Exhibit 2.1
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
DATED AS OF THE 21ST DAY OF MARCH 2003
BY
AND
AMONG
SRS TEXAS HOLDINGS, LLC
AND
NOBLE LOGISTIC SERVICES HOLDINGS, INC.
NOBLE LOGISTIC SERVICES, INC.
AND
NOBLE INTERNATIONAL, LTD.
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
THIS AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 21st day of March, 2003 ("Effective Date") by and among SRS TEXAS
HOLDINGS, LLC, a Texas limited liability company ("Buyer"), NOBLE LOGISTIC
SERVICES HOLDINGS, INC., a Texas corporation ("NLS"), NOBLE LOGISTIC SERVICES,
INC., a Michigan corporation ("Owner") and NOBLE INTERNATIONAL, LTD. a Delaware
corporation ("Parent").
WHEREAS, Buyer has agreed to purchase and the Owner has agreed to sell
one hundred percent (100%) of the outstanding capital stock of NLS (the "Stock")
under the terms and conditions of this Agreement.
WHEREAS, the parties entered into a Stock Purchase Agreement dated as
of February 26, 2003 (the "Original Agreement") to effectuate the purchase of
the Stock.
WHEREAS, the closing of the purchase under the Original Agreement has
not yet occurred and the parties now desire to amend and restate their agreement
with respect to the purchase.
WHEREAS, the following entities are wholly owned subsidiaries of NLS:
(a) Noble Logistic Services, Inc., a Texas corporation ("NLS-TX"); (b) Noble
Logistic Services Franchising, Inc., a Texas corporation ("NLSF"); (c) SYG
Franchisee Services, Inc., a Texas corporation ("SYG"); (d) Dedicated Services
Memphis Inc., a Texas corporation ("Memphis"); (e) Dedicated Services New York,
Inc., a Texas corporation ("New York"); (f) Dedicated Services California, Inc.,
a Texas corporation ("California"); and Dedicated Services Ohio, Inc., a Texas
corporation ("Ohio"). NLS-TX, NLSF, SYG, Memphis, New York, California and Ohio
are individually referenced herein as a Subsidiary and collectively as the
"Subsidiaries." (NLS and the Subsidiaries are collectively referred to as the
"Company").
WHEREAS, Owner owns all of the outstanding stock of Noble Logistic
Services, Inc., a California corporation ("NLS-CA") and Central Transportation,
Inc., a Delaware corporation ("CTD"). Whereas Parent owns all of the outstanding
stock of Owner.
WHEREAS, NLS-CA and CTD are engaged in substantially the same business
as NLS and the Subsidiaries.
WHEREAS, Buyer has expressed an interest in acquiring all of the assets
of NLS-CA, contemporaneously herewith (the "Companion Acquisition").
WHEREAS, Owner and Parent have deemed it advisable to enter into this
Agreement;
WHEREAS, Buyer has deemed it advisable to enter into this Agreement;
WHEREAS, capitalized terms used but not defined in the context of the
Section in which such terms first appear shall have the meaning set forth in
SECTION 9.13; and
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree that the
Original Agreement is replaced in its entirety and future agree as follows:
ARTICLE 1.
PURCHASE AND SALE
Section 1.1 The Purchase. Upon the terms and subject to the conditions
of this Agreement, at Closing (as defined below), Buyer shall purchase from
Owner the capital stock of NLS owned by the Owner so that after Closing Buyer
shall own one hundred percent (100%) of NLS in exchange for the consideration
set forth in SECTION 1.2.
Section 1.2 Purchase Price. The purchase price ("Purchase Price") for
the Stock shall be Three Million and 00/100 Dollars ($3,000,000), plus
additional consideration set forth below, and shall be payable as follows:
(a) One Million Five Hundred Thousand and 00/100
Dollars ($1,500,000.00) in cash, payable to the Owner by federal wire
transfer on the date of Closing in accordance with such instructions as
the Owner may provide to the Buyer at least 72 hours prior to the
Closing; and
(b) Delivery of a promissory note (the "First Note")
in the principal sum of One Million Five Hundred Thousand Dollars
($1,500,000), substantially in the form of Exhibit 1.3(b)(1) secured
by, among other things, all of the Assets and all other assets of
Buyer, which First Note and liens shall be subordinate to any lender
that provides financing to Buyer for this transaction in an amount not
to exceed $2,750,000; plus
(c) Delivery of:
(1) A promissory note (the "Receivable Note") in an
amount equal to the Company's accounts receivable that were
actually invoiced by NLSI or Owner prior to March 16, 2003
(the "Invoiced Receivables") minus $210,000. The Receivable
Note shall not bear interest and shall be payable on the
following schedule:
(i) On April 15, 2003, 25% of the principal
amount of the Receivable Note;
(ii) On April 30, 2003, 25% of the principal
amount of the Receivable Note;
(iii) On June 30, 2003, 33% of the principal
amount of the Receivable Note;
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(iv) On July 31, 2003, 17% of the principal
amount of the Receivable Note;
After the above payments, the Receivable Note shall terminate;
(2) A promissory note (the "Accrued Revenue Note") in
an amount equal to the sum Estimated Accrued Revenue less the
Estimated Accrued Payroll. The "Estimated Accrued Revenue"
means all accounts receivable and revenue of the Company
accrued but not invoiced as of 5:00 p.m. Central Standard Time
on March 15, 2003, less the estimated amount of the accrued
but unpaid hourly and salaried employee salary, employee
driver salary, wages and driver independent contractor
payables (which shall include all Company and Employee payroll
related taxes, including, but not limited to, FICA and FUTA
withholding, Medicare withholding, state employment tax and
payroll related workers' compensation expense) (collectively
"Total Payroll") owed by the Company as of 5:00 p.m. Central
Standard Time on March 15, 2003 (the "Estimated Accrued
Payroll"), all as estimated by the Parties at Closing using
their Best Efforts. Owner will provide for cash funding for
all pay periods beginning and ending prior to Closing. The
Accrued Revenue Note shall be payable according to the same
payment schedule as the Receivable Note and shall not bear
interest.
(d) Adjustment. The Accrued Revenue Note and, if necessary,
the Receivable Note may be adjusted by the Parties as follows:
(1) Within five business days following the Closing
Date, the Parties shall use their Best Efforts to agree on the
actual amount of accounts receivable of the Company accrued
but not invoiced as of 5:00 p.m. Central Standard Time on
March 24, 2003 (the "Actual Accrued Revenue"). If the Actual
Accrued Revenue exceeds the Estimated Accrued Revenue, the
principal amount of the Accrued Revenue Note shall be
increased to the extent of such difference. If the Actual
Accrued Revenue is less than the Estimated Accrued Revenue,
the principal amount of the Accrued Revenue Note shall be
decreased to the extent of such difference. If the amount of
any decrease of the Accrued Revenue Note is equal to or
greater than the principal amount of the Accrued Revenue Note
estimated as of Closing, the principal amount of the Accrued
Revenue Note shall be reduced to zero, the Accrued Revenue
Note shall be cancelled, and the remainder of the requisite
adjustment amount shall be deducted from the principal amount
of the Receivable Note.
(2) Within five business days following the Closing
Date, the Parties shall use their Best Efforts to agree on the
actual amount of the payroll expenses described in SECTION
1.3(C)(2) (the "Actual Payroll"). If the Actual Payroll
exceeds the Estimated Payroll, the principal amount of the
Accrued Revenue Note, or, if the Accrued Revenue Note has been
cancelled pursuant to SECTION 1.3(D)(1), the Receivable Note,
shall be decreased to the extent of such difference. If the
Actual Payroll is less than the Estimated Payroll, the
principal amount of the Accrued Revenue Note, or if the
Accrued Revenue Note has been cancelled
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pursuant to SECTION 1.3(D)(1), the Receivable Note, shall be
increased to the extent of such difference. If the amount of
any decrease in the principal amount of the Accrued Revenue
Note is equal to or greater than the principal amount of the
Accrued Revenue Note executed at Closing (as adjusted pursuant
to SECTION 1.3(D)(1)), the principal of the Accrued Revenue
Note shall be reduced to zero and the Accrued Revenue Note
shall be cancelled and the remainder of the requisite
adjustment shall be deducted from the principal amount of the
Receivable Note.
(3) After completion of the adjustments described in
SECTIONS 1.3(D)(1) and (2), within five business days
following the Closing Date, the Buyer and the Owner shall
execute an Amended and Restated Receivables Note and an
Amended and Restated Accrued Revenue Note if and to the extent
the principal amounts of such notes have changed according to
the adjustment process described herein.
(e) Owner and Company shall ensure that immediately prior to
Closing, the Company shall have sufficient cash to fund checks issued
but unpaid for the Estimated Accrued Payroll. To the extent that
receipts for client receivables received from and including March 16,
2003 through Closing (the "Gap Period Collection") exceed the Estimated
Accrued Payroll, the Receivable Note shall be adjusted downward dollar
for dollar. To the extent that the Gap Period Collections are less than
the Accrued Payroll, the Receivable Note will be adjusted upward dollar
for dollar.
(f) The adjustment for the Accrued Revenue Note and Receivable
Note shall be adjusted in accordance with the sample calculations set
forth on EXHIBIT 1.3(C).
(g) Distribution of Actual Payroll. The Company agrees that it
will fund payroll accrued up to and through Closing Date. Buyer agrees
that it shall be responsible for the distribution of Actual Payroll to
the relevant recipients when due following the Closing, and the
distribution of paychecks to employees of the Company for the pay
period ending on March 24, 2003.
Section 1.3 Closing. Closing of the transactions contemplated by this
Agreement (the "Closing") shall take place no later than March 21, 2003 (the
"Closing Date"). The Closing shall take place on the designated day in the
office of Xxxxx, Xxxxxx & XxXxxxxx, L.L.P., 0000 Xxxxx Xxxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx 00000 or such other place as the parties may agree, and shall be
effective at 5:00 p.m. Eastern Standard Time on the Closing Date. The Buyer and
the Owner agree that they will use their Best Efforts and negotiate in good
faith to resolve any disputes between the parties related to this Agreement.
Section 1.4 Other Deliveries on the Closing Date.
(a) NLS', Parent's, and Owner's Obligations. On the Closing
Date, NLS, Parent, and the Owner, as applicable, shall deliver to Buyer
each of the following documents in form and substance reasonably
satisfactory to Buyer:
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(1) A good standing certificate for NLS and each of
the Subsidiaries from the Comptroller of the State of Texas
and all applicable governmental entities dated no more than
five (5) days prior to Closing, if available.
(2) A Certificate of Existence from the Secretary of
State of the State of Texas and all applicable governmental
entities for NLS and each of the Subsidiaries dated within a
reasonable period of time prior to Closing.
