Exhibit 10.11
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made on the 8th day
of July, 1997, by and among JEH ACQUISITION CORP., a Delaware corporation
("Buyer"), JEH COMPANY, a Texas corporation ("Seller"), and JAMES E. HELZER, the
sole shareholder of Seller ("Shareholder"). MARILYN HELZER, spouse of
Shareholder ("Mrs. Helzer") has joined in this Agreement for the purposes set
forth below. JEH ENTERPRISES, INC., a Colorado corporation ("Enterprises"), has
joined in this Agreement for the purposes set forth below.
RECITALS
A. Seller is a wholesale distributor of roofing materials and supplies
and building products and supplies for commercial and residential applications,
with operations in Texas, Colorado, Indiana, Iowa and Virginia (the "Business").
B. Buyer intends to buy, and Seller intends to sell and assign to
Buyer, the Business and all of Seller's operating assets (the "Acquired
Business"), upon the terms and conditions of this Agreement.
C. Shareholder owns all of the issued and outstanding shares of stock
of Seller and will benefit substantially from the transactions under this
Agreement. In return for such benefits, Shareholder is willing to enter into
this Agreement for the purposes set forth below.
D. Mrs. Helzer acknowledges that she will receive a substantial
financial benefit from the transactions under this Agreement. Accordingly, she
is willing to, and does hereby, enter into this Agreement for the purposes of
joining in any and all representations, warranties, covenants and agreements of
Shareholder under this Agreement.
OPERATIVE TERMS
In consideration of the mutual promises, Buyer, Seller, Shareholder and
Mrs. Helzer agree as follows:
1. Purchased Assets; Excluded Assets; Assumed Liabilities.
1.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date (as defined in Section 4.1), Seller will sell and
assign to Buyer, and Buyer will purchase from Seller, the Business, all of
Seller's operating assets and all other assets used or useful in connection with
the Business, including, without limitation:
(a) the equipment, vehicles, rolling stock, racks, furniture,
fixtures, fixed assets and leasehold improvements including, without
limitation, those items described in Exhibit 1.1(a);
(b) inventories of roofing materials and supplies and building
products and supplies with respect to the Business which are held for
resale (the "Inventory");
(c) accounts and notes receivable held by Seller and notes,
bonds and other evidence of indebtedness of and rights to receive
payments from any person held by or owed to Seller (the "Accounts
Receivable"), including, without limitation, those described in Exhibit
1.1(c), and all of Seller's rights in collateral that secures any or
all of the Accounts Receivable;
(d) prepaid expenses and security deposits described in
Exhibit 1.1(d), manufacturers' rebates receivable as of June 30, 1997,
and other current assets related to or required in the Business;
(e) all of Seller's rights under the real property leases
described in Exhibit 1.1(e) (the "Third Party Leases");
(f) all of Seller's rights under the equipment leases and
contracts described in Exhibit 1.1(f) (the "Leases and Contracts");
(g) telephone numbers;
(h) goodwill, customer lists, assumed names, intellectual
property including, without limitation, the trade names, trademarks and
service marks described in Exhibit 1.1(h);
(i) computer hardware and software, and all of Seller's
rights under software licenses;
(j) cash and cash equivalents;
(k) assignable licenses and permits;
(l) business insurance policies including, without limitation,
all proceeds and rights to proceeds with respect thereto (the "Business
Insurance Policies");
(m) a term life insurance policy insuring Shareholder's life
and having a face amount of Two Million Dollars ($2,000,000) (the
"Assigned Life Insurance Policy");
(n) choses in action, claims, demands and rights in favor of
Seller other than Seller's rights under this Agreement;
(o) books and records; and
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(p) all other tangible and intangible assets related to the
Business.
Such assets, other than the Excluded Assets, as defined in Section 1.2, are
collectively called the "Purchased Assets." The Purchased Assets will be sold
free and clear of all security interests, liens, claims, encumbrances,
restrictions, reservations, charges or matters of a like kind (the
"Encumbrances"), except for the items described in Exhibit 1.1 (the "Permitted
Encumbrances").
1.2 Excluded Assets. The sale and purchase under this Agreement shall
not include the following assets (the "Excluded Assets"):
(a) the notes receivable dated December 29, 1995, from two
relatives of Shareholder in favor of Seller in the aggregate principal
amount of $268,758.00;
(b) the life insurance policies on the life of Shareholder
having a cash surrender value of $725,647.00 at December 31, 1996 on
Seller's balance sheet at the same date, which policies are listed in
Exhibit 1.2(b) (the "Excluded Life Insurance Policies");
(c) Seller's corporate minute books and tax returns (copies of
which shall be made available to Buyer upon request); and
(d) the other excluded assets listed on Exhibit 1.2(d) (the
"Other Excluded Assets").
1.3 Assumed Liabilities. At the Closing, Buyer shall assume:
(a) The accounts payable and accrued expenses of Seller, as of
the Effective Time, as defined in Section 4.1, that are both (i)
accrued by Seller in the ordinary course of the Business, consistent
with generally accepted accounting principles ("GAAP"), including trade
payables and all accrued expenses related to the operation and conduct
of the Business (provided, however, with respect to Seller's employees,
only accrued expenses with respect to vacation, sick leave, bonuses and
commissions), and (ii) expressly and finally set forth in the Closing
Balance Sheet, as defined in Section 2.3; and
(b) the obligations of Seller that accrue after June 30, 1997,
under the Third Party Leases and the Leases and Contracts, but not as
the result of any breach thereof by Seller or act or omission of Seller
that with notice, the passage of time, or both, would constitute a
breach thereof by Seller;
(collectively, the "Assumed Liabilities"). Except for the Assumed Liabilities,
Buyer will not assume any contracts, leases, debts, obligations or liabilities
of Seller, or arising out of the ownership or operation of the Business, whether
express or implied, contingent or otherwise, or resulting from any violation of
law, rule or regulation, or arising out of any act, omission or transaction of
Seller, Enterprises, Shareholder or Mrs. Helzer.
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1.4 Real Property Leases. At the Closing, as defined in Section 4.1,
Shareholder (or Shareholder and Mrs. Helzer, in each case in which Shareholder
and Mrs. Helzer are co-owners or own the property as community property), as
landlord, and Buyer, as tenant, shall enter into real estate leases with respect
to the following facilities:
(a) Corporate Offices
2500, 2550, and 2552 US Highway 287
Mansfield, Texas;
(b) Warehouse
603 Wisteria Street
Mansfield, Texas;
(c) Frisco Branch
4400 Preston Road
Frisco, Texas;
(d) Colleyville Branch
1800 Tarrant Lane
Colleyville, Texas;
(e) Mesquite Branch
901 Dalworth Drive
Mesquite, Texas;
(f) Colorado Springs Branch
5565 East Bijou Street
Colorado Springs, Colorado; and
(g) Henderson Branch
8221 East 96th Avenue
Henderson, Colorado.
The leases with respect to such facilities (the "Shareholder Leases")
shall be in the form of, and shall contain the terms set forth in, Exhibits
1.4(a), 1.4(b), 1.4(c), 1.4(d), 1.4(e), 1.4(f), and 1.4(g). The premises leased
under the Third Party Leases and the Shareholder Leases are individually and
collectively called the "Leased Premises."
1.5 Employment Agreements. At the Closing, Buyer, as employer, and
Shareholder, as employee, shall enter into an employment agreement, under which
Shareholder shall be employed as president or other senior officer of Buyer and
chief executive officer of the Acquired Business division of Buyer (which may be
called the JEH division), which employment agreement shall be in the form of,
and contain the terms set forth in, Exhibit 1.5(a) (the "J.E. Helzer Employment
Agreement"). At the Closing, Buyer will offer employment to E.G. Helzer,
Shareholder's brother,
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pursuant to an employment agreement which shall be in the form of, and contain
the terms set forth in, Exhibit 1.5(b) (the "E.G. Helzer Employment Agreement").
1.6 Initial Public Offering. If (a) within five (5) years after June
30, 1997, a company controlled by TDA Industries, Inc. files a Registration
Statement that is declared effective by the SEC which registers the common stock
of its roofing supply business (the "Roofing Company") for sale in connection
with an underwritten initial public offering of at least 10% of the Roofing
Company's then-outstanding common stock "(IPO"), and such stock is in fact sold
in such IPO, (b) the operations of the Acquired Business are part of the Roofing
Company's operations at the time of the effective date of such filing, (c) the
Acquired Business' earnings before interest, federal income taxes, depreciation
and amortization ("EBITDA") from July 1, 1997 to the effective date of such
filing are:
(i) not less than Three Million Eight Hundred
Thousand Dollars ($3,800,000.00) per year
(the "First Alternative"); or
(ii) less than Three Million Eight Hundred
Thousand Dollars ($3,800,000.00) per year
but not less than Three Million Six Hundred
Thousand Dollars ($3,600,000.00) per year
(the "Second Alternative");
(or, in the case of the First Alternative or Second Alternative, not less than a
seasonally adjusted portion of such amount for any partial fiscal year), and (d)
following the IPO, the Roofing Company's common stock is traded on a national
securities exchange or on NASDAQ, then Seller or its designee shall receive One
Million Three Hundred Fifty Thousand Dollars ($1,350,000.00), if the First
Alternative is met, or One Million Dollars ($1,000,000.00), if the Second
Alternative is met, payable, at the option of the Roofing Company, either in
cash, or in common stock of the Roofing Company valued at the price at which
such common stock is sold in the IPO. Such common stock delivered to Seller or
its designee pursuant to this Section 1.6 shall be issued subject to all normal
and customary agreements among the underwriters, the Roofing Company, and its
principal shareholders entered into in connection with the IPO, and to a lock-up
limited to no more than 24 months from the effective date of the IPO at the
discretion of the underwriters of such IPO, or any greater period of time that
may be required by any regulatory agency, share exchange, or NASDAQ. In the
event that Seller or its designee provides the Roofing Company notice, at least
30 days prior to the anticipated effective date of the IPO, that it would prefer
to receive the Roofing Company common stock, rather than cash, Buyer shall use
reasonable efforts to have such stock issued to Seller or its designee (subject
to the approval of the underwriters of such IPO). Buyer shall use reasonable
efforts to have Shareholder be given the opportunity, upon the consummation of
the IPO, to become a senior officer (other than chief executive officer) and a
director of the IPO company, in addition to such position(s) as he would
maintain with Buyer and the Acquired Business.
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For purposes of this Section, "Registration Statement" means a
registration statement filed by the Roofing Company with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, in connection
with a public offering of the Roofing Company's common stock (other than a
registration statement filed on Form S-4 or Form S-8, or any form substituting
therefor).
1.7 Exclusive Distributorship Agreement. At the Closing, JEH Exports,
Inc., a Texas corporation ("Exports"), the stock of which is owned solely by
Shareholder, and Buyer shall enter into, and Shareholder shall cause Exports to
enter into, the Exclusive Distributorship Agreement in the form of, and
containing the terms set forth in, Exhibit 1.7 (the "Distributorship Agreement")
pursuant to which Buyer shall be the sole distributor of Exports of roofing
materials in the territories described therein.
1.8 Enterprises. Seller, Enterprises, Shareholder and Mrs. Helzer,
jointly and severally, represent and warrant to Buyer, as of the Closing Date,
and covenant with Buyer, as follows:
(a) Enterprises is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Colorado.
Enterprises has full power to own its assets and to conduct its business as
presently conducted. Enterprises is not required to be authorized, qualified or
licensed to do business in any other state.
(b) Enterprises has all requisite power and authority to
execute and enter into this Agreement and all other agreements and instruments
contemplated hereby to be executed and delivered by Enterprises at the Closing
(the "Enterprises Document") and to perform its obligations hereunder and
thereunder. The execution, delivery and performance by Enterprises of this
Agreement and the Enterprises Documents have been duly authorized by all
necessary action, corporate or otherwise, by Enterprises and its stockholders.
This Agreement has been duly executed and delivered by Enterprises and its sole
shareholder, James E. Helzer, and is the legal, valid and binding agreement of
Enterprises, enforceable against Enterprises in accordance with its terms. The
Enterprises Documents will be, when executed and delivered by Enterprises, the
legal, valid and binding agreements of Enterprises enforceable against
Enterprises in accordance with their respective terms.
(c) Except as set forth in Exhibit 1.8, Enterprises has no
assets of any nature.
(d) Enterprises has no debts, obligations or other
liabilities, whether express or implied, contingent or otherwise, or resulting
from any violation of law, rule or regulation, or arising out of any act,
omission or transaction of Enterprises.
