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EXHIBIT 2.8
STOCK PURCHASE AGREEMENT
AMONG
BOOMERSHINE COLLISION CENTERS, INC.
AND
JAMES E. L. PETERS, JR.
NOVEMBER 6, 1997
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TABLE OF CONTENTS
Page
1. DEFINITIONS........................................................... 1
2. PURCHASE AND SALE OF TARGET SHARES.................................... 5
(a) Basic Transaction ............................................... 5
(b) Purchase Price .................................................. 5
(c) The Closing ..................................................... 6
(d) Deliveries at the Closing ....................................... 6
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION............. 6
(a) Representations and Warranties of the Seller..................... 6
(i) Authorization of Transaction.............................. 6
(ii) Noncontravention.......................................... 7
(iii) Brokers' Fees............................................. 7
(iv) Investment................................................ 7
(v) Target Shares............................................. 7
(b) Representations and Warranties of the Buyer...................... 7
(i) Organization of the Buyer................................. 8
(ii) Authorization of Transaction.............................. 8
(iii) Noncontravention.......................................... 8
(iv) Brokers' Fees............................................. 8
(v) Investment................................................ 8
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE TARGET COMPANIES........ 8
(a) Organization, Qualification and Corporate Power ................. 9
(b) Capitalization .................................................. 9
(c) Noncontravention ................................................ 9
(d) Brokers' Fees ................................................... 9
(e) Title to Assets ................................................. 9
(f) Financial Statements ............................................ 10
(g) Events Subsequent to Most Recent Accounting Period .............. 10
(h) Undisclosed Liabilities ......................................... 12
(i) Legal Compliance ................................................ 12
(j) Tax Matters ..................................................... 12
(k) Real Property ................................................... 14
(l) Intellectual Property ........................................... 15
(m) Tangible Assets ................................................. 17
(n) Contracts ....................................................... 17
(o) Notes and Accounts Receivable ................................... 18
(p) Powers of Attorney .............................................. 18
(q) Insurance ....................................................... 18
(r) Litigation ...................................................... 19
(s) Employees ....................................................... 19
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(t) Employee Benefits ............................................... 19
(u) Guaranties ...................................................... 21
(v) Environmental, Health, and Safety Matters ....................... 21
(w) Territorial Restrictions ........................................ 22
(x) Disclosure ...................................................... 23
5. PRE-CLOSING COVENANTS................................................. 23
(a) General ......................................................... 23
(b) Notices and Consents ............................................ 23
(c) Operation of Business ........................................... 23
(d) Preservation of Business ........................................ 23
(e) Full Access ..................................................... 23
(f) Notice of Developments .......................................... 23
(g) Exclusivity ..................................................... 23
6. POST-CLOSING COVENANTS................................................ 24
(a) General ......................................................... 24
(b) Litigation Support .............................................. 24
(c) Transition ...................................................... 24
(d) Confidentiality ................................................. 24
(e) Buyer Note ...................................................... 25
7. CONDITIONS TO OBLIGATION TO CLOSE..................................... 25
(a) Conditions to Obligation of the Buyer............................ 25
(b) Conditions to Obligation of the Seller........................... 27
8. REMEDIES FOR BREACHES OF THIS AGREEMENT............................... 28
(a) Survival of Representations and Warranties ...................... 28
(b) Indemnification Provisions for Benefit of the Buyer ............. 28
(c) Indemnification Provisions for Benefit of the Seller ............ 29
(d) Matters Involving Third Parties ................................. 30
(e) Recoupment Under Buyer Note ..................................... 31
(f) Other Indemnification Provisions ................................ 31
9. TAX MATTERS........................................................... 31
(a) Section 338(h)(10) Election ..................................... 31
(b) Tax Periods Ending on or Before the Closing Date ................ 32
(c) Tax Periods Beginning Before and Ending After the Closing Date .. 32
(d) Cooperation on Tax Matters ...................................... 32
(e) Certain Taxes ................................................... 33
10. TERMINATION........................................................... 33
(a) Termination of Agreement ........................................ 33
(b) Effect of Termination ........................................... 34
11. MISCELLANEOUS......................................................... 34
(a) Press Releases and Public Announcements.......................... 34
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(b) No Third Party Beneficiaries .................................... 34
(c) Entire Agreement ................................................ 34
(d) Succession and Assignment ....................................... 34
(e) Counterparts .................................................... 34
(f) Headings ........................................................ 34
(g) Notices ......................................................... 34
(h) Governing Law ................................................... 36
(i) Amendments and Waivers .......................................... 36
(j) Severability .................................................... 36
(k) Expenses ........................................................ 36
(l) Construction .................................................... 36
(m) Incorporation of Exhibits, Annexes and Schedules ................ 36
(n) Specific Performance ............................................ 36
(o) Submission to Jurisdiction ...................................... 37
Annex I Exceptions to the Seller's Representations and Warranties
Concerning the Transaction
Annex II Exceptions to the Buyer's Representations and Warranties
Concerning the Transaction
Annex III Description of Seller's Software
Exhibit A Form of Buyer Note
Exhibit B Historical Financial Statements
Exhibit C-1 Employment Agreement
Exhibit C-2 Licensing Agreement
Exhibit D Form of Opinion of Counsel to the Seller
Exhibit E Form of Opinion of Counsel to the Buyer
Exhibit F Form of Guaranty of Payment
Exhibit G Real Estate Purchase Agreement (Henry County Property)
Exhibit H Real Estate Purchase Agreement (Clayton County Property)
Exhibit I Assumption of Lease Agreement (Henry County Property)
Exhibit J Assumption of Lease Agreement (Clayton County Property)
Exhibit K Assumption of Lease Agreement (Cobb County Property)
Disclosure Schedule Exceptions to Representations and Warranties Concerning the
Target Companies
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STOCK PURCHASE AGREEMENT
Agreement entered into on November 6, 1997 by and among BOOMERSHINE
COLLISION CENTERS, INC., a Georgia corporation (the "Buyer"), and JAMES E. L.
PETERS, JR. (the "Seller"). The Buyer and the Seller are referred to
collectively herein as the "Parties."
The Seller in the aggregate owns all of the outstanding capital stock of
SOUTHLAKE COLLISION CENTER, INC., a Georgia corporation, SOUTHLAKE COLLISION
COBB PARKWAY, INC., a Georgia corporation, and SOUTHLAKE COLLISION HENRY COUNTY,
INC., a Georgia corporation (individually, the "Target;" collectively, the
"Target Companies").
This Agreement contemplates a transaction in which the Buyer will
purchase from the Seller, and the Seller will sell to the Buyer, all of the
outstanding capital stock of each of the Target Companies in return for cash and
the Buyer Note.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
ss.1504(a) or any similar group defined under a similar provision of state,
local or foreign law.
"Applicable Rate" means the corporate base rate of interest publicly
announced from time to time by NATIONSBANK OF GEORGIA, N.A.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer Note" has the meaning set forth in ss.2(b) below.
"Closing" has the meaning set forth in ss.2(c) below.
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"Closing Date" has the meaning set forth in ss.2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Target that is not already generally available to
the public.
"Controlled Group of Corporation" has the meaning set forth in Code
ss.1563.
"Deferred Intercompany Transaction" has the meaning set forth in Reg.
ss.1.1502-13.
"Disclosure Schedule" has the meaning set forth in ss.4 below.
"Employee Benefit Plan" means any: (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan; (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan; (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan); or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Environmental, Health and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excess Loss Account" has the meaning set forth in Reg. ss.1.1502-19.
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"Financial Statement" has the meaning set forth in ss.4(g) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
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"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in ss.8(d) below.
"Indemnifying Party" has the meaning set forth in ss.8(d) below.
"Intellectual Property" means: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith; (d) all mask works and all
applications, registrations, and renewals in connection therewith; (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals); (f) all computer software (including data and
related documentation); (g) all other proprietary rights; and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" 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), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in ss.4(g)
below.
"Most Recent Fiscal Month End" has the meaning set forth in ss.4(g)
below.
