party has been duly executed and delivered by the Purchaser and, assuming due
execution of each Transaction Document by the other parties thereto, constitutes
the valid and binding obligation of the Purchaser and enforceable against the
Purchaser in accordance with its terms, except as the enforceability hereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally and by general equitable principles
(regardless of whether the issue of enforceability is considered in a proceeding
in equity or at law).
Section 4.2. No Conflicts. The execution and delivery by the Purchaser
of the Transaction Documents to which it is a party and the consummation by the
Purchaser of the transactions contemplated thereby will not (a) violate any
provision of the certificate of formation or the limited liability company
agreement of the Purchaser; (b) violate any statute, ordinance, rule,
regulation, order or decree of any court or of any governmental or regulatory
body, agency or authority applicable to the Purchaser or by which its properties
or assets may be bound; (c) require the Purchaser to make or obtain any filing
with, or permit, consent or approval of, or give any notice to, any governmental
or regulatory body, agency or authority; or (d) result in a violation or breach
of, conflict with, constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation, payment
or acceleration) under, or result in the creation of any Lien upon any of the
properties or assets of the Purchaser under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, franchise, permit,
agreement, lease, franchise agreement or other instrument or obligation to which
the Purchaser is a party or by which the Purchaser or its properties or assets
are bound.
Section 4.3. Litigation. There is no action, suit, proceeding at law or
in equity, arbitration or administrative or other proceeding by or before or, to
the best knowledge of the Purchaser, any investigation by any governmental or
other instrumentality or agency, pending or threatened, against or affecting the
Purchaser or any of its subsidiaries or any of their respective properties or
rights which could reasonably be expected to prohibit or render illegal the
transactions contemplated by this Agreement.
Section 4.4. Capitalization. On the date hereof, the membership
interests in the Purchaser consist of 990,967.74 Preferred Units and 1,101,075.3
Class A Common Units. Except as set forth on Schedule 4.4, there are no
outstanding (x) options, warrants or other rights to purchase equity securities
of the Purchaser, (y) agreements or other obligations of the Company to issue
equity securities or (z) other rights to convert any obligation into, or
exchange any securities for, equity securities of the Purchaser;
Section 4.5. Material Adverse Changes. Since August 1, 2000, there has
not been a material adverse change in the Condition of the Purchaser.
Section 4.6. Due Issuance. The issuance of the XxXxxxxxx Equity Payment
and the Xxxxxxx Equity Payment have been duly and validly authorized, executed
and delivered by the Company and this Agreement constitutes a valid and legally
binding agreement of the Company enforceable against the Company in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium,
-31-
36
indemnity, contribution or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether the issue of enforceability is considered in a proceeding in equity or
at law). Upon consummation of the transaction contemplated hereby, the XxXxxxxxx
Equity Payment and the Xxxxxxx Equity Payment will be legally and validly
issued, fully paid and non-assessable.
Section 4.7. Broker's or Finder's Fees, etc. No agent, broker, person
or firm acting on behalf of the Purchaser or any of its Subsidiaries is, or will
be, entitled to any commission or broker's or finder's fees from any of the
parties hereto, or from any Person controlling, controlled by or under common
control with any of the parties hereto, in connection with any of the
transactions contemplated by this Agreement.
ARTICLE V
CONDUCT OF BUSINESS; EXCLUSIVE DEALING; REVIEW;
OTHER AGREEMENTS
Section 5.1. Access to Information Concerning Properties and Records.
During the period commencing on the date hereof and ending on the Closing Date,
the Sellers shall, and shall cause the Company and each Subsidiary of the
Company to, upon reasonable notice, afford the Purchaser, and its counsel,
accountants, consultants and other authorized representatives, reasonable access
during normal business hours to the officers, the employees set forth on
Schedule 5.1, properties, books and records of the Company or such Subsidiary of
the Company in order that they may have the opportunity to make such reasonable
investigations as they shall desire of the affairs of such entity and all other
information concerning its or its subsidiaries' business, properties and
personnel as the Purchaser may reasonably request. Such review shall not,
however, affect the representations and warranties made by the Sellers in this
Agreement or the remedies of the Purchaser for breaches of those representations
and warranties. The Sellers agree to cause the Company and each Subsidiary of
the Company and their respective officers, employees, counsel, accountants,
consultants and other representatives to furnish such additional financial and
operating data and other information and respond to such inquiries as the
Purchaser and its counsel, accountants, consultants and other authorized
representatives, shall from time to time reasonably request. Any information so
obtained by the Purchaser shall be subject to that certain Confidentiality
Agreement, dated as of July 5, 2000 by and between the Purchaser and the Company
(the "Non-Disclosure Agreement").
Section 5.2. Conduct of Business of the Company and its Subsidiaries.
