1
Exhibit 2.2
STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT, dated as of May 12, 1999, by and between
Compass International Services Corporation, a Delaware corporation (the
"SELLER") and Swiss-Irish Enterprises, Inc., a Texas corporation (together with
its assignees, the "BUYER"). Capitalized terms used herein and not otherwise
defined shall have the meaning set forth in Article 8 hereof.
WHEREAS, the Seller owns all of the issued and outstanding shares of
(I) common stock, $0.01 par value (the "METROWEBB SHARES"), of MetroWebb, Inc.,
a Delaware corporation ("METROWEBB"); (II) common stock, $0.01 par value (the
"PRINT & MAIL SERVICES SHARES"), of Compass Print & Mail Services, Inc., a
Delaware corporation ("PRINT & MAIL SERVICES"); (III) common stock, $0.01 par
value (the "MAIL SERVICES SHARES"), of Compass Mail Services, Inc., a Delaware
corporation ("MAIL SERVICES"); (IV) common stock, $0.01 par value (the "MWI
SHARES"), of MWI Laser Group, Inc., a Delaware corporation ("MWI"); and (V)
common stock, $0.01 par value (the "BENDER SHARES", and together with the
MetroWebb Shares, Print & Mail Services Shares, Mail Services Shares and MWI
Shares, the "SHARES"), of Bender Direct Mail Services, Inc., a Delaware
corporation ("BENDER" and together with MetroWebb, Print & Mail Services, Mail
Services and MWI, the "COMPANIES", and each, a "COMPANY");
WHEREAS, the Seller wishes to sell the Shares to the Buyer, and the
Buyer wishes to purchase the Shares from the Seller, on the terms and conditions
and for the consideration described in this Agreement;
WHEREAS, concurrently with the execution of this Agreement, the Seller
is entering into an Agreement and Plan of Merger (as amended or supplemented
from time to time, the "NCO MERGER AGREEMENT") with NCO Group, Inc., ("NCO"),
pursuant to which the Seller is to be merged with a wholly owned subsidiary of
NCO (the "NCO MERGER");
WHEREAS, it is a condition to the consummation of the NCO Merger that
the transactions contemplated by this Agreement are consummated;
WHEREAS, the Buyer wishes to deposit or cause to be deposited into
escrow certain assets to secure Buyer's obligations under this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties and
agreements herein contained, the parties hereto agree as follows:
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ARTICLE I
SALE AND PURCHASE OF THE SHARES
1.1. SALE AND PURCHASE OF THE SHARES. Subject to and upon the terms and
conditions set forth in this Agreement, at the Closing, the Seller shall sell to
the Buyer and the Buyer will purchase from Seller: (i) all of the Shares and
(ii) the Seller's interest in all tangible assets, if any, owned or leased by
Seller or any of its subsidiaries or affiliates located in the Dallas, Texas
metropolitan area or the Tulsa, Oklahoma metropolitan area used in Seller's
Print & Mail Business (the "Related Assets"), and the Buyer shall pay to the
Seller the Purchase Price in the manner set forth in Section 2.2(a) hereof.
1.2 ESCROW. (a) Concurrently with the execution of this Agreement, to
secure the Buyer's covenants, agreements and obligations hereunder, certain of
the Buyer's affiliates (the "Buyer Affiliates") shall, on behalf of the Buyer,
deposit (i) $2,000,000 and (ii) the Escrow Shares duly endorsed in blank or
accompanied by stock powers or other instruments of transfer duly executed in
blank, into escrow pursuant to an escrow agreement in the form set forth as
Exhibit 1.2-A hereto (the "Escrow Agreement"). In addition, concurrently with
the execution of this Agreement, each of the Buyer Affiliates shall execute and
deliver to the Seller a letter in the form and substance as set forth in Exhibit
1.2-B attached hereto. The Buyer hereby represents and warrants to the Seller
that the respective Buyer Affiliate has good and marketable title to the Escrow
Shares so deposited into escrow by such Buyer Affiliate and that the Escrow
Shares shall be deposited into escrow free and clear of all Liens or claims
whatsoever.
(b) Such $2,000,000 and the Escrow Shares shall be held by the Escrow
Agent (as defined in the Escrow Agreement) and released only pursuant to the
terms and conditions of the Escrow Agreement. The Seller and the Buyer agree
that such $2,000,000 (including any interest earned thereon) and the Escrow
Shares shall be immediately released and paid to the Seller as liquidated
damages in the event that the Agreement is terminated prior to the Closing
solely as a result of a breach or default by the Buyer under this Agreement. The
Seller and the Buyer also agree that such $2,000,000 (including any interest
earned thereon) and the Escrow Shares shall be immediately released to the Buyer
Affiliates if this Agreement is terminated prior to the Closing for any other
reason. The Seller and the Buyer also agree that such $2,000,000 (including any
interest earned thereon) and the Escrow Shares shall be released
contemporaneously with the Closing as the parties mutually agree in a manner to
facilitate the Closing as contemplated hereby. Each of the Seller and the Buyer
shall promptly execute and deliver to the Escrow Agent joint written
instructions consistent with the foregoing agreements.
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ARTICLE II
THE CLOSING
2.1. PLACE AND DATE. Subject to the satisfaction or waiver of the
conditions set forth in Section 6 hereof and subject to the parties rights of
termination under Section 7.1 hereof, the closing of the sale and purchase of
the Shares and the Related Assets, if any, (the "CLOSING") shall take place on
the earlier to occur of: (i) the thirtieth (30th) day following written notice
by the Buyer to the Seller that the Buyer is ready, willing and able to
consummate the Closing along with reasonable documentation supporting Buyer's
financial ability therefor (in which case, such notice shall include a waiver of
the condition set forth in Section 6.2(e)), or (ii) August 31, 1999 or, at the
option of the Seller such later date prior to October 31, 1999, in any case, at
the offices of Katten Muchin & Zavis, 525 West Monroe Street, Chicago, Illinois,
or such other time and place upon which the parties may agree. (The day on which
the Closing actually occurs is herein sometimes referred to as the "CLOSING
DATE.")
2.2. PURCHASE PRICE. At the Closing, (i) the Buyer shall pay to the
Seller an aggregate of $35,100,000 in immediately available funds (the "PURCHASE
PRICE"), and (ii) the Seller shall deliver to the Buyer, free and clear of any
Liens: (1) certificates representing all of the Shares, duly endorsed in blank
or accompanied by stock powers or other instruments of transfer duly executed in
blank, and bearing or accompanied by all requisite stock transfer stamps, (2)
assignments, deeds or bills of sale by the Seller and its subsidiaries,
necessary to transfer the Related Assets, if any, in form and substance
reasonably acceptable to Buyer, (3) all stock transfer records and minute books,
if any, and original partnership agreements, if any, to the extent they are in
possession of the Seller related to the Companies and the Company Subsidiaries
and (4) a release from any holder of any Lien (except for Liens described in
clauses (i), (ii), (iii), (iv) or (v) of Section 3.6, Liens securing
indebtedness of any Company or Company Subsidiary and Liens associated with a
contract or lease assigned or subleased pursuant to this Agreement on the assets
of the Companies and the Company Subsidiaries.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as follows:
3.1. ORGANIZATION. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
the Companies is a corporation is duly organized, and is validly existing and in
good standing under the laws of the jurisdictions of its incorporation. Each of
the Company Subsidiaries which is a corporation is duly organized, and each of
the Company Subsidiaries which is a partnership is duly formed, and each of the
Company Subsidiaries is validly existing and in good standing, in each case
under the laws
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of the jurisdictions of its incorporation or formation, as the case may be. Each
of the Seller, the Companies and the Company Subsidiaries has all requisite
corporate or partnership power and authority to own, lease and operate its
properties and to conduct its business as now being con ducted. Except as set
forth in Section 3.1 of the letter delivered by the Seller to the Buyer prior to
the execution hereof (the "SELLER DISCLOSURE LETTER"), each of the Seller, the
Companies and the Company Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified or licensed
and in good standing would not have a material adverse effect on the business or
financial condition of the Companies and the Company Subsidiaries taken as a
whole. Each of the Company Subsidiaries is listed in Section 3.1 of the Seller
Disclosure Letter, and except as and to the extent set forth therein, the
Companies own beneficially and of record directly or indirectly all of the
issued and outstanding capital stock or partnership interests, as the case may
be, of each of the Company Subsidiaries, free and clear of any liens, claims,
charges, mortgages or other encumbrances (collectively, "LIENS"). Except as set
forth in Section 3.1 of the Seller Disclosure Letter, neither the Companies nor
any of the Company Subsidiaries owns, controls or holds with the power to vote,
directly or indirectly, of record, beneficially or otherwise, any capital stock
or any equity or ownership interest in any Person. The Seller has heretofore
delivered to the Buyer accurate and complete copies of the certificate of
incorporation and by-laws or certificate of formation and limited partnership
agreement, as the case may be, of each of the Companies and the Company
Subsidiaries, as currently in effect.
3.2. CAPITALIZATION. The authorized capital stock of MetroWebb, Print &
Mail Services, Mail Services, MWI and Bender consist of 1,000 MetroWebb Shares,
3,000 Print & Mail Services Shares, 1,000 Mail Services Shares, 1,000 MWI Shares
and 1,000 Bender Shares, respectively, of which, as of the date hereof, 1,000
MetroWebb Shares, 500 Print & Mail Services Shares, 1,000 Mail Services Shares,
1,000 MWI Shares and 1,000 Bender Shares are issued and outstanding. No other
capital stock or other security of the Companies is authorized, issued or
outstanding. All issued and outstanding shares of capital stock of each Company
and each Company Subsidiary that is a corporation are duly authorized, validly
issued, fully paid and non assessable. There are not now and, on the Closing
Date, there will not be, any securities, options, warrants, calls,
subscriptions, preemptive rights or other rights or other agreements or
commitments whatsoever obligating the Seller, the Companies or the Company
Subsidiaries to issue, transfer, deliver or sell or cause to be issued,
transferred, delivered or sold any additional shares of capital stock or other
securities or partnership or other interests of any of the Companies or the
Company Subsidiaries, or obligating the Seller, the Companies or the Company
Subsidiaries to grant, extend or enter into any such agreement or commitment.
