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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) JULY 22, 1998
GRUBB & ELLIS COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 1-8122 94-1424307
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2215 SANDERS ROAD, SUITE 400 NORTHBROOK, IL 60062
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 847.753.7500
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NO CHANGE
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(Former name or former address, if changed since last report.)
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ITEM 2(A). ACQUISITION OR DISPOSITION OF ASSETS.
On July 22, 1998, Grubb & Ellis Company (the "Company") completed the
purchase of certain assets of Bishop Hawk, Inc., a California corporation
headquartered in Santa Clara, California ("Bishop Hawk"), pursuant to an
asset purchase agreement (the "Asset Purchase Agreement") entered into by
Bishop Hawk, Sopilote Inc. (the sole shareholder of Bishop Hawk), N. Bruce
Ashwill (the sole shareholder of Sopilote Inc.), and the Company (the
"Acquisition"). The business of Bishop Hawk consisted primarily of
transactional commercial real estate brokerage services. Bishop Hawk had
approximately 70 real estate professionals in four offices located in
Sacramento, Santa Clara, Hayward and Roseville, California.
The assets purchased are comprised mainly of real estate services contracts,
fixtures and equipment, accounts receivable, proprietary rights relating to
the business, and other personal property (the "Business"). The parties also
entered into a non-competition agreement, whereby the sellers agreed not to
compete with the Company for a three-year period. The purchase price,
inclusive of the non-competition agreement, was $11,061,270, plus an
additional amount ("Earnout Payment") which, if earned, will be payable by
September 22, 1999. The Earnout Payment is payable to the extent that the
gross revenue earned by the Company during the twelve months following the
date of the Acquisition through the efforts of the former Bishop Hawk
professionals who join the Company exceeds agreed-upon levels. Due to the
contingent nature of this payment, the Company will not record this portion
of the purchase price until it is paid. Of the purchase price, $8,527,450
was paid in cash at the closing of the Acquisition, and deferred payments
totaling $2,533,820, evidenced by two promissory notes issued by the Company
(together, the "Notes"), are payable in installments through July 22, 2000.
Up to $500,000 will be deducted from the deferred payments in the event that
certain revenue levels are not attained in the first year following the
Acquisition.
Prior to the Acquisition, there was no known material relationship between
the Company and its affiliates, officers, directors or their associates, on
the one hand, and the principals of Bishop Hawk, on the other. The terms of
the Acquisition and the consideration to be paid were arrived at through
arms' length negotiation between members of senior management of the Company
and Bishop Hawk, based upon their assessments of the value of the Business.
The funds used for the Acquisition included the Company's cash reserves along
with a loan of $3.5 million under the Company's existing credit line with PNC
Bank, National Association, and American National Bank and Trust Company of
Chicago.
Copies of the Asset Purchase Agreement, without exhibits, the Notes and a
press release dated July 22, 1998 issued by the Company are filed as exhibits
to this Report and are incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of the business acquired, without supporting
schedules, accompanied by manually-signed accountants' report: to be filed
by amendment to this Report not later than 60 days after the filing of this
Report.
(b) Pro-forma financial information: to be filed by amendment to this Report
not later than 60 days after the filing of this Report.
(c) Exhibits
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION
The registrant will furnish supplementally to the Commission, upon request,
any omitted schedule or exhibit to the listed exhibits.
2.1 Asset Purchase Agreement by and among Bishop Hawk, Inc., Sopilote
Inc., N. Bruce Ashwill and Grubb & Ellis Company dated July 22,
1998 (without exhibits).
2.2 Promissory Note Issued July 22, 1998 by Grubb & Ellis Company in
favor of Bishop Hawk, Inc. in the amount of $1,449,800.
2.3 Promissory Note Issued July 22, 1998 by Grubb & Ellis Company in
favor of Bishop Hawk, Inc. in the amount of $1,084,020.
2.4 Press Release of Grubb & Ellis Company dated July 22, 1998.
(23) CONSENTS OF EXPERTS AND COUNSEL
23.1 Consent of Accountants: to be filed by amendment to this Report
not later than 60 days after the filing of this Report.
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(27) FINANCIAL DATA SCHEDULE
27.1 Financial Data Schedule: to be filed by amendment to this Report
not later than 60 days after the filing of this Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GRUBB & ELLIS COMPANY
(Registrant)
Date: August 5, 1998 By: /s/ Robert J. Walner
Robert J. Walner
Senior Vice President and
General Counsel
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EXHIBIT INDEX
Exhibit
Number
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(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION
2.1 Asset Purchase Agreement by and among Bishop Hawk, Inc., Sopilote
Inc., N. Bruce Ashwill and Grubb & Ellis Company dated July 22, 1998,
without exhibits.
2.2 Promissory Note Issued July 22, 1998 by Grubb & Ellis Company in favor
of Bishop Hawk, Inc. in the amount of $1,449,800.
2.3 Promissory Note Issued July 22, 1998 by Grubb & Ellis Company in favor
of Bishop Hawk, Inc. in the amount of $1,084,020.
2.4 Press Release of Grubb & Ellis Company dated July 22, 1998.
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ASSET PURCHASE AGREEMENT
by and among
Bishop Hawk, Inc.,
Sopilote Inc.,
N. Bruce Ashwill
and
Grubb & Ellis Company
July 22, 1998
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<TABLE>
<CAPTION>
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
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<S> <C>
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. OTHER DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II. PURCHASE AND SALE OF ASSETS. . . . . . . . . . . . . . . . . . . . 8
2.1. TRANSFER OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2. ASSUMPTION OF LIABILITIES. . . . . . . . . . . . . . . . . . . . . . 8
2.3. EXCLUDED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5. ADDITIONAL CONSIDERATION . . . . . . . . . . . . . . . . . . . . . .10
2.6. POST-CLOSING ADJUSTMENT. . . . . . . . . . . . . . . . . . . . . . .10
2.7. CLOSING COSTS; TRANSFER TAXES AND FEES . . . . . . . . . . . . . . .11
ARTICLE III. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.1. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.2. DELIVERIES BY THE SELLER PARTIES TO BUYER AT CLOSING . . . . . . . .11
3.3. DELIVERIES BY BUYER TO THE SELLER PARTIES AT CLOSING . . . . . . . .14
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BISHOP HAWK, SOPILOTE AND
SHAREHOLDER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4.1. ORGANIZATION OF BISHOP HAWK. . . . . . . . . . . . . . . . . . . . .15
4.2. SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
4.3. AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
4.4. ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . . .16
4.5. ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
4.6. FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
4.7. CONTRACTS AND COMMITMENTS. . . . . . . . . . . . . . . . . . . . . .19
4.8. PERMITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
4.9. NO CONFLICT OR VIOLATION . . . . . . . . . . . . . . . . . . . . . .21
4.10. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . .21
4.11. BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . .22
4.12. LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
4.13. LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . .22
4.14. COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . . . . . .22
4.15. NO BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
4.16. NO OTHER AGREEMENTS TO SELL THE ASSETS. . . . . . . . . . . . . . .23
4.17. PROPRIETARY RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . .23
4.18. EMPLOYEE PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . .23
4.19. TRANSACTIONS WITH CERTAIN PERSONS . . . . . . . . . . . . . . . . .24
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TABLE OF CONTENTS
CONTINUED
PAGE
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4.20. TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
4.21. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
4.22. COMPLIANCE WITH ENVIRONMENTAL LAWS. . . . . . . . . . . . . . . . .26
4.23. PENDING TRANSACTIONS AND TRANSACTIONS IN PROGRESS . . . . . . . . .28
4.24. NO MISSTATEMENTS OR OMISSIONS . . . . . . . . . . . . . . . . . . .28
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . .29
5.1. ORGANIZATION OF BUYER. . . . . . . . . . . . . . . . . . . . . . . .29
5.2. AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.3. NO CONFLICT OR VIOLATION . . . . . . . . . . . . . . . . . . . . . .29
5.4. NO BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.5. NO PERMITS; LITIGATION . . . . . . . . . . . . . . . . . . . . . . .30
ARTICLE VI. COVENANTS OF THE SELLER PARTIES AND BUYER. . . . . . . . . . . . .30
6.1. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . .30
6.2. NO SOLICITATION. . . . . . . . . . . . . . . . . . . . . . . . . . .30
6.3. CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . .31
6.4. EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . .31
6.5. USE OF BUSINESS NAME . . . . . . . . . . . . . . . . . . . . . . . .33
6.6. NAMED INSURED. . . . . . . . . . . . . . . . . . . . . . . . . . . .33
6.7. COLLECTION OF ACCOUNTS RECEIVABLE AND LETTERS OF CREDIT. . . . . . .33
6.8. BOOKS AND RECORDS; TAX MATTERS . . . . . . . . . . . . . . . . . . .33
6.9. BULK SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
6.10. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
6.11. SACRAMENTO REVENUE GUARANTEE. . . . . . . . . . . . . . . . . . . .34
6.12. COMMISSION SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . .34
6.13. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . .35
ARTICLE VII. CONDITIONS TO THE SELLER PARTIES' OBLIGATIONS . . . . . . . . . .35
7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS. . . . . . . . . . . . . .35
7.2. CONSENTS; REGULATORY COMPLIANCE AND APPROVAL . . . . . . . . . . . .36
7.3. NO ACTIONS OR COURT ORDERS . . . . . . . . . . . . . . . . . . . . .36
7.4. DELIVERIES AT CLOSING. . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE VIII. CONDITIONS TO BUYER'S OBLIGATIONS. . . . . . . . . . . . . . . .36
8.1. REPRESENTATIONS, WARRANTIES AND COVENANTS. . . . . . . . . . . . . .36
8.2. CONSENTS; REGULATORY COMPLIANCE AND APPROVAL . . . . . . . . . . . .36
8.3. NO ACTIONS OR COURT ORDERS . . . . . . . . . . . . . . . . . . . . .37
8.4. DELIVERIES AT CLOSING. . . . . . . . . . . . . . . . . . . . . . . .37
8.5. MATERIAL CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . .37
ARTICLE IX. CONSENTS TO ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . .37
9.1. CONSENTS TO ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . .37
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TABLE OF CONTENTS
CONTINUED
PAGE
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ARTICLE X. SURVIVAL OF REPRESENTATIONS, ETC.; INDEMNIFICATION. . . . . . . . .37
10.1. SURVIVAL OF REPRESENTATIONS, ETC . . . . . . . . . . . . . . . . .37
10.2. INDEMNIFICATION BY THE SELLER PARTIES . . . . . . . . . . . . . . .38
10.3. INDEMNIFICATION BY BUYER. . . . . . . . . . . . . . . . . . . . . .38
10.4. GENERAL INDEMNIFICATION PROVISIONS. . . . . . . . . . . . . . . . .38
10.5. LIMITS ON INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . .40
ARTICLE XI. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . .40
11.1. TERMINATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . .40
11.2. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
11.3. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
11.4. CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . . . . . . .42
11.5. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. . . . . . . . . . . . . .42
11.6. MULTIPLE COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . .43
11.7. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
11.8. INVALIDITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
11.9. TITLES; GENDER. . . . . . . . . . . . . . . . . . . . . . . . . . .43
11.10. PUBLICITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
11.11. MATERIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . .43
11.12. ATTORNEYS' FEES. . . . . . . . . . . . . . . . . . . . . . . . . .43
11.13. KNOWLEDGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
</TABLE>
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EXHIBITS
EXHIBIT
A Non-Negotiable Note
B Subordination Agreement
C Participation Fund Note
D Non-Compete Agreement
E Form of Employment Agreement
F Form of Consulting Agreement
G Form of Assignment of Lease
H Facilities
I Allocation of Purchase Price
J Calculation and Timing of Earn-Out Payments
K Bill of Sale
L Assignment of Leases and Contract Rights
M Assignment of Trademarks
N Assumption of Certain Liabilities
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), dated as
of July 22, 1998, is by and among Grubb & Ellis Company, a Delaware
corporation ("Buyer), Bishop Hawk, Inc., a California corporation ("Bishop
Hawk"), Sopilote Inc., a California corporation ("Sopilote"), and N. Bruce
Ashwill ("Shareholder"). Bishop Hawk, Sopilote and Shareholder are referred
to in this Agreement collectively as the "Seller Parties."
RECITALS
A. Bishop Hawk owns certain assets which it uses in the
conduct of the Business (as defined below). Sopilote owns 100% of the
outstanding capital stock of Bishop Hawk and Shareholder owns 100% of the
outstanding capital stock of Sopilote.
B. Buyer desires to purchase from Bishop Hawk, and The
Seller Parties desire to sell to Buyer, such assets upon the terms and
subject to the conditions of this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the respective
covenants and promises contained herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1. DEFINED TERMS. As used herein, the terms below
shall have the following meanings. Any of such terms, unless the context
otherwise requires, may be used in the singular or plural, depending upon the
reference.
"ACTION" shall mean any action, claim, suit,
litigation, proceeding, labor dispute, arbitral action, governmental audit,
inquiry, criminal prosecution, investigation or unfair labor practice charge
or complaint.
"ADVERSE EFFECT" or "ADVERSE CHANGE" shall mean,
with respect to the Business or the Assets, any material adverse effect or
change in the condition (financial or other), business, results of
operations, prospects, assets, Liabilities or operations of the Business
and/or the Assets, other than economic factors affecting the Northern
California real estate brokerage industry generally or on the ability of The
Seller Parties to consummate the transactions contemplated hereby, or any
event or condition which would, with the passage of time, constitute an
Adverse Effect or Adverse Change.
"AFFILIATE" shall have the meaning set forth in the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
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"ANCILLARY AGREEMENTS" shall mean the Non-Negotiable
Note, the Subordination Agreement, the Participation Fund Note, the Non-Compete
Agreement, the Employment Agreements and the Assignment of Lease,
substantially in the forms attached hereto as Exhibits A, B, C, D, E, F and
G, respectively, and the other agreements, certificates and documents
required hereunder to consummate the closing.
"ASSETS" shall mean all of the right, title and
interest of Bishop Hawk in and to the business, properties, assets and rights
of any kind, whether tangible or intangible, real or personal and
constituting, or used or useful in connection with, or related to, the
Business owned by Bishop Hawk or in which Bishop Hawk has any interest,
including without limitation all of Bishop Hawk's right, title and interest
in the following:
(a) all Contract Rights;
(b) all Leases;
(c) all Leasehold Estates;
(d) all Leasehold Improvements;
(e) all Fixtures and Equipment;
(f) all Books and Records;
(g) all Proprietary Rights relating to the Business;
(h) to the extent transferable, all Permits;
(i) all computers and software;
(j) all Insurance Policies, to the extent assignable;
(k) all accounts receivable;
(l) all available supplies, sales literature,
catalogues, brochures, promotional literature, customer, supplier and
distributor lists, art work, display units, other marketing materials,
telephone and fax numbers and purchasing records related to the Business;
(m) all rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with the
Assets or services furnished to Bishop Hawk pertaining to the Business or
affecting the Assets, to the extent such warranties, representations and
guarantees are assignable;
(n) all deposits and prepaid expenses; and
(o) all claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind, against any Person, to
the extent related to the Assets, including
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without limitation any liens, security interests, pledges or other rights to
payment or to enforce payment in connection with products or services
delivered by Bishop Hawk on or prior to the Closing Date;
but excluding therefrom the Excluded Assets.
"ASSIGNMENT OF LEASE" shall mean the Assignment and
Assumption Agreement with respect to that certain Office Building Lease,
dated as of September 24, 1987, by and between Bishop Hawk and Sheffield,
Ltd., to be executed by Bishop Hawk, Sheffield, Ltd. and Buyer and delivered
at the Closing, substantially in the form attached as EXHIBIT G hereto.
"BOOKS AND RECORDS" shall mean (a) all records and
lists of Bishop Hawk pertaining to the Assets, (b) all records and lists
pertaining to the Business, customers, suppliers or personnel of Bishop Hawk,
(c) all product, business and marketing plans of Bishop Hawk and (d) all
books and ledgers maintained by Bishop Hawk.
"BROKERAGE CONTRACT" shall mean any contract in
which Bishop Hawk provides commercial real estate brokerage and related
services to real estate owners and tenants, including, without limitation,
commercial real estate brokerage, marketing, leasing, consulting, and similar
businesses.
"BUSINESS" shall mean Bishop Hawk's business of
providing various commercial real estate brokerage and related services to
real estate owners and tenants, including, without limitation, commercial
real estate brokerage, marketing, leasing, consulting, and similar businesses.
"CLOSING DATE" shall mean July 22, 1998, or such
other date upon which Buyer and the Seller Parties mutually agree.
"CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder.
"CONTRACT" shall mean any agreement, contract, note,
loan, evidence of indebtedness, purchase order, letter of credit, indenture,
security or pledge agreement, franchise agreement, undertaking, covenant not
to compete, employment agreement, license, instrument, Brokerage Contract and
obligation or commitment to which Bishop Hawk is a party or is bound and
which relates to the Business or the Assets, whether oral or written, but
excluding all Leases.