Except as required or specifically contemplated by this Agreement, during the
period from the date of this Agreement until the Closing, the Sellers shall
cause the Company and each Subsidiary of the Company to conduct its operations
according to its ordinary course of business, consistent with past practice and
will cause the Company and each Subsidiary of the Company to use its
commercially reasonable efforts to (i) preserve intact its business
organization, (ii) maintain its material rights, (iii) keep available the
services of its officers and employees, and (iv) maintain satisfactory
relationships with suppliers, distributors, customers, landlords, agents and
others having business relationships with it. Without limiting the generality of
and in addition to the foregoing, and except as otherwise required or
specifically contemplated by this Agreement, prior
-32-
37
to the time specified in the preceding sentence, the Sellers shall cause the
Company and each Subsidiary of the Company, without the prior written consent of
the Purchaser (which consent shall not be unreasonably withheld or delayed), to
not:
(a) amend its certificate of incorporation or by-laws or other
organizational documents in any way;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options or
otherwise) any stock of any class or any other securities;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock or
redeem or otherwise acquire any of its securities;
(d) (x) pledge or otherwise encumber shares of its capital stock; (y)
(A) incur, assume or prepay any Indebtedness (other than in the ordinary course
of business or in connection with the consummation of the transactions
contemplated hereby), (B) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for any obligations
of any other Person except its wholly owned subsidiaries or (C) make any loans,
advances or capital contributions to, or investments in, any other Person; or
(z) mortgage or pledge any of its assets or create or permit to exist any Lien
thereupon that secures any Indebtedness;
(e) enter into, adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, restricted
stock, performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreements, trusts, plans, funds or other
arrangements of or for the benefit or welfare of any of its employees, or
(except for normal increases in the ordinary course of business that are
consistent with past practices) increase in any manner the compensation or
fringe benefits of any such employee or pay any benefit not required by any
existing plan and arrangement (including, without limitation, the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units);
(f) transfer, sell, lease, license or dispose of any of its lines of
business, subsidiaries, divisions, operating units or facilities or enter into
any material commitment or transaction; provided, however, that the Sellers may
cause the Company to sell all of the outstanding capital stock of Trumac, Inc.,
a Connecticut corporation ("Trumac"), to the Sellers for nominal consideration
and on terms reasonably satisfactory to the Purchaser including, without
limitation, agreement by the Sellers that no recourse shall be sought from the
Company with respect to any liabilities incurred by the Sellers as a result of
such transaction (the "Trumac Sale");
(g) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or other-
-33-
38
wise acquire or agree to acquire any assets of any other Person (other than the
purchase of assets in the ordinary course of business and consistent with past
practice);
(h) take any action to terminate or materially amends any of its
pension plans or retiree medical plans with respect to or for the benefit of any
of its employees;
(i) modify, amend or terminate any contract identified or which should
have been identified on Schedules 3.8 or 3.9 or waive any of its material rights
or claims;
(j) effect any change in any of its methods of accounting, except as
may be required by law or GAAP;
(k) take any action, engage in any transaction or enter into any
agreement which would cause any of the representations or warranties set forth
in Article III hereof to be untrue as of the Closing Date;
(l) declare or pay a dividend or return any equity capital to its
stockholders or authorize or make any distribution, payment or delivery of
property or cash to its stockholders in their capacity as such, or redeem,
retire, purchase or otherwise acquire for consideration any shares of its
capital stock;
(m) execute any new lease or sublease for real property, or cancel,
modify, terminate or amend any Lease;
(n) enter into any agreement with any Affiliate; or
(o) enter into a legally binding commitment with respect to, or any
agreement to take, any of the foregoing actions.
Section 5.3. Commercially Reasonable Efforts. Subject to the terms and
conditions provided herein, the Sellers and the Purchaser shall, and the Sellers
shall cause the Company and each of its Subsidiaries to, cooperate and use their
respective commercially reasonable efforts to take, or cause to be taken, all
appropriate action, and to make, or cause to be made, all filings necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, their respective commercially reasonable efforts to obtain, prior to
the Closing Date, all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with the Company or any of its Subsidiaries (including, without limitation,
landlords) as are necessary for consummation of the transactions contemplated by
this Agreement and to fulfill the conditions to consummation of the transactions
contemplated hereby set forth in Articles VII and VIII hereof.
Section 5.4. Exclusive Dealing. During the period commencing on the
date of this Agreement and concluding on the earlier of (a) the Closing Date and
(b) the date this Agreement is terminated in accordance with its terms, the
Sellers shall not take (and the Sellers shall not authorize or permit the
Company or its Affiliates, officers, directors, employees, agents,
representatives, consultants, financial advisors, attorneys, accountants, or
other agents to so take) any
-34-
39
action to, directly or indirectly, encourage, solicit, initiate or engage in
discussions or negotiations with, or provide any information to, any Person,
other than the Purchaser (and its Affiliates and representatives), concerning
any acquisition of the Company or any of its Subsidiaries or any purchase of all
or any part of the capital stock of the Company or any of its Subsidiaries or
any merger, sale of substantial assets or similar transaction involving the
Company or any of its Subsidiaries.
ARTICLE VI
TAX MATTERS
Section 6.1. Tax Returns. (a) The Sellers shall have the exclusive
authority and obligation to prepare, execute on behalf of the Company and each
of its Subsidiaries and timely file, or cause to be prepared, executed and
timely filed, all Returns of the Company and each of its Subsidiaries that are
due with respect to any taxable year or other taxable period ending prior to or
ending on and including the Closing Date. Such authority shall include, but not
be limited to, the determination of the manner in which any items of income,
gain, deduction, loss or credit arising out of the income, properties and
operations of the Company and its Subsidiaries shall be reported or disclosed in
such Returns; provided, however, that such Returns shall be prepared by treating
items thereon in a manner consistent with the past practices of the Company and
its Subsidiaries with respect to such items; and provided further, that (i) the
Sellers shall provide the Purchaser with draft income Tax Returns for the
Company and each of its Subsidiaries at least thirty (30) days prior to the due
date for filing such Returns, (ii) at least fifteen (15) days prior to the due
date for the filing of such Returns the Purchaser shall notify the Sellers of
the existence of any objection the Purchaser may have to any items set forth on
such draft Returns, and (iii) if, after consulting in good faith, the Purchaser
and the Sellers are unable to resolve such objection(s), such objection(s) shall
be resolved by treating items on such Returns in a manner consistent with the
past practices of the Company and its Subsidiaries with respect to such items
unless otherwise required by law, and such Returns shall not be filed without
the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld or delayed.