There are no outstanding contractual obligations of the Seller, the Companies or
the Company Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Companies or the Company Subsidiaries. There are no
outstanding contractual obligations of the Seller, the Companies or the Company
Subsidiaries to vote or to dispose of any shares of the capital stock of any of
the Companies or the Company Subsidiaries. Except as set forth on Section 3.2 of
the Seller Disclosure Letter, Seller has good and marketable title to all of the
Shares, and each of the Companies owns good and marketable title to all issued
and outstanding shares of capital stock
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or partnership interests of each Subsidiary Company, in each case, free and
clear of all Liens except such Liens which shall be released at the Closing.
3.3. AUTHORIZATION OF THIS AGREEMENT. The Seller has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the Board of Directors of the
Seller, and no other corporate proceedings on the part of the Seller is
necessary to authorize this Agreement or consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Seller and this Agreement constitutes a valid and binding
agreement of the Seller, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting the rights and remedies of
creditors, and the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
3.4. CONSENTS AND APPROVALS; NO VIOLATION. Except for the filing of a
Pre-Merger Notification and Report Form by the Buyer under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR ACT"), no filing with, and no
permit, authorization, consent or approval of, any public body or authority is
necessary for the consummation by the Seller of the transactions contemplated by
this Agreement, the failure to make or obtain which is reasonably likely to have
a material adverse effect on the ability of the Seller to consummate the
transactions contemplated hereby or on the business or financial condition of
the Companies and the Company Subsidiaries taken as a whole. Except as set forth
on Section 3.4 of the Seller Disclosure Letter, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby nor compliance by the Seller with any of the provisions hereof will (I)
con flict with or result in any violation of any provision of the certificate of
incorporation, by-laws or other organizational document of the Seller or any of
the Companies or Company Subsidiaries, (II) result in a default or breach or the
creation of a Lien upon the properties or assets of any of the Companies or the
Company Subsidiaries, with or without notice or lapse of time, or both, under
any material note, bond, mortgage, indenture, license, benefit plan, agreement
or other material instrument or obligation to which the Seller, or any of the
Companies or the Company Subsidiaries, is a party or by which any of them or any
of their properties or assets is bound or (III) assuming the truth of the
representations and warranties of the Buyer contained herein and its compliance
with all agreements contained herein and assuming the due making of all filings
referred to in the preceding sentence, violate any material statute, rule,
regulation, order, injunction, writ or decree of any public body or authority by
which the Seller, or any of the Companies or the Company Subsidiaries or any of
their respective assets or properties, is bound.
3.5. LITIGATION. Except as set forth in Section 3.5 of the Seller
Disclosure Letter, there are no material (I) actions, suits or proceedings or
investigations pending or, to the knowledge of the Seller, threatened, or (II)
outstanding awards, judgments, orders, writs, injunctions or decrees, or, to the
knowledge of the Seller, applications, requests or motion therefor, against or
affecting the assets, business, operations or financial condition of the Seller
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at law or in equity in any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
which are reasonably likely to materially impair the ability of the Seller to
perform its obligations hereunder or consummate the transactions contemplated
hereby.
3.6. NO MATERIAL TRANSFERS. Except as set forth in Section 3.6 of the
Seller Disclosure Letter, since the date of their respective acquisition by the
Seller, none of the Companies or Company Subsidiaries has: (a) transferred any
material assets or properties to the Seller or affiliates of the Seller (other
than to one or more of the other Companies or Company Subsidiaries); or (b)
imposed or permitted to exist Liens on the assets of the Companies other than
Liens that will be released on or prior to the Closing and (I) Liens for taxes
and other governmental charges and assessments which are not yet due and payable
or which are being contested in good faith by appropriate proceedings, (II)
Liens of carriers, warehousemen, mechanics and materialmen and other like Liens
arising in the ordinary course of business, (III) easements, rights of way,
title imperfections and restrictions, zoning ordinances and other similar
encumbrances affecting the real property which do not have a material adverse
effect on the use of the properties or assets subject thereto or affected
thereby, (IV) statutory Liens in favor of lessors arising in connection with any
property leased to the Companies or the Company Subsidiaries, excluding Liens
arising from any default or breach by any of the Companies or the Company
Subsidiaries and (V) any other Liens which in the aggregate are not reasonably
likely to exceed $50,000 (collectively, "PERMITTED LIENS").
3.7. NO MATERIAL CONTRACTS BY EXECUTIVE OFFICERS OF THE SELLER. Except
as set forth in Section 3.7 of the Seller Disclosure Letter, since the date of
their respective acquisition by the Seller, no executive officer of the Seller
has (i) executed a material contract on behalf of any of the Companies or
Company Subsidiaries or which burdens the assets of any of the Companies or the
Company Subsidiaries or the Related Assets, if any, or (ii) taken any action on
behalf of any of the Companies or Company Subsidiaries which has resulted in any
material liability to the Companies or the Company Subsidiaries or a material
Lien on the assets of the Companies or the Company Subsidiaries or the Related
Assets, if any, other than such contracts and actions which any of Kenneth
Murphy, Morrie Maher, Jim Summers, Bob Jones, Scott Madsen, Richard Bainter,
John Erickson, Earl Johnson, Robert Meador, Harold Chandler or Jim Yarborough
has or had knowledge.
3.8 ASSETS OF THE PRINT AND MAIL DIVISION. Other than the Related
Assets, if any, and the contracts listed on Section 5.10 of the Seller
Disclosure Letter, all of the assets and property used in the Print and Mail
Division of the Seller are owned by the Companies and the Company Subsidiaries.
3.9. TAXES. Except as set forth in Section 3.9 of the Seller Disclosure
Letter:
(a) Since March 4, 1998, (i) all Tax Returns required to be filed with
respect to any Company or any Company Subsidiary have been duly filed or the
time for filing such Tax Returns shall have been validly extended and (ii) all
such Tax Returns were correct and complete
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in all material respects and any taxes related thereto, to the extent then due
and payable, have been paid.
(b) As of the date hereof, no written agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any material Taxes with respect to any Company or any Company
Subsidiary has been executed or filed with the IRS or any other taxing
authority.
(c) As of the date hereof, no material Tax Return with respect to any
Company or any Company Subsidiary is currently under audit by any taxing
authority, and neither the IRS nor any other taxing authority is now asserting
in writing against any Company or any Company subsidiary any material deficiency
for additional Taxes or any material adjustment of Taxes.
(d) None of the Companies or the Company Subsidiaries are parties to or
bound by or have any obligation under any written Tax sharing agreement or
arrangement.
(e) All payments for withholding Taxes, unemployment insurance and
employment Taxes required to be withheld and deposited or paid to all relevant
taxing authorities have been so withheld, deposited or paid by or on behalf of
each Company or Company Subsidiary.
(f) No consent has been filed under Section 341(f) of the Code with
respect to the Company or the Company Subsidiary.
3.10. FINDERS AND INVESTMENT. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the intervention of any Person acting on behalf of the Seller in such manner as
to give rise to any valid claim against the Buyer or any of the Companies for
any broker's or finder's fee or similar compensation, except for Lehman
Brothers, Inc., whose fees shall be paid by the Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
4.1. ORGANIZATION. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. The Buyer
has all requisite power and authority to own, lease and operate its properties
and to conduct its business as now being conducted. The Buyer is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified or
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licensed and in good standing would not have a material adverse effect on the
business or financial condition of the Buyer. The Buyer has heretofore delivered
to the Seller accurate and complete copies of the certificate of incorporation
and by-laws of the Buyer, as currently in effect.
4.2. AUTHORIZATION OF THIS AGREEMENT. The Buyer has all requisite
corporate power and authority to execute and deliver this Agreement and the
Escrow Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Escrow Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized and approved by the Board of Directors of the
Buyer, and no other proceedings on the part of the Buyer is necessary to
authorize this Agreement or consummate the transactions contemplated hereby and
thereby. This Agreement and the Escrow Agreement have been duly and validly
executed and delivered by the Buyer and this Agreement and the Escrow Agreement
constitute valid and binding agreements of the Buyer except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors, and the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.3. CONSENTS AND APPROVALS; NO VIOLATION. Except for the filing of a
Pre-Merger Notification and Report Form by the Buyer under the HSR Act, no
filing with, and no permit, authorization, consent or approval of, any public
body or authority is necessary for the consummation by the Buyer of the
transactions contemplated by this Agreement, the failure to make or obtain which
is reasonably likely to have a material adverse effect on the ability of the
Buyer to consummate the transactions contemplated hereby. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby nor compliance by the Buyer with any of the provisions
hereof will (I) conflict with or result in any violation of any provision of the
certificate of incorporation or by-laws of the Buyer or (II) assuming the truth
of the representations and warranties of the Seller contained herein and its
compliance with all agreements contained herein and assuming the due making of
all filings referred to in the preced ing sentence, violate any material
statute, rule, regulation, order, injunction, writ or decree of any public body
or authority by which the Buyer is bound.
4.4. LITIGATION. There are no material (I) actions, suits or
proceedings or investigations pending or, to the knowledge of the Buyer,
threatened, or (II) outstanding awards, judgments, orders, writs, injunctions or
decrees, or, to the knowledge of the Buyer, applications, requests or motion
therefor, against or affecting the assets, business, operations or financial
condition of the Buyer at law or in equity in any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, which are reasonably likely to materially impair the ability of
the Buyer to perform its obligations hereunder or consummate the transactions
contemplated hereby.