(3) A certificate of the Secretary of NLS and Owner
certifying resolutions duly adopted by NLS' or Owner's Board
of Director's (as applicable) obtained at least five (5) days
prior to Closing (i) authorizing the execution, delivery and
performance of this Agreement on behalf of NLS and Owner (as
applicable).
(4) An agreement relating to the pursuit and
settlement of claims relating to the Asset Purchase Agreement
dated February 28, 2001, by and among Xxxxxx Enterprises,
Inc., DSI Franchising, Inc., DSI Holdings, Inc., Noble
Holdings, Ltd. and Noble International, Ltd. The agreement
will provide that although all rights relating to any claims
under this Asset Purchase Agreement will be assigned to Buyer,
Owner and Buyer will agree, in a form reasonably satisfactory
to Buyer, that Owner or Parent will be able to discount or
otherwise compromise amounts owed by purchaser under the Asset
Purchase Agreement in an effort to enforce the non-competition
provisions set forth in the Asset Purchase Agreement and/or
otherwise resolve any disputes between the parties in a form
reasonably satisfactory to Buyer.
(5) An agreement relating to Owner's claims against
Xxxxxxxxxxx Xxxxxxx, Xxxxxx "Chip" Prescott, CNP Holdings LLC,
Reliable Transportation Solutions, Ltd., Xxxxx & Xxxxxx
Enterprises, and their related entities, including claims
which the Owner may have against the prior owners of the
Company. The agreement will provide that such claims will be
assigned to Owner. Owner agrees that it will not take any
actions against Xxxxx Xxxxxxx or the former owners of the
Company, excluding Xxxxx Xxxxxx, so long as Buyer is not in
default of the Receivable Note. Upon the payment of the
$392,000 set forth in Section 1.2(c)(1), Owner shall assign to
NLS all of its rights against Xxxxx Xxxxxxx, his interest in
related entities, and the former owners of the Company,
excluding Xxxxx Xxxxxx, and Owner may pursue its claim against
Prescott, CNP Holdings, LLC, JL&S Enterprises, Xxxxx and
Xxxxxx Enterprises a/k/a Xxxxx and Xxxxxx.
(6) An agreement relating to the pursuit and
settlement of claims set forth in Section 2.1(j). The
agreement will provide that Buyer and the Company will
cooperate with Owner in Owner's settlement and defense
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of such claims and that Buyer and the Company will agree to
reasonable commercial efforts to aid Owner in the settlement
and defense of such claims, including making reasonable
commercial accommodations to assist Owner in the settlement of
such claims, subject to the provisions of Section 5.3.
(7) Documentation evidencing that Owner, or its
Affiliates, shall have completed the closing of the Companion
Acquisition on or before the Closing Date.
(8) Such other documents and certificates as
reasonably may be required by Buyer to consummate this
Agreement and the transactions contemplated herein.
(b) Buyer's Obligations. On the Closing Date, Buyer shall
deliver to the Owner each of the following documents in form and
substance reasonably satisfactory to Owner:
(1) Certificate of Existence from the Secretary of
State of the State of Texas.
(2) Intentionally Omitted.
(3) Certificates of the Secretary of Buyer certifying
a resolution duly adopted by Buyer's sole Member obtained at
least five (5) days before Closing authorizing the execution,
delivery and performance of this Agreement on behalf of Buyer.
(4) Such other documents and certificates as
reasonably may be required by the Owner to consummate this
Agreement and the transactions contemplated herein.
(5) Documentation evidencing that Buyer, or its
Affiliates, shall have completed the closing of the Companion
Acquisition on or before the Closing Date.
(6) A promissory note in the principal sum of Three
Hundred Ninety-Two Thousand Dollars ($392,000), substantially
in the form of Exhibit 1.5(b)(6).
Section 1.5 Noncompete Agreements. On the Closing Date, NLS, Owner and
Parent shall enter into a Noncompete Agreement containing covenants duplicative
of those set forth in Section 7.
Section 1.6 Due Diligence. [Intentionally Omitted].
Section 1.7 Excluded Assets. The claims set forth in Exhibit 1.7 shall
be transferred to Owner prior to the Closing Date, except as provided for in
Section 1.4(a)(5).
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Section 1.8 Exclusivity. Prior to March 15, 2003, Owner, Parent and NLS
shall not, directly or indirectly, through any of their respective directors,
officers and employees, independent contractors, consultants, counsel,
accountants, investment advisors and other representatives or agents
(collectively, "Representatives") or otherwise, solicit or entertain offers
from, negotiate with or in any manner encourage, discuss, accept or consider any
proposal of any other person relating to the sale of the Stock or substantially
all of NLS', the Subsidiaries', NLS-CA,'s or CTD's assets or businesses whether
through direct purchase, merger, consolidation, or other business combination or
relating to a sale or transfer of more than 25% of the outstanding stock of NLS,
Subsidiaries, NLS-CA, or CTD (a "Proposal"). The Buyer acknowledges that NLS and
the Owner have previously actively marketed the sale of the business and the
Stock and that the receipt of and response to a Proposal shall not constitute a
breach of this SECTION 1.8 if such response does no more than indicate that (a)
the Proposal has been received, (b) the Owner or NLS have entered into an
agreement with respect to the acquisition contemplated herein or in the
Companion Agreement (as applicable), and (c) the Owner or NLS will not negotiate
with the parties offering the Proposal at this time. Owner will promptly provide
Buyer with a copy of any Proposal.
Section 1.9 [Intentionally Omitted].
Section 1.10 Schedules. Owner shall use its reasonable efforts to
deliver the schedules referred to in this Agreement (the "Schedules") to the
Buyer as soon as possible. Should the Schedules require updating due to
circumstances or information discussed prior to the Closing Date, Owner will
update the Schedules as soon as reasonably practical after learning of any
needed update. The Schedules shall be correct as of the date hereof and as of
the Closing Date.
Section 1.11 Accounting Back-Up. By 5:00 p.m. Central Standard Time on
the Closing Date and on March 24, 2003, Owner shall cause NLS to back-up its
accounting systems and store such back-up at an offsite storage location within
a reasonable time thereafter. Owner shall make such back-up available to Buyer.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF NLS AND OWNER
Section 2.1 Representations and Warranties of NLS. NLS and Owner make
the following representations and warranties to Buyer:
(a) Due Organization and Power.
(1) Owner. Owner is a corporation duly organized and
validly existing under the laws of the State of Michigan.
Owner and Parent have all requisite corporate power to enter
into this Agreement and the other documents and instruments to
be executed and delivered by Parent and Owner pursuant hereto
and to carry out the transactions contemplated hereby and
thereby.
(2) Company. Company is a corporation duly organized
and validly existing and in good standing under the laws of
the State of Texas. Company has all requisite corporate power
and authority to own, operate and lease its properties and to
carry on its business as and where such is now being
conducted. Company
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is duly qualified or registered to do business as a foreign
corporation, and is in good standing, in each jurisdiction in
which the character of the properties owned or leased by it,
or the nature of its business, makes such qualification or
registration necessary under applicable Law, except where the
failure to be so qualified or registered or to be in good
standing would not, individually or in the aggregate, have a
Material Adverse Effect. The stock records and minute books of
NLS and each Subsidiaries, which have been made available to
Buyer, are materially correct and complete in all respects.
(b) Authority. The execution and delivery of this Agreement
and the other documents and instruments to be executed and delivered by
Owner pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board
of Directors of Owner. No other corporate act or proceeding on the part
of Owner or its shareholders is necessary to authorize this Agreement
or the other documents and instruments to be executed and delivered by
Owner pursuant hereto or the consummation of the transactions
contemplated hereby and thereby. This Agreement constitutes, and when
executed and delivered, the other documents and instruments to be
executed and delivered by Owner pursuant hereto will constitute, valid
and binding agreements of Owner, enforceable in accordance with their
respective terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other Laws affecting creditors' rights
generally, and by general equitable principles.
(c) Subsidiaries. Company does not own, directly or
indirectly, any capital stock or other equity securities of any
corporation or have any direct or indirect equity or other ownership
interest in any entity, other than the Subsidiaries.
(d) Capitalization of Company. The authorized capital stock of
NLS consists entirely of one hundred thousand (100,000) shares of
common stock, par value ($.01) per share. No shares of such capital
stock are issued or outstanding except for one thousand (1,000) shares
of common stock of Company that are owned of record and beneficially by
Owner (the "Company Shares"). All such shares of capital stock of
Company are validly issued, fully paid and nonassessable. There are no
(i) securities convertible into or exchangeable for any of Company's
capital stock or other securities; (ii) options, warrants or other
rights to purchase or subscribe to capital stock or other securities of
Company or securities that are convertible into or exchangeable for
capital stock or other securities of Company; or (iii) except as set
forth in Schedule 2.1(d), contracts, commitments or agreements relating
to the issuance, sale or transfer of any capital stock or other equity
securities of Company, any such convertible or exchangeable securities
or any such options, warrants or other rights; and (iv) all of the
issued and outstanding shares of the Subsidiaries are owned by NLS.
(e) Title. Owner owns directly through legal and valid title
the Company Shares, free and clear of all Liens. Upon payment of the
amounts set forth in 1.2(a) as contemplated herein, Owner will convey
to Buyer all of Owner's rights, title and interest in and to the
Company Shares, free and clear of all Liens, except those created
herein.
(f) No Violation. Except as set forth in Schedule 2.1(f),
neither the execution and delivery of this Agreement or the other
documents and instruments to be executed and
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delivered by Owner or NLS pursuant hereto nor the consummation by Owner
of the transactions contemplated hereby and thereby (i) will violate
any Law or any Order applicable to Owner or Company, except for such
violations, the occurrence of which would not, individually or in the
aggregate, have a Material Adverse Effect on Owner's ability to perform
its obligations hereunder, (ii) will require any authorization, consent
or approval by, filing with or notice to any Government Entity, except
for (A) such authorizations, consents, approvals, filings or notices,
the failure of which to obtain or make would not, individually or in
the aggregate, have a Material Adverse Effect on Owner's ability to
perform its obligations hereunder, and (B) such authorizations,
consents, approvals, filings or notice requirements that become
applicable solely as a result of the specific regulatory status of
Buyer or any of its Affiliates, (iii) subject to obtaining the consents
referred to in Schedule 2.1(f), will violate or conflict with, or
constitute a default (or an event that, with notice or lapse of time,
or both, would constitute a default) under, or will result in the
termination of, or accelerate the performance required by, or result in
the creation of any Liens upon any of the assets of Company (or the
Company Shares) under, any term or provision of the Articles of
Incorporation or Bylaws of Company or of the express terms of any
Contract to which Owner or Company is a party or by which Owner or
Company or any of their respective assets or properties are bound or
affected, except for such violations, conflicts, defaults,
terminations, accelerations or Liens that would not, individually or in
the aggregate, have a Material Adverse Effect on Company or Owner's
ability to perform its obligations hereunder, and (iv) will violate any
agreement, note, bond, mortgage, indenture, deed of trust, license,
franchise, permit concession, lease or other instrument, obligation or
agreement of any kind to which NLS, any of the Subsidiaries or the
Owner is now a party or by which NLS, any of the Subsidiaries or the
Owner or any of their properties or assets, is, or may be, bound or
affected, the violation of which would have a Material Adverse Effect
on Company.