"Most Recent Accounting Period" has the meaning set forth in ss.4(g)
below.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Process Agent" has the meaning set forth in ss.10(p) below.
"Prohibited Transaction" has the meaning set forth in ERISA ss.406 and
Code ss.4975.
"Purchase Price" has the meaning set forth in ss.2(b) below.
"Reportable Event" has the meaning set forth in ERISA ss.4043.
"Requisite Sellers" means Sellers holding a majority in interest of the
Target Shares as set forth in ss.4(b) of the Disclosure Schedule.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge
or other security interest, other than: (a) mechanic's, materialmen's and
similar liens; (b) liens for Taxes not yet due and payable; (c) purchase money
liens and liens securing rental payments under capital lease arrangements; and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's Software" means that certain computer software owned by Seller
and more particularly described on Annex III attached hereto and incorporated
herein.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Survey" has the meaning set forth in ss.5(i) below.
"Target" has the meaning set forth in the preface above.
"Target Companies" has the meaning set forth in the preface above.
"Target Share" means any share of the Common Stock of the Target
Companies.
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
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"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in ss.8(d) below.
2. PURCHASE AND SALE OF TARGET SHARES.
(a) BASIC TRANSACTION. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, all of his Target Shares for the consideration
specified below in this ss.2.
(b) PURCHASE PRICE.
(i) The Buyer agrees to pay to the Seller ONE MILLION FIVE
HUNDRED FIFTY THOUSAND DOLLARS ($1,550,000) (the "Purchase
Price") in consideration of the Target Shares in the manner
provided in Section 2(b)(ii) hereof. A portion of the
Purchase Price, in the amount of Two Hundred Thousand
Dollars ($200,000) (the "Purchase Price Deposit"), shall be
paid by Buyer to Seller in immediately available funds upon
the execution by all parties of this Agreement.
(ii) In the event (A) this Agreement is terminated for any
reason whatsoever, (B) the Closing does not occur on or
prior to December 31, 1997 for any reason whatsoever, or
(C) the real estate transactions contemplated by the Real
Estate Purchase Agreements, forms of which are attached
hereto as EXHIBITS G and H, fail to close for any reason
whatsoever on or before December 31, 1997, then Seller
shall, within three (3) days of written demand therefor
from Buyer, repay and refund the Purchase Price Deposit to
Buyer in full; provided, however, that (1) if the Closing
does not occur on or before October 31, 1997 for any reason
other than any breach of Seller or the Target Companies of
their respective representations, warranties or covenants
hereunder, then Seller shall have the right to retain
Twenty-Five Thousand Dollars ($25,000) of said Purchase
Price Deposit as earnest money and not as a penalty, and
(2) if the Closing does not occur on or before November 30,
1997 for any reason other than any breach of Seller or the
Target Companies of their respective representations,
warranties or covenants hereunder, then Seller shall have
the right to retain Fifty Thousand Dollars ($50,000) of
said Purchase Price Deposit as earnest money and not as a
penalty. The $25,000 or $50,000 earnest money, as the case
may be (the "Earnest Money"), shall be the sole and
exclusive remedy of Seller for damages that are a result of
the non-occurrence of the Closing for any reason
whatsoever. Because the actual damages that the Seller
would sustain if the Closing does not occur for any reason
whatsoever are uncertain and would be impossible or very
difficult to ascertain accurately, the parties hereto agree
in good faith that the Earnest Money would be reasonable
and just compensation for the harm caused by the failure of
the Closing to occur. Therefore, the Seller acknowledges
and agrees to accept said Earnest Money,
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if due and paid hereunder, as liquidated damages, and not
as a penalty, in the event the Closing does not occur for
any reason whatsoever.
(iii) The Purchase Price shall be paid by Buyer to Seller at
Closing by delivery of: (i) its promissory note (the "Buyer
Note") in the form of EXHIBIT A attached hereto in the
aggregate principal amount of Seven Hundred Seventy-Five
Thousand Dollars ($775,000), said Buyer Note to be
guaranteed by an Affiliate of Buyer that is mutually
acceptable to Buyer and Seller, pursuant to a guaranty of
payment ("Note Guaranty") in the form of EXHIBIT F; and
(ii) an amount equal to Five Hundred Seventy-Five Thousand
Dollars ($575,000), representing the balance of the
Purchase Price minus the Purchase Price Deposit, in cash,
payable by wire transfer or delivery of other immediately
available funds. Additionally, upon the Closing of the
transactions contemplated hereof, Seller shall retain the
Purchase Price Deposit.
(c) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of SCHNADER HARRISON
SEGAL & LEWIS LLP in Atlanta, Georgia, commencing at 9:00 a.m. local time on the
second business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the Buyer and the Seller
may mutually determine (the "Closing Date"); provided, however, that the Closing
Date shall be no later than December 31, 1997.
(d) DELIVERIES AT THE CLOSING. At the Closing: (i) the Seller will
deliver to the Buyer the various certificates, instruments and documents
referred to in ss.7(a) below; (ii) the Buyer will deliver to the Seller the
various certificates, instruments and documents referred to in ss.7(b) below;
(iii) the Seller will deliver to the Buyer stock certificates representing all
of his Target Shares, endorsed in blank or accompanied by duly executed
assignment documents; and (iv) the Buyer will deliver to the Seller the
consideration specified in ss.2(b) above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer that the statements contained in this
ss.3(a) are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
ss.3(a)) with respect to himself, except as set forth in Annex I attached
hereto.
(i) AUTHORIZATION OF TRANSACTION. The Seller has full power and
authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the
Seller, enforceable in accordance with its terms and
conditions, except as such enforceability may be limited by
the effect of bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general
principles of equity. The Seller need not give any notice
to, make any filing with, or obtain any authorization,
consent, or approval of any government or
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governmental agency in order to consummate the transactions
contemplated by this Agreement.
(ii) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will: (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge or other restriction of any
government, governmental agency, or court to which the
Seller is subject; or (B) conflict with, result in a breach
of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other
arrangement to which the Seller is a party or by which he
is bound or to which any of his assets is subject.
(iii) BROKERS' FEES. The Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this
Agreement for which the Buyer could become liable or
obligated.
(iv) INVESTMENT. The Seller: (A) understands that the Buyer Note
has not been, and will not be, registered under the
Securities Act, or under any state securities laws, and is
being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public
offering: (B) is acquiring the Buyer Note solely for his
own account for investment purposes, and not with a view to
the distribution thereof; (C) is a sophisticated investor
with knowledge and experience in business and financial
matters; (D) has received certain information concerning
the Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and
the risks inherent in holding the Buyer Note; (E) is able
to bear the economic risk and lack of liquidity inherent in
holding the Buyer Note; and (F) is an Accredited Investor
for the reasons set forth on Annex I.
(v) TARGET SHARES. The Seller holds of record and owns
beneficially the number of Target Shares set forth next to
his name in ss.4(b) of the Disclosure Schedule, free and
clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities
laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims
and demands. The Seller is not a party to any option,
warrant, purchase right, or other contract or commitment
that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of a Target (other
than this Agreement). The Seller is not a party to any
voting trust, proxy, or other agreement or understanding
with respect to the voting of any capital stock of a
Target.
(b) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to the Seller that the statements contained in this ss.3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this ss.3(b)),
except as set forth in Annex II attached hereto.
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(i) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(ii) AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of the Buyer, enforceable in
accordance with its terms and conditions except as such
enforceability may be limited by the effect of bankruptcy,
insolvency or similar laws affecting creditors' rights
generally or by general principles of equity. The Buyer
need not give any notice to, make any filing with, or
obtain any authorization, consent or approval of any
government or governmental agency in order to consummate
the transactions contemplated by this Agreement.
(iii) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will: (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge or other restriction of any
government, governmental agency, or court to which the
Buyer is subject or any provision of its charter or bylaws;
or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement
to which the Buyer is a party or by which it is bound or to
which any of its assets is subject.
(iv) BROKERS' FEES. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this
Agreement for which the Seller could become liable or
obligated.
