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EXHIBIT 2.1
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STOCK AND MEMBERSHIP INTEREST PURCHASE AGREEMENT
This Stock and Membership Interest Purchase Agreement
("Agreement"),
dated as of January 8, 2003, is by and among Bob Spence
("Seller"); Pick and
Pull Auto Dismantling, Inc., a California corporation (the
"Company");
Pick-N-Pull Auto Dismantlers, a California general partnership
(the
"Partnership"); Pick-N-Pull Auto Dismantlers, Stockton, LLC, a
California
limited liability company (the "LLC"); and Norprop, Inc., an
Oregon corporation
("Buyer").
RECITALS
A. Seller is the owner of one thousand (1,000) shares of Common
Stock
of the Company, constituting all of the issued and outstanding
shares of capital
stock of the Company (the "Stock").
B. The Company is a general partner in the Partnership, which
general
partnership interest constitutes the sole asset of the
Company.
C. Seller is the owner of all of the membership interests in the
LLC
(the "Interest").
D. Buyer desires to purchase, and Seller desires to sell, the
Stock and
the Interest.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises
contained
herein, the parties agree as follows:
1. Certain Defined Terms. As used herein, the terms below shall
have the
following meanings:
"2002 Adjusted Partnership EBITDA" shall mean the EBITDA of
the
Partnership for calendar year 2002,
Plus the sum of the following amounts: (1) enterprise zone
tax
credits attributable to the Partnership for calendar year 2002,
(2) expenses
incurred by the Partnership during calendar year 2002 in
connection with the
Facilities in Fort Worth, Texas and (3) expenses incurred by the
Partnership
during calendar year 2002 in connection with the eComm
Litigation;
Minus the amount of the July through December scrap
settlement
of One Hundred Seventy Thousand Dollars ($170,000) with
Schnitzer Steel;
Plus the amount of the Partnership's share of the negative
EBITDA, or minus the amount of the Partnership's share of the
positive EBITDA,
as the case may be, of Carson City, Carson City Full Service and
Newark Full
Service for calendar year 2002 (for the purpose of eliminating,
from the
computation of 2002 Adjusted Partnership EBITDA, the
Partnership's share of any
EBITDA associated with Carson City, Carson City Full Service and
Newark Full
Service);
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all as determined in accordance with generally accepted
accounting principles
consistently applied, subject to adjustments for non-recurring
items as mutually
agreed upon by Seller and Buyer.
"2003 Adjusted Partnership EBITDA" shall mean the EBITDA of
the
Partnership for calendar year 2003, subject to adjustments for
non-recurring
items mutually agreed upon by Seller and Buyer,
Plus the sum of the following amounts: (1) any cost incurred
by the Partnership in calendar year 2003 in connection with
employing any
personnel hired by the Partnership at Buyer's request, (2)
expenses incurred by
the Partnership during calendar year 2003 in connection with the
eComm
Litigation, (3) salary earned by Bob Spence in consideration for
his service
during calendar year 2003 as President of the Partnership after
the Closing paid
pursuant to the employment agreement attached hereto as Exhibit
B, (4)
enterprise zone tax credits attributable to the Partnership for
calendar year
2003, (5) expenses incurred by the Partnership during calendar
year 2003 in
connection with the Facilities in Fort Worth, Texas and (6) all
individual
nonrecurring items of expense in excess of Ten Thousand Dollars
($10,000)
incurred by the Partnership during calendar year 2003;
Minus the amount of all individual nonrecurring items of
income in excess of Ten Thousand Dollars ($10,000) earned by the
Partnership
during calendar year 2003;
Provided, that allocations of Schnitzer corporate expenses
shall be taken into account in calculating the 2003 Adjusted
Partnership EBITDA
only to the extent like items and amounts (based on a level of
services
consistent with past practice) were allocated consistent with
past practices in
the comparable manner for calendar year 2002, or with the
consent of the parties
hereto; and
Provided, further, that the effects of any (i) purchase
accounting adjustments and (ii) changes in environmental
reserves, to the extent
such reserves relate to environmental facts or conditions
existing on or before
the Closing Date, shall be excluded from the calculation of the
2003 Adjusted
Partnership EBITDA;
all as determined in accordance with generally accepted
accounting principles
consistently applied.
"2002 LLC EBITDA" shall mean the EBITDA of the LLC for calendar
year
2002, determined in accordance with generally accepted
accounting principles
consistently applied.
"2003 LLC EBITDA" shall mean the EBITDA of the LLC for calendar
year
2003, determined in accordance with generally accepted
accounting principles
consistently applied.
"Carson City" shall mean the self-service automobile dismantling
and
retail parts sales business owned and operated by the
Partnership and located in
Carson City, Nevada.
"Carson City Full Service" shall mean the full-service
automobile
dismantling and retail parts sales business owned and operated
by the
Partnership and located in Carson City, Nevada.
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"Closing Date" shall mean the later of (a) ten (10) calendar
days after
completion of the audited financial statements of the Seller
Entities for fiscal
year 2002, or (b) February 14, 2003, or such other date as may
be mutually
agreed upon in writing by Seller and Buyer; provided, however,
that if the
Closing Date does not occur on or before February 15, 2003
because Seller, any
Seller Entity or any lessor of property on which a Facility is
located, does not
provide Buyer or Buyer's environmental consultants with
reasonable access to any
property or personnel for the purpose of conducting
environmental due diligence
or sampling and testing as contemplated in Section 6.4, then the
Closing Date
shall be the date that is ten (10) calendar days after
completion of the
environmental due diligence of Buyer described in Section
6.4.
"Code" shall mean the Internal Revenue Code of 1986, as it may
be
amended from time to time.
"Contract" shall mean any of the Contracts.
"Contracts" shall mean any of the agreements, contracts,
commitments or
other documents of the types described in Sections 4.9.1 through
4.9.8, to which
any Seller Entity is a party.
"Disclosure Schedule" shall mean the schedules delivered by
Seller to
Buyer, which set forth, with respect to the Seller Entities,
exceptions to the
representations and warranties of Seller, the Company, the
Partnership and the
LLC contained in this Agreement and provide certain other
information called for
herein. Seller has delivered the Disclosure Schedule to Buyer
and shall update
it, if applicable, on or before the Closing Date, subject to
Buyer's reasonable
approval of any changes to the Disclosure Schedule.
"eComm Litigation" shall mean the lawsuit brought by eComm
Technologies, Inc., Case No. 01-06154WJR, in the U.S. District
Court for the
Central District of California, in which the Partnership is a
defendant and
cross-complainant.
"EBITDA" shall mean net income before interest, income
taxes,
depreciation and amortization determined in accordance with
generally accepted
accounting principles consistently applied.