(g) Financial Statements. Owner has delivered to Buyer
complete and correct copies of the following financial statements
(1) the unaudited balance sheet (the "Balance Sheet")
of NLS-TX as of December 31, 2002 (the "Balance Sheet Date")
and the unaudited related statements of operations, of
stockholder's equity, and of cash flows for the twelve month
period ended December 31, 2002 and the one-month period ending
January 31, 2003 (such balance sheets, the related statements
of operations, of stockholder's equity and of cash flows and
the related notes and schedules are referred to herein as the
"Financial Statements"). The Balance Sheet and the Financial
Statements (collectively, the "Statements") are attached as
SCHEDULE 2.1(G)(1) to this Agreement.
(2) The Statements are true, complete and correct and
have been prepared in accordance with the books and records of
NLS-TX and the Balance Sheet has been prepared in accordance
with GAAP consistently applied except for provisions for
accrued vacation; the balance sheets in the Statements fairly
present the financial position and assets of Company as of
their respective dates and set forth in full and reflect all
indebtedness and known Liabilities, including Taxes, of
Company (whether accrued, absolute, contingent or otherwise)
as of such dates; the Statements fairly present the results of
operations of Company for the periods indicated and covered
thereby; and the Owner or NLS' equity of XXX-
0
TX as of such dates was as set forth in the Statements, after
full provision and reserves for all Taxes and other known
Liabilities for all periods up to the dates thereof.
(h) Tax Matters.
(1) Returns. All Tax returns required to be filed by
or on behalf of Company have been timely filed or will be
timely filed (within the time permitted by any timely filed
extension) and, when filed, were or will be complete and
accurate, except for any failures to file Tax returns or any
inaccuracies in filed Tax returns that would not, individually
or in the aggregate, have a Material Adverse Effect. All Taxes
shown as due and owing by Company on such Tax returns and the
Tax returns to be filed by Buyer pursuant to Section 5.5, and
Company's share of the Taxes on the Tax returns to be filed by
Buyer pursuant to Section 5.5, have been paid or adequately
accrued by NLS or Company, except for any failures to pay or
adequately accrue such Taxes that would not, individually or
in the aggregate, have a Material Adverse Effect. Company has
complied with all rules and regulations relating to the
withholding of Taxes, except for any such failures to comply
that would not, individually or in the aggregate, have a
Material Adverse Effect.
(2) Audits. Except as set forth on Schedule
2.1(h)(2), as of the date hereof, (A) there is no audit
examination, deficiency or proposed adjustment pending or, to
the Knowledge of Owner, threatened with respect to any Taxes
due and owing by Company, and (B) there are no outstanding
agreements or waivers extending the statutory period of
limitations for a Tax Assessment applicable to any Tax return
or report of Company with respect to a taxable period for
which such statute of limitations is still open.
(3) There is no dispute or claim concerning any Taxes
of NLS or any of the Subsidiaries either (1) claimed or raised
by any authority orally or in writing, or (2) as to which the
Owner, Parent or and NLS have Knowledge. The Owner has made
available to the Buyer correct and complete copies of all Tax
returns, examination reports, and statements of deficiencies
assessed against or agreed to by NLS or any of the
Subsidiaries.
(4) NLS and each of the Subsidiaries has not waived
any statute of limitations in respect of Taxes or agreed to
any extension of time with respect to a Tax assessment or
deficiency.
(5) Affiliated Group. Schedule 2.1(h)(5) lists every
year that Company was a member of an affiliated group of
corporations that filed a consolidated federal income Tax
return for which the statute of limitations does not bar a
federal income tax assessment.
(i) Absence of Certain Changes. Except as set forth in
Schedule 2.1(i), since the date of the Statements, there has not been
(i) any material adverse change in the financial
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condition or results of operations of Company, other than (A) changes
resulting from developments or occurrences (including, without
limitation, occurrences commonly referred to as terrorist attacks or
any armed hostilities associated therewith) relating to or affecting
United States or foreign economies in general or the industry of
Company in general ("General Changes") and (B) changes that are the
result of actions taken by Buyer prior to the Closing Date or as
contemplated herein that have an effect on Company, including, without
limitation, any disruptions to the business of Company as a result of
the execution of this Agreement, the announcement by Buyer of its
intention to acquire Company or the announcement by Owner of its
intention to divest Company and the consummation of the transactions
contemplated hereby ("Transaction Changes"); (ii) any material increase
in the compensation, salaries or wages payable or to become payable to
any employee of Company, except in the ordinary course of business or
as required under employment agreements in effect as of the date of the
Statements; (iii) any entry by Company into any employment, severance
or termination agreement with any employee of Company, or any amendment
thereto; (iv) any declaration, setting aside or payment of any dividend
or any other distribution in respect of Company's capital stock other
than cash distributions made pursuant to Owner's cash management
procedures; (v) any sale, lease or other transfer or disposition of any
material properties or assets of Company, except for properties and
assets sold in the ordinary course of business consistent with past
practice; (vi) except in the ordinary course, any material payment of
any dividends or any other distributions or payments to the Parent,
Owner, or Affiliated entities of Parent, other than payments to Owner
and/or Parent of outstanding cash held by the Company; (vii) any
accelerated payments on the inter-company obligations or Liabilities of
NLS or the Subsidiaries; (viii) any loss of officers, directors,
employees, dealers, distributors, independent contractors, customers or
suppliers suffered by NLS or any of the Subsidiaries which had or may
reasonably be expected to result in a Material Adverse Effect; (ix) any
material loss, damage, destruction of property or assets or other
casualty to property or assets (whether or not covered by insurance)
suffered by NLS or any of the Subsidiaries.
(j) No Litigation. Schedule 2.1(j) sets forth, as of the date
hereof, all actions, suits, arbitrations, proceedings or investigation
pending or, to the Knowledge of Owner, threatened against Company.
There is no outstanding Order against or adversely affecting Company,
or such other actions, suits, arbitrations, investigations or Orders
that would, individually or in the aggregate, have a Material Adverse
Effect or would reasonably be expected to have the effect of
preventing, delaying, making illegal or otherwise interfering with any
of the transactions contemplated by this Agreement.
(k) Compliance With Laws and Orders. To the Knowledge of
Owner, the business of Company is not being conducted in violation of
any laws or orders applicable to Company, except for violations that
would not, individually or in the aggregate, have a Material Adverse
Effect and except as set forth in Schedule 2.1(k).
(l) Licenses and Permits. Company has all licenses, permits,
approvals, authorizations and consents of all Government Entities
required for the conduct of the business of Company as presently
conducted and the operation of its Facilities (any real property,
leaseholds or other interests and any buildings, plants or structures
currently
11
owned or operated by Company) as presently operated, except for
failures to have such licenses, permits, approvals, authorizations or
consents that would not, individually or in the aggregate, have a
Material Adverse Effect. Company is in compliance with all such permits
and licenses, approvals, authorizations and consents, except for such
instances of noncompliance as would not, individually or in the
aggregate, have a Material Adverse Effect.
(m) Environmental Matters. Owner makes no representation or
warranty in this Agreement as to any matters relating to the
environment, Hazardous Substances or Environmental Laws except in this
Section 2.1(m). Except as set forth in Schedule 2.1(m):
(1) To the Knowledge of Owner, all of Company's
operations in, on or at the Facilities comply with all
applicable Environmental Laws and all permits, licenses,
registrations and other authorizations required to be obtained
by Company under applicable Environmental Laws to operate the
Facilities as they are currently operated, except for any
failures to comply with such Environmental Laws or with such
permits, licenses, registrations or authorizations that would
not, individually or in the aggregate, have a Material Adverse
Effect;
(2) To the Knowledge of Owner, no Hazardous
Substances have been produced, sold, used, stored,
transported, handled, released, discharged or disposed of at
or from the Facilities by any person in a manner that violated
any applicable Environmental Law, except for such violations
that would not, individually or in the aggregate, have a
Material Adverse Effect;
(3) To the Knowledge of Owner, Company has not
received written notice from any Government Entity that the
Facilities are in violation or allegedly in violation of, do
not comply with or allegedly do not comply with, or are the
basis for liability or alleged liability under any applicable
Environmental Law, except for such violations, noncompliance
or liabilities that would not, individually or in the
aggregate, have a Material Adverse Effect; and
(4) There are no defects in the environmental, zoning
or other permits pertaining to the operation of the assets of
Company, except for such defects that would not, individually
or in the aggregate, have a Material Adverse Effect, and after
the Closing Date, Owner will not undertake, directly or
indirectly, any challenges to the environmental, zoning or
other permits relating to the operation of the business of
Company.
(n) Title to Assets; Liens. Except as disclosed in
Schedule 2.1(n), Company and Subsidiaries own or leases all of
the material properties and assets reflected in the
Statements, except for properties and assets sold since the
date of the Statements in the ordinary course of business
consistent with past practice. Except as disclosed in Schedule
2.1(n), or as reflected in the Statements, such properties and
assets owned by Company are held free and clear of any Liens,
except (i) for Liens for current Taxes and assessments not yet
due and payable or being contested in good faith by
appropriate
12
proceedings, (ii) as reflected in title records relating to
real property owned by Company, and (iii) for Liens that,
individually or in the aggregate, do not materially detract
from the value, or impair in any material manner the use, of
the properties or assets subject thereto. Except as disclosed
in Schedule 2.1(n), the properties and assets of Company
comprise all of the material assets and rights of Company,
tangible and intangible (including Intellectual Property
Rights), that Company uses in the conduct of its business as
conducted on the date hereof. Except with respect to the
representations and warranties contained in this Section
2.1(n), Buyer is acquiring the assets of Company being
transferred to Buyer upon the acquisition by Buyer of the
Company Shares AS IS, WHERE IS. PARENT AND OWNER DISCLAIM ALL
OTHER EXPRESS OR IMPLIED WARRANTIES RELATING THERETO,
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
(o) Material Contracts. Schedule 2.1(o) sets forth a
list as of the date hereof of each of the following types of
Contracts to which Company and Subsidiaries are a party (each,
a "Material Contract"):
(1) Any Contract or oral agreement involving
the future performance of services or delivery of
goods or materials by Company which in 2002 was of an
amount or value in excess of One Hundred Thousand
Dollars ($100,000);
(2) Any Contract involving future annual
expenditures of Company in excess of One Hundred
Thousand Dollars ($100,000);
(3) Any collective bargaining agreement or
other Contract to or with any labor union or other
employee representative of a group of employees;
(4) Any employment Contract with any
employee of Company that has future liability in any
year in excess of One Hundred Thousand Dollars
($100,000);
(5) Any Contract for future performance of
services or delivery of goods or materials by the
Company which term is greater than one year;
(6) Any joint venture or partnership
Contract;
(7) Any Contract containing covenants that
materially restrict the future business activity of
Company;
(8) Any Contract relating to the borrowing
of money in excess of Fifty Thousand Dollars
($50,000); or
(9) Any Contract constituting a lease,
sublease, sub-sublease, prime lease or similar
interest in real property under which Company is a
party or holds such property.