(e) At the Closing, Enterprises shall sell, transfer and
assign to Buyer, for One Hundred Dollars ($100.00), and other good and valuable
consideration, all of the assets of Enterprises (including, without limitation,
its interest in any of the Third Party Leases and claims and choses in action),
under such documents of assignment and transfer as are acceptable to Buyer, in
its sole discretion, free and clear of all Encumbrances; provided, however, that
Buyer shall not
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assume any contracts, leases (except as may be assumed expressly by Buyer in
writing), debts, obligations or liabilities of Enterprises, or arising out of
the ownership or operation of any of Enterprises' assets, whether express or
implied, contingent or otherwise, or resulting from any violation of law, rule
or regulation, or arising out of any act, or omission or transaction of
Enterprises, and Seller, Enterprises, Shareholder and Mrs. Helzer, jointly and
severally, shall indemnify and hold Buyer harmless with respect thereto.
1.9 Manufacturers' Rebates. On or before March 1, 1998, Seller and
Buyer shall prorate, in accordance with the terms of this Section 1.9, the
volume rebates provided exclusively on an annual basis (for example, end of year
volume rebates which have not been previously credited or accrued) for calendar
year 1997 by the manufacturers listed on Exhibit 1.9. Seller's portion of such
annual rebate from any such manufacturer for calendar year 1997 shall be that
proportion of the annual rebate from such manufacturer for calendar year 1997 as
the dollar volume of purchases by Seller from such manufacturer during the first
six calendar months of 1997 ("Seller's Purchases") bears to the sum of (a)
Seller's Purchases and (b) the dollar volume of purchases by Buyer from such
manufacturer with respect to the Acquired Business during the balance of
calendar year 1997. Seller's share of the rebates, as determined under this
Section 1.9, will be paid to Seller as follows:
(i) by wire transfer in immediately available
funds of an amount not exceeding the sum of
(A) the difference between Two Hundred Fifty
Thousand Dollars ($250,000.00) and the
amount, if any, of the Additional Cash
Payment under Section 23(b)(i), and (B) One
Hundred Thousand Dollars ($100,000.00); and
(ii) if Seller's share of such rebates exceeds
the amount determined under clause (i)
above, the Promissory Note described in
Section 2.1 shall be amended by adding such
excess to the principal balance under the
Promissory Note.
1.10 Employee Services Agreement. Contemporaneously with the execution
of this Agreement, Seller and Buyer have entered into an Employee Services
Agreement in the form of, and containing the terms set forth in, Exhibit 1.10.
2. Purchase Price and Payment; Allocation; and Sales and Transfer Taxes.
2.1 Purchase Price and Payment. The purchase price for the Purchased
Assets, subject to adjustment under the terms of this Agreement (the "Purchase
Price"), shall be Fourteen Million Five Hundred Thousand Dollars
($14,500,000.00) (the "Tentative Purchase Price") plus the Adjustment Amount, as
defined in Section 2.2, if the Adjustment Amount is a positive number, or minus
the Adjustment Amount, if the Adjustment Amount is a negative number. At the
Closing, the Tentative Purchase Price, after applying the prorations, credits
and adjustments provided for in this Agreement (the "Adjusted Tentative Purchase
Price"), shall be payable as follows: (a) Buyer shall pay to Seller, by wire
transfer in immediately available United States funds, the sum of
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Thirteen Million Five Hundred Thousand Dollars ($13,500,000.00) (the "Closing
Cash Amount"); and (b) Buyer shall issue to Seller, Buyer's Secured
Non-Negotiable Promissory Note, in the form of, and containing the terms set
forth in, Exhibit 2.1(b)(1) to this Agreement for the balance of the Adjusted
Tentative Purchase Price (the "Promissory Note"). The Promissory Note shall be
secured by a Security Agreement in the form of, and containing the terms set
forth in, Exhibit 2.1(b)(2) (the "Security Agreement").
In addition to the foregoing, Buyer shall pay at the Closing the first
Three Hundred Fifty Thousand Dollars ($350,000.00) of the fees of Geneva
Corporate Finance, Inc. ("Geneva"), Seller's broker, with respect to the
transactions under this Agreement (the "Broker Contribution"); provided,
however, that Geneva shall not be deemed to be the agent or broker of Buyer as a
result of such payment or otherwise.
2.2 Adjustment Amount. The Adjustment Amount (which may be a positive
or negative number) will be equal to the difference between (a) the amount of
the Acquired Net Assets, as defined in this Section below, and (b) Fourteen
Million Two Hundred Twenty Six Thousand Dollars ($14,226,000.00). For purposes
of this Agreement, the "Acquired Net Assets" means the difference between (i)
the net book value of the Purchased Assets (other than the accrued portion of
the annual manufacturers' rebates receivable that are subject to proration under
Section 1.9), as finally determined on the Closing Balance Sheet, as defined in
Section 2.3(a), but excluding any Special Reserves, as defined in Section
2.4(c), up to One Million Nine Hundred Thousand Dollars ($1,900,000.00), and
(ii) the Assumed Liabilities, as finally determined on the Closing Balance
Sheet.
2.3 Adjustment Procedure.
(a) Seller will prepare and shall cause Waters & Murray
("W&M"), Seller's independent certified public accountants, to audit the
financial statements (the "Closing Financial Statements") of Seller as of June
30, 1997, which Closing Financial Statements shall contain an audited balance
sheet (the "Closing Balance Sheet") at June 30, 1997, audited statements of
income and retained earnings, and cash flows for the period from the date of the
Balance Sheet, as defined in Section 5.7, through June 30, 1997, all prepared in
accordance with generally accepted accounting principles, and a separate
computation of the Acquired Net Assets. Buyer's independent certified public
accountants, Deloitte & Touche LLP ("D&T") and representatives of Buyer shall
review the audit conducted by W&M. Seller and Shareholder will arrange for D&T's
and Buyer's representatives to have full access to the W&M audit workpapers and
files. Seller and Shareholder also agree that representatives of D&T and Buyer
will be present to observe the physical inventory count taken by Seller and W&M
prior to June 30, 1997. Seller shall deliver the Closing Financial Statements to
Buyer and D&T within sixty (60) days after the Closing Date. If, within thirty
(30) days following delivery to Buyer and D&T of the Closing Financial
Statements, Buyer has not given Seller notice of its objection to the Closing
Financial Statements (such notice, if given, must contain a statement of the
basis of Buyer's objection), then the Closing Financial Statements, including,
without limitation, the computation of the Acquired Net Assets, shall be deemed
to have been finally determined for purposes of this Agreement, and the Acquired
Net Assets as so determined will be
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used in computing the Adjustment Amount. If Buyer gives such notice of an
objection, then the matters as to which Buyer has objected will be submitted to
D&T and W&M (the "Accountants") for resolution, and the Accountants shall
determine the Acquired Net Assets. If the Accountants are unable to agree as to
the resolution of such matters and the Acquired Net Assets within thirty (30)
days after such matters are submitted to the Accountants, the Accountants shall
select another "Big Six" accounting firm (New York City or Dallas office) (the
"Other Accountants") which will resolve such matters and determine the Acquired
Net Assets. Each party will furnish to the Accountants (and, if applicable, the
Other Accountants) such workpapers and other documents and information relating
to the disputed matters as the Accountants or the Other Accountants may request
and are available to that party (or its independent public accountants), and
each party will be afforded the opportunity to present to the Accountants and
the Other Accountants any material relating to such disputed issues and to
discuss such issues with the Accountants and the Other Accountants. The
resolution of such issues under this Section 2.3 (a) by the Accountants or Other
Accountants, as the case may be, as set forth in a notice delivered to both
parties by the Accountants or Other Accountants shall be deemed to be a final
determination thereof for purposes of this Agreement, shall be binding and
conclusive on the parties, and the Acquired Net Assets, as finally determined by
the Accountants or Other Accountants, will be used in computing the Adjustment
Amount. Buyer and Seller shall each bear one-half of the fees of the Other
Accountants in connection with the resolution or attempted resolution of the
disputed matters.
(b) On the tenth business day following the final
determination of the Acquired Net Assets, under Section 2.3(a), and the
Adjustment Amount:
(i) if the Purchase Price is greater than the
sum of the Closing Cash Amount and the
principal amount of the Promissory Note,
Buyer shall pay the difference to Seller (up
to Two Hundred Fifty Thousand Dollars
($250,000.00)) by wire transfer in
immediately available funds (the "Additional
Cash Payment"), together with simple
interest, from July 1, 1997, to the date of
payment, at the annual rate of six percent
(6%), and if such difference exceeds Two
Hundred Fifty Thousand Dollars
($250,000.00), the Promissory Note shall be
amended by Seller and Buyer by adding such
excess to the principal balance under
the Promissory Note; or
(ii) if the Purchase Price is less than the sum
of the Closing Cash Amount and the principal
amount of the Promissory Note, Seller shall
pay (and Shareholder shall cause Seller to
pay) (A) the difference to Buyer (up to Two
Hundred Fifty Thousand Dollars
($250,000.00)) by wire transfer in
immediately available funds, together with
simple interest, from July 1, 1997, to the
date of payment, at the annual rate of six
percent (6%), and (B) if such difference
exceeds Two Hundred Fifty Thousand Dollars
($250,000.00), the
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Promissory Note shall be amended by Seller
and Buyer by reducing the principal balance
of the Promissory Note by the amount of such
excess (up to Two Hundred Fifty Thousand
Dollars ($250,000.00)), and (C) Seller shall
pay (and Shareholder shall cause Seller to
pay) the remainder of such excess, if any,
in the same manner as provided in
Subparagraph (A) of this Section 2.3(b)(ii)
above.
2.4 Contingent Payments.
(a) Based on Modified EBITDA. Buyer shall pay to Seller or its
designee, as additional consideration for the sale of the Purchased Assets, the
applicable percentage set forth below of the Modified EBITDA, as defined in this
Section 2.4(a), of the Acquired Business, on an annual non-cumulative basis, for
each of the fiscal years ending June 30, 1998 through June 30, 2002:
MODIFIED EBITDA FOR PERCENTAGE OF MODIFIED
FISCAL YEAR EBITDA TO BE PAID TO SELLER
------------------- OR ITS DESIGNEE
-----------------------------
Less than $3,000,00.00 0%
$3,000,000.00 - $4,000,000.00 35%
$4,000,001.00 - $5,000,000.00 40%
More than $5,000,000.00 50%
For purposes of this Section, the Modified EBITDA of the Acquired
Business shall not be charged with any interest cost relating to the purchase of
the Acquired Business. The Modified EBITDA of the Acquired Business will be
conclusively determined annually by Buyer's independent certified public
accountants. For purposes of this Section 2.4(a), the "Modified EBITDA" means
the EBITDA of the Acquired Business for any fiscal year of Buyer minus the
capital expenditures during such fiscal year with respect to the Acquired
Business (which expenditures, for purposes of this Section 2.4(a), shall be
deemed not to exceed 50% of the depreciation expense of the Acquired Business
for such fiscal year), plus Fifty Thousand Dollars ($50,000.00) of the cash
compensation paid to Shareholder during such fiscal year under the J.E. Helzer
Employment Agreement.
(b) Based on EBITDA.
(i) For any fiscal year during the period
commencing on the Closing Date and extending
until and including June 30, 2002 (the
"Applicable Period") in which the EBITDA of
the Acquired Business (plus $50,000.00 of
the compensation paid to Shareholder under
the J.E. Helzer Employment Agreement)
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is not less than Four Million Four Hundred
Thousand Dollars ($4,400,000.00), Buyer
shall pay to Seller or its designee the sum
of One Million Dollars ($1,000,000.00);
provided, however, that Buyer shall not pay,
and Seller shall not be entitled to receive,
more than Two Million Dollars
($2,000,000.00) in the aggregate under this
Section 2.4(b)(1).
(ii) In the event that the aggregate EBITDA of
the Acquired Business during the Applicable
Period (plus $50,000.00 per fiscal year of
the annual compensation paid to Shareholder
under the J.E. Helzer Employment Agreement)
is not less than Twenty Million Dollars
($20,000,000.00), Buyer shall pay to Seller
or its designee the sum of (A) One Million
Three Hundred Fifty Thousand Dollars
($1,350,000.00), and (B) the difference, if
any, between Two Million Dollars
($2,000,000.00) and the amount Seller or its
designee is entitled to be paid under
Section 2.4 (b) (1).
All payments under this Section 2.4(b) shall bear simple interest at
the rate of 6% from July 1, 1997, to the date of payment.
(c) Based on Reduction of Accounts Receivable Reserves.
(i) Schedule 2.4(c)(i) contains a list, as of
June 30, 1997, of certain account debtors of
Seller (individually, together with its
affiliates and related parties, a "Special
Account Debtor" and collectively the
"Special Account Debtors"), and the
outstanding account balances of each Special
Account Debtor. Schedule 2.4(c)(i) also
contains, with respect to each Special
Account Debtor, (i) that portion of the
reserves carried on Seller's books and
records of not less than Six Hundred
Thousand Dollars ($600,000.00) (the "Regular
Reserves"), that has been allocated to each
Special Account Debtor, and (ii) that
portion of the special reserves, of not less
than One Million Seven Hundred Thousand
Dollars ($1,700,000.00) (the "Special
Reserves"), that has been allocated to each
Special Account Debtor. The sum of the
Regular Reserves and Special Reserves, on
the Closing Balance Sheet (the "Total A/R
Reserves"), will be not less than Two
Million Three Hundred Thousand Dollars
($2,300,000.00). The amounts of the Regular
Reserves and Special Reserves (i.e., the
Total A/R Reserves), and the allocations of
such Regular Reserves and Special Reserves to
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any or all Special Account Debtors on the
Closing Balance Sheet, may vary from the
Regular Reserves and Special Reserves and
the allocations thereof contained in
Schedule 2.4(c)(i).