"Effective Date" shall mean January 1, 2003.
"Encumbrances" shall mean any claim, lien, pledge, option,
charge,
easement, security interest, right-of-way, encumbrance,
conditional use permit
or other rights of third parties.
"Facilities" shall mean all real property and any related
facilities
that are wholly or partially owned or leased by any Seller
Entity.
"Financial Statements" shall mean the following financial
statements of
the Seller Entities: (i) audited balance sheets at December 31,
2001, 2000 and
1999 and unaudited balance sheets at November 30, 2002
(collectively, the
"Balance Sheets"); (ii) audited statements of income and
shareholders' equity
(collectively, the "Statements of Income") and statements of
cash flow for the
years ended December 31, 2001, 2000 and 1999; and (iii)
unaudited Statements of
Income and statements of cash flow for the eleven (11) month
period ending on
November 30, 2002 for the Seller Entities.
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"Initial Company Purchase Price" means Sixty-Six Million Nine
Hundred
Seventy-Three Thousand Dollars ($66,973,000).
"Initial LLC Purchase Price" means Eighteen Million Nine
Hundred
Fifty-Six Thousand Dollars ($18,956,000).
"LLC Balance Sheet Adjustment" shall mean the amount equal to:
(A) the
aggregate amount of cash and cash equivalents held by the LLC,
minus (B) the
aggregate amount owed to Seller or any third party under loans
payable by the
LLC; all as shown on the LLC's audited balance sheet at December
31, 2002,
prepared in accordance with generally accepted accounting
principles
consistently applied.
"Material Adverse Change" shall mean any change that has
resulted, will
result or is likely to result in a Material Adverse Effect.
"Material Adverse Effect" shall mean a material adverse effect
on the
business, results of operations, financial position or prospects
of the Seller
Entities, which shall in any event include any adverse effect on
the equity,
assets, revenue or net income of a Seller Entity in excess of
One Hundred
Thousand Dollars ($100,000).
"Minority Interest Debt" shall mean the aggregate amount owed to
the
Partnership by Seller Entities other than the Company and the
LLC.
"Newark Full Service" shall mean the full service automobile
dismantling and retail parts sales business that was located in
Newark,
California.
"Partnership Balance Sheet Adjustment" shall mean the amount
equal to
fifty percent (50%) of: (A) the sum of the following amounts:
(1) the aggregate
amount of cash and cash equivalents held by the Partnership plus
the aggregate
amount of the Partnership's share of cash and cash equivalents
held by the
Partnership's Subsidiaries, (2) the Partnership's share of the
appraised value
of the Facilities in Phoenix, Arizona, (3) the Partnership's
share of the
appraised value of the unused land adjacent to the Facilities in
Summit,
Illinois, (4) the aggregate amount owed to the Partnership by
Buyer or Schnitzer
Steel under accounts receivable, (5) the Partnership's share of
the appraised
value of the land and buildings and net book value of the
working capital and
other assets and liabilities of Carson City and Carson City Full
Service, and
(6) the aggregate amount of any debt owed by Carson City to the
Partnership;
minus (B) the aggregate amount owed to Buyer or Schnitzer Steel
under notes
payable by the Partnership, net of the Minority Interest Debt,
or any other
long-term debt owed to any other party by the Partnership,
exclusive of any
capital lease obligations; in each case (other than appraised
values) as shown
on the Partnership's audited balance sheet at December 31, 2002,
prepared in
accordance with generally accepted accounting principles
consistently applied.
"Potential Environmental Liabilities" shall mean the
aggregate
potential liabilities of the Seller Entities that Buyer
reasonably believes, on
the basis of probabilistic risk analysis, could reasonably be
expected to result
in the need for remedial action due to any existing fact or
condition with
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respect to any of the Facilities or compliance by any Seller
Entity with any
Environmental Law, including without limitation any existing
fact or condition
with respect to (i) soil Contamination existing at a Facility at
the time a
Seller Entity became owner or occupier of the Facility site,
(ii) soil
Contamination that has occurred at any Facility since a Seller
Entity has owned
or occupied such Facility, (iii) ground water Contamination, or
(iv) storm water
Contamination. The parties acknowledge that Buyer is not
performing Phase II
environmental studies at all of the Facility sites and that
Buyer will use the
Phase I environmental studies provided to Buyer by Seller or
obtained by Buyer
and the Phase II environmental studies obtained by Buyer as
representative of
site conditions at all Facility sites to extrapolate, on the
basis of
probabilistic risk analysis, the Potential Environmental
Liabilities with
respect to all Facilities.
"Potential Environmental Liability" shall mean any of the
Potential
Environmental Liabilities.
"Representative" shall mean any officer, director, principal,
attorney,
agent, employee or other authorized representative.
"Schnitzer Steel" shall mean Schnitzer Steel Industries, Inc.,
an
Oregon corporation.
"Seller Entities" shall mean the Company, the Partnership, the
LLC and
all Subsidiaries.
"Seller Entity" shall mean any of the Seller Entities.
"Subsidiaries" shall mean all corporations, partnerships,
joint
ventures or other entities in which the Company, the
Partnership, the LLC or any
Subsidiary either owns capital stock or is a partner or is in
some other manner
affiliated through an investment or participation in the equity
of such entity.
"Subsidiary" shall mean any of the Subsidiaries.
"Tangible Personal Property" shall mean all the tangible
personal
property owned by the Seller Entities.
"Third-Party Indemnification Obligations" shall mean the amount
of any
third-party indemnification obligations that inure to the
benefit of any Seller
Entity, and are in writing and binding on and fully enforceable
against the
third party and its successors and assigns with respect to
specified Potential
Environmental Liabilities, but only to the extent the third
party is
creditworthy and can reasonably be expected to honor such
indemnification
obligations and to have sufficient financial resources to pay
such
indemnification obligations when due.
2. Purchase and Sale of Stock and Interest.
2.1 Transfer of Stock and Interest. Upon the terms and subject
to
the conditions contained herein, Seller will sell, convey,
transfer, assign and
deliver to Buyer, and Buyer will acquire on the Closing Date but
effective as of
the Effective Date, the Stock and the Interest.
