EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT made this 8th day of December, 1997 by and
among Xxxxxx X. Xxxxxx ("Xxxxxx"), DOLLAR DRY DOCK REAL ESTATE, INC., a Delaware
corporation ("DDRE"), THE HERITAGE GROUP, INC. , a Connecticut corporation
("Heritage")(DDRE and Heritage are sometimes referred to hereinafter
collectively as the "Company"), THE XXXXXXX COMPANY, INC., a Massachusetts
corporation (hereinafter referred to as "XxXxxxx") and THE XXXXXXX COMPANIES,
INC., a Massachusetts corporation (hereinafter referred to as "Parent").
WHEREAS, Xxxxxx desires to sell and XxXxxxx desires to purchase all
of the issued and outstanding shares of capital stock of DDRE (the "Shares")
subject to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements and conditions hereinafter set forth, the parties hereto
hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF SHARES.
1.1 Purchase and Sale of Shares. Subject to the terms and conditions
of this Agreement, at the Closing (as defined in Section 1.3 hereof) Xxxxxx
agrees to sell and transfer the Shares to XxXxxxx, and XxXxxxx agrees to
purchase the Shares from Xxxxxx.
1.2 Purchase Price and Payment. The purchase price (the "Purchase
Price") for the Shares will be Four Million Dollars ($4,000,000.00) payable as
follows: One Million Five Hundred Thousand Dollars ($1,500,000.00) by certified
or bank cashier's check or by wire transfer as a deposit, (the "Escrow Amount")
to be held in escrow pursuant to the terms of the Escrow Agreement dated the
date hereof by and among Xxxxxx, XxXxxxx and Xxxxxx, Xxxxx & Xxxxxx, P.C., as
Escrow Agent (the "Escrow Agent"), and the balance of Two Million Five Hundred
Thousand Dollars ($2,500,000.00) by certified or bank cashier's check or by wire
transfer at the Closing.
1.3 Time and Place of Closing. The closing of the purchase and sale
provided for in this Agreement (the "Closing" or the "Closing Date") shall be
held at 10:00 A.M., local time on January 16, 1998 at the offices of Xxxxxx,
Xxxxx & Xxxxxx, P.C., 000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000, or at such
other place,
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date or time as may be fixed by mutual agreement of XxXxxxx and Xxxxxx. Time
shall be of the essence.
1.4 Closing Obligations. At the Closing:
(a) Xxxxxx shall deliver to XxXxxxx:
(1) a certificate or certificates representing the Shares,
duly endorsed (or accompanied by duly executed stock powers), for
transfer to XxXxxxx;
(2) an employment agreement in the form of Exhibit
1.4(a)(2) attached hereto and made a part hereof (the "Employment
Agreement") executed by Xxxxxx;
(3) a non-competition agreement in the form of Exhibit
1.4(a)(3) attached hereto and made a part hereof (the
"Non-Competition Agreement") executed by Xxxxxx;
(4) an opinion dated as of such date from Xxxxxx, Xxxxx &
Xxxxxx, P.C., counsel for Xxxxxx, in the form of Exhibit 1.4(a)(4)
attached hereto and made a part hereof;
(5) a general release of the Company in the form of Exhibit
1.4(a)(5) attached hereto and made a part hereof (the "Company
General Release");
(6) a Certificate of Good Standing as of a date within 30
days of the Closing Date issued by the Connecticut Department of
Revenue; and
(7) the resignations of Xxxxxx and Xxxx Xxxx as officers
and directors of DDRE and as officers and directors of Heritage and
as trustees of the 401(k) Plan of the Company.
(b) XxXxxxx shall deliver to Xxxxxx:
(1) the sum of Two Million Five Hundred Thousand Dollars
($2,500,000.00) by bank cashier's or certified check payable to the
order of Xxxxxx X. Xxxxxx or by wire transfer to an account specified
by Xxxxxx X.
Xxxxxx;
(2) the Employment Agreement, executed by XxXxxxx;
(3) the Non Competition Agreement executed by XxXxxxx;
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(4) an opinion dated as of such date from Lynch, Brewer,
Xxxxxxx & Sands, LLP, counsel for XxXxxxx, in the form of Exhibit
1.4(b)(4) attached hereto and made a part hereof;
(5) a general release of Xxxxxx in the form of Exhibit
1.4(b)(5) attached hereto and made a part hereof (the "Xxxxxx General
Release").
(c) The Escrow Agent shall deliver the Escrow Amount to Xxxxxx and
interest on the Escrow Amount to XxXxxxx subject to and in accordance with the
provisions of the Escrow Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
XXXXXX.
2.1 Making of Representations and Warranties. The Company and Xxxxxx
hereby jointly and severally make the representations and warranties contained
in this Section 2, subject to the disclosures set forth herein or in the
Disclosure Schedule heretofore delivered by Xxxxxx to XxXxxxx (the "Disclosure
Schedule").
2.2 Organization and Qualification of DDRE . DDRE is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware with full corporate power and authority to own or lease its
properties and to conduct the business heretofore conducted by it in the manner
and in the places where such properties are owned or leased or such business is
conducted by it. The copies of DDRE's corporate charter certified by the
Secretary of the State of Delaware and of DDRE's By-laws as amended to date,
certified by DDRE's Secretary and heretofore delivered to XxXxxxx'x counsel, are
complete and correct. DDRE is registered and qualified to do business as a
foreign corporation in the State of Connecticut, and neither the character or
location of the properties owned or leased by DDRE nor the nature of the
business transacted by DDRE makes registration or qualification in any other
jurisdiction necessary. DDRE has duly filed any and all certificates and reports
required to be filed to date by the laws of the States of Delaware and
Connecticut.
2.3 Organization and Qualification of Heritage . Heritage is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Connecticut with full corporate power and authority to own or
lease its properties and to conduct the business heretofore conducted by it in
the manner and in the places where such properties are owned or leased or such
business is conducted by it. The copies of Heritage's corporate charter
certified by the Secretary of the State of Connecticut and of Heritage's By-laws
as amended to date, certified by Heritage's Secretary and heretofore delivered
to XxXxxxx'x counsel, are complete and correct. Heritage is not registered or
qualified to do business as a foreign
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corporation in any jurisdiction, and neither the character or location of the
properties owned or leased by Heritage nor the nature of the business transacted
by Heritage makes registration or qualification in any jurisdiction necessary.
Heritage has duly filed any and all certificates and reports required to be
filed to date by the laws of the State of Connecticut.
2.4 Capital Stock of DDRE. The authorized capital stock of DDRE
consists of 1,000 shares of Common Stock, par value $1.00 per share, of which
100 shares are duly and validly issued, outstanding, fully paid, and
non-assessable and no shares are held in the treasury. All of such issued and
outstanding shares are owned of record and beneficially by Xxxxxx. Except for
the pledge of such shares to the Federal Deposit Insurance Corporation which
shall be terminated on or before the Closing, Xxxxxx has good and valid title to
said shares of capital stock of DDRE free of any adverse claim, pledge, lien, or
restriction, and there are no outstanding subscriptions, options, warrants,
calls, commitments, or agreements of any kind for the issuance or sale of, or
outstanding shares or securities convertible into, any additional shares of
capital stock of DDRE.
2.5 Capital Stock of Heritage; No Other Subsidiaries. The authorized
capital stock of Heritage consists of 5,000 shares of Common Stock, no par value
of which 400 shares are duly and validly issued, outstanding, fully paid, and
non-assessable and no shares are held in the treasury. All of such issued and
outstanding shares are owned of record and beneficially by DDRE. DDRE has good
and valid title to said shares of capital stock of Heritage free of any adverse
claim, pledge, lien, or restriction, and there are no outstanding subscriptions,
options, warrants, calls, commitments, or agreements of any kind for the
issuance or sale of, or outstanding shares or securities convertible into, any
additional shares of capital stock of Heritage. DDRE has no other direct or
indirect subsidiaries or any proprietary interest in any other corporation or
other form of business organization.