(v) INVESTMENT. The Buyer is not acquiring the Target Shares of
Seller with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities
Act.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE TARGET COMPANIES. The
Seller represents and warrants to the Buyer that the statements contained in
this ss.4 are true, correct and complete as of the date of this Agreement and
will be true, correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this ss.4), except as set forth in the disclosure schedule delivered
by the Seller to the Buyer as a part of this Agreement and initialed by the
Parties (the "Disclosure Schedule"). Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein, however, unless the Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein
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(unless the representation or warranty has to do with the existence of the
document or other item itself). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this ss.4.
(a) ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Each Target is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Each Target is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each Target has full corporate power and
authority and all licenses, permits and authorizations necessary to carry on the
businesses in which it is engaged and in which it presently proposes to engage
and to own and use the properties owned and used by it. ss.4(a) of the
Disclosure Schedule lists the directors and officers of each Target. The Seller
has delivered to the Buyer correct and complete copies of the charter and bylaws
of each Target (as amended to date). The minute book (containing the records of
meetings of the stockholders, the board of directors, and any committees of the
board of directors), the stock certificate books, and the stock record books of
each Target is correct and complete in all material respects. No Target is in
default under or in violation of any provision of its charter or bylaws.
(b) CAPITALIZATION. The entire authorized capital stock of each Target
is as set forth on ss.4(b) of the Disclosure Schedule. The Target Shares of each
Target are issued and outstanding. All of the issued and outstanding Target
Shares have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the Seller as set forth in ss.4(b) of
the Disclosure Schedule. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require a Target to issue,
sell, or otherwise cause to become outstanding any of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to a Target. There are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of the capital stock of a Target.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will:
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, or court to which a Target is subject or any provision of
the charter or bylaws of a Target; or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which a Target is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets). Each Target does not need to give any notice to, make any filing
with, or obtain any authorization, consent or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) BROKERS' FEES. Each Target has no Liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
(e) TITLE TO ASSETS. Each Target has good and marketable title to, or
a valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for
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properties and assets disposed of in the Ordinary Course of Business since the
date of the Most Recent Balance Sheet.
(f) FINANCIAL STATEMENTS. Attached hereto as EXHIBIT B are the
following financial statements of the Target Companies (collectively, the
"Financial Statements"): compiled and unaudited balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the fiscal
years ended December 31, 1995, December 31, 1996, and July 31, 1997 (the "Most
Recent Accounting Period") for each of the Target Companies. The Financial
Statements (including the notes thereto) have been prepared on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of a Target as of such dates and the results of operations of a Target
for such periods, are correct and complete, and are consistent with the books
and records of a Target (which books and records are correct and complete). The
books of account of each Target are sufficient to prepare the Financial
Statements in accordance with GAAP.
(g) EVENTS SUBSEQUENT TO MOST RECENT ACCOUNTING PERIOD. Since the Most
Recent Accounting Period, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of each Target. Without limiting the generality of the foregoing,
since that date:
(i) each Target has not sold, leased, transferred or assigned
any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) each Target has not entered into any agreement, contract,
lease or license (or series of related agreements,
contracts, leases and licenses) either involving more than
$10,000 or outside the Ordinary Course of Business;
(iii) each Target has not accelerated, terminated, modified or
canceled any agreement, contract, lease or license (or
series of related agreements, contracts, leases and
licenses) involving more than $10,000 to which the Target
is a party or by which it is bound;
(iv) each Target has not imposed any Security Interest upon any
of its assets, tangible or intangible;
(v) each Target has not made any capital expenditure (or series
of related capital expenditures either involving more than
$10,000 or outside the Ordinary Course of Business;
(vi) each Target has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of,
any other Person (or series of related capital investments,
loans and acquisitions) either involving more than $10,000
or outside the Ordinary Course of Business;
(vii) each Target has not issued any note, bond or other debt
security or created, incurred, assumed or guaranteed any
indebtedness for borrowed money or capitalized lease
obligation either involving more than $10,000 singly or
$10,000 in the aggregate;
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(viii) each Target has not delayed or postponed the payment of
accounts payable and other Liabilities outside the
Ordinary Course of Business;
(ix) each Target has not canceled, compromised, waived or
released any right or claim (or series of related rights
and claims) either involving more than $10,000 or outside
the Ordinary Course of Business;
(x) each Target has not granted any license or sublicense of
any rights under or with respect to any Intellectual
Property;
(xi) there has been no changes made or authorized in the
charter or bylaws of a Target;
(xii) each Target has not issued, sold or otherwise disposed of
any of its capital stock, or granted any options,
warrants or other rights to purchase or obtain (including
upon conversion, exchange or exercise) any of its capital
stock;
(xiii) each Target has not declared, set aside or paid any
dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed,
purchased or otherwise acquired any of its capital stock;
(xiv) each Target has not experienced any material damage,
destruction or loss (whether or not covered by insurance)
to its property;
(xv) each Target has not made any loan to, or entered into any
other transaction with, any of its directors, officers
and employees outside the Ordinary Course of Business;
(xvi) each Target has not entered into any employment contract
or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or
agreement;
(xvii) each Target has not granted any increase in the base
compensation of any of its directors, officers and
employees outside the Ordinary Course of Business;
(xviii) each Target has not adopted, amended, modified or
terminated any bonus, profit-sharing, incentive,
severance or other plan, contract or commitment for the
benefit of any of its directors, officers and employees
(or taken any such action with respect to any other
Employee Benefit Plan);
(xix) each Target has not made any other change in employment
terms for any of its directors, officers and employees
outside the Ordinary Course of Business;
(xx) each Target has not made or pledged to make any
charitable or other capital contribution outside the
Ordinary Course of Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside
the Ordinary Course of Business involving a Target; and
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(xxii) each Target has not committed to any of the foregoing.
(h) UNDISCLOSED LIABILITIES. Each Target has no Liability (and there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against it giving rise to any
Liability), except for Liabilities set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto); and (ii) Liabilities which
have arisen after the Most Recent Accounting Period in the Ordinary Course of
Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement or violation of law).
(i) LEGAL COMPLIANCE. Each Target and its respective predecessors and
Affiliates have in all material respects complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings and charges thereunder) of federal, state, local and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand or notice has been
filed or commenced against any of them alleging any failure so to comply.
(j) TAX MATTERS.
(i) Each Target has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and
complete in all respects. All Taxes owed by a Target
(whether or not shown on any Tax Return) have been paid.
Each Target currently is not the beneficiary of any
extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a
jurisdiction where a Target does not file Tax Returns
that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of
the assets of any of a Target that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) Each Target has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.
(iii) To the Knowledge of Seller, there are no claims by any
governmental authority to assess any additional Taxes for
any period for which Tax Returns have been filed. There
is no dispute or claim concerning any Tax Liability of a
Target either: (A) claimed or raised by any authority in
writing; or (B) as to which the Seller has Knowledge
based upon personal contact with any agent of such
authority. ss.4(j) of the Disclosure Schedule lists all
federal, state, local and foreign income Tax Returns
filed with respect to any of the Target Companies for
taxable periods ended on or after the date of
incorporation of each Target, and, with respect to each
such Tax Return,ss.4(j) of the Disclosure Schedule also
indicates those Tax Returns that have been audited and
those that currently are the subject of an audit. The
Seller has delivered to the Buyer correct and complete
copies of all income Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed
to by a Target since the date of incorporation of each
Target.
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(iv) No Target has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(v) No Target is subject to any private letter ruling of the
IRS or comparable rulings of other taxing authorities.
(vi) Each Target has properly and timely elected under Section
1362 of the Code, and under each analogous or similar
provision of state or local law in each jurisdiction
where each Target is required to file a Tax Return, to be
treated as an "S" corporation for all taxable periods
since the date of incorporation of each respective
Target. Buyer has received a copy of any such elections
and there has not been any voluntary or involuntary
termination or revocation of any such election.
(vii) No Target has ever owned any subsidiaries nor ever been a
member of any consolidated, combined or affiliated group
of corporations for any Tax purposes.
(viii) No Target has any undistributed earnings and profits nor
had for any taxable years gross receipts more than
twenty-five percent (25%) of which are "passive
investment income" (as defined in Section 1375 of the
Code).