(ii) Subject to the terms of this Section 2.4(c),
if the portion of the Total A/R Reserves
allocated to Special Account Debtors, under
Section 2.4(c)(i), is reduced by Buyer as of
the end of any fiscal year during the
Applicable Period, in accordance with GAAP,
on Buyer's audited balance sheet, solely
because of collections by Buyer with respect
to such Special Account Debtors, then, the
following provisions shall apply:
(A) Seller or its designee shall
be paid 100% of such reductions until
the Total. A/R Reserves are not less
than Two Million Five Hundred
Thousand Dollars ($2,500,000.00)
(determined after taking into account
such reductions).
(B) Then, Buyer shall retain 100%
of such reductions until the Total
A/R Reserves are not less than Two
Million Three Hundred Thousand
Dollars ($2,300,000.00) (determined
after taking into account such
reductions).
(C) Seller or its designee and
Buyer shall share equally any such
reductions at any time that the Total
A/R Reserves are less than Two
Million Three Hundred Thousand
Dollars ($2,300,000.00).
(iii) Notwithstanding Section 2.4(c)(ii),
Seller or its designee shall not be
entitled to be paid, under Section
2.4(c)(ii), any portion of a
reduction in the Total A/R Reserves
allocated to any Special Account
Debtor under Section 2.4(c)(i) unless
and until:
(A) the total balance of the
Accounts Receivable of such Special
Account Debtor as of the end of such
fiscal year is less than the total
balance of the Accounts
12
Receivable of such Special Account
Debtor as of June 30, 1997; and
(B) the ratio of the
Overdue Balance of the Accounts
Receivable of such Special Account
Debtor to the total balance of the
Accounts Receivable of such Special
Account Debtor as of the end of such
fiscal year is less than the ratio of
the Overdue Balance of the Accounts
Receivable of such Special Account
Debtor to the total balance of the
Accounts Receivable of such Special
Account Debtor as of June 30, 1997.
For purposes of this Subparagraph
(B), "Overdue Balance" means any
balance not collected within 45 days
after the invoice date.
(iv) [INTENTIONALLY OMITTED]
(v) An example of the application of this
Section 2.4(c) is contained in Schedule
2.4(c)(v).
2.5 Allocations. The consideration for the Purchased Assets will be
allocated in accordance with the Allocation of Purchase Price Agreement in the
form of, and containing the terms set forth in, Exhibit 2.5. Such allocations
will be conclusive and binding on Seller and Buyer for federal income tax
purposes, and Seller and Buyer will report such allocations to the Internal
Revenue Service as required by Section 1060 of the Internal Revenue Code of
1986, as amended, and the regulations with respect to that Section.
2.6 Sales and Transfer Taxes. Seller shall pay (and Shareholder shall
cause Seller to pay) all sales and other transfer taxes and fees arising out of
the sale and assignment of the Purchased Assets to Buyer; provided, however,
that with respect to sales or other transfer taxes arising out of the sale or
transfer under this Agreement of motor vehicles under certificates of title,
Buyer shall pay such sales or other transfer taxes up to Fifty Thousand Dollars
($50,000.00) ("Buyer's Sales Tax Portion") and the balance, if any, of such
sales or other transfer taxes shall be shared by Seller and Buyer equally.
Seller shall pay (and Shareholder shall cause Seller to pay) all documentary and
other excise taxes with respect to the Promissory Note and any amendments
thereto.
3. Casualty and Condemnation.
3.1 Risk of Loss. Until the Closing, the risk of loss or damage to the
Purchased Assets shall be borne by Seller, and if the Purchased Assets or any
portion thereof are stolen or are damaged or destroyed by fire or other casualty
before the Closing and can be restored, repaired or replaced substantially in
the same condition as exists on the date of this Agreement, within ninety (90)
days
13
after such casualty, Seller shall so restore, and Shareholder shall cause
Seller to restore, such Purchased Assets, and the Closing Date shall be
extended accordingly; but if such uninsured portion of the cost of
restoration, repair or replacement exceeds One Hundred Thousand Dollars
($100,000.00) (and Seller refuses to restore, repair or replace such
Purchased Assets), or such restoration, repair or replacement cannot be
completed within such period, this Agreement, at the option of Buyer, shall
be deemed terminated.
If Buyer elects to purchase the Purchased Assets even though the
Purchased Assets are not restored, repaired or replaced, or the uninsured
portion of the cost of restoration, repair or replacement exceeds One Hundred
Thousand Dollars ($100,000.00), Buyer shall be entitled to the benefits of any
insurance on the Purchased Assets to the extent required for such restoration,
repair or replacement. Seller shall not be required to restore, repair or
replace the stolen, damaged or destroyed Purchased Assets if the uninsured
portion shall cost more than One Hundred Thousand Dollars ($100,000.00) or if it
will take longer than ninety (90) days to complete, but, if Buyer elects to go
forward with the purchase, Buyer will receive a credit against the Purchase
Price at the Closing for such uninsured portion of the loss and the restoration
and an assignment by Seller of all of its rights under insurance policies with
respect to the stolen, damaged or destroyed Purchased Assets and all other
rights and claims for damages with respect to such stolen property, damage or
destruction.
3.2 Condemnation. If at any time prior to the Closing, the real
property of which the Leased Premises are a part, or any portion thereof, is
taken by eminent domain or if any preliminary steps in any taking by eminent
domain of such real property or the Leased Premises, or any portion thereof,
occurs prior to the Closing, Buyer may, at its option, within ten (10) days
after receipt of notice or knowledge thereof, terminate this Agreement. Seller
shall give Buyer notice of any such taking and all steps preliminary thereto as
soon as Seller becomes aware of them. If Buyer does not elect to so terminate
this Agreement, this Agreement shall remain in full force and effect, and Seller
or Shareholder (or Shareholder and Mrs. Helzer), as the case may be, shall in
such event turn over or credit to Buyer at the Closing all monies received or to
be received by Seller or Shareholder (or Shareholder and Mrs. Helzer), as the
case may be, by reason of such taking, and Seller or Shareholder (or Shareholder
and Mrs. Helzer), as the case may be, shall assign to Buyer all of Seller's or
Shareholder's (or Shareholder's and Mrs. Helzer's) right, title and interest in
and to any awards (and rights or claims to any such awards) that may be made for
such taking and any additional money that may be payable thereunder.
4. Closing.
4.1 Closing; Closing Date; and Effective Time. Subject to the terms and
conditions of this Agreement, the closing of the transactions contemplated by
this Agreement (the "Closing") will occur at 9:00 a.m. local time at the offices
of Jackson & Walker, L.L.P., 901 Main Street, Suite 6000, Dallas, Texas, 75202,
on July 8, 1997 or on such other date as may be agreed upon in writing by Seller
and Buyer (the "Closing Date"). The sale and purchase under this Agreement
shall, contingent upon the completion of the Closing, be effective as of 12:01
a.m. on July 1, 1997 (the
14
"Effective Time"), and all transactions with respect to the Business after the
Effective Time shall be for Buyer's benefit.
4.2 Actions to be Taken at the Closing. At the Closing, the parties
will take all of the following actions and deliver all of the following
documents:
(a) Seller will deliver to Buyer the following documents, in
each case in a form acceptable to Buyer in its sole discretion:
(i) a Bill of Sale with respect to the tangible
Purchased Assets, transferring to Buyer good
and marketable title in and to such
Purchased Assets, free and clear of all
Encumbrances and other matters except for
the Permitted Encumbrances applicable
thereto;
(ii) an assignment of Accounts Receivable to
Buyer and all collateral securing any or all
of such Accounts Receivable;
(iii) assignments of all of Seller's rights under
the Third Party Leases;
(iv) assignments of all of Seller's rights under
the Leases and Contracts;
(v) assignments of all of the other Purchased
Assets;
(vi) estoppel certificates and consents to
assignment signed by each party (other than
Seller) with respect to each of the Third
Party Leases and the Leases and Contracts
that Buyer is taking by assignment under the
terms of this Agreement;
(vii) the closing statement signed by Seller;
(viii) certificates issued by the Comptroller of
Public Accounts of the State of Texas to the
effect that Seller is in good standing with
respect to the payment of franchise, sales
and use taxes in the State of Texas;
(ix) certificates that Seller is authorized to
transact business in the States of Colorado,
Indiana, Iowa and Virginia;
(x) certificates issued by the Department of
Revenue of the States of Colorado, Indiana,
Iowa and Virginia to the effect that
15
Seller is in good standing with respect to
the payment of franchise, income, sales and
use taxes in the respective states;
(xi) Seller's "dba's" or fictitious names in the
States of Colorado, Indiana, Iowa and
Virginia;
(xii) certificates of title for each of the motor
vehicles included in the Purchased Assets
duly assigned to Buyer, together with
appropriate applications to transfer title
thereto to Buyer, duly executed by Seller
and accompanied by funds to pay the
applicable sales and transfer taxes and fees
(except for Buyer's Sales Tax Portion);
(xiii) such other instruments, documents and papers
to transfer and vest in Buyer good and
marketable title in and to the Purchased
Assets free and clear of all Encumbrances
except for the Permitted Encumbrances
applicable thereto.
(b) Seller will give Buyer exclusive possession
of the Purchased Assets.
(c) Buyer will pay the Closing Cash Amount and deliver to
Seller the Promissory Note and Security Agreement in accordance with
Section 2.1.
(d) Buyer will pay the Broker Contribution in accordance with
Section 2.1.
(e) Buyer will deliver to Seller the closing statement signed
by Buyer.
(f) Buyer and Shareholder shall enter into the J.E. Helzer
Employment Agreement.
(g) Shareholder (or Shareholder and Mrs. Helzer), as the case
may be, and Buyer shall enter into each of the Shareholder Leases.
(h) Seller, Shareholder, and Mrs. Helzer, on the one hand, and
Buyer, on the other hand, shall take such other actions and shall
execute and deliver such other instruments, documents and certificates
as are required by the terms of this Agreement or as may be reasonably
requested by the other party or parties in connection with the
consummation of the transactions contemplated by this Agreement.
4.3 Adjustments to Purchase Price. The Purchase Price shall be subject
to the following credits and adjustments, which shall be reflected in the
closing statements to be executed and delivered by Buyer and Seller as
hereinabove provided:
(a) Prorations as to Assumed Liabilities. Any rents and fees
with respect to the Assumed Liabilities will be prorated as of June 30,
1997. Seller will assign to Buyer all
16
unused deposits with respect to the Assumed Liabilities and will
receive a credit in the amount thereof with respect to the Purchase
Price
(b) Prorations as to Insurance Policies. All premiums with
respect to the Business Insurance Policies and the Assigned Life
Insurance Policy will be prorated as of June 30, 1997.
(c) Ad Valorem Taxes. Ad valorem real and tangible personal
property taxes with respect to the Purchased Assets for the calendar
year in which the Closing occurs shall be prorated between Seller and
Buyer as of June 30, 1997 on the basis of no applicable discount. If
the amount of such taxes with respect to any of the Purchased Assets
for the calendar year in which the Closing occurs has not been
determined as of June 30, 1997, then the taxes with respect to such
Purchased Assets for the preceding calendar year, on the basis of no
applicable discount, shall be used to calculate such prorations, with
known changes in valuation or millage being applied. The prorated taxes
shall be an adjustment to the amount of cash due from Buyer at the
Closing. In the event the actual amount of any of such taxes should
vary by more than One Hundred Dollars ($100.00) from estimates used at
the Closing to prorate such taxes, then the parties shall re-prorate
such taxes within ten (10) days following request by either party based
on the actual amount of the relevant tax bill.
(d) Special Assessments. Seller shall, on its closing
statement, be charged an amount equal to the amount of all unpaid
certified, confirmed and ratified special assessment liens with respect
to each of the Leased Premises (if such assessments are the obligation
of the tenant under the applicable lease) as of June 30, 1997 and, in
the case of pending liens with respect to a parcel or the Leased
Premises (if such liens would be the obligation of the tenant under the
applicable lease), an amount equal to the last estimate by the public
body of the assessment.
5. Representations and Warranties of Seller and Shareholder. Seller, Shareholder
and Mrs. Helzer, jointly and severally, represent and warrant to Buyer, as of
the Closing Date, as follows:
5.1 Organization. Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas. Seller has
full power to own its assets and to conduct its business as presently conducted.
