<PAGE>
EXHIBIT 2(b)
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
PHILADELPHIA SUBURBAN CORPORATION
(PURCHASER)
AND
ALLETE WATER SERVICES, INC.
(SHAREHOLDER)
DATE: NOVEMBER 20, 2003
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS...................................................1
ARTICLE 2
PURCHASE OF STOCK; PURCHASE PRICE............................10
2.1 Purchase and
Sale of Stock........................................10
2.2 Purchase
Price....................................................10
2.3 Payment of
Purchase Price on the Closing Date.....................11
2.4 Closing and
Closing Deliveries....................................11
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDER..................................................13
3.1
Organization......................................................13
3.2
Capitalization....................................................14
3.3 Due
Authorization.................................................14
3.4 No
Breach.........................................................14
3.5 Clear
Title.......................................................15
3.6 Condition of
Assets...............................................15
3.7
Litigation........................................................15
3.8 Labor
Matters.....................................................15
3.9 Tax
Matters.......................................................16
3.10 Employee
Benefits.................................................17
3.11 No
Guarantees.....................................................20
3.12 Financial
Statements..............................................20
3.13 Absence of Certain
Developments...................................21
3.14 Intellectual
Property.............................................21
3.15 Compliance with
Laws..............................................22
3.16 Operating
Contracts...............................................22
3.17 Real
Estate.......................................................23
3.18 Accounts
Receivable...............................................25
3.19 Books and Records;
Bank Accounts..................................25
3.20
Employees.........................................................25
3.21 Permits and
Certificate Applications..............................26
3.22 Developer
Contracts...............................................26
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3.23
Subsidiaries......................................................26
3.24
Insurance.........................................................26
3.25
Brokers...........................................................27
3.26 Relationship with
Related Persons.................................27
3.27 Internal Disclosure
Controls and Procedures.......................28
3.28 Environmental
Matters.............................................28
3.29 Debt
Instruments..................................................28
3.30 Customers and
Suppliers...........................................29
3.31 Shareholder
Loans.................................................29
3.32 Adequacy of
Properties............................................29
3.33 Absence of Certain
Business Practices.............................29
3.34 Trade
Regulation..................................................30
3.35 Shareholder Ownership
of the Stock................................30
3.36 Virginia
Operations...............................................30
3.37 Employee
Retention................................................30
3.38 Regulation as
Utilities...........................................31
3.39 Limitation on
Representations and Warranties......................31
3.40 Internal Accounting
Controls......................................31
3.41 Water
Quality.....................................................31
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER....................................................31
4.1
Organization......................................................32
4.2 Due
Authorization.................................................32
4.3 No
Breach.........................................................32
4.4 Investment
Representations........................................32
4.5
Brokers...........................................................32
ARTICLE 5
PERFORMANCE AND COVENANTS PENDING CLOSING....................33
5.1 Continuing Due
Diligence..........................................33
5.2 Conduct of
Business...............................................33
5.3
Encumbrances......................................................33
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5.4 Pay
Increases.....................................................34
5.5 Restrictions on
New Contracts.....................................34
5.6 Preservation of
Business..........................................34
5.7 Payment and
Performance of Obligations............................34
5.8 Restrictions on
Sale of Assets....................................34
5.9 Prompt
Notice.....................................................34
5.10
Consents..........................................................35
5.11 Copies of
Documents...............................................35
5.12 No Solicitation of
Other Offers...................................35
5.13 Accounts Receivable
and Payable...................................35
5.14 Title Matters;
Surveys............................................35
5.15
Insurance.........................................................37
5.16 Filing Reports and
Making Payments................................37
5.17 Capital
Expenditures..............................................37
5.18 Monthly and Year-End
2003 Financials..............................37
5.19
Litigation........................................................38
5.20 Notification of
Inaccuracy........................................38
5.21 Debt
Instruments..................................................38
5.22
Guarantees........................................................38
5.23 Environmental
Assessment..........................................39
5.24 Cooperation with
Respect to Permits, Licenses and
Regulatory
Matters................................................39
5.25 Performance and Other
Bonds.......................................39
5.26 Absence of Certain
Developments...................................40
5.27 Certain Accounting
Matters........................................40
5.28 Capital
Expenditures..............................................41
ARTICLE 6
MUTUAL CONDITIONS PRECEDENT TO THE PARTIES'
OBLIGATIONS..................................................41
6.1
Proceedings.......................................................41
6.2 Consents and
Approvals............................................42
6.3 Antitrust
Matters.................................................42
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ARTICLE 7
ADDITIONAL CONDITIONS PRECEDENT TO THE
PURCHASER'S OBLIGATIONS......................................43
7.1 Accuracy of
Representations and Warranties........................43
7.2 Compliance with
Covenants and Agreements..........................43
7.3 No Material
Adverse Effect........................................43
7.4 Legal
Opinion.....................................................43
ARTICLE 8
ADDITIONAL CONDITIONS PRECEDENT TO THE
SHAREHOLDER'S OBLIGATIONS....................................43
8.1 Accuracy of
Representations and Warranties........................43
8.2 Compliance with
Covenants and Agreements..........................43
8.3 Legal
Opinion.....................................................44
8.4 Delivery of
Purchase Price and Other Consideration................44
ARTICLE 9
INDEMNIFICATION..............................................44
9.1 Indemnification
by the Shareholder................................44
9.2 Indemnification
by the Purchaser..................................45
9.3 Procedure for
Indemnification.....................................46
9.4 Dispute
Resolution................................................47
9.5 Effect of
Insurance...............................................48
9.6 Effect of
Taxes...................................................49
ARTICLE 10 TAX
MATTERS..................................................50
10.1 Tax
Returns.......................................................50
10.2
Controversies.....................................................50
10.3 Transfer
Taxes....................................................51
10.4 Amended Tax
Returns...............................................51
10.5 Non-foreign Person
Affidavit......................................51
10.6 Tax
Indemnification...............................................51
10.7 Section 338
Election..............................................52
10.8 Post-Closing Access
and Cooperation...............................52
ARTICLE 11
PERFORMANCE FOLLOWING THE CLOSING DATE.......................52
11.1 Further Acts and
Assurances.......................................52
11.2 Non-Competition
Agreement.........................................53
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11.3 Non-Solicitation
Agreement........................................53
11.4 Reasonableness of
Covenants.......................................53
11.5 Injunctive
Relief.................................................53
11.6 Blue Pencil
Doctrine..............................................54
11.7
Guarantees........................................................54
11.8 Employee
Matters..................................................54
11.9 Indemnification of
Officers and Directors of the Company and the
Subsidiaries......................................................56
ARTICLE 12
TERMINATION..................................................57
12.1
Termination.......................................................57
12.2 Return of Documents
and Nondisclosure.............................57
ARTICLE 13
MISCELLANEOUS................................................58
13.1 Survival of
Representations and Warranties, Covenants and
Agreements........................................................58
13.2 Preservation of and
Access to Records.............................58
13.3
Cooperation.......................................................58
13.4 Public
Announcements..............................................58
13.5
Notices...........................................................59
13.6 Entire
Agreement..................................................59
13.7
Remedies..........................................................59
13.8
Amendments........................................................60
13.9 Successors and
Assigns............................................60
13.10 Fees and
Expenses.................................................60
13.11 Governing Law and
Jurisdiction....................................60
13.12 Counterparts and Facsimile
Signature..............................61
13.13
Headings..........................................................61
13.14 Scope of
Agreement................................................61
13.15 Number and
Gender.................................................61
13.16
Severability......................................................61
13.17 Parties in
Interest...............................................61
13.18
Waiver............................................................62
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13.19
Construction......................................................62
13.20 Specific
Performance..............................................62
13.21 Supplementation of
Schedules......................................62
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<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK
PURCHASE AGREEMENT
(this "AGREEMENT") is
made and entered into
as of the 20th day of November, 2003, by and between PHILADELPHIA SUBURBAN
CORPORATION, a Pennsylvania corporation (the "PURCHASER"), and ALLETE WATER
SERVICES, INC., a Minnesota corporation
(the "SHAREHOLDER").
RECITALS
--------
A. The
Shareholder is the sole owner of 6,000 issued and outstanding
shares
of capital stock (the "STOCK") of Heater Utilities, Inc., a South Carolina
corporation (the "COMPANY").
B. The Company
owns all of the issued and outstanding capital stock of its
two subsidiary corporations: (i) Brookwood Water Corporation,
a North Carolina
corporation ("BROOKWOOD"), and (ii) LaGrange Waterworks
Corporation,
a North
Carolina corporation ("LAGRANGE")
(individually, each of
Brookwood and LaGrange
may herein be referred to as a
"SUBSIDIARY," and
collectively, may be
referred
to herein as the "SUBSIDIARIES").
C. The Company owns and
operates approximately
450 community water systems
and 33 wastewater utility systems within the State
of North Carolina, and
also
owns and operates 2 small community water systems located in Carroll County,
Virginia.
D. Brookwood
owns and operates
approximately 10 community water systems in
and about Fayetteville, North Carolina (in Cumberland and Hoke Counties)
and
LaGrange owns and operates 3 community
water systems in and about Fayetteville,
North Carolina (in Cumberland County). Neither of the Subsidiaries owns or
operates any wastewater utility
systems.
E. The Purchaser
desires to purchase
the Stock held by the Shareholder and
the Shareholder desires to sell the Stock to the
Purchaser on the terms and
subject to the conditions set forth in this
Agreement.
F. Upon
consummation of the purchase and sale of the Stock pursuant to
this
Agreement, the Purchaser will own all of the issued and
outstanding
capital
stock of the Company.