2.6 Authority of the Company and Xxxxxx. The Company and Xxxxxx have
full power and authority to enter into and perform this Agreement and consummate
the transactions contemplated hereby. All necessary action, corporate or
otherwise, has been taken by the Company and Xxxxxx to authorize the execution,
delivery, and performance of this Agreement, and the same is the valid and
binding obligation of the Company and Xxxxxx in accordance with its terms,
subject to applicable bankruptcy, reorganization, and similar laws affecting the
rights of creditors generally and subject to equitable principles. The execution
and delivery of this Agreement do not, and the performance of the terms hereof
will not, constitute a default or event of default under, or violate, conflict
with, or result in any breach of the terms, conditions, or provisions of (a) the
corporate charter or by-laws of DDRE, (b) the corporate charter or by-laws of
Heritage, (c) to the best of the Company's and Xxxxxx'x knowledge, the laws or
regulations of any jurisdiction
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or any other governmental requirements, or (d) to the best of the Company's and
Xxxxxx'x knowledge, any mortgage, lien, lease, agreement, contract, instrument,
order, arbitration award, injunction, judgment or decision to which Xxxxxx or
DDRE or Heritage is a party or by which they or any one of them or their assets
or properties are bound or materially affected. To the best of the Company's and
Xxxxxx'x knowledge, no approval, authorization, license, permit or other action
by, or filing with, any federal, state, or municipal commission, board, agency
or other governmental authority (excluding the Securities and Exchange
Commission and any state securities administrator) is required in connection
with the execution and delivery by Xxxxxx, DDRE and Heritage of this Agreement
or the consummation of the transactions contemplated hereby.
The execution and delivery of this Agreement do not, and the
performance of the terms thereof and the consummation of the transactions
contemplated hereby will not, result in or permit (a) the creation or imposition
of any lien, charge, security interest, pledge, or other encumbrance on any of
the assets or properties of Xxxxxx or DDRE or Heritage, (b) the acceleration of
any indebtedness of Xxxxxx or DDRE or Heritage, or (c) the termination of any
contract or agreement to which Xxxxxx or DDRE or Heritage is party or by which
they or any of their assets or properties are bound or materially affected.
2.7 Financial Statements of the Company. Xxxxxx has delivered to
XxXxxxx: (a) a consolidated balance sheet of the Company as at December 31,
1996, and the related consolidated statements of Income and retained earnings
and cash flow for the fiscal year then ended, together with the report thereon
of Xxxxxx, Yanaros & Xxxxxx, PC, independent certified public accountants, (b)
balance sheet of DDRE as at December 31, 1995, and the related statement of
Income and retained earnings and cash flow for the fiscal year then ended,
together with the reports thereon of Xxxxxx, Yanaros & Xxxxxx, PC, independent
certified public accountants, (c) consolidated balance sheets of the Company as
at September 30, 1996 and 1997, and the related consolidated statements of
income for the nine-month periods then ended, each prepared by the Company, and
(d) a consolidated balance sheet of the Company as at October 31, 1997 (the
"Base Balance Sheet") and the related consolidated statement of income, for the
one and 10 month period then ended, each prepared by the Company. Such financial
statements and the notes thereto fairly present the financial condition and the
results of operations, and cash flow of the Company as at the respective dates
of and for the periods referred to in such financial statements, all in
accordance with generally accepted accounting principles (GAAP), consistently
applied, subject, in the case of interim financial statements, to normal
recurring year-end adjustments (the effect of which were not or will not,
individually or in the aggregate, be materially adverse) and the absence of
notes (that, if presented, would not differ materially from those included in
the Company's financial statements for the one year period ended December 31,
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1996); the financial statements referred to in this Section 2.7 reflect the
consistent application of such accounting principles throughout the periods
involved. Notwithstanding the foregoing, XxXxxxx acknowledges that the Company's
accrual for income taxes payable as reflected in the income statement for the
interim periods in 1997 and in the balance sheet at September 30, 1997 and the
Base Balance Sheet is based solely on the amount of estimated taxes paid through
each respective date and may not reflect the amount which would need to be
accrued for each such respective balance sheet to comply with GAAP.
2.8 Books and Records. With respect to the period since May 21, 1992
that Xxxxxx owned the capital stock of DDRE and with respect to the period since
February, 1996 that DDRE owned the capital stock of Heritage (the "Operative
Period"), the books of account, minute books, stock record books, and other
records of DDRE and Heritage, all of which have been made available to XxXxxxx,
are complete and correct and have been maintained in accordance with sound
business practices, including the maintenance of an adequate system of internal
controls. The minute books of the Company contain accurate and complete records
of all meetings held of, and corporate action taken by, the stockholders, the
Boards of Directors, and committees of the Boards of Directors of the Company
during the Operative Period, and no meeting of any such stockholders, Board of
Directors, or committee during the Operative Period has been held for which
minutes have not been prepared and are not contained in such minute books. At
the Closing, all of those books and records will be in the possession of DDRE or
Heritage, as the case may be.
2.9 Absence of Undisclosed Liabilities. As of the date hereof,
neither the Company nor Xxxxxx knows, nor with the exercise of reasonable
judgement, should know, of any material liabilities of the Company of any
nature, whether accrued, absolute, contingent or otherwise (including without
limitation liabilities as guarantor or otherwise with respect to obligations of
others, or liabilities for taxes due or then accrued or to become due) except
for liabilities (a) disclosed in the Base Balance Sheet, (b) disclosed in
Exhibit 2.26, (c) disclosed in any of the other Schedules attached to this
Agreement (in each case as adjusted to reflect transactions in the ordinary
course between the date of the Base Balance Sheet or any such Schedule and the
Closing Date), (d) specified in any mortgage, indenture, instrument, contract,
agreement, lease, or other arrangement described in any Schedule hereto, or (f)
covered by insurance.
2.10 Absence of Certain Changes. Except as otherwise provided in
Section 4.2(b) hereof, or as otherwise disclosed in the Disclosure Schedule,
since October 31, 1997, there has not been nor, to the best of the Company's or
Xxxxxx'x knowledge, is there threatened, anticipated or contemplated:
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(a) any change in the financial condition, properties, assets,
liabilities, business or operations of the Company which change by itself or in
conjunction with all other such changes (except for changes arising in the
ordinary course of business consistent with prior practice) has been or would be
materially adverse with respect to the business of the Company;
(b) any contingent liability incurred by either DDRE or Heritage as
guarantor or otherwise with respect to the obligations of others, except by
endorsement of instruments for collection in the ordinary course of business;
(c) any mortgage, encumbrance, or lien placed on any of the Company's
properties, which remains in existence on the date hereof or at the time of the
Closing;
(d) any obligation or liability incurred by DDRE or Heritage, other
than obligations and liabilities incurred in the ordinary course of business;
(e) any purchase, sale, or other disposition, or any agreement or
other arrangement for the purchase, sale, or other disposition, of any of the
assets or properties of the Company other than in the ordinary course of
business;
(f) any purchase of the assets or business of any other real estate
brokerage business, or any agreement or other arrangement for the purchase or
other acquisition of any such business;
(g) any damage, destruction, or, loss, whether or not covered by
insurance, adversely affecting any of the property or assets of the Company;
(h) any change in the compensation payable or to become payable by
the Company to any of its managers, employees or agents, or any bonus payment or
incentive or other arrangement made to or with any of such managers, employees
or agents, except for changes arising in the ordinary course of business
consistent with past practices;
(i) any change with respect to the management or supervisory
personnel of the Company; or
(j) any obligations or liabilities incurred by the Company to any of
its stockholders, directors or officers or any loans or advances made by the
Company to any of its stockholders, directors, or officers.
2.11 Payment of Taxes. The Company has filed, or obtained extensions
of the time to file all federal, state and local income, excise or franchise tax
returns,
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real estate and personal property tax returns, sales and use tax returns and
other tax returns required to be filed by it and has paid all taxes (including
interest and penalties thereon, if any) owing by it, except for taxes which have
not yet become due which have been adequately provided for in the financial
statements referred to in Section 2.7 above. Neither the Internal Revenue
Service nor any other taxing authority has during the past five years, or is now
asserting or threatening to assert against the Company any deficiency or claim
for additional taxes or interest thereon or penalties in connection therewith.