Seller is duly authorized, qualified or licensed to do business and is in good
standing as a foreign corporation in the States of Colorado, Indiana, Iowa and
Virginia and in each other state or jurisdiction in which any of the Purchased
Assets are located or Seller conducts its business or operations.
5.2 Authority. Seller has all requisite power and authority to execute
and enter into this Agreement and all other agreements and instruments
contemplated hereby to be executed and delivered by Seller at the Closing (the
"Seller Documents") and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by Seller of this Agreement and the Seller
Documents have been duly authorized by all necessary action, corporate or
otherwise, by Seller and its stockholders. This Agreement has been duly executed
and delivered by Seller, Shareholder and
17
Mrs. Helzer and is the legal, valid and binding agreement of Seller, Shareholder
and Mrs. Helzer, enforceable against Seller, Shareholder and Mrs. Helzer,
respectively, in accordance with its terms. The Seller Documents will be, when
executed and delivered by Seller, the legal, valid and binding agreements of
Seller enforceable against Seller in accordance with their respective terms.
5.3 Title and Condition.
(a) The Purchased Assets are owned solely by Seller, and
Seller has good, assignable and marketable title to the Purchased Assets.
Attached to this Agreement as Schedule 5.3(a) is a true, correct and complete
list of Seller's creditors including, without limitation, its secured
creditors and other creditors having liens on any of its assets. At the
Closing, Buyer shall receive from Seller good, assignable and marketable
title to the Purchased Assets, free and clear of any and all Encumbrances
other than the Permitted Encumbrances.
(b) Except as set forth in Schedule 5.3.(b) hereto, the
tangible Purchased Assets (excluding, for purposes of this Section 5.3, the
Inventory) are in good condition and repair, ordinary wear and tear excepted.
There are no patent or latent defects regarding the Purchased Assets or the
Leased Premises, or any portion thereof, including, without limitation,
burial grounds, archaeological deposits, sink holes, or other on-site
conditions which could reduce the fair market value thereof.
5.4 Purchased Assets. The Purchased Assets constitute all of the assets
and properties owned by Seller that are used or useful in connection with the
Business.
5.5 No Violation. Neither the execution or delivery of this Agreement
or any of the Seller Documents nor, subject to required consents and approvals
of third parties described in Schedule 5.5, the consummation of the transactions
contemplated hereby or thereby, including, without limitation, the transfer and
assignment of the Purchased Assets to Buyer, will conflict with or result in the
breach of any term or provision of, or constitute a default under, or result in
the creation of, any Encumbrances upon any of the Purchased Assets pursuant to,
or give any third party the right to accelerate any obligation under, any
article provision, bylaw, agreement, contract, lease, indenture, deed of trust,
instrument, order, law or regulation to which Seller is a party or by which
Seller or any of the Purchased Assets is in any way bound or obligated.
5.6 Government Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration of filing with, any
governmental authority is required on the part of Seller, Shareholder or Mrs.
Helzer in connection with the transactions contemplated by this Agreement.
5.7 Financial Statements and Condition. Seller has delivered to
Buyer:
(a) the audited balance sheets of Seller as at December 31 in
each of the years 1994 and 1995, and the related audited statements of
income and retained earnings, and cash flows for each of the years then
ended, including, without limitation, the notes thereto, together with
the report thereon of W&M (the "1994 and 1995 Financial Statements");
18
(b) an audited balance sheet of Seller as at December 31, 1996
(including the notes thereto, the "Balance Sheet"), and the related
audited statements of income and retained earnings, and cash flows. for
the year then ended, including, without limitation, the notes thereto,
together with the report thereon of W&M (the "1996 Financial
Statements"); and
(c) an unaudited balance sheet of Seller at May 31, 1997 (the
"Interim Balance Sheet") and the related unaudited statements of income
and retained earnings for the five months then ended (the "Interim
Financial Statements").
Each of the financial statements described in this Section, and the notes
thereto, fairly present the financial condition, the results of operations, and
the cash flows of Seller as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP, subject,
in the case of the Interim Financial Statements, to normal recurring year-end
adjustments (the effect of which will not, individually or in the aggregate, be
material) and the absence of notes (that, if presented, would not differ
materially from those included in the Balance Sheet). The financial statements
referred to in this Section 5.7 reflect the consistent application of GAAP
throughout the periods involved, except as disclosed in the notes to such
financial statements. No financial statements of any entity other than Seller
are required by GAAP to be included in the financial statements of Seller.
Seller has Acquired Net Assets of not less than Thirteen Million Seven
Hundred Twenty-Six Thousand Dollars ($13,726,000.00), taking into account, for
such purposes, reserves against Accounts Receivable of Six Hundred Thousand
Dollars ($600,000.00).
5.8 Absence of Material Adverse Change. Except as set forth on Schedule
5.8 hereto, since December 31, 1996, there has not been:
(a) any material adverse change in the financial condition,
results of operations, business, business prospects, personnel, assets
or liabilities (contingent or otherwise) of Seller;
(b) any dividend declared or paid or distribution made on
Seller's capital stock, or any redemption or repurchase of Seller's
capital stock;
(c) any increase in salary or wages, or payment of any bonus,
commission or other compensation to any of the officers, directors,
employees or agents of Seller;
(d) any pending or threatened labor disputes or other labor
problems relating to any employees of Seller;
(e) any default (including, without limitation, any event
that, with the giving of notice or passage of time, or otherwise, would
cause a default), termination or threatened termination under or
amendment to any agreement, contract, lease, instrument or license to
which Seller is a party or that is applicable to any portion of the
Purchased Assets;
19
(f) any casualty loss, theft, damage or destruction of any of
the Purchased Assets which has resulted, either singly or in the
aggregate, in a loss of Five Thousand Dollars ($5,000.00) or more,
whether or not covered by insurance;
(g) any condemnation or eminent domain proceeding and, to the
knowledge of Seller or Shareholder, there has been no threatened
condemnation or eminent domain proceeding affecting any of the
Purchased Assets or the Leased Premises;
(h) any sale, assignment or transfer of any assets of Seller,
except in the ordinary course of Seller's business and consistent with
its past practices;
(i) any waiver by Seller of any material rights related to
Seller or any of the Purchased Assets;
(j) any other transactions, agreements, contracts or
commitments entered into by Seller or Shareholder affecting Seller or
any of the Purchased Assets, except in the ordinary course of Seller's
business and consistent with its past practices; or
(k) any agreement or understanding to do or resulting in any
of the foregoing.
5.9 Litigation: Investigations. Schedule 5.9 hereto contains:
(a) a detailed description of all pending (or, to the
knowledge of Seller or Shareholder, threatened) lawsuits, claims,
administrative charges, complaints, proceedings or investigations by
any person or governmental authority against or relating to Seller or
any of the Purchased Assets or to which Seller or any of the Purchased
Assets is subject;
(b) any judgment, order, writ, injunction or decree to which
Seller is subject, or relating to any of the Purchased Assets or the
business or operations of Seller; and
(c) a detailed description of all lawsuits, claims,
administrative proceedings or investigations pending (or, to the
knowledge of Seller or Shareholder, threatened), within the preceding
four (4) years, against Seller, with respect to any of the Purchased
Assets or the businesses or operations of Seller.
5.10 Compliance with Laws and Other Requirements. Seller complies
with and has at all times complied with, and the Purchased Assets and Leased
Premises and the use, operation and maintenance thereof by Seller comply with
and have at all times complied with, and neither Seller nor any of the Purchased
Assets and Leased Premises nor the use, operation or maintenance thereof by
Seller is in violation or contravention of, any applicable (including, without
limitation, any tax, environmental, health, safety or employment) statute, law,
ordinance, decree, order, rule or regulation of any governmental or
administrative or quasi-governmental authority, agency or body.
20
(a) Notices of Violation. Notices received by Seller during
the last four (4) years from any governmental agency or body claiming
any such violation or contravention are fully described in Schedule
5.10(a) to this Agreement. Except as set forth in Section 5.10(a),
there are no agreements with, or commitments to, any governmental,
administrative, or quasi-governmental authority, agency or body
affecting or binding on Seller, or with respect to the Purchased Assets
or Leased Premises, in any manner. Except as described in Schedule
5.10(a), there is no proposal pending or threatened for public
improvement, assessment, paving agreement, road expansion or
improvement agreement, utility moratorium, use moratorium, improvement
moratorium, or legal, administrative, or other proceeding or
governmental investigation or requirement, formal or informal, pending
or, to the knowledge of Seller or Shareholder, threatened which affects
or may affect the Purchased Assets or the Leased Premises, or which
adversely affects or may affect Seller's ability to perform hereunder,
or other charge or expense upon or related to the Purchased Assets or
the Leased Premises.
(b) Taxes/Assessments. Except as set forth in Schedule
5.10(b), there are no taxes, fees, or assessments of any kind or nature
whatsoever which are presently due or, to the knowledge of Seller or
Shareholder, which will or may become due with respect to the Purchased
Assets or Leased Premises except for ad valorem real property taxes for
the current calendar year which are not yet due and payable. None of
the Leased Premises, nor any portion thereof, is within a "special
assessment district" and, to the knowledge of Seller or Shareholder, no
application has been made or submitted by anyone for the creation
thereof or annexation thereby which affects or may affect any of the
Leased Premises.
(c) Zoning and Land Use Laws. Each of the Leased Premises has
the appropriate zoning and other land use classifications, licenses,
permits and authorizations for the current use being made thereof by
Seller. There are no laws, rules, regulations or ordinances or
modifications with respect to zoning or land use in effect or, to the
knowledge of Seller or Shareholder, proposed, which restrict or
prevent, or will restrict or prevent, the use of the Purchased Assets
or Leased Premises in substantially the same manner as such Purchased
Assets or Leased Premises, as the case may be, are currently being used
by Seller ("Buyer's Intended Use"); and, further, none of the parcels
comprising the Leased Premises constitutes any non-conforming use.
(d) Adverse Restrictions and Rights. There are no existing
easements, rights-of-way, or restrictions other than existing zoning
and government regulations affecting the Leased Premises which could
adversely affect or prohibit the use of any of the Leased Premises for
Buyer's Intended Use.
(e) Third-Party Rights/Encumbrances. No party other than Buyer
has any right or option to acquire the Purchased Assets or any portion
thereof.
(f) Environmental Compliance. Except as set forth in Schedule
5.10(f) hereto, (i) none of the real property owned, leased, managed,
operated or otherwise utilized by Seller
21
is on any federal or state "Superfund" list or has ever been the site
of any activity or condition that would violate any federal, state,
local or other environmental statute, law, ordinance, decree, order,
rule or regulation, past or present, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, 42 U.S.C. ss.ss. 9601 et seq. ("CERCLA"), the Resource
Conservation and Recovery Act, 42 U.S.C. ss.ss. 6901 et seq. ("RCRA"),
the Clean Air Act, 42 U.S.C. ss.ss. 7401 et seq., the Clean Water Act
of 1977, 33 U.S.C. ss.ss. 1251 the Toxic Substances Control Act, 15
U.S.C. ss.ss. 2601 et seq., or any other federal, state, or local laws
relating to air pollution, water pollution, noise control, or the
handling, discharge, disposal, or recovery, either on-site or off-site
(collectively referred to as "Environmental Laws"), of any toxic or
hazardous materials, substances, wastes or other contaminants
(including, without limitation, biohazardous waste), petroleum products
or their derivatives (collectively referred to as "Pollutants"); (ii)
no Pollutants have been handled, stored, recycled, or disposed of or
leaked or spilled on, or have otherwise contaminated, any of the Leased
Premises, or any other real property currently or previously owned,
leased or used by Seller, or would give rise to a cleanup or
remediation obligation under or threatened violation of any such
Environmental Law; (iii) the improvements on the Leased Premises
contain no asbestos-containing materials; (iv) no electrical
transformers, fluorescent light fixtures with ballast or other
equipment containing PCB's are or were located in the Leased Premises
at any time during or prior to Seller's use thereof; (v) none of the
Leased Premises has been used as a landfill; (vi) there are no
incinerators, above or below ground storage tanks, septic tanks or
cesspools on any of the Leased Premises; and (vii) Seller has not
arranged for the disposal of any Pollutant off the Leased Premises
which would subject Seller or Buyer to liability under any
Environmental Laws.
(g) Waste Disposal. Seller has disposed of all toxic or
hazardous waste in compliance with the Environmental Laws.
(h) Licenses. There are no proceedings or investigations
pending or, to the knowledge of Seller or Shareholder, threatened, that
could result in a termination, revocation, suspension or probation with
respect to any of Seller's licenses, permits or authorizations.