AGREEMENT
---------
In consideration of the foregoing Recitals and the mutual promises
contained in this Agreement, and other good and valuable
consideration,
the
receipt and sufficiency of which are hereby
acknowledged, the
Purchaser and the
Shareholder agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified:
1
<PAGE>
"ACQUISITION
PROPOSAL"
means any proposal relating to the possible
acquisition of the Company, Brookwood and/or LaGrange, whether by way of (i)
merger, (ii) purchase of any capital stock of
any of the foregoing,
or (iii)
purchase of all or substantially all of the
assets of the foregoing.
"AFFILIATE" when
used in reference to a specified Person, means any Person
that, directly or indirectly, through one or more
intermediaries,
controls, or
is controlled by, or is under common
control with the specified Person.
"AGREEMENT" has
the meaning set forth in the introductory paragraph of this
Agreement.
"ALLETE,
INC." means ALLETE,
Inc., a Minnesota
corporation, the
ultimate
corporate parent of the Shareholder,
Company and its Subsidiaries.
"ALLETE, INC.
GUARANTEE" means that certain ALLETE, Inc. Guarantee executed
and delivered on the date hereof by ALLETE,
Inc., the form of which is set forth
as EXHIBIT B to this Agreement, and which will become effective only upon the
Closing of this Agreement and shall be applicable
only to obligations of the
Shareholder that arise after the Closing
Date.
"ANCILLARY
DOCUMENTS"
has the meaning set forth in Section 3.3 of this
Agreement.
"APPLICABLE
LAWS" means any and
all laws (including
Environmental
Laws),
ordinances, constitutions, regulations, statutes, treaties, rules, codes,
licenses, certificates, franchises, permits, requirements and Injunctions
adopted, enacted, implemented, promulgated,
issued, entered or deemed applicable
by or under the authority of any
Governmental Body
having jurisdiction
over a
specified Person or any of such Person's
properties or assets.
"BALANCE
SHEETS" has the meaning set forth in Section 3.12 of this
Agreement.
"BALANCE
SHEET DATE" has the meaning set forth in Section 3.12 of this
Agreement.
"BASKET
AMOUNT" has the meaning set forth in Section 9.1(a) of this
Agreement.
"BENEFIT
PLAN" means any and
all bonus, stock
option, restricted
stock,
stock purchase, stock appreciation, phantom stock, profit participation,
profit-sharing, deferred compensation, severance, retention, pension,
retirement, disability insurance, medical insurance, dental insurance, health
insurance, or life insurance, death benefit, incentive, welfare and/or other
benefit, compensation and/or retirement plan, policy, arrangement and/or
Contract maintained, sponsored or participated in by the Company or any
Subsidiary.
"BROOKWOOD" has
the meaning set forth in the Recitals to this Agreement.
"BUSINESS"
means the ownership and/or operation of community
water and
wastewater utility systems which serve
primarily residential customers and, to a
much lesser extent, serve a commercial customer base. With respect to the
Company, the Business refers to community water utility
systems and wastewater
utility systems, and with respect to the
Subsidiaries,
the Business refers
to
community water utility systems.
2
<PAGE>
"CARY
PROPERTY" has the meaning set forth in Section 5.14(a) of this
Agreement.
"CLOSING" has
the meaning set forth in Section 2.4(a) of this Agreement.
"CLOSING
DATE" has the meaning set forth in Section 2.4(a) of this
Agreement.
"CODE" means the
Internal Revenue Code
of 1986, as amended,
or rules and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"COMPANY" has
the meaning set forth in the Recitals to this Agreement.
"COMPANY
PLAN" has the meaning set forth in Section 11.8(b) of this
Agreement.
"COMPETING
BUSINESS" has the meaning set forth in Section 3.26 of this
Agreement.
"CONFIDENTIAL
INFORMATION"
means
any information or compilation of
information not generally known to the public or the industry or which the
Company or the Subsidiaries have not disclosed to third parties without a
written obligation of confidentiality, which is proprietary to the
Company or
the Subsidiaries, relating to the Company's or the
Subsidiaries'
procedures,
techniques, methods, concepts, ideas,
affairs, products, processes and services,
including, but not limited to, information
relating to marketing, merchandising,
selling, research, development, manufacturing, purchasing, accounting,
engineering, financing, costs, customers, plans, pricing, billing, needs of
customers and products and services
used by customers, all lists of customers
and their addresses, prospects, sales calls, products,
services, prices and the
like as well as any specifications,
formulas, plans, drawings, accounts or sales
records, sales brochures, code books, manuals, trade secrets, knowledge,
know-how, pricing strategies, operating costs, sales margins, methods of
operations, invoices or statements and the
like.
"CONTRACT"
means any agreement, lease of personal or mixed property,
license, contract, obligation, promise,
commitment,
arrangement,
understanding
or undertaking, instrument, document (whether written or oral and whether
express or implied) of any type,
nature or description
that is legally
binding
but excluding leases of Leased Real Estate.
As used herein, the
word "Contract"
shall be limited in scope if modified
by an adjective specifying the type of
contract to which this Agreement or a
Section hereof refers.
"CONVERTIBLE
SECURITIES"
means any and all securities convertible or
exchangeable for any shares of capital stock of the Company or either
Subsidiary, including, without limitation,
common stock.
"DOJ" means the
United States Department of Justice.
"DEBT
INSTRUMENTS"
has the meaning set forth in Section 3.29 of this
Agreement.
"DEBT
SECURITIES" means any and all indebtedness issued by or on behalf of
the Company or either Subsidiary which constitutes a security under the
Securities Act of 1933, as amended (the
"SECURITIES ACT").
"DEVELOPER
CONTRACTS"
has the meaning
set forth in Section
3.16 of this
Agreement.
3
<PAGE>
"DIRECTOR
INDEMNIFIED
PARTY" or "DIRECTOR INDEMNIFIED PARTIES" has the
meaning set forth in Section 11.9(a) of
this Agreement.
"DISCLOSE" means
to reveal, deliver,
divulge, disclose, publish, copy,
communicate, show or otherwise make known or
available to any other Person, or
in any way to copy, any of the Confidential
Information of the Company and/or
its Subsidiaries.
"EMPLOYEES" has
the meaning set forth in Section 3.20(a) of this Agreement.
"ENCUMBRANCE"
means and includes:
(i) with respect to
any personal property, any intangible property or
any property other than real property, any security or other property
interest or
right, claim, lien, pledge, option, charge, security interest,
contingent or
conditional sale, or other title claim or retention agreement
or lease or use agreement in the nature thereof whether voluntarily
incurred or
arising by operation
of law, and including
any agreement to
grant or submit
to any of the foregoing in the future; and
(ii) with respect to any real property (whether and including Owned
Real Estate or
Leased Real Estate), any mortgage, lien, easement, interest,
right-of-way,
condemnation or
eminent domain proceeding, encroachment, any
building,
use or other form of
restriction,
encumbrance
or other claim
(including
adverse or
prescriptive) or right
of third parties
(including
Governmental
Bodies), any lease or sublease, boundary dispute, and
agreements
with respect to any
real property
including: purchase,
sale,
right of first
refusal, option, construction, building or property service,
maintenance,
property management, conditional or contingent sale,
use or
occupancy,
franchise or concession, whether voluntarily incurred or
arising
by operation of
law, and including any
agreement to grant or submit to any
of the foregoing
in the future.
"ENVIRONMENTAL
ASSESSMENT"
has the meaning
set forth in Section
5.23 of
this Agreement.
"ENVIRONMENTAL
ASSESSMENT
FIRM" has the meaning
set forth in Section 5.23
of this Agreement.
"ENVIRONMENTAL
LAWS" means any and
all Applicable Laws
(i) regulating the
use, treatment, generation, transportation, storage, control, management,
recycling or disposal of any Hazardous
Material, including,
but not limited to,
the Comprehensive Environmental Response, Compensation and Liability Act
(42
U.S.C. Section 9601 ET SEQ.), the Resource Conservation and Recovery
Act (42
U.S.C. Section 6901 ET SEQ.), the
Hazardous Materials Transportation Act (49
U.S.C. Section 1801 ET SEQ.), the Federal
Water Pollution Control Act (33 U.S.C.
Section 1251 ET SEQ.), the Clean Water Act (33 U.S.C. Section 1251 ET SEQ.),
the Clean Air Act (42 U.S.C. Section 7401 ET SEQ.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 ET
SEQ.), and/or (ii) relating to the
protection, preservation or conservation of
the environment, all
as existing,
defined or interpreted as of the date
hereof.
"ERISA"
means the Employee
Retirement
Income Security Act of 1974, as
amended.
"ERISA
AFFILIATE"
has the meaning set forth in Section 3.10(b) of this
Agreement.
4
<PAGE>
"EXISTING
POLICY" has the meaning set forth in Section 5.14(a) of this
Agreement.
"FINAL ORDER"
has the meaning set forth in Section 6.2 of this Agreement.
"FTC" means the
United States Federal Trade Commission.
"GAAP" means
generally accepted accounting principles in the United States.
"GOVERNMENTAL
BODY" means any:
(i) nation,
state, county, city, town, village, district or
other
jurisdiction of
any nature;
(ii) federal, state,
local, municipal, foreign or other government;
(iii) governmental or
quasi-governmental
authority of any nature
(including any
governmental agency, branch, board, commission, department,
instrumentality,
office or other entity, and any court or other tribunal);
(iv) multinational
organization or body; and/or
(v) body
exercising,
or entitled or purporting to
exercise,
any
administrative,
executive,
judicial, legislative, police, regulatory or
taxing authority
or power of any nature.
"HSR" means the
Hart Scott Rodino
Antitrust Improvements
Act of 1976, as
amended.