2.12 Title to Properties; Encumbrances. The Company has good and
valid title to all of the properties and assets located at the facilities
operated by the Company and included on the Base Balance Sheet (except for
properties and assets sold or otherwise disposed of since October 31, 1997 in
the ordinary course of business). None of the said assets or properties is
subject to any mortgage, pledge, lien, security interest, conditional sale
agreement, title restriction, encumbrance, or right, title, and interest of
others except: (a) liens for current taxes not yet due and payable, or (b)
encumbrances or liens referred to in the Base Balance Sheet or in this Agreement
or in the Disclosure Schedule.
2.13 Real Property. The Schedule of Real Estate Leases attached
hereto as Exhibit 2.13 contains a true and complete description of all of the
facilities currently leased by the Company, and including a summary of the
principal terms of the leases with respect to each such location, including
annual rent, security deposit, lease termination date, and renewal options, if
any. To the best of the Company's and Xxxxxx'x knowledge, all of the Company's
leases with respect to such facilities are in full force and effect, validly
subsisting, and no default exists under any thereof. The Company does not own
any real property except for the Disney time share unit to be transferred to
Xxxxxx as provided in Section 4.2(b) hereof.
2.14 Furniture and Equipment. The Schedule of Owned Furniture and
Equipment attached hereto as Exhibit 2.14(A) contains a true and complete
description of all the furniture and furnishings, office and computer equipment
owned by the Company as of the date hereof included in the Base Balance Sheet.
The Schedule of Leased Furniture and Equipment attached hereto as Exhibit
2.14(B) contains a true and complete description of all the furniture and
furnishings, and office and computer equipment leased, or otherwise used, but
not owned, by the Company as of the date hereof. To the best of the Company's
and Xxxxxx'x knowledge, all of the Company's leases of personal property are
valid and subsisting and no default in any material respect exists under any
thereof.
2.15 Listing Agreements. The Schedule of Listing Agreements attached
hereto as Exhibit 2.15 contains a true and complete description of all of the
Company's pending listing agreements with customers as of November 30, 1997
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showing the area number, MLS number, location/office through which listed and
property address.
2.16 Escrow Funds. The Schedule of Escrow Funds attached hereto as
Exhibit 2.16 contains a true and complete listing of all amounts held in escrow
by the Company as of October 31, 1997.
2.17 Pending Closing Receivables. The Schedule of Pending Closing
Receivables attached hereto as Exhibit 2.17 contains a true and complete
description of all of the Company's pending closing receivables as of November
30, 1997. Except for: (a) the receivables in the amount of $16,627.86 as of the
date of the Base Balance Sheet (plus interest accrued since the date of the Base
Balance Sheet), representing loans to sales associates; and (b) the officer loan
in the amount of $53,904.67 as of the date of the Base Balance Sheet (plus
interest accrued since the date of the Base Balance Sheet) which is to be
forgiven as provided in Section 4.2(b) hereof, the Company has no other accounts
or loans receivable from any person, firm, or corporation, including, without
limitation any person, firm or corporation which is affiliated with the Company,
or from any director, officer, employee, or stockholder of the Company.
2.18 Trade Names, Trademarks and Copyrights. The Schedule of
Trademarks attached hereto as Exhibit 2.18 contains a true and complete
description of all copyrights, trade names (including, without limitation, the
trade names "Dollar Dry Dock" and "Heritage"), service marks, logos, trademarks
and trademark rights, and trademark registrations and applications used in
connection with or relating to the business of the Company as of the date hereof
(collectively, the "Trademarks"). The Company's rights to use the Trademarks do
not require the consent of any other person. The Company and Xxxxxx represent
and warrant that:
(a) there are no claims or demands of any other person pertaining
thereto and no proceedings have been instituted, or are pending or, to the best
of the Company's and Xxxxxx'x knowledge, threatened, which challenge the rights
of the Company in respect of any of the Trademarks (including, without
limitation, the trade names "Dollar Dry Dock" and "Heritage");
(b) to the best of the Company's and Xxxxxx'x knowledge, none of the
Trademarks (including, without limitation, the trade names "Dollar Dry Dock" and
"Heritage"), is being infringed by others, or is subject to any outstanding
order, decree, judgment or stipulation; and
(c) The Company does not, and is not required to, pay any license fee
or royalty to any person for the use of any of the Trademarks (including,
without limitation, the trade names "Dollar Dry Dock" and "Heritage").
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2.19 Trade Secrets and Proprietary Information. To the best of the
Company's and Xxxxxx'x knowledge: (i) the Company owns or has the exclusive
right to use all trade secrets and proprietary information, customer lists,
customer, and marketing data and information, and technology and know-how used
in connection with or relating to business of the Company as of the date hereof
(collectively, the "Proprietary Information"); (ii) the Company is not using or
in any way making use of any confidential information or trade secrets of any
third party, including without limitation, a former employer of any present or
past employee of the Company; and (iii) the Company's rights to use of the
Proprietary Information do not require the consent of any other person and the
same are freely transferable without the consent of any third party. The Company
and Xxxxxx represent and warrant that:
(a) to the best of the Company's and Xxxxxx'x knowledge, no other
person has an interest in or right or license to use, or the right to license
others to use, the Proprietary Information;
(b) there are no claims or demands of any other persons pertaining
thereto known to the Company or to Xxxxxx, and no proceedings have been
instituted, or are pending or, to the best of the Company's and Xxxxxx'x
knowledge, threatened, which challenge the rights of the Company in respect
thereof;
(c) to the best of the Company's and Xxxxxx'x knowledge, none of the
Proprietary Information is being infringed by others, or is subject to any
outstanding order, decree, judgment or stipulation;
(d) no proceeding charging the Company with infringement of any
adversely held trade secrets or confidential information has been filed or, to
the best of the Company's and Xxxxxx'x knowledge, is threatened to be filed; and
(e) The Company does not and, is not required to, pay any license fee
or royalty to any person for the use of any Proprietary Information.
2.20 Contracts. Except for contracts, commitments, plans, agreements,
licenses, leases, instruments, indentures, and sales and purchase orders
described in the Schedules to this Agreement, neither the Company nor Xxxxxx is
aware of, or with the exercise of reasonable judgement, should be aware of the
Company being a party to or subject to
(a) any plan or contract providing for bonuses, pensions, incentive
compensation, deferred compensation, retirement payments, group insurance, death
benefit, profit sharing, collective bargaining or the like covering the
employees of the Company;
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(b) any contract of employment with any employee of the Company which
is not terminable at will without notice and without obligation to pay severance
pay or any agreement, plan, arrangement or understanding pursuant to which the
Company has an obligation to any employee of the Company with respect to
vacation pay, bonus, gift, pension, profit sharing, or other arrangements,
payments, or fringe benefits;
(c) any contract or agreement for the purchase of any fixed assets
for a price in excess of $10,000 whether or not such purchase is in the ordinary
course of business;
(d) any contract or agreement containing covenants limiting the
freedom of the Company or any of its officers to compete in any business or with
any person or entity;
(e) any license agreement (as licensor or licensee); or
(f) any contract or agreement requiring consent by a party thereto
(other than the Company) for the consummation of the transactions contemplated
by this Agreement.
To the best of the Company's and Xxxxxx'x knowledge, all of The
Company's contracts, commitments, plans, agreements, licenses, leases,
instruments, indentures, and sales and purchase orders are in full force and
effect, validly subsisting, and no default exists under any thereof.
2.21 Environmental Matters. The Company is in compliance in all
material respects with all federal, state, and local laws, statutes, ordinances,
rules, regulations, and other governmental requirements relating to (i) the
protection of the environment, (ii) the emission or release of any pollutants or
contaminants into the environment, or (iii) the generation, use, storage,
transport, disposal, or clean-up of hazardous or toxic wastes, substances, or
materials, including without limitation the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, and the Resource
Conservation and Recovery Act of 1976, as amended, (collectively, the
"Environmental Laws").