4.5. FINDERS AND INVESTMENT BANKERS. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the intervention of any
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Person acting on behalf of the Buyer in such manner as to give rise to any valid
claim against the Seller or any of the Companies for any broker's or finder's
fee or similar compensation.
ARTICLE V
COVENANTS
5.1. CONDUCT OF BUSINESS OF THE COMPANIES. Except as contemplated by
this Agreement or as otherwise set forth on Section 5.1 of the Seller Disclosure
Letter, during the period from the date of this Agreement to the Closing Date,
the Seller will use its commercially reasonable efforts to cause the Companies
and the Company Subsidiaries to conduct their respective operations in all
material respects according to its ordinary and usual course of business. The
Seller will promptly advise the Buyer in writing of any change in any of the
Companies' or the Company Subsidiaries' business or financial condition that is
materially adverse to the Companies and the Company Subsidiaries taken as a
whole. Without limiting the generality of the foregoing, and except as set forth
in Section 5.1 of the Seller Disclosure Letter or otherwise expressly
contemplated by this Agreement, prior to the Closing Date, none of the Companies
or the Company Subsidiaries will, without the prior written consent of the
Buyer:
(a) amend its certificate of incorporation or by-laws, or
certificate of formation or limited partnership agreement, as the case
may be;
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of additional options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any shares of capital stock of any
class or any partnership interests or any securities convertible into
or exercisable for shares of capital stock of any class or any
partnership interests;
(c) split, combine or reclassify any shares of its capital
stock or any limited partnership interests or redeem or otherwise
acquire any shares of its capital stock or any limited partnership
interests;
(d) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock or any partnership interests
or take any cash or transfer any assets out of the Companies and the
Company Subsidiaries, PROVIDED HOWEVER, in any event the Seller may
cause any Company or Company Subsidiary to make or pay distributions or
dividends: (i) to pay bills or satisfy obligations to third parties
(which bills or obligations are currently existing on the date hereof
or subsequently incurred in the ordinary course of business or with the
approval of management of the Print and Mail Division), on behalf of
the Print and Mail Division of the Seller, the Companies or Company
Subsidiaries, including without limitation any taxes (other than Taxes)
currently due and payable in the ordinary course of business and lease
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payments, whether such bills or obligations are in the name of the
Companies or the Company Subsidiaries or in the Seller's name or (ii)
between or among the Companies or the Company Subsidiaries.
(e) (i) take action to create, incur or assume any debt
(including obligations in respect of capital leases) other than as in
existence on the date hereof (or which, in the ordinary course of
business, replaces any debt owed to a unaffiliated third party); (II)
ex cept in the ordinary course of business and consistent with past
practices assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any Person other than any of the Companies or the
Company Subsidiaries; or (III) make any loans, advances or capital
contributions to, or investments in, any Person other than any of the
Companies or the Company Subsidiaries, except for customary loans or
advances to employees or trade credit in the ordinary course of
business and consistent with past practices;
(f) except in the ordinary course of business or Section 5.1
of the Seller Disclosure Letter, sell, transfer, mortgage or otherwise
dispose of or encumber, any of its assets;
(g) make any material election under the Code;
(h) merge with or into or consolidate with any other Person
(other than with one or more of the Companies or the Company
Subsidiaries) or make any acquisition of all or any part of the assets
or capital stock or business of any other Person except for tangible
property acquired in the ordinary course of business; or
(i) agree to do any of the foregoing.
Notwithstanding the foregoing, no actions in violation of this Section 5.1 taken
by persons affiliated with the Buyer (unless expressly directed in writing by
the Seller) shall be deemed a breach of this Section.
5.2. ACCESS TO INFORMATION. The Seller shall afford to the Buyer and to
the Buyer's financial advisors, legal counsel, accountants, consultants,
financing sources, and other authorized representatives access during normal
business hours throughout the period prior to the Closing Date to all of its
books, records, properties, plants and personnel related to any of the Companies
or the Company Subsidiaries and, during such period, shall furnish as promptly
as practicable to the Buyer all other information as the Buyer reasonably may
request.
5.3. FILINGS; OTHER ACTIONS. Each of the parties hereto agrees to
furnish to each other party hereto such necessary information and commercially
reasonable assistance as such other party may request in connection with its
preparation of necessary filings or submissions to any regulatory or
governmental agency or authority, including, without limitation, any filing
necessary under the provisions of the HSR Act, or any other federal, state,
local or foreign statute
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or regulations. Each of the parties shall respond as promptly as practicable to
(i) any inquiries or requests received from the FTC or the Antitrust Division
for additional information or documentation and (ii) any inquiries or requests
received from any state attorney general or other governmental entity in
connection with antitrust or related matters. Each of the parties shall (c) give
the other party prompt notice of the commencement of any claim, action, suit or
proceeding by or before any governmental entity with respect to any of the
transactions contemplated by this Agreement, (y) keep the other party informed
as to the status of any such claim, action, suit or proceeding, and (z) promptly
inform the other party of any communication to or from the FTC or the Antitrust
Division or any other governmental entity regarding the transactions
contemplated by this Agreement. Each of the parties will consult and cooperate
with one another, and will consider in good faith the views of one another, in
connection with any analysis, appearance, presentation, memorandum, brief,
argument, opinion or proposal made or submitted in connection with any claim,
action, suit or proceeding under or relating to the HSR Act or any other federal
or state antitrust or fair trade law. In addition, except as may be prohibited
by any governmental entity or by any applicable federal, state, local and
foreign laws, ordinances or regulations, in connection with any claim, action,
suit or proceeding under or relating to the HSR Act or any other federal or
state antitrust or fair trade law or any other similar claim, action, suit or
proceeding, each of the parties will permit authorized representatives of the
other party to be present, to the extent reasonably practicable, at each meeting
or conference relating to any such claim, action, suit or proceeding and to have
access to and be consulted in connection with any document, opinion or proposal
made or submitted to any governmental entity in connection with any such claim,
action, suit or proceeding.
5.4. COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and
conditions hereof, the parties hereto agree to use their commercially reasonable
efforts consistent with applicable legal requirements to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary or
proper and advisable under applicable laws and regulations to ensure that the
conditions set forth in Article VI hereof are satisfied and to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
5.5. PUBLIC ANNOUNCEMENTS. The Seller and the Buyer will obtain the
prior written consent of the other before issuing any press release or otherwise
making any public statements with respect to this Agreement and the transactions
contemplated hereby, except as may be required by law or by obligations pursuant
to any listing agreement with any securities exchange.
5.6. CERTAIN ACTIONS. The Seller shall permit the President of the
Print and Mail Division to take any reasonable business actions necessary or
desirable to operate the Print and Mail Division so long as such actions can be
(i) funded from the existing financial resources of the Companies and the
Company Subsidiaries and (ii) taken without the Seller or any of its
subsidiaries (including the Companies and the Company Subsidiaries) incurring
any additional indebtedness or future liabilities. Notwithstanding the
foregoing, it shall be required that the President of the Print and Mail
Division obtain the prior written consent of the Seller prior to
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taking any significant personnel action with respect to the Print and Mail
Division. For purposes of this Section 5.6, a "significant personnel action"
means a termination of any officer of the Print and Mail Division or any of its
subdivisions, an increase of the compensation of any Print and Mail Division
personnel, except for normal cost-of-living or merit increases for non-officer
employees, an increase of the compensation of or execution of an employment
contract with any officer of the Print and Mail Division or any of its
subdivisions, or an implementation of a change to the existing employee benefit
and 401(k) plans.
5.7. TAX MATTERS.
(a) TERMINATION OF EXISTING TAX SHARING ARRANGEMENTS. As of the Closing
Date, all existing tax sharing agreements and arrangements (other than any tax
sharing agreement or arrangement provided hereof) between any Company or any
Company Subsidiary, on the one side, and the Seller or any Non-Company
Affiliate, on the other side, shall be terminated, and no additional payments
shall be made thereunder. After the Closing, neither the Companies, the Company
Subsidiaries, the Seller, nor the Non-Company Affiliates shall have any further
rights or liabilities under any such agreements or arrangements for any taxable
period (whether the current year, a future year, or a past year).
(b) SECTION 338(h)(10) ELECTION.
(i) The Buyer and the Seller (or the parent of any consolidated group
of which Seller is a member) shall make a timely election under section
338(h)(10) of the Code and section 1.338(h)(10)-1 of the Treasury Regulations
promulgated pursuant to the Code and any corresponding elections under state or
local tax law, with respect to the purchase and sale of the Shares and Buyer's
indirect acquisition of all outstanding ownership interests in the Company
Subsidiaries (collectively, the "338 ELECTION"). The Seller shall take all
actions reasonably requested by the Buyer (including, but not limited to, the
preparation, completion and timely joint filing by the Buyer and the Seller of
Form 8023 as provided below, and the preparation, completion and timely filing
of such other forms, returns, elections, schedules and other documents and
instruments reasonably requested by the Buyer) to effect a timely section
338(h)(10) election in accordance with section 338(h)(10) of the Code and
section 1.338(h)(10)-1 of the Treasury Regulations promulgated pursuant to the
Code, and any corresponding elections under state or local tax law, with respect
to the purchase and sale of the Shares. Seller shall deliver to Buyer a duly
executed copy of Internal Revenue Service Form 8023 and any similar forms
required under state and local laws no later than 20 days prior to the date each
such form is required to be filed. The Buyer and Seller shall report the
purchase and sale of the Shares consistent with the 338 Election and
corresponding state elections and shall take no position contrary thereto or
inconsistent therewith in any tax return, or in any discussion with or any
proceeding before any taxing authority or other governmental body or otherwise
unless required to do so pursuant to a determination (as defined in section
1313(a) of the Code) or a similar determination under state law.