(b) Except as provided in Section 6.1(a) above, the Purchaser shall
have the exclusive authority and obligation to prepare and timely file, or cause
to be prepared and timely filed, all Returns of the Company and each of its
Subsidiaries. Such authority shall include, but not be limited to, the
determination of the manner in which any items of income, gain, deduction, loss
or credit arising out of the income, properties and operations of the Company or
any of its Subsidiaries shall be reported or disclosed on such Returns;
provided, however, the Purchaser shall provide the Sellers with draft income Tax
Returns for the Company and each of its Subsidiaries required to be prepared by
the Purchaser pursuant to this Section 5.1(b) that include any period or portion
thereof ending prior to or including the Closing Date. The Purchaser shall
provide the Sellers with an opportunity to review and comment on such Tax
Returns and the Purchaser shall in good faith take into account such comments in
its preparation of such Tax Returns.
Section 6.2. Payment of Taxes. (a) The Sellers shall be responsible and
liable for the timely payment of any and all Taxes imposed on or with respect to
the properties, income and operations of the Company and each Subsidiary of the
Company for all Pre-Closing Periods,
-35-
40
provided, however, that (i) the Sellers shall only be responsible and liable for
Taxes attributable to the taxable period ending on the Closing Date, to the
extent such Taxes exceed the amount set forth on Schedule 3.12(b) with respect
thereto and (ii) the Taxes attributable to such period shall be paid by the
Company to the extent of the amount set forth on Schedule 3.12(b).
(b) All Taxes and Tax liabilities with respect to the income, property
or operations of the Company and each Subsidiary of the Company that relate to
the Overlap Period shall be apportioned between tax periods ending prior to or
on the Closing Date, on the one hand, and tax periods ending after the Closing
Date, on the other, as follows: (i) in the case of Taxes other than income,
sales and use and withholding Taxes, on a per diem basis, and (ii) in the case
of income, sales and use and withholding Taxes, as determined from the books and
records of the Company or such Subsidiary of the Company as though the taxable
year of the Company or such Subsidiary of the Company terminated at the close of
business on the Closing Date. The Purchaser and the Sellers agree to the extent
permitted by applicable law to elect with the relevant taxing authority to treat
for all purposes the Closing Date as the last day of a taxable period of the
Company and any Subsidiary of the Company. Notwithstanding the foregoing
provisions of this Section 6.2(b), all Taxes resulting from the Trumac Sale
shall be borne exclusively by the Sellers.
(c) All transfer, sales and use, value added, registration,
documentary, stamp and similar Taxes ("Transfer Taxes") imposed in connection
with the sale of the Stock or any other transaction that occurs pursuant to this
Agreement shall be borne equally by the Sellers, on the one hand, and the
Purchaser, on the other.
Section 6.3. Amended Returns. None of the Sellers, the Company or any
of the Company's Subsidiaries shall file or cause to be filed any amended Return
or claims for refund without the prior written consent of the Purchaser.
Section 6.4. Prior Tax Agreements. The Company and each of its
Subsidiaries shall terminate or cause to be terminated any and all of the tax
sharing, allocation, indemnification or similar agreements, arrangements or
undertakings in effect, written or unwritten, on the Closing Date as between the
Sellers or any predecessor or Affiliate thereof, on the one hand, and the
Company or any Subsidiary of the Company, on the other hand, for all Taxes
imposed by any government or taxing authority, regardless of the period in which
such Taxes are imposed, and there shall be no continuing obligation to make any
payments under any such agreements, arrangements or undertakings.
Section 6.5. Non-foreign Person Affidavit. The Sellers shall furnish to
the Purchaser on or before the Closing Date a non-foreign person affidavit as
required by Section 1445 of the Code.
Section 6.6. Post-Closing Access and Cooperation. From and after the
Closing Date, the Sellers agree and the Purchaser agrees to cause the Company
and each Subsidiary of the Company, to afford the Purchaser (or the Purchaser's
representative) or the Sellers, as the case may be, and upon reasonable notice
and without undue interruption to the business of the Sellers, the Company or
its Subsidiaries, as the case may be, access during normal business hours to the
books and records of the Sellers, the Company and its Subsidiaries relating to
the Company and
-36-
41
its Subsidiaries prior to the Closing Date for a period of seven (7) years
following the Closing Date in connection with (i) preparation of the Returns
specified in Section 6.1 above, (ii) evaluation of any claim for indemnification
under Section 6.7 below, and (iii) investigation or contest of any inquiry,
claim, assessment, audit or similar event. The Purchaser shall, from and after
the Closing Date, preserve all books and records of the Company and its
Subsidiaries relating to the Company and its Subsidiaries prior to the Closing
Date for such seven (7) year period, and, thereafter, not destroy or dispose of
or allow the destruction or disposition of such books and records without first
having offered to deliver such books and records to the Sellers at the Sellers'
expense. If the Sellers fail to request such books and records within ninety
(90) days after receipt of the notice described in the preceding sentence, the
Purchaser may dispose of such books and records.