5.11 Certain Contracts. The following Schedules to this Agreement
contain true, correct and complete copies of the following agreements,
contracts, leases, instruments, arrangements and commitments (and all
amendments, supplements and modifications thereto) (and, where indicated below,
detailed descriptions of the terms of unwritten agreements, contracts, leases,
instruments, arrangements, and commitments) relating to Seller or by which
Seller or any of the Purchased Assets is in any way bound or obligated:
(a) all supply agreements, contracts or arrangements
(Schedule 5.11(a)),
(b) all real estate leases relating to property owned,
occupied or utilized by Seller (the "Real Estate Leases") (Schedule
5.11(b));
22
(c) all equipment leases relating to equipment utilized by
Seller (the "Equipment Leases") (Schedule 5.11(c));
(d) all agreements with any present director, officer,
employee, agent, representative or affiliate of Seller (Schedule
5.11(d)),
(e) all insurance policies relating to the Purchased Assets,
the Leased Premises, or the Business and the Assigned Life Insurance
Policy (all of which policies are in full force and effect) (Schedule
5.11(e).
(f) all profit-sharing, pension, stock option, severance,
retirement, bonus, deferred compensation, group life and health
insurance or other employee benefit plans, trusts, agreements and
arrangements, personnel policies, and employee handbooks, whether or
not legally binding, covering or provided to any employees of Seller
(Schedule 5.11(f));
(g) all other agreements, contracts, leases, instruments,
arrangements and commitments relating to or affecting Seller or the
Purchased Assets or any interest therein that are not otherwise
disclosed in the above-referenced Schedules (Schedule 5.11(g)); and
(h) detailed descriptions of the terms of any unwritten
agreements, contracts, leases, instruments, arrangements, or
commitments and a list of proposed agreements, contracts, leases,
instruments, arrangements, or commitments (Schedule 5.11(h)).
All of such agreements, contracts, leases, instruments, arrangements,
and commitments referred to above are valid, binding and in full force and
effect and enforceable in accordance with their respective terms and conditions.
Seller has performed all obligations to be performed by it under all such
agreements, contracts, leases, instruments, arrangements and commitments, and
there is no existing default or event of default or event that, with notice or
lapse of time or both, would constitute a default thereunder. There has been no
termination or threatened termination or notice of default under any such
agreement, contract, lease, instrument, arrangement or commitment.
5.12 Employees. Schedule 5.12 hereto contains a true, correct and
complete listing of all of the current employees of Seller, their current
respective positions or job classifications, and their current respective wage
scales or salaries, as the case may be, and other compensation and benefits.
Schedule 5.12 also contains Seller's unemployment tax rate.
5.13 Employee Benefit Plans. Buyer shall not be subject to any
liability with respect to, or resulting from the termination by Seller of any of
its employees from, any profit-sharing, 401 (k), pension, stock option, vacation
pay, sick pay, personal leave, severance pay, retirement, bonus, deferred
compensation, group life and health insurance or other employee benefit plan,
agreement or commitment of Seller ("Benefit Plan") (except to the extent
otherwise expressly provided in Section 1.3), whether or not legally binding, or
resulting from the employment by Buyer of any such employee, and Buyer shall not
be responsible for any liability whatsoever under any such Benefit
23
Plan. Seller does not contribute or have an obligation to contribute to any
multi-employer plan within the meaning of Section 3(37) or 400(a)(3) of ERISA on
behalf of Seller's employees.
5.14 Labor Matters. Except as set forth in Schedule 5.14 hereto:
(a) Seller has no collective bargaining, union or labor
agreements, contracts or other arrangements with any group of
employees, labor union or employee representatives;
(b) Neither Seller nor Shareholder has any knowledge of any
organization effort currently being made or threatened by or on behalf
of any labor union with respect to employees of Seller;
(c) there are no labor controversies, strikes, work stoppages
or slowdowns pending or, to the knowledge of Seller or Shareholder,
threatened, against Seller;
(d) there is no written or oral contract with any of Seller's
employees that cannot be terminated without liability; and
(e) there are no pending or, to the knowledge of Seller or
Shareholder, threatened, lawsuits, proceedings or claims against Seller
by any employees or former employees of Seller with respect to
employment matters of any kind.
5.15 Intangible Rights. Schedule 5.15 contains a list and copy of all
intangible property relating to the Purchased Assets or Seller or owned by,
licensed by or licensed to Seller, or in which Seller otherwise claims a right,
including, without limitation, all trademarks, service marks, trade names,
assumed names, "dba's", fictitious names and registrations or applications
therefor, and trade secrets (collectively, the "Intangible Rights"). Any
registrations or applications for the trademarks, service marks, trade names,
brand names and copyrights set forth in Schedule 5.15 are in Seller's name only.
Seller owns and has the right to use all franchises, trademarks, service marks,
assumed names, "dba's", fictitious names, and trade names set forth on Schedule
5.15 in the geographic areas in which such marks and names are currently being
used. Neither any portion of the Intangible Rights nor Seller's ownership or use
thereof infringes on the property rights of any other person nor, to the
knowledge of Seller or Shareholder, do the rights of any other person infringe
on any of the Intangible Rights. No claim, demand or allegations of infringement
relating to the ownership or use of any of the Intangible Rights set forth in
Schedule 5.15 has been received by Seller or Shareholder or, to the knowledge of
Seller or Shareholder, made by any person. Seller has no assumed names in the
State of Texas or any of its counties.
5.16 Insurance.
(a) Except as disclosed in Schedule 5.16, there are no pending
claims under any of the policies required to be described in Schedule
5.11(e), and no events have occurred which would give rise to a right
to pursue a claim under any such policy or arrangement.
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(b) There are no outstanding requirements or recommendations
which have been communicated to Seller by any current insurer or
underwriter with respect to Seller's assets or the Business or
otherwise which requires or recommends changes in the conduct of the
Business or requires or recommends any changes, repairs or other work
to be done with respect to the Business or any of Seller's assets.
(c) Seller has not received (i) any refusal of insurance
coverage or any notice that a defense will be afforded under a
reservation of rights, or (ii) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of any policy is not
willing or able to perform its obligations thereunder.
(d) Seller has paid all premiums due, and has otherwise
performed all of its obligations, under (i) each Business Insurance
Policy to which Seller is a party or that provides coverage to Seller,
and (ii) the Assigned Life Insurance Policy.
(e) To Seller's and Shareholder's knowledge, Seller has given
notice to the insurer of all claims that may be insured thereby.
(f) Seller has no self-insurance plans or arrangements in
effect.
5.17 Shareholder: and Interests in Competitors. Shareholder owns all of
the issued and outstanding shares of stock of Seller and no other person or
entity has any rights in or option to acquire any shares of stock, warrants or
other equity interests in Seller or to exercise voting or other rights as to any
of Seller's shares of stock. Except for beneficial ownership of not more than 5%
of the outstanding equity securities of publicly-held companies, and except as
set forth in Schedule 5.17 hereto, neither Seller nor Shareholder, nor Mrs.
Helzer, nor any member of the immediate family of Shareholder or Mrs. Helzer,
nor any officer or director of Seller, nor any person or entity controlling,
controlled by or under common control with Seller or Shareholder owns, directly
or indirectly, an interest in any person or entity that is a competitor,
customer, supplier or landlord of Seller or that otherwise has business dealings
with Seller.
5.18 Taxes. Seller has: (a) filed, when due, with all applicable
governmental agencies, all tax returns, estimates, reports and statements
required to be filed by it, all of which are true and correct; and (b) paid all
taxes required to be paid by it as reflected on such returns, estimates, reports
or statements, or otherwise required to be paid by Seller, including, without
limitation, all income, sales, use, property and transfer taxes, levies, duties,
licenses, registration fees and charges of any nature whatsoever and worker's
compensation and unemployment taxes, and including, without limitation, all
additions or additional amounts thereto, and interest and penalties thereon.
Seller has withheld all taxes required to be withheld under applicable tax laws
and regulations, and such withholdings have either been paid, when due, to the
respective governmental agencies or have been properly set aside in accounts for
such purposes and will be paid, when due, to the applicable governmental
agencies.
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5.19 No Other Agreements. Neither Seller, Shareholder nor Mrs. Helzer
has entered into any agreement, commitment or understanding with any other
person with respect to the sale, transfer, lease or other disposition of all or
any portion of the Purchased Assets (except for sales, transfers or leases in
the ordinary course of Seller's business and consistent with its past practices)
or with respect to a sale, encumbrance or transfer of any stock of Seller.
5.20 Accounts Receivable.
(a) All Accounts Receivable of Seller that are reflected on
the Balance Sheet or the Interim Balance Sheet (except to the extent of
collections thereof) represent, and all Accounts Receivable that will
be reflected on the accounting records of Seller as of June 30, 1997,
will represent, valid obligations in favor of Seller arising from sales
actually made by the Seller in the ordinary course of the Business.
Unless paid prior to the Closing Date, the Accounts Receivable (other
than those of the Special Account Debtors, as to which no
representation or warranty as to collectibility is given) (the "Other
Accounts Receivables") will be as of the Closing Date collectible net
of the reserves with respect to the Other Accounts Receivables shown on
the Closing Balance Sheet. Subject to such reserves, each of the Other
Accounts Receivable will be collected in full, without any set-off, in
the ordinary course. Except as provided in Schedule 5.20(a), there is
no contest, claim, or right of set-off, or, to the best of Seller's and
Shareholder's knowledge, any threatened contest, claim or right of
set-off, or circumstances that with notice, the lapse of time or both,
could result in such a contest, claim or right of set-off (other than
with respect to returns of merchandise in the ordinary course of the
Business), with respect to any Account Receivable or under any contract
with any obligor of an Account Receivable.
(b) Schedule 5.20(b) contains a complete and accurate list of
all Accounts Receivable of Seller as of June 30, 1997, which list sets
forth the aging of such Accounts Receivable and describes any
collateral that secures payment of any Accounts Receivable.
(c) Except as provided in Schedule 5.20(c), no account debtor
has withheld payment or threatened to withhold payment of any Account
Receivable and, to the best of Seller's and Shareholder's knowledge,
none of Seller's account debtors is insolvent or has filed or had filed
against it a petition in bankruptcy or similar petition and, to the
best of Seller's and Shareholder's knowledge, there are no
circumstances that could lead to such insolvency or bankruptcy filing
or similar petition.
5.21 Inventory. All Inventory of Seller, whether or not reflected in
the Balance Sheet or the Interim Balance Sheet consists of a quality and
quantity usable and salable in the ordinary course of the Business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Balance Sheet, the
Interim Balance Sheet and on the accounting records of Seller as of June 30,
1997, as the case may be. All Inventory not written off has been valued on
Seller's books and records at Seller's net cost, which does not exceed net
realizable value on a first in, first out basis. The quantities of each item of
the Inventory are reasonable with respect to the needs of the Business.
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5.22 No Undisclosed Liabilities. Except for the Assumed Liabilities,
Seller has no liabilities or obligations of any nature (whether known or unknown
and whether absolute, accrued, contingent, or otherwise) for which Buyer will or
could be liable.
5.23 Solvency. Seller is not now insolvent, and will not be rendered
insolvent by any of the transactions contemplated by this Agreement. In
addition, immediately after giving effect to the consummation of the
transactions contemplated by this Agreement (a) Seller will be able to pay its
debts as they become due, (b) the property of Seller does not and will not
constitute unreasonably small capital, and Seller will not have unreasonably
small capital and will not have insufficient capital with which to conduct its
present or proposed business, and (c) taking into account all pending and
threatened litigation, final judgments against Seller in actions for money
damages are not reasonably anticipated to be rendered at a time when, or in
amounts such that, Seller will be unable to satisfy any such judgments promptly
in accordance with their terms (taking into account the maximum probable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered) as well as all other obligations of Seller.
The cash available to Seller, after taking into account all other anticipated
uses of the cash of Seller, will be sufficient to pay all such judgments
promptly in accordance with their terms. For purposes of this Section,
"insolvent" means that the sum of the present fair saleable value of Seller's
assets does not and will not exceed its debts and other probable liabilities,
and the term "debts" includes any legal liability of Seller, whether matured or
unmatured, liquid or unliquidated, absolute, fixed or contingent, disputed or
undisputed or secured or unsecured.
5.24 No Misrepresentations. The representations, warranties and
statements made by Seller, Shareholder and Mrs. Helzer in or pursuant to this
Agreement and the Exhibits and Schedules hereto are true, complete and correct
in all respects and do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make any such representation,
warranty or statement, under the circumstances in which it was made, not
misleading. Seller and Shareholder have disclosed to Buyer all material events,
conditions or facts known to either or both of them that affect the condition
(financial or otherwise), business or prospects of Seller. None of the
information supplied or to be supplied by Seller or Shareholder for inclusion in
any registration statement (or any amendments thereto) to be filed with the
Securities and Exchange Commission (the "SEC") by Buyer or any of its affiliates
under the Securities Act of 1933 (the "Securities Act") or the Securities
Exchange Act of 1934 (the "Exchange Act") in connection with Seller,
Shareholder, the Acquired Business or the transactions contemplated by this
Agreement (for purposes of this Section and Section 8.11, the "Registration
Statement"), or any other document to be filed with any regulatory authority in
connection with Seller, Shareholder, the Acquired Business or the transactions
contemplated hereby will, when any such Registration Statement becomes effective
or any such other document is filed, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein not misleading.