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(ii) The purchase price and all other items that comprise the "modified
aggregate deemed sale price" (as defined in, and required to be allocated
pursuant to, section 338(h)(10) of the Code) shall be allocated in accordance
with a schedule prepared by the Buyer and the Seller on a reasonable basis in
accordance with the requirements of the Code and the regulations thereunder as
agreed by Buyer and Seller on or before the Closing Date. Such allocation shall,
for tax purposes, be binding on the Seller and the Buyer. The Seller and the
Buyer shall file their respective tax returns in accordance with such allocation
and shall not take any position inconsistent with such allocation unless
required to do so pursuant to a determination (as defined in section 1313(a) of
the Code) or a similar determination under state law. In the event that such
allocation is disputed by any taxing authority, the party receiving notice of
such dispute shall promptly notify and consult with the other parties hereto
concerning resolution of such dispute and such dispute shall be settled or
comprised by the Seller.
(c) INDEMNIFICATION BY SELLER. Seller shall be responsible for and
shall indemnify, defend and hold harmless the Buyer and the entities acquired
pursuant hereto and all of their respective affiliates, against liability for or
payment of any (i) Taxes of or payable by, or chargeable as a lien upon the
assets of, any Company or Company Subsidiary arising with respect to any taxable
period (or portion thereof) which ends on or before the Closing Date
("Pre-Closing Period"), (ii) Taxes of any member (including any Company or any
Company Subsidiary) of a combined, consolidated or unitary tax group for which
any Company or any Subsidiary may be jointly or severally liable as a result of
its inclusion in such group on or prior to the Closing Date, (iii) Taxes arising
as a result of any transfer of any asset to any Company or any Company
Subsidiary upon or prior to the Closing pursuant to Section 6901 of the Code or
any comparable provision of state or local tax law, (iv) Taxes resulting from
the elections made under Section 338(h)(10) of the Code and any comparable
provisions of state and local law, described in Section 5.7(b) hereof, or
Seller's failure to timely and properly comply with its obligations under
Section 5.7(b) and (v) Taxes resulting from the transactions described in
Section 5.9 relating to forgiveness of intercompany indebtedness, other than
Taxes reflected as an adjustment to the Purchase Price in Section 5.7(d).
(d) INDEMNIFICATION BY THE BUYER AND ADJUSTMENT TO PURCHASE PRICE.
Notwithstanding anything contained in Section 5.7(c) above, Buyer will be
responsible for and will indemnify, defend and hold harmless Seller and their
affiliates against (i) the payment of any interest and penalties with respect to
any taxable period ending on or before the Closing Date to the extent due to the
failure of Buyer to timely file a Tax Return, extension of time to file, or to
make a payment of Tax required in connection with such Tax Return which the
Buyer is required to file or make pursuant to Section 5.7(e) below and (ii) the
payment of the Pre-Closing Adjustment (as defined below). Buyer shall pay Seller
as additional purchase price the amount determined in this Section 5.7(d) (the
"Pre-Closing Adjustment"). The Pre-Closing Adjustment shall be an amount equal
to the federal, state and local Tax liability for the Companies and Company
Subsidiaries with respect to taxable income recognized for the period beginning
July 1, 1999, and ending on the Closing Date (the "Adjustment Period")
(excluding, however, Taxes resulting from the election under Section 338(h)(10)
and comparable provisions of state or local law). Taxable income shall be
apportioned between the period ending June 30, 1999 and the Adjustment Period on
the basis of the actual activities of the relevant entity as determined from the
books and records of such entity
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for such taxable period (excluding, however, gain resulting from the election
under Section 338(h)(10) and comparable provisions of state or local law). After
determining the taxable income apportioned to the Adjustment Period, the
Companies and Company Subsidiaries shall determine their federal tax liability
on a separate member basis following the rules of Treasury Regulation Section
1.1552-1(a)(2)(ii) as if the Companies and Company Subsidiaries were a separate
consolidated group for federal income tax purposes. Any state or local income or
franchise tax based on income shall be computed for the Adjustment Period in the
same manner. Buyer will provide a reasonable good faith estimate of the
Pre-Closing Adjustment at least 5 days prior to the Closing Date and shall pay
such amount to the Seller at the Closing. No later than the due date of the
Seller's federal income tax return for the period which includes the Closing
Date, the Buyer shall provide a final statement of the Pre-Closing Adjustment.
To the extent the final Pre-Closing Adjustment is greater than the estimate, the
Buyer shall pay the difference to Seller at the time of the delivery of the
final statement and to the extent the final Pre-Closing Adjustment is less than
the estimate, the Seller shall pay the difference to Buyer within 15 days of the
receipt of the final statement. Any disagreement regarding the final Pre-Closing
Amount or final statement shall be resolved following the dispute resolution
procedure set forth in this Section 5.7.
(e) PREPARATION AND FILING OF RETURNS FOR PRE-CLOSING PERIODS. Seller
shall be responsible for the initial preparation of all Tax Returns of the
Companies and the Company Subsidiaries for taxable periods ending on or before
the Closing Date. Buyer shall have the right, directly or through its designated
representatives, to review at its expense any such returns that pertain to the
Companies, and the Company Subsidiaries at least 15 days prior to the filing
thereof. The taxable income (or loss) of the Company and the Company
Subsidiaries through the Closing Date will be included in the consolidated
federal Tax Return of Seller and in applicable state combined, unitary or
consolidated Tax Returns of the Seller. Seller will prepare and forward any
"separate company" state and local Tax Returns described in this Section 5.7(e)
due after the Closing Date to Buyer, which Tax Returns shall be true, correct
and complete in all material respects for signature and filing at least 5 days
prior to the (extended) due date of such returns. In the event the original due
date of any such return falls after the Closing Date and Seller wishes to seek
an extension of time to file such return, Seller shall forward to Buyer for
filing the appropriate extension to file forms together with the full amount of
the Tax required to be deposited in connection therewith at least 5 days prior
to the original due date of such return. Seller shall deliver to Buyer at least
5 days before any Tax Return or extension thereof required or permitted
hereunder is due the necessary payment of Tax or the full amount of tax required
to be deposited in connection with the extension. Seller shall have the right to
offset any Tax or estimate thereof required to be delivered by Seller to Buyer
under this Section 5.7(e) by the amount of any unpaid Pre-Closing Adjustment
owed by Buyer to Seller.
(f) PREPARATION AND FILING OF RETURNS FOR POST-CLOSING PERIODS. Buyer
shall cause to be prepared, and filed, all Tax Returns of the Company and the
Company Subsidiaries for all taxable periods ending after the Closing Date. For
any such Tax Return that includes a Pre-Closing Period, (i) to the extent
permissible under applicable law, the return for the taxable period prepared by
Buyer shall treat all material items in the Pre-Closing Period consistent with
the applicable returns for previous periods prepared by Seller and (ii) at least
15 days prior to the filing of the
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returns, Buyer shall submit a copy of the returns to Seller, for Seller's
approval. Buyer shall apportion any Tax due for a taxable period beginning
before the Closing Date and ending after the Closing Date with respect to the
Companies and the Company Subsidiaries between the portion of such taxable
period through and including the Closing Date and the balance of such taxable
period on the basis of the actual activities of the relevant entity as
determined from the books and records of such entity for such taxable period. At
least 15 days prior to the filing of such Tax Returns, Buyer shall notify Seller
of the amount of such Tax apportioned to the portion of such taxable period
through and including the Closing Date. Seller shall approve such Tax Returns
and pay to Buyer the amount of such Tax no later than 5 days prior to the due
date of the filing of such returns and the payment of such Taxes. Seller shall
have the right to offset any Tax or estimate thereof required to be delivered by
Seller to Buyer under this Section 5.7(f) by the amount of any unpaid
Pre-Closing Adjustment owed by Buyer to Seller.
(g) CERTIFICATE OF NON-FOREIGN STATUS. Seller shall deliver to Buyer at
the Closing a Certificate of Non-Foreign Status which meets the requirements of
Treasury Regulations Section 1.1445-2, duly executed and acknowledged,
certifying under penalties of perjury that as of the Closing each Company and
Company Subsidiary is not a foreign person for United States income tax
purposes.
(h) AMENDMENT OF RETURNS. Unless otherwise required by law, the Seller
shall not (and shall not permit any Non-Company Affiliate) to, amend any Tax
Return with respect to any Company or any Company Subsidiary for any taxable
period (including a portion thereof) ending on or prior to the Closing Date, in
a way that would reasonably be expected to increase the Tax liability or
obligation of any Company or any Company Subsidiary for any period ending after
the Closing Date without the prior written consent of the Buyer, which consent
shall not be unreasonably withheld. Unless otherwise required by law, the Buyer
shall not (and shall not permit any Company, any Company Subsidiary or any of
its other affiliates to) amend any Tax Return of any Company or any Company
Subsidiary for any taxable period (including a portion thereof) ending on or
prior to the Closing Date, in a way that would reasonably be expected to
increase the Tax liability or obligation of the Seller or any Non-Company
Affiliate without the prior written consent of the Seller, which consent shall
not be unreasonably withheld.
(i) REFUNDS. (i) The Seller or the Non-Company Affiliates shall be
entitled to retain (or shall be entitled to receive immediate payment from the
Buyer of) any refund or credit with respect to Taxes (plus any interest received
with respect thereto) from the applicable taxing authorities relating to any
Company or any Company Subsidiary that are the responsibility of the Seller
hereunder, and (ii) the Buyer, the Companies or the Company Subsidiaries shall
be entitled to retain (or shall be entitled to receive immediate payment from
the Seller of) any refund or credit with respect to Taxes (plus any interest
received with respect thereto) from the applicable taxing authorities relating
to any Company or any Company Subsidiary that are not described as being the
right of the Seller or the Non-Company Affiliates in clause (i) of this Section
5.7(i).