"HAZARDOUS
MATERIALS" means any
and all (i) dangerous,
toxic or hazardous
pollutants, contaminants, chemicals, wastes, materials or
substances listed or
identified in, or directly or indirectly
regulated by, any
Environmental
Law,
and (ii) any of the following, whether or not included in the foregoing:
polychlorinated biphenyls, asbestos in any
form or condition, urea-formaldehyde,
petroleum (including crude oil or any
fraction thereof),
natural gas,
natural
gas liquids, liquefied natural gas, synthetic gas usable for fuel or
mixtures
thereof, nuclear fuels or materials,
chemical wastes,
radioactive
materials,
explosives and known possible
carcinogens.
"IRS" means the
United States Internal Revenue Service.
"INACTIVE
EMPLOYEES" has the
meaning set forth in Section 3.20(a) of this
Agreement.
"INDEMNIFIED
PARTY" has the meaning set forth in Section 9.3 of this
Agreement.
"INDEMNIFYING
PARTY" has the meaning set forth in Section 9.3 of this
Agreement.
"INJUNCTION"
means any and all writs, rulings, awards, directives,
injunctions (whether temporary, preliminary
or permanent), judgments, decrees or
orders (whether executive, judicial or
otherwise) adopted, enacted, implemented,
promulgated, issued, entered or deemed applicable by or
under the authority of
any Governmental Body.
5
<PAGE>
"INTELLECTUAL
PROPERTY"
means any and all (i) inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations, continuations in
part, revisions, extensions and
reexaminations thereof; (ii) trademarks, service
marks, trade dress, logos, trade names, assumed names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill
associated therewith,
and all
applications,
registrations and renewals in connection
therewith;
(iii) copyrightable
works,
all copyrights and all applications, registrations and renewals in connection
therewith; (iv) mask works and all
applications,
registrations and renewals in
connection therewith; (v) trade secrets and confidential
business
information
(including ideas, research and development,
know-how, technology, formulas,
compositions, manufacturing and production
processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists,
pricing
and cost information and business and marketing plans and proposals); (vi)
computer software (including data and
related software program documentation in
computer-readable and hard-copy forms); (vii) other intellectual
property and
proprietary rights of any kind, nature or
description, including
web sites, web
site domain names and other e-commerce assets and resources of any kind or
nature; and (viii) copies of tangible
embodiments
thereof (in whatever
form or
medium).
"KNOWLEDGE"
means, with respect to an individual who is a natural being, an
individual's actual knowledge (following due inquiry and
investigation)
of a
fact or other matter. With respect to an entity that is a party to this
Agreement, "Knowledge" shall be solely attributed to the Knowledge of an
officer, director, or the Senior Management Employees of the Purchaser,
the
Shareholder, the Company or the
Subsidiaries, respectively, and as applicable to
the context used in this Agreement. As used herein, the Knowledge of the
Subsidiaries shall be attributed to the Company
for purposes of this
Agreement
and, as a consequence, the "Knowledge of
the Company" shall be deemed to include
the Knowledge of the Subsidiaries.
"LAGRANGE" has
the meaning set forth in the Recitals to this Agreement.
"LEASED
REAL ESTATE" has the meaning set forth in Section 3.17 of this
Agreement.
"LEASES" has the
meaning set forth in Section 3.17(a) of this Agreement.
"LIABILITY" or
"LIABILITIES" means
any and all debts,
liabilities and/or
obligations of any type, nature or description (whether known or unknown,
asserted or unasserted, secured or
unsecured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated and
whether due or to become due).
"LOSS"
or "LOSSES" has the meaning set forth in Section 9.1 of this
Agreement.
"MATERIAL
ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" means, in
connection
with the Company and the Subsidiaries (evaluated on the basis of the
three (3)
companies taken as a whole and not on an
individual
company-by-company
basis)
with due consideration to the size and complexity of the Business and
transactions contemplated by this
Agreement, any event, change or effect that is
materially adverse, individually or in the aggregate, to the condition
(financial or otherwise), properties, assets, Liabilities, revenues, income,
business, operations,
6
<PAGE>
results of operations of such Persons,
taken as a whole; PROVIDED, HOWEVER, that
in no event shall any of the following
constitute a material
adverse change, or
be deemed to have a material adverse effect, in the business, operations,
assets, results of operations or condition
of the Company and the Subsidiaries:
(i) any change or effect resulting from conditions affecting the industry in
which the Company and the Subsidiaries operate or from changes in general
business or economic conditions, (ii) any change or effect
resulting from the
announcement or pendency of any of the transactions contemplated by this
Agreement, (iii) any change or effect
resulting from
compliance by the Company
and/or the Subsidiaries with the terms of, or the taking of any action
contemplated or permitted by, this
Agreement and any Ancillary Document, or (iv)
any change or effect resulting from any
change in Applicable Law. In furtherance
of the foregoing, and notwithstanding
anything to the contrary set forth in this
Agreement, any Material Adverse Effect or any Material
Adverse Change with
respect to the Company and/or either of the
Subsidiaries
shall be evaluated
on
the basis of the Company and the Subsidiaries taken as a whole (in the
aggregate) and not on an individual
company-by-company basis.
"NCDEH"
means the Division of
Environmental
Health of the
Department of
Environment and Natural Resources, a regulatory agency of the state of North
Carolina which, among other things, regulates the issuance of water system
permits and compliance with federal and
state Applicable Laws.
"NCDWQ"
means the Division of Water Quality of the Department of
Environment and Natural Resources, a regulatory agency of the state of North
Carolina which, among other things,
regulates the issuance of wastewater permits
and compliance with federal and state
Applicable Laws.
"NCUC" means the
North Carolina Utilities Commission, a regulatory agency
of the state of North Carolina which, among other things, regulates rates,
service and PCN Certificates of entities that own and/or
operate water systems
and wastewater utility systems.
"OPERATING
CONTRACTS"
has the meaning
set forth in Section
3.16 of this
Agreement.
"ORDINARY COURSE
OF BUSINESS" means an action taken by a Person only if:
(i) such action is
consistent with the past practices of such Person
and is taken in
the ordinary course of the normal day-to-day operations of
such Person;
and
(ii) such action is
not required
to be authorized by the board of
directors of
such Person (or by any Person or group of Persons constituting
a governing body
of a Person exercising similar authority).
"OVERLAP
PERIOD" has the meaning set forth in Section 10.2 of this
Agreement.
"OWNED REAL
ESTATE" has the meaning set forth in Section 3.17 hereof.
"PBGC" means the
Pension Benefit Guaranty Corporation.
"PCBs" has the
meaning set forth in Section 3.28 of this Agreement.
7
<PAGE>
"PCN
CERTIFICATES"
means the certificates of public convenience and
necessity that are issued and regulated by
the NCUC.
"PERMITS"
means all right, title and interest in and to any permits,
licenses, filings, authorizations,
approvals, or other indicia of authority (and
any pending applications for approval or renewal of a Permit), to own,
construct, operate, sell, inventory,
disburse or maintain
any asset or conduct
any business as issued by any Governmental
Body.
"PERMITTED
ENCUMBRANCES"
has the meaning set
forth in Section
3.17(c) of
this Agreement.
"PERMITTED
EXCEPTIONS" has the meaning set forth in Section 5.14(b) of
this
Agreement.
"PERSON"
means any individual, corporation (including any non-profit
corporation), general, limited or limited liability partnership, limited
liability company, joint venture, estate,
trust, association,
organization, or
other entity or Governmental Body.
"PRE-CLOSING
PERIOD" has the
meaning set forth in
Section 3.9(b) of
this
Agreement.
"PROCEEDING"
means any suit, litigation, arbitration, hearing, audit,
investigation, order, or other action (whether
civil, criminal,
administrative
or investigative) noticed, commenced,
brought, conducted, or heard by or before,
or otherwise involving, any Governmental
Body or arbitrator.
"PURCHASE
PRICE" has the meaning set forth in Section 2.2 of this
Agreement.
"PURCHASER" has
the meaning set forth in the introductory paragraph of this
Agreement.
"PURCHASER
PLAN" has the
meaning set forth in Section 11.8(b) of this
Agreement.
"REAL ESTATE"
has the meaning set forth in Section 3.17 of this Agreement.
"RELATED PERSON"
or "RELATED PERSONS"
means, with respect to
a particular
individual,
(i) each other member of such individual's Family (as hereafter
defined);
and
(ii) any Affiliate of one or more members of such individual's
Family.
With respect to
a specified Person other than an individual:
(i) any Affiliate of
such specified Person; and
(ii) each Person
that serves as a director, governor, officer,
manager, general
partner, executor or
trustee of such specified Person (or
in a similar
capacity).
For purposes
of this definition,
the "FAMILY" of an
individual
includes
(i) such individual, (ii) the individual's
spouse, (iii) any
lineal ancestor or
lineal descendant of the individual, or
(iv) a trust for the
benefit of any of
the foregoing.
8
<PAGE>
"REQUIRED
CONSENT" has the meaning set forth in Section 3.17(k) of this
Agreement.
"RETENTION AND
SEVERANCE AGREEMENTS"
has the meaning set
forth in Section
3.37 of this Agreement.
"RETENTION
PAYMENT" has the meaning set forth in Section 3.37 of this
Agreement.
"RIGHTS" means
any and all outstanding subscriptions, warrants, options, or
other arrangements or commitments obligating or which may obligate
(with or
without notice or passage of time or both)
the Company or either
Subsidiary to
issue or dispose of any of their respective (as opposed to third party)
securities including, without limitation, Convertible Securities and Debt
Securities.
"SCHEDULES"
has the meaning
set forth in the
introductory
paragraph to
Article 3 of this Agreement.