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2.2 Company Purchase Price. The purchase price for the Stock
(the
"Company Purchase Price") shall be the Initial Company Purchase
Price, less Two
Hundred Fifty Thousand Dollars ($250,000), plus the Partnership
Balance Sheet
Adjustment (or minus, if negative), less any adjustment required
under Section
2.6 to account for Potential Environmental Liabilities at the
Facilities of
Seller Entities other than the LLC, and is subject to
post-Closing adjustment as
described in Section 2.4. The Company Purchase Price shall be
payable as
follows:
2.2.1 Earnest Money. The first Five Million Dollars
($5,000,000) of the Company Purchase Price (the "Earnest Money")
will be paid by
Buyer to Seller on the date of execution of this Agreement in
cash by wire
transfer in accordance with the wire transfer instructions set
forth in Exhibit
A. Buyer shall be entitled to prompt return of the Earnest
Money, together with
interest earned thereon at the rate of two and one-half percent
(2.5%) per
annum, if Buyer notifies Seller on or before the Closing Date
that the Closing
shall not occur as a result of (i) a failure of Seller to either
(A) comply with
his obligations under Section 3.2.3 or (B) close the
transactions contemplated
by this Agreement other than as a result of a breach by Buyer,
or (ii) the
existence of Potential Environmental Liabilities of more than
Five Million
Dollars ($5,000,000) in excess of any amount recorded on the
Financial
Statements, whether or not the fact or condition giving rise to
such Potential
Environmental Liabilities would cause any representations and
warranties made
herein to be inaccurate, or (iii) the failure of a landlord of
one or more of
the Facilities to consent to Buyer's conducting due diligence at
such Facilities
as contemplated in Section 6.4. If (a) Buyer does not so notify
Seller, (b)
Buyer thereafter refuses to close the transactions contemplated
by this
Agreement on the Closing Date, even though Seller is obligated
to close, and (c)
Seller fulfills all of the conditions precedent to the Closing
and is ready,
willing and able to close on the Closing Date, then Seller shall
be entitled to
receipt of the Earnest Money and all interest earned thereon, as
full and
liquidated damages for Buyer's breach and not as a penalty, and
as Seller's sole
and exclusive remedy for such breach by Buyer. If Buyer so
notifies Seller and
Seller thereafter does not promptly refund the Earnest Money and
interest
thereon, then from the date of Buyer's demand therefor until the
date of payment
to Buyer, the amounts owed hereunder shall bear interest at the
rate of ten
percent (10%) per annum. Seller and the Company hereby agree
that from and after
the date of demand by Buyer and until such time as Buyer has
been paid the
Earnest Money and all accrued interest in full, any distribution
by either the
Partnership to the Company or the LLC to Seller shall be paid to
Buyer and
applied to reduce the amount owed, and Seller and the Company
hereby agree that
Buyer shall have a right of setoff to the fullest extent
permitted by law during
such time.
2.2.2 Cash at Closing. The balance of the Company Purchase
Price will be paid to Seller by Buyer by wire transfer in cash
on the Closing
Date in accordance with the wire transfer instructions set forth
in Exhibit A
attached, subject to the holdback provisions specified in
Sections 2.6 or 9.4
below.
2.3 LLC Purchase Price. The purchase price for the Interest
(the
"LLC Purchase Price") shall be the Initial LLC Purchase Price,
less Two Hundred
Thousand Dollars ($200,000), plus the LLC Balance Sheet
Adjustment (or minus, if
negative), less any adjustment required under Section 2.6 to
account for
Potential Environmental Liabilities at the Facilities of the
LLC, and is subject
to post-Closing adjustment as described in Section 2.5. The LLC
Purchase Price
shall be paid to Seller by Buyer by wire transfer in cash on the
Closing Date in
accordance with the wire transfer instructions set forth in
Exhibit A attached,
subject to the holdback provisions specified in Sections 2.6 or
9.4 below. In
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addition, at Closing Buyer shall pay to Seller in full the note
payable owed by
the LLC to Seller, the principal amount of which at December 31,
2002 was
approximately Three Million Three Hundred Thousand Dollars
($3,300,000).
2.4 Company Purchase Price Adjustment.
2.4.1 Calculation of 2003 Adjusted Partnership EBITDA. No
later than February 28, 2004, Buyer shall deliver to Seller a
calculation of the
2003 Adjusted Partnership EBITDA (the "Statement of 2003
Partnership EBITDA").
Buyer and Seller agree that each of them will cooperate and
assist in the
preparation of the Statement of 2003 Partnership EBITDA and in
the conduct of
the audits, reviews, inventories and inspections to be
undertaken in connection
therewith. The Statement of 2003 Partnership EBITDA shall be
accompanied by (i)
a statement signed by the President or Chief Financial Officer
of Buyer, setting
forth the amount, if any, by which the 2003 Company EBITDA is
greater or less
than the 2002 Company EBITDA, and (ii) work papers setting forth
the
calculations showing the basis for the determination of such
amount.
2.4.2 Amount of Adjustment. Subject to adjustment pursuant
to
the resolution of any disputes in accordance with Section 2.4.3,
the Company
Purchase Price shall be finally adjusted as follows:
(i) if the amount equal to one hundred seventy-five
percent (175%) of the sum of the 2002 Adjusted Partnership
EBITDA, subject to
any adjustment required pursuant to Section 2.6, and the 2003
Adjusted
Partnership EBITDA is greater than the Initial Company Purchase
Price, Buyer
shall pay Seller the amount of such difference by wire transfer
of immediately
available funds; and
(ii) if the amount equal to one hundred seventy-five
percent (175%) of the sum of the 2002 Adjusted Partnership
EBITDA, subject to
any adjustment required pursuant to Section 2.6, and the 2003
Adjusted
Partnership EBITDA is less than the Initial Company Purchase
Price, Seller shall
pay Buyer the amount of such difference by wire transfer of
immediately
available funds;
provided, that in no event shall the aggregate payment by Buyer
to Seller or by
Seller to Buyer under this Section 2.4 and Section 2.5 exceed
Twelve Million
Dollars ($12,000,000).
2.4.3 Dispute of Statement of 2003 Partnership EBITDA. In
the
event that Seller, in good faith, disputes the Statement of 2003
Partnership
EBITDA, Seller shall notify Buyer in a writing setting forth in
detail the
items, amount, nature and basis of such dispute (a "Dispute
Notice"), within ten
(10) business days after delivery of the Statement of 2003
Partnership EBITDA.
In the event of such dispute, Seller and Buyer shall first use
their diligent
good-faith efforts to resolve such dispute between themselves.