"CONTRACT RIGHTS" shall mean all of Bishop Hawk's
rights under the Contracts listed on Schedule 4.7 and not rejected by Buyer
and under any Contracts not required to be listed on Schedule 4.7 which
Buyer, in its sole discretion, elects to accept and assume, but excluding
Contracts related solely to Liabilities that are not Assumed Liabilities.
"COPYRIGHTS" shall mean registered copyrights,
copyright applications and unregistered copyrights.
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"COURT ORDER" shall mean any judgment, decision,
consent decree, injunction, ruling or order of any federal, state or local
court or governmental agency, department or authority that is binding on any
Person or its property under applicable law.
"DEFAULT" shall mean (a) a breach of or default
under any Contract or Lease, (b) the occurrence of an event that with the
passage of time or the giving of notice or both would constitute a breach of
or default under any Contract or Lease or (c) the occurrence of an event that
with or without the passage of time or the giving of notice or both would
give rise to a right of termination, renegotiation or acceleration under any
Contract or Lease.
"DISCLOSURE SCHEDULE" shall mean a schedule executed
and delivered by The Seller Parties to Buyer as of the date hereof which sets
forth the exceptions to the representations and warranties contained in
Article IV hereof and certain other information called for by this Agreement.
Unless otherwise specified, any reference in this Agreement to any numbered
schedule is a reference to the Disclosure Schedule.
"EMPLOYEE PLAN" shall mean (i) any "employee pension
benefit plan" as defined in Section 3(2) of ERISA, (ii) any "employee welfare
benefit plan" as defined in Section 3(1) of ERISA, and (iii) any employment,
consulting, severance or other similar contract, arrangement or policy and
each plan, arrangement (written or oral), program, agreement or commitment
providing for insurance coverage (including without limitation any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits or for deferred compensation,
profit-sharing bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation or post-retirement
insurance that is neither an employee welfare benefit plan nor an employee
pension benefit plan as defined in Section (3)(1) or (3)(2) of ERISA,
respectively.
"EMPLOYEES" shall mean all persons employed by
Bishop Hawk or any subsidiary of Bishop Hawk on a full-time basis, together
with all persons retained as "independent contractors" as of the relevant
date.
"EMPLOYMENT AGREEMENTS" shall mean the Employment
Agreements to be entered into by and between Buyer and Greg Kasner and Bryan
Friedman substantially in the form attached as EXHIBIT E hereto and the
Consulting Agreement to be entered into by and between Buyer and Bruce
Ashwill each substantially in the form attached as EXHIBIT F hereto, each of
which shall be delivered at the Closing.
"ENCUMBRANCE" shall mean any claim, lien, pledge,
option, charge, easement, security interest, deed of trust, mortgage,
right-of-way, encroachment, building or use restriction, conditional sales
agreement, encumbrance or other right of third parties, whether voluntarily
incurred or arising by operation of law, and includes, without limitation,
any agreement to give any of the foregoing in the future, and any contingent
sale or other title retention agreement or lease in the nature thereof.
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"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA AFFILIATE" of Bishop Hawk means any other
person that, together with Bishop Hawk as of the relevant measuring date
under ERISA, was or is required to be treated as single employer under
Section 414 of the Code.
"EXCLUDED ASSETS," notwithstanding any other
provision of this Agreement, shall mean the following assets of Bishop Hawk
which are not to be acquired by Buyer hereunder:
(a) the fees and receivables set forth on
Schedule 1.1(a);
(b) all Permits, to the extent not transferable;
(c) all claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind against any Person
arising out of or relating to the Assets to the extent related to the
Excluded Liabilities;
(d) any Owned Real Property or other ownership
interest of Bishop Hawk in real property; and
(e) all motor vehicles owned or leased by Bishop
Hawk.
"FACILITIES" shall mean all offices, improvements
and all real property and related facilities which are identified or listed
on EXHIBIT H attached hereto.
"FACILITY LEASES" shall mean all of the leases of
Facilities listed on Schedule 4.6.
"FINANCIAL STATEMENTS" shall mean the balance sheets
of Bishop Hawk dated as of March 31, 1998, November 30, 1997 and 1996 and the
related statements of income and cash flow for each of the four months ended
March 31, 1998 and the two years ended November 30, 1997 and 1996.
"FIXTURES AND EQUIPMENT" shall mean all of the
furniture, fixtures, furnishings, machinery, spare parts, supplies, equipment
and other tangible personal property owned by Bishop Hawk and used in
connection with the Business, wherever located, including all warranty rights
with respect thereto.
"FORMER FACILITY" shall mean each office,
improvement and all real property and related facilities that were owned,
leased, managed or operated by Bishop Hawk at any time prior to the date
hereof, but excluding any Facilities.
"INSURANCE POLICIES" shall mean the insurance
policies listed on Schedule 4.21 related to the Assets.
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"LEASED REAL PROPERTY" shall mean all leased
property described in the Facility Leases.
"LEASEHOLD ESTATES" shall mean all of Bishop Hawk's
rights and obligations as lessee under the Leases.
"LEASEHOLD IMPROVEMENTS" shall mean all leasehold
improvements situated in or on the Leased Real Property and owned by Bishop
Hawk.
"LEASES" shall mean all of the existing leases with
respect to the personal or real property of Bishop Hawk listed on Schedule
4.7 and not rejected by Buyer.
"LIABILITIES" shall mean any direct or indirect
liability, indebtedness, obligation, commitment, expense, claim, deficiency,
guaranty or endorsement of or by any Person of any type, whether accrued,
absolute, contingent, matured, unmatured or other.
"NON-COMPETE AGREEMENT" shall mean the Non-Compete
Agreement to be executed by Bishop Hawk, Shareholder, Sopilote and Buyer and
delivered at the Closing, substantially in the form attached as EXHIBIT D
hereto.
"ORDINARY COURSE OF BUSINESS" or "ORDINARY COURSE"
or any similar phrase shall mean the ordinary course of the Business and
consistent with Bishop Hawk's past practice.
"OWNED REAL PROPERTY" shall mean all real property
owned in fee by Bishop Hawk, including without limitation all rights,
easements and privileges appertaining or relating thereto, all buildings,
fixtures, and improvements located thereon and all Facilities thereon, if any.
"PATENTS" shall mean all patents and patent
applications and registered design and registered design applications.
"PERMITS" shall mean all real estate business and
professional licenses, including broker licenses and real estate salesperson
licenses, all other licenses, permits, franchises, approvals, authorizations,
consents or orders of, or filings with, any governmental authority, whether
foreign, federal, state or local, from parties to Contracts or from any other
Person, necessary or desirable for the past, present or anticipated conduct
of, or relating to the operation of the Business.
"PERSON" shall mean any person or entity, whether an
individual, trustee, corporation, partnership, limited partnership, limited
liability company, trust, unincorporated organization, business association,
firm, joint venture, governmental agency or authority.
"PROPRIETARY RIGHTS" shall mean all of Bishop Hawk's
Copyrights, Patents, Trademarks, technology rights and licenses, computer
software (including without limitation any source or object codes therefor or
documentation relating thereto), trade secrets, logos, trade
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names, corporate names, franchises, know-how, inventions, designs,
specifications, plans, drawings, intellectual property rights and right,
title and interest to the name "Bishop Hawk."
"REGULATIONS" shall mean any laws, statutes,
ordinances, regulations, rules, notice requirements, court decisions, agency
guidelines, principles of law and orders of any foreign, federal, state or
local government and any other governmental department or agency, including
without limitation Environmental Laws, energy, motor vehicle safety, public
utility, zoning, building and health codes, occupational safety and health
and laws respecting employment practices, employee documentation, terms and
conditions of employment and wages and hours.
"REPRESENTATIVE" shall mean any officer, director,
principal, attorney, agent, employee or other representative.
"SUBORDINATION AGREEMENT" shall mean a Subordination
Agreement among Bishop Hawk and PNC Bank, National Association, as agent, in
the form attached hereto as EXHIBIT B, or such other substantially similar
form as is reasonably acceptable to PNC Bank, National Association.
"SUBSIDIARY" shall mean (a) any corporation in an
unbroken chain of corporations beginning with Bishop Hawk if each of the
corporations other than the last corporation in the unbroken chain then owns
stock in one of the other corporations in such chain, (b) any partnership in
which Bishop Hawk is a general partner, (c) any partnership in which Bishop
Hawk possesses an interest in the total capital or total income of such
partnership, (d) any limited liability company, joint venture or other entity
in which Bishop Hawk owns membership interests possessing voting power or
equity interest or (e) any direct or indirect stock or other equity interest
in any Person.
"TAX" shall mean any federal, state, local, foreign
or other tax, levy, impost, fee, assessment or other government charge,
including without limitation income, estimated income, minimum, alternative
minimum, gross receipts, business, occupation, franchise, property, payroll,
personal property, sales, transfer, excise, use, employment, commercial rent,
occupancy, stamp or documentation or withholding taxes, together with any
interest, penalties, additions to any taxes or any other additional amounts
with respect thereto.
"TRADEMARKS" shall mean registered trademarks,
registered service marks, trademark and service mark applications and
unregistered trademarks and service marks.
"WARRANTS" shall mean (a) agreements, rights to
subscribe (including any preemptive rights), options, warrants, calls,
commitments or rights of any character to purchase or otherwise acquire any
common stock or other securities of Bishop Hawk, and (b) outstanding
securities of Bishop Hawk that are convertible into or exchangeable for
capital shares or other securities of Bishop Hawk.
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1.2. OTHER DEFINED TERMS. The following terms shall have
the meanings defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
TERM SECTION
<S> <C>
Assumed Liabilities 2.2
Assumption Document 3.3(a)
Base Amount 2.6(b)
Closing 3.1
Closing Balance Sheet 2.6(a)
Current Assets 2.6(a)
Current Liabilities 2.6(a)
Losses 10.2
Disputes 11.11
Earn-Out Payment 2.7
Environmental Conditions 4.22(a)
Environmental Laws 4.22(a)
Excluded Liabilities 2.3
Hazardous Substance 4.22(a)
Indemnitee 10.4
Indemnitor 10.4
Net Working Capital 2.6(a)
Non-Negotiable Note 2.4
Purchase Price 2.4
Release 4.22(a)
Rehired Employees 6.4(a)
Participation Fund Note 2.4
Tax Return 4.20
Taxpayer 4.20
Third Party Claims 10.4
</TABLE>
ARTICLE II.
PURCHASE AND SALE OF ASSETS
2.1. TRANSFER OF ASSETS. Upon the terms and subject to the
conditions contained herein, at the Closing, Bishop Hawk will sell, convey,
transfer, assign and deliver to Buyer, and Buyer will acquire from Bishop
Hawk, the Assets, free and clear of all Encumbrances.
2.2. ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions contained herein, at the Closing, Buyer shall assume the
following, and only the following, Liabilities of Bishop Hawk (the "Assumed
Liabilities"):
All Liabilities accruing, arising out of, or relating to events or
occurrences happening after the Closing Date under the Contracts and Leases
listed on Schedule 4.7 and not
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rejected by Buyer or under Contracts or Leases which are not listed on
Schedule 4.7 but which Buyer, in its sole discretion, elects to accept and
assume, but not including any Liability for any Default under any such
Contract or Lease occurring on or prior to the Closing Date.
2.3. EXCLUDED LIABILITIES. Notwithstanding any other provision of
this Agreement, except for the Assumed Liabilities expressly specified in
Section 2.2, Buyer shall not assume, or otherwise be responsible for, any
Liabilities of Bishop Hawk, whether liquidated or unliquidated, or known or
unknown, whether arising out of occurrences prior to, at or after the date
hereof ("Excluded Liabilities"), which Excluded Liabilities include, without
limitation:
(a) any Liability to or in respect of any Employees or former
Employees of Bishop Hawk including without limitation (i) any employment
agreement, whether or not written, between Bishop Hawk and any Person, (ii) any
Liability under any Employee Plan at any time maintained, contributed to or
required to be contributed to by or with respect to Bishop Hawk or under which
Bishop Hawk may incur Liability, or any contributions, benefits or Liabilities
therefor, or any Liability with respect to Bishop Hawk's withdrawal or partial
withdrawal from or termination of any Employee Plan and (iii) any claim of an
unfair labor practice, or any claim under any state unemployment compensation or
worker's compensation law or regulation or under any federal or state employment
discrimination law or regulation or any other claims, which shall have been
asserted on or prior to the Closing Date or is based on acts or omissions which
occurred on or prior to the Closing Date;
(b) any Liability of Bishop Hawk in respect of any Tax;
(c) any Liability of Bishop Hawk for indebtedness for borrowed
money, including any loans payable by Bishop Hawk to any affiliate of Bishop
Hawk, and any interest thereon;
(d) any Liability of Bishop Hawk, including, among other things,
Actions with respect to Environmental Laws, arising out of or related to any
Action against Bishop Hawk or any Action which adversely affects the Assets and
which shall have been asserted on or prior to the Closing Date or to the extent
the basis of which shall have arisen out of facts or events occurring on or
prior to the Closing Date;
(e) any Liability of Bishop Hawk resulting from entering into,
performing its obligations pursuant to or consummating the transactions
contemplated by, this Agreement (including without limitation any Liability of
Bishop Hawk pursuant to Article VIII hereof); and
(f) any Liability related to any Former Facility.
2.4. PURCHASE PRICE. At the Closing, upon the terms and subject to
the conditions set forth herein, Buyer shall pay to Bishop Hawk for the sale,
transfer, assignment, conveyance and delivery of the Assets (the "Purchase
Price"), $10,061,270 in the following manner: (i) $7,527,450 by wire transfer
of immediately available funds to an account designated
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by Bishop Hawk, (ii) a promissory note in the principal amount of $1,449,800,
in the form attached as EXHIBIT A hereto (the "Non-Negotiable Note") and
(iii) a promissory note in the principal amount of $1,084,020 in the form
attached as EXHIBIT C hereto (the "Participation Fund Note"). The Purchase
Price shall be allocated among the Assets in the manner required by Section
1060 of the Code and regulations thereunder. EXHIBIT I attached hereto sets
forth the amount of the Purchase Price allocable to the various Assets.
Buyer, and the Seller Parties agree to each prepare and file on a timely
basis with the Internal Revenue Service substantially identical initial and
supplemental Internal Revenue Service Forms 8594 "Asset Acquisition Statement
Under Section 1060" consistent with EXHIBIT I.
2.5. ADDITIONAL CONSIDERATION. As additional consideration for the
purchase of the Assets, Buyer shall pay to Bishop Hawk the earn-out payments
calculated according to and at the times set forth on EXHIBIT J hereto
(collectively, the "Earn-Out Payment").
2.6. POST-CLOSING ADJUSTMENT.
(a) CLOSING BALANCE SHEET. On or before September 22, 1998,
Buyer shall prepare and deliver to Bishop Hawk (i) a balance sheet dated the
Closing Date (the "Closing Balance Sheet") and (ii) a reasonably detailed
calculation of Net Working Capital and the amount of any payment due pursuant to
Section 2.6(b). The Closing Balance Sheet shall be prepared by Buyer's
personnel in accordance with generally accepted accounting principles applied
consistently with the preparation of Buyer's financial statements and shall
fairly and accurately present as of the Closing Date the Assets of Bishop Hawk
acquired by Buyer, including all Current Assets, and the Liabilities of Bishop
Hawk assumed or incurred by Buyer, including all Current Liabilities. The
Closing Balance Sheet shall be accompanied by a calculation of the Net Working
Capital. "Net Working Capital" shall mean the net amount of Current Assets less
Current Liabilities as set forth on the Closing Balance Sheet. "Current Assets"
shall mean all of the Assets which constitute prepaid expenses and all other
Assets (except accounts receivable) that are properly classified as current
assets under generally accepted accounting principles. "Current Liabilities"
shall mean all Liabilities assumed or incurred by Buyer that relate to the
Business which are accounts payable or accrued wages (but excluding commissions
payable to Employees and third party brokers in respect of excluded accounts
receivable), vacation and sick pay and other employee benefits and other
Liabilities assumed or incurred by Buyer that are properly classified as current
liabilities under generally accepted accounting principles.
(b) PAYMENT. If the Net Working Capital set forth on the
Closing Balance Sheet is less than $50,000 (the "Base Amount"), the Seller
Parties shall pay to Buyer the amount equal to the difference between the Base
Amount less the Net Working Capital. If the Net Working Capital set forth on
the Closing Balance Sheet is greater than the Base Amount, Buyer shall pay to
Bishop Hawk an amount equal to the difference between the Net Working Capital
less the Base Amount.
(c) DISPUTED ADJUSTMENT AMOUNT. If Bishop Hawk shall disagree
with the Adjustment Amount, it shall notify Buyer of such disagreement in
writing specifying in
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detail the particulars of such disagreement within 15 business days after
Bishop Hawk's receipt of the Closing Balance Sheet. To the extent that any
portion of the Adjustment Amount is not in dispute, within 15 business days
after Bishop Hawk's receipt of the Closing Balance Sheet, Buyer shall pay
Bishop Hawk, or the Seller Parties shall pay Buyer, as the case may be, that
portion of the Adjustment Amount which is not in dispute.