"SECURITIES
ACT" has the
meaning set forth in the definition of "Debt
Securities" in Article 1 of this
Agreement.
"SENIOR
MANAGEMENT
EMPLOYEE(S)"
means the chief executive officer,
president, any vice president, the chief financial officer, treasurer or
secretary of a party to this Agreement. With respect to the Company and the
Subsidiaries, the Senior Management Employees shall mean and be
limited solely
to William E. Grantmyre, Jerry H. Tweed, Freda H. Hilburn, Kristin O.
Brandenburg, Richard J. Durham, Kenneth Strickland, Ruel C. Shaw, Jill
Strickler, Donald Sutter and Gary
Moseley.
"SEVERANCE
PAYMENT" has the meaning set forth in
Section 11.8(f) of
this
Agreement.
"SHAREHOLDER"
has the meaning set
forth in the
introductory paragraph
of
this Agreement.
"SHAREHOLDER
GUARANTEE"
has the meaning
set forth in Section
5.22(b) of
this Agreement.
"SHAREHOLDER'S
REPRESENTATIVE" has the meaning set forth in Section 10.2 of
this Agreement.
"STOCK" has the
meaning set forth in the Recitals to this Agreement.
"SUBSIDIARY" OR
"SUBSIDIARIES" has the meaning set forth in the Recitals to
this Agreement.
"SUPPLEMENT" has
the meaning set forth in Section 13.21 of this Agreement.
"TAX" or "TAXES"
means any and all net income, gross income, gross revenue,
gross receipts, net receipts, ad valorem,
franchise,
profits, transfer,
sales,
use, social security, employment, unemployment, disability, license,
withholding, payroll, privilege, excise, value-added, severance, stamp,
occupation, property, customs, duties, real estate and/or other taxes,
assessments, levies, fees or charges of any kind whatsoever imposed by any
Governmental Body, together with any
interest or penalty relating thereto.
9
<PAGE>
"TAX MATTER" has
the meaning set forth in Section 10.2 of this Agreement.
"TAX RETURN" or
"TAX RETURNS" means any return, declaration, report, claim
for refund or information return or statement relating to Taxes, including,
without limitation, any schedule or attachment
thereto, any amendment
thereof,
and any estimated report or statement.
"THIRD
PARTY PLANS" has the meaning set forth
in Section 11.8(d) of
this
Agreement.
"THREATENED"
means a claim,
Proceeding, dispute,
action, or other
matter
for which any demand or statement
has been made,
orally or in writing,
or any
oral or written notice has been given, that would lead a reasonably prudent
Person to conclude that such a claim, Proceeding, dispute, action, or other
matter may, with reasonable certainty, be asserted, commenced, taken or
otherwise pursued in the future; PROVIDED,
HOWEVER, that the foregoing shall not
include customer billing or service
disputes in the Ordinary Course of Business.
"TITLE
DOCUMENTS"
has the meaning set forth in Section 5.14(a) of this
Agreement.
"TITLE
POLICY" has the meaning set forth in Section 5.14(c) of this
Agreement.
"TRANSACTIONAL
EXPENSES" has the meaning set forth in Section 13.10 of this
Agreement.
"USE"
means to appropriate any of the Confidential Information of the
Company and/or its Subsidiaries for the benefit of oneself or any
other Person
other than the Company.
"VDH" means the
Office of Water
Programs of the
Virginia Department of
Health, a regulatory agency of the Commonwealth of
Virginia which, among
other
things, regulates the issuance of water system permits and compliance with
federal and state Applicable Laws.
"WARN ACTS" has
the meaning set forth in Section 3.10(k) of this Agreement.
ARTICLE 2
PURCHASE OF STOCK; PURCHASE PRICE
2.1 PURCHASE AND SALE OF STOCK. In reliance upon the representations,
warranties and covenants contained in this Agreement as of
the date hereof and
on the Closing Date, the Purchaser agrees to purchase the Stock from the
Shareholder, and the Shareholder agrees to
sell, transfer,
convey, assign and
deliver the Stock to the Purchaser on the
terms and conditions set forth in this
Agreement. Such sale, transfer, conveyance,
assignment and delivery of the Stock
shall convey good and marketable
title to the Stock,
free and clear of any
and
all Rights and Encumbrances, and at such time the Stock will be
fully paid and
non-assessable. At the Closing the Shareholder will deliver to the Purchaser
certificate(s) evidencing the Stock duly endorsed
in blank or with stock powers
duly executed by the Shareholder.
2.2 PURCHASE PRICE. The purchase price
to be paid to the Shareholder by the
Purchaser for the Stock (the "PURCHASE PRICE") shall be Forty-Eight Million
Dollars ($48,000,000).
10
<PAGE>
2.3 PAYMENT OF PURCHASE PRICE ON THE
CLOSING DATE. The Purchase Price shall
be paid on the Closing Date by wire
transfer of immediately available funds to
an account (or accounts) designated by the
Shareholder at least two (2) business
days prior to the Closing.
2.4 CLOSING AND CLOSING
DELIVERIES.
(a) CLOSING AND CLOSING DATE. Subject to the satisfaction or
waiver of
the conditions precedent contained in Articles 6, 7 and 8 hereof, the
closing of the
transactions
contemplated by this
Agreement (the "CLOSING")
shall be held at a
mutually agreed
time, but in no event no more than
ten
(10) business days
after (i) all consents and approvals (including the Final
Order(s) described and
defined in Section 6.2 of this Agreement) required to
consummate the
transactions
contemplated hereby have been received from any
Governmental
Body, including the FTC, DOJ, the NCUC and the
VDH, and (ii)
all other conditions to the Closing have been duly
satisfied or waived
in
writing, at the
offices of Briggs and Morgan, Professional Association, 2400
IDS Center,
Minneapolis, Minnesota, 55402. The Closing shall be effective
as
of 11:59 P.M.
on the date of Closing
and such date is
referred to in
this
Agreement as the
"CLOSING DATE."
(b) CLOSING DELIVERIES
BY THE SHAREHOLDER. At the Closing, the
Shareholder
shall execute,
where necessary or
appropriate, and
deliver to
the Purchaser each and
all of the following:
(i) A
certificate in the
form of EXHIBIT A hereto signed by a
duly authorized officer of the Shareholder, and dated as of the
Closing
Date, to the effect that the representations and warranties made by
the
Shareholder in this
Agreement (as modified by the Schedules and any
Supplement(s)) and in
any document,
instrument and/or agreement to be
executed and delivered by the Shareholder pursuant to this Agreement
are true and correct in all material respects at and as of the
Closing
and the Shareholder has performed and complied with all of its
covenants,
agreements and obligations under this Agreement which are to
be performed and
complied with by the
Shareholder on or
prior to the
Closing Date;
(ii) The
certificates evidencing the Stock duly endorsed by the
Shareholder in blank
or accompanied
by stock powers duly
executed by
the Shareholder;
(iii) A copy certified
by the Secretary of
the Shareholder of the
duly adopted
resolutions of the Board of Directors of the Shareholder
approving this
Agreement,
including
the Ancillary Documents,
authorizing the
execution and delivery of this Agreement and the
Ancillary
Documents, and
the consummation of the transactions
contemplated hereby and thereby;
(iv) The
corporate minute
books,
the corporate seals, and
stock books for the Company and the Subsidiaries;
(v) A
satisfaction of
debt
in a form satisfactory to the
Purchaser executed by
the Shareholder
with respect to the
payment of
intercompany
11
<PAGE>
liabilities and obligations between the Shareholder and its
Affiliates
(other than the
Company and the
Subsidiaries) and the
Company and the
Subsidiaries;
(vi) Delivery of
any and all documents relating to Permits;
(vii) A duly executed
written opinion letter
by counsel for
the
Shareholder, dated as
of the Closing Date, addressed to the Purchaser,
as contemplated by Section 7.4 of this Agreement;
(viii) Duly executed
resignations
of (A) the officers of the
Company and the
Subsidiaries who are also officers of the Shareholder,
and (B) the directors of the Company and the Subsidiaries,
effective as
of the Closing Date;
(ix)
Certificates of good
standing for the Shareholder, the
Company and each of the Subsidiaries dated within five (5) days of
the
Closing Date
issued by the Secretary of State of their respective
states of incorporation;
(x) The
non-foreign person
affidavit required by Section 1445
of the Code;
(xi) The
termination documents for the guarantees described in
Section 5.22;
(xii) Evidence
reasonably satisfactory to the Purchaser that the
Company and the
Subsidiaries
have arranged for the payment of the
Retention Payments concurrently upon the Closing; and
(xiii) Such other documents and items as are reasonably
necessary
or appropriate
to effect the consummation of the transactions
contemplated hereby or which may be customary under local law.