If Seller and
Buyer are unable to resolve any items in dispute within twenty
(20) business
days after delivery of the Dispute Notice, then such unresolved
items in dispute
shall be submitted to an independent nationally recognized
accounting firm with
no material relationship to any party hereto (such accounting
firm shall be
referred to as the "Arbitrator"). Within thirty (30) business
days, the
Arbitrator shall determine the remaining disputed items and
report to Seller and
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Buyer in writing with respect to such items. The Arbitrator's
decision shall be
in writing and shall be final, conclusive and binding on all
parties. A judgment
on the determination made by the Arbitrator pursuant to this
Section 2.4.3 may
be entered into and enforced by any court of appropriate
jurisdiction. The fees
and expenses of the Arbitrator in connection with the resolution
of disputes
pursuant to this Section 2.4.3 shall be borne by Buyer if the
Arbitrator
concludes that the actual 2003 Adjusted Partnership EBITDA is
greater than the
amount set forth in the Statement of 2003 Partnership EBITDA,
and otherwise by
Seller.
2.4.4 Payment of Adjustment. Within five (5) business days
following (i) the expiration of the ten (10) business day period
for giving the
Dispute Notice under Section 2.4.3, if no such Dispute Notice is
given, or (ii)
the resolution of any disputes pursuant to Section 2.4.3, the
parties shall make
any payment required under Section 2.4.2. Past-due amounts owing
under this
Section 2.4 shall bear interest at a rate of ten percent (10%)
per annum from
the date payment is due until the date of payment.
2.5 LLC Purchase Price Adjustment.
2.5.1 Calculation of 2003 LLC EBITDA. No later than February
28, 2004, Buyer shall deliver to Seller a calculation of the
2003 LLC EBITDA
(the "Statement of 2003 LLC EBITDA"). Buyer and Seller agree
that each of them
will cooperate and assist in the preparation of the Statement of
2003 LLC EBITDA
and in the conduct of the audits, reviews, inventories and
inspections to be
undertaken in connection therewith. The Statement of 2003 LLC
EBITDA shall be
accompanied by (i) a statement signed by the President or Chief
Financial
Officer of Buyer, setting forth the amount, if any, by which the
2003 LLC EBITDA
is greater or less than the 2002 LLC EBITDA, and (ii) work
papers setting forth
the calculations showing the basis for the determination of such
amount.
2.5.2 Amount of Adjustment. Subject to adjustment pursuant
to
the resolution of any disputes in accordance with Section 2.5.3,
the LLC
Purchase Price shall be finally adjusted as follows:
(i) if the amount equal to three hundred fifty percent
(350%) of the sum of the 2002 LLC EBITDA, subject to any
adjustment required
pursuant to Section 2.6, and the 2003 LLC EBITDA is greater than
the Initial LLC
Purchase Price, Buyer shall pay Seller the amount of such
difference by wire
transfer of immediately available funds; and
(ii) if the amount equal to three hundred fifty percent
(350%) of the sum of the 2002 LLC EBITDA, subject to any
adjustment required
pursuant to Section 2.6, and the 2003 LLC EBITDA is less than
the Initial LLC
Purchase Price, Seller shall pay Buyer the amount of such
difference by wire
transfer of immediately available funds;
provided, that in no event shall the aggregate payment by Buyer
to Seller or by
Seller to Buyer under this Section 2.5 and Section 2.4 exceed
Twelve Million
Dollars ($12,000,000).
2.5.3 Dispute of Statement of 2003 LLC EBITDA. In the event
that Seller, in good faith, disputes the Statement of 2003 LLC
EBITDA, Seller
shall deliver to Buyer a Dispute Notice within ten (10) business
days after
delivery of the Statement of 2003 LLC EBITDA. In the event of
such dispute,
Seller and Buyer shall first use their diligent good-faith
efforts to resolve
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such dispute between themselves. If Seller and Buyer are unable
to resolve any
items in dispute within twenty (20) business days after delivery
of the Dispute
Notice, then such unresolved items in dispute shall be submitted
to the
Arbitrator. Within thirty (30) business days, the Arbitrator
shall determine the
remaining disputed items and report to Seller and Buyer in
writing with respect
to such items. The Arbitrator's decision shall be in writing and
shall be final,
conclusive and binding on all parties. A judgment on the
determination made by
the Arbitrator pursuant to this Section 2.5.3 may be entered
into and enforced
by any court of appropriate jurisdiction. The fees and expenses
of the
Arbitrator in connection with the resolution of disputes
pursuant to this
Section 2.5.3 shall be borne by Buyer if the Arbitrator
concludes that the
actual 2003 LLC EBITDA is greater than the amount set forth in
the Statement of
2003 LLC EBITDA, and otherwise by Seller.
2.5.4 Payment of Adjustment. Within five (5) business days
following (i) the expiration of the ten (10) business day period
for giving the
Dispute Notice under Section 2.5.3, if no such Dispute Notice is
given, or (ii)
the resolution of any disputes pursuant to Section 2.5.3, the
parties shall make
any payment required under Section 2.5.2. Past-due amounts owing
under this
Section 2.5 shall bear interest at a rate of ten percent (10%)
per annum from
the date payment is due until the date of payment.
2.6 Right to Terminate and Adjustments Based On Potential
Environmental Liabilities. If Buyer identifies Potential
Environmental
Liabilities of more than Five Million Dollars ($5,000,000),
Buyer shall so
notify Seller and Buyer and Seller shall, on or before February
14, 2003,
attempt to agree upon appropriate adjustments to the Company
Purchase Price and
LLC Purchase Price. In the absence of such mutual agreement,
either Buyer or
Seller may at any time on or before February 15, 2003 terminate
this Agreement,
and Seller must return any Earnest Money previously paid by
Buyer within three
days. Adjustments shall be made to the calculation of 2002
Adjusted Partnership
EBITDA and 2002 LLC EBITDA to correct for accruals or changes in
accruals (other
than accruals of environmental liabilities for environmental
conditions existing
as of December 31, 2001) that (i) if known by any Seller Entity
on or before
December 31, 2002, would have been required to be recorded in a
financial
statement under generally accepted accounting principles
consistently applied to
make the Financial Statements or any of them not misleading or
inaccurate and
(ii) are discovered by Buyer or Buyer's auditors or consultants
in the course of
its due-diligence review, have a magnitude of Twenty-Five
Thousand Dollars
($25,000) or more and would have been required to be recorded in
a financial
statement under generally accepted accounting principles
consistently applied.