6. Representations and Warranties of Buyer. Buyer represents and warrants to
Seller, as of the Closing Date, as follows:
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6.1 Organization. Buyer is a corporation duly organized, validly
existing and with active status under the laws of the State of Delaware. Buyer
has full power to own its properties and to conduct its business as presently
conducted.
6.2 Authority. Buyer has all requisite corporate power and authority to
execute and enter into this Agreement and all other agreements and instruments
contemplated hereby to be executed and delivered by Buyer (the "Buyer
Documents") and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by Buyer of this Agreement and the Buyer
Documents have been duly authorized by all necessary action, corporate or
otherwise, by Buyer, and this Agreement has been duly executed and delivered and
is, and the Buyer Documents will be, when executed and delivered by Buyer, the
legal, valid and binding agreements of Buyer, enforceable against Buyer in
accordance with their respective terms, except to the extent that the same may
be limited by insolvency, bankruptcy, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
6.3 No Violation. Neither the execution or delivery of this Agreement
or any of the Buyer Documents nor the consummation of the transactions
contemplated hereby or thereby conflict with or result in the breach of any term
or provision of, or constitute a default under, or give any third party the
right to accelerate any obligation under, any charter provision, bylaw,
agreement, contract, lease, indenture, deed of trust, instrument, order, law, or
regulation to which Buyer is a party or by which Buyer or any of its assets or
properties is in any way bound or obligated.
7. Seller's Covenants. Seller covenants and agrees as follows, and Shareholder
covenants to cause Seller to perform such covenants and agreements (all of which
covenants and agreements by Seller and Shareholder shall be conditions to
Buyer's obligations hereunder):
7.1 Conduct of Business. Prior to the Closing, Seller shall (and
Shareholder shall cause Seller to):
(a) operate in the ordinary course of its business and
consistent with its current methods of transacting business and past
practices;
(b) use its best efforts to preserve its goodwill and the
goodwill of its customers, franchisors, lessors, suppliers, employees,
tenants, governmental authorities and others having dealings with
Seller;
(c) maintain its books of account and records in the usual,
regular and ordinary manner and consistent with its past practices, and
furnish Buyer with a copy of each of Seller's monthly unaudited
financial statements within ten (10) business days after the end of the
calendar month to which such financial statements relate;
(d) maintain all licenses, permits, authorizations,
certificates, qualifications, registrations and other governmental
approvals that are required for Seller to carry on its business in good
standing;
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(e) make capital expenditures and other expenditures necessary
for the maintenance of the Purchased Assets and the Business;
(f) maintain all existing insurance policies and surety bonds,
letters of credit, guaranties and similar instruments and commitments
now in place for the benefit of Seller, the Business or the Purchased
Assets;
(g) not assume or incur any liabilities or obligations not in
the ordinary course of its business; and
(h) not, other than in the ordinary course of Seller's
business and consistent with its prior practices, increase the salary,
wages, bonus, commission or other compensation of any officer,
director, employee, agent or representative of Seller or enter into or
amend in any material respect any profit-sharing, pension, stock
option, vacation pay, sick pay, personal leave, severance, retirement,
bonus, deferred compensation, group life and health insurance or other
employee benefit or employee benefit plan, trust agreement or
arrangement affecting any such person, or any compensation, separation
or consultation agreement with any such person.
7.2 Fulfillment of Conditions. Seller shall take (and Shareholder shall
cause Seller to take) all reasonable steps (including, without limitation, the
payment of reasonable fees and expenses related thereto) that are within its
power to cause to be fulfilled the conditions precedent to Buyer's, Seller's or
Shareholder's obligations to consummate the transactions contemplated hereby.
Neither Seller nor Shareholder shall take any action that would cause the
conditions to the obligations of the parties to effect the transactions
contemplated hereby not to be fulfilled including, without limitation, taking or
causing to be taken any action that would cause the representations and
warranties made by Seller, Shareholder and Mrs. Helzer herein not to be true,
correct and accurate in all material respects as of the Closing.
7.3 Access and Information. Seller shall permit Buyer and its
authorized representatives to have reasonable access, during normal business
hours, to:
(a) Seller's assets and all its books, records and documents
of or relating to Seller and its assets, liabilities and obligations,
and Seller shall furnish to Buyer such information, financial records
and other documents with respect to Seller's assets, liabilities and
obligations and Seller's operations and business as Buyer shall
reasonably request; and
(b) Seller's officers, directors, employees, agents,
accountants, auditors, franchisors, lessors, customers and suppliers,
for consultation or verification of any information obtained by Buyer,
and Seller shall use reasonable efforts to cause such persons or
entities to cooperate with Buyer in such consultation and in verifying
such information.
Notwithstanding the foregoing, Buyer shall be entitled to rely on the
representations and warranties of Seller, Shareholder and Mrs. Helzer as if no
investigation had been made.
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7.4 Legal or Governmental Actions. If Seller is notified of any legal
or governmental or administrative act or proceeding instituted against or with
respect to Seller, the Purchased Assets, the Leased Premises, or any portion
thereof prior to the Closing, Seller shall promptly give notice thereof to
Buyer.
7.5 Update of Representations and Warranties. Between the date of this
Agreement and the Closing Date' Seller shall give notice to Buyer promptly upon
Seller's or Shareholders becoming aware of (a) any inaccuracy of a
representation or warranty set forth in Section 5 or in any Schedule hereto, or
(b) any event or state of facts that, if it had occurred or existed on or prior
to the date of this Agreement, would have caused any such representation or
warranty to be inaccurate, and any such notice shall describe such inaccuracy,
event or state of facts in detail.
7.6 COBRA and HIPAA Compliance. Sellers shall comply fully with the
provisions of the Consolidated Omnibus Budget Reconciliation Act ("COBRA") and
the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") with
respect to Seller's employees whose employment with Seller will terminate in
connection with the transactions under this Agreement.
7.7 Payment of Liabilities. Seller shall pay or otherwise satisfy in
the ordinary course all of Seller's trade payables and shall fully pay or
otherwise satisfy all other claims or liabilities relating to the assets of the
Business incurred through June 30, 1997, other than the Assumed Liabilities.
7.8 Change of Seller's Name. Immediately following the Closing, Seller
shall change its name to a name which does not include "JEH " and is otherwise
not confusingly similar to Buyer's current name or "JEH/Eagle Supply, Inc."
8. Conditions to Obligations of Buyer. The obligations of Buyer under this
Agreement are subject to the satisfaction at or prior to the Closing of the
following conditions, but compliance with any of such conditions may be waived
by Buyer in writing:
8.1 Representations and Warranties True; and Conditions Satisfied. All
representations and warranties of Seller and Shareholder contained in this
Agreement (including, without limitation, the Schedules hereto) (without giving
effect to any updating or corrective information furnished pursuant to Section
7.5 of this Agreement or otherwise), shall be true and correct in all material
respects at and as of the Closing with the same effect as though such
representations and warranties were made at and as of the Closing; Seller and
Shareholder shall have performed and complied with all of the covenants and
agreements and satisfied all of the conditions required by this Agreement to be
performed, complied with or satisfied by either or both of them at or prior to
the Closing; and Buyer shall have received certificates to the foregoing effect
from the President of Seller and from Shareholder.
8.2 Litigation. There shall be no pending or threatened litigation in
any court or any proceeding before or by any administrative or governmental
authority to restrain or prohibit or obtain damages or other relief with respect
to this Agreement or the consummation of the transactions
30
contemplated hereby or as a result of which Buyer could be deprived of any of
the material benefits of the transactions contemplated hereby.
8.3 Closing Documents. Seller shall have executed and delivered the
documents and items required of Seller in Section 4.2;
8.4 Miscellaneous Consents. Seller shall have secured all contractual
and other third-party consents required in connection with the transactions
contemplated by this Agreement in form and substance satisfactory to Buyer.
8.5 Employees. Buyer shall have hired such of Seller's employees as
Buyer may desire, in its sole discretion, to hire.
8.6 Exclusive Possession. Seller shall have delivered to Buyer
exclusive possession of the Purchased Assets, the Leased Premises and the
equipment described in the Leases and Contracts.
8.7 Licenses and Consents. Buyer shall have secured all necessary
governmental certificates, approvals, consents and authorizations to purchase
the Purchased Assets and to operate the Purchased Assets and the Leased Premises
for Buyer's Intended Use.
8.8 Acquisition Review. The results of Buyer's investigation of Seller,
the Business, the Purchased Assets, the Leased Premises, Seller's operations and
financial condition shall be acceptable to Buyer in its sole discretion.
8.9 Minimum Acquired Net Assets. Seller and Shareholder shall have
delivered to Buyer a certificate stating that as of the Closing Date, Seller has
Acquired Net Assets of not less than Thirteen Million Seven Hundred Twenty-Six
Thousand Dollars ($13,726,000.00), taking into account, for such purposes,
reserves against Accounts Receivable of Six Hundred Thousand Dollars
($600,000.00).
8.10 Opinion of Counsel. Buyer shall have received an opinion letter
from counsel to Seller and Shareholder in the form attached as Exhibit 8.10.
8.11 Consent Letters. Buyer shall have received, in the form of, and
containing the terms set forth in, Exhibit 8.11, letters from Seller and W&M,
respectively, agreeing to consent to the inclusion, in any Registration
Statement, of the 1994 and 1995 Financial Statements, the 1996 Financial
Statements, the Closing Financial Statements, and the opinions of W&M with
respect thereto.
8.12 Employment Agreements. Buyer and Shareholder and E.G. Helzer shall
have entered into the J.E. Helzer Employment Agreement and the E.G. Helzer
Employment Agreement, respectively.
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9. Conditions to Obligations of Seller and Shareholder. The obligations of
Seller and Shareholder under this Agreement are subject to the satisfaction at
or prior to the Closing of the following conditions, but compliance with any of
such conditions may be waived by Seller in writing:
9.1 Representations and Warranties True; Conditions Satisfied. All
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects at and as of the Closing with the same
effect as though such representations and warranties were made at and as of the
Closing; Buyer shall have performed and complied with all the covenants and
agreements and satisfied all the conditions required by this Agreement to be
performed, complied with or satisfied by it at or prior to the Closing; and
Seller shall have received a certificate to the foregoing effect from the
President or a Vice President of Buyer.
9.2 Litigation. There shall be no pending or threatened litigation in
any court or any proceeding before or by any administrative or governmental
authority to restrain or prohibit or obtain damages or other relief with respect
to this Agreement or the consummation of the transactions contemplated hereby or
as a result of which Seller could be deprived of any of the material benefits of
the transactions contemplated hereby.
9.3 Opinion of Counsel. Seller shall have received an opinion letter
from Buyer's counsel in the form attached as Exhibit 9.3.
10. Joinder of Mrs. Helzer. Whether or not elsewhere explicitly provided in this
Agreement, each representation, warranty, covenant and agreement of Shareholder
in this Agreement shall be deemed to have been made by Shareholder and Mrs.
Helzer jointly and severally.
11. Covenant Not to Compete. Seller and Shareholder hereby, jointly and
severally, agree as follows:
11.1 Noncompetition. For a period of five (5) years following the
Effective Time, neither Seller nor Shareholder, nor any person or entity
directly or indirectly owning, owned by, controlling, controlled by or under
common ownership or control with ("Affiliates") Seller or Shareholder, shall,
directly or indirectly, on its, his or their own behalf or on behalf of any
competitor of Buyer: (a) engage (whether as owner, partner, stockholder, joint
venturer, manager, employee, investor or otherwise) in the sale, at wholesale or
retail, of any roofing materials or supplies and/or building products or
supplies (the "Restricted Business") in the counties of the State of Texas, the
States of Colorado, Indiana, Iowa and Virginia and in all other areas in which
Buyer is transacting business at June 30, 1997 or has transacted business in the
past two years (collectively, the "Market"); (b) affiliate with, or own or have
a proprietary interest of any kind in, any business or firm that owns, manages
or operates a business that sells at wholesale or retail any roofing materials
or supplies and/or building products or supplies anywhere within the Market; or
(c) alone or acting with others, employ or attempt to employ or solicit for any
employment competitive with Buyer, any of Buyer's employees who worked for
Seller prior to the Closing, or alone or acting with others, influence or seek
to influence any employee to leave Buyer's employment. Seller and Shareholder
also covenant,
32
jointly and severally, that at no time shall any or either of them disparage
Buyer, any of its affiliated entities, or any of the directors or officers of
Buyer or any of its affiliated entities.
The parties acknowledge that Shareholder's son is in the roofing
contracting business in Texas, Indiana and Virginia, and that Shareholder's
providing of advice to his son with respect to such business will not be deemed
to be a breach of this Section provided that in providing such advice,
Shareholder is not directly or indirectly engaging in the Restricted Business
anywhere within the Market during the five year period described above.
11.2 Payment for Covenants. As additional consideration to Shareholder
for his covenants under Section 11.1. Buyer shall pay at the Closing One Hundred
Dollars ($100.00) to Shareholder.