(ix) No Target has filed a consent under Code ss.341(f)
concerning collapsible corporations. No Target has made
any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances
could obligate it to make any payments that will not be
deductible under Code ss.280G. No Target has been a
United States real property holding corporation within
the meaning of Code ss.897(c)(2) during the applicable
period specified in Code ss.897(c)(1)(A)(ii). Each Target
has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a
substantial understatement of federal income Tax within
the meaning of Code ss.6662.
(x) None of the Target Companies nor any other Person
(including Seller) on behalf of any of the Target
Companies has: (i) agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any
similar provision of state, local or foreign law by
reason of a change in accounting method initiated by a
Target, or has any knowledge that the IRS has proposed
any such adjustment or change in accounting method, or
has any application pending with any taxing authority
requesting permission for any changes in accounting
methods that relate to the business or operations of a
Target; (ii) executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any predecessor
provision thereof or any similar provision of state,
local or foreign law with respect to a Target; or (iii)
requested any extension of time within which to file any
Tax Return, which Tax Return has since not been filed.
(k) REAL PROPERTY. ss.4(k) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to a Target. The Seller
has delivered to the Buyer correct and complete
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copies of the leases and subleases listed in ss.4(k) of the Disclosure Schedule
(as amended to date). With respect to each lease and sublease listed in ss.4(k)
of the Disclosure Schedule:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on
identical terms following the consummation of the
transactions contemplated hereby;
(iii) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or
permit termination, modification or acceleration
thereunder;
(iv) no party to the lease or sublease has repudiated any
provision thereof;
(v) there are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v) above
are true and correct with respect to the underlying
lease;
(vii) each Target has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have
received all approvals of governmental authorities
(including licenses and permits) required in connection
with the operation thereof and have been operated and
maintained in accordance with: (A) all federal, state,
county, municipal and other governmental statutes, laws,
rules, order, regulations, ordinances or recommendations
affecting said facilities or any part thereof, or the use
thereof including without limitation the Americans with
Disabilities Act, whether or not any such statutes, laws,
rules, orders, regulations, ordinances or recommendations
which may hereafter be enacted involve a change of policy
on the part of the governmental body enacting the same;
(B) all rules, orders and regulations of the National
Board of Fire Underwriters or other bodies exercising
similar functions which apply to said facilities; and (C)
the requirements of all policies public liability, fire
and other insurance which at any time may be in force
with respect to said facilities;
(ix) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for
the operation of said facilities; and
(x) the owner of the facility leased or subleased has good
and marketable title to the parcel of real property, free
and clear of any Security Interest, easement, covenant or
other restriction, except for installments of special
easements not yet delinquent and recorded easements,
covenants and other restrictions which
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do not impair the current use, occupancy, or value, or
the marketability of title, of the property subject
thereto.
(l) INTELLECTUAL PROPERTY.
(i) Each Target owns or has the right to use pursuant to
license, sublicense, agreement or permission all
Intellectual Property necessary for the operation of the
businesses of the Target as presently conducted and as
presently proposed to be conducted. Each item of
Intellectual Property owned or used by a Target
immediately prior to the Closing hereunder will be owned
or available for use by the Target Companies on identical
terms and conditions immediately subsequent to the
Closing hereunder; provided, however, that the Seller's
Software will be available for use by the Target
Companies in accordance with the terms of the License
Agreement attached hereto as EXHIBIT C-2 attached hereto
and incorporated herein. Each Target has taken all
necessary action to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) Each Target has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any
Intellectual Property rights of third parties, and the
Seller has not ever received any charge, complaint,
claim, demand or notice alleging any such interference,
infringement, misappropriation or violation (including
any claim that a Target must license or refrain from
using any Intellectual Property rights of any third
party). To the Knowledge of the Seller, no third party
has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual
Property rights of a Target.
(iii) ss.4(l)(iii) of the Disclosure Schedule identifies each
patent or registration which has been issued to a Target
with respect to any of its Intellectual Property,
identifies each pending patent application or application
for registration which a Target has made with respect to
any of its Intellectual Property, and identifies each
license, agreement or other permission which a Target has
granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). The
Seller has delivered to the Buyer correct and complete
copies of all such patents, registrations, applications,
licenses, agreements and permissions (as amended to date)
and has made available to the Buyer correct and complete
copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such
item. ss.4(l)(iii) of the Disclosure Schedule also
identifies each trade name or unregistered trademark used
by a Target in connection with any of its businesses.
With respect to each item of Intellectual Property
required to be identified in ss.4(l)(iii) of the
Disclosure Schedule:
(A) each Target possess all right, title and interest
in and to the item, free and clear of any Security
Interest, license or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling or
charge;
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(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand
is pending or, to the Knowledge of the Seller, is
threatened which challenges the legality,
validity, enforceability, use or ownership of the
item; and
(D) each Target has never agreed to indemnify any
Person for or against any interference,
infringement, misappropriation or other conflict
with respect to the item.
(iv) ss.(l)(iv) of the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns
and that a Target uses pursuant to license, sublicense,
agreement or permission. The Seller has delivered to the
Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to
date). With respect to each item of Intellectual Property
required to be identified in ss.4(l)(iv) of the
Disclosure Schedule:
(A) the license, sublicense, agreement or permission
covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) the license, sublicense, agreement or permission
will continue to be legal, valid, binding,
enforceable, and in full force and effect on
identical terms following the consummation of the
transactions contemplated hereby (including the
assignments and assumptions referred to in ss.2
above);
(C) no party to the license, sublicense, agreement or
permission is in breach or default, and no event
has occurred which with notice or lapse of time
would constitute a breach or default or permit
termination, modification or acceleration
thereunder;
(D) no party to the license, sublicense, agreement or
permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in
subsections (A) through (D) above are true and
correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is
not subject to any outstanding injunction,
judgment, order, decree, ruling or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand
is pending or, to the Knowledge of the Seller, is
threatened which challenges the legality, validity
or enforceability of the underlying item of
Intellectual Property; and
(H) each Target has not granted any sublicense or
similar right with respect to the license,
sublicense, agreement or permission.
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21
(v) To the Knowledge of the Seller, each Target does not
interfere with, infringe upon, misappropriate or
otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the
continued operation of its businesses as presently
conducted.
(m) TANGIBLE ASSETS. Each Target owns or leases all buildings,
machinery, equipment and other tangible assets necessary for the conduct of its
businesses as presently conducted. To the Seller's Knowledge, each such tangible
asset is free from any material defects (patent and latent), has been maintained
in accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear), and is suitable for the purposes for
which it presently is used.
(n) CONTRACTS. ss.4(n) of the Disclosure Schedule lists the following
contracts and other agreements to which a Target is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person
providing for lease payments in excess of $10,000 per
annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of supplies, products or other personal
property, or for the furnishing or receipt of services,
the performance of which will extend over a period of
more than one year, result in a material loss to a
Target, or involve consideration in excess of $10,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed
any indebtedness for borrowed money, or any capitalized
lease obligation, in excess of $10,000 or under which a
Target has imposed a Security Interest on any of its
assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement with the Seller or with another Target;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance or other
material plan or arrangement for the benefit of its
current or former directors, officers and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting or other basis providing
annual compensation in excess of $10,000 or providing
severance benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers and employees
outside the Ordinary Course of Business;
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(xi) any agreement under which the consequences of a default
or termination could have a material adverse effect on
the business, financial condition, operations, results of
operations or future prospects of a Target; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of
$10,000.
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement listed in ss.4(n) of the Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and conditions of each oral
agreement referred to in ss.4(n) of the Disclosure Schedule. With respect to
each such agreement: (A) the agreement is legal, valid, binding, enforceable,
and in full force and effect; (B) the agreement will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms,
except as such enforceability may be limited by the effect of bankruptcy,
insolvency or similar laws affecting creditors' rights generally or by general
principles of equity following the consummation of the transactions contemplated
hereby; (C) no party is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification or acceleration, under the agreement; and (D) no party
has repudiated any provision of the agreement.