If in the course of its due diligence review Buyer identifies
any
Potential Environmental Liability (whether or not such liability
would be
required to be recorded in a financial statement under generally
accepted
accounting principles) but the condition in Section 8.6 is
either satisfied or
waived, (a) the LLC Purchase Price shall be reduced by the
aggregate amount of
Potential Environmental Liabilities at the LLC's Facilities,
less (ii) the
amount of any Third-Party Indemnification Obligations with
respect to such
liabilities, plus (iii) costs and expenses, including consulting
and attorneys
fees, Buyer reasonably expects to incur in collecting on such
Third-Party
Indemnification Obligations, and (b) the Company Purchase Price
shall be reduced
by: (i) fifty percent (50%) of the aggregate amount of Potential
Environmental
Liabilities at the Facilities of all other Seller Entities, less
(ii) fifty
percent (50%) of the amount of any Third-Party Indemnification
Obligations with
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respect to such liabilities, plus (iii) costs and expenses,
including consulting
and attorneys fees, Buyer reasonably expects to incur in
collecting on such
Third-Party Indemnification Obligations; provided, however, that
no Potential
Environmental Liability at any Facility or related Third-Party
Indemnification
Obligations shall be included in the foregoing Purchase Price
adjustments unless
the aggregate amount of Potential Environmental Liabilities at
that Facility
exceed Twenty-Five Thousand Dollars ($25,000); and provided,
further, that
Seller shall bear the burden of proving the amount of any
Third-Party
Indemnification Obligations. Prior to the Closing Date, Buyer
shall notify
Seller in writing of Buyer's estimate and description of the
Potential
Environmental Liabilities, net of the difference between any
Third-Party
Indemnification Obligations and reasonably expected costs and
expenses of
collecting on Third-Party Indemnification Obligations. In the
event that Seller,
in good faith, disputes Buyer's estimate of that amount, Seller
shall notify
Buyer in a writing setting forth in detail the items, amount,
nature and basis
of such dispute within ten (10) days of the receipt of Buyer's
estimate. In the
event of such dispute, Seller and Buyer shall first use their
diligent
good-faith efforts to resolve such dispute between themselves.
If Seller and
Buyer are unable to resolve any items in dispute within twenty
(20) days of
Seller's notice of dispute, then such unresolved items in
dispute shall be
submitted to an independent nationally recognized environmental
consulting firm
mutually selected by Seller and Buyer within ten (10) business
days following
the expiration of the twenty (20) day period, with no material
relationship to
any party hereto (such consulting firm shall be referred to as
the
"Environmental Dispute Arbitrator"). Each party shall submit to
the
Environmental Dispute Arbitrator and exchange with each other
within twenty (20)
days after the Environmental Dispute Arbitrator is selected a
figure and
supporting documentation representing such party's calculation
of the Potential
Environmental Liabilities, net of the difference between any
Third-Party
Indemnification Obligations and reasonably expected costs of
collecting on
Third-Party Indemnification Obligations, which documentation
shall form the sole
basis for the Environmental Dispute Arbitrator's decision.
Within thirty (30)
business days, the Environmental Dispute Arbitrator shall select
one or the
other of the two figures submitted. The Environmental Dispute
Arbitrator's
decision shall be final, conclusive and binding on all parties.
A judgment on
the determination made by the Environmental Dispute Arbitrator
pursuant to this
Section 2.6 may be entered into and enforced by any court of
appropriate
jurisdiction. If the Closing occurs prior to resolution of the
amount to be
deducted from either the LLC Purchase Price or the Company
Purchase Price
pursuant to this Section 2.6, Buyer shall be entitled to
withhold the amount of
Buyer's estimate from the applicable Purchase Price pending
resolution of the
dispute. The parties agree that upon the later of the Closing
and the resolution
of any dispute regarding the amount, if any, to be deducted
under this Section
2.6, Seller shall automatically be released from any and all
liabilities to
Buyer related to or arising from Potential Environmental
Liabilities, except for
liabilities arising from a breach of one or more representations
or warranties
contained in this Agreement.
2.7 Employment Agreements. In addition to the payment of the
Company Purchase Price specified above in Section 2.2 and the
LLC Purchase Price
specified above in Section 2.3, the Partnership shall hire
Seller and Robert T.
Reddy as President and Chief Financial Officer, respectively, in
accordance with
the terms of the Employment Agreements attached hereto as
Exhibits B and C (the
"Employment Agreements").
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3. Closing.
3.1 Closing. The closing of the transactions contemplated
herein
(the "Closing") shall be held at 10 a.m. local time on the
Closing Date at the
offices of Weintraub Genshlea Chediak Sproul, 400 Capitol Mall,
Suite 1100,
Sacramento, California, unless the parties otherwise agree. All
transactions
contemplated in this Agreement to occur on the Closing Date
shall be deemed
effective as of the Effective Date.
3.2 Documents to Be Delivered. To effect the transfer referred
to
in Section 2.1 and the delivery of the consideration described
in Sections 2.2
and 2.3, Seller, the Partnership, the Company and the LLC, on
the one hand, and
Buyer, on the other hand, shall, on the Closing Date, deliver
the following:
3.2.1 Seller shall deliver to Buyer certificate(s)
evidencing
shares of the Stock, free and clear of any Encumbrances of any
nature
whatsoever, duly endorsed in blank for transfer or accompanied
by stock powers
duly executed in blank.
3.2.2 Seller shall deliver to Buyer the certificate(s), if
any, evidencing the Interest, free and clear of any Encumbrances
of any nature
whatsoever, duly endorsed in blank for transfer.
3.2.3 Seller, the Company, the Partnership, the LLC and
Buyer
shall each deliver all documents required to be delivered
pursuant to Sections 7
and 8.
3.2.4 Buyer shall deliver to Seller immediately available
funds as provided in Sections 2.2 and 2.3.
3.3 Form of Documents. All instruments and documents executed
and
delivered to Buyer pursuant hereto shall be in form and
substance, and shall be
executed in a manner, reasonably satisfactory to Buyer. All
instruments and
documents executed and delivered to Seller pursuant hereto shall
be in form and
substance, and shall be executed in a manner, reasonably
satisfactory to Seller.
4. Representations and Warranties of Seller, the Partnership,
the Company
and the LLC. As a material inducement to Buyer to enter into
this Agreement and
consummate the transactions contemplated hereby, Seller, the
Partnership, the
Company and the LLC hereby represent and warrant to Buyer that
all of the
statements contained in this Section 4 are correct and complete
in all material
respects as of the date of this Agreement and as of the Closing
Date, except as
set forth in the Disclosure Schedule.