Section 6.7. Tax Indemnification. Notwithstanding any provision to the
contrary contained in this Agreement, the Sellers, jointly and severally, agree
to indemnify, defend and hold harmless each Purchaser Indemnitee and its
successors on an after-tax basis against (i) all Taxes, losses, claims and
expenses resulting from, arising out of, or incurred with respect to, any claims
that may be asserted by any party based upon, attributable to, or resulting from
the failure of any representation or warranty made pursuant to Section 3.12 of
this Agreement to be true and correct as of the Closing Date; (ii) all Taxes
imposed for the Overlap Period for which the Sellers are liable pursuant to
Section 6.2(b) hereof; (iii) all Taxes imposed on the Company or any of its
Subsidiaries, or for which the Purchaser or the Company may be liable, as a
result of any transaction contemplated by this Agreement, except for the portion
of Transfer Taxes for which the Purchaser is responsible pursuant to Section
6.2(c); (iv) all Taxes imposed on the Sellers or any Person (other than the
Company and its Subsidiaries) in which any of the Sellers or any of their
respective Affiliates has or had at any time a direct or indirect majority
equity interest for any taxable year or other taxable period; (v) all Taxes
imposed on or asserted against the properties, income or operations of the
Company or its Subsidiaries, or for which the Company or any of its Subsidiaries
may otherwise be liable, for all Pre-Closing Periods; (vi) Taxes (if any)
incurred by the Sellers, the Company, any Subsidiary of the Company or the
Purchaser as a result of the Trumac Sale; provided, however, that with respect
to (i) and (ii) above, the Seller shall not be liable with respect to Taxes
included in the calculation of the Current Liabilities to the extent the
inclusion of such Taxes results in an actual reduction in the Closing Date
Working Capital. A Purchaser Indemnitee shall promptly give the Sellers written
notice of all Taxes, losses, claims and expenses which such Purchaser Indemnitee
has reasonably determined may give rise to a right of indemnification under this
Section 6.7, including a computation of the amount of the claimed
indemnification with sufficient detail and particularity to enable the Sellers
to reasonably determine the amount of such required indemnification.
Section 6.8. Tax Controversies. Notwithstanding any other provision of
this Agreement regarding third party claims to the contrary, this Section 6.8
shall solely control the procedures with respect to inquiries, claims,
assessments, audits or similar events with respect to Taxes of the Company or
any of its Subsidiaries (a "Tax Matter"). The Purchaser shall promptly notify
the Sellers upon receipt by the Purchaser of written notice of any Tax Matter
relating to Pre-Closing Periods for which the Sellers may be liable under this
Agreement. The Purchaser shall have the authority to represent the interests of
the Company and its Subsidiaries with respect to any Tax Matter before the
Internal Revenue Service, any other taxing authority, any other governmental
-37-
42
agency or authority or any court and shall have the sole right to control the
defense, compromise or other resolution of any Tax Matter, including responding
to inquiries, filing Returns and contesting, defending against and resolving any
assessment for additional Taxes or notices of Tax deficiency or other adjustment
of Taxes of, or relating to, a Tax Matter; provided, however, that the Purchaser
shall not enter into any settlement of or otherwise compromise any Tax Matter
that affects the Tax liability of the Sellers, the Company or any of its
Subsidiaries for any taxable period ending prior to or ending on and including
the Closing Date without the prior written consent of the Sellers, which consent
shall not be unreasonably withheld or delayed. The Purchaser shall keep the
Sellers fully and timely informed with respect to the commencement, status and
nature of any Tax Matter.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
Section 7. Conditions to the Purchaser's Obligations. The obligations
of the Purchaser to purchase the Stock on the Closing Date is subject to the
satisfaction, at or prior to the Closing, of the following conditions:
Section 7.1. Truth of Representations and Warranties. The
representations and warranties of the Sellers contained in this Agreement and on
the Schedules shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, and the Purchaser shall have
received a certificate signed by each Seller, dated the Closing Date, to such
effect.
Section 7.2. Performance of Agreements. All of the agreements of the
Sellers and CFI to be performed prior to the Closing pursuant to the terms of
this Agreement shall have been duly performed in all material respects, and the
Purchaser shall have received a certificate signed by each Seller, dated the
Closing Date, to such effect.
Section 7.3. No Material Adverse Change. Prior to the Closing Date
there shall not have been a material adverse change in the business, properties,
assets, liabilities, results of operations, condition (financial or otherwise),
prospects, customer relationships or supplier relationships (collectively, the
"Condition") of the Company from January 1, 2000, and the Purchaser shall have
received a certificate duly executed by each Seller, dated the Closing Date, to
such effect.
Section 7.4. No Litigation Threatened. No action or proceedings shall
have been instituted or threatened before a court or other government body or by
any public authority to restrain or prohibit any of the transactions
contemplated hereby, and the Purchaser shall have received a certificate signed
by an executive officer of the Company, dated the Closing Date, to such effect.
Section 7.5. Good Standing and Other Certificates. The Sellers shall
have delivered to the Purchaser (a) copies of the certificate of incorporation
or other organizational documents of the Company and each of its Subsidiaries,
including all amendments thereto, in each case certified by the Secretary of
State or other appropriate official of the jurisdiction of organization, (b)
certificates from the Secretary of State or other appropriate official of the
relevant jurisdiction of
-38-
43
organization of the Company and each of its Subsidiaries to the effect that such
entity, is in good standing or subsisting in such jurisdiction and listing all
charter documents on file, (c) certificates from the Secretary of State or other
appropriate official in each jurisdiction in which the character or location of
the properties owned or leased by the Company or any of its Subsidiaries or the
nature of their respective businesses makes qualification to do business
necessary, to the effect that the Company or, as the case may be, such
Subsidiary of the Company is in good standing in such jurisdictions, (d) a
certificate as to the tax status of the Company and each of its Subsidiaries
from the appropriate officials in the jurisdiction of incorporation of such
entity, (e) a copy of the By-Laws of the Company and each of its Subsidiaries,
certified by the Secretary of such entity as being true and correct and in
effect on the Closing Date and (f) resolutions of the Board of Directors of each
of the Company and CFI approving and authorizing the Transaction Documents to
which they are a party, certified as of the Closing Date by the applicable
corporate secretary as being in full force and effect without modification or
amendment.