(j) AUDITS. Each of the Buyer and the Seller shall promptly (and shall
cause their respective affiliates to) notify the other in writing within 10
business days from receipt
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of notice of any pending or threatened Tax audits or assessments of any Company
or any Company Subsidiary relating to any taxable period (or a portion thereof)
ending on or prior to the Closing Date. The Seller shall have the right to
represent the interests of the Companies and the Company Subsidiaries (at
Seller's expense) in any Tax audit or administrative or court proceeding to the
extent relating to Taxes that are the responsibility of the Seller hereunder,
and to employ counsel of its choice at its expense, PROVIDED that the Seller
shall not (and shall not permit any Non-Company Affiliate to) compromise or
settle any issue relating to Taxes that would reasonably be expected to have a
material adverse effect on the Tax liabilities of any Company or any Company
Subsidiary without the Buyer's prior written consent, which consent shall not be
unreasonably withheld. Seller shall consult regularly and in good faith with
Buyer regarding the prosecution of any such contest. Buyer shall have the right
through its representatives, at its own expense, to review in advance and
comment on all submissions made in the course of such audits or proceedings. The
Buyer shall have the right to represent the interests of the Companies and the
Company Subsidiaries in any other Tax audit or administrative or court
proceeding not described as being the right of the Seller under this Section
5.7(j) and to employ counsel of its choice at its expense, PROVIDED that the
Buyer shall not (and shall not permit any Company, any Company Subsidiary or any
of its other affiliates to) compromise or settle any issue relating to Taxes
that would reasonably be expected to have a material adverse effect on the Tax
liabilities of the Seller or any Non-Company Affiliate or the Seller's
obligations set forth in Section 5.7(c) without the Seller's prior written
consent, which consent shall not be unreasonably withheld; PROVIDED further,
however, the Buyer shall be subject to any pre-existing right of any third party
to represent the interests of any Company or any Company Subsidiary. Buyer shall
consult regularly and in good faith with Seller regarding the prosecution of any
such contest. Seller shall have the right through its representatives, at its
own expense, to review in advance and comment on all submissions made in the
course of such audits or proceedings.
(k) TAX DISPUTE RESOLUTION MECHANISM. Wherever in this Agreement it
shall be provided that a dispute shall be resolved pursuant to the "TAX DISPUTE
RESOLUTION MECHANISM," such dispute shall be resolved as follows: (i) the
parties will in good faith attempt to negotiate a prompt settlement of the
dispute; (ii) if the parties are unable to negotiate a resolution of the dispute
within 10 days, the dispute will be submitted to the New York office of a firm
of independent accountants of nationally recognized standing reasonably
satisfactory to the Buyer and the Seller (or, if the Buyer and the Seller do not
agree on such a firm, then a firm chosen by the Arbitration and Mediation
Committee of the New York Society of Certified Public Accountants) (the "TAX
DISPUTE ACCOUNTANTS"); (iii) the parties will present their arguments and submit
the proposed amount of each item in dispute to the Tax Dispute Accountants
within 10 days after submission of the dispute to the Tax Dispute Accountants;
(iv) the Tax Dispute Accountants, whose decision shall be final, conclusive and
binding on the parties, shall resolve the dispute, in a fair and equitable
manner and in accordance with applicable Tax law and the provisions of this
Agreement, by selecting, for each item in dispute, the proposed amount for such
item submitted by one party or the other party within 10 days after the parties
have presented their arguments to the Tax Dispute Accountants; (v)
notwithstanding any other provision of this Agreement, any payment to be made as
a result of the resolution of a dispute shall be made, and any other action to
be taken as a result of the resolution of a dispute shall be taken, on or before
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the later of (x) the date on which such payment or action would otherwise be
required or (y) the third business day following the date on which the dispute
is resolved (in the case of a dispute resolved by the Tax Dispute Accountants,
such date being the date on which the parties receive written notice from the
Tax Dispute Accountants of their resolution); PROVIDED, that if a dispute with
respect to an item in a Tax Return shall not be resolved on or before the date
that is three business days prior to the latest date on which such Tax Return
may be filed under applicable Tax law, then the party having the responsibility
for filing such Tax Return shall file such Tax Return reflecting all disputed
items that have been resolved in the manner so resolved, and reflecting all
unresolved disputed items in the manner proposed by such party, and shall, if
necessary, upon the resolution of all such unresolved disputed items, file an
amended Tax Return reflecting the resolution thereof in the manner so resolved;
and (VI) the fees and expenses of the Tax Dispute Accountants in resolving a
dispute will be borne equally by the Buyer and the Seller.
(l) COOPERATION ON TAX MATTERS.
(i) The Buyer and the Seller shall (and shall cause their
respective affiliates to) cooperate with the other, with respect to the
preparation or filing of any Tax Returns referred to in Section 5.7(e)
or (f) and any Tax audit or administrative or court proceeding referred
to in Section 5.7(j). Such cooperation shall include providing such
information (including access to books and records) relating to any
Company or any Company Subsidiary as is reasonably necessary for the
preparation or filing of any such Tax Return or the preparation of any
such audit, proceeding, prosecution or defense and making personnel
available at and for reasonable times, including, without limitation,
to prepare responses to any taxing authority's requests for
information, PROVIDED that the foregoing shall be done in a manner so
as not to interfere unreasonably with the conduct of the business of
the parties.
(ii) Each of the Buyer and the Seller agrees to retain or
cause to be retained all books, records, Returns, schedules, documents,
work papers and other material items of information relating to Taxes
with respect to the Companies and the Company Subsidiaries for the
longer of (x) the seven-year period beginning on the Closing Date or
(y) the full period of the applicable statute of limitations, including
any extension thereof, and to abide by all record retention agreements
entered into with any taxing authority. Each of the Buyer and the
Seller agrees to give each other reasonable notice prior to
transferring, discarding or destroying any such materials relating to
Taxes with respect to the Companies and the Company Subsidiaries, and,
if the other party so requests, to allow the other party to take
possession of such materials.
(m) TAX TREATMENT. Any indemnity payment made pursuant to this
Section 5.7 shall be treated as an adjustment to the Purchase Price for Tax
purposes unless otherwise required by law.
(n) INDEMNIFICATION RIGHTS. At the Closing, the Buyer shall cause
each Company and Company Subsidiary to assign to the Seller all rights to
indemnification for any Pre-Closing Taxes under acquisition agreements to which
such Company or Company Subsidiary is a party.
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5.8. EMPLOYEE BENEFITS. Following the Closing Date, the Buyer
shall, or shall cause its subsidiaries and affiliates to, honor in accordance
with their terms all employment, severance and other compensation agreements and
arrangements existing on or prior to the execution of this Agreement, which are
set forth in Section 5.8 of the Seller Disclosure Letter or which were signed or
approved by any shareholder of the Buyer. The Buyer further agrees to, on an
ongoing basis, furnish coverage under the Companies' group health plans which
satisfies the provisions of Section 4980B of the Code and Sections 601 through
609 of ERISA with respect to employees of the Companies and the Company
Subsidiaries (whether their employment terminated before or after the Closing
Date) and their respective qualified beneficiaries.
5.9. NO INTER-COMPANY OBLIGATIONS. On or prior to the Closing
Date, the Seller shall take, and shall cause the Companies and the Company
Subsidiaries to take, any and all actions so that, other than as contemplated by
this Agreement including the exhibits and schedules hereto, as of or prior to
the Closing, all inter-company loans, accounts payable or account receivable
between the Seller and its subsidiaries (other than the Companies and the
Company Subsidiaries), on one hand, and the Companies and the Company
Subsidiaries, on the other hand, outstanding as of the date hereof shall be
forgiven.
5.10. ASSIGNMENT AND ASSUMPTION OF CERTAIN CONTRACTS. The parties
agree that, as soon as reasonably practicable after the date hereof but prior to
the Closing, Seller and/or certain of it subsidiaries shall assign to certain of
the Companies or Company Subsidiaries the contracts listed in Section 5.10 of
the Seller Disclosure Letter (which are necessary or desirable in the operation
of business of the Companies) pursuant to a form of assignment and assumption
agreement reasonably acceptable to the Seller and the Buyer.
ARTICLE VI
CLOSING CONDITIONS
6.1. CONDITIONS TO THE OBLIGATIONS OF THE SELLER AND THE BUYER.
The respective obligations of each party to consummate the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) There shall not be in effect any statute, rule or
regulation enacted, promulgated or deemed applicable by any
governmental authority of competent jurisdiction that makes
consummation of the transactions contemplated hereby illegal and no
temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect; PROVIDED, HOWEVER,
that each of the parties shall use their commercially reasonable
efforts to prevent
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the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered.
(b) Each of the Seller, the Buyer and any other person (as
defined in the HSR Act and the rules and regulations thereunder)
required in connection with the transactions contemplated hereby to
file a Pre-Merger Notification and Report Form under the HSR Act with
the FTC and the Antitrust Division shall have made such filing and the
applicable waiting period with respect to each such filing (including
any extension thereof by reason of a request for additional
information) shall have expired or been terminated.
6.2. CONDITIONS TO THE OBLIGATIONS OF THE BUYER. The obligations
of the Buyer to effect the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions
unless waived by Buyer.
(a) The representations and warranties of the Seller contained
in this Agreement shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date.
(b) The Seller shall have, in all material respects, performed
all covenants and agreements and complied with all conditions required
by this Agreement to be performed or complied with by the Seller prior
to or on the Closing Date.
(c) The Seller shall have delivered to the Buyer a
certificate, as contemplated under and meeting the requirements of
section 1.1445-2(b)(2)(i) of the Treasury Regulations, to the effect
that the Seller is not a foreign person within the meaning of the Code
and applicable Treasury Regulations.
(d) There shall not have occurred any casualty loss to the
Companies which, after taking into account applicable insurance
coverage, has had a material adverse effect on the business or
financial condition of the Companies and the Company Subsidiaries taken
as a whole.