4.1 Ownership of all Stock; Capitalization. The Company is
the
sole corporate Seller Entity. The authorized capital of the
Company consists of
one hundred thousand (100,000) authorized shares of common
stock, no par value,
of which one thousand (1,000) shares are issued and outstanding,
all of which
are duly authorized, validly issued, fully paid and
nonassessable, and which
have not been issued in violation of any federal, state or other
law or
regulation pertaining to the issuance of securities, or in
violation of any
preemptive or similar rights granted pursuant to the Company's
articles of
incorporation or otherwise. Seller owns of record and
beneficially all of the
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outstanding capital stock of the Company and all outstanding
membership
interests in the LLC, free and clear of all Encumbrances or
limitations,
including limitations affecting Seller's ability to vote or to
transfer the
Stock or the Interest to Buyer. There are no outstanding or
authorized rights,
options, warrants, convertible securities, rights of first
refusal, subscription
rights, conversion rights, exchange rights or other agreements
or commitments of
any kind that could require any Seller Entity to issue shares of
capital stock
or ownership interests, or Seller to offer or sell the Stock or
the Interest to
anyone other than Buyer. There are no outstanding obligations of
the Company or
the LLC to repurchase, redeem or otherwise acquire any of its
outstanding shares
of capital stock or membership interests, respectively. At the
Closing, Buyer
will acquire good and marketable title to the Stock and the
Interest, free and
clear of all pledges, security interests, shareholders
agreements, purchase
arrangements, restrictions, redemption agreements, Encumbrances
or limitations
of whatever nature.
4.2 Organization. Each Seller Entity is duly formed, validly
existing and, as applicable, in good standing under the laws of
the state in
which it is organized, and has full power and authority to
conduct its business
as it is currently being conducted and to own and lease its
properties and
assets. Each Seller Entity is duly qualified to do business and
is in good
standing in each jurisdiction in which such qualification is
necessary under the
applicable law as a result of the conduct of its business or the
ownership of
its properties, except where the failure to so qualify would not
have a Material
Adverse Effect. Section 4.2 of the Disclosure Schedule contains
a true and
correct copy of the organizational documents for each Seller
Entity.
4.3 Authorization. Each of Seller, the Partnership, the
Company
and the LLC has all necessary power and authority to enter into
this Agreement
(and all other agreements, instruments and certificates executed
and delivered
in connection herewith) and to carry out their terms, and each
has taken all
action necessary to consummate the transactions contemplated
hereby and to
perform his or its respective obligations hereunder. Each of the
Company, the
Partnership and the LLC has taken all action necessary to
authorize the
execution, delivery and performance of this Agreement. This
Agreement has been
duly executed and delivered by Seller, the Partnership, the
Company and the LLC
and is a legal, valid and binding obligation of each of Seller,
the Partnership,
the Company and the LLC, enforceable against each of Seller, the
Partnership,
the Company and the LLC in accordance with the terms hereof.
4.4 Subsidiaries. Except as set forth in section 4.4 of the
Disclosure Schedule, none of the Seller Entities owns or
controls any direct or
indirect equity interest or participation in any corporation,
partnership,
limited liability company, trust or other business association,
joint venture,
subsidiary or other entity.
4.5 Financial Statements. Seller has furnished the Financial
Statements to Buyer. The Financial Statements (i) are complete
and in accordance
with the books and records of the Company, the Partnership, the
LLC and the
Subsidiaries, respectively; (ii) present fairly the financial
position as of the
dates indicated and the results of operations for the periods
then ended of the
Company, the Partnership, the LLC and the Subsidiaries,
respectively, in all
material respects; and (iii) have been prepared in accordance
with generally
accepted accounting principles consistently applied throughout
the periods
indicated except as expressly stated herein. Except as and to
the extent
reflected or reserved against in the Balance Sheets (including
any notes
thereto), no Seller Entity has, as of the dates of the Balance
Sheets, any
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<PAGE>
material liabilities or obligations (absolute or contingent) of
a nature and
amount required or customarily reflected in a balance sheet (or
the notes
thereto) prepared in accordance with generally accepted
accounting principles
consistently applied. The reserves, if any, reflected on the
Balance Sheets are
consistent with generally accepted accounting principles. The
Statements of
Income are complete, in all material respects, are in accordance
with the books
and records of the Seller Entities and present fairly the
results of operations
of the Seller Entities for the periods indicated.
4.6 Absence of Certain Changes or Events. Except as set forth
in
section 4.6 of the Disclosure Schedule, since December 31, 2001,
there has not
been any:
4.6.1 Material Adverse Change or event, occurrence,
development or state of circumstances or facts that could
reasonably be expected
to result in a Material Adverse Change;
4.6.2 (i) ten percent (10%) or greater increase in the
compensation payable or to become payable by the Seller Entities
to any of their
officers, employees or agents (collectively, "Personnel"), other
than for
employees, officers and agents having annual compensation of
less than
Thirty-Five Thousand Dollars ($35,000) or as identified in
section 4.6.2 of the
Disclosure Schedule; (ii) bonus, incentive compensation, service
award or other
like benefit granted, made or accrued, contingently or
otherwise, for or to the
credit of any Personnel other than in the ordinary course of
business or as
identified in section 4.6.2 of the Disclosure Schedule; (iii)
employee welfare,
pension, retirement, profit-sharing or similar payment or
arrangement made or
agreed to, other than in the ordinary course of business or as
described in
section 4.6.2 of the Disclosure Schedule; or (iv) employment
agreement executed
or amended;
4.6.3 addition to or modification of the employee benefit
plans, arrangements or practices described in the Disclosure
Schedule affecting
Personnel, other than (i) contributions made for the period
after September 30,
2002, in accordance with the normal practices of the Seller
Entities or (ii) the
extension of coverage to other Personnel who became eligible
after December 31,
2001;
4.6.4 cancellation of any indebtedness or waiver of any
rights
of substantial value to any Seller Entity, whether or not in the
ordinary course
of business;
4.6.5 amendment, cancellation or termination of any
Contract,
license or other instrument to which any Seller Entity is a
party;
4.6.6 purchase or other acquisition of property, sale, lease
or other disposition of property, or expenditure, except in the
ordinary course
of business;
4.6.7 payment of any obligation of any Seller Entity other
than in the ordinary course of business or pursuant to a
Contract;
4.6.8 change in accounting methods, principles, estimates or
practices by any Seller Entity;
4.6.9 revaluation by any Seller Entity of any of its assets,
including, without limitation, writing off notes or accounts
receivable, that
has had, or reasonably could be expected to have, a Material
Adverse Effect;
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<PAGE>
4.6.10 damage, destruction or loss (whether or not covered
by
insurance) adversely affecting the properties, business or
prospects of any
Seller Entity that has had, or reasonably could be expected to
have, a Material
Adverse Effect;
4.6.11 mortgage, pledge or other encumbrance, or consent to
encumbrance, of any assets of the Seller Entities except in the
ordinary course
of business;
4.6.12 declaration, setting aside or payment of dividends or
distributions for any capital stock of any Seller Entity, or
redemption,
purchase or other acquisition of any of the Seller Entities'
equity securities,
or payment by any Seller Entity to or for the account of its
equity holders,
other than in the ordinary course of business and consistent
with past
practices;
4.6.13 issuance by any of the Seller Entities of, or
commitment of any of the Seller Entities to issue, any shares of
stock or other
equity securities or obligations or securities convertible into
or exchangeable
for shares of stock or other equity securities;
4.6.14 indebtedness incurred by a Seller Entity for borrowed
money, or commitment to borrow money entered into by a Seller
Entity, or loans
made or agreed to be made by a Seller Entity, other than loans
and advances
consistent with past practices by the Partnership to any Seller
Entity or by any
Seller Entity to the Partnership or any other Seller Entity;
4.6.15 liabilities incurred by any of the Seller Entities
that, either singly or in the aggregate, are material to the
business, results
of operations, financial conditions or prospects of the Seller
Entities;
4.6.16 conduct of the business of the Seller Entities that
is
outside the ordinary course of business or not substantially in
the manner that
Seller Entities previously conducted their business;
4.6.17 payment, discharge or satisfaction of any liabilities
other than the payment, discharge or satisfaction in the
ordinary course of
business and consistent with past practice of liabilities
reflected or reserved
against in the Balance Sheets or incurred in the ordinary course
of business and
consistent with past practice since September 30, 2002;
4.6.18 oral or written agreement by any Seller Entity to do
any of the foregoing;
4.6.19 change in the assets, liabilities, licenses, permits
or
franchises of any Seller Entity, or in any agreement to which
any Seller Entity
is a party or is bound, that has had or reasonably could be
expected to have a
Material Adverse Effect; or
4.6.20 other event or condition of any character that in any
one case or in the aggregate has materially and adversely
affected, or event or
condition known to the Company, Seller, the Partnership or the
LLC (other than
matters of general public knowledge relating to general economic
conditions or
to the Company's, the Partnership's or the LLC's industry as a
whole) that it is
reasonable to expect will, in any one case or in the aggregate,
materially and
adversely affect the condition (financial or otherwise), assets,
liabilities,
working capital, reserves, earnings, business or prospects of
the Company, the
Partnership or the LLC.