Section 7.6. Approvals and Consents. All other governmental and
third-party consents, waivers and approvals, if any, disclosed on any Schedule
or necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been received without the incurrence of any obligation or
any payment by the Company or any of its Subsidiaries in connection with
obtaining such consent, waiver or approval.
Section 7.7. Resignation of Directors and Officers. Each of XxXxxxxxx
and Xxxxxxx shall have resigned from his position as a director of the Company
and CFI and/or, as the case may be, as an officer of the Company and CFI
effective on the Closing Date.
Section 7.8. Opinion of the Sellers' Counsel. The Sellers shall have
furnished the Purchaser with an opinion of Xxxxxxx Xxxx LLP with respect to the
transactions contemplated hereby, dated the Closing Date, substantially in the
form attached hereto as Exhibit 6.
Section 7.9. Statutes. No statute, rule, regulation, executive order,
decree or order of any kind shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which prohibits the consummation
of the transactions contemplated by this Agreement or has the effect of making
them illegal.
Section 7.10. Transaction Documents. Each Transaction Document shall
have been duly executed and delivered by the Sellers and the other parties
thereto.
Section 7.11. Financing. Purchaser shall have received the proceeds
from one or more financings on terms and conditions satisfactory to Purchaser in
its sole discretion in an amount sufficient to consummate the transactions
contemplated hereby and shall have received each of the consents and approvals
necessary under its existing financing arrangements in order to consummate the
transactions contemplated hereby.
Section 7.12. Trumac Sale. The Trumac Sale shall have been consummated
in accordance with its terms.
-39-
44
Section 7.13. CFI Mexico. The Company shall have obtained good and
valid title, free and clear of any and all Encumbrances, of all of the
outstanding capital stock at CFI Mexico not otherwise owned by the Company on
terms and conditions satisfactory to the Purchaser.
Section 7.14. CFI Preferred Stock. Prior to the Closing Date, the
Company shall have caused all of the outstanding preferred stock of CFI to be
canceled on terms and conditions satisfactory to the Seller, and no dividends
with respect to such preferred stock shall remain due.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
Section 8. Conditions to the Obligations of the Sellers. The obligation
of the Sellers to sell the Stock on the Closing Date is subject to satisfaction,
at or prior to such date, of the following conditions:
Section 8.1. Truth of Representations and Warranties. The
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of such date, and the Sellers shall have received a certificate signed
by an executive officer of the Purchaser, dated the Closing Date, to such
effect.
Section 8.2. Performance of Agreements. All of the agreements of the
Purchaser to be performed prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed in all material respects, and the
Sellers shall have received a certificate signed by an executive officer of the
Purchaser, dated the Closing Date, to such effect.
Section 8.3. Approvals and Consents. All governmental and third-party
consents and approvals, if any, including, without limitation, termination of
the waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1976, as amended, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received.
Section 8.4. Opinion of the Purchaser's Counsel. The Purchaser shall
have furnished the Sellers with an opinion of White & Case LLP with respect to
the transactions contemplated hereby, dated the Closing Date, substantially in
the form attached hereto as Exhibit 7.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 9.1. Survival of Representations. (a) Except as set forth in
paragraph (b) below, the representations and warranties of the Sellers and the
Purchaser contained in this Agreement, the Schedules hereto or in any
certificate delivered pursuant hereto shall survive the purchase and sale of the
Stock pursuant to this Agreement for a period of eighteen (18) months after the
Closing Date. All statements in this Agreement and the Schedules hereto or in
any certificate delivered pursuant hereto shall be deemed representations and
warranties of the Sellers for all purposes of this Agreement. Covenants shall
survive in accordance with their respective terms.
-40-
45
(b) The representations and warranties contained in Sections 3.1, 3.2,
3.3, 3.4, 3.24, 4.1 and 4.4 shall survive indefinitely. The representations and
warranties contained in Sections 3.12 and 3.18 shall survive until sixty (60)
days after the expiration of the applicable statute of limitations period (after
giving effect to any waivers and extensions thereof). The representations and
warranties contained in Section 3.25 shall survive until six (6) years after the
date hereof.
Section 9.2. General Indemnification. (a) The Sellers, jointly and
severally, agree to indemnify, defend and hold the Purchaser, its Affiliates and
their respective Subsidiaries, officers, directors, employees, and agents (each,
a "Purchaser Indemnitee" and, collectively, the "Purchaser Indemnitees")
harmless on an after-tax basis from any damages, losses, liabilities,
obligations, claims of any kind, interest or expenses (including, without
limitation, reasonable attorneys' fees and expenses, but excluding
consequential, punitive and other special damages(except if arising out of third
party claims)) (collectively, "Losses") suffered, incurred or paid as a result
of (i) any breach by any of the Sellers or CFI of any of their respective
covenants or agreements contained in this Agreement, (ii) the failure of any
representation or warranty (other than a breach of Section 3.12 with respect to
Taxes which shall be governed by Section 6.7) made by any of the Sellers in this
Agreement to be true and correct in all respects as of the Closing Date, (iii)
any Losses arising in connection with the transactions described in Section
7.13, (iv) any failure of the Company to comply with the requirements of Section
4980B of the Code or part 6 of subtitle B of Title 1 of ERISA or any failure of
an Employee Benefit Plan that is intended to comply with the requirements of
Section 125 of the Code to so comply, (v) any Losses arising from the Sale or
prior operation of Trumac and (vi) any Losses arising from EEOC Charge Number
146A10005 listed on Schedule 3.11 hereto.