(e) The NCO Merger shall have been consummated in accordance
with the terms of the NCO Merger Agreement or is being consummated
simultaneously with the Closing.
6.3. CONDITIONS TO THE OBLIGATIONS OF THE SELLER. The obligations
of the Seller to effect the transactions contemplated hereby shall be subject to
the fulfillment, at or prior to the Closing Date, of the following conditions
unless waived by the Seller.
(a) The representations and warranties of the Buyer contained
in this Agreement shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date.
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(b) The Buyer shall have, in all material respects, performed
all covenants and agreements and complied with all conditions required
by this Agreement to be performed or complied with by the Buyer prior
to or on the Closing Date.
(c) The NCO Merger shall have been consummated in accordance
with the terms of the NCO Merger Agreement; PROVIDED, HOWEVER, that if
(i) the NCO Merger Agreement has not been terminated, this condition
shall not be applicable if the Buyer delivers to the Seller fifteen
(15) days prior written notice that the Buyer is ready, willing and
able to pay the entire Purchase Price in cash at the Closing
accompanied by reasonable documentation demonstrating Buyer's financial
ability therefor, or (ii) if the NCO Merger Agreement has been
terminated, this condition shall not be applicable if the Buyer is
ready, willing and able to pay the entire Purchase Price in cash and
consummate the Closing before the later of June 30, 1999 or the
fifteenth (15th) day following the termination of the NCO Merger
Agreement, as evidenced by reasonable documentation demonstrating
Buyer's financial ability therefor.
(d) Unless the Closing is contemporaneous with the NCO Merger,
the lenders under Seller's existing credit agreement shall have given
their written consent to the sale of the Shares and the Related Assets,
if any, pursuant to this Agreement. The Seller shall use commercially
reasonable efforts to obtain such consent. If such lenders provide
their approval, Seller shall use commercially reasonable efforts to
satisfy any obligations or conditions imposed by such lenders without
looking to the Buyer for reimbursement or offset, including the payment
of all fees required by such lenders. If such lenders withhold their
consent or impose obligations or conditions that the Seller cannot
reasonably satisfy and this Agreement is terminated prior to the
Closing, then Seller shall be obligated to pay to Buyer up to
$1,000,000 of Buyer's documented out-of-pocket fees, cost and expenses
that Buyer incurs in connection with this transaction so long as (i)
Buyer is not in breach or default under this Agreement, (ii) but for
such consent Seller is otherwise obligated hereunder to consummate the
Closing and (iii) the Buyer is ready willing and able to consummate the
Closing hereunder by paying all of the Purchase Price in cash.
(e) The Seller shall have received either: (i) the written
consent from Petula Associates as lessor, to an assignment to the Buyer
and a novation fully releasing the Seller from its obligations under
that certain real property lease including any amendments thereto (the
"Petula Lease"), between the Seller and Petula Associates or (ii) on
the same terms and conditions as now exist, an assumption or sublease
of the Petula Lease by the Buyer, without a novation of the Seller, in
a form and substance reasonably acceptable to the Seller.
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ARTICLE VII
TERMINATION AND ABANDONMENT
7.1. Termination. This Agreement may be terminated at any time prior to
the Closing Date, whether before or after approval by the stockholders of the
Seller:
(a) by mutual consent of the Board of Directors of the Seller
and the Board of Directors of the Buyer;
(b) by the Seller at any time after June 30, 1999, with
fifteen (15) days prior written notice to the Buyer if the NCO Merger
Agreement is terminated pursuant to its terms prior to the closing of
the NCO Merger, unless the Closing has occurred prior to such fifteenth
day pursuant to Section 6.3(c);
(c) by the Buyer if the NCO Merger Agreement is terminated
pursuant to its terms prior to the closing of the NCO Merger;
(d) by the Buyer by written notice to the Seller if any of the
conditions set forth in Sections 6.1 and 6.2 (including with respect to
any representations and warranties) shall not have been fulfilled by
October 31,1999, unless such failure shall be due to the failure of the
Buyer to perform or comply with any of the covenants, agreements or
conditions hereof to be performed or complied with by it prior to the
Closing; or
(e) by the Seller by written notice to the Buyer if any of the
conditions set forth in Sections 6.1 and 6.3 (including with respect to
any representations and warranties) shall not have been fulfilled by
August 31, 1999, unless such failure shall be due to the failure of the
Seller to perform or comply with any of the covenants, agreements or
conditions hereof to be performed or complied with by it prior to the
Closing.
7.2. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to the provisions of Section 7.1, except as expressly
provided in this Agreement, this Agreement shall become null and void and have
no effect, without any liability in respect hereof or of the transactions
contemplated hereby on the part of any non-breaching or non-defaulting party
hereto, or any of its directors, officers, employees, agents, consultants,
representatives, advisers, stockholders or affiliates. Notwithstanding the
termination of this Agreement, any breaching or defaulting party shall remain
fully liable hereunder for its breaches and defaults under this Agreement. The
Seller and the Buyer agree that the $2,000,000 (including any interest earned
thereon) and the Escrow Shares deposited by the Buyer Affiliates on behalf of
the Buyer pursuant to the Escrow Agreement and Section 1.2 hereof, shall be
immediately released and paid to the Seller as liquidated damages in the event
that the Agreement is terminated prior to the Closing solely as a result of a
breach or default by the Buyer under this Agreement. The Seller and the Buyer
also agree that such $2,000,000 (including any interest earned thereon) and the
Escrow Shares shall be immediately released to the Buyer Affiliates if this
Agreement is terminated prior to the Closing for any other reason. Each of the
Seller and the Buyer shall
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promptly execute and deliver to the Escrow Agent joint written instructions
consistent with the foregoing purposes. No termination of this Agreement shall
affect any rights or obligations of the parties under the Escrow Agreement.
ARTICLE VIII
DEFINED TERMS
8.1. DEFINITION OF CERTAIN TERMS. The terms defined in this
Section 8.1, whenever used in this Agreement (including in the Disclosure
Letters), shall have the respective meanings indicated below for all purposes of
this Agreement (each such meaning to be equally applicable to the singular and
the plural forms of the respective terms so defined). All references herein to a
Section or Article are to a Section or Article of this Agreement, unless
otherwise indicated.
BENDER: as defined in the first recital of this Agreement.
BENDER SHARES: as defined in the first recital of this
Agreement.
BUYER: as defined in the first paragraph of this Agreement.
CLOSING: as defined in Section 2.1(a).
CLOSING DATE: as defined in Section 2.1(a).
CODE: shall mean the Internal Revenue Code of 1986, as
amended.
COMPANY OR COMPANIES: as defined in the first recital of this
Agreement.
COMPANY SUBSIDIARIES: means the entities listed on Section
3.1 of the Seller Disclosure Letter.
DISCLOSURE LETTERS: as defined in Section 4.1.
ESCROW SHARES: means 1,849,863 shares of common stock, $.01
par value per share, of the Seller and any shares of common stock, no par value,
of NCO which may be obtained or obtainable in exchange for such Seller shares
pursuant to the NCO Merger.
HSR ACT: as defined in Section 3.4.
LIENS: as defined in Section 3.1.
MAIL SERVICES: as defined in the first recital of this
Agreement.
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MAIL SERVICES SHARES: as defined in the first recital of
this Agreement.
METROWEBB: as defined in the first recital of this Agreement.
METROWEBB SHARES: as defined in the first recital of this
Agreement.
MWI: as defined in the first recital of this Agreement.
MWI SHARES: as defined in the first recital of this
Agreement.
NON-COMPANY AFFILIATE: shall mean any affiliate of the
Seller other than the Companies and the Company Subsidiaries.
PERSON: any natural person, firm, partnership, association,
corporation, company, trust, business trust, governmental authority or other
entity.
PRE-CLOSING INCOME TAXES: shall mean (i) any Taxes
attributable to any taxable period ending on or prior to the Closing Date with
respect to any Company or Company Subsidiary, including any Taxes attributable
to any 338(h)(10) election pursuant to Section 5.7(b).
PRE-CLOSING INCOME TAX RETURNS: shall mean any Tax Returns
relating to any Pre- Closing Income Taxes.
PRINT & MAIL SERVICES: as defined in the first recital of this
Agreement.
PRINT & MAIL SERVICES SHARES: as defined in the first recital
of this Agreement.
PURCHASE PRICE: as defined in Section 2.2(a).
SELLER: as defined in the first paragraph of this Agreement.
SELLER DISCLOSURE LETTER: as defined in Section 3.1.
SHARES: as defined in the first recital of this Agreement.
TAX DISPUTE ACCOUNTANTS: shall have the meaning as
defined in Section 5.7(g).
TAX DISPUTE RESOLUTION MECHANISM: shall have the meaning as
defined in Section 5.7(g).
TAXES: shall mean all federal, state, local and foreign income
taxes (and state franchise taxes measured by or based on income), and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
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TAX RETURNS: shall mean all federal, state, local and foreign
tax returns, declarations, statements, reports, schedules, forms and information
returns and any amendments to any of the foregoing relating to Taxes.
TREASURY REGULATIONS: shall mean the regulations prescribed
under the Code.
ARTICLE IX
MISCELLANEOUS
9.1. AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement of the Buyer and the Seller, at any time prior to the Closing Date
with respect to any of the terms contained herein.
9.2. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the
Seller, on the one hand, or the Buyer, on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by the Seller
or the Buyer, respectively, only by a written instrument signed by the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
9.2.
9.3. NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES UPON
CLOSING. Each and every representation and warranty contained in this Agreement
shall survive the date of this Agreement but shall expire and terminate upon
consummation of the Closing.
9.4. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if (a) delivered personally or by
overnight courier, (b) mailed by registered or certified mail, return receipt
requested, postage prepaid, or (c) transmitted by telecopy, and in each case,
addressed to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice; provided that notices of a
change of address shall be effective only upon receipt thereof):
(a) if to the Buyer, to:
Swiss-Irish Enterprises, Inc.