(c) CLOSING DELIVERIES
BY THE PURCHASER. At the Closing, the Purchaser
shall execute, where necessary or appropriate, and deliver to the
Shareholder each and
all of the following:
(i)
Payment of
the Purchase Price in the manner set forth
in
Section 2.3 of this Agreement;
(ii) A
certificate in
the form of EXHIBIT C hereto signed by
a
duly authorized
officer of the Purchaser, and dated as of the Closing
Date, to the effect that the representations and warranties made by
the
Purchaser in this
Agreement (as modified by the Schedules and any
Supplement(s)) and in
any document,
instrument and/or agreement to be
executed and delivered by the Purchaser pursuant to this Agreement are
true and correct in all material respects at and as of the Closing
and
the Purchaser has
performed and complied with all of its
covenants,
agreements and
obligations
under this Agreement which are to be
performed and complied with by the Purchaser on or prior to the
Closing
Date;
12
<PAGE>
(iii) A copy certified
by the Secretary of the Purchaser of the
duly adopted
resolutions of the
Board of Directors of
the Purchaser
approving this
Agreement,
including the Ancillary Documents, and
authorizing the execution and delivery of this Agreement, including
the
Ancillary
Documents, and
the consummation of the transactions
contemplated hereby and thereby;
(iv) A duly
executed written opinion letter by counsel for the
Purchaser, dated as of
the Closing Date, addressed to the Shareholder,
as contemplated by Section 8.3 of this Agreement;
(v)
Evidence reasonably satisfactory to the Shareholder that the
performance and other
bonds required by Section 5.25 have been secured
in accordance with the provisions of such section;
(vi) A
certificate of good standing of the Purchaser dated within
five (5) days of the Closing Date issued by the Secretary of State of
the Purchaser's state of incorporation; and
(vii) Such other
documents and items as are reasonably necessary
or appropriate
to effect the consummation of the transactions
contemplated hereby or which may be customary under local law.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
As an inducement for the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, the
Shareholder represents and
warrants to the Purchaser that each and all
of the following representations and
warranties (as modified by the Schedules to
this Agreement (the "SCHEDULES") and
any Supplement delivered by the Shareholder pursuant to Section 13.21 of
this
Agreement) are true and correct as of the date of this
Agreement and will be
true and correct as of the Closing
Date. The Schedules shall be arranged in
paragraphs corresponding to the sections and subsections contained in this
Article 3.
3.1 ORGANIZATION.
(a) THE SHAREHOLDER. The Shareholder is a Minnesota corporation and
is
duly organized, validly existing and in good standing under the laws of
Minnesota.
The Shareholder has all requisite power and authority to own,
operate and lease its
properties
and assets
(including
the Stock) and to
conduct its business
as it is now being conducted.
(b) THE COMPANY AND THE SUBSIDIARIES. The Company and the
Subsidiaries
each (i) are a
corporation
duly organized, validly existing and in good
standing under the
laws of their respective states of incorporation, (ii)
have all requisite
power and authority,
corporate and
otherwise,
to own,
operate and lease its
properties
and assets and to
conduct the Business as
it is now being
conducted by each entity. The Business is the only
business
conducted by the Company and the Subsidiaries. As set forth in SCHEDULE
3.1(b), each of the Company and the Subsidiaries is duly qualified to
transact
13
<PAGE>
business as a foreign
corporation and is in
good standing under the laws of
every state or
jurisdiction
in which the nature of
their activities or
of
their properties (owned, leased or operated) makes such qualification
necessary and in which
the failure to be so qualified could not reasonably
be expected to have a
Material Adverse Effect.
3.2 CAPITALIZATION. The authorized
capital stock of the
Company consists
solely of 6,000 shares of common voting
stock, One Dollar
($1.00) par value, of
which 6,000 shares are issued and
outstanding on the date hereof, and are owned
beneficially and of record by the
Shareholder,
free and clear of all
liens and
Encumbrances. The Company is the sole legal, beneficial and equitable
shareholder of all of the equity interests in and with respect to the
Subsidiaries. None of the Stock has been issued
in violation
of the rights of
any Person. Except as set forth in SCHEDULE
3.2 hereto, as of the
date hereof,
(i) there are no Convertible Securities or Debt Securities outstanding, (ii)
there are no Rights outstanding,
and (iii) there are no
shareholder
agreements
or other agreements, understandings or
commitments relating to the rights of the
Shareholder to vote or dispose of the
Stock.
3.3 DUE AUTHORIZATION. The execution, delivery and performance of this
Agreement, including the documents,
instruments
and agreements to be
executed
and delivered by the Shareholder pursuant to this Agreement (the "ANCILLARY
DOCUMENTS"), and the consummation of the
transactions
contemplated hereby
and
thereby have been duly and validly
authorized by all necessary corporate action
on the part of the Shareholder.
This Agreement and the
Ancillary Documents have
been, or will be on or before the
Closing Date,
duly and validly
authorized,
executed and delivered by the Shareholder, and the obligations of the
Shareholder hereunder and thereunder are or will be, upon such
execution and
delivery, valid, legally binding and enforceable against the Shareholder in
accordance with their respective terms.
3.4 NO BREACH. The Shareholder has
full power and authority, corporate and
otherwise, to sell, assign, transfer, convey and deliver the Stock to the
Purchaser and to otherwise perform its obligations under this
Agreement and the
Ancillary Documents. The execution and delivery of this Agreement and the
Ancillary Documents to be executed and
delivered by the Shareholder pursuant to
this Agreement, and the consummation of the
transactions contemplated hereby and
thereby will not: (i) violate any provision
of the Articles of
Incorporation or
Bylaws of the Shareholder, (ii) except as set forth in
SCHEDULE 3.4, or as
contemplated by clause (iii) immediately
following, violate any
Applicable Laws
or Injunction applicable to the Shareholder,
the Company or the
Subsidiaries,
(iii) other than the filings required by HSR, the NCUC, and the
VDH, and except
as provided in SCHEDULE 3.4 hereto, require any filing with, Permits from,
authorization, consent or approval of, or the giving of any notice to, any
Person, (iv) except as provided in SCHEDULE
3.4 hereto, result in a violation or
breach of, or constitute (with or without
due notice or lapse of time or both) a
default (or give another party any rights of termination, cancellation or
acceleration) under any of the terms,
conditions
or provisions of any note,
bond, mortgage, indenture, license, franchise, Permit (including, but not
limited to, any Permits, approvals or authorizations of any
Governmental Body),
lease or other Contract to which the
Company and/or the
Shareholder is a party,
or by which they or any of their properties or assets may be bound, or (v)
result in the creation or imposition of any
Encumbrance on any of the properties
or assets of the Company or the Subsidiaries, such that in the case of any
violation or the absence of Permit, consent
or approval
14
<PAGE>
described in clauses (ii), (iii) and (iv) above, the occurrence or omission of
which would not be reasonably likely to
have a Material Adverse Effect.
3.5 CLEAR TITLE. Except as otherwise set forth in
SCHEDULE 3.5 or the
leased property disclosed in SCHEDULE 3.16 hereto,
on the Closing Date, (i) the
Company and each of the Subsidiaries will hold good title to their
respective
personal property, and (ii) such personal property is and shall be free and
clear of any and all Encumbrances of any kind, nature and description
whatsoever, except for Encumbrances which are
disclosed, reflected
or reserved
for or against in the Balance Sheets.
3.6 CONDITION OF ASSETS. Except as set
forth in SCHEDULE 3.6 hereto, all of
the properties and assets of the Company and the Subsidiaries (i) have been
maintained in accordance with industry
standards in all material respects, (ii)
are in reasonable operating condition and repair,
and (iii) are the assets used
to operate the Company's Business as
currently conducted.
3.7 LITIGATION. Except as set forth in
SCHEDULE 3.7 hereto,
and except for
any Proceeding which generally affects the business of all
Persons conducting
business similar to the Company and the
Subsidiaries
and in which the
Company
and/or the Subsidiaries are not a named
defendant, there is no Proceeding:
(a) that has
been commenced by or served upon the Company, the
Subsidiaries or the
Shareholder, or of
which the Shareholder or the Company
have Knowledge; or
(b) to the
Knowledge of the Company or the Shareholder, that
challenges,
or that will have, the
effect of preventing,
delaying, making
illegal, or otherwise
interfering with, any of the transactions contemplated
hereby.
To the Knowledge of the Shareholder or the
Company, no such
Proceeding has been
Threatened. Except as provided in SCHEDULE 3.7
hereto, to the
Knowledge of the
Shareholder or the Company, the Company and the Subsidiaries are not
(individually or otherwise) a party to or subject to the provisions of any
Injunction which could, individually or in
the aggregate, reasonably be expected
to have a Material Adverse Effect, or impair the ability of the
Shareholder to
consummate the transactions contemplated
hereby.
3.8 LABOR MATTERS. Except as set forth
in SCHEDULE 3.8 hereto, the Company
and the Subsidiaries, individually or collectively,
have never been a
party to
any collective bargaining agreement or other
labor Contract and there has never
been, and there is not presently
pending or existing,
and to the Knowledge
of
the Shareholder or the Company, there is not Threatened (i) any strike,
slowdown, walkout, picketing, work stoppage, labor arbitration or other
Proceeding in respect of the grievance of
any employee, (ii) any
application or
complaint filed by any employee or union with the National Labor Relations
Board, or any comparable Governmental Body,
(iii) any organizational activity or
other labor dispute against or affecting
the Company or the Subsidiaries, and no
application for certification of a collective
bargaining
agreement is
pending
or, to the Knowledge of the Shareholder or
the Company, is Threatened. There is
no lockout of any employees by the Company or the Subsidiaries and no such
action is
15
<PAGE>
contemplated by either the Company or the
Subsidiaries.
Except as set forth
in
SCHEDULE 3.8 hereto, there is no Proceeding pending or,
to the Knowledge of the
Shareholder or the Company, Threatened by any Person against
the Company or the
Subsidiaries or any of their current or
former officers,
directors or employees
relating to employment, equal employment opportunity, discrimination,
harassment, wrongful discharge, unfair labor practices,
immigration,
wages,
hours, benefits, collective bargaining, the payment of social security or
similar Taxes, occupational safety and
health or plant closing.
3.9 TAX MATTERS.
(a) TAX RETURNS. The
Company and the Subsidiaries have timely filed, or
caused to be timely
filed, or will timely file or cause to be
timely filed
with the appropriate
taxing authorities,
all Tax Returns that
are required
to be filed by, or
with respect to, the Company and the Subsidiaries on or
prior to the Closing
Date. The Returns have
accurately
reflected and will
accurately
reflect
all Liability for Taxes of the Company and the
Subsidiaries
for the periods
covered thereby. SCHEDULE 3.9(a) lists all
income Tax
Returns filed with any Governmental Body with respect to the
Company and the Subsidiaries for the taxable periods ended on or after
December 31, 1999.