11.3 Remedies: Curtailment. Seller and Shareholder each agrees that a
breach or violation of the covenants in Section 11.1 by Seller or Shareholder
shall entitle Buyer, as a matter of right, to an injunction issued by any court
of competent jurisdiction, restraining any further or continued breach or
violation of such covenants. Such right to an injunction shall be cumulative and
in addition to, and not in lieu of, any other remedies to which Buyer may be
entitled. Further, during any period in which Seller or Shareholder is in breach
of any of such covenants, the time period of such covenant shall be extended for
an amount of time that Seller or Shareholder is in breach hereof In the event of
a breach by Seller or Shareholder of the covenants under Section 11.1, without
limiting Buyer's remedies with respect to such breach, including, without
limitation, equitable remedies, Buyer shall not be required to make, and Seller
or its designee shall have no right to receive, any further payments under
Section 2.4(a), (h) or (c).
The covenants contained in Section 11.1 will be construed as ancillary
to and independent of any other provision of this Agreement, and the existence
of any claim or cause of action of Seller or Shareholder against the Buyer or
any officer, director, or shareholder of Buyer, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Buyer of the covenants contained in Section 11.1.
The parties to this Agreement agree that the limitations contained in
Section 11.1 with respect to geographic area, duration and scope of activity are
reasonable. However, if any court shall determine that the geographic area,
duration or scope of activity of any restriction contained in Section 11.1 is
unenforceable, it is the intention of the parties that such restrictive covenant
set forth herein shall not thereby be terminated but shall be deemed amended to
the extent required to render it valid and enforceable.
12. INDEMNIFICATION.
12.1 BUYER'S RIGHT TO INDEMNIFICATION. SELLER SHAREHOLDER AND MRS.
HELZER, JOINTLY AND SEVERALLY, SHALL INDEMNIFY AND HOLD BUYER AND ITS OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS AND REPRESENTATIVES (THE "INDEMNIFIED
PARTIES") HARMLESS FROM ANY
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AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, CONTINGENCIES, DAMAGES, JUDGMENTS,
FINES, PENALTIES, AMOUNTS PAID IN SETTLEMENT, COSTS AND EXPENSES (INCLUDING,
WITHOUT LIMITATION, ALL COURT COSTS AND REASONABLE ATTORNEYS' FEES AND
DISBURSEMENTS), AND WHETHER AS A RESULT OF DIRECT CLAIMS OR THIRD PARTY CLAIMS
("LOSSES"), THAT THE INDEMNIFIED PARTIES OR ANY OF THEM MAY SUFFER OR INCUR AS A
RESULT OF OR RELATING TO: (a) THE BREACH OR INACCURACY, OR ANY ALLEGED BREACH OR
INACCURACY, OF ANY OF THE REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS
MADE BY SELLER, SHAREHOLDER OR MRS. HELZER HEREIN (WITHOUT GIVING EFFECT TO ANY
UPDATING OR CORRECTIVE INFORMATION FURNISHED PURSUANT TO SECTION 7.5 OF THIS
AGREEMENT OR OTHERWISE) OR IN ANY ASSIGNMENT, BILL OF SALE, LEASE OR OTHER
INSTRUMENT, DOCUMENT OR PAPER DELIVERED PURSUANT TO THIS AGREEMENT; (b) ANY
LAWSUIT, CLAIM OR PROCEEDING OF ANY NATURE ARISING OUT OF ANY ACT OR TRANSACTION
OCCURRING PRIOR TO THE CLOSING OR ARISING OUT OF FACTS OR CIRCUMSTANCES THAT
EXISTED AT OR PRIOR TO THE CLOSING; (c) ANY INCOME, FRANCHISE, SALES, USE,
TRANSFER, EXCISE OR OTHER TAX ARISING UPON THE CONSUMMATION OF THE PURCHASE AND
SALE OF THE PURCHASED ASSETS HEREUNDER (EXCEPT FOR BUYER'S SALES TAX PORTION),
OR ARISING OUT OF OR RESULTING FROM THE OPERATIONS OF SELLER, ANY TRANSACTION OR
ACTIVITY OF SELLER, OR ANY INCOME DERIVED BY SELLER (OTHER THAN THE ASSUMED
LIABILITIES); (d) ANY WAGES, SALARIES, VACATION PAY, SICK PAY, OR PERSONAL
LEAVE, OR ACCRUALS WITH RESPECT THERETO (OTHER THAN THE ASSUMED LIABILITIES), OR
OTHER COMPENSATION, LIABILITIES, OBLIGATIONS, CLAIMS OR CONTINGENCIES OF ANY
NATURE DUE OR PAYABLE AT ANY TIME WHATSOEVER TO ANY CURRENT OR FORMER DIRECTOR,
OFFICER, EMPLOYEE, AGENT OR REPRESENTATIVE OF SELLER, INCLUDING, WITHOUT
LIMITATION, ANY CLAIMS UNDER ANY BENEFIT PLAN; (e) ANY CONTAMINATION ON OR UNDER
THE LEASED PREMISES OR IN ANY OF THE PURCHASED ASSETS CAUSED BY ANYONE (OTHER
THAN BUYER OR ITS AGENTS OR EMPLOYEES) ON OR PRIOR TO THE CLOSING DATE, OR ANY
LIABILITY OR OBLIGATION FOR REMEDIATION OR CLEAN-UP OF ENVIRONMENTAL CONDITIONS
AS A RESULT OF SELLERS OPERATIONS, WHETHER ON OR UNDER THE LEASED PREMISES OR
ELSEWHERE, OR THE ACTIVITIES OF ANY PERSON (OTHER THAN BUYER) ON OR UNDER THE
LEASED PREMISES; (f) THE CONDUCT OF SELLER'S BUSINESS AND OPERATIONS (OTHER THAN
THE ASSUMED LIABILITIES); (g) ANY FAILURE OF SELLER TO COMPLY WITH ANY FEDERAL,
STATE OR LOCAL LAW, REGULATION, RULING OR ORDINANCE, OR ANY OTHER LEGAL
REQUIREMENT, INCLUDING, WITHOUT LIMITATION, SELLERS FAILURE TO COMPLY WITH
COBRA, HIPAA OR THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT; (h)
NONCOMPLIANCE BY BUYER OR SELLER WITH THE BULK TRANSFER PROVISIONS OF THE
UNIFORM COMMERCIAL CODE (OR ANY SIMILAR LAW) OF ANY STATE IN CONNECTION WITH THE
SALE AND TRANSFER OF THE
34
PURCHASED ASSETS TO BUYER OTHER THAN WITH RESPECT TO THE ASSUMED LIABILITIES;
AND i) ANY LIABILITIES OR OBLIGATIONS OF SELLER NOT BEING EXPRESSLY ASSUMED BY
BUYER PURSUANT TO THIS AGREEMENT.
SELLER, SHAREHOLDER AND MRS. HELZER, JOINTLY AND SEVERALLY, SHALL BE
RESPONSIBLE HEREUNDER FOR, AND SHALL INDEMNIFY THE INDEMNIFIED PARTIES FROM AND
AGAINST, ANY AND ALL SUCH LOSSES WHETHER OR NOT IT IS ALLEGED OR PROVEN THAT THE
LOSSES AROSE OUT OF OR RESULTED FROM THE SOLE OR CONCURRENT NEGLIGENCE OR GROSS
NEGLIGENCE OF ANY INDEMNIFIED PARTY, OR THE SOLE OR CONCURRENT STRICT LIABILITY
IMPOSED ON ANY INDEMNIFIED PARTY, OR THE SOLE OR CONCURRENT LIABILITY IMPOSED
VICARIOUSLY ON ANY INDEMNIFIED PARTY, UNDER ANY FEDERAL OR STATE STATUTES OR
REGULATIONS, AT COMMON LAW OR OTHERWISE; PROVIDED, HOWEVER, THAT SELLER,
SHAREHOLDER AND MRS. HELZER SHALL NOT BE RESPONSIBLE HEREUNDER FOR ANY LOSSES TO
THE EXTENT THEY ARE FINALLY ADJUDICATED BY A COURT OF COMPETENT JURISDICTION TO
HAVE RESULTED SOLELY FROM THE INDEMNIFIED PARTY'S INTENTIONAL MISCONDUCT.
SELLER, SHAREHOLDER AND MRS. HELZER, JOINTLY AND SEVERALLY, SHALL
INDEMNIFY, DEFEND, AND HOLD HARMLESS THE INDEMNIFIED PARTIES AGAINST ALL LOSSES
IN CONNECTION WITH ANY CLAIM, ACTION, SUIT, PROCEEDING, OR INVESTIGATION,
WHETHER CIVIL OR CRIMINAL, ADMINISTRATIVE, OR INVESTIGATIVE ARISING OUT OF OR
UNDER THE FEDERAL SECURITIES LAWS OR ANY STATE BLUE SKY OR SECURITIES LAWS BASED
IN WHOLE OR IN PART ON (i) ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF A
MATERIAL FACT CONTAINED IN THE REGISTRATION STATEMENTS AND OTHER DOCUMENTS
DESCRIBED IN SECTION 5.24 (INCLUDING, WITHOUT LIMITATION, ANY AMENDMENT OR
SUPPLEMENT TO SUCH REGISTRATION STATEMENTS OR DOCUMENTS), (ii) ANY OMISSION OR
ALLEGED OMISSION TO STATE IN SUCH REGISTRATION STATEMENTS OR DOCUMENTS A
MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS
THEREIN NOT MISLEADING, OR (iii) ANY VIOLATION BY SELLER OR SHAREHOLDER OF THE
FEDERAL SECURITIES LAWS OR ANY STATE BLUE SKY OR SECURITIES LAWS IN CONNECTION
WITH SUCH REGISTRATION STATEMENTS OR DOCUMENTS.
IN THE EVENT THAT SELLER, SHAREHOLDER OR MRS. HELZER IS IN BREACH OF
ANY OF ITS, HIS OR HER REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS
UNDER THIS AGREEMENT, BUYER SHALL HAVE THE RIGHT, WITHOUT LIMITING ANY OF ITS
OTHER REMEDIES, WHETHER UNDER THIS AGREEMENT OR OTHERWISE, TO SET OFF, AGAINST
ANY PAYMENTS DUE FROM BUYER TO SELLER OR SHAREHOLDER, WHETHER UNDER
35
THE PROMISSORY NOTE OR OTHERWISE, THE AMOUNT OF ANY CLAIMS BY OR LOSSES OF BUYER
WITH RESPECT TO SUCH BREACH.
12.2 SELLER'S RIGHT TO INDEMNIFICATION. BUYER SHALL INDEMNIFY AND HOLD
SELLER AND ITS OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS AND
REPRESENTATIVES HARMLESS FROM ANY AND ALL LOSSES THAT THEY OR ANY OF THEM MAY
SUFFER OR INCUR AS A RESULT OF OR RELATING TO THE BREACH OR INACCURACY, OR ANY
ALLEGED BREACH OR INACCURACY, OF ANY OF THE REPRESENTATIONS, WARRANTIES,
COVENANTS OR AGREEMENTS MADE BY BUYER HEREIN.
12.3 NOTICE OF THIRD PARTY CLAIMS. THE PARTY SEEKING INDEMNIFICATION
HEREUNDER (INDIVIDUALLY, THE "INDEMNITEE" AND COLLECTIVELY, "INDEMNITEES") WITH
RESPECT TO ANY THIRD PARTY CLAIM SHALL PROMPTLY, AND IN ANY EVENT WITHIN 30 DAYS
AFTER NOTICE TO IT (NOTICE TO INDEMNITEE BEING THE SERVICE OF PROCESS UPON
INDEMNITEE OF ANY LEGAL ACTION, RECEIPT OF ANY CLAIM IN WRITING OR OTHER FORM OR
MANNER OF ACTUAL NOTICE) OF ANY CLAIM AS TO WHICH IT ASSERTS A RIGHT TO
INDEMNIFICATION, NOTIFY THE PARTY FROM WHOM INDEMNIFICATION IS SOUGHT
(INDIVIDUALLY, "INDEMNITOR" AND COLLECTIVELY, "INDEMNITORS") OF SUCH CLAIM.
12.4 Survival of Representations and Warranties. Except as expressly
provided elsewhere in this Agreement or as provided in this Section 12.4, all
representations and warranties made under this Agreement by Seller, Shareholder
and Mrs. Helzer, or Buyer, as the case may be, will survive until the end of the
twenty eighth (28th) calendar month after June 30, 1997; provided, however, that
(a) each of the representations and warranties of Seller, Shareholder and Mrs.