13
Owner has delivered to, or made available for inspection by, Buyer a
copy of each Material Contract. Except as set forth in Schedule 2.1(o),
to the Knowledge of Owner, each Material Contract is in full force and
effect and is valid and enforceable by Company in accordance with its
terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other Laws affecting creditors' rights generally, and
by general equitable principles. Except as set forth in Schedule
2.1(o), to the Knowledge of NLS, Company is in compliance in all
material respects with all material terms and requirements of each
Material Contract.
(p) Employee Benefit Plans; Labor.
(1) Schedule 2.1(p)(1) lists each material benefit
plan (within the meaning of ERISA), employment contract, stock
option, stock appreciation right, phantom stock, restricted
stock, severance, termination or other compensation plan,
program, arrangement or understanding maintained or
contributed to by Parent or Company for the benefit of Active
Employees or Former Employees (the "Company Benefit Plans").
Within a reasonable time after Closing, Parent will deliver
to, or make available for inspection by, a copy of each
Company Benefit Plan.
(2) None of the Company Benefit Plans that cover
current employees of Company is a "multiemployer plan" as
defined in Section 3(37) of ERISA.
(3) Except as set forth on Schedule 2.1(p)(3), as of
the Closing Date there are no pending grievances, labor
arbitrations or other labor disputes relating to employees of
Company, except for such grievances, arbitrations or other
disputes that would not, individually or in the aggregate,
have a Material Adverse Effect. Except as set forth on
Schedule 2.1(p), as of the date hereof, Company has not
suffered any strike, picketing or work stoppage by any group
of employees of Company affecting Company during the three (3)
years preceding the date hereof.
(4) Except as set forth in Schedule 2.1(p)(3)(4),
NLS' employees are not represented by labor unions.
(q) Intellectual Property Rights. Schedule 2.1(q) sets forth a
list, as of the Closing Date, of all United States or foreign patents,
registered trademarks, registered copyrights and applications therefor,
computer software (excluding office productivity software such as
Microsoft Office(TM), PowerPoint(TM), etc.), trade secrets and internet
domain names used by Company in, and material to, the conduct of the
business of Company as presently conducted (the "Intellectual Property
Rights") and the entity that owns such Intellectual Property Rights.
Company owns or possesses adequate licenses or other valid rights to
use all Intellectual Property Rights, and to the Knowledge of Owner,
the conduct of the business of Company as presently conducted does not
conflict with any valid patents, trademarks, tradenames, licenses,
proprietary rights or copyrights of others, except for such conflicts
that would not, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth in Schedule 2.1(q), no
Non-Exclusive Intellectual Property is used by Company in, or is
material to, the conduct of the business of Company as presently
conducted.
14
(r) No Undisclosed Liabilities. Except as set forth in
SCHEDULE 2.1(R), and as disclosed in this Agreement, there are no
Liabilities of the Company which would, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(s) 2000 Stock Purchase Agreement. There have been no
assignments of any rights, duties or obligations of NLS' or Owner's (or
any of its successors) under that certain Stock Purchase Agreement
dated July 13, 2000, and all such rights, duties and obligations are
the property of NLS as of the Closing Date.
Section 2.2 Brokers. Except as set forth in SCHEDULE 2.2, none of NLS,
the Subsidiaries or the Owner, nor any of their respective directors, officers
or employees has employed any broker, finder, or financial advisor or incurred
any liability for any brokerage fee or commission, finder's fee or financial
advisory fee, in connection with the transactions contemplated hereby, nor is
there any basis known to the Owner for any such fee or commission to be claimed
by any person or entity.
Section 2.3 Knowledge. As used in this Agreement (i) with regard to the
Knowledge of Owner, the term "Knowledge" means: the actual, direct or personal
knowledge of Owner (with a duty of inquiry only as to officers of NLS and the
Subsidiaries); and (ii) with respect to NLS or the Subsidiaries, the actual,
direct or personal knowledge of any director or officer of NLS or any of the
Subsidiaries.
Section 2.4 Opportunity to Seek Independent Counsel. Buyer acknowledges
that Xxxxx, Xxxxxx & XxXxxxxx, LLP, has acted as counsel to Buyer and not as
counsel to Owner in connection with the transactions contemplated by this
Agreement.
Section 2.5 Accounts Receivable. SCHEDULE 2.5 sets forth the accounts
receivable of NLS and each of the Subsidiaries as of the Closing Date. Except as
set forth in SCHEDULE 2.5(A), (i) NLS and the Subsidiaries have good right,
title and interest in and to all trade accounts receivable and notes receivable
reflected in the Statement, (ii) none of such Account Receivables is subject to
any Lien; and (iii) all of the Account Receivables owing to NLS and the
Subsidiaries constitute valid and enforceable claims arising from bona fide
transactions in the ordinary course of business, and there are no known material
claims, refusals to pay or other rights of set-off against any thereof.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Owner as follows:
Section 3.1 Due Organization and Power. Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws of
Texas. Buyer has all requisite corporate power to enter into this Agreement and
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto and to carry out the transactions contemplated hereby and
thereby.
Section 3.2 Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto and the
15
consummation of the transactions contemplated hereby and thereby have been duly
authorized by its sole Member. No other corporate act or proceeding on the part
of Buyer or its Member is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by Buyer pursuant hereto
or the consummation of the transactions contemplated hereby and thereby. This
Agreement constitutes, and when executed and delivered, the other documents and
instruments to be executed and delivered by Buyer pursuant hereto will
constitute, valid and binding agreements of Buyer, enforceable in accordance
with their respective terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally,
and by general equitable principles.
Section 3.3 No Violation. Neither the execution and delivery of this
Agreement or the other documents and instruments to be executed and delivered by
Buyer pursuant hereto nor the consummation by Buyer of the transactions
contemplated hereby and thereby (i) will violate any law or any order applicable
to Buyer, except for such violations, the occurrence of which would not,
individually or in the aggregate, have a Material Adverse Effect on Buyer's
ability to perform its obligations hereunder, (ii) will require any
authorization, consent or approval by, filing with or notice to any Government
Entity, except for (A) the applicable requirements of the HSR Act and (B) such
authorizations, consents, approvals, filings or notices, the failure of which to
obtain or make would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer's ability to perform its obligations hereunder, or (iii)
will violate or conflict with, or constitute a default (or an event that, with
notice or lapse of time, or both, would constitute a default) under, or will
result in the termination of, or accelerate the performance required by, any
term or provision of the charter or Regulations of Buyer or of the express terms
of any Contract to which Buyer is a party or by which Buyer or any of its assets
or properties may be bound or affected, except for such violations, conflicts,
defaults, terminations or accelerations that would not, individually or in the
aggregate, have a Material Adverse Effect on Buyer's ability to perform its
obligations hereunder.
Section 3.4 Litigation. As of the date hereof, there is no action,
suit, arbitration, proceeding or investigation pending or, to the Knowledge of
Buyer, threatened (in a reasonably serious manner and in writing) against Buyer,
and there is no outstanding order against or affecting Buyer, in each case,
that, individually or in the aggregate, would be reasonably expected to have the
effect of preventing, delaying, making illegal or otherwise interfering with any
of the transactions contemplated by this Agreement.
Section 3.5 Fees. Neither Buyer nor any of its affiliates has paid or
become obligated to pay any fees or commissions to any broker or finder in
connection with the transactions provided for herein or in connection with the
negotiation thereof.
Section 3.6 Financing. Buyer has immediately available funds, or an
irrevocable financing commitment to obtain immediately available funds, for
purposes of paying the amounts set forth in SECTION 1.2(A) at Closing. Buyer has
obtained or will obtain prior to the Closing Date all approvals, consents,
authorizations, guarantees, pledges, certificates and other documents, and has
completed or will complete prior to the Closing Date all action, necessary to
enable Buyer to consummate the transactions contemplated by this Agreement,
including, without limitation, the payment of the amounts set forth in SECTION
1.2(A) at Closing.
16
ARTICLE 4.
CONDITIONS PRECEDENT TO CLOSING
Section 4.1 Conditions to Obligations of NLS and the Owner on the
Closing Date. This Agreement and the obligations of NLS and the Owner to
consummate the transactions to be consummated on the Closing Date shall be
subject to the satisfaction of or waiver by them in writing of the following
conditions at or prior to the Closing Date:
(a) Deliveries. Buyer shall have delivered to the
Owner each of the documents specified in SECTIONS 1.4 AND 1.5 hereof,
made the payments, and delivered the documents specified in SECTION 1.2
hereof.
(b) Litigation. No action or proceeding shall have
been instituted or threatened by third parties against the Owner, NLS,
or Buyer to restrain or prohibit or to obtain damages in respect of the
transactions contemplated by this Agreement.
(c) Representations and Warranties. All
representations and warranties of Buyer are true and correct as of the
Closing Date (except to the extent that any such representation and
warranty relates by its express terms solely to a prior date).
(d) Transition Services Agreement. A transition
services agreement in a form to be agreed upon by Buyer and Owner prior
to Closing.
(e) Security Agreement and Pledge Agreement. A
Security Agreement and Pledge Agreement securing the payment
obligations of Buyer under the Note and the Receivable Note in a form
mutually agreeable to Buyer and Owner prior to Closing.
Section 4.2 Conditions to Obligations of Buyer on the Closing Date.
This Agreement and the obligations of Buyer to consummate the transaction to be
consummated on the Closing Date shall be subject to the satisfaction of or
waiver by Buyer in writing of the following conditions at or prior to the
Closing Date:
(a) Deliveries. NLS, Owner and/or the Parent, shall
have delivered to Buyer each of the documents specified in SECTIONS 1.4
AND 1.5 hereof and certificates representing the Stock, duly endorsed,
free and clear of all Liens, except as provided herein.
(b) Litigation. No action or proceeding shall have
been instituted or threatened by third parties against the Parent,
Owner, NLS or Buyer to restrain or prohibit or to obtain damages in
respect of the transactions contemplated by this Agreement.