(o) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
of each of the Target Companies are reflected properly on its books and records,
are valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Most Recent Balance Sheet of a Target (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of a Target.
(p) POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Target Companies.
(q) INSURANCE. ss.4(q) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability and Workers' Compensation coverage and
bond and surety arrangements) to which a Target has been a party, a named
insured, or otherwise the beneficiary of coverage at any time within the past
five (5) years:
(i) the name, address and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other
basis) and amount (including a description of how
deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
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With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither the Target Companies nor any other party to the policy is in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default, or permit termination,
modification or acceleration, under the policy; and (D) no party to the policy
has repudiated any provision thereof. Each Target has been covered during the
past five (5) years by insurance in scope and amount customary and reasonable
for the businesses in which it has engaged during the aforementioned period.
ss.4(q) of the Disclosure Schedule describes any self-insurance arrangements
affecting a Target.
(r) LITIGATION. ss.4(r) of the Disclosure Schedule sets forth each
instance in which a Target: (i) is subject to any outstanding injunction,
judgment, order, decree, ruling or charge; or (ii) is a party or, to the
Knowledge of the Seller, is threatened to be made a party to any action, suit,
proceeding, hearing or investigation of, in or before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings and investigations set forth in ss.4(r) of the Disclosure Schedule
could result in any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of a Target.
The Seller has no reason to believe that any such action, suit, proceeding,
hearing or investigation may be brought or threatened against a Target.
(s) EMPLOYEES. To the Knowledge of the Seller, no executive, key
employee or group of employees has any plans to terminate employment with a
Target. Each Target is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. Each Target has not
committed any unfair labor practice. The Seller has no Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of a Target.
(t) EMPLOYEE BENEFITS.
(i) ss.4(t) of the Disclosure Schedule lists each Employee
Benefit Plan that a Target maintains or to which a Target
contributes.
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in
form and in operation in all respects with the
applicable requirements of ERISA, the Code, and
other applicable laws.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1s, and Summary Plan Descriptions) have been
filed or distributed appropriately with respect to
each such Employee Benefit Plan. The requirements
of Part 6 of Subtitle B of Title I of ERISA and of
Code ss.4980B have been met with respect to each
such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
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(C) All contributions (including all employer
contributions and employee salary reduction
contributions) which are due have been paid to
each such Employee Benefit Plan which is an
Employee Pension Benefit Plan and all
contributions for any period ending on or before
the Closing Date which are not yet due have been
paid to each such Employee Pension Benefit Plan or
accrued in accordance with the past custom and
practice of the Target. All premiums or other
payments for all periods ending on or before the
Closing Date have been paid with respect to each
such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the
requirements of a "qualified plan" under Code
ss.401(a) and has received, within the last two
years, a favorable determination letter from the
Internal Revenue Service.
(E) The market value of assets under each such
Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan)
equals or exceeds the present value of all vested
and nonvested Liabilities thereunder determined in
accordance with PBGC methods, factors, and
assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for
determination.
(F) The Seller has delivered to the Buyer correct and
complete copies of the plan documents and summary
plan descriptions, the most recent determination
letter received from the Internal Revenue Service,
the most recent Form 5500 Annual Report, and all
related trust agreements, insurance contracts and
other funding agreements which implement each such
Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that a Target
maintains or ever has maintained or to which it
contributes, ever has contributed, or ever has been
required to contribute:
(A) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer
Plan) has been completely or partially terminated
or been the subject of a Reportable Event as to
which notices would be required to be filed with
the PBGC. No proceeding by the PBGC to terminate
any such Employee Pension Benefit Plan (other than
any Multiemployer Plan) has been instituted or, to
the Knowledge of the Seller, threatened.
(B) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No
Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or
comply in connection with the administration or
investment of the assets of any such Employee
Benefit Plan. No action, suit, proceeding, hearing
or investigation with respect to the
administration or the investment of the assets of
any such Employee Benefit Plan (other than routine
claims for
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benefits) is pending or, to the Knowledge of the
Seller, threatened. The Seller has no Knowledge of
any Basis for any such action, suit, proceeding,
hearing or investigation.
(C) Each Target has not incurred, and the Seller has
no reason to expect that each Target will incur,
any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA
(including any withdrawal Liability) or under the
Code with respect to any such Employee Benefit
Plan which is an Employee Pension Benefit Plan.
(iii) Each Target does not contribute to, ever has contributed
to, or ever has been required to contribute to any
Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iv) Each Target does not maintain or ever has maintained or
contributes, ever has contributed, or ever has been
required to contribute to any Employee Welfare Benefit
Plan providing medical, health, or life insurance or
other welfare-type benefits for current or future retired
or terminated employees, their spouses, or their
dependents (other than in accordance with Code ss.4980B).
(u) GUARANTIES. Each Target is not a guarantor or otherwise is liable
for any Liability or obligation (including indebtedness) of any other Person.
(v) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) Each Target has complied and is in compliance with all
Environmental, Health and Safety Requirements.
(ii) Without limiting the generality of the foregoing, each
Target has obtained and complied with, and is in
compliance with, all permits, licenses and other
authorizations that are required pursuant to
Environmental, Health and Safety Requirements for the
occupation of its facilities and the operation of its
business; a list of all such permits, licenses and other
authorizations is set forth on the attached
"Environmental and Safety Permits Schedule."
(iii) Each Target has not received any written or oral notice,
report or other information regarding any actual or
alleged violation of Environmental, Health and Safety
Requirements, or any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or
corrective obligations, relating to any of them or its
facilities arising under Environmental, Health and Safety
Requirements.
(iv) None of the following exists at any property or facility
owned or operated by a Target: (A) underground storage
tanks; (B) asbestos-containing material in any form or
condition; (C) materials or equipment containing
polychlorinated biphenyls; or (D) landfills, surface
impoundments or disposal areas.
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(v) Each Target has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported,
handled, or released any substance, including without
limitation any hazardous substance, or owned or operated
any property or facility (and no such property or
facility is contaminated by any such substance) in a
manner that has given or would give rise to liabilities,
including any liability for response costs, corrective
action costs, personal injury, property damage, natural
resources damages or attorney fees, pursuant to the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Solid
Waste Disposal Act, as amended ("SWDA"), or any other
Environmental, Health and Safety Requirements.
(vi) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will
result in any obligations for site investigation or
cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the
so-called "transaction-triggered" or "responsible
property transfer" Environmental, Health and Safety
Requirements.
(vii) Each Target has not, either expressly or by operation of
law, assumed or undertaken any liability, including
without limitation any obligation for corrective or
remedial action, of any other Person relating to
Environmental, Health and Safety Requirements.
(viii) No facts, events or conditions relating to the past or
present facilities, properties or operations of a Target
will prevent, hinder or limit continued compliance with
Environmental, Health and Safety Requirements, give rise
to any investigatory, remedial or corrective obligations
pursuant to Environmental, Health and Safety
Requirements, or give rise to any other liabilities
(whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental, Health and Safety
Requirements, including without limitation any relating
to onsite or offsite releases or threatened releases of
hazardous materials, substances or wastes, personal
injury, property damage or natural resources damage.
(w) TERRITORIAL RESTRICTIONS. No Target is restricted by any written
agreement or understanding with any Person from carrying on its business
anywhere in the world. Buyer, solely as a result of its purchase of the Target
Companies from Seller pursuant hereto, will not thereby become restricted in
carrying on any business anywhere in the world.
(x) DISCLOSURE. The representations and warranties contained in this
ss.4 do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this ss.4 not misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
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(a) GENERAL. Each of the Parties will use his or its reasonable best
efforts to take all action and to do all things necessary, proper or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in ss.7 below).
(b) NOTICES AND CONSENTS. The Seller will cause each Target to give
any notices to third parties, and will cause each Target to use its reasonable
best efforts to obtain any third party consents, that the Buyer reasonably may
request in connection with the matters referred to in ss.4(c) above. Each of the
Parties will (and the Seller will cause each Target to) give any notices to,
make any filings with, and use its reasonable best efforts to obtain any
authorizations, consents and approvals of governments and governmental agencies
in connection with the matters referred to in ss.3(a)(ii), ss.3(b)(iii), and
ss.4(c) above.