Helzer in Sections 5.10 and 5.18 will survive until 30 days after expiration of
the applicable statute of limitation, and (b) the representations and warranties
of Seller, Shareholder and Mrs. Helzer in Sections 5.1. 5.2 and 5.3(a) will
survive forever. No claim for breach of a representation or warranty may be
brought by any person unless written notice of such claim is given to Seller and
Shareholder, or Buyer, as the case may be, on or prior to the last day of the
applicable survival period in this Section 12.4 (in which event each
representation and warranty with respect to any asserted claim will survive
until such claim is finally resolved and all obligations with respect thereto
are fully satisfied under the terms of this Agreement).
12.5 Limitations. Notwithstanding anything to the contrary contained in
this Agreement, in no event shall the aggregate amount of liability of Seller,
Shareholder and Mrs. Helzer for breaches of representation or warranty under
this Agreement exceed the sum of Six Million Dollars ($6,000,000.00).
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12.6 Floor for Indemnification. Notwithstanding anything to the
contrary in this Agreement, except for the obligations under Section 12.1 with
respect to breaches of the representations and warranties of Seller, Shareholder
and Mrs. Helzer contained in Sections 5.1. 5.2. 5.3(a), 5.10 and 5.18 (the
"Exempt Indemnification Obligations"), Seller, Shareholder and Mrs. Helzer, as
the Indemnitors, will not have any obligation until the aggregate of all Losses
payable by the Indemnitors to the Indemnitees exceeds One Hundred Forty Thousand
Dollars ($140,000.00) (the "Floor"). Upon the aggregate of all Losses payable by
the Indemnitors (except the Exempt Indemnification Obligations) exceeding the
Floor, Seller, Shareholder and Mrs. Helzer, jointly and severally, will be
liable to the Indemnitees, on a dollar-for-dollar basis, for the amount above
the Floor.
With respect to Losses payable in connection with Exempt
Indemnification Obligations, Seller, Shareholder and Mrs. Helzer, jointly and
severally, will be liable for all of such Losses from the first dollar in any
event.
An Adjustment Amount will not constitute a claim under the
indemnification provisions of this Agreement, and will not be subject to the
Floor.
13. Termination.
13.1 Events of Termination. This Agreement and the transactions
contemplated hereby may be terminated and abandoned:
(a) at any time prior to the Closing by mutual written
consent of Buyer and Seller;
(b) subject to Section 13.2 below, by either Seller or Buyer
if a condition to its performance hereunder shall not be satisfied or
waived in writing at or prior to the Closing;
(c) by Buyer if a final, non-appealable judgment has been
entered against it or its affiliates restraining, prohibiting,
declaring illegal or awarding substantial damages in connection with
the transactions contemplated hereby;
(d) by Seller if a final, non-appealable judgment has been
entered against it restraining, prohibiting, declaring illegal or
awarding substantial damages in connection with the transactions
contemplated hereby;
(e) by Seller or Buyer, if the Closing does not occur on
or before July 10, 1997; or
(f) by Buyer pursuant to other Sections of this Agreement
permitting Buyer to terminate this Agreement.
13.2 Limitation on Right to Terminate. A party shall not be permitted
to exercise any right of termination pursuant to Section 13.1(b) above if the
event giving rise to the termination right shall be due to the material and
willful failure of the party seeking to terminate this Agreement to perform
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or observe any of the covenants or agreements set forth herein to be performed
or observed by such party.
13.3 Rights Upon Termination. If this Agreement is terminated as
permitted under this Section 13, such termination shall be without liability of
or to any party to this Agreement (except pursuant to this Section 13 and to
Sections 14.3. 14.4. 14.5 and 14.6, which shall survive such termination). In
any such event, except as otherwise expressly provided in this Agreement, all
parties hereto shall thereupon be relieved of all further obligations to each
other hereunder.
If Seller or Shareholder, on the one hand, or Buyer, on the other hand,
fails to perform any of its or his obligations under this Agreement, then the
other party or parties may elect (a) to terminate this Agreement whereupon all
parties hereto shall be released from any further obligations hereunder, (b) to
seek specific performance of the other party's or parties' obligations
hereunder, or (c) to pursue any and all other remedies available at law or in
equity.
14. Miscellaneous.
14.1 Notices. All notices that are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered personally or by a recognized courier
service or by registered or certified mail, postage prepaid, to the parties at
the following addresses (or to the attention of such other person or to such
other address as any party shall provide to the other parties by notice in
accordance with this Section):
If to Buyer: JEH Acquisition Corp.
c/o TDA Industries, Inc.
122 East 42nd Street, Suite 1116
New York, NY 10168
Attention: Douglas P. Fields, Chief
Executive Officer
With copy to: Carlton, Fields, Ward,
Emmanuel, Smith & Cutler, P.A.
P.O. Box 3239
Tampa, Florida 33601
(if by mail)
or
One Harbour Place, 5th Floor
Tampa, Florida 33602
(if by hand delivery)
Attention: Nathaniel L. Doliner,
Attorney at Law
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If to Seller: JEH Company
2500 Hwy 287
P.O. Box 463
Mansfield, Texas 76063
(prior to the Closing Date)
or
8110 Russell Curry Road
Arlington, Texas 76017
(on or after the Closing Date)
Attention: Mr. James E. Helzer,
Chief Executive Officer
With copy to: Raymond Meeks, Attorney at Law
1000 N. Walnut Creek Drive, Suite C
Mansfield, Texas 76063
If to Shareholder or 8110 Russell Curry Road
Mrs. Helzer: Arlington, Texas 76017
With copy to: Raymond Meeks, Attorney at Law
1000 N. Walnut Creek Drive, Suite C
Mansfield, Texas 76063
Any such notice under this Section shall be deemed to have been given
and received on the day it is personally delivered or delivered by a recognized
courier service or, if mailed, on the fifth day after it is mailed.
14.2 Further Assurances. Each party hereto agrees to execute, without
unreasonable delay, any and all documents and to perform such other acts as may
be reasonably necessary or expedient to further the purposes of this Agreement
and the transactions contemplated hereby. In connection with taking such
actions, each party will provide the other with the same assurances regarding
authority, validity and the other matters to which reference is made in Section
5 and Section 6 hereof.
14.3 Publicity. Neither Seller nor Shareholder shall issue or make, or
cause to be issued or made, any press release or public announcement or
disclosure concerning the transactions contemplated hereby without the advance
approval in writing of the form and substance thereof by Buyer, unless such
announcement is required by applicable legal requirements.
14.4 Attorneys' Fees. In the event of a dispute between or among the
parties with respect to this Agreement, the prevailing party or parties shall be
entitled to recover the prevailing party's (or parties') reasonable attorneys'
fees and costs, whether incurred during trial, on appeal or in bankruptcy
proceedings.
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14.5 Expenses. Except as otherwise stated herein, each of the parties
hereto shall, whether or not the transactions contemplated hereby are
consummated, bear its own attorneys', accountants', auditors' or other fees,
costs and expenses incurred in connection with the negotiation, execution and
performance of this Agreement or any of the transactions contemplated hereunder.
14.6 Brokers. Seller and Shareholder, jointly and severally (a)
represent to Buyer that neither Seller nor Shareholder has incurred nor will
incur any liability for brokerage fees, finder's fees or agent's commissions,
except with respect to Geneva in connection with this Agreement or the
transactions contemplated hereby, and (b) agree that they will indemnify and
hold harmless Buyer against all claims for fees, commissions and costs of any
broker, finder or agent (including, without limitation, Geneva) engaged by or
for either or both of them in connection with the negotiation, execution or
consummation of this Agreement or the transactions contemplated by this
Agreement; provided, however, upon the Closing, Buyer shall pay the Broker
Contribution to Geneva.
Buyer represents to Seller and Shareholder that Buyer has not incurred
and will not incur any liability for brokerage fees, finders' fees or agent's
commissions in connection with this Agreement or the transactions contemplated
hereby, and Buyer agrees that it will indemnify and hold harmless Seller and
Shareholder against any claims for fees, commissions and costs of any broker,
finder or agent engaged by Buyer in connection with the negotiation, execution
or consummation of this Agreement or the transactions contemplated by this
Agreement.
14.7 Counterparts. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto, all of which together
shall constitute one and the same instrument.
14.8 Assignment; and No Third Party Beneficiaries. 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 permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned or delegated by any of Seller, Shareholder or Buyer without
the prior written consent of the other party or parties; provided, however, that
notwithstanding the foregoing, Buyer may assign this Agreement to any related or
affiliated entity of Buyer or any lender to Buyer. Any assignment or delegation
made in violation of this Agreement shall be null and void. This Agreement is
not intended to confer upon any person (including, without limitation,
employees, customers or suppliers of Seller or Buyer) other than the parties
hereto and any permitted assignee, any rights or remedies hereunder. Nothing in
this Agreement shall be construed to imply any admission of liability or
obligation to any person except the parties to this Agreement.
14.9 Entire Agreement. This Agreement and the documents attached as
Exhibits and Schedules hereto or expressly contemplated hereby contain the
entire understanding of the parties relating to the subject matter contained
herein and supersede all prior written or oral and all contemporaneous oral
agreements and understandings relating to the subject matter hereof. This
Agreement cannot be modified or amended except in writing signed by the party
against whom enforcement is sought.
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14.10 Exhibits and Schedules. All Exhibits and Schedules to this
Agreement are incorporated herein by reference and made a part hereof.
14.11 Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the substantive laws of the State of New
York without giving effect to any conflict-of-laws rule or principle that might
result in the application of the laws of another jurisdiction.
14.12 Jurisdiction and Venue. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the State of New
York, or, if it has or can acquire jurisdiction, in the United States District
Court for the Southern District of New York, or the Middle District of Florida,
and each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue therein. If neither the United States District Court for the
Southern District of New York nor the United States District Court for the
Middle District of Florida has or can acquire jurisdiction, then any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement, shall be resolved by binding arbitration before a panel
of three neutral arbitrators in Atlanta, Georgia, or such other mutually agreed
venue under the rules of the American Arbitration Association.
14.13 Survival of Representations, Warranties, Covenants and
Agreements. All representations, warranties, covenants and agreements made by
the parties hereto in this Agreement or in any certificate or other document
delivered pursuant hereto shall survive the execution of this Agreement and the
Closing.
14.14 Headings. The descriptive headings of the Sections and
Subsections hereof are inserted for convenience only and do not constitute a
substantive portion of this Agreement.
14.15 Invalidity. In the event that any provision of this Agreement is
determined to be invalid or unenforceable, such invalidity or unenforceability
shall not affect the validity or enforceability of any other provision of this
Agreement.
14.16 Waiver. The waiver by any party hereto of any breach, default,
misrepresentation or breach of warranty or covenant hereunder must be in writing
and shall not be deemed to extend to any prior or subsequent breach, default,
misrepresentation or breach of warranty or covenant hereunder and shall not
affect in any way any rights arising by virtue of any such prior or subsequent
occurrence.
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14.17 Certain Consents. In the event any of the Leases and Contracts
(individually, a "Lease" or a "Contract") requires consent to its assignment and
such consent is not obtained prior to the Closing, and Buyer agrees in writing
to proceed with the Closing despite the absence of such consent, then until such
consent has been obtained or the applicable Lease or Contract terminates, the
Lease or Contract shall not be deemed assigned to Buyer but instead Buyer shall
be deemed to be Seller's subcontractor or the parties shall make such other
arrangements as necessary to assure Buyer the benefits of the Lease or Contract.
In that event, Buyer shall perform all obligations of Seller under the
applicable Lease or Contract (except any obligations arising out of a default
prior to the Closing Date or event prior to the Closing Date which with notice,
lapse of time or both would constitute such a default), and Buyer shall be
entitled to all benefits from such Lease or Contract. Seller, Shareholder, and
Mrs. Helzer, jointly and severally, shall indemnify Buyer with respect to all
Losses of Buyer resulting from or arising out of the failure of Seller to obtain
such consent.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day first above written.
WITNESSES:
JEH ACQUISITION CORP.,
/s/ J. Michael Waters a Delaware corporation ("Buyer")
- -----------------------------
/s/ John C. Knight By: /s/ Douglas P. Fields
- ------------------------------ -----------------------------
Name: Douglas P. Fields
Title: Chief Executive Officer
JEH COMPANY,
/s/ J. Michael Waters a Texas corporation ("Seller")
- -----------------------------
/s/ John C. Knight By: /s/ James E. Helzer
- ------------------------------ -----------------------------
Name: James E. Helzer
Title: Chief Executive Officer
/s/ J. Michael Waters
- -----------------------------
/s/ John C. Knight /s/ James E. Helzer
- ------------------------------ --------------------------------
JAMES E. HELZER, individually
("Shareholder")
/s/ J. Michael Waters
- -----------------------------
/s/ John C. Knight /s/ Marilyn Helzer
- ------------------------------ -------------------------------
MARILYN HELZER, individually
("Mrs. Helzer")
JEH ENTERPRISES, INC.
/s/ J. Michael Waters a Colorado corporation ("Enterprises")
- -----------------------------
/s/ John C. Knight By: /s/ J.E. Helzer
- ------------------------------ ----------------------------
Name: J.E. Helzer
--------------------------
Title: President
-------------------------
43