(b) PAYMENT OF TAXES. All Taxes and Tax Liabilities of the
Company and
the Subsidiaries for all taxable years
or periods that end on or before the
Closing Date and, with respect to any taxable year or period beginning
before and ending
after the Closing
Date, the portion of
such taxable year
or period ending on the day immediately preceding the Closing Date
("PRE-CLOSING PERIOD")
have been timely paid.
(c) OTHER TAX MATTERS. Except as set forth in SCHEDULE 3.9(c):
(i) the
Company and the Subsidiaries have not been the subject
of a dispute or claim or an audit or other examination of Taxes by the
Tax authorities of any
Governmental Body, nor
have the Company or the
Subsidiaries received
any notices from any such Taxing authority
relating to any issue
which could have a Material Adverse Effect.
SCHEDULE 3.9(c) also includes a list of all Tax examination reports
and
statements of deficiencies assessed against or agreed to by the
Company
and/or the
Subsidiaries since
January 1, 1998, each of which has been
provided to the Purchaser.
(ii) the
Shareholder, the Company and the Subsidiaries have not
(A) entered into an agreement or waiver or been requested to enter
into
an agreement or waiver extending any statute of limitations
relating to
the payment or collection of Taxes of the Company or the
Subsidiaries,
or (B) is presently
contesting the Tax Liability of the Company or the
Subsidiaries before any Governmental Body.
(iii) the Company and
the Subsidiaries have not been included in
any "consolidated,"
"unitary" or
"combined" Tax Return
provided for
under Applicable
Law with respect to
Taxes for any taxable period for
which the statute of limitations has not expired.
16
<PAGE>
(iv) all Taxes
which the Company or the Subsidiaries are (or have
been) required by law to withhold or collect have been duly
withheld or
collected, and have
been timely paid over to the proper authorities to
the extent due and payable.
(v) neither the
Company nor
either of the Subsidiaries is a
"United States real property holding corporation" within the
meaning of
Section 897(c)(2) of the Code.
(vi) there
are no Tax sharing, allocation,
indemnification or
similar agreements
in effect as between the Company and/or the
Subsidiaries or any
predecessor
or Affiliate thereof and any other
party (including the
Shareholder
and any predecessors or Affiliates
thereof) under
which the Purchaser, the Company or either of the
Subsidiaries could be
liable for any Taxes or other claims of any
Person.
(vii) none of
the Company or the Subsidiaries have applied for,
been granted, or
agreed to any
accounting method
change for which it
will be required to take into account any adjustment under Section 481
of the Code or any similar provision of the Code or the
corresponding
Tax laws
of any nation, state or locality.
(viii) no election under Section 341(f) of the Code has
been made
or shall be made prior to the Closing Date to treat the Company or
the
Subsidiaries as a consenting corporation, as defined in Section 341 of
the Code.
(ix) neither the
Company nor the Subsidiaries are, individually
or collectively,
a party to any
agreement that would require any of
them to make any payment that would constitute an "excess parachute
payment" for purposes of Sections 280G and 4999 of the Code.
(x) there
are no requests for
rulings in
respect of any
Taxes
pending between the Company or the Subsidiaries and any Tax
authority.
3.10 EMPLOYEE
BENEFITS.
(a) BENEFIT PLANS.
Except as set forth in
SCHEDULE 3.10 hereto,
the
Company and the
Subsidiaries
do not maintain or
contribute to any
Benefit
Plans. Without limiting the generality of the
foregoing provision of
this
Section, except as described in SCHEDULE
3.10 hereto, there are
no pension
plans, welfare plans, or any employee
benefit plans qualified under Section
401(a) of the Code, to
which the Company or either of the Subsidiaries are
required to
contribute.
Except as described in
SCHEDULE 3.10 hereto,
the
Company and the
Subsidiaries do not and will not have any unfunded Liability
for services rendered
prior to the Closing Date under any Benefit Plans. The
Company and the Subsidiaries are not in any material default under any
Benefit Plan. Other
than claims for benefits in ordinary course, there are
no actions,
suits, disputes,
arbitrations or other
material claims pending
or, to the Knowledge of the Shareholder or the Company, Threatened with
respect to any Benefit
Plan.
17
<PAGE>
(b) EMPLOYEE PENSION BENEFIT PLANS. Except as set forth in SCHEDULE
3.10, none of the
Company, the
Subsidiaries,
or any Person required
to be
aggregated with the
Company and the Subsidiaries under Section 414(b), (c),
(m), or (o) of the Code ("ERISA AFFILIATE"), maintains or has ever
maintained
an Employee
Pension Benefit Plan as defined in Section
3(2) of
ERISA, that is subject to Section 412 of
the Code and Section 302 of ERISA.
With respect to each
such Employee Pension
Benefit Plan
maintained or ever
maintained by the
Company, by either Subsidiary, or by any ERISA Affiliate:
(i) no unsatisfied
liabilities to
participants, the IRS,
the United States
Department
of Labor, the PBGC, or to any other Person or entity
have been
incurred as a result
of the termination
of any Employee Pension Benefit
Plan, (ii) no Employee
Pension Benefit Plan, which is subject to the minimum
funding requirements of Part 3 of Subtitle
B of Title I of ERISA or subject
to Section 412 of the Code, has incurred any "accumulated funding
deficiency" within the
meaning of Section 302 of ERISA or Section 412 of the
Code and there has
been no waived funding
deficiency within the
meaning of
Section 303 of ERISA
or Section 412 of the Code, (iii) all premiums to the
PBGC have been
timely paid in full, and (iv) the PBGC has not
instituted
proceedings to
terminate any such Plan and no condition exists that presents
a risk that such
proceedings
will be instituted
or that would
constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a
trustee to administer,
any such Plan. Neither
the Company
nor the Subsidiaries currently sponsor, maintain, contribute to, or are
required to contribute
to an Employee Pension
Benefit Plan subject to Title
IV of ERISA.
(c) MULTIEMPLOYER PLANS. Except as set forth in SCHEDULE
3.10 hereto,
neither the Company
nor any of its
Subsidiaries
contributes to, or has
or
could have, any Liability (including but not limited to withdrawal
Liability)
with respect to any multiemployer plan (as defined in Section
4064(a) of ERISA or
Section 4001(a)(3) of ERISA).
(d) OTHER PLANS.
Except as otherwise set forth in SCHEDULE 3.10, there
are no present or
former employees of
the Company or the
Subsidiaries who
are entitled to (i)
any pensions, group health, or other benefits to be paid
upon or after
termination of employment, including termination on account of
disability
(except as otherwise
required under Section 601 of ERISA),
or
(ii) deferred
compensation payments.
(e) DOCUMENTS. The Shareholder has made available to the Purchaser
the
following documents, as they may have been amended to the date hereof,
embodying or relating to each Benefit Plan of the Company and the
Subsidiaries
set forth in SCHEDULE 3.10 hereto: (i) all written plan
documents for each
such Benefit Plan,
including all amendments to each such
Benefit Plan, any related trust agreements, group annuity contracts,
insurance policies or other funding
agreements or
arrangements,
(ii) the
most recent
determination
letter received from the IRS, if any, as
to the
qualified status of any such Benefit Plan
under Section 401(a) of the Code,
(iii) the current
summary plan
description,
if any, for each such
Benefit
Plan, and (iv) the
most recent annual
return/report on form 5500, 5500-C or
5500-R, if any, for
each such Benefit Plan.
(f) PROHIBITED TRANSACTIONS. The Company and the Subsidiaries have
not,
nor has any other
"disqualified person"
or "party in interest", as defined
in Section
4975(e)(2)
18
<PAGE>
of the Code and Section 3(14) of ERISA, respectively, engaged in a
"prohibited
transaction,"
as such term is
defined in Section
4975 of the
Code and Section 406 of ERISA, with respect to any Benefit Plan of the
Company or any Subsidiary subject to ERISA, which could reasonably be
expected to subject the Company or any Subsidiary to a Tax or penalty on
prohibited
transactions imposed by either Section 502(i) of ERISA or
Section
4975 of the Code.
The execution and delivery by the Shareholder of this
Agreement and the
consummation of the transactions contemplated hereby will
not (i) involve any
prohibited transaction within the meaning of Section 406
of ERISA or Section 4975 of the Code with respect to any Benefit
Plan set
forth in SCHEDULE 3.10 hereto, or (ii) accelerate the payment of any
benefits under any
Benefit Plan set forth in SCHEDULE 3.10 hereto.
(g) FIDUCIARY DUTY. None of the Company, the Subsidiaries, nor any
other fiduciary of any Benefit
Plan set forth in
SCHEDULE 3.10 hereto
are
engaged in any
transaction
with respect to such Benefit Plan or
failed to
act in a manner with
respect to such Benefit Plan which could reasonably be
expected to subject
the Company or any Subsidiary to any material Liability
for a breach of
fiduciary duty under ERISA or any other Applicable Law.
(h) GROUP HEALTH
PLANS. Except as set forth in SCHEDULE 3.10, the
Company, the Subsidiaries and all ERISA Affiliates have complied in all
material respects with the coverage continuation requirements of all
Applicable Laws,
including Sections 601
through 609 of ERISA, Section 4980B
of the Code, and the requirements of any similar state law regarding
continued health coverage, and the Company and the Subsidiaries have
incurred no material Liability with respect to its failure to offer or
provide continued coverage in accordance with the
foregoing
requirements,
nor is there any suit
or other action
pending, or to the
Knowledge of the
Shareholder or the
Company, Threatened,
with respect to such
requirements.