(d) RESOLUTION OF DISPUTED ADJUSTMENT AMOUNT. Buyer and the
Seller Parties shall use their best efforts for a period of 30 calendar days
after Buyer's delivery of such notice (or such longer period as Buyer and the
Seller Parties shall mutually agree upon) to resolve any disagreements raised by
the Seller Parties with respect to the calculation of the Adjustment Amount.
If, at the end of such period, Buyer and the Seller Parties are unable to
resolve such disagreements, and the amount in dispute is greater than $50,000,
then Jack B. Hicks CPA and Coopers & Lybrand, independent auditors of the Seller
Parties, and Buyer, respectively, shall jointly select a third independent
auditor of recognized national standing to resolve any remaining disagreements.
The determination by such third independent auditor shall be final, binding and
conclusive on the parties. Buyer and the Seller Parties shall use their best
efforts to cause such third independent auditor to make its determination within
30 calendar days of accepting its selection. Within ten calendar days after the
date of determination of such third independent auditor, Buyer shall pay Bishop
Hawk, or the Seller Parties shall pay Buyer, as the case may be, the Adjustment
Amount. The fees and expenses of such third independent auditor shall be borne
by Buyer and the Seller Parties equally. If the amount in dispute is $50,000 or
less then Buyer and Bishop Hawk shall flip a coin and the winning party's
positions shall be accepted.
2.7. CLOSING COSTS; TRANSFER TAXES AND FEES. The Seller Parties shall
be responsible for any documentary and transfer taxes. Buyer shall pay all
sales, use or other taxes imposed by reason of the transfers of Assets provided
hereunder and any deficiency, interest or penalty asserted with respect thereto.
The Seller Parties shall pay the fees and costs of recording or filing all
applicable conveyancing instruments described in Section 3.2(a). The Seller
Parties shall pay all costs of applying for new Permits and obtaining the
transfer of existing Permits which may be lawfully transferred. Buyer shall be
responsible for Taxes relating to the Assets that are attributable to taxable
periods (or portions thereof) commencing after the Closing Date.
ARTICLE III.
CLOSING
3.1. CLOSING. The closing of the transactions contemplated by this
Agreement and the Ancillary Agreements (the "Closing") shall take place at
10:00 a.m. local time on the Closing Date at the offices of Latham & Watkins
in San Francisco, California, unless the parties hereto otherwise agree.
3.2. DELIVERIES BY THE SELLER PARTIES TO BUYER AT CLOSING.
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(a) INSTRUMENTS AND POSSESSION. To effect the sale and transfer
referred to in Section 2.1 hereof, Bishop Hawk shall execute (as applicable) and
deliver to Buyer at the Closing:
(i) a Bill of Sale, in the form attached hereto as EXHIBIT
K, conveying in the aggregate all of Bishop Hawk's owned personal property
included in the Assets;
(ii) subject to Section 9.1, an Assignment of Leases and
Contract Rights in the form attached hereto as EXHIBIT L;
(iii) an Assignment of Trademarks in the form attached
hereto as EXHIBIT M, in recordable form to the extent necessary to assign such
rights;
(iv) copies of all filings (where necessary) and documents
necessary to release the Assets from all Encumbrances, in a form reasonably
satisfactory to Buyer's counsel;
(v) such other instruments as shall be requested by Buyer
to vest in Buyer title in and to the Assets in accordance with the provisions
hereof; and
(b) ANCILLARY AGREEMENTS. At the Closing, the Seller Parties
shall execute (as applicable) and deliver to Buyer the Ancillary Agreements to
which they are parties.
(c) TRANSACTION FILES AND BROKERAGE CONTRACTS. Bishop Hawk
shall deliver to Buyer at the Closing all current and past transaction files and
Brokerage Contracts.
(d) PERMITS AND CONSENTS. Subject to Section 9.1, Bishop Hawk
shall deliver all Permits and any other third party consents, approvals and
waivers from governmental authorities and other parties required for the valid
transfer of the Assets as contemplated by this Agreement.
(e) OPINION OF COUNSEL. Bishop Hawk shall deliver to Buyer an
opinion of O'Melveny & Myers counsel to the Seller Parties, dated as of the
Closing Date, in form and substance reasonably satisfactory to Buyer, to the
effect that:
(i) ORGANIZATION. Bishop Hawk is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California, and, if applicable, Bishop Hawk is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
ownership or leasing of its property or nature of the Business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the Business or the Assets;
(ii) POWER AND AUTHORITY. Bishop Hawk has the necessary
power and authority to enter into this Agreement and the Ancillary Agreements
and to consummate the transactions contemplated hereby and thereby; and Bishop
Hawk has the
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necessary power and authority to own, lease and operate the Assets and its
other properties and to conduct the Business as presently conducted;
(iii) AUTHORIZATION AND ENFORCEABILITY. The execution,
delivery and performance by the Seller Parties of this Agreement and the
Ancillary Agreements to which they are parties, have been duly authorized by all
necessary action of Bishop Hawk and Sopilote, as the case may be, and the Seller
Parties have duly executed and delivered this Agreement and the Ancillary
Agreements to which they are parties, and no approval of Sopilote or Shareholder
is required in connection therewith or, if required, such approval has been duly
obtained in accordance with the provisions of Bishop Hawk's and Sopilote's
organizational documents and applicable law, and this Agreement and each
Ancillary Agreement to which they are parties constitutes the legally valid and
binding obligation of the Seller Parties, enforceable against them in accordance
with their terms, except as limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally or by equitable principles (whether considered in an action at law or
in equity), (ii) limitations imposed by federal or state law or equitable
principles upon the availability of specific performance, injunctive relief or
other equitable remedies, or (iii) other customary limitations reasonably
satisfactory to Buyer's counsel;
(iv) NO BREACH OF CONTRACTS. Neither the execution and
delivery of this Agreement or the Ancillary Agreements by the Seller Parties nor
the consummation of the transactions contemplated hereby or thereby will
(A) violate the Articles of Incorporation or Bylaws of Bishop Hawk or Sopilote,
(B) cause a Default under any term or provision of any material Contract or
Lease to which Bishop Hawk is a party or by which the Assets are bound, or (C)
to the best knowledge of such counsel, violate any Court Order applicable to
Bishop Hawk;
(v) NO VIOLATION OF LAW. Neither the execution and
performance of this Agreement or the Ancillary Agreements by the Seller Parties
nor the consummation of the transactions contemplated hereby or thereby will
violate or result in a failure to comply with any Regulation or Court Order
applicable to the Business or operations of Bishop Hawk and Sopilote; and, to
the best knowledge of such counsel, Bishop Hawk and Sopilote have all licenses,
franchises and other authority required to conduct the Business as it is now
being conducted; and no Permit of, or filing with, any governmental authority
or, to the best knowledge of such counsel, any other person, is required for the
execution and delivery of this Agreement or the Ancillary Agreements by the
Seller Parties or the consummation by the Seller Parties of the transactions
contemplated hereby and thereby, except as set forth in this Agreement, the
Disclosure Schedule, the exhibits hereto or the Ancillary Agreements;
(vi) TRANSFER AND ASSIGNMENT. The documents to be delivered
by the Seller Parties at the Closing to effect the transfer and assignment to
Buyer of all right, title and interest in and to the Assets are effective to do
so, subject to (A) the effects of bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
equitable principles (whether considered in an action at law or in equity),
(B) limitations imposed by federal or state law or equitable principles upon the
availability of
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specific performance, injunctive relief or other equitable remedies, or (C)
other customary limitations reasonably satisfactory to Buyer's counsel;
(vii) OTHER OPINIONS. Such other opinions as Buyer may
reasonably request. In rendering such opinions, such counsel may rely as they
deem advisable (a) as to matters governed by the laws of jurisdictions other
than states in which they maintain offices, upon opinions of local counsel
satisfactory to such counsel and (b) as to factual matters, upon certificates
and assurances of public officials and officers of Bishop Hawk. In addition,
such opinions may be subject to such additional qualifications and exceptions as
are reasonably acceptable to counsel to Buyer.
(f) CERTIFICATES. Bishop Hawk shall furnish Buyer with such
certificates of Bishop Hawk's officers and others as may reasonably be requested
by Buyer.
(g) INSURANCE. Bishop Hawk shall provide Buyer with certified
copies of policies or certificates of insurance, as requested by Buyer,
evidencing Buyer as an additional insured, as contemplated by Section 6.6.
(h) AUTHORIZATION AND APPROVAL. Buyer shall have received from
Bishop Hawk resolutions adopted by the Bishop Hawk board of directors, Sopilote
and Shareholder approving this Agreement and the Ancillary Agreements to which
the Seller Parties are parties and the transactions contemplated hereby and
thereby, certified by Bishop Hawk's and Sopilote's corporate secretaries, as
applicable.
3.3. DELIVERIES BY BUYER TO THE SELLER PARTIES AT CLOSING.
(a) ASSUMPTION DOCUMENT. Upon the terms and subject to the
conditions contained herein, at the Closing Buyer shall deliver to Bishop Hawk
an instrument of assumption substantially in the form attached hereto as EXHIBIT
N, evidencing Buyer's assumption, pursuant to Section 2.2, of the Assumed
Liabilities (the "Assumption Document").
(b) OPINION OF GENERAL COUNSEL TO BUYER. Buyer shall deliver to
Bishop Hawk an opinion of the general counsel of Buyer, dated as of the Closing
Date, in form and substance reasonably satisfactory to Bishop Hawk, to the
effect that:
(i) INCORPORATION. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware; Buyer is qualified to do business as a foreign corporation in
California;
(ii) CORPORATE POWER AND AUTHORITY. Buyer has the necessary
corporate power and authority to enter into this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated hereby and thereby;
(iii) CORPORATE ACTION AND ENFORCEABILITY. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements by Buyer have been
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duly authorized by all necessary corporate action of Buyer, and this
Agreement and the Ancillary Agreements have been duly executed and delivered
by Buyer, and constitute legally valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms, except as limited
by (i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally or by equitable principles
(whether considered in an action at law or in equity), (ii) limitations
imposed by federal or state law or equitable principles upon the availability
of specific performance, injunctive relief or other equitable remedies, or
(iii) other customary limitations reasonably satisfactory to Bishop Hawk's
counsel;
(iv) NO VIOLATION OF LAW. Neither the execution and
performance of this Agreement or the Ancillary Agreements by Buyer nor the
consummation of the transactions contemplated hereby or thereby will violate or
result in a failure to comply with any Regulation or Court Order applicable to
Buyer and
(v) OTHER OPINIONS. Such other opinions as Bishop Hawk may
reasonably request. In rendering such opinions, such counsel may rely as they
deem advisable (a) as to matters governed by the laws of jurisdictions other
than states in which they maintain offices, upon opinions of local counsel
satisfactory to such counsel and (b) as to factual matters, upon certificates
and assurances of public officials and officers of Buyer. In addition, such
opinions may be subject to such additional qualifications and exceptions as are
reasonably acceptable to counsel to Bishop Hawk.
(c) ANCILLARY AGREEMENTS. At the Closing, Buyer shall execute
(as applicable) and deliver to the Seller Parties the Ancillary Agreements to
which it is a party.
(d) CERTIFICATES. Buyer shall furnish Bishop Hawk with such
certificates of its officers and others as may be reasonably requested by Bishop
Hawk.
(e) CORPORATE DOCUMENTS. Bishop Hawk shall have received from
Buyer resolutions adopted by the board of directors of Buyer approving this
Agreement, the Ancillary Agreements and the transactions contemplated hereby or
thereby, certified by Buyer's corporate secretary (as applicable).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BISHOP HAWK, SOPILOTE AND SHAREHOLDER
Except as set forth in the Disclosure Schedule, the Seller Parties,
jointly and severally, hereby represent and warrant to Buyer as follows, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct:
4.1. ORGANIZATION OF BISHOP HAWK. Bishop Hawk is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, has the requisite power and authority to conduct its business as it
is presently being conducted and to
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own and lease its properties and Assets, to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its
obligations hereunder. Bishop Hawk is not qualified to do business as a
foreign corporation in any jurisdiction, and the character of its properties
owned or leased or the nature of its activities do not make such
qualification necessary in any jurisdiction. Copies of the Articles of
Incorporation and Bylaws of Bishop Hawk and any amendments thereto previously
delivered to Buyer are accurate and complete.
4.2. SUBSIDIARIES. Bishop Hawk has no Subsidiaries. Bishop Hawk does
not own any direct or indirect stock or other equity interest in any person.
4.3. AUTHORIZATION.
(a) Each of Bishop Hawk and Sopilote has all requisite corporate
or organizational power and authority, and has taken all action necessary, to
execute and deliver this Agreement and the Ancillary Agreements, to consummate
the transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Ancillary Agreements by Bishop Hawk and Sopilote and the consummation by Bishop
Hawk and Sopilote of the transactions contemplated hereby and thereby have been
duly approved by the board of directors of each of Bishop Hawk and Sopilote. No
other proceedings on the part of Bishop Hawk or Sopilote are necessary to
authorize this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by Bishop Hawk or Sopilote and Shareholder and is, and upon execution
and delivery of the Ancillary Agreements will be, the legal, valid and binding
obligations of the Seller Parties, enforceable against them in accordance with
their terms, except as limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally or by
equitable principles (whether considered in an action at law or in equity), or
(ii) limitations imposed by federal or state law or equitable principles upon
the availability of specific performance, injunctive relief or other equitable
remedies.
(b) Sopilote owns 100% of the outstanding capital stock of
Bishop Hawk, free and clear of any Encumbrances. There are no Warrants with
respect to the equity securities of Bishop Hawk. Shareholder owns 100% of the
outstanding capital stock of Sopilote, free and clear of any Encumbrances.
4.4. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1998 there
has been no:
(a) Adverse Change in the Assets or Business;
(b) change in accounting methods, principles or practices by
Bishop Hawk affecting the Assets, the Liabilities or the Business;
(c) damage, destruction or loss (whether or not covered by
insurance) causing or resulting in an Adverse Effect;
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(d) cancellation of any indebtedness or waiver or release of any
right or claim of Bishop Hawk relating to the Assets and the Business other than
in the Ordinary Course of Business;
(e) except as set forth in Schedule 4.4(e), increase in the rate
of compensation or change in the commission rate schedule payable or to become
payable to any partner, director, officer or other Employee or any consultant,
Representative or agent of Bishop Hawk of more than $1,000, including without
limitation the making of any loan to, or the payment, grant or accrual of any
bonus, incentive compensation, service award or other similar benefit to, any
such Person, or the addition to, modification of, or contribution to any
Employee Plan, arrangement, or practice described in the Disclosure Schedule
other than contributions made for fiscal 1997 in accordance with the normal
practices of Bishop Hawk;
(f) amendment, cancellation or termination of any Contract,
commitment, agreement, Lease, transaction or Permit relating to the Assets or
the Business or entry into any Contract, commitment, agreement, Lease,
transaction or Permit which is not in the Ordinary Course of Business, including
without limitation any employment or consulting agreements;
(g) except as set forth on Schedule 4.4(g), mortgage, pledge or
other encumbrance of any Asset;
(h) sale, assignment or transfer of any of the Assets, other
than in the Ordinary Course of Business;
(i) other than in the Ordinary Course of Business, incurrence of
indebtedness by Bishop Hawk for borrowed money or commitment to borrow money
entered into by Bishop Hawk, or loans made or agreed to be made by Bishop Hawk,
or indebtedness guaranteed by Bishop Hawk relating to the Assets and the
Business;
(j) incurrence by Bishop Hawk of Liabilities relating to the
Assets or the Business, except Liabilities incurred in the Ordinary Course of
Business;
(k) execution of any Lease by Bishop Hawk or the incurring of
any obligation by Bishop Hawk to execute any Lease;
(l) failure to pay or satisfy when due any material Liability of
Bishop Hawk relating to the Assets or the Business;
(m) failure of Bishop Hawk to carry on the Business in the
Ordinary Course so as to keep generally available to Buyer the services of the
Employees, and to preserve for Buyer the Assets and the Business and the
goodwill of Bishop Hawk's Employees, suppliers, customers, distributors and
others having business relations with it;
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(n) existence of any other event or condition which in any one
case or in the aggregate has or might reasonably be expected to have an Adverse
Effect on the Business; or
(o) agreement by Bishop Hawk, Sopilote or Shareholder to do any
of the things described in the preceding clauses (a) through (n) other than as
expressly provided for herein.
4.5. ASSETS. Bishop Hawk has no ownership interest in any Owned Real
Property other than Excluded Assets. Excluding the Leased Real Property, Bishop
Hawk has and will transfer good and marketable title to the Assets, and upon the
consummation of the transactions contemplated hereby, Buyer will acquire good
and marketable title to all of the Assets, free and clear of any Encumbrances.
The Assets include all assets reasonably necessary for the conduct of the
Business as currently conducted. Schedule 4.5 contains accurate lists and
summary descriptions of all tangible Assets where the value of an individual
item exceeds $500 or where an aggregate of similar items exceeds $500. Schedule
4.5 shall be delivered within two days after Closing. All tangible assets and
properties which are part of the Assets are in good operating condition and
repair and are usable in the ordinary course of business and conform in all
material respects to all applicable Regulations (including Environmental Laws)
relating to their construction, use and operation.