(c) OPERATION OF BUSINESS. The Seller will not cause or permit any
Target to engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the generality of the
foregoing, the Seller will not cause or permit any Target to: (i) declare, set
aside, or pay any dividend or make any distribution with respect to its capital
stock or redeem, purchase, or otherwise acquire any of its capital stock; or
(ii) otherwise engage in any practice, take any action, or enter into any
transaction of the sort described in ss.4(g) above.
(d) PRESERVATION OF BUSINESS. The Seller will cause each Target to
keep its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers and employees.
(e) FULL ACCESS. Upon prior reasonable notice from Buyer, the Seller
will permit, and the Seller will cause each Target to permit, representatives of
the Buyer to have full access at all reasonable times, and in a manner so as not
to interfere with the normal business operations of each Target, to all
premises, properties, personnel, books, records (including Tax records),
contracts and documents of or pertaining to each Target.
(f) NOTICE OF DEVELOPMENTS. The Seller will give prompt written notice
to the Buyer of any material adverse development causing a breach of any of the
representations and warranties in ss.4 above. Each Party will give prompt
written notice to the others of any material adverse development causing a
breach of any of his or its own representations and warranties in ss.3 above. No
disclosure by any Party pursuant to this ss.5(f), however, shall be deemed to
amend or supplement Annex I, Annex II, or the Disclosure Schedule or to prevent
or cure any misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. The Seller will (and the Seller will not cause or
permit each Target to): (i) solicit, initiate or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets, of a
Target (including any acquisition structured as a merger, consolidation or share
exchange); or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Seller will not vote any of their Target Shares in favor of any
such acquisition structured as a merger, consolidation or share exchange. The
Seller will notify the Buyer immediately if any Person makes any proposal,
offer, inquiry or contact with respect to any of the foregoing.
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6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
period following the Closing.
(a) GENERAL. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under ss.8 below). The
Seller acknowledges and agrees that from and after the Closing, the Buyer will
be entitled to possession of all documents, books, records (including Tax
records), agreements and financial data of any sort relating to a Target.
(b) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with:
(i) any transaction contemplated under this Agreement; or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction, on or prior
to the Closing Date involving a Target, each of the other Parties will cooperate
with him or it and his or its counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under ss.8
below).
(c) TRANSITION. The Seller will not take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of a Target from maintaining the same
business relationships with a Target after the Closing as it maintained with the
Target prior to the Closing. The Seller will refer all customer inquiries
relating to the businesses of a Target to the Buyer from and after the Closing.
(d) CONFIDENTIALITY. The Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in his possession. In the
event that the Seller is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information, the Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this ss.6(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, the Seller is, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, the Seller may disclose the
Confidential Information to the tribunal; provided, however, that the Seller
shall use his best efforts to obtain, at the request of the Buyer, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Buyer shall
designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure.
(e) BUYER NOTE. The Buyer Note will be imprinted with a legend
substantially in the following form:
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The payment of principal and interest on this Note is subject to certain
recoupment provisions set forth in a Stock Purchase Agreement dated as of
November ___, 1997 (the "Purchase Agreement") among the issuer of this
Note, the person to whom this Note originally was issued, and certain
other persons. This Note was originally issued on ____, 19__, and has not
been registered under the Securities Act of 1933, as amended. The
transfer of this Note is subject to certain restrictions set forth in the
Purchase Agreement. The issuer of this Note will furnish a copy of these
provisions to the holder hereof without charge upon written request.
Each holder desiring to transfer the Buyer Note first must furnish the Buyer
with: (i) a written opinion satisfactory to the Buyer in form and substance from
counsel satisfactory to the Buyer by reason of experience to the effect that the
holder may transfer the Buyer Note as desired without registration under the
Securities Act; and (ii) a written undertaking executed by the desired
transferee satisfactory to the Buyer in form and substance agreeing to be bound
by the recoupment provisions and the restrictions on transfer contained herein.
(f) CONSTRUCTION OF HENRY COUNTY PROPERTY. Buyer acknowledges and
agrees that, subsequent to the Closing Date, Buyer will undertake, at Buyer's
cost and expense, the construction of certain leasehold improvements (the
"Leasehold Improvements") upon the real property on which Southlake Collision
Henry County, Inc. conducts its business (the "Henry County Property") for the
purpose of completing the construction of the existing improvements thereon.
This provision shall survive the Closing of the transactions contemplated
hereby.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3(a)
and ss.4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Seller shall have performed and complied with all of
its covenants hereunder in all material respects through
the Closing;
(iii) each Target shall have procured all of the third party
consents specified in ss.5(b) above;
(iv) no action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling
or charge would: (A) prevent consummation of any of the
transactions contemplated by this Agreement; (B) cause
any of the transactions contemplated by this Agreement to
be rescinded following consummation; (C) affect adversely
the right of the Buyer to own the Target Shares of the
Seller of each Target and to control each Target; or (D)
affect adversely the right of a Target to own its assets
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and to operate its businesses (and no such injunction,
judgment, order, decree, ruling or charge shall be in
effect);
(v) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in ss.7(a)(i)-(iv) is satisfied in all
respects;
(vi) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have
expired or otherwise been terminated and the Parties,
each Target shall have received all other authorizations,
consents and approvals of governments and governmental
agencies referred to in ss.3(a)(ii), ss.3(b)(ii), and
ss.4(c) above;
(vii) the relevant parties shall have entered into side
agreements in form and substance as set forth in EXHIBITS
C-1 (Employment Agreement), and C-2 (Licensing
Agreement), attached hereto and the same shall be in full
force and effect;
(viii) the Buyer shall have received from counsel to the Seller
an opinion in form and substance as set forth in EXHIBIT
D attached hereto, addressed to the Buyer, and dated as
of the Closing Date;
(ix) the Buyer shall have received the resignations, effective
as of the Closing, of each director and officer of each
Target other than those whom the Buyer shall have
specified in writing at least five business days prior to
the Closing;
(x) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other
documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in
form and substance to the Buyer and its counsel;
(xi) Buyer and Seller shall have entered into Real Estate
Purchase Agreements in form and substance as set forth on
EXHIBIT G and EXHIBIT H attached hereto and incorporated
herein and the same shall be in full force and effect;
(xii) Buyer and Seller shall have entered into Assumption of
Lease Agreements in form and substance as set forth on
EXHIBIT I and EXHIBIT J as attached hereto and
incorporated herein with respect to the Henry County
Property and the real property on which the business of
Southlake Collision Center, Inc. is conducted (the
"Clayton County Property"), and the same shall be in
full force and effect; and
(xiii) Buyer and the relevant parties shall have entered into an
Assumption to Lease Agreement in form and substance as
set forth on EXHIBIT K as attached hereto with respect to
the lease listed on Section 4(k) of the Disclosure
Schedule that pertains to the real property on which the
business of Southlake Collision Cobb County, Inc. is
conducted, and the same shall be in full force and
effect.
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The Buyer may waive any condition specified in this ss.7(a) if it executes a
writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the
Seller to consummate the transactions to be performed by him in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3(b)
above shall be true and correct in all material respects
at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through
the Closing;
(iii) no action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling
or charge would: (A) prevent consummation of any of the
transactions contemplated by this Agreement; or (B) cause
any of the transactions contemplated by this Agreement to
be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling or charge
shall be in effect);
(iv) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions
specified above in ss.7(b)(i)-(iii) is satisfied in all
respects;
(v) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have
expired or otherwise been terminated and the Parties,
each Target shall have received all other authorizations,
consents and approvals of governments and governmental
agencies referred to in ss.3(a)(ii), ss.3(b)(ii), and
ss.4(c) above;
(vi) the relevant parties shall have entered into side
agreements in form and substance as set forth in EXHIBITS
C-1 (Employment Agreement), and C-2 (Licensing
Agreement), attached hereto and the same shall be in full
force and effect;
(vii) the Seller shall have received from counsel to the Buyer
an opinion in form and substance as set forth in EXHIBIT
E attached hereto, addressed to the Seller, and dated as
of the Closing Date; and
(viii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and
all certificates, opinions, instruments and other
documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in
form and substance to the Seller and his counsel.