3700 Pipestone Road
Dallas, Texas 75212
Telecopy: (214) 637-4286
Attention: Kenneth W. Murphy
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with a copy to
Cleave Buchanan
13111 North Central Expressway
Suite 300
Dallas, Texas 75243
Telecopy: (972) 644-8088
(b) if to the Seller, to
Compass International Services Corporation
One Penn Plaza
Suite 4430
New York, New York 10119
Telecopy: (212) 629-4925
Attention: Julie Schechter, Esq.
with a copy to
Katten Muchin & Zavis
525 West Monroe Street
Chicago, Illinois 60661
Telecopy: 312-902-1061
Attention: Howard S. Lanznar, Esq.
and so long as the NCO Merger Agreement has not been
terminated, with additional copies to
NCO Group, Inc.
565 Pennsylvania Avenue
P.O. Box 7002
Fort Washington, PA 19034
Telecopy: (215) 793-2929
Attention: Joshua Ginden, Esq.
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Telecopy: (215) 569-5555
Attention: Francis E. Dehel, Esq.
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Any notice so addressed shall be deemed to be given (X) three business days
after being mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid and (Y) upon delivery, if transmitted by hand
delivery, overnight courier or telecopy.
9.5. ASSIGNMENT; PARTIES IN INTEREST. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Any party may assign
its rights hereunder so long as the assignee agrees in writing to be bound by
this Agreement.
9.6. EXPENSES. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
9.7. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
9.8. GOVERNING LAW. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the internal
laws of the State of Delaware, without giving effect to the conflict of laws
rules thereof to the extent such rules would permit the application of the laws
of another jurisdiction.
9.9. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.10. INTERPRETATION. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.
9.11. ENTIRE AGREEMENT. This Agreement, including the
Disclosure Letters and the Confidentiality Agreement, embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements and the
understandings between the parties with respect to such subject matter.
9.12. SEVERABILITY. If any provision, including any phrase,
sentence, clause, section or subsection, of this Agreement is invalid,
inoperative or unenforceable for any reason, such circumstances shall not have
the effect of rendering such provision in question invalid, inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision herein contained invalid, inoperative, or unenforceable to any extent
whatsoever.
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9.13. WAIVER OF JURY TRIAL; PROCESS AND LEGAL COSTS. In any
action between or among any of the parties, whether arising out of this
Agreement or otherwise (a) each of the parties irrevocably waives the right to
trial by jury and (b) each of the parties irrevocably consents to service of
process by first class certified mail, return receipt requested, postage
prepaid, to the address at which such party is to receive notice in accordance
with Section 9.4 and (c) the prevailing parties shall be entitled to recover
their reasonable attorneys' fees and court costs from the other parties.
9.14. INTERPRETATION OF REPRESENTATIONS; DISCLOSURE LETTERS.
Each representation and warranty made in this Agreement or pursuant hereto is
independent of all other representations and warranties made by the same
parties, whether or not covering related or similar matters, and must be
independently and separately satisfied. Exceptions or qualifications to any such
representation or warranty shall not be construed as exceptions or
qualifications to any other representation or warranty. The parties acknowledge
that the Disclosure Letters (i) relate to certain matters concerning the
disclosures required and transactions contemplated by this Agreement, (ii) are
qualified in their entirety by reference to specific provisions of this
Agreement, (iii) are not intended to constitute and shall not be construed as
indicating that such matter is required to be disclosed, nor shall such
disclosure be construed as an admission that such information is material with
respect to the Seller, the Companies, the Company Subsidiaries or the Buyer, as
the case may be, except to the extent required by this Agreement, and (iv)
disclosure of the information contained in one section or part of a Disclosure
Letter shall be deemed as proper disclosure for all sections or parts of such
Disclosure Letter, only if appropriately cross-referenced or if the relevance
thereof is reasonably apparent from the context in which it appears
9.15. KNOWLEDGE OF CERTAIN BUYER AFFILIATES. Notwithstanding
anything to the contrary in this Agreement, the Seller shall have no liability
for, and the Buyer shall have no right to terminate this Agreement due to, the
breach or alleged breach by the Seller of any of the Seller's representations
and warranties contained herein resulting from the failure to disclose any item
if and to the extent that such item was known by Kenneth Murphy, the President
of the Print & Mail Division of the Seller.
9.16 FURTHER ASSURANCES. Each party agrees that it and its
agents shall execute and deliver or cause to be executed and delivered from time
to time such instruments, documents, agreements, and assurances and take such
other action as the other party may reasonably request to more effectively
assign and transfer to and vest the Buyer with all right, title and interest in
and to the Shares and the Related Assets, if any.
* * * *
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IN WITNESS WHEREOF, the Buyer and the Seller have caused this
Stock Purchase Agreement to be signed by their respective duly authorized
officers as of the date first above written.
BUYER: SWISS-IRISH ENTERPRISES, INC.
By /s/ KENNETH W. MURPHY
---------------------------
Name: Kenneth W. Murphy
Title: President
SELLER: COMPASS INTERNATIONAL
SERVICES CORPORATION
By /s/ MICHAEL J. CUNNINGHAM
--------------------------
Name: Michael J. Cunningham
Title: Chairman
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Exhibit 1.2A to
Stock Purchase Agreement
ESCROW AGREEMENT
----------------
This ESCROW AGREEMENT (this "Escrow Agreement") is entered into as of
May 12, 1999, by and among Compass International Services Corporation, a
Delaware corporation (the "Seller"), Swiss-Irish Enterprises, Inc., a Texas
corporation (the "Buyer"), and Harris Trust and Savings Bank, an Illinois
banking corporation, as Escrow Agent ("Escrow Agent"). Buyer and Seller are
hereinafter sometimes referred to collectively as the "Parties."
RECITALS
--------
A. The Parties have entered into that certain Stock Purchase Agreement
(the "Purchase Agreement"), dated as of the date hereof, pursuant to which the
Buyer proposes to purchase all of the issued and outstanding shares of certain
of the Seller's subsidiaries.
B. Concurrently with the execution of the Purchase Agreement, the
Seller is entering into an Agreement and Plan of Merger (the "NCO Merger
Agreement") with NCO Group, Inc., a Pennsylvania corporation ("NCO"), pursuant
to which the Seller is to be merged with a wholly-owned subsidiary of NCO (the
"NCO Merger").
C. Pursuant to Section 1.2 of the Purchase Agreement, Buyer is required
to deposit or cause to be deposited (i) the amount of Two Million Dollars
($2,000,000) and (ii) 1,849,863 shares of common stock of the Seller and any
shares of common stock of NCO which may be obtained in exchange for such
1,849,863 shares of common stock of Seller pursuant to the NCO Merger Agreement
(the "Escrow Shares"), into the escrow created by this Escrow Agreement, which,
together with any interest accrued thereon in accordance with the provisions of
Section 4 hereof, shall be referred to as the "Escrow Funds."
D. The Escrow Funds are intended to serve as a guaranty of the
obligations of the Buyer under the Purchase Agreement and shall be paid to the
Seller as liquidated damages in the event that Buyer breaches the Purchase
Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the premises set forth above and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. GOVERNING AGREEMENT. The Escrow Agreement shall govern the terms
upon which the Escrow Agent shall distribute the Escrow Funds to Buyer and
Seller. Notwithstanding the foregoing or anything else to the contrary contained
herein or in the Purchase Agreement, Escrow Agent shall not be required to make
a determination as to whether the Buyer has breached the terms of the Purchase
Agreement.
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2. APPOINTMENT OF ESCROW AGENT. Escrow Agent is hereby appointed
escrow agent in accordance with the instructions specifically set forth herein,
and no implied covenants or obligations shall be read into this Escrow Agreement
against the Escrow Agent.
3. DISTRIBUTION OF ESCROW FUNDS. The Escrow Agent shall only
distribute the Escrow Funds as directed in joint written instructions from the
Buyer and the Seller or as ordered by a Final Decision (as hereinafter defined).
As used herein, "Final Decision" means a decision, order, judgment or decree of
an arbitrator or court having jurisdiction which is either not subject to appeal
or as to which notice of appeal has not been timely filed or served. Such Final
Decision shall be accompanied by a legal opinion of counsel for the presenting
party satisfactory to the Escrow Agent to the effect that said decision order,
judgment or decree is final and enforceable and is not subject to further
appeal. The Escrow Agent shall act on such Final Decision and legal opinion
without further question.
4. ESCROW ACCOUNT INTEREST. The Escrow Funds shall be credited by
Escrow Agent and recorded in an escrow account. Escrow Agent shall be permitted
and is hereby authorized to deposit, transfer, hold and invest all of the cash
portion of the Escrow Funds, including principal and interest, in the J.P.
Morgan Institutional Service Prime Money Market Fund , a money market fund
and/or as jointly directed by the Buyer and the Seller to the Escrow Agent
during the period of this escrow in accordance with such instructions and
directions as may from time to time be provided to Escrow Agent in writing and
signed by the Buyer and the Seller. Any interest received by Escrow Agent with
respect to the Escrow Funds, including reinvested interest shall become part of
the Escrow Funds. The parties acknowledge that the Escrow Agent shall not be
responsible for any diminution in the Escrow Account as a result of losses
resulting from investments. The Escrow Agent may use its own Bond Department in
executing purchases and sales of permissible investments.
5. NOTICES. All notices, payment, and distributions required or
permitted to be given or delivered hereunder shall be deemed to have been
properly given or delivered to the following addresses, if delivered in person,
or, mailed, on the second business day following the date when mailed by
registered or certified mail, postage prepaid and addressed as follows:
If to Buyer: Swiss-Irish Enterprises, Inc.