4.6. FACILITIES.
(a) LEASES OR OTHER AGREEMENTS. Except for Facility Leases
listed on Schedule 4.6, there are no leases, subleases, licenses, occupancy
agreements, options, rights, concessions or other agreements or arrangements,
written or oral, granting to any Person the right to purchase, use or occupy any
Facility, or any real property in connection with the Business or any portion
thereof or interest in any such Facility or real property.
(b) FACILITY LEASES AND LEASED REAL PROPERTY. With respect to
each Facility Lease, Bishop Hawk has and will transfer to Buyer at the Closing
an unencumbered interest in the Leasehold Estate. Bishop Hawk enjoys peaceful
and undisturbed possession of all the Leased Real Property, subject to the
applicable leases and rights of the fee owners.
(c) CERTIFICATE OF OCCUPANCY. To the Seller Parties' knowledge,
all Facilities have received all required approvals of governmental authorities
(including without limitation Permits and a certificate of occupancy or other
similar certificate permitting lawful occupancy of the Facilities) required in
connection with the operation thereof and have been operated and maintained in
all material respects in accordance with applicable Regulations.
(d) UTILITIES. All Facilities are supplied with utilities
(including without limitation water, sewage, disposal, electricity, gas and
telephone) and other services necessary for the operation of such Facilities as
currently operated, and there is no condition known to the Seller Parties which
would reasonably be expected to result in the termination of the present access
from any Facility to such utility services.
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(e) IMPROVEMENTS, FIXTURES AND EQUIPMENT. Except as set forth
on Schedule 4.6, all Leasehold Improvements, Fixtures and Equipment and other
tangible assets owned, leased or used by Bishop Hawk at the Facilities are (i)
insured to the extent and in a manner customary in the industry, (ii) not in
need of maintenance, repair or correction except for ordinary routine
maintenance and repair, the cost of which would not be material, (iii)
sufficient for the operation of the Business as presently conducted and (iv) in
conformity, in all material respects, with all applicable Regulations.
(f) NO SPECIAL ASSESSMENT. Bishop Hawk has not received notice
of any special assessment relating to any Facility or any portion thereof and
there is no pending or, to the Seller Parties' knowledge, threatened special
assessment.
4.7. CONTRACTS AND COMMITMENTS.
(a) CONTRACTS. Schedule 4.7 sets forth a complete and accurate
list of any and all Contracts of the following categories:
(i) Contracts not made in the Ordinary Course of Business;
(ii) employment contracts and severance agreements, employee
compensation contracts, independent contractor salesperson compensation
contracts, including without limitation Contracts (A) to employ or terminate
executive officers or other personnel and other contracts with present or former
officers, directors or shareholders of Bishop Hawk or (B) that will result in
the payment by, or the creation of any Liability to pay on behalf of Buyer,
Bishop Hawk, Sopilote or Shareholder any severance, termination, "golden
parachute," or other similar payments to any present or former personnel
following termination of employment or otherwise as a result of the consummation
of the transactions contemplated by this Agreement;
(iii) labor or union contracts;
(iv) distribution, franchise, license, technical assistance,
sales, commission, consulting, agency or advertising contracts related to the
Assets or the Business;
(v) options with respect to any property, real or personal,
whether Bishop Hawk shall be the grantor or grantee thereunder;
(vi) Contracts involving future expenditures or Liabilities,
actual or potential, in excess of $10,000 or otherwise material to the Business
or the Assets;
(vii) Contracts or commitments relating to commission
arrangements with others, including, but not limited to, listing agreements;
(viii) promissory notes, loans, agreements, indentures,
evidences of indebtedness, letters of credit, guarantees, or other instruments
relating to an obligation of Bishop Hawk to pay money, individually in excess of
or in the aggregate in excess of $10,000, whether Bishop Hawk shall be the
borrower, lender or guarantor thereunder or whereby any
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Assets are pledged (excluding credit provided by Bishop Hawk in the Ordinary
Course of Business to purchasers of its services);
(ix) Contracts containing covenants limiting the freedom of
Bishop Hawk or any partner, officer, director or shareholder of Bishop Hawk to
engage in any line of business or compete with any Person;
(x) any Contract with the United States, state or local
government or any agency or department thereof involving expenditures or
Liabilities in excess of $20,000.
(xi) Leases of personal property not cancelable (without
Liability) within 30 calendar days; and
(xii) standard operating manuals and other similar
agreements pursuant to which Bishop Hawk conducts the Business.
Bishop Hawk has delivered to Buyer true, correct and complete copies of all of
the Contracts listed on Schedule 4.7, including all amendments and supplements
thereto.
(b) ABSENCE OF DEFAULTS. All of the Contracts and Leases to
which Bishop Hawk is party or by which it or any of the Assets is bound or
affected are valid, binding and enforceable against Bishop Hawk in accordance
with their terms, except as limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally or by equitable principles (whether considered in an action at law or
in equity), or (ii) limitations imposed by federal or state law or equitable
principles upon the availability of specific performance, injunctive relief or
other equitable remedies. Bishop Hawk has fulfilled, or taken all action
necessary to enable it to fulfill when due, all of its obligations under each of
such Contracts and Leases. Bishop Hawk and, to the Seller Parties' knowledge,
all other parties to such Contracts and Leases have complied in all respects
with the provisions thereof, and neither Bishop Hawk nor, to the Seller Parties'
knowledge, any other party thereto is in Default thereunder and no notice of any
claim of Default has been given to Bishop Hawk. To the knowledge of the Seller
Parties, the services called for by any unfinished Contract can be provided in
accordance with the terms of such Contract, including time specifications, and
have no reason to believe that any unfinished Contract will, upon performance by
Bishop Hawk, result in a loss to Bishop Hawk. With respect to any and all
Leases, none of the Seller Parties has received any notice of cancellation or
termination under any option or right reserved to the lessor, or any notice of
Default, thereunder. With respect to any and all Brokerage Contracts, except as
set forth on Schedule 4.7, neither Bishop Hawk, Sopilote nor Shareholder,
directly or indirectly,: (i) has received any notice of cancellation,
termination or probation or any notice of Default thereunder; or (ii) has
knowledge or notice of any other fact or circumstance which would or could
result in a cancellation, termination or probation thereunder.
4.8. PERMITS.
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(a) Schedule 4.8 sets forth a complete list of all Permits and
applications for Permits used in the operation of the Business and held by
Bishop Hawk and all of its licensed real estate persons (together with primary
location where duties are performed and a description of duties) currently
sponsored by Bishop Hawk's corporate real estate license. Bishop Hawk has, and
at all times has had, all Permits required under any Regulation (including
Environmental Laws) in the operation of Bishop Hawk's Business or in the
ownership of the Assets, and owns or possesses such Permits free and clear of
all Encumbrances. Neither Bishop Hawk nor any of its real estate persons is in
Default, nor have any of them received any notice of any claim of Default, with
respect to any such Permit. Except as otherwise provided by Regulations, all
such Permits are renewable by their terms or in the Ordinary Course of Business
without the need to comply with any special qualification procedures or to pay
any amounts other than routine filing fees and except as set forth on Schedule
4.8, will not be adversely affected by the completion of the transactions
contemplated by this Agreement. No present or former partner, shareholder,
director, officer or Employee of Bishop Hawk or any affiliate thereof, or any
other Person, owns or has any proprietary, financial or other interest (direct
or indirect) in any Permit which Bishop Hawk owns, possesses or uses.
(b) Except as disclosed on Schedule 4.8 hereto, no notice to,
declaration, filing or registration with, or Permit from, any domestic or
foreign governmental or regulatory body or authority, or any other Person, is
required to be made or obtained by Bishop Hawk or any of its real estate persons
in connection with the execution, delivery or performance of this Agreement and
the consummation of the transactions contemplated hereby.
4.9. NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by the Seller Parties with any of the
provisions hereof, will (a) violate or conflict with any provision of the
Articles of Incorporation or Bylaws of Bishop Hawk or Sopilote, (b) violate,
conflict with, or result in or constitute a Default under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any
Encumbrance upon any of the Assets under, any of the terms, conditions or
provisions of any Contract, Lease or Permit, (i) to which Bishop Hawk is a party
or (ii) by which the Assets are bound, (c) violate any Regulation or Court
Order, or (d) impose any Encumbrance on the Assets or the Business.
4.10. FINANCIAL STATEMENTS. Bishop Hawk has previously delivered
to Buyer the Financial Statements. The Financial Statements (a) are in
accordance with the Books and Records of Bishop Hawk, (b) except as set forth on
Schedule 4.10, have been prepared on a modified cash basis consistently applied
throughout the periods covered thereby and (c) fairly present the assets,
Liabilities (including all reserves) and financial position of Bishop Hawk as of
the date thereof and the results of operations and changes in cash flows for the
periods then ended. As of the date of the Financial Statements, there were no
liabilities of Bishop Hawk that will be Assumed Liabilities which, in accordance
with generally accepted accounting principles, should have been set forth or
reserved for in the Financial Statements or the notes thereto, which are not set
forth or reserved for in the Financial Statements or the notes thereto.
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4.11. BOOKS AND RECORDS. Bishop Hawk has made and kept (and given
Buyer access to) Books and Records and accounts, which, in reasonable detail,
accurately and fairly reflect the activities of Bishop Hawk. Bishop Hawk has
not engaged in any transaction, maintained any bank account or used any
corporate funds except for transactions, bank accounts and funds which have been
and are reflected in the normally maintained Books and Records of Bishop Hawk.
4.12. LITIGATION. Except as set forth on Schedule 4.12, there is
no Action pending, or to the knowledge of the Seller Parties, threatened or
anticipated (a) against, related to or affecting (i) Bishop Hawk, the Business
or the Assets (including with respect to Environmental Laws) or (ii) any
officers or directors of Bishop Hawk as such, (b) seeking to delay, limit or
enjoin the transactions contemplated by this Agreement, (c) that involve the
risk of criminal liability, or (d) in which Bishop Hawk is a plaintiff,
including any derivative suits brought by or on behalf of Bishop Hawk. Bishop
Hawk is not in Default with respect to or subject to any Court Order, and there
are no unsatisfied judgments against Bishop Hawk, the Business or the Assets.
There are no Court Orders or agreements with, or liens by, any governmental
authority or quasi-governmental entity relating to any Environmental Law which
regulate, obligate, bind or in any way affect Bishop Hawk or any Facility.
4.13. LABOR MATTERS. Bishop Hawk is not a party to any labor
agreement with respect to its Employees with any labor organization, union,
group or association and there are no employee unions (nor any other similar
labor or employee organizations) under local statutes, custom or practice. In
the past five years, Bishop Hawk has not experienced any attempt by organized
labor or its representatives to make Bishop Hawk 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. There is no labor strike or
labor disturbance pending or, to the best of the Seller Parties' knowledge,
threatened against Bishop Hawk nor is any grievance currently being asserted,
and in the past five years, Bishop Hawk has not experienced a work stoppage or
other labor difficulty, and is not and has not engaged in any unfair labor
practice. Buyer has delivered true and correct lists of all Employees and
information setting forth the employer, names and current annual salary rates or
current hourly wages or compensation of all present Employees whose annual cash
compensation for the 1997 fiscal year exceeded $25,000, and also sets forth the
earnings for each of such Employees as reflected on Form W-2 or 1099 for the
1997 calendar year. Bishop Hawk has not received any notices of planned or
contemplated departures of Employee salespersons.
4.14. COMPLIANCE WITH LAW. The Seller Parties have not violated
during the prior two years and are in compliance with all Regulations and Court
Orders relating to the Assets or the Business or operations of Bishop Hawk.
None of the Seller Parties has received any notice to the effect that, or
otherwise been advised that, Bishop Hawk is not in compliance with any such
Regulations or Court Orders, and none of the Seller Parties has any knowledge of
any existing circumstances which are likely to result in violations of any of
the foregoing.
4.15. NO BROKERS. Neither Bishop Hawk nor any officer, director,
Employee, shareholder, member or affiliate of Bishop Hawk, has employed or made
any agreement with any
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broker, finder or similar agent or any Person which will result in the
obligation of Buyer or any of its affiliates to pay any finder's fee,
brokerage fee or commission or similar payment in connection with the
transactions contemplated hereby. Following the Closing, neither Buyer nor
any of its affiliates will have any obligation to any financial or legal
advisor of the Seller Parties.
4.16. NO OTHER AGREEMENTS TO SELL THE ASSETS. Neither Bishop Hawk
nor any of Bishop Hawk's officers, directors, shareholders, members or
affiliates have any commitment or legal obligation, absolute or contingent, to
any other Person other than Buyer to sell, assign, transfer or effect a sale of
any of the Assets (other than inventory in the Ordinary Course of Business), to
sell or effect a sale of the capital stock of Bishop Hawk, to effect any merger,
consolidation, liquidation, dissolution or other reorganization of Bishop Hawk,
or to enter into any agreement or cause the entering into of an agreement with
respect to any of the foregoing.
4.17. PROPRIETARY RIGHTS.
(a) PROPRIETARY RIGHTS. Schedule 4.17 lists all of Bishop
Hawk's Proprietary Rights. Schedule 4.17 also sets forth: (i) for each
Trademark, the application serial number or registration number, the class of
goods covered and the expiration date for each country in which a Trademark has
been registered and (ii) for each Copyright, the number and date of filing for
each country in which a Copyright has been filed. Bishop Hawk has no Patents.
The Proprietary Rights listed in the Disclosure Schedule are all those used by
Bishop Hawk in connection with the Business.
(b) ROYALTIES AND LICENSES. Bishop Hawk does not have any
obligation to compensate any Person for the use of any such Proprietary Rights
nor has Bishop Hawk granted to any Person any license, option or other rights to
use in any manner any of its Proprietary Rights, whether or not requiring the
payment of royalties.
(c) OWNERSHIP AND PROTECTION OF PROPRIETARY RIGHTS. Bishop Hawk
owns or has a valid right to use each of the Proprietary Rights, and the
Proprietary Rights will not cease to be valid rights of Bishop Hawk by reason of
the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby. Neither Bishop Hawk nor Shareholder has
received any notice of invalidity or infringement of any rights of others with
respect to such Trademarks. No other Person (i) has notified Bishop Hawk or
Shareholder that it is claiming any ownership of or right to use such
Proprietary Rights, or (ii) to the best of the Seller Parties' knowledge, is
infringing upon any such Proprietary Rights in any way.
4.18. EMPLOYEE PLANS.
(a) DISCLOSURE OF EMPLOYEE PLANS. Schedule 4.18 contains a
complete list of all Employee Plans that are sponsored or contributed to by
Bishop Hawk or any of its ERISA Affiliates which cover or have covered current
or former Employees of Bishop Hawk with respect to their relationship with
Bishop Hawk.
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(b) PENSION AND MULTIEMPLOYER PLANS. Neither Bishop Hawk nor
any of its ERISA Affiliates sponsors, contributes to or has any obligation to
contribute, and has not sponsored, contributed to or had any obligation to
contribute, to any pension plan subject to Title IV of ERISA or any
"multiemployer plan" as defined in Sections 3(37) or 4001(a)(3) of ERISA.
(c) WELFARE PLANS. Each Employee Plan which covers or has
covered Employees or former Employees of Bishop Hawk and which is a "group
health plan," as defined in Section 607(1) of ERISA, has been operated in
compliance with provisions of Part 6 of Title I, Subtitle B of ERISA and
Sections 162(k) and 4980B of the Code at all times.
(d) NO LIABILITY TO BUYER. Neither the execution and delivery
of this Agreement or other related agreements by Bishop Hawk nor the
consummation of the transactions contemplated hereby or any related transactions
will result in any liability to Buyer or any affiliate of Buyer under or with
respect to any Employee Plan.
(e) LITIGATION. There is no Action or Court Order outstanding,
relating to or seeking benefits under any Employee Plan that is pending, or to
the Seller Parties' knowledge, threatened or anticipated against Bishop Hawk,
any ERISA Affiliate or any Employee Plan.
(f) NO OTHER MATERIAL LIABILITY. No event has occurred in
connection with which Bishop Hawk or any ERISA Affiliate or any Employee Plan,
directly or indirectly, could be subject to any material Liability (i) under any
Regulation or Court Order relating to any Employee Plans or (ii) pursuant to any
obligation of Bishop Hawk to indemnify any person against Liability incurred
under any such Regulation or Court Order as they relate to the Employee Plans.
4.19. TRANSACTIONS WITH CERTAIN PERSONS. Except as set forth on
Schedule 4.19, no officer, director or Employee of Bishop Hawk nor any member of
any such person's immediate family is presently a party to any transaction with
Bishop Hawk related to the Assets or the Assumed Liabilities, including without
limitation, any contract, agreement or other arrangement (a) providing for the
furnishing of services by, (b) providing for the rental of real or personal
property from or (c) otherwise requiring payments to (other than for services as
officers, directors or Employees of Bishop Hawk) any such Person or any entity
in which any such Person has an interest as a shareholder, officer, director,
trustee or partner.