(b) The Purchaser agrees to indemnify, defend and hold the Sellers
harmless on an after-tax basis from all Losses suffered, incurred or paid as a
result of (i) any breach by the Purchaser of any of its covenants or agreements
contained in its Agreement, (ii) the failure of any representation or warranty
made by the Purchaser in this Agreement to be true and correct in all respects
as of the Closing Date, (iii) any matters which occur after the Closing Date as
a result of the direction of or approved by the Board of Directors of the
Company after the Closing Date or (iv) the redemptions contemplated by Section
2.2(b)(i) and (ii) having violated Section 33-687 of the Connecticut General
Statutes.
(c) For purposes of Sections 9.2(a)(ii) and 9.2(b)(ii), the failure of
any representation or warranty to be true and correct shall be determined
without giving effect to either (i) any knowledge qualifications, except
knowledge qualifications as to threatened matters and third-party acts and as
specifically set forth in Sections 3.8 and 3.9; or (ii) any materiality
qualification, materiality limitation or other materiality exception, including
the words "material adverse effect", "in any material respect", "material",
"materially" or a variance of any of the foregoing.
(d) The Purchaser, with respect to the obligations of the Sellers
pursuant to Section 9.2(a)(ii), and the Sellers, with respect to the obligations
of the Purchaser pursuant to Section 9.2(b)(ii) or (iii) shall not be entitled
to seek indemnification unless, until and to the extent the aggregate amount of
the Losses actually incurred by any Purchaser Indemnitee or the Sellers exceeds
an amount equal to $200,000 in the aggregate; provided, however, that the
Purchaser shall not be prohibited from seeking indemnification for Losses below
$200,000 to the extent such
-41-
46
Losses arise from a breach of representations or warranties contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.12 or 3.24.
(e) The obligations to indemnify and hold harmless pursuant to Section
9.2(a) and (b) shall survive the consummation of the transactions contemplated
hereby for the relevant periods set forth in Section 9.1, except for claims for
indemnification asserted prior to the end of such periods, which claims and the
corresponding indemnity obligations shall survive until final resolution
thereof.
(f) In the event that the Purchaser reasonably believes that Losses
which are otherwise indemnifiable pursuant to Section 9.2(a) are covered by
insurance policies of the Company or any of its Subsidiaries (as such insurance
policies were in effect immediately prior to the Closing) the Purchaser shall,
as soon as practicable, submit a claim to the insurance carrier of such
insurance policy, provided that nothing in this Section 9.2(f) shall (i) require
the Purchaser to enforce any rights the Purchaser may have against such
insurance carrier (other than the filing of the claim) or (ii) prevent the
Purchaser from making a claim against either or both of the Sellers pursuant to
Section 9.3 with respect to such Losses or invoking Section 9.4 for the
resolution of any third party claims.
Section 9.3. Indemnification Procedure. (a) Within a reasonable period
of time after the incurrence of any Losses by any Person entitled to
indemnification pursuant to Section 9.2 hereof (an "Indemnified Party"),
including, without limitation, any claim by a third party described in Section
9.5, which might give rise to indemnification hereunder, the Indemnified Party
shall deliver to the party from which indemnification is sought (the
"Indemnifying Party") a certificate in the form of Exhibit 8 (the
"Certificate"), which Certificate shall:
(i) state that the Indemnified Party has paid or properly
accrued Losses or anticipates that it will incur liability for Losses
for which such Indemnified Party is entitled to indemnification
pursuant to this Agreement;
(ii) specify in reasonable detail each individual item of Loss
included in the amount so stated, the date such item was paid or
properly accrued, the basis for any anticipated liability and the
nature of the misrepresentation, breach of warranty, breach of covenant
or claim to which each such item is related and the computation of the
amount to which such Indemnified Party claims to be entitled hereunder;
and
(iii) be delivered to the Indemnified Party and, if
applicable, the Escrow Agent.
(b) In the event that the Indemnifying Party shall object to the
indemnification of an Indemnified Party in respect of any claim or claims
specified in any Certificate, the Indemnifying Party shall, within fifteen (15)
business days after receipt by the Indemnifying Party of such Certificate,
deliver to the Indemnified Party a notice to such effect and the Indemnifying
Party and the Indemnified Party shall, within the thirty (30) day period
beginning on the date of receipt by the Indemnified Party of such objection,
attempt in good faith to agree upon the rights of the respective parties with
respect to each of such claims to which the Indemnifying Party shall have so
objected. If the Indemnified Party and the Indemnifying Party shall succeed in
reaching
-42-
47
agreement on their respective rights with respect to any of such claims, the
Indemnified Party and the Indemnifying Party shall promptly prepare and sign a
memorandum setting forth such agreement. Should the Indemnified Party and the
Indemnifying Party be unable to agree as to any particular item or items or
amount or amounts, then the Indemnified Party and the Indemnifying Party shall
submit such dispute to a court of competent jurisdiction. The party which
receives a final judgment in such dispute shall be indemnified and held harmless
for all reasonable attorney and consultant's fees or expenses by the other
party.
(c) Claims for Losses specified in any Certificate to which an
Indemnifying Party shall not object in writing within fifteen (15) business days
of receipt of such Certificate, claims for Losses covered by a memorandum of
agreement of the nature described in paragraph (b), claims for Losses the
validity and amount of which have been the subject of judicial determination as
described in paragraph (b) and claims for Losses the validity and amount of
which shall have been the subject of a final judicial determination, or shall
have been settled with the consent of the Indemnifying Party, as described in
Section 9.5, are hereinafter referred to, collectively, as "Agreed Claims".