3700 Pipestone Road
Dallas, Texas 75212
Attention: Kenneth W. Murphy
Facsimile No.: 214-637-4286
If to Seller: Compass International Services Corporation
One Penn Plaza, Suite 4430
New York, NY 10119
Attention: Julie Schechter
Facsimile No.: 212-967-0650
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with copy to: NCO Group, Inc.
515 Pennsylvania Avenue
Fort Washington, PA 19034
Attention: Paul Weitzel
Facsimile No.: 215-793-2908
If to Escrow Agent: Harris Trust and Savings Bank
311 W. Monroe Street, 12th Floor
Chicago, Illinois 60606
Attention: Escrow Division - Linda Garcia
Facsimile No.: 312-461-3525
Wires to Escrow Agent should be directed to the following:
Harris Trust and Savings Bank
ABA # 071000288
A/C # 109-211-3
Attn: Linda Garcia
or such other address as a party shall designate by written notice to all other
parties to the Escrow Agreement.
6. RELIANCE. Escrow Agent may act upon any instrument or other writing
believed by it in good faith to be genuine and to be signed or presented by the
proper person or persons and shall not be liable in connection with the
performance by it of its duties pursuant to the provisions hereof, except for
its own willful default or gross negligence. Buyer and Seller shall, jointly and
severally, indemnify and save harmless the Escrow Agent for all losses, costs,
and expenses which may be incurred by it without gross negligence or willful
misconduct on the part of Escrow Agent, arising out of or in connection with its
entering into this Escrow Agreement and carrying out its duties hereunder.
7. TERMINATION OF ESCROW. This escrow shall terminate upon a
distribution of all of the Escrow Funds to the Parties as set forth herein.
8. FEES AND EXPENSES. The Escrow Agent shall be entitled to
compensation for its services as stated in the fee schedule attached hereto as
Exhibit A, which compensation shall be paid equally by Buyer, on the one hand,
and Seller, on the other hand. The fee agreed upon for the services rendered
hereunder is intended as full compensation for the Escrow Agent's services as
contemplated by this Agreement; PROVIDED, HOWEVER, that in the event that the
conditions for the disbursement of funds under this Agreement are not fulfilled,
or the Escrow Agent renders any material service not contemplated in this
Agreement or there is any assignment of interest in the subject matter of this
Agreement, or any material modification hereof, or if any material controversy
arises hereunder, or the Escrow Agent is made a party to any litigation
pertaining to this Agreement, or the subject matter hereof, then the Escrow
Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all costs and expenses, including
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reasonable attorney's fees, occasioned by any delay, controversy, litigation or
event, and the same shall be recoverable jointly and severally from Seller and
Buyer, with each of Buyer and Seller having a right of contribution for one-half
of such recovery from the other party. To the extent such fees and expenses are
not paid by Buyer or Seller, the foregoing shall be paid from the Escrow Account
after written notice from the Escrow Agent to Buyer and Seller.
9. INDEMNIFICATION OF ESCROW AGENT. Buyer and Seller, jointly and
severally, hereby indemnify and hold harmless the Escrow Agent from and against,
any and all loss, liability, cost, damage and expense, including, without
limitation, reasonable counsel fees, which the Escrow Agent may suffer or incur
by reason of any action, claim or proceeding brought against the Escrow Agent
arising out of or relating in any way to this Agreement or any transaction to
which this Agreement relates unless such action, claim or proceeding is the
result of the willful misconduct of the Escrow Agent. The Escrow Agent may
consult counsel in respect of any question arising under the Agreement and the
Escrow Agent shall not be liable for any action taken or omitted in good faith
upon advice of such counsel. The costs and expenses of enforcing this right of
indemnification shall also be paid by Buyer and Seller. This right of
indemnification shall survive the termination of this Escrow Agreement and the
removal or resignation of the Escrow Agent.
10. ACCEPTANCE OF APPOINTMENT. Harris Trust and Savings Bank hereby
agrees to act as Escrow Agent under this Escrow Agreement. Escrow Agent shall
have no duty to enforce any provision hereof requiring performance by any other
party hereunder. In no event shall the Escrow Agent be liable to any party
hereto for any special, indirect or consequential loss or damage of any kind
whatsoever, even if Escrow Agent has been previously advised of such loss or
damage.
11. COUNTERPARTS. This Escrow Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
12. RESIGNATION. Escrow Agent may resign upon thirty (30) day's advance
written notice to the parties hereto. If a successor escrow agent is not
appointed within the thirty (30) day period following such notice, Escrow Agent
may petition any court of competent jurisdiction to name a successor escrow
agent.
13. GOVERNING LAW. This Agreement shall be construed, performed, and
enforced in accordance with, and governed by, the internal laws of the State of
Illinois without giving effect to the principles of conflict of laws thereof.
14. AMENDMENTS. This Agreement may be amended or modified, and any of
the terms, covenants, representations, warranties, or conditions hereof may be
waived, only by a written instrument executed by all of the parties hereto, or
in the case of a waiver, by the party waiving compliance. Any waiver by any
party of any condition, or of the breach of any provision, term, covenant,
representation, or warranty contained in the Agreement, in any one or more
instances, shall not be deemed to be nor construed as further or continuing
waiver of any such conditions,
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or of the breach of any other provision, term, covenant, representation, or
warranty of this Agreement.
15. SECTION HEADINGS. The section headings in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
16. SEVERABILITY. In the event that any part of this Agreement is
declared by any court or other judicial or administrative body to be null, void,
or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Agreement shall remain in full
force and effect.
BUYER:
SWISS-IRISH ENTERPRISES, INC.
By:_________________________________
Its:________________________________
SELLER:
COMPASS INTERNATIONAL SERVICES
CORPORATION
By:_________________________________
Its:________________________________
ESCROW AGENT:
HARRIS TRUST AND SAVINGS BANK,
as Escrow Agent
By: _________________________________
Its:_________________________________
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CORPORATE TRUST SERVICES
Exhibit A
Schedule of Fees
as
Escrow Agent
for
Compass International Services Corporation and
Swiss-Irish Enterprises, Inc.
Acceptance Fee ......................................................$ 1,500
- in-house legal review of escrow document
- administrative review of documents
- establishment of appropriate accounts
- participation in pre-closing and closing
Annual Administration Fee............................................$ 2,500
- routine administrative functions under the agreement
- custody of investments
Activity Fees
- deposit, delivery of securities (per event)................$ 35
- deposit of funds...........................................$ 20
- disbursement (checks, wires, etc.).........................$ 20
- international wires........................................$ 40
- purchases, sales of individual securities (per event)......$ 100
- investment in selected money market mutual funds...........No Charge
- asset/transaction report (per statement)...................$ 10
Out of Pocket
Additionally, the cost of items that can be directly allocated such as
postage, telephone, overnight delivery, etc. incurred during the routine
administration of the agreement will be billed separately.
Acceptance of the appointment as escrow agent is contingent upon our mutual
agreement to and execution of an escrow document.
This schedule applies to Escrow Agent appointments requiring the usual amount
of responsibility, time and attention. Fees are subject to reasonable
adjustment as changes in laws, procedures, or costs of doing business demand. If
in any specific situation, the agent's duties and responsibilities are greater
than customary or additional work becomes necessary because of the imposition
of governmental legislation or regulation, we reserve the right to adjust our
fees. Fees for services not specifically covered in this schedule will be
assessed in an amount commensurate with the services rendered. The acceptance
fee and first year's administration fee are billed at closing.
Harris Trust and Savings Bank [HARRIS BANK LOGO] Vicki Buresh
111 West Monroe (312) 461-1385
Chicago, IL 60603 5/10/99
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EXHIBIT 1.2-B
-------------
May 12, 1999
Compass International Services Corporation
One Penn Plaza, Suite 4430
New York, New York 10119
Reference is made to that certain Stock Purchase Agreement (the
"Purchase Agreement") dated as of May 12, 1999 between Compass International
Services Corporation, a Delaware corporation (the "Seller"), and Swiss-Irish
Enterprises, Inc., a Texas corporation (the "Buyer"), and to that certain Escrow
Agreement dated as of May 12, 1999 between the Seller, the Buyer and Harris
Trust and Savings Bank, as escrow agent (the "Escrow Agreement"). Capitalized
terms used but not defined herein are used herein as defined in the Purchase
Agreement.
In order to induce the Seller to enter into the Purchase Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
I hereby acknowledge, I hereby represent, warrant, acknowledge and agree as
follows:
1. On the date hereof, I will deposit or will cause to be
deposited into the escrow created by the Escrow Agreement (the
"Escrow Account"), the amount of cash and shares of Seller
Common Stock set forth across from my name on EXHIBIT A
attached hereto.
2. I have good and marketable title to the Escrow Shares being
deposited into the Escrow Account by me and such Escrow Shares
shall be deposited into the Escrow Account free and clear of
all Liens or claims whatsoever.
3. I understand and agree that such Escrow Shares and cash are
subject to the terms and conditions of the Purchase Agreement
and the Escrow Agreement, which shall be controlling in all
events and binding upon me.
4. I UNDERSTAND AND AGREE THAT PURSUANT TO THE TERMS AND
CONDITIONS OF THE PURCHASE AGREEMENT AND THE ESCROW AGREEMENT,
SUCH ESCROW SHARES AND CASH MAY BE FORFEITED TO THE SELLER AS
DAMAGES OR LIQUIDATED DAMAGES PURSUANT TO THE PURCHASE
AGREEMENT AND/OR THE ESCROW AGREEMENT WITHOUT ANY FURTHER
NOTICE TO ME OR CONSENT ON MY PART.
5. I have had the opportunity to confer with anyone of my choice
(including an attorney) concerning this letter agreement, the
Purchase Agreement and the Escrow
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Compass International Services Corporation
May , 1999
Page 1
Agreement. I additionally have had ample time to consider this
letter agreement and am executing it voluntarily with an
intent to be legally bound by it.
Sincerely,
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