2.22 Compliance with Laws. To the best of the Company's and Xxxxxx'x
knowledge, the Company is in compliance, in all material respects, with all
laws, statutes, ordinances, rules, regulations, and other governmental
requirements which apply to the conduct of its business. No notice, order, or
demand from any federal, state, or local governmental agency, commission, or
authority has been served upon the Company claiming violation of, or requiring
that any action be taken under, any such law, statute, ordinance, rule,
regulation, or other governmental
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requirement and no proceeding or investigation is pending, or, to the best of
the Company's and Xxxxxx'x knowledge, threatened, anticipated, or contemplated,
against the Company based upon, arising out of, or resulting from any actual or
alleged failure by the Company to comply with any such law, statute, ordinance,
rule, regulation, or other governmental requirement.
2.23 Litigation. Except as described in the Schedule of Litigation
attached hereto as Exhibit 2.23, there is no suit, action, or legal,
administrative or other proceeding or governmental investigation pending, or, to
the best of the Company's and Xxxxxx'x knowledge, threatened, anticipated, or
contemplated against the Company or any of its assets or properties, and there
are no unsatisfied or outstanding judgments, orders, decrees, or stipulations
affecting the properties, assets, condition (financial or otherwise), and
business of the Company. Neither the Company nor Xxxxxx knows or has grounds to
know of any basis for any action or of any governmental investigation relating
to or affecting the properties, assets, condition (financial and otherwise), or
business of the Company.
2.24 Permits. The Company holds all federal, state, and local
licenses, permits, approvals, and authorizations which are required to permit it
to conduct its business, and all such licenses, permits, approvals, and
authorizations are valid and in full force and effect. All such licenses,
permits, approvals, and authorizations are listed in the Disclosure Schedule.
2.25 Insurance. The Schedule of Insurance attached hereto as Exhibit
2.25 sets forth a description of all insurance policies relating to the
properties and business, assets, and business of the Company (specifying the
insurer, the amount of the coverage, the type of insurance, the policy number,
and any pending claims thereunder) maintained by the Company. The properties,
assets, and business of the Company are insured to the extent disclosed in the
Schedule of Insurance.
2.26 Accrued Commissions, Accounts Payable and Accrued Expenses. To
the best of the Company's and Xxxxxx'x knowledge, the Schedule of Accrued
Commissions, Accounts Payable and Accrued Expenses attached hereto as Exhibit
2.26 contains a true and complete description of: (a) all of the Company's
accrued commissions; (b) other accounts payable; and (c) any accrued expense of
the Company, in each case as of October 31, 1997, including all credits and
allowances applicable thereto.
The Company has no trade accounts payable to any person, firm, or
corporation, which is affiliated with the Company, or to any director, officer,
employee, or stockholder of the Company.
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2.27 Employee List; List of Sales Associates. The Company has
previously delivered to XxXxxxx: (i) a report dated December 4, 1997 which
contains the names and compensation of all the current employees of the Company
as of November 30, 1997; and (ii) a report dated December 5, 1997 which contains
the names, office locations and commission split rates of all of the Company's
sales associates as of November 30, 1997. The Company has provided XxXxxxx with
Form 1099's for 1996 for each of such individuals. The Company has paid or
accrued all wages, salaries, bonuses, commissions and pension plan benefits
accrued or due to the employees, sales associates, and other independent
contractors of the Company.
2.28 Employee Benefit Plans. (a) All employee benefit plans, as that
term is defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended, which are maintained or contributed to by the Company for
the benefit of its employees and which are intended to be qualified under
Section 401(a) of the Internal Revenue Code, have in fact been so qualified and
continue to be so qualified. All such plans are described in the Disclosure
Schedule.
(b) No event or omission has occurred which would cause any such plan
to lose its qualification under Section 401(a) of the Internal Revenue Code.
Xxxxxx does not know, and with the exercise of reasonable judgment, has no
reason to know of any event or omission which has occurred and which would
result in a violation of any laws, rulings, or regulations applicable to any
such employee benefit plan, including, without limitation, the Employee
Retirement Income Security Act of 1974 as amended ("ERISA"), and the regulations
promulgated thereunder.
2.29 Transactions with Interested Persons. Except as described in the
Disclosure Schedule, no officer or director of the Company owns directly or
indirectly, on an individual or joint basis, any interest in, or serves as an
officer or director of, any customer, competitor or supplier of the Company or
any organization which has a contract or arrangement with the Company.
2.30 Misstatements and Omissions. Neither the Company nor Xxxxxx has
made any material misstatements of fact or omitted to state any material fact
necessary to make not misleading, in the aggregate, the representations,
warranties and agreements set forth herein.
2.31 Brokerage. Neither the Company nor Xxxxxx has engaged the
services of any broker or finder hereunder and there are no existing,
threatened, or anticipated claims for brokers' or finders' fees or compensation
in connection with the transactions herein provided for by any person, firm or
corporation claiming a right to the same because engaged by the Company or
Xxxxxx.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF XXXXXXX AND PARENT.
3.1 Making of Representation and Warranties. XxXxxxx and Parent
hereby make the representations and warranties contained in this Section 3.
3.2 Organization and Qualification of XxXxxxx. XxXxxxx and Parent are
each corporations duly organized, validly existing, and in good standing under
the laws of the Commonwealth of Massachusetts with full power and authority to
own or lease their respective properties and to conduct their respective
businesses in the manner and in the places where such properties are owned or
leased or such businesses are conducted by them including, without limitation,
as contemplated by this Agreement on and after the Closing Date.
3.3 Authority. XxXxxxx and Parent each have full power, authority and
financial ability to enter into and perform this Agreement and consummate the
transactions contemplated hereby. All necessary action, corporate or otherwise,
has been taken by XxXxxxx and Parent to authorize the execution, delivery, and
performance of this Agreement and the same is the valid and binding obligation
of XxXxxxx and Parent in accordance with its terms, subject to laws of general
application affecting creditors' rights generally and subject to equitable
principles. The execution and delivery of this Agreement do not, and the
performance of the terms hereof will not, constitute a default or event of
default under, or violate, conflict with, or result in any breach of the terms,
conditions, or provisions of (a) the corporate charter or by-laws of XxXxxxx or
Parent, (b) the laws or regulations of any jurisdiction or any other
governmental requirements, or (c) any mortgage, lien, lease, agreement,
contract, instrument, order, arbitration award, injunction, judgment or decision
to which XxXxxxx or Parent is a party or by which they or any of their assets or
properties are bound or materially affected. Except as provided in Section 9.2
hereof, no approval, authorization, license, permit or other action by, or
filing with, any federal, state, or municipal commission, board, agency or other
governmental authority is required in connection with the execution and delivery
by XxXxxxx or Parent of this Agreement or the consummation of the transactions
contemplated hereby.
3.4 Financial Statements. The December 31, 1996 and September 30,
1997 consolidated balance sheets of Parent (including the related notes, where
applicable) fairly present the consolidated financial position of Parent and its
subsidiaries as of the dates thereof and the related consolidated statements of
Income and shareholders equity and cash flow for the fiscal year and nine-month
periods then ended (including the related notes, where applicable) fairly
present [subject, in the case of interim financial statements, to normal
recurring year-end adjustments (the effect of which were not or will not,
individually or in the
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aggregate, be materially adverse)] the results of the consolidated operations
and changes in shareholders' equity of Parent and its subsidiaries for the
respective fiscal periods and as of the respective date therein set forth; each
of such statements (including the related notes, where applicable) complies in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been
prepared in accordance with GAAP consistently applied during the periods
involved, except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q.