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<PAGE>
4.7 Title to Assets, etc. Except as set forth in section 4.7
of
the Disclosure Schedule, the Company, the Partnership, the LLC
and the
Subsidiaries have good and marketable fee simple title to the
Tangible Personal
Property. None of the Facilities or Tangible Personal Property
(collectively,
the "Assets") is subject to any Encumbrances or restrictions of
any kind, other
than (i) liens on the Balance Sheets, (ii) liens for taxes not
yet due or being
contested in good faith (and for which adequate accruals or
reserves have been
established on the Financial Statements) or (iii) Encumbrances
that do not
materially detract from the value of the Assets as now used or
materially
interfere with any present or intended use of the Assets. The
Seller Entities
have in all material respects performed all the obligations
required to be
performed by them with respect to the Assets leased by them
through the date
hereof. The Seller Entities have properly exercised all options
purported to
have been exercised prior to the date hereof by any Seller
Entity under the
leases of the Facilities and recorded all liabilities that could
become due
under such leases or upon the termination of such leases.
4.8 Condition of Tangible Assets.
4.8.1 Condition of Assets. The Tangible Personal Property
has
been maintained and operated in accordance with prudent industry
practices, is
in good operating condition and repair (except for ordinary wear
and tear), is
sufficient for the operation of the Seller Entities' businesses
as currently
conducted and, to the best of the knowledge of Seller and the
Seller Entities,
is in conformity with all applicable laws, ordinances, orders,
regulations and
other requirements (including applicable zoning, environmental
and motor vehicle
safety standards, and occupational safety and health laws and
regulations)
relating thereto currently in effect. The Seller Entities enjoy
peaceful and
undisturbed possession of all of the Facilities. There are no
pending or
threatened condemnation proceedings relating to any of the
Facilities. To the
best of the knowledge of Seller and the Seller Entities, neither
the operations
of the Seller Entities on any of the Facilities nor any
improvements on the
Facilities violate any applicable building code, zoning
requirement or other
statute or ordinances. To the best of the knowledge of Seller
and the Seller
Entities, there are no material defects in the improvements to
the Facilities
(including, without limitation, in connection with the heating,
ventilation, air
conditioning, electrical, plumbing, telephone, mechanical and
other building
systems, exterior walls, roofs, windows and other structural
elements and sewage
disposal systems), and the improvements are substantially sound
and in good
working order and are in compliance with all applicable laws and
codes. None of
said improvements, equipment and other assets is subject to any
commitment or
other arrangement for their sale or use by any affiliate of the
Seller Entities
or third parties.
4.8.2 Governmental Regulation and Utilities. The Seller
Entities have no knowledge of and are not subject to any pending
or contemplated
special assessments, condemnation, taking or other similar
proceeding by any
public authority against the Facilities, and there is no plan,
study or effort
by any governmental authority or agency or any provision of any
ordinance or
regulation that in any way prevents or unreasonably interferes
with or would
prevent or unreasonably interfere with the use or zoning of the
Facilities. The
Facilities have adequate water supply, storm and sanitary sewer
facilities,
telephone, gas, electrical connections, fire protection,
drainage and means of
ingress and egress to and from public highways that meet all
requirements
imposed by applicable law and as are necessary to the conduct of
the business
conducted at the Facilities for the foreseeable future. To the
best of the
knowledge of Seller and the Seller Entities, all streets and
roads necessary for
access to and full utilization of the Facilities, or any part
thereof, have been
built, completed, dedicated and accepted for maintenance and
public use by the
appropriate governmental authorities.
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<PAGE>
4.8.3 Property Liens; Other. To the best of the knowledge of
Seller and the Seller Entities, none of the material structures
on the
Facilities encroaches upon real property of another person, and
no structure of
any other person substantially encroaches upon any of the
Facilities. There are
no developments affecting any of the Assets pending or, to the
knowledge of
Seller, the Company, the Partnership or the LLC, threatened that
might
materially detract from the value of the Assets, materially
interfere with any
present or intended use of any of the Assets or materially
adversely affect the
marketability of the Assets.