4.20. TAX MATTERS.
(a) Each of Bishop Hawk, Sopilote and their respective
predecessors (collectively, the "Taxpayers") has timely filed or will timely
file all returns, reports, declarations, statements or any other documents
required to be filed prior to the Closing Date with respect to Taxes
(collectively, "Tax Returns") and such Tax Returns reflect or will reflect
completely and accurately all liability for Taxes for the periods covered
thereby. Bishop Hawk has delivered to Buyer complete and accurate copies of
Bishop Hawk's federal income tax
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returns for the years 1995 and 1996. All Taxes required to be collected or
withheld by any Taxpayer have been duly collected or withheld and, to the
extent required when due, have been or will be duly paid to the proper Taxing
authority.
(b) All Taxes due and payable (and not validly extended) by
Taxpayers for the periods ending prior to or on the Closing Date shall have been
paid by Taxpayers.
(c) No deficiency for any amount of Tax has been asserted or
assessed by a Taxing authority against any Taxpayer, and none of the Seller
Parties has knowledge or reason to know that any assessment or an assertion of a
Tax Liability will be made.
(d) There are no liens for Taxes (other than for current Taxes
not yet due and payable) on any Asset or Assets.
(e) None of the Assets is property that is required to be
treated as being owned by any other Person pursuant to the so-called safe harbor
lease provisions of former Section 168(f)(8) of the Code.
(f) Bishop Hawk is not a person other than a "United States
person" within the meaning of the Code.
(g) The transaction contemplated herein is not subject to the
tax withholding provisions of Section 3406 of the Code, or of Subchapter A of
Chapter 3 of the Code or of any other provision of federal or state law.
(h) Except as set forth on Schedule 4.20, no Taxpayer has been a
member of an affiliated or combined group of corporations for Tax purposes and
the results of the operations of any Taxpayer have not been included in a
consolidated or combined or other similar Tax Return that includes the results
of the operations of any Taxpayer and any other Person(s). Except as set forth
on Schedule 4.20, no tax sharing agreements or other agreement relating to
allocation or sharing of Taxes exists between Bishop Hawk and any other
Person(s), or is otherwise binding on any Taxpayer, and Bishop Hawk does not
have any liability for Taxes owed by any other Person(s) by reason of Bishop
Hawk's status as an assignee or otherwise under any federal or state law or
regulation.
4.21. INSURANCE. Schedule 4.21 contains a complete and accurate
list of all policies or binders of property, casualty, errors and omissions,
corporate liability, general liability, directors and officers, title, worker's
compensation and other forms of insurance. Schedule 4.21 sets forth, with
respect to each policy or binder for the last three years, the carrier, broker
policy number, coverage limits, expiration dates, annual premiums, form (e.g.,
occurrence or claims made), a general description of the type of coverage
provided, loss experience history by line of coverage and a named insured
schedule for each policy or binder maintained by Bishop Hawk on the Business,
the Assets or its Employees. Except as set forth in Schedule 4.21, Bishop
Hawk's loss experience history in the last three years has been zero. All
insurance
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coverage applicable to Bishop Hawk, the Business and the Assets is in full
force and effect, provides coverage as may be required by applicable
Regulation and by any and all Contracts to which Bishop Hawk is a party.
There is no Default under any such policies or binders nor has there been any
failure to give notice or present any claim under any such policy or binder
in a due and timely fashion. There are no outstanding unpaid premiums except
in the Ordinary Course of Business and no notice of reduction or cancellation
or nonrenewal of any existing policy or binder has been received. There are
no provisions in such insurance policies for retroactive or retrospective
premium adjustments. All general liability and workers' compensation
insurance policies maintained by Bishop Hawk have been occurrence policies
and not claims made policies. There are no provisions in any of Bishop
Hawk's occurrence policies (including those in effect up to two years prior
to the date hereof) that would relieve the insurer of its obligations should
the policy holder become bankrupt, insolvent or liquidated. There are no
outstanding performance bonds covering or issued for the benefit of the
Bishop Hawk.
4.22. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) DEFINITIONS. The following terms, when used in this Section
4.22, shall have the following meanings. Unless the context otherwise requires,
any of these terms may be used in the singular or the plural depending on the
reference.
(i) For purposes of this Section, the term "Bishop Hawk"
shall include (A) all partnerships, joint ventures and other entities
or organizations in which Bishop Hawk was at any time or is a partner, joint
venturer, member or participant and (B) all predecessor or former corporations,
partnerships, joint ventures, organizations, businesses or other entities,
whether in existence as of the date hereof or at any time prior to the date
hereof, the assets or obligations of which have been acquired or assumed by
Bishop Hawk or to which Bishop Hawk has succeeded.
(ii) "RELEASE" shall mean and include any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into the environment or the workplace of any
Hazardous Substance, and otherwise as defined in any Environmental Law.
(iii) "HAZARDOUS SUBSTANCE" shall mean any pollutant,
contaminant, chemical, waste and any toxic, infectious, carcinogenic, reactive,
corrosive, ignitable or flammable chemical or chemical compound or hazardous
substance, material or waste, whether solid, liquid or gas, including, without
limitation, any quantity of asbestos in any form, urea formaldehyde, PCB's,
radon gas, crude oil or any fraction thereof, all forms of natural gas,
petroleum products or by-products or derivatives, radioactive substance or
material, pesticide waste waters, sludges, slag and any other substance,
material or waste that is subject to regulation, control or remediation under
any Environmental Laws.
(iv) "ENVIRONMENTAL LAWS" shall mean all Regulations which
regulate or relate to the protection or clean-up of the environment, the use,
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treatment, storage, transportation, generation, manufacture, processing,
distribution, handling or disposal of, or emission, discharge or other
release or threatened release of, Hazardous Substances or otherwise dangerous
substances, wastes, pollution or materials (whether, gas, liquid or solid),
the preservation or protection of waterways, groundwater, drinking water,
air, wildlife, plants or other natural resources, or the health and safety of
persons or property, including without limitation protection of the health
and safety of Employees. Environmental Laws shall include, without
limitation, the Federal Insecticide, Fungicide, Rodenticide Act, Resource
Conservation & Recovery Act, Clean Water Act, Safe Drinking Water Act, Atomic
Energy Act, Occupational Safety and Health Act, Toxic Substances Control Act,
Clean Air Act, Comprehensive Environmental Response, Compensation and
Liability Act, Emergency Planning and Community Right-to-Know Act, Hazardous
Materials Transportation Act and all analogous or related federal, state or
local law, each as amended.
(v) "ENVIRONMENTAL CONDITIONS" means the introduction into
the environment of any pollution, including, without limitation, any
contaminant, irritant or pollutant or other Hazardous Substance (whether or not
upon any Facility or Former Facility or other property and whether or not such
pollution constituted at the time thereof a violation of any Environmental Law
as a result of any Release of any kind whatsoever of any Hazardous Substance) as
a result of which Bishop Hawk has or may become liable to any Person or by
reason of which any Facility or any of the Assets may suffer or be subjected to
any lien.
(b) FACILITIES AND FORMER FACILITIES. Except as set forth on
Schedule 4.22, the Facilities are, and at all times when owned, leased and
operated by Bishop Hawk have been, and all Former Facilities were at all times
when owned, leased or operated by Bishop Hawk, owned, leased and operated by
Bishop Hawk in compliance with all Environmental Laws and in a manner that will
not give rise to any Liability of Bishop Hawk under any Environmental Laws.
(c) NOTICE OF VIOLATION. Except as set forth on Schedule 4.22,
neither Bishop Hawk, Sopilote nor Shareholder has received notice of alleged,
actual or potential responsibility for, or any inquiry or investigation
regarding, (i) any Release or threatened Release of any Hazardous Substance at
any location, whether at the Facilities, the Former Facilities or otherwise or
(ii) an alleged violation of or non-compliance with the conditions of any Permit
required under any Environmental Law or the provisions of any Environmental Law.
Except as set forth on Schedule 4.22, neither Bishop Hawk, Sopilote nor
Shareholder has received notice of any other claim, demand or Action by any
individual or entity alleging any actual or threatened injury or damage for
which Bishop Hawk is alleged to be responsible to any Person, property, natural
resource or the environment arising from or relating to any Release or
threatened Release of any Hazardous Substances at, on, under, in, to or from any
Facilities or Former Facilities, or in connection with any operations or
activities of Bishop Hawk.
(d) ENVIRONMENTAL CONDITIONS. Except as set forth on Schedule
4.22, there are no present or past Environmental Conditions in any way relating
to the Business, any Facility or Former Facility. Notwithstanding the
foregoing, except as set forth on Schedule 4.22,
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neither Bishop Hawk nor any of Bishop Hawk's agents has, in the conduct of
the Business, (i) represented, either directly or indirectly, that Bishop
Hawk possesses any expertise regarding Environmental Laws or the management,
evaluation or assessment of the environmental condition of any Facility or
Former Facility, (ii) participated, either directly or indirectly, in the
environmental management (including, without limitation, the oversight of any
asbestos abatement or soil or groundwater remediation) of any Facility or
Former Facility or (iii) retained or managed any environmental consultant or
expert in connection with the management, evaluation or assessment of the
environmental condition of any Facility or Former Facility.
(e) INDEMNIFICATION AGREEMENTS. Except as set forth on
Schedule 4.24, Bishop Hawk is not a party, whether as a direct signatory or as
successor, assign or third party beneficiary, or otherwise bound, to any Lease
or other Contract (excluding insurance policies disclosed on the Disclosure
Schedule) under which Bishop Hawk is obligated by or entitled to the benefits
of, directly or indirectly, any representation, warranty, indemnification,
covenant, restriction or other undertaking concerning Environmental Conditions.
(f) RELEASES OR WAIVERS. Except as set forth on Schedule 4.22,
Bishop Hawk has not released any other Person from any claim under any
Environmental Law or waived any rights concerning any Environmental Condition.
(g) NOTICES, WARNINGS AND RECORDS. Except as set forth on
Schedule 4.22, Bishop Hawk has given all notices and warnings, made all reports,
and has kept and maintained all records required by and in compliance with all
Environmental Laws.
4.23. PENDING TRANSACTIONS AND TRANSACTIONS IN PROGRESS. The
Seller Parties have delivered true and correct copies of (i) all listings as of
the date hereof and (ii) the 13-week commission receivables reports for each of
Bishop Hawk's offices dated as of July 19, 1998.
4.24. NO MISSTATEMENTS OR OMISSIONS. No representations or
warranties by Bishop Hawk or Shareholder in this Agreement, nor any document,
exhibit, statement, certificate or schedule heretofore or hereinafter furnished
to Buyer pursuant hereto, or in connection with the transactions contemplated
hereby, including without limitation the Disclosure Schedule, contains or will
contain any untrue statement of fact, or omits or will omit to state any fact
necessary to make the statements or facts contained therein not misleading.
Bishop Hawk and Shareholder have disclosed all events, conditions and facts
affecting the Business and prospects of Bishop Hawk.
Notwithstanding anything contained in this Article IV or any other
provision of this Agreement, it is the explicit intent of each party hereto that
(i) the Seller Parties are making no representation or warranty whatsoever,
express or implied, beyond those expressly given in this Agreement, and (ii) all
representations of any type relied upon by the parties hereto in making this
Agreement are specifically set forth herein. Each party further acknowledges
that it has relied on no other representation, and each party hereby waives any
and all claims which it
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may have against the other based on any representation heretofore made and
not specifically set forth herein.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Seller Parties as follows,
which representations and warranties are, as of the date hereof, and will be, as
of the Closing Date, true and correct:
5.1. ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Buyer is qualified to do business as a foreign corporation in
California.
5.2. AUTHORIZATION. Buyer has all requisite power and authority, and
has taken all corporate action necessary, to execute and deliver this Agreement
and the Ancillary Agreements, to consummate the transactions contemplated hereby
and thereby and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Ancillary Agreements by Buyer
and the consummation by Buyer of the transactions contemplated hereby and
thereby have been duly approved by the board of directors of Buyer and the
stockholders of Buyer. No other corporate proceedings on the part of Buyer are
necessary to authorize this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by Buyer and is, and upon execution and delivery the
Ancillary Agreements will be, the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally or by equitable principles (whether
considered in an action at law or in equity), or (ii) limitations imposed by
federal or state law or equitable principles upon the availability of specific
performance, injunctive relief or other equitable remedies.
5.3. NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by Buyer with any of the provisions hereof,
will (a) violate or conflict with any provision of the Certificate of
Incorporation or Bylaws of Buyer, (b) violate, conflict with, or result in or
constitute a Default under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Encumbrance upon any of Buyer's assets
under, any of the terms, conditions or provisions of any contract, indebtedness,
note, bond, indenture, security or pledge agreement, commitment, license, lease,
franchise, permit, agreement, authorization, concession, or other instrument or
obligation to which Buyer is a party or (c) violate any Regulation or Court
Order.
5.4. NO BROKERS. Neither Buyer nor any of its officers, directors,
employees, shareholders or Affiliates has employed or made any agreement with
any broker, finder or similar agent or any Person which will result in the
obligation of Bishop Hawk or any of its respective Affiliates to pay any
finder's fee, brokerage fees or commission or similar payment in
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connection with the transactions contemplated hereby.
5.5. NO PERMITS; LITIGATION. No notice to, declaration, filing or
registration with, or Permit from, any domestic or foreign governmental or
regulatory body or authority, or any other Person, is required to be made or
obtained by Buyer in connection with the execution, delivery or performance of
this Agreement and the consummation of the transactions contemplated hereby.
There is no Action pending, or to Buyer's knowledge, threatened or anticipated,
seeking to delay, limit or enjoin the transactions contemplated by this
Agreement.
ARTICLE VI.
COVENANTS OF THE SELLER PARTIES AND BUYER
The Seller Parties and Buyer each covenant with the other as follows:
6.1. FURTHER ASSURANCES. Upon the terms and subject to the conditions
contained herein, the parties agree, both before and after the Closing, (i) to
use all reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement, (ii) to execute
any documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out any of the transactions contemplated
hereunder and (iii) to cooperate with each other in connection with the
foregoing. Without limiting the foregoing, the parties agree to use their
respective best efforts (A) to obtain all necessary waivers, consents and
approvals from other parties to the Contracts and Leases to be assumed by Buyer;
PROVIDED, HOWEVER that Buyer shall not be required to make any payments,
commence litigation or agree to modifications of the terms thereof in order to
obtain any such waivers, consents or approvals; (B) to obtain all necessary
Permits as are required to be obtained under any Regulations; (C) to give all
notices to, and make all registrations and filings with third parties, including
without limitation submissions of information requested by governmental
authorities; and (D) to fulfill all conditions to this Agreement. The Seller
Parties shall provide reasonable assistance to Buyer and its accountants in
connection with any audit or financial review of the financial statements of the
Seller Parties and standard representation letters to auditors.
6.2. NO SOLICITATION. From the date hereof through the Closing or
the earlier termination of this Agreement, the Seller Parties shall not, and
the Seller Parties shall use best efforts to ensure that their
Representatives, including investment bankers, attorneys, accountants and
shareholders, do not, directly or indirectly, enter into, solicit, initiate
or continue any discussions or negotiations with, or encourage or respond to
any inquiries or proposals by, or participate in any negotiations with, or
provide any information to, or otherwise cooperate in any other way with, any
Person or group, other than Buyer and its Representatives, concerning any
sale of all or a portion of the Assets or the Business, or of any shares of
capital stock of Bishop Hawk, or any merger, consolidation, liquidation,
dissolution or similar transaction involving the Seller Parties. The Seller
Parties hereby represent that it is not now engaged in discussions or
negotiations with any party other than Buyer with respect to any of the
foregoing. The Seller Parties
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shall notify Buyer promptly (orally and in writing) if any such written
offer, or any inquiry or contact with any Person with respect thereto, is
made.
6.3. CONDUCT OF BUSINESS. From the date hereof through the Closing,
the Seller Parties shall, except as contemplated by this Agreement, or as
consented to by Buyer in writing, operate the Business in the Ordinary Course of
Business and will not take any action inconsistent with this Agreement or with
the consummation of the Closing. Without limiting the generality of the
foregoing, the Seller Parties shall not, except as specifically contemplated by
this Agreement or as consented to by Buyer in writing:
(a) (i) take any action with respect to the grant of any bonus,
severance or termination pay (otherwise than pursuant to policies or agreements
of Bishop Hawk in effect on the date hereof that are described on the Disclosure
Schedule) or with respect to any increase of benefits payable under its
severance or termination pay policies or agreements in effect on the date hereof
or increase in any manner the compensation or fringe benefits of any employee or
pay any benefit not required by any existing Employee Plan or policy;
(ii) make any change in the key management structure of
Bishop Hawk, including without limitation the hiring of additional officers or
the termination of existing officers;
(iii) adopt, enter into or amend any Employee Plan,
agreement (including without limitation any collective bargaining or employment
agreement), trust, fund or other arrangement for the benefit or welfare of any
employee, except for any such amendment as may be required to comply with
applicable Regulations;
(iv) fail to maintain all Employee Plans in accordance with
applicable Regulations; or
(b) intentionally do any act which would cause any
representation or warranty of the Seller Parties in this Agreement to be or
become untrue in any material respect.