3.5 Line of Credit. XxXxxxx currently has in effect a $3,000,000 line
of credit arrangement with BankBoston, N.A. (the "Line of Credit") from which
$1,500,000 has been borrowed to fund the deposit contemplated by this Agreement,
and $1,500,000 currently remains available. Of the $1,500,000 line of credit
currently available, XxXxxxx currently anticipates that it may draw down up to
$300,000 of the Line of Credit for other acquisitions between the date hereof
and the Closing Date. The Company also anticipates that it may need to draw down
funds from the Line of Credit for working capital purposes. The payment of a
portion of the Purchase Price balance under this Agreement is a permitted use of
funds under the Line of Credit. The Line of Credit is not due to expire pursuant
to its terms prior to the Closing Date contemplated by this Agreement.
3.6 Absence of Certain Events. Since December 31, 1996, no event has
occurred, nor, to the best of XxXxxxx'x or Parent's knowledge, is any event
threatened which has had or is reasonably likely to have, individually or in the
aggregate, a material adverse effect on the business, properties, assets,
liabilities, prospects, results of operations or financial condition of XxXxxxx
or Parent and which would prevent or hinder the consummation of the transactions
contemplated by this Agreement.
3.7 Litigation. There is no suit, action, or legal, administrative or
other proceeding or governmental investigation pending, or, to the best of
XxXxxxx'x or Parent's knowledge, threatened, anticipated, or contemplated
against XxXxxxx or Parent or any of their respective assets or properties,
which, in any single case or in the aggregate, challenges or questions in any
respect the validity of, or would prevent or hinder the consummation of, the
transactions contemplated by this Agreement and there are no unsatisfied or
outstanding judgments, orders, decrees, or stipulations which would prevent or
hinder the consummation of the transactions contemplated by this Agreement.
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3.8 Shares Acquired for Investment. XxXxxxx agrees that it is
purchasing the Shares for its own account for investment and not with a view to
distribution thereof except in accordance with applicable securities laws.
3.9 Misstatements and Omissions. Neither XxXxxxx nor Parent has made
any material misrepresentation of fact or omitted to state any material fact
necessary to make complete, accurate and not misleading every representation,
warranty and agreement set forth herein.
3.10 Brokerage. Neither XxXxxxx or Parent has engaged the services of
any broker or finder hereunder, and there are no existing, threatened, or
anticipated claims for brokers' or finders' fees or compensation in connection
with the transactions herein provided for by any person, firm or corporation
claiming a right to the same because engaged by XxXxxxx or Parent.
SECTION 4. COVENANTS OF THE COMPANY AND XXXXXX.
4.1 Making of Covenants and Agreements. The Company and Xxxxxx make
the covenants and agreements set forth in this Section 4.
4.2 Conduct of Business. (a) Between the date of this Agreement and
the Closing, the Company will conduct its business only in the ordinary course
consistent with prior practices and will refrain from changing or introducing
any method of management or operations except in the ordinary course of business
and consistent with prior practices and shall use best efforts to maintain and
service such business, to keep available the services of present employees and
sales associates and to maintain existing business relationships. Without
limitation of the foregoing, between the date of this Agreement and the Closing,
unless otherwise consented to by XxXxxxx in writing in advance (which will not
be unreasonably withheld or delayed), the Company will:
(i) not take any affirmative action or fail to take any reasonable
action within its control, as a result of which any of the changes or events
listed in Section 2.10 is likely to occur;
(ii) use its best efforts to keep intact its business organization,
keep available the present employees and sales associates thereof, and preserve
the goodwill of all suppliers, customers and others having business relations
with it;
(iii) maintain at all times all insurance of the kind, in the amount
and with the insurers set forth in the Schedule of Insurance;
(iv) remain current in the payment of all trade accounts payable;
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(v) confer with XxXxxxx concerning operational matters of a material
nature;
(vi) otherwise report to XxXxxxx periodically as reasonably requested
by XxXxxxx, concerning the status of the business, operations and finances of
the Company; and
(vii) permit XxXxxxx and its authorized representatives, including
its counsel and independent public accountants, to have reasonable access upon
reasonable notice, to all the premises, properties, assets, records, books,
contracts and documents of the Company and furnish to XxXxxxx or its authorized
representatives such financial and other information with respect to the
business, properties, assets, or operational processes and procedures of the
Company as XxXxxxx may from time to time reasonably request, provided, however,
that until the Closing, XxXxxxx shall hold in strict confidence all documents
and information concerning the Company so obtained or furnished.
(b) Notwithstanding subsection 4.2(a) to the contrary, between the
date hereof and the Closing, the Company shall be permitted to distribute to
Xxxxxx as a dividend: (i) cash in the amount of $144,000; (ii) forgiveness the
loan receivable from Xxxxxx in the principal amount of $53,904.67, and any
accrued interest thereon; (iii) DDRE's undivided .1374 percent interest in Xxxx
00 of the Disney Vacation Club at Xxxx Disney World Resort; (iv) the motor
vehicle leased by the Company after prepayment by the Company of the remaining
lease payments or any lease termination fee with respect thereto and any other
reasonable payments necessary to purchase the vehicle; and (v) the motor vehicle
owned by the Company after payment by the Company of the note payable with
respect to such owned vehicle. XxXxxxx acknowledges that neither the Company nor
Xxxxxx shall be in breach of their obligations under subsection 4.2(a), and in
particular, subsection 4.2(a)(ii) if, despite the Company having used best
efforts, one or more employees or sales associates decide to terminate their
relationship with the Company.
4.3 Authorization from Others. Prior to the Closing, the Company will
use its best efforts to obtain all authorizations, consents, and permits of, and
make all filings with, third parties, in form satisfactory to XxXxxxx, required
to permit the consummation by the Company of the transactions contemplated by
this Agreement, including (a) consents from all third parties under contracts,
leases, and other agreements whose consent is so required in order to consummate
the transactions contemplated hereby (including, without limitation, the consent
of the Landlord with respect to the Windsor, CT sales office), and (b) consents
from, and filings with, all federal, state, and local governmental agencies,
commissions, and authorities required in connection with the transactions
contemplated hereby.
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4.4 Breach of Representations and Warranties; Notice to XxXxxxx.
Promptly upon the occurrence of, or promptly upon the Company's becoming aware
of the impending or threatened occurrence of any event which would cause or
constitute a breach, or would have caused or constituted a breach had such event
occurred or been known to the Company prior to the date hereof, of any of the
representations and warranties of the Company contained in or referred to in
this Agreement or in any Schedule or Exhibit referred to in this Agreement, the
Company shall give detailed written notice thereof to XxXxxxx and shall use its
best efforts to prevent or promptly remedy the same.
4.5 Continued Efforts; Consummation of Agreement. The Company and
Xxxxxx shall use best efforts to (a) cause to be fulfilled and satisfied all of
the conditions to the Closing which are the responsibility of the Company or
Xxxxxx; (b) cause to be performed all of the matters required upon the Closing
which are the responsibility of the Company or Xxxxxx; and (c) take such steps
and do such acts as may be necessary to make all of its warranties and
representations true and correct as of the Closing Date with the same effect as
if the same had been made, and this Agreement had been dated, as of the Closing
Date except to the extent that such representations and warranties may become
untrue or incorrect on the Closing Date because of changes occurring in the
ordinary course of business or as otherwise permitted by this Agreement.
SECTION 5. COVENANTS OF XXXXXXX AND PARENT.
5.1 Making of Covenants and Agreements. XxXxxxx and Parent make the
covenants and agreements set forth in this Section 5.
5.2 Authorization From Others. Prior to the date of the Closing,
XxXxxxx and Parent will use their best efforts to obtain all authorizations,
consents and permits of others, if any, required to permit consummation by
XxXxxxx of the transactions contemplated by this Agreement including (a)
consents from all third parties whose consent is so required in order to
consummate the transactions contemplated hereby, and (b) consents from, and
filings with, all federal, state, and local governmental agencies, commissions,
and authorities required in connection with the transactions contemplated
hereby. XxXxxxx agrees to use reasonable efforts to cooperate with Xxxxxx in his
attempt to amend the Glastonbury, Connecticut lease to provide that Xxxxxx shall
be granted a right of first refusal on the terms set forth in the lease.