Except as set forth in
SCHEDULE 3.10, (i) there has been no violation of the
obligations
imposed by Section
9801 of the Code and Part 7 of Subtitle B of
Title I of ERISA with
respect to any Benefit Plan to which such obligations
apply, (ii) none of
the Company, the Subsidiaries or any ERISA Affiliate has
contributed
to a nonconforming group health plan (as defined in Section
5000(c) of the Code),
and (iii) none of the Company, the Subsidiaries or any
ERISA Affiliate has incurred a Tax under
Section 5000(a) of the
Code which
is, or is reasonably expected to become, a Liability of the Company,
the
Subsidiaries or an
ERISA Affiliate.
(i) TRIGGERING OF OBLIGATION AND OTHER BINDING COMMITMENTS. Except
for
the claims set forth
in SCHEDULE 3.10, the
consummation of the transactions
described in this
Agreement, in and of
themselves, or in
conjunction with
any other event which
has occurred on or prior to the date hereof (excluding
the Retention and Severance Agreements), will not entitle any current
or
former employee of the Company or the Subsidiaries to severance pay,
unemployment
compensation or any
other similar payment,
or accelerate the
time of payment or
vesting, or increase
the amount of
compensation due
to
any such employee or
former employee.
(j) OPERATIONAL
COMPLIANCE. Each
Benefit Plan has been
administered
in all material
respects in
accordance
with its terms and all
Applicable
Laws, and, except as set
19
<PAGE>
forth in SCHEDULE
3.10, each Benefit Plan intended to be qualified
under
Section 401(a) of the
Code is so qualified and is, as most recently amended,
the subject of a
favorable determination letter as to its qualification.
No
event has occurred and no condition or set of circumstances exists in
connection
with which the
Company or any
Subsidiary
could be directly
or
indirectly
subject to any
Encumbrance or loss of
Tax deduction under ERISA
or the Code or under
any agreement, instrument, statute, rule of law or
regulations
pursuant to or under
which the Company or
any Subsidiary
has
indemnified
or is required to indemnify any Person against any such
liability (except liability for benefit claims and funding obligations
payable in the
ordinary course).
(k) WARN COMPLIANCE. The Company and the Subsidiaries have complied
in
all respects with the
Worker Adjustment and Retraining Notification Act, 29
U.S.C. ss. 2101 et
seq., and its corresponding regulations, and any similar
state law, rule or
regulation or local
ordinance, rule or
regulation,
in
each case in effect as
of the date hereof,
providing for
notification
to
employees affected by
closing, relocation,
sale of business, mass layoff or
similar event (collectively, the "WARN ACTS") on account of closings,
relocations,
sales of businesses,
mass layoffs or
similar events occurring
on or prior to the
Closing and all related notices, payments, fines or
assessments due to any
Government Body pursuant to such WARN Acts.
(l) ABSENCE OF
TERMINATION
RESTRICTIONS.
Except as set forth in
SCHEDULE 3.10, (i) each Benefit Plan may be
terminated
by the Company or
either Subsidiary,
as applicable,
in accordance with its
terms and without
the Company or any
Subsidiary incurring
any obligation or liability arising
or resulting
from such termination, and (ii) neither the Company,
either
Subsidiary nor the
Shareholder has made any representations to employees
of
the Company or either
Subsidiary
that any Benefit
Plan would be
continued
without change for any period of time on
and after the Closing
Date. The
foregoing shall not be
applicable to the Retention and Severance Agreements
described in Section
3.37 and 11.8 hereof.
3.11 NO GUARANTEES.
Except as set forth in SCHEDULE 3.11, (i) none of the
obligations of the Company or the
Subsidiaries is guaranteed by, or subject to a
similar contingent Liability to, any Person,
and (ii) neither the
Company nor
the Subsidiaries have, individually or collectively,
guaranteed,
or otherwise
become contingently liable for, any
Liability of any Person. To the Knowledge of
the Shareholder or the Company,
no event has arisen
that would give rise to any
obligation under any guarantee set forth in SCHEDULE 3.11 or
under any of the
bonds set forth in SCHEDULE 5.25.
3.12 FINANCIAL
STATEMENTS. The Shareholder has caused the Company and the
Subsidiaries to furnish true and correct copies of the financial statements
identified in SCHEDULE 3.12 hereto to the Purchaser. All of said financial
statements, including any notes thereto, fairly present the consolidated
financial position and condition of the
Company and the Subsidiaries as of their
respective dates and the results of their
operations for the periods covered in
accordance with GAAP applied by the Company
and the Subsidiaries on a consistent
basis throughout the periods covered
thereby and on a basis consistent with that
of prior years and periods; PROVIDED,
HOWEVER, that any unaudited and/or interim
financial statements listed on such SCHEDULE 3.12 are subject to year-end
adjustments and lack footnotes and other
required
20
<PAGE>
presentation items. Except for Liabilities (i)
reflected or reserved against in
the consolidated balance sheets (the "BALANCE
SHEETS") of the
Company and the
Subsidiaries as of December 31, 2002 (the
"BALANCE SHEET DATE") or in the notes
thereto, (ii) incurred in the Ordinary Course of Business since the BALANCE
SHEET DATE (none of which resulted from, arose out of, is related
to, or was
caused by any breach of Contract), (iii)
arising under Contracts entered into in
the Ordinary Course of Business to which
the Company or the
Subsidiaries are a
party, and/or (iv) set forth in SCHEDULE 3.12 hereto, the Company and the
Subsidiaries do not have any Liabilities which, individually or in the
aggregate, would have a Material Adverse
Effect. The reserves
reflected in the
Balance Sheets are adequate.
3.13 ABSENCE
OF CERTAIN DEVELOPMENTS. Except for the transactions
contemplated by this Agreement or as otherwise set forth on SCHEDULE 3.13
hereto, since the Balance Sheet Date, (i)
there has not been any development or
combination of developments affecting the Company or the
Subsidiaries of
which
the Shareholder, the Company or the
Subsidiaries have Knowledge that has had, or
is likely to have, a Material Adverse Effect, and (ii) the Company and the
Subsidiaries have conducted the Business in the
Ordinary Course of Business and
have not:
(a) declared, set
aside or paid a dividend or made any other
distribution
with respect to any class of capital
stock of the Company
or
the Subsidiaries;
(b) changed accounting
methods or practices (including, without
limitation,
any change in
depreciation,
amortization
or cost accounting
policies or
rates);
(c) except as set forth in SCHEDULE 3.37, entered into any employment
contract or collective
bargaining
agreement,
written or oral, or
modified
the terms of any
existing employment contract or agreement or adopted,
amended, modified or
terminated any Benefit Plan;
(d) made any change or amendment in its articles of incorporation or
bylaws;
(e) issued or sold any securities; acquired, directly or
indirectly, by
redemption
or otherwise, any securities; or granted or entered into any
options, warrants,
calls or commitments of any kind with respect thereto;
(f) made any capital expenditure exceeding One Hundred Thousand
Dollars
($100,000); and/or
(g) incurred any obligations for borrowed money or purchase money
debt
other than that
incurred pursuant to the Debt Instruments described and set
forth in SCHEDULE 3.29
of this Agreement.
3.14 INTELLECTUAL
PROPERTY. SCHEDULE 3.14 hereto contains a list and
description of all Intellectual Property owned by the Company and the
Subsidiaries or used by the Company or the
Subsidiaries in the
operation of the
Business. Except as set forth in SCHEDULE
3.14, the Company and the Subsidiaries
have all rights necessary to use such
Intellectual Property, and the Shareholder
and the Company have no Knowledge of any asserted
claim to the effect
that the
operation of the Business or the possession
or use in the Business of any of the
Intellectual Property listed and set forth in SCHEDULE
3.14 hereto,
infringes
the Intellectual Property rights of
21
<PAGE>
any other Person. Except as set forth in SCHEDULE
3.14, the Shareholder and the
Company have no Knowledge of any claim that
any of the Intellectual Property set
forth in SCHEDULE 3.14 is invalid; and, except as set forth in SCHEDULE
3.14
hereto, neither the Company nor any
Subsidiary is obligated under any Contract
or otherwise to pay royalties, fees or
other payments with respect to any of the
Intellectual Property listed and set forth in SCHEDULE
3.14 hereto. Except
as
set forth in SCHEDULE 3.14, the
consummation of the transactions contemplated by
this Agreement will not adversely affect the use by the Company or the
Subsidiaries of any of the Intellectual Property set forth in SCHEDULE 3.14
hereto.
3.15 COMPLIANCE WITH
LAWS. Except as set
forth in SCHEDULE
3.15, (i) the
Business has been operated and the Company and the Subsidiaries are in
compliance in all respects with the
requirements of Applicable Laws to which the
Company and the Subsidiaries are subject such that
any lack of compliance would
not have a Material Adverse Effect, and (ii) neither the Company nor the
Subsidiaries have received any notice of, and
neither the
Shareholder nor
the
Company have Knowledge of, any violation of
a material nature of
any Applicable
Laws respecting the Company or the
Subsidiaries.
3.16 OPERATING
CONTRACTS. Except
as disclosed in SCHEDULE 3.16 and the
developer Contracts set forth in SCHEDULE
3.22 (the "DEVELOPER CONTRACTS"), and
except with respect to (i) Contracts that have been fully performed as of the
date hereof and have no further
force or effect,
(ii) Contracts for capital
expenditures having a remaining balance of Fifty Thousand Dollars
($50,000) or
less, (iii) leases of personal property having a term of less
than one (1) year
or which require payments on an annual basis of
Twenty Five Thousand
Dollars
($25,000) or less per annum, (iv) Contracts for services, raw materials,
supplies or equipment involving payments of Ten Thousand Dollars
($10,000) or
less per annum, or (v) Contracts for the sale of any properties or services
involving a value of Fifty Thousand Dollars ($50,000) or less per annum,
excluding properties or services sold in the
Ordinary Course of
Business, the
Company and the Subsidiaries are not a party to any oral or
written Contract.