(c) Third Party Consents. NLS and the Subsidiaries
shall have obtained and delivered to Buyer, on or prior to the Closing
Date, such consents and approvals of third parties as may be required
for the consummation of the transactions contemplated herein.
17
(d) Due Diligence Satisfaction. Buyer shall have
completed its due diligence investigation to its complete satisfaction,
which shall have been completed on or before March 12, 2003.
(e) No Adverse Changes. There shall not have been any
Material Adverse Change in the business, financial condition,
prospects, assets and operations of NLS or the Subsidiaries since
December 31, 2002.
(f) Representations and Warranties. All
representations and warranties of NLS and the Owner are true and
correct as of the Closing Date (except to the extent that any such
representation and warranty relates by its express terms solely to a
prior date).
(g) Transition Services Agreement. The Transition
Services Agreement is duly executed by Parent and Owner.
(h) Subordination Agreement. A Subordination
Agreement on terms and conditions satisfactory to Owner and executed by
Owner providing that the Note will be subordinate to any lender which
provides financing to the Company in an amount not to exceed Two
Million Seven Hundred Fifty and 00/100 Dollars ($2,750,000). The
Subordination Agreement will also provide that the shares of the
Company will be released by Owner upon payment by Buyer of the
Receivable Note, provided that Company and Buyer are not in default
under this Agreement, the Note or any other Material Contract to which
Buyer or Owner is or may be a party.
Section 4.3 Acknowledgement and Waiver. Notwithstanding anything to the
contrary contained in this Article 4 or otherwise in this Agreement:
(a) Buyer acknowledges that throughout the period
prior to and up to the Closing, NLS and Owner have afforded to Buyer
and its directors, officers, employees, counsel, accountants,
investment advisors and other authorized representatives and agents
access to the facilities, properties and the books and records of the
Company. Buyer acknowledges and agrees that it is satisfied with the
materials which it has been provided.
(b) Buyer, NLS, Owner and Parent acknowledge and
agree that, by entering into this Agreement: (i) each is expressly
waiving (A) all conditions precedent required to be satisfied prior to
or upon Closing; (B) all deliveries required to be made prior to or
upon Closing; and (C) any other action required to be taken prior to or
upon Closing (the "Pre-Closing Conditions") which have not been
satisfied, made or taken as of the Closing Date, (ii) the failure by
any party to satisfy the Pre-Closing Conditions does not and shall not
constitute a breach of this Agreement; and (iii) the parties shall have
no obligation following the Closing to perform any of the Pre-Closing
Conditions other than as set forth in a Post-Closing Undertakings
Agreement to be executed by the parties at the Closing.
18
ARTICLE 5.
INDEMNIFICATION
Section 5.1 Indemnification by the Owner and Parent. Subject to the
limitation contained in SECTION 5.4 hereof, the Owner and Parent, jointly and
severally, covenant and agree to indemnify, defend, protect and hold harmless
Buyer and its officers, managers and members and any legal entity created by
Buyer for the purpose of carrying out a portion of the business transferred to
Buyer pursuant to this Agreement (the "Affiliated Entities"), after the date of
Closing, from and against any and all losses, payments, claims, damages,
liabilities, obligations, penalties, judgments, awards, costs, expenses
(including attorney's fees), interest, disbursements and any amounts due
(including in settlement) as a result of any and all actions, suits,
proceedings, demands, assessments, adjustments and investigations (collectively
"Losses") incurred by Buyer and/or its officers, managers, Affiliated Entities
(provided the indemnity shall not extend to liabilities attributable to the
creation or organization of the Affiliated Entities) as a result of or arising
from any of the following ("Seller Indemnifiable Claims"):
(a) Representations and Warranties. Any breach or
inaccuracy of any representations or warranties (excluding breaches or
inaccuracies of SECTIONS 2.1(M) OR 2.1(H) set forth herein or in this
Agreement including any Schedules, certificates or exhibits delivered
in connection herewith.
(b) Covenants. Any breach or nonfulfillment of any
covenant or agreement on the part of any of NLS, Parent or the Owner
under this Agreement, except as waived in SECTION 4.3(B) herein by
Buyer.
(c) Taxes. Any breach or inaccuracy of any
representations or warranties contained in SECTION 2.1(H) set forth
herein or in this Agreement including any Schedules, certificates or
exhibits delivered in connection herewith.
(d) Environmental Matters. Any breach or inaccuracy
of any representation or warranties contained in SECTION 2.1(M) of NLS
or the Owner set forth herein or in this Agreement including any
Schedules, certificates or exhibits delivered in connection herewith.
(e) Litigation. Any and all adverse consequences and
Losses arising out of or based upon or related in any way to any
current claims and litigation (including any future claims or
counterclaims made in any current litigation) as set forth in SECTION
2.1(J), including any Schedules, certificates or exhibits delivered in
connection herewith (and further including the failure to list any
current claims and litigation in Schedule 2.1(j)) or the enforcement of
any non-competition agreements for the benefit of NLS.
Section 5.2 Indemnification by Buyer. Subject to SECTION 5.4 hereof,
Buyer covenants and agrees to indemnify, defend, protect and hold harmless the
Owner, the Parent, NLS, and their respective officers, directors and
shareholders from and after the date of this Agreement, from and against any and
all Losses incurred by the Owner the Parent, NLS, and their respective officers,
directors and shareholders as a result of or arising from any of the following
("Buyer Indemnifiable Claims"): (a) any breach or inaccuracy of any
representation and warranty of
19
Buyer set forth herein or in the Schedules or certificates delivered in
connection herewith; (b) any breach or nonfulfillment of any covenant or
agreement on the part of Buyer under this Agreement; (c) all liabilities of NLS
and its Subsidiaries of any kind or nature except for those Liabilities which
are Owner's obligations hereunder; (d) Buyer's operation of NLS or the
Subsidiaries after Closing; (e) any losses incurred by Parent or Owner relating
to guaranty obligations of Parent or Owner of real property leases of NLS or its
Subsidiaries (provided that Buyer shall not have such indemnification
obligations with respect to leases where a landlord's consent is required for
the consummation of the transactions contemplated by this Agreement, and
landlord withholds such consent, provided that Buyer shall use its Best Efforts
to obtain such consent) or (f) all payment obligations of Buyer under the
promissory notes issued pursuant to the terms of this Agreement. Buyer's entire
liability to Owner, Parent, and their affiliates in connection with the
transaction contemplated hereby shall be as set forth in this Article 5.
Section 5.3 Procedure for Indemnification.
(a) Notice. Buyer and the Owner (herein referred to
as the "Indemnified Party") shall give written notice to the other
(herein referred to as the "Indemnifying Party") of any claim, suit,
judgment or matter for which indemnity may be sought under SECTIONS 5.1
AND 5.2, promptly but in any event within 30 business days after the
Indemnified Party receives notice of the claim. Notice hereunder shall
be given in accordance with SECTION 9.3. The indemnification period
provided for herein shall be tolled for a particular claim for the
period beginning on the date the Indemnifying Party receives written
notice of that claim until the final resolution of such claim.
(b) Defense of Claim. The Indemnifying Party shall
have the right to defend and settle, at its own expense and by its own
counsel (reasonably satisfactory to the Indemnified Party) any such
matter so long as the Indemnifying Party pursues the same diligently
and in good faith and the settlement does not negatively affect or
impair the rights of the Indemnified Party; provided, however, that
under no circumstance shall the Indemnifying Party settle any claim
without the written consent of the Indemnified Party. If the
Indemnifying Party undertakes to defend or settle, it shall promptly
notify the Indemnified Party of its intention to do so, and the
Indemnified Party shall cooperate with the Indemnifying Party and its
counsel in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records and other information
reasonably requested by the Indemnifying Party and in the Indemnified
Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by Indemnifying
Party, provided that if counsel to the Indemnified Party shall have a
conflict of interest that prevents such counsel from representing a
particular Indemnified Party, such Indemnified Party shall have the
right to participate in such matter through counsel of its own choosing
and the Indemnifying Party will reimburse the Indemnified Party for the
actual reasonable expenses of its counsel. After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to
defend or settle any such asserted liability, and for so long as the
Indemnifying Party diligently pursues such defense, the Indemnifying
Party shall not be liable for any additional legal expenses incurred by
the Indemnified Party in connection with any defense or settlement of
such asserted liability unless such expenses relate to those incurred
as the result of hiring
20
counsel due to a conflict of interest. If the Indemnifying Party
desires to accept a final and complete settlement of any claim that
does not negatively affect or impair the rights of the Indemnified
Party and the Indemnified Party refuses to consent to such settlement,
then the Indemnifying Party's liability under this SECTION 5.3 with
respect to such claim shall be limited to the amount so offered by the
Indemnifying Party in settlement and the Indemnified Party shall
reimburse the Indemnifying Party for any additional costs of defense
which it subsequently incurs with respect to such claim and all
additional costs of settlement or judgment. If the Indemnifying Party
does not undertake to defend such matter to which the Indemnified Party
is entitled to indemnification hereunder, or fails to diligently pursue
such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying
Party, and the Indemnified Party may settle such matter, and the
Indemnifying Party shall reimburse the Indemnified Party for the amount
paid in such defense or settlement and any other liabilities or
expenses incurred by the Indemnified Party in connection therewith,
provided, however, that under no circumstances shall the Indemnified
Party settle any claim without the written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld.
Section 5.4 Limitation Upon Indemnity. Rights to indemnification under
SECTION 5.1 or 5.2 hereof are subject to the following limitations:
(a) No amount shall be payable by the Owner or Parent
in indemnification under SECTIONS 5.1(A) AND (B) hereof until and
unless the aggregate of all Losses incurred by Buyer with respect to
one or more Seller Indemnifiable Claims shall exceed Two Hundred Fifty
Thousand ($250,000.00) Dollars (the "Threshold"), in which event the
injured party shall be entitled to indemnification under SECTIONS
5.1(A) OR (B) hereof for all such Losses above the Threshold incurred
by Buyer with respect to all such Seller Indemnifiable Claims, subject
to the additional limitations set forth in SECTION 5.4(B) hereof.
(b) Except as otherwise provided herein, the total
liability of the Owner or Parent under SECTIONS 5.1(A) AND (B) hereof
with respect to all Losses incurred by Buyer with respect to Seller
Indemnifiable Claims shall not exceed One Million ($1,000,000) Dollars
and 00/100. The Owner shall not be liable for Seller Indemnifiable
Claims covered by insurance actually received by Buyer; provided that:
(i) the Owner shall be liable for any deductible payable by Buyer in
connection with such an insurance claim, and (ii) in no event shall
this provision be construed as a waiver by Buyer's insurer of any
subrogation claim against Owner.