Within ten (10) days of the determination of the amount of any Agreed Claims,
the Indemnifying Party shall pay to the Indemnified Party (except in the case
where a payment has been already effected pursuant to the Escrow Agreement or by
way of a reduction of the XxXxxxxxx Note and/or the Xxxxxxx Note, if applicable,
for such Agreed Claims) an amount equal to the Agreed Claim by wire transfer in
immediately available funds to the bank account or accounts designated by the
Indemnified Party in a notice to the Indemnifying Party not less than two (2)
business days prior to such payment.
Section 9.4. Third Party Claims. If a claim by a third party is made
against an Indemnified Party, and if such party intends to seek indemnity with
respect thereto under this Article IX, such Indemnified Party shall promptly
notify the Indemnifying Party and, if applicable, the Escrow Agent of such
claims; provided that the failure to so notify shall not relieve the
Indemnifying Party of its obligations hereunder, except to the extent that the
Indemnifying Party is actually and materially prejudiced thereby. The
Indemnifying Party shall have one hundred and eighty (180) days after receipt of
such notice to assume the conduct and control, through counsel reasonably
acceptable to the Indemnified Party at the expense of the Indemnifying Party, of
the settlement or defense thereof, and the Indemnified Party shall cooperate
with it in connection therewith; provided that (i) the Indemnifying Party shall
permit the Indemnified Party to participate in such settlement or defense
through counsel chosen by such Indemnified Party, provided that the fees and
expenses of such counsel shall be borne by such Indemnified Party and (ii) the
Indemnifying Party shall promptly assume and hold such Indemnified Party
harmless from and against the full amount of any Loss resulting therefrom. So
long as the Indemnifying Party is reasonably contesting any such claim in good
faith, the Indemnified Party shall not pay or settle any such claim.
Notwithstanding the foregoing, but subject to Section 6.3 hereof, the
Indemnified Party shall have the right to pay or settle any such claim, provided
that in such event it shall waive any right to indemnity therefor by the
Indemnifying Party for such claim unless the Indemnifying Party shall have
consented to such payment or settlement. If the Indemnifying Party does not
notify the Indemnified Party within thirty (30) days after the receipt of the
Indemnified Party's notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof, the Indemnified Party shall have the right to
contest, settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement. The Indemnifying
-43-
48
Party shall not, except with the consent of the Indemnified Party, enter into
any settlement that is not entirely indemnifiable by the Indemnifying Party
pursuant to this Article IX and does not include as an unconditional term
thereof the giving by the Person or Persons asserting such claim to all
Indemnified Parties of an unconditional release from all liability with respect
to such claim or consent to entry of any judgment. Notwithstanding any of the
foregoing, in the event that the Indemnified Party is a Purchaser Indemnitee and
it is reasonably foreseeable that the amount of any Loss to be incurred by the
Indemnified Party with respect to any third party claim is more than twice the
amount indemnifiable by any Indemnifying Party, the Indemnified Party shall be
entitled to conduct and control the defense and/or settlement of any such claim
without the consent of the Indemnifying Party.
Section 9.5. Limitation on Indemnity. The aggregate liability of each
of the Sellers to indemnify the Purchaser Indemnitees under Sections 6.7 (to the
extent such liability arises from the failure of any representation or warranty
in Section 3.12 to be true and correct) and 9.2(ii) shall be limited to an
amount not to exceed the sum of the Escrow Amount, the XxXxxxxxx Note Amount and
the Xxxxxxx Note Amount; provided, however, that the indemnification obligations
of the Sellers may exceed such amount (x) in the event that any Purchaser
Indemnitee incurs Losses resulting from fraud or willfull misconduct of either
Seller or (y) with respect to a breach of any representation or warranty
contained in Section 3.1, 3.2, 3.3, 3.4, 3.18 or 3.24. The amount of any and all
Losses incurred by any Indemnified Party shall be determined net of the amount
by which all amounts recovered by the Indemnified Party under insurance policies
with respect to such Losses exceeds all projected increases in insurance
premiums with respect to such Losses for the five (5) year period following the
date of recovery of such insurance proceeds.
ARTICLE X
TERMINATION AND ABANDONMENT
Section 10.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual consent of the Sellers and the Purchaser;
(b) by the Sellers or by the Purchaser if the Closing shall not have
occurred by October 31, 2000; provided that the right to terminate this
Agreement under this Section 10.1(b) shall not be available to any party whose
failure to fulfill any covenant, obligation or agreement under this Agreement
shall be the cause of the failure of the Closing to occur on or before such
date;
(c) (i) by the Sellers, if there has been a material breach of any
covenant or a material breach of any representation or warranty on the part of
the Purchaser or (ii) by the Purchaser, if there has been a material breach of
any covenant or a material breach of any representation or warranty on the part
of either Seller, provided that any such breach of a covenant or representation
or warranty has not been cured within ten (10) business days following receipt
by the breaching party of written notice of such breach; and
-44-
49
(d) by the Sellers or by the Purchaser, if any law or regulation of any
competent authority shall be enacted that renders illegal or otherwise
permanently prohibits consummation of the transactions contemplated hereby or if
any judgment, injunction, order or decree of any competent authority that
renders illegal or otherwise permanently prohibits the transactions contemplated
hereby is entered and such judgment, injunction, order or decree shall become
final and nonappealable.
Section 10.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 10.1 by the Purchaser, on the one hand, or
the Sellers, on the other hand, written notice thereof shall forthwith be given
to the other party specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall be terminated and, subject to the
immediately succeeding sentence, there shall be no liability hereunder on the
part of the Purchaser or either Seller, except that the provisions of the last
sentence of Sections 5.1, 11.1, 11.2, 11.4, 11.5 and 11.12 shall survive any
termination of this Agreement. Nothing in this Section 10.2 shall relieve any
party of liability for breach of this Agreement; provided, however, that neither
the Purchaser nor any of the Sellers shall be entitled to claim, and each hereby
expressly waives any right to, any consequential, punitive or other special
damages.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Expenses. The parties hereto shall pay all of their own
expenses relating to the transactions contemplated by this Agreement, including,
without limitation, the fees and expenses of their respective counsel and
financial advisors.