4.9 Contracts and Commitments. Except as set forth in the
Financial Statements or in section 4.9 of the Disclosure
Schedule, no Seller
Entity is a party to any written or oral:
4.9.1 commitment, contract, note, loan, evidence of
indebtedness, purchase order or letter of credit involving any
actual or
potential obligation or liability on the part of such Seller
Entity of more than
Fifty Thousand Dollars ($50,000) individually or in the
aggregate and not
cancelable (without liability) within thirty (30) days;
4.9.2 lease of real property (section 4.9 of the Disclosure
Schedule indicates for each lease the term, annual rent and
renewal options);
4.9.3 lease of personal property involving any annual
expense
in excess of Ten Thousand Dollars ($10,000) and not cancelable
(without
liability) within thirty (30) days (section 4.9 of the
Disclosure Schedule
indicates with respect to each lease listed on the Disclosure
Schedule a general
description of the leased items, term, annual rent and renewal
options);
4.9.4 material contracts and commitments not otherwise
described above or listed in the Disclosure Schedule (including
purchase orders,
franchise agreements and undertakings or commitments to any
governmental or
regulatory authority);
4.9.5 governmental or regulatory licenses or permits
required
to conduct the business of the Seller Entity as currently
conducted;
4.9.6 contracts or agreements containing covenants limiting
the freedom of the Seller Entities to engage in any line of
business or compete
with any person;
4.9.7 employment contracts, including, without limitation,
contracts to employ executive officers and other contracts with
officers or
directors of the Seller Entities; or
4.9.8 agreement, license, permit or other instrument under
which the Seller Entity has acquired or been granted, or sold or
granted, a
right to use any Proprietary Rights, as defined below.
No Seller Entity and, to the best knowledge of the Company, the
Partnership, the
LLC and Seller, no other party is in breach or violation of, or
in default
under, any of the Contracts or other instruments, obligations,
evidences of
indebtedness or commitments described in this Section 4.9.
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<PAGE>
4.10 No Conflict or Violation. Neither the execution and
delivery
of this Agreement nor the consummation of the transactions
contemplated hereby
will (i) violate or conflict with any provision of the Articles
of
Incorporation, Bylaws, Partnership Agreement or other charter
documents of any
Seller Entity; (ii) either alone or with the giving of notice or
the passage of
time or both, conflict with, constitute grounds for termination
or acceleration
of, result in a breach of the terms, conditions or provisions
of, result in the
loss of any benefit to any Seller Entity under or constitute a
default under
(whether by virtue of the application of a "change of control"
provision or
otherwise) any contract, agreement, indebtedness, lease,
Encumbrance,
commitment, license, franchise, permit, authorization or
concession to which
Seller or any Seller Entity is a party or by which the Assets
are bound; (iii)
violate any statute, rule, regulation, ordinance, code, order,
judgment, writ,
injunction, decree or award of any governmental authority
applicable to any
Seller Entity; or (iv) result in an imposition or creation of
any Encumbrance,
restriction or charge on the business or assets of any Seller
Entity.
4.11 Consents and Approvals. No consent, approval or
authorization
of, or declaration, filing or registration with, any
governmental or regulatory
authority, or any other person or entity, is required to be made
or obtained by
any Seller Entity in connection with the execution, delivery and
performance of
this Agreement and the consummation of the transactions
contemplated hereby. The
Seller Entities have made all registrations or filings with any
governmental
authority required for the execution or delivery of this
Agreement or the
consummation of the transactions contemplated hereby.
4.12 Litigation. Except as set forth in the Disclosure
Schedule,
there is no action, order, writ, injunction, judgment or decree
outstanding or
claim, suit, litigation, proceeding, labor dispute, arbitral
action or
investigation (collectively, "Actions") pending or, to the
knowledge of Seller,
the Partnership, the Company or the LLC, threatened or
anticipated against,
relating to or affecting (i) the Company, (ii) Seller, (iii) the
Partnership,
(iv) any Subsidiary, (v) any benefit plan for Personnel or any
fiduciary or
administrator thereof or (vi) the transactions contemplated by
this Agreement,
that reasonably could be expected to result in payment of
greater than Ten
Thousand Dollars ($10,000) in damages by any Seller Entity.
Neither Seller nor
any Seller Entity is in violation of any applicable laws or
regulations, other
than violations that singly or in the aggregate do not, and,
with the passage of
time will not, have a Material Adverse Effect, and there are no
unsatisfied
judgments against Seller or any Seller Entity, or the business
or activities of
any Seller Entity. There is not a reasonable likelihood of an
adverse
determination of any pending Actions that would, individually or
in the
aggregate, have a Material Adverse Effect.
4.13 Labor Matters. No Seller Entity is a party to any
collective
bargaining agreement or other agreement governing the wages,
hours or terms of
employment of its employees. Except as set forth in section 4.13
of the
Disclosure Schedule, no Seller Entity has experienced any
attempt by organized
labor or its representatives to make it conform to demands of
organized labor
relating to its employees or to enter into a binding agreement
with organized
labor that would cover the employees of the Seller Entity. To
the best of the
knowledge of Seller and the Seller Entities, the Seller Entities
are in
compliance with all applicable laws respecting employment
practices and terms
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<PAGE>
and conditions of employment and wages and hours and are not
engaged in any
unfair labor practice. There is no unfair-labor-practice charge
or complaint
against any Seller Entity, or representation petition respecting
any Seller
Entity's employees, pending before the National Labor Relations
Board or any
other governmental agency, and Seller, the Company, the
Partnership and the LLC
have no knowledge of any facts or information that would give
rise thereto.
There is no labor strike, slowdown, work stoppage or labor
disturbance pending
or threatened against any Seller Entity, nor is any grievance
currently being
asserted. No Seller Entity has experienced a work stoppage or
other labor
difficulty since the inception of its business.
4.14 Liabilities. No Seller Entity has liabilities or
obligations
(absolute, accrued, contingent or otherwise) except (i)
liabilities that are
reflected and reserved against on the Balance Sheets or (ii)
liabilities
incurred in the ordinary course of business and consistent with
past practice
since September 30, 2002.
4.15 Compliance with Law. Each Seller Entity has at all
relevant
times conducted its business in compliance with its articles of
incorporation,
bylaws or other charter documents and, to the best of the
knowledge of Seller
and the Seller Entities, all applicable laws and regulations. No
Seller Entity
is in violation of any applicable laws or regulations, other
than violations
that singly or in the aggregate do not, and, with the passage of
time will not,
have a Material Adverse Effect. No Seller Entity is subject to
any outstanding
order, writ, injunction or decree that materially and adversely
affects its
business, results of operations, financial condition or
prospects, and no Seller
Entity has been charged with, or threatened with a charge of, a
violation of any
provision of federal, state or local law or regulation.
4.16 Brokers. No Seller Entity has entered into or will enter
into
any agreement, arrangement or understanding with any person or
firm that will
result in the obligation of any Seller Entity or Seller to pay
any finder's fee,
brokerage commission or similar payment in connection with the
transactions
contemplated hereby.
4.17 No Other Agreements to Sell the Assets. Neither Seller nor
any
Seller Entity has any legal obligation, absolute or contingent,
to any other
person or firm to sell the Assets, to sell any capital stock or
to effect any
merger, consolidation or other reorganizatio
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