(c) With respect to claims under SECTION 5.2 hereof,
the Owner's and Parent's recourse and Buyer's total liability shall be
limited to the assets of NLS and the Subsidiaries.
(d) Subject to SECTION 5.4(F) hereof, the obligations
of the Owner and Parent under SECTIONS 5.1 with respect to any Losses
incurred by Buyer with respect to any Seller Indemnifiable Claim
relating to any matter referred to in SECTIONS 5.1 (A) AND (B) hereof
shall survive until the expiration of the applicable statute of
limitations under
21
which the underlying claim is made. Subject to SECTION 5.4(F) hereof,
the obligations of the Owner and Parent under SECTION 5.1(C) AND (D)
hereof with respect to any Losses incurred by Buyer with respect to any
Seller Indemnifiable Claim relating to any matter referred to in
SECTION 5.1(C) AND (D) hereof shall only survive for a period of three
(3) years from the Closing.
(e) Subject to SECTION 5.4(F) hereof, the obligations
of Buyer under SECTION 5.2 hereof with respect to any Losses incurred
by the Owner with respect to any Buyer Indemnifiable Claim relating to
any matter referred to in SECTION 5.2 hereof shall survive until the
expiration of the applicable statute of limitations under which the
underlying claim is made.
(f) The foregoing provisions of this SECTION 5.4
notwithstanding if, prior to the termination of any obligation to
indemnify, written notice of Seller Indemnifiable Claim or an Buyer
Indemnifiable Claim, as the case may be, is given by the Indemnified
Party to the Indemnifying Party, or a suit or action based upon Seller
Indemnifiable Claim or Buyer Indemnifiable Claim, as the case may be,
is commenced against the Indemnifying Party, the Indemnified Party
shall not be precluded from pursuing such claim, breach, occurrence,
other matter, or suit or action, or from recovering from the
Indemnifying Party (whether through the courts or otherwise) on the
Seller Indemnifiable Claim or Buyer Indemnifiable Claim, as the case
may be, by reason of the termination otherwise provided for above in
this SECTION 5.4.
(g) The limitations on indemnity set forth in this
SECTION 5.4 shall not apply to claims for indemnification made pursuant
to SECTIONS 5.1(E) or 5.2(F).
Section 5.5 Tax Matters:
(a) Tax Periods Ending on or Before the Closing Date.
Owner shall prepare or cause to be prepared and file or cause to be
filed all Tax returns for NLS and each of the Subsidiaries for all
periods ending on or prior to the Closing Date which are filed after
the Closing Date. Owner shall permit Buyer to review and comment on
each such Tax return described in the preceding sentence prior to
filing. Owner shall pay as required all Taxes, including those related
to employee withholding requirements, for such periods through and
including the Closing Date.
(b) Tax Periods Beginning Before and Ending After the
Closing Date. Buyer shall prepare or cause to be prepared and file or
cause to be filed any Tax returns of NLS and each of the Subsidiaries
for Tax periods which begin before the Closing Date and end after the
Closing Date. NLS and each of the Subsidiaries will promptly pay the
Taxes with respect to such periods.
(c) Refunds. Any refunds or credits of federal,
state, local or foreign income and franchise Taxes (including any
interest thereon) received by or credited to Company attributable to
periods ending on or prior to the Closing Date (collectively, "Parent's
Refunds") shall be for the benefit of Parent, and Buyer shall use its
reasonable
22
best efforts at Owner's expense, to obtain any Parent's Refunds and
shall cause Company to pay over to Parent any Parent's Refunds
immediately upon receipt thereof.
(d) Cooperation. After the Closing Date, Parent and
Buyer shall make available to the other, as reasonably requested, and
to any taxing authority (which such authority is legally permitted to
receive pursuant to its subpoena power or its equivalent) all
information, records or documents relating to Tax liabilities or
potential Tax liabilities of Company for all periods prior to or
including the Closing Date and shall preserve all such information,
records and documents until the expiration of any applicable statute of
limitations for assessment or refund of Taxes or extensions thereof.
Buyer shall prepare, or cause Company to prepare, and provide to Parent
such federal, state, local and foreign Tax information packages as
Parent shall request for Parent's use in preparing any Tax return that
relates to Company. Such Tax information packages shall be completed by
Buyer and provided to Parent within forty-five (45) days after Parent's
request therefor. Notwithstanding any other provisions hereof, each
Party shall bear its own expenses in complying with the foregoing
provisions.
(e) Cooperation on Tax Matters.
(1) Buyer, NLS and each of the Subsidiaries and
Parent and Owner shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with
the filing of Tax returns pursuant to this SECTION 5.5 and any
audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the
other party's request) the provision of records and
information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional
information and explanation of any material provided
hereunder. NLS and each of the Subsidiaries and Owner agree
(A) to retain all books and records with respect to Tax
matters pertinent to NLS and each of the Subsidiaries relating
to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the
extent notified by the Buyer or Owner, any extensions thereof)
of the respective taxable periods, and to abide by all record
retention agreements entered into with any Tax authority, and
(B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and
records and, if the other party so requests, NLS and each of
the Subsidiaries or Owner, as the case may be, shall allow the
other party to take possession of such books and records.
(2) Buyer, Parent and Owner further agree, upon
request, to use their best efforts to obtain any certificate
or other document from any Governmental Entity or any other
person as may be necessary to mitigate, reduce or eliminate
any Tax that could be imposed (including, but not limited to,
with respect to the transactions contemplated hereby).
(f) Section 338 Election. Buyer shall not make an
Internal Revenue Code Section 338 or Section 338 (h)(10) election.
23
(g) Certain Taxes. All transfer, documentary, sales,
use, stamp, registration and other such Taxes and fees (including any
penalties and interest) incurred by the Company in connection with this
Agreement shall be paid by Buyer when due, and Buyer will, at its own
expense, file all necessary Tax returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees, and, if required by applicable
law, Buyer will, and will cause its affiliates to, join in the
execution of any such Tax returns and other documentation.
(h) The limitations on indemnity set forth in this
SECTION 5.4 shall not apply to Owner's or Company's failure to pay
Accounts Payable and Accrued Liabilities which in the ordinary course
of Company's business consistent with past practice would have been
paid prior to Closing.
ARTICLE 6.
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Section 6.1 General. The Owner, Parent and Buyer, on behalf of their
affiliates and employees, recognize and acknowledge that they had in the past,
currently have, and in the future will have, access to certain confidential
information of NLS and the Subsidiaries, such as lists of clients, operational
policies, and pricing and cost policies that are valuable, special and unique
assets of NLS and the Subsidiaries. The Owner, Parent and Buyer, on behalf of
their affiliates and employees agree that they will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose whatsoever, except as is required in the course of
performing duties for NLS and the Subsidiaries, unless (a) such information
becomes known to the public generally through no fault of the disclosing party,
or (b) disclosure is required by law or the order of any governmental authority,
provided, that prior to disclosing any information pursuant to this clause (b)
the disclosing party shall, if possible, give prior written notice thereof to
NLS and the Subsidiaries and provide NLS and the Subsidiaries with the
opportunity to contest such disclosure. In the event of a breach or threatened
breach of the provisions of this SECTION 6.1, NLS and the Subsidiaries shall be
entitled to an injunction restraining the disclosing party from disclosing, in
whole or in part, such confidential information. Nothing herein shall be
construed as prohibiting NLS and the Subsidiaries from pursuing any other
available remedy for such breach or threatened breach, including the recovery of
damages.
Section 6.2 Equitable Relief. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
NLS and the Subsidiaries would have no other adequate remedy, it is agreed that
the foregoing covenants may be enforced against them by injunctions, restraining
orders and other equitable actions.
Section 6.3 Survival. The obligations of the parties under this ARTICLE
6 shall survive the termination of this Agreement. Upon termination of this
Agreement, Buyer agrees to promptly return NLS or the Subsidiaries all original
and duplicate copies of written materials containing such confidential
information should the transaction contemplated herein not occur.
24
ARTICLE 7.
NONCOMPETITION COVENANTS
Section 7.1 Prohibited Activities. The Owner, the Parent, and their
affiliated entities will not, directly or indirectly, in conjunction with any
other person, company, partnership, corporation or business of whatever nature,
for a period of five (5) years from the Closing.
(a) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial or advisory capacity,
whether as an employee, independent contractor, consultant or advisor,
or as a sales representative, in the delivery business or businesses in
which NLS or the Subsidiaries is then engaging involving delivery or
distribution of any product or services.
(b) call upon any person or entity which is, at that time, or
which has been, within two (2) year prior to that time, a client of NLS
or the Subsidiaries for the purpose of soliciting or selling services
in the delivery business or businesses in which NLS is then engaging
involving delivery or distribution of any product or services.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Owner, the Parent, or its affiliates from acquiring, as a passive
investor with no involvement in the operations of the business, not more than
ten (10%) of the capital stock of a business whose stock is publicly traded on a
national securities exchange or over-the-counter or (b) providing such dedicated
logistics services directly or indirectly for the use and benefit of its
manufacturing operations.
Section 7.2 Equitable Relief. Because of the difficulty of measuring
economic losses to NLS, the Subsidiaries and their successors or assigns as a
result of a breach of the foregoing covenant, and because of the immediate and
irreparable damage that could be caused to NLS and the Subsidiaries for which
they would have no other adequate remedy, the Owner and Parent agrees that the
foregoing covenant may be enforced by NLS, the Subsidiaries and their successors
or assigns by injunctions, restraining orders and other equitable actions.
Section 7.3 Reformation and Severability. The covenants in this ARTICLE
7 are severable and separate, and the unenforceability of any specific covenant
shall not affect the continuing validity and enforceability of any other
covenant. In the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in this ARTICLE 7 are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable and this
Agreement shall thereby be reformed.
Section 7.4 Material and Independent Covenant. The Owner and Parent
acknowledge that their agreement with the covenants set forth in this ARTICLE 7
are material conditions to Buyer's agreement to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. It is
specifically agreed that the period during which the agreements and covenants of
each Owner made in this ARTICLE 7 shall survive shall be computed by excluding
from such computation any time during which such Owner or Parent (as applicable)
is in violation of any provision of this ARTICLE 7.
25
ARTICLE 8.
ADDITIONAL COVENANTS
Section 8.1 Delivery of Financial Statements Post-Closing. Buyer shall
deliver to Owner no later than April 20, 2003 a profit and loss balance sheet
and a cash flow statement, each for the period from March 1, 2003 through the
Closing Date.