The Seller may waive any condition specified in this ss.7(b) if they execute a
writing so stating at or prior to the Closing.
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8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained in this Agreement shall survive execution and delivery
of this Agreement, any examination by or on behalf of the Parties, and the
Closing contemplated herein, only to the extent specified below:
(i) the representations and warranties contained in
ss.3(a)(iii)-(iv), ss.3(b)(iv)-(v), ss.4(a)-(i),
ss.4(k)-(u) and ss.4(w)-(x) shall survive for a period of
two (2) years following the Closing Date;
(ii) the representations and warranties contained in
ss.3(a)(i), (ii) and (v), ss.3(b)(i)-(iii), ss.4(a) and
ss.4(v) shall survive without limitation; and
(iii) the representations and warranties contained in ss.4(j)
shall survive as to any Tax covered by such
representations and warranties for so long as any statute
of limitations for such Tax remains open, in whole or in
part, including without limitation by reason of waiver of
such statute of limitations.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(i) In the event the Seller breaches (or in the event any
third party alleges facts that, if true, would mean the
Seller has breached) any of his representations,
warranties and covenants contained herein (other than the
covenants in ss.2(a) above and the representations and
warranties in ss.3(a), ss.4(a), ss.4(c), ss.4(j) and
ss.4(v) above), and, if there is an applicable survival
period pursuant to ss.8(a) above, provided that the Buyer
makes a written claim for indemnification against the
Seller pursuant to ss.8(d) below within such survival
period, then the Seller agrees to indemnify the Buyer
from and against the entirety of any Adverse Consequences
the Buyer may suffer through and after the date of the
claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end of any
applicable survival period) resulting from, arising out
of, relating to, in the nature of, or caused by the
breach (or the alleged breach); provided, however, that
the Seller shall not have any obligation to indemnify the
Buyer from and against any Adverse Consequences resulting
from, arising out of, relating to, in the nature of, or
caused by the breach (or alleged breach) of any
representation or warranty of the Seller contained in
ss.4(a)-(i), ss.4(k)-(u) and ss.4(w)-(x) above until the
Buyer has suffered Adverse Consequences by reason of all
such breaches (or alleged breaches) in excess of a
Thirty-Five Thousand Dollars ($35,000) aggregate
threshold (at which point the Seller will be obligated to
indemnify the Buyer from and against all such Adverse
Consequences that are in excess of said $35,000) not to
exceed a maximum dollar amount of One Million Five
Hundred Fifty Thousand Dollars ($1,550,000).
(ii) In the event the Seller breaches (or in the event any
third party alleges facts that, if true, would mean the
Seller has breached) any of his covenants in ss.2(a)
above or any of his or its representations and warranties
in ss.3(a), ss.4(a), ss.4(c), ss.4(j) or ss.4(v) above,
and, if there is an applicable survival period
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pursuant to ss.8(a) above, provided that the Buyer makes
a written claim for indemnification against the Seller
pursuant to ss.8(d) below within such survival period,
then the Seller agrees to indemnify the Buyer from and
against the entirety of any Adverse Consequences the
Buyer may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences
the Buyer may suffer after the end of any applicable
survival period) resulting from, arising out of, relating
to, in the nature of, or caused by the breach (or the
alleged breach).
(iii) The Seller agrees to indemnify the Buyer from and against
the entirety of any Adverse Consequences the Buyer may
suffer resulting from, arising out of, relating to, in
the nature of, or caused by any Liability of the Target
for any Taxes of the Target with respect to any Tax year
or portion thereof ending on or before the Closing Date
(or for any Tax year beginning before and ending after
the Closing Date to the extent allocable (determined in a
manner consistent with ss.9(c)) to the portion of such
period beginning before and ending on the Closing Date).
(iv) The Seller agrees to indemnify the Buyer from and against
the entirety of any Adverse Consequences the Buyer may
suffer resulting from, arising out of, relating to, in
the nature of, or caused by any matter that is
discovered, revealed or disclosed as a result of Buyer's
due diligence in connection with the transaction
contemplated hereby and is mutually agreed upon by the
parties hereto in writing.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER. In the event
the Buyer breaches (or in the event any third party alleges facts that, if true,
would mean the Buyer has breached) any of its representations, warranties and
covenants contained herein, and, if there is an applicable survival period
pursuant to ss.8(a) above, provided that the Seller makes a written claim for
indemnification against the Buyer pursuant to ss.8(d) below within such survival
period, then the Buyer agrees to indemnify the Seller from and against the
entirety of any Adverse Consequences the Seller may suffer through and after the
date of the claim for indemnification (including any Adverse Consequences the
Seller may suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach).
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for
indemnification against any other Party (the
"Indemnifying Party") under this ss.8, then the
Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying
any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is
prejudiced.
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(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the
Indemnified Party so long as: (A) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party will indemnify
the Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim; (B) the
Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder; (C)
the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief;
(D) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party;
and (E) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with
ss.8(d)(ii) above: (A) the Indemnified Party may retain
separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim; (B)
the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent
of the Indemnifying Party (not to be withheld
unreasonably); and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not
to be withheld unreasonably).
(iv) In the event any of the conditions in ss.8(d)(ii) above
is or becomes unsatisfied, however: (A) the Indemnified
Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to,
the Third Party Claim in any manner it reasonably may
deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any
Indemnifying Party in connection therewith); (B) the
Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable
attorneys' fees and expenses); and (C) the Indemnifying
Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent
provided in this ss.8.
(e) RECOUPMENT UNDER BUYER NOTE. The Buyer shall have the option of
recouping all or any part of any Adverse Consequences it may suffer ("Recoupment
Amount") (in lieu of seeking any indemnification to which it is entitled under
this ss.8) by notifying the Seller that the Buyer is reducing the principal
amount outstanding under its Buyer Note. This shall affect the timing and amount
of payments required under the Buyer Note in the same manner as if the Buyer had
made
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a permitted prepayment (without premium or penalty) thereunder. If, within five
(5) days after Buyer's notice regarding said recoupment, Seller provides Buyer
with notice in which Seller objects to said recoupment, then Buyer, in lieu of
reducing said principal amount outstanding under its Buyer Note, shall begin
paying all amounts due under said Buyer Note, up to an amount equal to the
Recoupment Amount, into a court of competent jurisdiction (the "Court Funds").
If the dispute between Buyer and Seller with respect to the Recoupment Amount is
resolved in favor of Buyer, then the Court Funds shall be paid to Seller and the
principal amount outstanding under the Buyer Note shall be reduced by an amount
equal to the Recoupment Amount. If the dispute between Buyer and Seller with
respect to the Recoupment Amount is resolved in favor of Seller, then the Court
Funds shall be paid to Seller.
(f) OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable or common law remedy (including without limitation any such remedy
arising under Environmental, Health and Safety Requirements) any Party may have
with respect to the Target or the transactions contemplated by this Agreement.
The Seller hereby agrees that he will not make any claim for indemnification
against the Target by reason of the fact that he was a director, officer,
employee or agent of any such entity or was serving at the request of any such
entity as a partner, trustee, director, officer, employee or agent of another
entity (whether such claim is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses or otherwise and whether such claim
is pursuant to any statute, charter document, bylaw, agreement or otherwise)
with respect to any action, suit, proceeding, complaint, claim or demand brought
by the Buyer against the Seller (whether such action, suit, proceeding,
complaint, claim or demand is pursuant to this Agreement, applicable law, or
otherwise).
9. TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between Buyer and Seller for certain tax matters following the
Closing Date:
(a) SECTION 338(H)(10) ELECTION. The Seller agrees, if so directed by
the Buyer, to join with Buyer in making an election under Section 338(h)(10) of
the Code (and any corresponding elections under state, local or foreign tax law)
(collectively, a "Section 338(h)(10) Election") with respect to the purchase and
sale of the Target Shares of each Target hereunder. Seller will pay any Tax,
including any liability of each Target for Tax resulting from the application to
it of Treasury Regulation ss.1.338(h)(10)-1(f)(5), attributable to the making of
the Section 338(h)(10) Election, and Seller will indemnify Buyer and each Target
against any Adverse Consequences arising out of any failure to pay such Tax.