6.4. EMPLOYEE MATTERS.
(a) Buyer shall extend offers of employment to all Employees
other than those listed by Buyer on Schedule 6.4(a) hereto (such Employees are
hereinafter referred to as the "Rehired Employees"), which offers shall be on
terms and conditions determined by Buyer in its sole discretion. Bishop Hawk
shall terminate the employment of all Rehired Employees immediately prior to the
Closing and shall cooperate with and use its best efforts to assist Buyer in its
efforts to secure reasonably satisfactory employment arrangements with those
employees to whom Buyer makes offers of employment.
(b) Bishop Hawk shall be solely responsible for all of the
Employee Plans listed on Schedule 4.18 and all obligations and liabilities
thereunder. Buyer shall not assume any of such Employee Plans or any obligation
or liability thereunder. Any individual
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who is covered under any Employee Plan that constitutes a "group health plan"
within the meaning of Section 5000(b)(l) of the Code pursuant to the
provisions of Part 6 of Title, I, Subtitle B of ERISA or Section 4980B of the
Code as of the Closing Date shall continue to be covered under such group
health plan after the Closing Date in accordance with such Code sections.
(c) With respect to any and all of the Employees, Bishop Hawk
will be responsible for the funding and payment of any and all Employee and
salesperson wages, compensation, commissions, and benefits through the Closing
Date, including, among other things, accrued vacation, sick time, severance,
claims, and other accrued benefits and any other claims through the Closing
Date.
(d) Except as provided in the Ancillary Agreements, nothing
contained in this Agreement shall confer upon any Rehired Employee any right
with respect to continuance of employment by Buyer, nor shall anything herein
interfere with the right of Buyer to terminate the employment of any of the
Rehired Employees at any time, with or without cause, or restrict Buyer in the
exercise of its independent business judgment in modifying any of the terms and
conditions of the employment of the Rehired Employees.
(e) No provision of this Agreement shall create any third party
beneficiary rights in any Rehired Employee, any beneficiary or dependents
thereof, or any collective bargaining representative thereof, with respect to
the compensation, terms and conditions of employment and benefits that may be
provided to any Rehired Employee by Buyer or under any benefit plan which Buyer
may maintain.
(f) Neither Bishop Hawk, Sopilote nor Shareholder shall,
directly or indirectly, hire or offer employment to or seek to hire or offer
employment to any Employee whose employment is continued by Buyer after the
Closing Date or any employee of Buyer or any successor or affiliate of Buyer
which is engaged in the Business, unless Buyer first terminates the employment
of such employee or gives its written consent to such employment or offer of
employment.
(g) With respect to each Rehired Employee whose employment is
terminated by Buyer for any or no reason within six months following the Closing
Date, the Seller Parties shall reimburse Buyer for the greater of (A) two weeks
of severance pay or (B) the amount of any severance payments set forth in any
employment, independent contractor, severance or other written agreement in
effect between Bishop Hawk and such Rehired Employee immediately prior to the
Closing.
(h) The Seller Parties shall pay all salaries, wages and
benefits due to the Rehired Employees who are not solely independent contractors
(as determined immediately prior to the Closing) through July 31, 1998. To the
extent actually paid, such payments shall be considered a Current Asset for the
purposes of the working capital adjustment set forth in Section 2.6 above.
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6.5. USE OF BUSINESS NAME. Within ten days following the Closing,
Bishop Hawk shall, the Seller Parties shall cause their respective Subsidiaries
to, and Shareholder shall cause all other entities which he controls to, file an
amendment to its Articles of Incorporation, qualifications to do business and
any other required corporate documents to eliminate therefrom the name "Bishop
Hawk," "BH" or any other name or mark (including the Bishop Hawk logo) that has
such a near resemblance thereto as may be likely to cause confusion or mistake
to the public, or to otherwise deceive the public.
6.6. NAMED INSURED. From and after the Closing, the Seller Parties
shall cause Buyer to be added as a named insured on Bishop Hawk's insurance
policies related to the Business.
6.7. COLLECTION OF ACCOUNTS RECEIVABLE AND LETTERS OF CREDIT. At the
Closing, Buyer will acquire hereunder, and thereafter Buyer or its designee
shall have the right and authority to collect for Buyer's or its designee's
account, all receivables, letters of credit and other items which constitute a
part of the Assets, and the Seller Parties shall within forty-eight (48) hours
after receipt of any payment in respect of any of the foregoing, properly
endorse and deliver to Buyer any letters of credit, documents, cash or checks
received on account of or otherwise relating to any such receivables, letters of
credit or other items. The Seller Parties shall promptly transfer or deliver to
Buyer or its designee any cash or other property that the Seller Parties may
receive in respect of any deposit, prepaid expense, claim, contract, license,
lease, commitment, sales order, purchase order, letter of credit or receivable
of any character, or any other item, constituting a part of the Assets.
6.8. BOOKS AND RECORDS; TAX MATTERS.
(a) BOOKS AND RECORDS. Each party agrees that it will cooperate
with and make available to the other party, during normal business hours, all
Books and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing which are
necessary or useful in connection with any tax inquiry, audit, investigation or
dispute, any litigation or investigation or any other matter requiring any such
Books and Records, information or employees for any reasonable business purpose.
The party requesting any such Books and Records, information or employees shall
bear all of the out-of-pocket costs and expenses (including without limitation
attorneys' fees, but excluding reimbursement for salaries and employee benefits)
reasonably incurred in connection with providing such Books and Records,
information or employees.
(b) COOPERATION AND RECORDS RETENTION. Bishop Hawk, Sopilote,
Shareholder and Buyer shall (i) each provide the other with such assistance as
may reasonably be requested by any of them in connection with the preparation of
any Tax Return, audit, or other examination by any taxing authority or judicial
or administrative proceedings relating to Liability for Taxes, (ii) each retain
and provide the other with any records or other information that may be relevant
to such Tax Return, audit or examination, proceeding or determination, and
(iii) each provide the other with any final determination of any such audit or
examination, proceeding, or determination that affects any amount required to be
shown on any Tax Return of the other for
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any period. Without limiting the generality of the foregoing, Buyer and the
Seller Parties shall each retain, until the applicable statutes of
limitations (including any extensions) have expired, copies of all Tax
Returns, supporting work schedules, and other records or information that may
be relevant to such Tax Returns for all tax periods or portions thereof
ending on or before the Closing Date and shall not destroy or otherwise
dispose of any such records without first providing the other party with a
reasonable opportunity to review and copy the same.
(c) PAYMENT OF LIABILITIES. Following the Closing Date, Bishop
Hawk and Shareholder shall pay promptly when due all of the debts and
Liabilities of Bishop Hawk, including any Liability for Taxes, other than
Assumed Liabilities; provided, however, this covenant shall not apply to that
portion (or all) of any debt that Bishop Hawk is contesting in good faith.
6.9. BULK SALES. It may not be practicable to comply or attempt to
comply with the procedures of the "Bulk Sales Act" or similar law of any or all
of the states in which the Assets are situated or of any other state which may
be asserted to be applicable to the transactions contemplated hereby.
Accordingly, to induce Buyer to waive any requirements for compliance with any
or all of such laws, the Seller Parties hereby agree that the indemnity
provisions of Article VIII shall apply to any Losses of Buyer arising out of or
resulting from the failure of Bishop Hawk, Sopilote, Shareholder or Buyer to
comply with any such laws.
6.10. TAXES. The Seller Parties shall pay or cause to be paid
when due all Taxes for which Bishop Hawk is or may be liable or that are or may
become payable with respect to all taxable periods ending on or prior to the
Closing Date.
6.11. SACRAMENTO REVENUE GUARANTEE. Buyer may withhold and set
off against any amounts otherwise due to the Seller Parties pursuant to the
Non-Negotiable Note 35% (but not more than $500,000) of any shortfall in
gross revenues generated by all Rehired Employees in Buyer's Sacramento
office in the 12 months ended on the first anniversary of the Closing Date
provided such Rehired Employees remain employed by Buyer on the first
anniversary of the Closing Date, as compared to the gross revenues generated
by all Rehired Employees in Bishop Hawk's Sacramento office in the 12 months
immediately prior to the Closing Date. For purposes of calculating gross
revenues in Bishop Hawk's Sacramento office in the 12 months immediately
prior to the Closing Date, such gross revenues shall not include revenues
generated by any Rehired Employee who is terminated by Buyer in the six
months following the Closing Date. Schedule 6.11 hereto sets forth the gross
revenues generated by each of the Rehired Employees in Bishop Hawk's
Sacramento office in the 12 months immediately prior to the Closing Date.
Within 60 days after the first anniversary of the Closing Date, Buyer shall
deliver to Bishop Hawk (i) its calculation of gross revenues for such 12
month period and the amount of any withholding or set off pursuant to this
Section and (ii) the difference, if any, between $500,000 and the amount of
such withholding or set off, in immediately available funds. Any payment made
in accordance with subsection (ii) of the previous sentence shall be applied
to and reduce any outstanding principal amount under the Non-Negotiable Note.
Buyer's calculation of gross revenues shall be subject to the review and
reasonable approval of Bishop Hawk.
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6.12. COMMISSION SCHEDULE. From the Closing Date through December
31, 1999, Buyer shall adopt and not reduce the commission splits set forth in
the commission agreements (including any commissions set forth in any addenda or
amendments to such commision agreements) provided to Buyer by the Seller Parties
with respect to the Employees of Bishop Hawk who are employed or retained as
independent contractors by Buyer following the Closing. Buyer shall not be
obligated to adopt any terms not related to the commission splits (including but
not limited to any additional compensation or expense reimbursements) set forth
in such commission agreements.
6.13. FINANCIAL STATEMENTS. The Seller Parties shall cooperate
with Buyer and provide all reasonable assistance requested by Buyer including
providing management representation letters satisfactory to Ernst & Young LLP in
its sole discretion signed by appropriate persons reasonably requested by Ernst
& Young, if not available from Employees of Buyer, and to assist Buyer in
preparing (i) a balance sheet of Bishop Hawk dated as of November 30, 1997 and
the related statements of operations, changes in shareholder equity and cash
flows for the year ended November 30, 1997, each audited by Ernst & Young LLP in
accordance with generally accepted accounting principles, and (ii) an unaudited
balance sheet of Bishop Hawk dated as of May 31, 1998 and the related statements
of operations, changes in shareholder equity and cash flows for the six-month
period ended May 31, 1998. Buyer shall pay all fees, costs and expenses
associated with the preparation of the financial statements of Bishop Hawk and
the audit described in this Section. If Buyer is unable to prepare each of the
foregoing items within 60 days following the Closing Date as a result of a
material breach of this Section by the Seller Parties, then the Seller Parties
agree, jointly and severally, to pay to Buyer $1,000,000 in immediately
available funds. Buyer agrees to notify the Seller Parties when Buyer first
becomes aware of a breach of this Section 6.13, and the Seller Parties shall
have the right to cure such breach up until such time as the breach becomes a
material breach. For purposes of this Section 6.13 only, "material breach"
shall mean those actions of the Seller Parties which cause Buyer to fail to
timely file the financial statements referenced above with the Securities and
Exchange Commission.
ARTICLE VII.
CONDITIONS TO THE SELLER PARTIES' OBLIGATIONS
The obligations of Seller to consummate the transactions provided for
hereby are subject, in the discretion of Seller, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by Seller:
7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) The representations and warranties of Buyer in this
Agreement shall be true and correct when made and at and as of the Closing Date
as if such representations were made at such time (except that those
representations and warranties which are made as of a specific date shall be
true and correct only as of such date), except for inaccuracies which
individually or in the aggregate would not reasonably be expected to materially
impair the ability of Buyer to perform its obligations under, or to complete the
transactions contemplated by this
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Agreement and (b) Buyer shall have performed and satisfied in all material
respects all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
7.2. CONSENTS; REGULATORY COMPLIANCE AND APPROVAL. All consents,
approvals and waivers from governmental authorities and other parties necessary
to permit Bishop Hawk to transfer the Assets to Buyer as contemplated hereby
shall have been obtained. The Seller Parties shall be satisfied that all
approvals required under any Regulations to carry out the transactions
contemplated by this Agreement shall have been obtained and that the parties
shall have complied with all Regulations applicable to the transactions
contemplated by this Agreement.
7.3. NO ACTIONS OR COURT ORDERS. No Action by any governmental
authority or other Person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to damage the Seller Parties, Buyer, the
Assets or the Business materially if the transactions contemplated hereby are
consummated. There shall not be any Regulation or Court Order that makes the
purchase and sale of the Business or the Assets contemplated hereby illegal or
otherwise prohibited.
7.4. DELIVERIES AT CLOSING. Buyer shall have executed (as applicable)
and delivered, or caused to be delivered, to the Seller Parties the documents
and agreements set forth in Section 3.3 hereof.
ARTICLE VIII.
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions provided for
hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions, any of which may be
waived by Buyer:
8.1. REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of the Seller Parties in this Agreement shall be true and correct
when made and at and as of the Closing Date as if such representations were made
at such time (except that those representations and warranties which are made as
of a specific date shall be true and correct only as of such date), except for
inaccuracies that individually or in the aggregate would not reasonably be
expected to have an Adverse Effect. The Seller Parties shall have performed and
satisfied in all material respects all agreements and covenants required hereby
to be performed by them prior to or on the Closing Date.
8.2. CONSENTS; REGULATORY COMPLIANCE AND APPROVAL. All Permits,
consents, approvals and waivers from governmental authorities and other parties
necessary to the consummation of the transactions contemplated hereby and for
the operation of the Business by Buyer (including, without limitation, all
required third party consents to the assignment of the Leases and Contracts to
be assumed by Buyer) shall have been obtained. Buyer shall be satisfied that
all approvals required under any Regulations to carry out the transactions
contemplated by
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this Agreement shall have been obtained and that the parties shall have
complied with all Regulations applicable to the transactions contemplated by
this Agreement.
8.3. NO ACTIONS OR COURT ORDERS. No Action by any governmental
authority or other Person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to damage Buyer, the Assets or the Business
materially if the transactions contemplated hereby are consummated, including
without limitation any Adverse Effect on the right or ability of Buyer to own,
operate, possess or transfer the Assets after the Closing. There shall not be
any Regulation or Court Order that makes the purchase and sale of the Business
or the Assets contemplated hereby illegal or otherwise prohibited.
8.4. DELIVERIES AT CLOSING. The Seller Parties shall have executed
and delivered each of documents and agreements set forth in Section 3.2 hereof.
The Seller Parties shall have filed (where necessary) and delivered to Buyer all
documents necessary to transfer and assign to Buyer all right, title and
interest in and to the Assets and to release the Assets from all Encumbrances,
which documents shall be in a form reasonably satisfactory to Buyer's counsel.
8.5. MATERIAL CHANGES. Since March 31, 1998, there shall not have
been any Adverse Change with respect to the Business or the Assets.
ARTICLE IX.
CONSENTS TO ASSIGNMENT
9.1. CONSENTS TO ASSIGNMENT. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any Contract, Lease, Permit or any claim or right or any benefit
arising thereunder or resulting therefrom if an attempted assignment thereof,
without the consent of a third party thereto, would constitute a Default
thereof or in any way adversely affect the rights of Bishop Hawk or Buyer
thereunder. If such consent is not obtained, or if an attempted assignment
thereof would be ineffective or would affect the rights thereunder so that
Buyer would not receive all such rights, Bishop Hawk and Shareholder will
cooperate with Buyer, in all reasonable respects, to provide to Buyer the
benefits under any such Contract, Lease, Permit or any claim or right,
including without limitation enforcement for the benefit of Buyer of any and
all rights of Bishop Hawk and Shareholder against a third party thereto
arising out of the Default or cancellation by such third party or otherwise.
ARTICLE X.
SURVIVAL OF REPRESENTATIONS, ETC.; INDEMNIFICATION
10.1. SURVIVAL OF REPRESENTATIONS, ETC. All of the
representations and warranties made by each party in this Agreement or in any
attachment, Exhibit, the Disclosure Schedule, certificate, document or list
delivered by any such party pursuant hereto shall survive the Closing for a
period of (and claims based upon or arising out of such representations,
warranties, covenants and agreements may be asserted at any time before the date
which shall be)
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two years following the Closing Date (except with respect to the
representations and warranties set forth in Section 4.18 ("Employee Plans"),
Section 4.20 ("Tax Matters") and Section 4.22 ("Compliance With Environmental
Laws"), each of which shall survive for a period equal to the relevant
statute of limitations (including any extensions thereof)). No investigation
made by any of the parties hereto shall in any way limit the representations
and warranties of the parties. Each party hereto shall be entitled to rely
upon the representations and warranties of the other party set forth in this
Agreement. The termination of the representations and warranties provided
herein shall not affect the rights of a party in respect of any claim made by
such party in a writing received by the other party prior to the expiration
of the applicable survival period provided herein.