All of the Contracts set forth in SCHEDULE 3.16 hereto
are referred to in this
Agreement as the "OPERATING CONTRACTS." All of the Operating
Contracts and the
Developer Contracts were made in the
Ordinary Course of
Business, and, to
the
Knowledge of the Shareholder or the
Company, are valid, binding and currently in
full force and effect. Except as set forth
in SCHEDULE 3.16 hereto, neither the
Company nor the Subsidiaries are in material
default under any of the Operating
Contracts or the Developer Contracts, and, to the Knowledge of the
Shareholder
or the Company, no event has occurred
which, through the
passage of time or the
giving of notice, or both, would constitute a default by the Company or the
Subsidiaries, or give rise to a right of
termination or cancellation by another
party under any of the Operating Contracts
or the Developer Contracts, or cause
the acceleration of any Liability of the
Company or the Subsidiaries, or result
in the creation of any Encumbrance upon any of the properties or
assets of the
Company or the Subsidiaries. Except as set
forth in SCHEDULE 3.16 hereto, to the
Knowledge of the Shareholder or the
Company, no other
party is in default under
any of the Operating Contracts or the
Developer Contracts.
Except as set
forth
in SCHEDULE 3.16 hereto, none of the Operating Contracts or the Developer
Contracts have been canceled, terminated, amended or modified. Except as set
forth in SCHEDULE 3.4 hereto, the
consummation of the transactions contemplated
hereby will not require the consent or approval of
any Person under any
of the
Operating Contracts or the Developer
Contracts.
22
<PAGE>
3.17 REAL ESTATE. With
respect to real estate (including fixtures and
improvements) owned by the Company or the Subsidiaries (the "OWNED REAL
ESTATE"), and real estate (including
fixtures and
improvements) leased
by the
Company or the Subsidiaries (the "LEASED
REAL ESTATE") (collectively, Owned Real
Estate and Leased Real Estate shall be
referred to herein as "REAL ESTATE"):
(a) SCHEDULE 3.17
contains a description (including system name, county
internal identification numbers and deed and map
references) segregated by
each of the Company
and the Subsidiaries of each parcel of Owned Real Estate
and a listing and
description
(including
the parties, term, expiration
date(s), address, and
the general use description of the leased premises) of
each written or oral lease regarding Leased Real Estate which is not
otherwise set forth in SCHEDULE 3.16 hereto (the leases of Leased Real
Estate described in SCHEDULE 3.16 and
SCHEDULE 3.17 are
collectively, the
"LEASES");
(b) Except as set forth in SCHEDULE 3.17 hereto, there are no
deferred
property Taxes or
assessments
with respect to the
Real Estate which may or
will become due and payable as a result of the consummation of the
transaction
contemplated hereby;
(c) The Company,
and each Subsidiary,
respectively, is the sole owner
in fee simple title of
each parcel of Owned Real Estate and each such parcel
is free and clear of
any and all
Encumbrances, except
(A) those parcels of
Owned Real Estate that are held in fee simple determinable, fee simple
subject to
condition subsequent or are held solely pursuant to easement
(perpetual
or otherwise), and (B) (i) those Encumbrances set forth in
SCHEDULE 3.17 hereto,
(ii) municipal zoning ordinances, recorded or platted
easements for public
utilities and recorded
building and use
restrictions
and covenants,
(iii) general Real
Estate Taxes and
installments of special
assessments
payable in the year of Closing, and (iv) minor survey
exceptions,
Encumbrances,
licenses, easements or reservations of, or rights
of others for, oil,
gas minerals,
ores or metals,
rights of way,
sewers,
electric lines,
telegraph and telephone lines and other similar purposes, or
zoning or other
restrictions on the
use of real property,
minor defects in
title or other
similar charges or Encumbrances not interfering in any
material respect with
the Ordinary Course of Business of the Company or with
the use or ownership
of the Owned Real Estate (collectively the "PERMITTED
ENCUMBRANCES").
To the Knowledge of the Company or the Shareholder, the
Permitted Encumbrances and those Encumbrances set forth in SCHEDULE 3.17
hereto do not
individually or in the aggregate materially impair or prohibit
the current use or operation of the Owned Real Estate
by the Company or the
Subsidiaries;
(d) Except as
set forth in SCHEDULE 3.17 hereto, there are no
condemnation
Proceedings pending
or, to the Knowledge of the Company or the
Shareholder,
Threatened
with respect to all or any part of any parcel
of
Real Estate. SCHEDULE 3.17 hereto sets forth all private condemnation
proceedings
that have been
initiated by the Company under a statutory power
of condemnation
granted by the North Carolina General Statutes (Chapter 40A,
Section
40A-3(a)(1));
(e) To the Knowledge of the Company or the Shareholder, except
for the
Permitted Encumbrances and those Encumbrances set forth in SCHEDULE 3.17
hereto,
23
<PAGE>
there are no
Encumbrances which
materially and
adversely affect the use or
occupancy of all or any part of any
parcel of Owned Real Estate or any
easements;
(f) Except as set forth in SCHEDULE 3.17 hereto, to the Knowledge of
the Company or the
Shareholder, the
improvements located
on each parcel of
Real Estate, including
fences, driveways and other structures occupied, used
or claimed by the Company or the Subsidiaries, are wholly within the
boundary lines of such
parcels of Real Estate and such improvements and the
present uses thereof
by the Company and the Subsidiaries, as applicable, do
not in any material
respect infringe upon the rights of any other Person;
(g) Except as set forth in SCHEDULE 3.17 hereto, to the Knowledge of
the Company or the
Shareholder,
no buildings,
fences, driveways or other
structures of any
adjoining owner
encroach, in any
material respect
which
interferes
with the operation of
the Business, upon any
part of any parcel
of Real Estate or any
easements;
(h) Except as
set forth in SCHEDULE 3.17, the Company and the
Subsidiaries,
as applicable, have all easements (or access
through public
utility easements) on to private property,
construction
permits, highway
encroachment
agreements and permits (and other similar licenses and permits)
and right-of-way-licenses reasonably necessary to conduct
the Business and
to use and operate the
Real Estate in the manner it is currently being used
and operated by the
Company and the
Subsidiaries, except
where the failure
to have any such easements or access, construction permits, highway
encroachment
agreements
and permits (and other similar licenses and
permits), and right-of-way licenses would not have a Material Adverse
Effect;
(i) Neither the
Company nor any Subsidiary is in default in the
performance of any
material obligation under the Leases or easements, and to
the Knowledge of the
Company or the
Shareholder, none of
the other parties
to the Leases or
easements are in default in performance of their material
obligations
thereunder,
the Leases and easements are in full force and
effect, and neither
the Company nor any of the Subsidiaries has assigned its
rights under the
Leases or easements;
(j) Except as set forth in SCHEDULE 3.17 neither the Company nor any
Subsidiary
has leased or granted
to any other Person or entity the right to
use or occupy all or
any portion of the
Owned Real
Estate, and the Owned
Real Estate is not
subject to an option or right to purchase in favor of any
Person or entity;
(k) Except as set forth in SCHEDULE 3.17, no consents to or
approval of
the transactions
contemplated by this Agreement are required from any Person
or entity under the
terms of the easements
or Leases,
and to the extent
a
consent or approval is
required (each, a "REQUIRED CONSENT"), on or before
Closing, the Shareholder shall, at its sole cost, obtain the Required
Consent, in form
reasonably satisfactory to the Purchaser; and
(l) Except as set
forth in SCHEDULE 3.17, each of the parcels of Owned
Real Estate
constitutes
a separate
tax parcel,
and is not taxed with
any
other real
property.
24
<PAGE>
The Purchaser
acknowledges and agrees that the title commitment and survey
work and documentation provided in Section 5.14 of this
Agreement may
contain
additional information regarding the Owned
Real Estate of which the Shareholder
does not have Knowledge as of the date of
this Agreement and, as
a result, may
be properly included in a Supplement
submitted by the
Shareholder in accordance
with the terms of Section 13.21 of this
Agreement.
3.18 ACCOUNTS
RECEIVABLE. The accounts receivable of the Company and the
Subsidiaries, and other rights to the payment of money
represent,
and on the
Closing Date will represent, valid obligations arising from
sales actually made
or services actually performed in the
Ordinary Course of Business.
3.19 BOOKS AND
RECORDS; BANK ACCOUNTS. All of the books of account and other
financial and corporate records of the Company and the
Subsidiaries
have been
made available to the Purchaser and its representatives (or will be so made
available prior to the Closing Date). Such books of account and records are
current and complete in all material
respects. All such books and records are
consistent with the financial statements
set forth in SCHEDULE 3.12 hereto.
3.20 EMPLOYEES.
(a) SCHEDULE 3.20
sets forth a complete
and accurate list of
all the
employees of the Company and each Subsidiary as of the date hereof (the
"EMPLOYEES"),
together
with the following information for each such
Employee: name, position held, current
salary, 2002 bonus,
commission and
incentive amounts (if any), Fair Labor
Standards Act status,
date of hire,
current salary grade, annual vacation entitlement, accrued, but unused
vacation, service date for employee benefit
plan purposes, social
security
number, work locations and any other information the Purchaser may
reasonably
request. SCHEDULE 3.20 will indicate which Employees are not
actively at work due
to an approved medical, family, military, or personal
leave under the
policies