5.3 Breach of Representations and Warranties; Notice to Xxxxxx.
Promptly upon the occurrence of, or promptly upon XxXxxxx'x becoming aware of
the impending or threatened occurrence of any event which would cause or
constitute a breach, or would have caused or constituted a breach had such event
occurred or
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been known to XxXxxxx prior to the date hereof, of any of the representations
and warranties of XxXxxxx contained in or referred to in this Agreement or in
any Schedule or Exhibit referred to in this Agreement, XxXxxxx shall give
detailed written notice thereof to Xxxxxx and shall use its best efforts to
prevent or promptly remedy the same.
5.4 Continued Efforts; Consummation of Agreement. XxXxxxx and Parent
shall use best efforts to (a) cause to be fulfilled and satisfied all of the
conditions to the Closing which are the responsibility of XxXxxxx or Parent; (b)
cause to be performed all of the matters required upon the Closing which are the
responsibility of XxXxxxx or Parent; and (c) take such steps and do such acts as
may be necessary to make all of its warranties and representations true and
correct as of the Closing Date with the same effect as if the same had been
made, and this Agreement had been dated, as of the Closing Date except to the
extent that such representations and warranties may become untrue or incorrect
on the Closing Date because of changes occurring in the ordinary course of
business or as otherwise permitted by this Agreement.
SECTION 6. CONDITIONS PRECEDENT TO XXXXXX'X OBLIGATIONS.
6.1 Conditions. The obligations of Xxxxxx to consummate this
Agreement and the transactions contemplated hereby are subject to the
satisfaction of the following conditions on or prior to the Closing except to
the extent that any such condition can be and is waived by Xxxxxx.
6.2 Performance by XxXxxxx. Each document and the consideration
required to be delivered pursuant to Section 1.4(b) shall have been delivered by
XxXxxxx to Xxxxxx.
6.3 Receipt of Escrow Amount. The Escrow Agent shall have delivered
to Xxxxxx the Escrow Amount.
6.4 No Proceedings. Since the date of this Agreement, there must not
have been commenced against the Company or XxXxxxx any legal proceeding (a)
involving any challenge to, or seeking damages or other relief in connection
with, any of the transactions contemplated hereby; or (b) that, if successful,
will have a material and substantial adverse effect on the viability of the
Company or XxXxxxx.
SECTION 7. CONDITIONS PRECEDENT TO XXXXXXX'X OBLIGATIONS.
7.l Conditions. The obligations of XxXxxxx to consummate this
Agreement and the transactions contemplated hereby are subject to the
satisfaction of the following conditions prior to the Closing except to the
extent that any such condition can be and is waived by XxXxxxx.
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7.2 Performance by the Company and Xxxxxx. Each document required to
be delivered pursuant to Section 1.4(a) shall have been delivered by Xxxxxx to
XxXxxxx.
7.3 Consent of Lessors. The Company shall have received a Consent to
Assignment in substantially the form of Exhibit 7.3 hereof from the landlord of
the Windsor, CT sales office. Notwithstanding the foregoing, on the Closing
Date, XxXxxxx will waive the condition set forth in this Section 7.3 in the
event that (a) Xxxxxx shall have failed to obtain such consent despite using
best efforts; (b) Xxxxxx agrees to indemnify XxXxxxx for any and all actual
damages incurred by XxXxxxx directly arising from the failure to obtain such
consent for relocation expenses and damages payable to such landlord, in
accordance with Section 8 hereof; and (c) there is withheld from the Purchase
Price and placed in escrow on the Closing Date the sum of One Hundred Thousand
Dollars ($100,000) as security for Xxxxxx'x obligations under this Section 7.3.
7.4 No Proceedings. Since the date of this Agreement, there must not
have been commenced against the Company or XxXxxxx any legal proceeding (a)
involving any challenge to, or seeking damages or other relief in connection
with, any of the transactions contemplated hereby; or (b) that, if successful,
will have a material and substantial adverse effect on the viability of the
Company or XxXxxxx.
SECTION 8. SURVIVAL OF WARRANTIES; INDEMNIFICATION.
8.1 Survival of Warranties. All representations, warranties,
agreements, covenants and obligations herein or in any schedule, exhibit,
certificate or financial statement referred to herein shall be deemed to have
been relied upon by the other party hereto and shall survive the Closing
regardless of any investigation made by or on behalf of either party hereto for
a period of one (1) year from the Closing Date, provided, however, that all
representations and warranties with respect to the Company's taxes (including
without limitation Section 2.11 hereof) shall survive the Closing for a period
equal to the length of the statute of limitations applicable to such taxes and
that all representations and warranties with respect to the Company's title to
its assets and properties and with respect to the Company's compliance with or
liability under the Environmental Laws (including, without limitation, Section
2.21 hereof) shall survive the Closing indefinitely, and in no event shall any
claim or action be brought by either party hereunder for breach of any
representation or warranty after the expiration of the period of survival for
the representation or warranty which is the subject of such claim or action and
shall not merge in the performance of any obligation by either party hereto.
8.2 Indemnification. (a) Xxxxxx shall indemnify and hold XxXxxxx
harmless against all claims, suits, obligations, liabilities, damages, losses,
costs, and
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expenses, including without limitation of the foregoing, reasonable attorney's
fees, based upon, arising out of, or resulting from: (i) any breach of any of
the representations and warranties of Xxxxxx or the Company set forth herein;
(ii) any breach by the Company or Xxxxxx of any covenant or obligation of the
Company or Xxxxxx in this Agreement; (iii) any actual or alleged failure by the
Company prior to the Closing Date to comply with any federal, state, or local
law, statute, ordinance, rule, regulation, or other governmental requirement
known to Xxxxxx, including, without limitation, any such law, statute,
ordinance, rule, regulation, or other governmental requirement relating to (A)
discrimination in employment opportunities, (B) the payment of severance
benefits to former employees, (C) the continuation of health insurance or other
benefits for former employees, or (D) the emission or release of pollutants or
contaminants into the environment; (iv) any liability or obligation of the
Company or Xxxxxx of any kind, nature or description arising from or relating to
the Company's operations prior to the Closing Date to the extent that such
liability or obligation (A) arose prior to the date hereof and is not
specifically disclosed in this Agreement or reflected in the Base Balance Sheet,
and was known or with the exercise of reasonable diligence should have been
known by the Company or Xxxxxx on the date hereof, or (B) arose after the date
hereof and not in the ordinary course of business; (v) claims for federal, state
or local taxes arising out of any period prior to the Closing Date for which the
times for filing the return has passed as of the Closing Date, whether from
audit adjustment or other cause; and (vi) any claim by any person for brokerage
or finders' fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such person with either the
Company or Xxxxxx in connection with the transactions contemplated hereby.
(b) XxXxxxx and Parent shall indemnify and hold Xxxxxx harmless
against all claims, suits, obligations, liabilities, damages, losses, costs, and
expenses, including without limitation of the foregoing, reasonable attorney's
fees, based upon, arising out of, or resulting from: (i) any breach of any of
the representations and warranties of XxXxxxx set forth herein; (ii) any breach
by XxXxxxx of any covenant or obligation of XxXxxxx in this Agreement; (iii) any
claim by any person for brokerage or finders' fees or commissions or similar
payments based upon any agreement or understanding alleged to have been made by
any such person with XxXxxxx in connection with the transactions contemplated
hereby; and (iv) any liability or obligation of Xxxxxx of any kind, nature or
description arising from or relating to XxXxxxx'x operation of the Company after
the Closing Date.
(c) Any claim for indemnification under this Agreement shall be
asserted by written notice from the party seeking indemnification (the
"Indemnitee") to the other party (the "Indemnitor"), describing in reasonable
detail the nature and amount of such claim. If any claim for indemnification
hereunder is based upon an action or claim filed or made against the Indemnitee
by a third party, the Indemnitee
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shall promptly notify the Indemnitor of such claim or demand, specifying the
nature of such claim or demand and the amount or the estimated amount thereof to
the extent then feasible, which estimate shall not be conclusive of the final
amount of such claim and demand (the "Claim Notice"). The Indemnitor shall have
thirty days from the personal delivery or mailing of the Claim Notice (the
"Notice Period") to notify the Indemnitee (A) whether or not it disputes its
liability to the Indemnitee hereunder with respect to such claim or demand and
(B) notwithstanding any such dispute, whether or not it desires, at its sole
cost and expense, to defend the Indemnitee against any such claim or demand.