10.2. INDEMNIFICATION BY THE SELLER PARTIES. Except as
otherwise limited by this Article, the Seller Parties, jointly and severally,
shall indemnify and hold harmless Buyer and its Affiliates, parents,
subsidiaries, officers, directors, employees, agents, independent contractor
salespersons, successors and assigns from any and all liabilities, losses,
damages, claims, costs and expenses, interest, awards, judgments and
penalties (whether or not arising out of third-party claims) (including,
without limitation, costs of mitigation, losses in connection with any
Environmental Law, lost profits and other losses resulting from any shutdown
or curtailment of operations, reasonable attorneys' fees and expenses and any
and all amounts paid in investigation, defense or settlement of any or all of
the foregoing) ("Losses"), arising out of or resulting from (a) any or all
misrepresentations or breaches of warranty by Bishop Hawk, Sopilote or
Shareholder contained herein or in any document delivered hereunder; (b) the
breach of any or all covenants or agreements contained herein to be performed
by the Seller Parties; (c) all Excluded Liabilities; and (d) the breach of
any or all Ancillary Agreements executed by Bishop Hawk, Sopilote or
Shareholder; PROVIDED THAT such party shall be responsible only for its own
breach of an Ancillary Agreement other than a breach by Bishop Hawk, Sopilote
or Shareholder, for which the indemnifying parties shall be jointly and
severally liable.
10.3. INDEMNIFICATION BY BUYER. Except as otherwise limited by
this Article, Bishop Hawk and its respective Affiliates and agents shall be
indemnified and held harmless by Buyer for any and all Losses arising out of or
resulting from (a) any and all misrepresentations or breach of warranty by Buyer
contained herein or in any document delivered hereunder, (b) the breach of any
covenant or agreement by Buyer contained herein or in the Ancillary Agreements
to which Buyer is a party and (c) and the ownership or operation of the Business
after the Closing Date; PROVIDED, HOWEVER, that indemnification under this
Section 10.3 shall only be available to the extent that Losses are not subject
to indemnification under Section 10.2.
10.4. GENERAL INDEMNIFICATION PROVISIONS.
(a) For the purposes of this Section, the term "Indemnitee"
shall refer to the person or persons indemnified, or entitled, or claiming to be
entitled, to be indemnified, pursuant to the provisions of this Article X, as
the case may be; and the term "Indemnitor" shall refer to the person having the
obligation to indemnify pursuant to this Article X. The term "Losses" is not
limited to matters asserted by third parties, but includes Losses incurred or
sustained by an Indemnitee in the absence of third party claims, and payments by
the Indemnitee
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shall not be a condition precedent to recovery. Amounts payable by the
Seller Parties to Buyer in respect of Losses for which Buyer is entitled to
indemnification hereunder shall be payable by the Seller Parties as incurred
by Buyer. Amounts payable by Buyer with respect to Losses for which Bishop
Hawk, Sopilote or Shareholder are entitled to indemnification shall be paid
by Buyer as incurred.
(b) An Indemnitee shall give the Indemnitor notice of any matter
which an Indemnitee has determined has given or could give rise to a right of
indemnification under this Agreement as soon as practicable after the Indemnitee
becomes aware of such matter, stating the amount of Losses, if known, and the
method of computation thereof, all with reasonable particularity and containing
a reference to the provisions of this Agreement in respect of which such right
of indemnification is claimed or arises. The obligations and liabilities of an
Indemnitor under this Article with respect to Losses arising from claims of any
third party that are subject to the indemnification provided for in this Article
("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: if an Indemnitee shall receive notice of any
Third Party Claim, the Indemnitee shall give the Indemnitor notice of such Third
Party Claim as promptly as practicable (and in any event within fifteen (15)
calendar days after the service of the citation or summons) and shall permit the
Indemnitor, at its option, to participate in the defense of such Third Party
Claim by counsel of its own choice and at its expense; provided that such
counsel is reasonably acceptable to Indemnitee. The Indemnitor shall also be
entitled, at its option, to assume and control the defense of such Third Party
Claim at its cost, risk and expense and through counsel of its choice if it
gives notice, within fifteen (15) calendar days after receiving notice of such
claim from the Indemnitee, of his or its intention to do so to the Indemnitee,
unless the named parties to such action or proceeding include both the
Indemnitor and the Indemnitee and the Indemnitee has been advised in writing by
counsel that there may be one or more legal defenses available to such
Indemnitee that are different from or additional to those available to the
Indemnitor. If the Indemnitor exercises its right to undertake the defense
against any such Third Party Claim as provided above, the Indemnitee shall
cooperate with the Indemnitor in such defense and make available to the
Indemnitor, at the Indemnitor's expense, all witnesses, pertinent records,
materials and information in its possession or under its control relating
thereto as is reasonably required by the Indemnitor. Similarly, in the event
the Indemnitee is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnitor shall cooperate with the Indemnitee in
such defense and make available to it all such witnesses, records, materials and
information in its possession or under its control relating thereto as is
reasonably required by the Indemnitee. No such Third Party Claim, except the
settlement thereof which involves the payment of money only and for which the
Indemnitee is fully indemnified by the Indemnitor, may be settled by the
Indemnitor without the written consent of the Indemnitee, which consent will not
be unreasonably withheld. If the Indemnitor fails to assume the defense of such
Third Party Claim within fifteen (15) calendar days after receipt of the notice
thereof, the Indemnitee against which such claim has been asserted will (upon
delivering notice to such effect to the Indemnitor) have the right to undertake,
at the Indemnitor's cost and expense, the defense, compromise or settlement of
such claim on behalf of and for the account and risk of the Indemnitor and the
Indemnitor will be
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bound by any determination made in such claim or compromise or settlement
effected by the Indemnitee.
10.5. LIMITS ON INDEMNIFICATION.
(a) No Indemnitee shall be entitled to assert any right to
indemnification pursuant to Section 10.2(a) unless the aggregate of all claims
for Losses with respect to such section equals or exceeds $160,000 individually
(including a series of related claims) or in the aggregate; PROVIDED, HOWEVER,
that this limitation shall not apply with respect to Losses arising out of a
breach of representation or warranty contained in Section 4.3(b)
("Authorization"), Section 4.18 ("Employee Plans"), Section 4.20 ("Tax Matters")
or Section 4.22 ("Compliance With Environmental Laws"). Once such claims equal
or exceed the $160,000 threshold, Buyer will be entitled, except as set forth
below, to the full amount of all indemnified claims in excess of $160,000, up to
an aggregate of $8,048,200 plus 80% of the Earn-Out Payment.
(b) Buyer may withhold and set off against any amounts otherwise
due to the Seller Parties (including pursuant to the Non-Negotiable Note and the
Additional Consideration) any amount as to which the Seller Parties are
obligated to indemnify Buyer hereunder, and with respect to Losses arising out
of or resulting from misrepresentations or breaches of warranties contained
herein, the amounts in excess of the threshold set forth in Section 10.5(a).
(c) The amount of any Loss subject to indemnification hereunder
shall be calculated net of any amounts which have been previously recovered by
the Indemnitee under Bishop Hawk's general liability policy (including any
"tail" coverage).
ARTICLE XI.
MISCELLANEOUS
11.1. TERMINATION.
(a) TERMINATION. This Agreement may be terminated at any time
prior to Closing:
(i) By mutual written consent of Buyer and Bishop Hawk;
(ii) By Buyer or Bishop Hawk if the Closing shall not have
occurred on or before July 24, 1998; PROVIDED HOWEVER, that this provision shall
not be available to Buyer if Bishop Hawk has the right to terminate this
Agreement under clause (iv) of this Section 11.1, and this provision shall not
be available to Bishop Hawk if Buyer has the right to terminate this Agreement
under clause (iii) of this Section 11.1;
(iii) By Buyer if there is a material breach of any
representation or warranty set forth in Article IV hereof or any covenant or
agreement to be complied with or performed by the Seller Parties pursuant to the
terms of this Agreement or the failure of a condition set forth in Article VIII
to be satisfied (and such condition is not waived in writing by Buyer) on or
prior to the Closing Date, or the occurrence of any event which results or would
result in the failure of
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a condition set forth in Article VIII to be satisfied on or prior to the
Closing Date; PROVIDED, HOWEVER, that Buyer may not terminate this Agreement
prior to the Closing if Bishop Hawk has not had an adequate opportunity to
cure such failure; or
(iv) By Bishop Hawk if there is a material breach of any
representation or warranty set forth in Article V hereof or of any covenant or
agreement to be complied with or performed by Buyer pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VII to be
satisfied (and such condition is not waived in writing by Bishop Hawk) on or
prior to the Closing Date, or the occurrence of any event which results or would
result in the failure of a condition set forth in Article VII to be satisfied on
or prior to the Closing Date; PROVIDED, HOWEVER, that Bishop Hawk may not
terminate this Agreement prior to the Closing Date if Buyer has not had an
adequate opportunity to cure such failure.
(b) IN THE EVENT OF TERMINATION. In the event of termination of
this Agreement:
(i) Each party will redeliver all documents, work papers
and other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; and
(ii) No party hereto shall have any Liability to any other
party to this Agreement, except as stated in subsections (i) and (ii) of this
Section 11.1(b), except for any willful breach of this Agreement occurring prior
to the proper termination of this Agreement. The foregoing provisions shall not
limit or restrict the availability of specific performance or other injunctive
relief to the extent that specific performance or such other relief would
otherwise be available to a party hereunder.
11.2. ASSIGNMENT. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned by any party without the
prior written consent of the other parties; except that Buyer may, without
such consent, assign all such rights to any lender as collateral security and
assign all such rights and obligations to a wholly-owned subsidiary (or a
partnership controlled by Buyer) or subsidiaries of Buyer or to a successor
in interest to Buyer which shall assume all obligations and Liabilities of
Buyer under this Agreement without releasing Buyer therefrom. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns, and
no other Person shall have any right, benefit or obligation under this
Agreement as a third party beneficiary or otherwise.
11.3. NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic or
digital transmission method, with electronic confirmation; when received, if
sent for next day delivery to a domestic address by recognized overnight
delivery service (E.G.,
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Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
If to Bishop Hawk, Sopilote or Shareholder, addressed to:
N. Bruce Ashwill
3430 Robin Lane, Suite 4
Cameron Park, CA 95682
Fax: (530) 677-3528
With a copy to:
O'Melveny & Myers
275 Battery Street, 26th Fl.
San Francisco, CA 94111
Attention: Douglas P. Ley, Esq.
Fax: (415) 984-8701
If to Buyer, addressed to:
Grubb & Ellis Company
2215 Sanders Road, 4th Floor
Northbrook, IL 60062
Attention: General Counsel
Fax: (847) 753-9034
With a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, CA 94111
Attention: Scott R. Haber, Esq.
Fax: (415) 395-8095
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4. CHOICE OF LAW. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the
internal laws of the State of California, except with respect to matters of law
concerning the internal corporate or organizational affairs of any corporate or
other entity which is a party to or the subject of this Agreement, and as to
those matters the law of the jurisdiction under which the respective entity
derives its powers shall govern.
11.5. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement
and the Ancillary Agreements, together with all exhibits and schedules hereto
and thereto (including the Disclosure Schedule), constitute the entire agreement
among the parties pertaining to the subject
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matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto. No amendment, supplement, modification
or waiver of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
11.6. MULTIPLE COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.7. EXPENSES. Except as otherwise specified in this Agreement,
each party hereto shall pay its own legal, accounting, out-of-pocket and other
expenses incident to this Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
11.8. INVALIDITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9. TITLES; GENDER. The titles, captions or headings of the
Articles and Sections herein, and the use of a particular gender, are for
convenience of reference only and are not intended to be a part of or to affect
or restrict the meaning or interpretation of this Agreement.
11.10. PUBLICITY. Subject to applicable laws and regulations,
including securities laws and stock exchange regulations and policies neither
Buyer, Bishop Hawk nor Shareholder shall issue any press release or make any
public statement regarding the transactions contemplated hereby, without prior
written approval of the other party. Buyer may, at its discretion, issue or
make an appropriate press release or public announcement after the Closing.
11.11. MATERIALITY. Materiality for purposes of this Agreement
shall be defined in the context in which used and except as otherwise expressly
herein provided, without regard to any dollar amount or amounts stated in this
Agreement.
11.12. ATTORNEYS' FEES. If any party to this Agreement brings an
action or arbitration to interpret or enforce its rights under this Agreement,
the prevailing party shall be entitled to recover its costs and expenses,
including without limitation reasonable attorneys' fees, incurred in connection
with such action or arbitration, including any appeal of such action or
arbitration.
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11.13. KNOWLEDGE. Any reference to the Seller Parties' knowledge
or the knowledge of the Seller Parties shall mean the actual knowledge, after
reasonable investigation and inquiry, of Shareholder or Greg Kasner.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their respective behalf, by their respective officers
thereunto duly authorized, all as of the day and year first above written.
BISHOP HAWK, INC., GRUBB & ELLIS COMPANY,
a California corporation a Delaware corporation
By: /s/ Greg Kasner By: /s/ Robert J. Walner
-------------------- -------------------------
Name: Greg Kasner Name: Robert J. Walner
Title: President Title: Senior Vice President
N. Bruce Ashwill, an SOPILOTE, INC.,
individual a California corporation
/s/ N. Bruce Ashwill By: /s/ N. Bruce Ashwill
-------------------- -------------------------
N. Bruce Ashwill
Title: Chairman
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAS BEEN
TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN
CONNECTION WITH ANY DISTRIBUTION THEREOF. IT MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WHICH IS THEN
EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND QUALIFICATION
UNDER APPLICABLE STATE SECURITIES LAWS OR (ii) AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT OR LAWS.
GRUBB & ELLIS COMPANY
PROMISSORY NOTE
$1,449,800 July 22, 1998
FOR VALUE RECEIVED, Grubb & Ellis Company, a Delaware corporation
(the "Company," which term includes any successor corporation) hereby
promises to pay to Bishop Hawk, Inc., a California corporation ("Payee"), or
to its order, at such address as Payee may designate in writing, (i) the
principal sum of ONE MILLION FOUR HUNDRED FORTY-NINE THOUSAND EIGHT HUNDRED
DOLLARS ($1,449,800), or if less, the aggregate unpaid and outstanding
principal amount of this Note, plus (ii) any accrued unpaid interest in coin
or currency of the United States of America as at the time of payment shall
be legal tender for the payment of public and private debts. Interest will
be computed on the basis of a three hundred sixty-five (365) day year and the
actual number of days elapsed. Interest shall accrue on the unpaid principal
amount from the date hereof at the interest rate equal to ten percent (10%)
per annum (the "Interest Rate"); PROVIDED, HOWEVER, that interest shall never
accrue at a rate greater than the maximum rate permitted by the California
usury law. Except as set forth below, principal and accrued interest shall
be due and payable in two installments: (i) Nine Hundred Forty-Nine Thousand
Eight Hundred Dollars ($949,800) of the principal amount shall be due and
payable on the date that is 12 months after the date first set forth above,
along with all accrued interest thereon to date and (ii) the remaining
balance of principal and accrued interest shall be due and payable at on the
date that is 14 months after the date first set forth above, to the extent
such payments are lawful.
Upon the occurrence of an Event of Default under this Note,
including, without limitation, failure to pay the principal by the stated
maturity (whether by acceleration, notice of prepayment or otherwise),
interest shall thereafter accrue on the entire unpaid principal balance under
this Note, including without limitation any delinquent interest which has
been added to the principal amount due under this Note pursuant to the terms
hereof, at the rate of five percent (5%) over the Interest Rate per annum (on
the basis of a 365-day year and the actual number of days elapsed).
1. DEFINITIONS.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Event of Default" has the meaning set forth in Section 4.1.
<PAGE>
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or other agency or political subdivision thereof.
2. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law or other law, which
would prohibit or forgive the Company from paying all or any portion of the
principal of, or interest on, this Note as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Note; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law as though no such law had been enacted.
3. PREPAYMENT. This Note may be prepaid in whole or in part at any
time prior to maturity without premium or penalty, provided that any
prepayment of any portion of the principal amount of this Note shall be
accompanied by payment of all interest accrued hereunder. Any partial
prepayment shall be applied first to accrued interest hereon and then to the
unpaid principal hereof. Concurrently with any prepayment of any portion of
the principal amount of this Note, Payee shall make a notation of such
payment on this Note. If full payment of all unpaid principal of and accrued
interest on this Note is made, this Note shall be cancelled.