Section 8.2 Agreements as to Specified Matters. Except as specifically
set forth on the Schedules and except as may be otherwise agreed in writing by
Buyer, from the date of the Original Agreement until the Closing, NLS and the
Subsidiaries will conduct their business and operations according to their
ordinary and usual course of business, to preserve substantially intact the
business organizations of NLS and the Subsidiaries and preserve NLS's and the
Subsidiaries' current relationships with customers, employees, suppliers and
other persons with which they have significant business relations. Without
limiting the generality of the foregoing, and, except as otherwise expressly
provided in this Agreement, as set forth in SCHEDULE 8.1, or in the ordinary
course of business, prior to the Closing Date, without the prior written consent
of Buyer, NLS and the Subsidiaries will not:
(a) Amend their articles of incorporation or code of
regulations;
(b) Borrow or agree to borrow any funds;
(c) Incur, assume, suffer or become subject to, whether
directly or by way of guarantee or otherwise, any claims, obligations,
liabilities or loss contingencies which, individually or in the
aggregate, are material to the conduct of the businesses of NLS or the
Subsidiaries, or have or would have a Material Adverse Effect on the
financial condition of NLS or the Subsidiaries;
(d) Pay, discharge or satisfy any claims, liabilities or
obligations except in the ordinary course of business; or
(e) Permit or allow any of the assets to be subjected to any
Lien;
(f) Write off as uncollectable any accounts receivable;
(g) Cancel or amend any debts, waive any claims or rights or
sell, transfer or otherwise dispose of any properties or assets, other
than for such debts, claims, rights, properties or assets which,
individually or in the aggregate, are not material to the conduct of
its business;
(h) License, sell, transfer, pledge, modify, disclose, dispose
of or permit to lapse any right to the use of any Intellectual Property
Rights;
(i) Terminate, enter into, adopt, institute or otherwise
become subject to or amend in any material respect any collective
bargaining agreement or employment or similar agreement or arrangement
with any of the directors, officers or employees; (ii) terminate, enter
into, adopt, institute or otherwise become subject to or amend in any
material respect any compensation plan; (iii) contribute, set aside for
contribution or
26
authorize the contribution of any amounts for any such compensation
plan; or (iv) grant or become obligated to grant any general increase
in the compensation of any directors, officers or employees;
(j) Make or enter into any commitment for capital expenditures
for additions to property, plant or equipment individually in excess of
$25,000.00;
(k) Declare, pay or set aside for payment any dividend or
other distribution in respect of their capital stock or other
securities (including without limitation distributions in redemption or
liquidation) or redeem, purchase or otherwise acquire any shares of
their capital stock or other securities; (ii) issue, grant or sell any
shares of their capital stock or equity securities of any class, or any
options, warrants, conversion or other rights to purchase or acquire
any such shares or equity securities or any securities convertible into
or exchangeable for such shares or equity securities; (iii) become a
party to any merger, exchange, reorganization, recapitalization,
liquidation, dissolution or other similar corporate transaction; or
(iv) organize any new subsidiary, acquire any capital stock or other
equity securities or other ownership interest in, or assets of, any
person or entity or otherwise make any investment by purchase of stock
or securities, contributions to capital, property transfer or purchase
of any properties or assets of any person or entity;
(l) Pay, lend or advance any amounts to, or sell, transfer or
lease any properties or assets to, or enter into any agreement or
arrangement with, any director, officer or employee of NLS or the
Subsidiaries;
(m) Terminate, enter into or amend in any material respect any
item identified in SECTION 2.1(O), or take any action or omit to take
any action which will cause a breach, violation or default (however
defined) under any such items;
(n) Take any action that can be reasonably anticipated to have
a Material Adverse Effect on NLS or the Subsidiaries or that could
cause any representation or warranty set forth in SECTION 2 hereof to
be untrue or any condition to the Closing not to be satisfied;
(o) Accelerate xxxxxxxx, shipments to customers, payments from
customers or franchisees, orders from suppliers or payment of accounts
payable (including, but not limited to, inter-company obligations) or
adjust the level of inventory, except in the ordinary course of
business consistent with past practices;
(p) Acquire any of the business or assets of any other person,
firm, association or corporation;
(q) Do any act or omit to do any act, or permit any act or
omission to act, which could cause a breach or default by NLS or the
Subsidiaries under any of their respective contracts, agreements,
commitments or obligations;
(r) Enter into or amend any other agreements, commitments or
Contracts which, individually or in the aggregate, are material to NLS
or the Subsidiaries,
27
except agreements for the purchase and sale of goods or services in the
ordinary course of business, consistent with past practice; or
(s) Agree, whether in writing or otherwise, to take any action
described in this subsection.
Section 8.3 Confidentiality.
(a) NLS, Buyer, Parent, the Subsidiaries and the Owner agree
that they will not use, or permit the use of, any of the information
relating to another party furnished to it in connection with the
transactions contemplated herein ("Information") in a manner or for a
purpose detrimental to such party or otherwise than in connection with
the transaction, and that it will not disclose, divulge, provide or
make accessible (collectively, "Disclose"), or permit the Disclosure of
any of the Information to any person or entity, other than its
directors, officers, employees, investment advisors, accountants,
counsel and other authorized representatives and agents, except (i) as
may be required by judicial or administrative process or, in the
opinion of its counsel, by other requirements of applicable law, (ii)
that after Closing, Buyer shall own and be entitled to use any of such
information that was owned by NLS prior to the consummation of the
transactions contemplated herein, and (iii) provided, however, that
prior to any Disclosure of any Information permitted hereunder, the
disclosing party will first obtain the recipients' consent before
undertaking to comply with the provisions of this subsection with
respect to such information. The term "Information" as used herein will
not include any information relating to a party which the party
disclosing such information can show: (i) to have been in its
possession prior to its receipt from another party hereto; (ii) to be
now or to later become generally available to the public through no
fault of the disclosing party; (iii) to have been available to the
public at the time of its receipt by the disclosing party; (iv) to have
been received separately by the disclosing party in an unrestricted
manner from a person entitled to disclose such information; or (v) to
have been developed independently by the disclosing party without
regard to any information received in connection with this transaction.
(b) Each party hereto also agrees to promptly return to the
party from whom it originally received confidential information subject
to this SECTION 8.2 all original and duplicate copies of written
materials containing Information should the transactions contemplated
herein not occur. The provisions of this subsection shall survive
termination or cancellation of this Agreement.
Section 8.4 Filings; Consents; Removal of Objections. Subject to the
terms and conditions herein provided, the parties hereto will use their best
efforts to take or cause to be taken all actions and do or cause to be done all
things necessary, proper or advisable under applicable laws to consummate and
make effective, as soon as reasonably practicable, the transactions contemplated
hereby, including without limitation obtaining all consents of any person or
entity, whether private or governmental, required in connection with the
consummation of the transactions contemplated herein. In furtherance, and not in
limitation of the foregoing, it is the intent of the parties to consummate the
transactions contemplated herein at the earliest practicable time, and they
respectively agree to exert their best efforts to that end, including
28
without limitation: (i) the removal or satisfaction, if possible, of
any objections to the validity or legality of the transactions
contemplated herein; and (ii) the satisfaction of the conditions to
consummation of the transactions contemplated hereby.
Section 8.5 Further Assurances; Cooperation; Notification.
(a) Each party hereto will, before, at and after the Closing,
execute and deliver such instruments and take such other actions as the
other party or parties, as the case may be, may reasonably require in
order to carry out the intent of this Agreement.
(b) [Intentionally Omitted].
(c) At all times from the date hereof until the Closing, each
party will promptly notify the other in writing of the occurrence of
any event which it reasonably believes will or may result in a failure
by such party to satisfy the conditions specified in SECTION 4.1 and
SECTION 4.2 hereof.
(d) If, in connection with Legal Proceedings, Owner shall
require the assistance of Buyer's employees, Buyer shall provide such
employees to Owner as are reasonably required by Owner. Owner shall pay
Buyer's out-of-pocket costs incurred in connection with such use of
Buyer's employees and shall reimburse Buyer for the number of whole
business days spent by each such employee in providing such services at
the rate equal to the average daily gross pay (excluding the value of
employee benefits) of such employee during each calendar month in which
such services are performed.
(e) If, in connection with Legal Proceedings, Buyer shall
require the assistance of Owner's employees, Owner shall provide such
employees to Buyer as are reasonably required by Buyer. Except for any
Legal Proceeding in which Owner shall be required to indemnify Buyer in
accordance with Section 5, Buyer shall pay Owner's out-of-pocket costs
incurred in connection with such use of Owner's employees and shall
reimburse Owner for the number of whole business days spent by each
such employee in providing such services at the rate equal to the
average daily gross pay (excluding the value of employee benefits) of
such employee during each calendar month in which such services are
performed. In the case of any Legal Proceeding in which Owner shall be
required to indemnify Buyer in accordance with Section 5,Owner shall be
responsible for out-of-pocket costs incurred in connection with such
use of Owner's employees. In connection with any Legal Proceedings in
which Buyer is identified, Buyer, its agents, officers, directors and
shareholders, shall use their best efforts to assist Owner in the
prosecution, defense and settlement of such claims.
Section 8.6 Supplements to Disclosure Schedules. At least 48 hours
prior to the Closing, NLS and the Owner will supplement or amend the Schedules
with respect to any event or development which, if existing or occurring at or
prior to the date of this Agreement, would have been required to be set forth or
described in the Schedules or which is necessary to correct any information in
the Schedules or in any representation and warranty which has been rendered
inaccurate by reason of such event or development. For purposes of determining
the accuracy as of the date hereof of the representations and warranties
contained in SECTION 2 hereof in order to
29
determine the fulfillment of the conditions set forth in SECTION 4.2(F), the
Schedules will be deemed to exclude any information contained in any supplement
or amendment hereto delivered after the delivery of the Schedules, provided that
if the Closing will take place the Schedules, as so amended, will be deemed the
Schedules hereunder for all purposes.
Section 8.7 Assignment or Satisfaction of Claims and Rights. In
addition to delivery of the payment set forth above and as additional
consideration for receipt of Stock, Buyer hereby:
(a) agrees to satisfy in full, and deliver to Owner, damages
incurred in connection with claims against those persons or entities
set forth in the attached Exhibit 8.6(a) in the amounts set forth
opposite such claims; plus
(b) the assignment by Buyer or NLS to Owner of the claims
against those persons or entities set forth in the attached Exhibit
8.6(b) which will provide that Owner may not settle such claims without
the consent of Buyer or NLS and Owner shall agree to reimburse Buyer or
NLS for any costs they incur in enforcing any non-competition
obligations of Xxxxx Xxxxxx and his affiliated entities.
Section 8.8 Employee Matters.
(a) 401(k) Retirement Plan. As of the Closing Date, NLS shall
cease to be a participating employer under Noble International, Ltd.
Employees' 401(k) Retirement Plan (the "Parent Retirement Plan"), and
Parent shall take, or cause to be taken, all such action as may be
necessary to effect such cessation of participation. As of the Closing
Date, the Active Employees shall be treated as having incurred a
severance of employment for all purposes of the Parent Retirement Plan
and all costs and expenses associated with such severance and
termination of the plans shall be the sole responsibility of the Parent
and Owner.