Section 11.2. Governing Law. This Agreement, and the legal relations
between the parties hereto, shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements executed and to
be performed solely within such State.
Section 11.3. Captions. The Article and Section captions used herein
are for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 11.4. Publicity. None of the parties hereto shall, and the
Sellers shall not authorize or permit the Company or any of its Subsidiaries to,
issue any press releases nor (except for such disclosure to such party's parent,
as applicable, or officers, attorneys, consultants, accountants and other agents
who are involved in the transactions contemplated hereby) otherwise disclose any
details of the transactions contemplated hereby without all of the other
parties' prior written consent, except as may be required by law. Except as set
forth in the immediately preceding sentence, none of the parties will notify its
employees (except to the extent reasonably necessary to enable those employees
to assist the parties in the performance of their obligations hereunder) or the
media prior to the joint approval of a press release on a mutually agreed upon
date of any details of this contemplated transaction. To the extent that any
such disclosure is required by law, the disclosing party will provide the other
party with written notice of such required disclosure no less than three (3)
business days prior to such disclosure and the other
-45-
50
party will review and approve the proposed disclosure, which approval will not
be unreasonably withheld.
Section 11.5. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when (i) delivered by
hand, (ii) transmitted by prepaid cable, telex or telecopier, provided that a
copy is sent at about the same time by registered mail, return receipt requested
and, provided further, that a transmission made on a day which is not a business
day or after 3:00 pm on a business day shall be deemed given on the following
business day, (iii) one business day after mailed, to the addressee, if sent by
Express Mail, Fed Ex, or other overnight delivery service, or (iv) three
business days after mailed, to the addressee, by regular mail delivery of the
U.S. Postal Service, to the addressee at the following addresses or telecopier
numbers (or to such other address or telecopier number as a party may specify by
notice given to the other party pursuant to this provision):
if to the Purchaser, to:
GEEG Holdings, L.L.C.
0000 Xxxxx Xxxx
Xxxxx 0000
Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxxx
with a copy to:
Harvest Partners, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
and
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
if to XxXxxxxxx, to:
Xxxx X. XxXxxxxxx
00Xxxxxx Xxxxxxxx
Xxxxxxxx, XX 00000
-46-
51
with a copy to:
Xxxxxxx Xxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: F. Xxxx Xxxxx, Esq.
if to Xxxxxxx, to
Xxxxxx X. Xxxxxxx
00 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: F. Xxxx Xxxxx, Esq.
or to such other Person or address as shall be designated in writing by any such
party.
Section 11.6. Parties in Interest. This Agreement may not be
transferred, assigned, pledged or hypothecated by any party hereto, other than
by operation of law, provided that the Purchaser may, at any time, assign its
rights under this Agreement to any of its Affiliates, and any such Affiliate
shall thereupon assume all of the Purchaser's obligations hereunder, so long as
the Purchaser remains primarily liable for its obligations hereunder and,
provided, further, that the Purchaser may, at any time, and without the prior
consent of any other party hereto, assign its rights under this Agreement to its
and its subsidiaries' financing sources by way of security, to any Person
appointed to enforce such security or any Person in connection with such
enforcement. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.
Section 11.7. Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
Section 11.8. Entire Agreement. This Agreement, including the other
documents entered into in connection herewith, contains the entire understanding
of the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
Section 11.9. Amendments. This Agreement may not be changed, amended,
waived, or modified orally, but only by an agreement in writing signed by the
Purchaser and the Sellers.
-47-
52
Section 11.10. Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
Section 11.11. Third Party Beneficiaries. Except as expressly provided
in Section 9.2, each party hereto intends that this Agreement shall not benefit
or create any right or cause of action in or on behalf of any Person other than
the parties hereto.
Section 11.12. Submission to Jurisdiction; Waiver of Jury Trial. The
Sellers and the Purchaser hereby submit to the jurisdiction of the State and
Federal courts located within the State of New York for purposes of all legal
proceedings which may arise hereunder or under any of the other documents
entered into in connection herewith. The Sellers and the Purchaser irrevocably
waive, to the fullest extent permitted by law, any objection which he/it may
have or hereafter have to the laying of the venue of any such proceeding brought
in such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum. The Sellers and the Purchaser hereby
consent to process being served in any such proceeding by the mailing of a copy
thereof by registered or certified mail, postage prepaid, to its address
specified in Section 11.5 or in any other manner permitted by law. THE SELLERS
AND THE PURCHASER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY
OTHER DOCUMENTS ENTERED INTO IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OF THE PURCHASER OR
ANY SELLER.
-48-
53
IN WITNESS WHEREOF, each of the Purchaser and the Company has caused
its corporate name to be hereunto subscribed by its officer thereunto duly
authorized and each of the Sellers subscribed their respective names hereunto,
all as of the day and year first above written.
GEEG HOLDINGS, L.L.C
By /s/ Xxxxx Xxxxxxx
-----------------------------------------
Name:
Title:
54
CFI HOLDINGS, INC.
By /s/ Xxxx X. XxXxxxxxx
----------------------------------------
Name:
Title:
55
/s/ Xxxx X. XxXxxxxxx
--------------------------------------
XXXX X. XXXXXXXXX
56
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------
XXXXXX X. XXXXXXX