(d) If the Indemnitor disputes its obligation to indemnify the
Indemnitee, the third party with respect to such claim or demand, or the amount
thereof (whether or not the Indemnitor desires to defend the Indemnitee against
such claim or demand as provided in paragraphs (e) and (f) below), such dispute
shall be resolved in accordance with Section 8.3 hereof. Pending the resolution
of any dispute by the Indemnitor of its liability with respect to any claim or
demand, such claim or demand shall not be settled without the prior written
consent of the Indemnitee, which consent shall not be unreasonably withheld or
delayed.
(e) In the event that the Indemnitor notifies the Indemnitee within
the Notice Period that it desires to defend the Indemnitee against such claim or
demand then, except as hereinafter provided, the Indemnitor shall have the right
to defend the Indemnitee at the Indemnitor's sole cost and expense, by
appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by it to a final conclusion in such a manner as to avoid any risk of
the Indemnitee becoming subject to further liability in respect of such matter;
provided, however, the Indemnitor shall not, without the prior written consent
of the Indemnitee (which consent shall not be unreasonably withheld or delayed),
consent to the entry of any judgment against the Indemnitee or enter into any
settlement or compromise which does not include, as an unconditional term
thereof, the giving by the claimant or plaintiff to the Indemnitor of a release,
in form and substance satisfactory to the Indemnitor, as the case may be, from
all liability in respect of such claim or litigation. If any Indemnitor desires
to participate in, but not control, any such defense or settlement, it may do so
at its sole cost and expense.
(f)(i) If the Indemnitor elects not to defend the Indemnitee against
such claim or demand, whether by not giving the Indemnitee timely notice as
provided above or otherwise, then the amount of any such claim or demand as
reduced to judgment or settlement, or if the same be defended by the Indemnitor
or by the Indemnitee (but the Indemnitee shall not have any obligation to defend
any such claim or demand), then that portion thereof as to which such defense is
unsuccessful, in each case, shall be conclusively deemed to be a liability of
the Indemnitor hereunder, unless the Indemnitor shall have disputed its
liability to the
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Indemnitee hereunder, as provided in (d) above, in which event such dispute
shall be resolved as provided in Section 8.3 hereof.
(ii) In the event an Indemnitee should have a claim against
Indemnitor hereunder that does not involve a claim or demand being asserted
against or sought to be collected from it by a third party, the Indemnitee shall
promptly send a Claim Notice with respect to such claim to the Indemnitor. If
the Indemnitor disputes its liability with respect to such claim or demand, such
dispute shall be resolved in accordance with Section 8.3 hereof.
(g) Notwithstanding anything to the contrary contained herein, (i)
Xxxxxx shall not be liable with respect to any amount to the extent coverable by
errors and omissions or other insurance in the amount currently in effect; and
(ii) XxXxxxx shall not assert any claims for indemnification hereunder against
Xxxxxx to the extent that and until, the aggregate of such claims exceed One
Hundred Sixty Thousand Dollars ($160,000), provided, however, that such dollar
limitation shall not apply to any claim for indemnification under Section
8.2(a)(vi) hereof.
8.3 Mediation. If any dispute, claim, disagreement or other matter
arising from or relating to this Agreement or the alleged breach of this
Agreement (including, without limitation, a dispute under Section 10.2 hereof)
cannot be settled within ten (10) days after any party sends written notice to
each other party to this Agreement, the parties shall try in good faith to
settle such matter by non-binding mediation which, in the event the matter
occurs prior to the Closing, shall take place in Hartford, Connecticut, and if
after the Closing, in Boston, Massachusetts, administered by the American
Arbitration Association under its Commercial Mediation Rules which are then in
effect before commencing litigation. The mediator shall be a disinterested
attorney who during the ten (10) year period preceding such matter has devoted
the majority of his or her professional time to practicing corporate, limited
liability company or partnership law for businesses located in the State of
Connecticut or the Commonwealth of Massachusetts, including but not limited to
forming, structuring, advising, purchasing, merging, selling and dissolving such
businesses. XxXxxxx and Xxxxxx each shall submit a written statement of their
position to each other and to the American Arbitration Association within
fifteen (15) days after the date of written notice from the American Arbitration
Association of the claim and each shall attend a hearing with the mediator
within thirty (30) days after the date of such notice, time being of the
essence.
8.4 Attorneys' Fees. The party losing any litigation proceeding
arising from or relating to this Agreement shall pay the costs, expenses and
fees, including reasonable attorneys' fees, incurred by the party prevailing in
such proceeding. The parties shall request that the judge make such an award
with any decision.
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8.5 Venue. (a) With respect to any judicial action to be taken prior
to the Closing, each party hereby designates the Hartford County, Connecticut
Superior Court or the United States District Court for the District of
Connecticut, as the exclusive courts of proper jurisdiction and venue of and for
any and all litigation relating to this Agreement; hereby irrevocably consents
to such designation, jurisdiction and venue; and hereby waives any objection or
defense relating to jurisdiction or venue with respect to any lawsuit or other
legal proceeding initiated in or transferred to the Hartford County, Connecticut
Superior Court or the United States District Court for the District of
Connecticut.
(b) With respect to any judicial action to be taken after the
Closing, each party hereby designates the Middlesex County, Massachusetts
Superior Court or the United States District Court for the District of
Massachusetts, as the exclusive courts of proper jurisdiction and venue of and
for any and all litigation relating to this Agreement; hereby irrevocably
consents to such designation, jurisdiction and venue; and hereby waives any
objection or defense relating to jurisdiction or venue with respect to any
lawsuit or other legal proceeding initiated in or transferred to the Middlesex
County, Massachusetts Superior Court or the United States District Court for the
District of Massachusetts.
SECTION 9. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING
9.1 Employee Benefit Plan. XxXxxxx shall use reasonable efforts
following the Closing to cause the Company to either terminate its 401(k)
retirement plan or merge it with and into XxXxxxx'x 401(k) retirement plan, in
either case subject to and in accordance with the requirements of ERISA.
9.2 Filing with S.E.C.. Parent shall file all reports or other
filings required with the SEC with respect to this transaction, including
without limitation, the preparation and filing of a Current Report on form 8-K
on or before the date which is fifteen (15) days from the date hereof.
9.3 Other Agreements. XxXxxxx shall cause the Company to: (a)
continue to account for, maintain and safeguard all deposits and other funds of
the customers of the Company after the Closing and to indemnify Xxxxxx with
respect to such funds; (b) use its best efforts to obtain the release of the
personal guaranty of the obligations of the Company by Xxxxx Xxxxxx to Savings
Bank of Manchester which shall include, if necessary, the guaranty of such
obligation by XxXxxxx; and (c) in the event XxXxxxx decides to renew or cause
the Company to renew the real estate lease with respect to the Company's
premises in Avon, Connecticut, enter into such renewal only on the condition
that Xxxxxx shall have no further obligation under said lease.
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9.4 No 338 Election. XxXxxxx and its affiliates shall not file a
Section 338 election or a Section 338(h)(10) election with respect to the
acquisition of the stock of DDRE by XxXxxxx.
SECTION 10. TERMINATION
10.1 This Agreement may, by notice given prior to or at the Closing,
be terminated:
(a) (i) by XxXxxxx if any of the conditions in Section 7 have not
been satisfied on or before the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of XxXxxxx to
comply with its obligations under this Agreement) and XxXxxxx has not waived
such condition on or before the Closing Date; or (ii) by Xxxxxx, if any of the
conditions in Section 6 have not been satisfied on or before the Closing Date or
if satisfaction of such a condition is or becomes impossible (other than through
the failure of Xxxxxx to comply with his obligations under this Agreement) and
Xxxxxx has not waived such condition on or before the Closing Date; or
(b) by mutual consent of XxXxxxx and Xxxxxx.