(b) Health Plan. Owner and Parent shall be responsible for all
costs and expenses associated with the provision of health care
coverage for periods prior to the Closing Date. Owner and Buyer shall
enter into the Transition Services Agreement providing for the
temporary maintenance of health care coverage for Active and Former
Employees of NLS following the Closing Date, for which Buyer and NLS
will be financially responsible in accordance with the Transition
Services Agreement. Subject only to such Transition Services Agreement,
Buyer and NLS shall be responsible for providing a health plan covering
employees of Buyer.
(c) All employee benefits will be terminated as of the Closing
and the costs related to such terminations shall be the responsibility
of Owner and Parent.
Section 8.9 Post-Closing Access to Information. For a period of two (2)
years after the Closing Date, each Party shall provide, and shall cause its
appropriate personnel to provide, when reasonably requested for a reason related
to any obligation under this Agreement to do so by the other Party, access to
all tax, financial and accounting records of or relating to NLS and the right to
make copies or extracts therefrom at its expense. No Party shall intentionally
dispose of, alter or destroy any such books, records and other data without
giving thirty (30) days' prior
30
written notice to the other Party and permitting the other Party, at its
expense, to examine, duplicate or repossess such records, files, documents and
correspondence. Notwithstanding the provisions of this Section, while the
existence of an adversarial proceeding between the parties will not abrogate or
suspend the provisions of this Section as to such records or other information
directly pertinent to such dispute, the parties may not utilize this Section but
rather, absent agreement, must utilize the rules of discovery.
Section 8.10 Corporate Name. Buyer acknowledges that Parent and/or its
Affiliates have the absolute and exclusive proprietary right to all names,
tradenames, trade marks, service names and service marks incorporating the words
"Noble Logistic Services" or "Noble Logistics" corporate symbols or logos
related thereto. Owner and Parent hereby grant to Buyer and Company, a
perpetual, royalty-free license to use the words "Noble Logistics" and "Noble
Logistic Services" and the Noble Intellectual Property provided, however, that
Buyer will not use any other derivation of the name "Noble" or the Parent's
symbols or logo, being the shield and/or lion character.
Section 8.11 Coamerica Liens. Notwithstanding anything contained in
this Agreement or the Schedules attached hereto, Owner will cause all Comerica
liens to be promptly released.
Section 8.12 Insurance. Buyer or the Company shall have the right to
make claims under insurance policies issued by third parties that may have
provided coverage to Company prior to the Closing Date, for claims which arose
prior to the Closing Date only.
ARTICLE 9.
MISCELLANEOUS
Section 9.1 Successors and Assigns. This Agreement and the rights of
the parties hereunder may not be assigned (except by operation of law) and shall
be binding upon and shall inure to the benefit of the parties hereto, the
successors and assignees of NLS, the Subsidiaries and Buyer, and the successors
and assigns of the Owner. Notwithstanding the above, Buyer may assign this
Agreement to an affiliated entity and all of the rights and obligations of Buyer
shall be assigned therewith as if such affiliated entity had executed this
Agreement instead of Buyer. Provided that prior to such assignment, Buyer
obtains the written consent of Owner which consent will not be unreasonably
withheld.
Section 9.2 Entire Agreement. This Agreement (including the Schedules
and exhibits attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the Owner, Parent, NLS
and Buyer and supersede any prior agreement and understanding relating to the
subject matter of this Agreement. This Agreement may be modified or amended only
by a written instrument executed by all of the undersigned.
Section 9.3 Notices. All notices and communications required or
permitted hereunder shall be in writing and may be given by depositing the same
in the United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested, by national
courier, or by delivering the same in person to an officer or agent of such
party, as follows:
31
(a) If to Owner, addressed to it at:
00000 Xxx Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Esq.
With a copy to:
Xxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxx., Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx
(b) If to Buyer or NLS, addressed to it at:
Xx. Xxxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxx, XX 00000
With a copy to:
Xxxxx, Xxxxxx & XxXxxxxx, LLP
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxx, Esq.
or to such other address as any party hereto shall specify pursuant to this
SECTION 9.3 from time to time. Any notice, demand or communication required,
permitted or desired to be given hereunder shall be deemed effectively given
when personally delivered, sent for next business day by national courier,
delivered by confirmed facsimile, or mailed by prepaid certified mail, return
receipt requested.
Section 9.4 Governing Law; Consent to Jurisdiction. The laws of the
State of Texas shall govern the validity of this Agreement, the construction of
its terms, and the interpretation of the rights and duties of the parties
hereto. Each party hereto irrevocably and unconditionally hereby (i) agrees that
any action, claim, suit or other legal proceeding arising out of or relating to
this Agreement shall be brought in any court of general jurisdiction sitting in
Xxxxxx County, Texas; (ii) consents to the jurisdiction of any such court in any
such action, claim, suit or proceeding; (iii) agrees that venue for any such
action, claim, suit or proceeding shall lie exclusively in Xxxxxx County, Texas
only; and (iv) waives any objection which such party may have to (x) submitting
to the jurisdiction of any such court or (y) the laying of venue of any such
action, claim, suit or proceeding in any such court.
Section 9.5 Exercise of Rights and Remedies. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such
32
right, power or remedy, nor shall it be construed as a waiver of or acquiescence
in any such breach or default, or of any similar breach or default occurring
later; nor shall any waiver of any single breach or default be deemed a waiver
of any other breach or default occurring before or after that waiver.
Section 9.6 Expenses. Each party shall bear their own costs and
expenses relating to this Agreement and the transactions contemplated herein
including, without limitation, fees and expenses of attorneys, accountants,
investment bankers, brokers, printers, copiers, consultants or other
representatives.
Section 9.7 Closing of the Books. The parties agree to use the interim
closing of the books method of accounting for NLS and the Subsidiaries for tax
purposes.
Section 9.8 Time. Time is of the essence with respect to this
Agreement.
Section 9.9 Construction. This Agreement shall not be construed either
more favorably for or more strongly against any party hereto.
Section 9.10 Reformation and Severability. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
Section 9.11 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
Section 9.12 Public Announcements. Each of the parties hereto agrees
that it will not, without the prior written consent of the other party, make any
public announcement of this Agreement or any of the terms and conditions set
forth herein, except for such disclosure to the public or to governmental
agencies as its counsel shall deem necessary to comply with applicable law, rule
or regulation.
Section 9.13 Definitions. For purposes of this Agreement, the term:
"Accounts Receivable" shall mean the accounts receivable of the
Company's customers, including any accrued, but unbilled amounts.
"Active Employee" shall mean any employee of NLS who is actively
employed as of the Closing Date by NLS or not so actively employed due to
vacation, illness, short-term disability, military leave, layoff with recall
rights or authorized leave of absence.
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the Exchange Act.
"Agreement" shall mean this Amended and Restated Stock Purchase
Agreement.
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"Best Efforts" shall mean the efforts that a prudent person desirous of
achieving a result would use in similar circumstances to achieve that result as
expeditiously as possible; provided, however, that a person required to use Best
Efforts under this Agreement will not be thereby required to take actions that
would result in a material adverse change in the benefits to such person of this
Agreement or to dispose of or make any change to its business, expend any
material funds or incur any other material burden.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Company Benefit Plans" shall have the meaning set forth in Section
2.1(p).
"Contract" shall mean any written indenture, mortgage, deed of trust,
lease, licensing agreement, contract, instrument or other agreement.
"Environmental Laws" shall mean all Laws regarding protection of the
environment, including, without limitation, those protecting the quality of the
ambient air, soil, surface water or groundwater, in effect as of or, to the
extent applicable, at any time prior to the date of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Facilities" shall mean any real property, leaseholds or other
interests and any buildings, plants or structures currently owned or operated by
Company.
"Former Employee" is an individual, other than an Active Employee and
an individual who would be such an Active Employee if Parent were substituted
for Company in applying the definitions relevant to such term, who was an
employee of Company at the time he or she last terminated employment with Parent
or any of its Affiliates (including Company).
"GAAP" shall mean generally accepted accounting principles in the
United States.
"Government Entities" shall mean any court, arbitrator, department,
commission, board, bureau, agency, authority, instrumentality or other body,
whether federal, state, municipal, foreign or other.
"Hazardous Substance" shall mean all pollutants, contaminants,
chemicals, compounds or industrial, toxic, hazardous or petroleum or
petroleum-based substances or wastes, waste waters or byproducts, including,
without limitation, asbestos, polychlorinated biphenyls or urea formaldehyde,
and any other substances subject to regulation under any Environmental Law.
"Laws" shall mean any federal, state, local, foreign or other statute,
law, ordinance, rule or regulation.
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"Liability" or "Liabilities" means any liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due and regardless of when asserted).
"Lien" shall mean any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind.
"Material Adverse Effect" shall mean a material adverse effect on the
results of operations or financial condition of Company taken as a whole.
"Material Contract" shall have the meaning set forth in Section 2.1(o).
"Noble Intellectual Property" all brand names, patents, trademarks,
copyrights, licenses and sublicenses, technical information, computer software
and related documentation, know-how, trade secrets, drawings, blueprints,
designs, design protocols, specifications for materials, quality assurance and
control procedures, design tools and simulation capability, manuals, data
concerning historic or current research and development and other intellectual
property rights that, in each case, are both (a) owned by Parent or Owner or an
Affiliate of Parent or Owner (other than Company) and (b) used exclusively in
the dedicated delivery business by Company.
"Orders" shall mean any order, writ, injunction, judgment, plan or
decree of any kind.
"Party(ies)" shall mean Owner and/or Buyer, as the case may be.
"Taxes" shall mean any and all federal, state, local, foreign or other
taxes of any kind (together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto) imposed by any taxing
authority, including, without limitation, taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth, and taxes or
other charges in the nature of excise, withholding, ad valorem or value added.
Where any group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred to
using such defined term in the singular number, and vice versa. Where the term
"as of the date hereof" is used, it shall also include the "Closing Date".
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IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Stock Purchase Agreement as of the day and year first above written.
SRS TEXAS HOLDINGS, LLC NOBLE LOGISTIC SERVICES, INC.
A TEXAS LIMITED LIABILITY COMPANY A MICHIGAN CORPORATION
By:___________________________ By:______________________________
Name: Xxxxxx Xxx Savant Name: ___________________________
Its:___________________________ Its: Vice President
NOBLE LOGISTIC SERVICES HOLDINGS, INC., NOBLE INTERNATIONAL, LTD. A
A TEXAS CORPORATION DELAWARE CORPORATION
By:___________________________ By:_____________________________
Name: ________________________ Name:__________________________
Its: Vice President Its:_____________________________
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