Seller will also pay any state, local or foreign Tax (and indemnify the Buyer
and each Target against any Adverse Consequences arising out of any failure to
pay such Tax) attributable to an election under state, local or foreign law
similar to the election available under Section 338(g) of the Code (or which
results from the making of an election under Section 338(g) of the Code) with
respect to the purchase and sale of the Target Shares of each Target hereunder.
(b) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. Buyer shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for each Target for all periods ending on or prior to the Closing Date which are
filed after the Closing Date. Seller shall reimburse Buyer for Taxes of each
Target with respect to such periods within ten (10) business days after payment
by Buyer or a Target of such Taxes to the extent such Taxes are not reflected in
the reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) shown on
the face of the Closing Balance Sheet of a Target.
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(c) 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 each Target for Tax periods which begin before the Closing Date
and end after the Closing Date. Seller shall pay to Buyer within fifteen (15)
days after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion of such
Taxable period ending on the Closing Date to the extent such Taxes are not
reflected in the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income)
shown on the face of the Closing Balance Sheet. For purposes of this Section, in
the case of any Taxes that are imposed on a periodic basis and are payable for a
Taxable period that includes (but does not end on) the Closing Date, the portion
of such Tax which relates to the portion of such Taxable period ending on the
Closing Date shall: (A) in the case of any Taxes other than Taxes based upon or
related to income or receipts, be deemed to be the amount of such Tax for the
entire Taxable period multiplied by a fraction the numerator of which is the
number of days in the Taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire Taxable period; and (B)
in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date. Any credits relating to a Taxable period that begins before
and ends after the Closing Date shall be taken into account as though the
relevant Taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of each Target.
(d) COOPERATION ON TAX MATTERS.
(i) Buyer, each Target and Seller 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 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. Each Target and Seller agree: (A) to retain
all books and records with respect to Tax matters
pertinent to a Target relating to any taxable period
beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified
by Buyer or Seller, any extensions thereof) of the
respective taxable periods, and to abide by all record
retention agreements entered into with any taxing
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, each Target or Seller, as the case may
be, shall allow the other party to take possession of
such books and records.
(ii) Buyer and Seller further agree, upon request, to use
their best efforts to obtain any certificate or other
document from any governmental authority 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).
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(iii) Buyer and Seller further agree, upon request, to provide
the other party with all information that either party
may be required to report pursuant to Section 6043 of the
Code and all Treasury Department Regulations promulgated
thereunder.
(e) CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by Seller
when due, and Seller will, at his 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.
10. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller on or before December 31, 1997 if
the Buyer is not reasonably satisfied with the results of
its continuing business, legal, environmental and
accounting due diligence regarding the Target Companies;
(iii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing:
(A) in the event the Seller has breached any material
representation, warranty or covenant contained in this
Agreement in any material respect, the Buyer has notified
the Seller of the breach, and the breach has continued
without cure for a period of 30 days after the notice of
breach; or (B) if the Closing shall not have occurred on
or before December 31,1997, by reason of the failure of
any condition precedent under ss.7(a) hereof (unless the
failure results primarily from the Buyer itself breaching
any representation, warranty or covenant contained in
this Agreement); and
(iv) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing: (A)
in the event the Buyer has breached any material
representation, warranty or covenant contained in this
Agreement in any material respect, the Seller has
notified the Buyer of the breach, and the breach has
continued without cure for a period of 30 days after the
notice of breach; or (B) if the Closing shall not have
occurred on or before December 31, 1997, by reason of the
failure of any condition precedent under ss.7(b) hereof
(unless the failure results primarily from the Seller
himself breaching any representation, warranty or
covenant contained in this Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to ss.10(a) above, all rights and obligations of the Parties hereunder
shall terminate without any Liability of any Party to any other Party (except
for any Liability of any Party then in breach).
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11. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
Buyer and the Seller; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Parties prior to making the disclosure).
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests or obligations hereunder without the prior
written approval of the Buyer and the Seller; provided, however, that the Buyer
may: (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates; and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases the Buyer nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Seller: Mr. James E. L. Peters, Jr.
3056 Lake Park Drive
Jonesboro, Georgia 30236
Phone: 770-673-1786
Copy to: Lawrence M. Merlin, Esq.
ERCK, DEVER & MERLIN, LLC
Suite 2150, Tower Place
3340 Peachtree Road, N.E.
Atlanta, Georgia 30326-1084
Phone: 404-240-9400
Fax: 404-240-9419
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If to Buyer: BOOMERSHINE COLLISION CENTERS, INC.
2150 Cobb Parkway
Smyrna, Georgia 30080
Attn: Mr. David Pollard
Phone: 770-953-1800
Fax: 770-_________________
Copy to: Stephen C. Whicker, Esq.
THE WHICKER LAW FIRM
6111 Peachtree Dunwoody Road, N.E.
Suite 102-D
Atlanta, Georgia 30328
Phone: 770-394-7755
Fax: 770-394-8472
Copy to: David S. Cooper, Esq.
SCHNADER HARRISON SEGAL & LEWIS, LLP
Suite 2800, SunTrust Plaza
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3252
Phone: 404-215-8100
Fax: 404-223-5164
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Georgia without giving
effect to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of Georgia.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the
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remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
(k) EXPENSES. Each of the Parties and each Target will bear his or its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. The
Seller agrees that no Target has borne or will bear any of the Seller's costs
and expenses (including any of its legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty and covenant contained herein shall have
independent significance. If any Party has breached any representation, warranty
or covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty or covenant.
(m) INCORPORATION OF EXHIBITS, ANNEXES AND SCHEDULES. The Exhibits,
Annexes and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in ss.10(o) below),
in addition to any other remedy to which they may be entitled, at law or in
equity.
(o) SUBMISSION TO JURISDICTION. Each of the Parties submits to the
jurisdiction of any state court sitting in Cobb County, Georgia, or federal
court sitting in the Northern District of the State of Georgia in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court. Each Party also agrees not to bring any action or proceeding arising
out of or relating to this Agreement in any other court. Each of the Parties
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety or other security that might
be required of any other Party with respect thereto. Any Party may make service
on any other Party by sending or delivering a copy of the process to the Party
to be served at the address and in the manner provided for the giving of notices
in ss.10(g) above. Nothing in this ss.10(o), however, shall affect the right of
any Party to bring any action or proceeding arising out of or relating to this
Agreement in any other court or to serve legal process in any other manner
permitted by law or at equity. Each Party agrees that a final judgment in any
action or proceeding so brought
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shall be conclusive and may be enforced by suit on the judgment or in any other
manner provided by law or at equity.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
[as of] the date first above written.
BUYER: BOOMERSHINE COLLISION CENTERS, INC.
By: /s/ DAVID POLLARD
------------------------------------------
Title: President
SELLER: JAMES E.L. PETERS, JR.
/s/ JAMES E.L. PETERS, JR.
---------------------------------------------
JAMES E.L. PETERS, JR.
The Target Companies, by signing below, acknowledge that they have
reviewed this Agreement and agree to be bound by, and, where applicable,
represent and warrant as to the accuracy of, the following provisions of this
Agreement: Section 4(n) and Sections 5(a) - (g).
SOUTHLAKE COLLISION CENTER, INC.,
a Georgia corporation
By: /s/ JAMES E.L. PETERS, JR.
------------------------------------------
Title: President
SOUTHLAKE COLLISION COBB PARKWAY,
INC., a Georgia corporation
By: /s/ JAMES E.L. PETERS, JR.
------------------------------------------
Title: President
SOUTHLAKE COLLISION HENRY COUNTY,
INC., a Georgia corporation
By: /s/ JAMES E.L. PETERS, JR.
------------------------------------------
Title: President
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