10.2(a) If this Agreement is terminated by either XxXxxxx or Xxxxxx
pursuant to Section 10.1(a) hereof, as a result of the failure by the other
party to satisfy Section 6.2 or Section 7.2 hereof, as the case may be, then the
terminating party shall be entitled to liquidated damages in the amount of One
Million Five Hundred Thousand Dollars ($1,500,000.00) (which, in the event that
Xxxxxx is the terminating party, shall be satisfied through receipt of the
Escrow Amount as provided in the Escrow Agreement) plus reasonable attorneys'
fees incurred by such terminating party to collect such liquidated damages,
which shall be the terminating party's sole remedy at law and in equity against
the non-terminating party, for any breach giving rise to a termination of this
Agreement as provided in this Section 10.
(b) If this Agreement is terminated by either XxXxxxx or Xxxxxx
pursuant to Section 10.1(a) hereof, as a result of the failure to satisfy any of
the conditions set forth in Sections 6.4, 7.3 or 7.4 hereof (unless any such
condition is waived by the other party), the Escrow Amount described in Section
1.2 hereof shall be returned to XxXxxxx and all further obligations of the
parties under this Agreement will terminate, except that the obligations in
Sections 11.10 and 11.11 will survive.
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SECTION 11. MISCELLANEOUS.
11.1 Law Governing. This Agreement shall be construed under and
governed by the laws of the State of Connecticut with respect to any matter or
dispute arising prior to the Closing, and thereafter, this Agreement shall be
construed under and governed by the laws of the Commonwealth of Massachusetts.
11.2 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given on the date of service if
served personally on the party to whom notice is to be given; or if delivered by
overnight private carrier, on the date of delivery; or on the third day after
mailing if mailed to the party to whom notice is to be given by first class
mail, certified, postage prepaid, and properly addressed as follows:
To XxXxxxx The XxXxxxx Company, Inc.
or Parent: 00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, President
Copies to: Xxxxxxx X. Xxxxxx, Xx., Esq.
Lynch, Brewer, Xxxxxxx & Xxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
To Xxxxxx Xxxxxx X. Xxxxxx
Dollar Dry Dock Real Estate, Inc.
Riverdale Farms, Building 9
000 Xxxxxxxx Xxxx
Xxxx, XX 00000
Copies to: Xxxxxx Xxxxxxx, Esq.
Xxxxxx, Xxxxx & Xxxxxx, P.C.
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
or to such other address of which either party may notify the other party.
11.3 Entire Agreement. This Agreement, including the Schedules,
Disclosure Schedule and Exhibits referred to herein, is complete and all
promises, representations, understandings, warranties and agreements with
reference to the subject matter hereof, and all inducements to the making of
this Agreement relied
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upon by either party hereto, have been expressed herein or in such Schedules,
Disclosure Schedule or Exhibits.
11.4 Assignability. This Agreement shall be assignable by XxXxxxx to
any affiliate of XxXxxxx upon written notice to Xxxxxx, although no such
assignment shall relieve XxXxxxx or Parent of any liability or obligation under
this Agreement. This Agreement may not be assigned by Xxxxxx without the prior
written consent of XxXxxxx. This Agreement shall be enforceable by, and shall
inure to the benefit of and be binding upon, the parties hereto and their heirs,
administrators, executors permitted successors and assigns and no others.
11.5 Amendment. This Agreement may be amended only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
11.6 Waiver. Any delay by any party hereto in enforcing any right
hereunder with respect to a breach of any provision of this Agreement shall not
operate nor be construed as a waiver of any such right. Any waiver must be in
writing and shall not operate as a waiver with respect to any subsequent breach.
11.7 Third Parties. This Agreement is entered into by the parties
hereto for the sole benefit of the parties hereto and their respective heirs,
executors, administrators, successors and permitted assigns. No third party
shall have any benefit, right or obligation under this Agreement.
11.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall be deemed to be one and the same instrument.
11.9 Fees and Expenses. Each of the parties will bear its own
expenses in connection with the negotiation and consummation of the transactions
contemplated by this Agreement. XxXxxxx acknowledges that the reasonable legal
and accounting fees and expenses incurred by Xxxxxx and the Company in
connection with this transaction will be paid for by the Company.
11.10 Public Announcements. Any public announcement, press release or
similar publicity with respect to this Agreement or the transactions
contemplated hereby will be issued, if at all, at such time and in such manner
as the Parent determines. Notwithstanding the foregoing, the Parent currently
anticipates that it will issue a press release announcing this transaction as
soon as practical after the signing of this Agreement. XxXxxxx and Xxxxxx will
consult with each other concerning the means by which the Company's employees
and sales associates,
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customers and suppliers and others having dealings with the Company will be
informed of the transactions contemplated hereby.
11.11 Confidentiality. Between the date of this Agreement and the
Closing Date, each of Xxxxxx and the Company on the one hand, and XxXxxxx and
Parent on the other hand, will maintain in confidence, and will cause its
respective directors, officers, employees, agents, and advisors to maintain in
confidence, any written, oral, or other information obtained in confidence from
the other party in connection with this Agreement or the transactions
contemplated hereby, unless (a) such information is already known to such party
or to others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the transactions
contemplated hereby (including, without limitation the filing by the Parent with
the Securities and Exchange Commission on or about 15 days following the date
hereof of a Current Report on Form 8-K with respect to the transactions
contemplated hereby), or (c) the furnishing or use of such information is
required in connection with any legal proceeding.
If the transactions contemplated hereby are not consummated, each
party will return or destroy as much of such written information as the other
party may reasonably request.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date set forth above.
DOLLAR DRY DOCK REAL ESTATE, INC.
By /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, President
THE HERITAGE GROUP, INC.
By /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, President
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, Individually
THE XXXXXXX COMPANY, INC.
By /s/ Xxxx X. Xxxxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxxxx, President
THE XXXXXXX COMPANIES, INC.
By /s/ Xxxxxxx X. XxXxxxx
------------------------------------
Xxxxxxx X. XxXxxxx, President
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The XxXxxxx Companies, Inc.
Form 8-K
Stock Purchase Agreement among The XxXxxxx Companies, Inc., The XxXxxxx
Company, Inc., Dollar Dry Dock Real Estate, Inc. ("DDRE"), The Heritage Group,
Inc. ("Heritage") and Xxxxxx X. Xxxxxx ("Xxxxxx")
List of Schedules and Exhibits Omitted from Stock Purchase Agreement
Exhibit 1.4(a)(2) Employment Agreement with Xxxxxx
Exhibit 1.4(a)(3) Non Competition Agreement Xxxxxx
Exhibit 1.4(a)(4) Opinion from Xxxxxx, Xxxxx & Xxxxxx, counsel to Xxxxxx
Exhibit 1.4(a)(5) Release by Xxxxxx
Exhibit 1.4(b)(4) Opinion from Lynch, Brewer, Xxxxxxx & Sands, LLP,
counsel to XxXxxxx
Exhibit 1.4(b)(5) Release by DDRE and Heritage
Exhibit 2.13 Schedule of Real Estate Leases
Exhibit 2.14A Schedule of Owned Furniture and Equipment
Exhibit 2.14B Schedule of Leased Furniture and Equipment
Exhibit 2.15 Schedule of Listing Agreements
Exhibit 2.16 Schedule of Escrow Funds
Exhibit 2.17 Schedule of Pending Closing Receivables
Exhibit 2.18 Schedule of Trademarks
Exhibit 2.23 Schedule of Litigation
Exhibit 2.25 Schedule of Insurance
Exhibit 2.26 Schedule of Accrued Commissions, Accounts Payable
and Accrued Expenses
Exhibit 2.27 Schedule of Employees and Sales Associates
Exhibit 7.3 Consent to Transaction by Windsor Lessor
Disclosure Schedule Exceptions, if any, to the representations, warranties
and agreements of Xxxxxx in the Agreement
The Registrant hereby undertakes to furnish supplementally a copy of
any omitted schedule to the Commission upon request.
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