4. DEFAULTS AND REMEDIES.
4.1 EVENTS OF DEFAULT. An "Event of Default" occurs if:
(1) the Company defaults in the payment of principal and accrued
interest on this Note when the same becomes due and payable at maturity or
otherwise;
(2) the Company fails to comply with any of its other agreements
contained in this Note and the default continues for the period and after
the notice specified below;
(3) the Company, pursuant to or within the meaning of any
Bankruptcy Law (A) becomes insolvent, (B) fails generally to pay its debts
as they become due, (C) admits in writing its inability to pay its debts
generally as they become due, (D) commences a voluntary case or proceeding
under any Bankruptcy Law with respect to itself, (E) consents to the entry
of a judgment, decree or order for relief against it in an involuntary case
or proceeding under any Bankruptcy Law, (F) consents to the appointment of
a Custodian of it or for any part of its property, (G) consents to or
acquiesces in the institution of bankruptcy or insolvency proceedings
against it, (H) applies for, consents to or acquiesces in the appointment
of or taking possession by a Custodian of the Company or for any part of
its properties, (I) makes a general assignment for the benefit of its
creditors, or (J) takes any corporate act to authorize any of the
foregoing; or
(4) a court of competent jurisdiction enters a judgment, decree
or order for relief in respect of the Company in an involuntary case or
proceeding under any Bankruptcy Law which shall (A) approve as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition in respect of the Company, (B) appoint a Custodian of the
Company
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<PAGE>
or for any part of its properties or (C) order the winding-up or
liquidation of its affairs; and such judgment, decree or order shall remain
unstayed and in effect for a period of 30 consecutive days; or any
bankruptcy or insolvency petition or application is filed, or any
bankruptcy or insolvency proceeding is commenced against the Company and
such petition, application or proceeding is not dismissed within 30 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means
any receiver, trustee, assignee, liquidator, sequestrator or similar official
under any Bankruptcy Law.
A Default under clause (2) is not an Event of Default until Payee
notifies the Company of the Default and the Company does not cure the Default
within 30 days after receipt of the notice. The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default." When a Default is cured, it ceases.
4.2 ACCELERATION. If an Event of Default (other than an Event of
Default specified in Section 4.1(3) or (4)) occurs and is continuing, Payee
may, by written notice to the Company, declare to be immediately due and
payable all principal of and accrued interest on this Note. Such amount
shall become immediately due and payable without presentment, demand, protest
and notice of any kind or of dishonor, all of which are hereby expressly
waived. If an Event of Default specified in Section 4.1(3) or (4) occurs,
such amount shall IPSO FACTO become and be immediately due and payable
without any declaration or other act on the part of Payee. Upon payment of
such principal amount and interest, all of the Company's obligations under
this Note shall terminate. Payee may rescind an acceleration and its
consequences.
4.3 OTHER REMEDIES. Except as set forth in Section 4.2 and if an
Event of Default occurs and is continuing, Payee may pursue any available
remedy by proceeding at law or in equity to collect the payment of amounts
due on this Note or to enforce the performance of any provision of this Note.
A delay or omission by Payee in exercising any right or remedy accruing upon
an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. A waiver on any one
occasion shall not be construed as a bar to or waiver of any such right or
remedy on any future occasion. No remedy is exclusive of any other remedy.
All available remedies are cumulative to the extent permitted by law.
4.4 WAIVER OF PAST DEFAULTS. Payee may waive an existing Default
or Event of Default and its consequences. When a Default or Event of Default
is waived, it is cured and ceases.
None of the provisions hereof and none of Payee's rights or
remedies on account of any past or future defaults shall be deemed to have
been waived by Payee's acceptance of any past due payment or by an indulgence
granted by Payee to the Company. It is agreed that time is of the essence of
this Note.
5. COMPANY'S RIGHT OF OFFSET. The Company may withhold and set off
against principal and accrued unpaid interest otherwise due Payee under this
Note any amount due and payable by Payee, Sopilote Inc. or N. Bruce Ashwill
to the Company pursuant to the terms and conditions of the Asset Purchase
Agreement by and among Payee, Sopilote Inc., N. Bruce Ashwill and the
Company, dated as of
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<PAGE>
the date first set forth above (the "Asset Purchase Agreement"). The
outstanding principal amount under this Note may be reduced in accordance
with Section 6.11 of the Asset Purchase Agreement.
6. MISCELLANEOUS.
6.1 NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if given in the manner and to the addresses set forth in the Asset
Purchase Agreement.
6.2 LEGAL HOLIDAYS. A "Legal Holiday" used with respect to a
particular place of payment is a Saturday, a Sunday or a day on which banking
institutions at such place are not required to be open. If a payment date is
a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.
6.3 GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF CALIFORNIA, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
6.4 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Note may
not be used to interpret another indenture, loan or debt agreement of the
Company or any of its Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Note.
6.5 NO RECOURSE AGAINST OTHERS. A director, officer, employee,
stockholder or incorporator, as such, of the Company shall not have any
liability for any obligations of the Company under this Note or for any claim
based on, in respect of or by reason of such obligations or their creation.
Payee by accepting this Note waives and releases all such liability. Such
waiver and release are part of the consideration for the issuance of this
Note.
6.6 NO TRANSFER BY PAYEE. Payee shall not, directly or
indirectly, assign, sell, transfer or otherwise dispose of this Note nor any
right hereunder or interest herein, or agree to do any of the foregoing with
respect to this Note.
6.7 SUCCESSORS. All agreements of the Company in this Note shall
bind its successor.
6.8 SEVERABILITY. In case any provision in this Note shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
6.9 AMENDMENTS AND WAIVERS. This Note may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the
written consent of Payee to such amendment, modification, supplement, waiver
or consent.
6.10 SUBORDINATION AGREEMENT. THE OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT
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<PAGE>
CERTAIN SUBORDINATION AGREEMENT DATED AS OF THE DATE HEREOF BETWEEN PAYEE AND
PNC BANK, NATIONAL ASSOCIATION, AS AGENT.
IN WITNESS WHEREOF, the Company has caused this Promissory Note to
be duly executed the day and year first above written.
GRUBB & ELLIS COMPANY, a Delaware corporation
By: /s/ Robert J. Walner
---------------------------
Name: Robert J. Walner
Its: Senior Vice President
5
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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAS BEEN
TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN
CONNECTION WITH ANY DISTRIBUTION THEREOF. IT MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO (i) A REGISTRATION STATEMENT WHICH IS THEN
EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND QUALIFICATION
UNDER APPLICABLE STATE SECURITIES LAWS OR (ii) AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT OR LAWS.
GRUBB & ELLIS COMPANY
PROMISSORY NOTE
$1,084,020 July 22, 1998
FOR VALUE RECEIVED, Grubb & Ellis Company, a Delaware corporation
(the "Company," which term includes any successor corporation) hereby
promises to pay to Bishop Hawk, Inc., a California corporation ("Payee"), to
an account designated by Payee, (i) the principal sum of ONE MILLION
EIGHTY-FOUR THOUSAND AND TWENTY DOLLARS ($1,084,020) or if less, the
aggregate unpaid and outstanding principal amount of this Note, plus (ii) any
accrued unpaid interest in coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public and
private debts. Interest will be computed on the basis of a three hundred
sixty-five (365) day year and the actual number of days elapsed. Interest
shall accrue on the unpaid principal amount from the date hereof at a rate
equal to eight percent (8%) per annum (the "Interest Rate"); PROVIDED,
HOWEVER, that interest shall never accrue at a rate greater than the maximum
rate permitted by the California usury law. Principal and accrued interest
shall be due and payable in two installments: (i) Four Hundred Ninety
Thousand Fifty Dollars ($490,050) of the principal amount shall be due and
payable at the first anniversary of the date first set forth above, along
with all accrued interest thereon to date and (ii) the remaining balance of
principal and accrued interest shall be due and payable at the second
anniversary of the date first set forth above, to the extent such payments
are lawful.
Upon the occurrence of an Event of Default under this Note,
including, without limitation, failure to pay the principal by the stated
maturity (whether by acceleration, notice of prepayment or otherwise),
interest shall thereafter accrue on the entire unpaid principal balance under
this Note, including without limitation any delinquent interest which has
been added to the principal amount due under this Note pursuant to the terms
hereof, at the rate of ten percent (10%) over the Interest Rate per annum (on
the basis of a 365-day year and the actual number of days elapsed).
1. DEFINITIONS.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Event of Default" has the meaning set forth in Section 4.1.
2. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law or other law, which
would prohibit or forgive the Company from paying all or any portion of the
principal of, or interest on, this Note as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may
<PAGE>
affect the covenants or the performance of this Note; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law as though no such law had been enacted.
3. PREPAYMENT. This Note may not be prepaid in whole or in part at
any time prior to maturity.
4. DEFAULTS AND REMEDIES.
4.1 EVENTS OF DEFAULT. An "Event of Default" occurs if:
(1) the Company defaults in the payment of principal and accrued
interest on this Note when the same becomes due and payable at maturity or
otherwise;
(2) the Company fails to comply with any of its other agreements
contained in this Note and the default continues for the period and after
the notice specified below;
(3) the Company, pursuant to or within the meaning of any
Bankruptcy Law (A) becomes insolvent, (B) fails generally to pay its debts
as they become due, (C) admits in writing its inability to pay its debts
generally as they become due, (D) commences a voluntary case or proceeding
under any Bankruptcy Law with respect to itself, (E) consents to the entry
of a judgment, decree or order for relief against it in an involuntary case
or proceeding under any Bankruptcy Law, (F) consents to the appointment of
a Custodian of it or for any part of its property, (G) consents to or
acquiesces in the institution of bankruptcy or insolvency proceedings
against it, (H) applies for, consents to or acquiesces in the appointment
of or taking possession by a Custodian of the Company or for any part of
its properties, (I) makes a general assignment for the benefit of its
creditors, or (J) takes any corporate act to authorize any of the
foregoing; or
(4) a court of competent jurisdiction enters a judgment, decree
or order for relief in respect of the Company in an involuntary case or
proceeding under any Bankruptcy Law which shall (A) approve as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition in respect of the Company, (B) appoint a Custodian of the
Company or for any part of its properties or (C) order the winding-up or
liquidation of its affairs; and such judgment, decree or order shall remain
unstayed and in effect for a period of 30 consecutive days; or any
bankruptcy or insolvency petition or application is filed, or any
bankruptcy or insolvency proceeding is commenced against the Company and
such petition, application or proceeding is not dismissed within 30 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means
any receiver, trustee, assignee, liquidator, sequestrator or similar official
under any Bankruptcy Law.
A Default under clause (2) is not an Event of Default until Payee
notifies the Company of the Default and the Company does not cure the Default
within 30 days after receipt of the notice. The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default." When a Default is cured, it ceases.
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4.2 ACCELERATION. If an Event of Default (other than an Event of
Default specified in Section 4.1(3) or (4)) occurs and is continuing, Payee
may, by written notice to the Company, declare to be immediately due and
payable all principal of and accrued interest on this Note. Such amount
shall become immediately due and payable without presentment, demand, protest
and notice of any kind or of dishonor, all of which are hereby expressly
waived. If an Event of Default specified in Section 4.1(3) or (4) occurs,
such amount shall IPSO FACTO become and be immediately due and payable
without any declaration or other act on the part of Payee. Upon payment of
such principal amount and interest, all of the Company's obligations under
this Note shall terminate. Payee may rescind an acceleration and its
consequences.
4.3 OTHER REMEDIES. Except as set forth in Section 4.2 and if an
Event of Default occurs and is continuing, Payee may pursue any available
remedy by proceeding at law or in equity to collect the payment of amounts
due on this Note or to enforce the performance of any provision of this Note.
A delay or omission by Payee in exercising any right or remedy accruing upon
an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. A waiver on any one
occasion shall not be construed as a bar to or waiver of any such right or
remedy on any future occasion. No remedy is exclusive of any other remedy.
All available remedies are cumulative to the extent permitted by law.
4.4 WAIVER OF PAST DEFAULTS. Payee may waive an existing Default
or Event of Default and its consequences. When a Default or Event of Default
is waived, it is cured and ceases.
None of the provisions hereof and none of Payee's rights or
remedies on account of any past or future defaults shall be deemed to have
been waived by Payee's acceptance of any past due payment or by an indulgence
granted by Payee to the Company. It is agreed that time is of the essence of
this Note.
5. MISCELLANEOUS.
5.1 NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if given in the manner and to the addresses set forth in the Asset
Purchase Agreement.
5.2 LEGAL HOLIDAYS. A "Legal Holiday" used with respect to a
particular place of payment is a Saturday, a Sunday or a day on which banking
institutions at such place are not required to be open. If a payment date is
a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.
5.3 GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF CALIFORNIA, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
5.4 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Note may
not be used to interpret another indenture, loan or debt agreement of the
Company or any of its Subsidiaries. Any such indenture, loan or debt
agreement may not be used to interpret this Note.
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5.5 NO RECOURSE AGAINST OTHERS. A director, officer, employee,
stockholder or incorporator, as such, of the Company shall not have any
liability for any obligations of the Company under this Note or for any claim
based on, in respect of or by reason of such obligations or their creation.
Payee by accepting this Note waives and releases all such liability. Such
waiver and release are part of the consideration for the issuance of this
Note.
5.6 NO TRANSFER BY PAYEE. Payee shall not, directly or
indirectly, assign, sell, transfer or otherwise dispose of this Note nor any
right hereunder or interest herein, or agree to do any of the foregoing with
respect to this Note.
5.7 SUCCESSORS. All agreements of the Company in this Note shall
bind its successor.
5.8 SEVERABILITY. In case any provision in this Note shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
5.9 AMENDMENTS AND WAIVERS. This Note may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the
written consent of Payee to such amendment, modification, supplement, waiver
or consent.
5.10 SUBORDINATION AGREEMENT. THE OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT DATED AS OF THE DATE HEREOF BETWEEN PAYEE AND PNC
BANK, NATIONAL ASSOCIATION, AS AGENT.
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[SIGNATURE PAGE TO PROMISSORY NOTE]
IN WITNESS WHEREOF, the Company has caused this Promissory Note to
be duly executed the day and year first above written.
GRUBB & ELLIS COMPANY, a Delaware corporation
By: /s/ Robert J. Walner
-----------------------------
Name: Robert J. Walner
Its: Senior Vice President
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[LOGO] NEWS RELEASE
FOR IMMEDIATE RELEASE CONTACT: Janice Kalmar
847.753.7513
GRUBB & ELLIS ACQUIRES THE ASSETS OF BISHOP HAWK, INC. ONE OF
NORTHERN CALIFORNIA'S LEADING REAL ESTATE FIRMS
PURCHASE MAKES GRUBB & ELLIS NO. 1 SERVICE PROVIDER IN SACRAMENTO
AND SIGNIFICANTLY EXPANDS PRESENCE IN THE SILICON VALLEY
NORTHBROOK, Ill, July 22, 1998--Grubb & Ellis Company (NYSE: GBE) today
announced it has acquired the assets of Bishop Hawk, Inc., one of the largest
full-service commercial real estate firms in Northern California with offices
in Sacramento, Santa Clara, Hayward and Roseville. The purchase gives Grubb &
Ellis a dominant position in both the Silicon Valley and Sacramento markets.
"This acquisition is consistent with our acquisition strategy of making
Grubb & Ellis No. 1, No. 2 or No. 3 in the markets we serve," said Neil
Young, Chairman and Chief Executive Officer. "Our clients will benefit from
Grubb & Ellis' increased presence in the Silicon Valley, which is the center
of the world's knowledge-based economy, as well as our capability to handle
their needs throughout the United States."
Grubb & Ellis expects the acquisition to be accretive to EBITDA before
integration costs, which are expected to be incurred over the next six
months. It is expected to be accretive to earnings per share by Fiscal year
2000.
Founded in 1980, Bishop Hawk has more than 70 transaction professionals
in four offices. The firm provides a full range of investment sales, office,
industrial and retail sales and leasing services to a broad base of clients.
It has annual transaction volume valued in excess of $850 million.
-more-
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GRUBB & ELLIS ACQUIRES BISHOP HAWK, ADD 1
Under the terms of transaction, N. Bruce Aswill, a 25-year veteran of
the commercial real estate industry and Bishop Hawk's founder, will assist
Grubb & Ellis in its business development and recruiting efforts. Greg
Kasner, President/General Manager, has joined Grubb & Ellis as Senior Vice
President and Director of Operations for the Company's San Jose and
Sacramento offices. Bryan Friedman, Senior Vice President of Bishop Hawk's
Santa Clara/East Bay offices, will assume the position of Senior Vice
President and District Manager of Grubb & Ellis' San Jose office. Bob Dean,
District Manager of Grubb & Ellis' Sacramento office, will oversee the
combined Sacramento operations as well as Bishop Hawk's satellite office in
Roseville.
"Today's announcement allows Grubb & Ellis to significantly expand its
presence in one of the largest business centers in the world and is pivotal
to our plan of unifying Grubb & Ellis' operations in Northern California,"
said Alan Collenette, Regional Manager of Grubb & Ellis' Northern California
Region.
The acquisition gives Grubb & Ellis a total of 220 transaction
professionals in eight Northern California offices. It follows the Company's
purchase in April of White Commercial Real Estate, the leading industrial
real estate firm in Hayward. These acquisitions, along with the recent
purchase of two well-respected management services firms, make Grubb & Ellis
one of the pre-eminent full-service real estate providers in Northern
California.
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GRUBB & ELLIS ACQUIRES BISHOP HAWK, ADD 2
"We view our partnership as a perfect fit. The strengths of Bishop Hawk
and Grubb & Ellis truly do complement each other and both firms share a
common customer service philosophy," said Greg Kasner, President of Bishop
Hawk. "Our clients and professionals will benefit from the investments Grubb
& Ellis has made in research and technology as well as from being a part of a
global service provider."
Bishop Hawk marks the sixth acquisition Grubb & Ellis has announced
since April. Since that time the Company has announced the acquisitions of:
- White Commercial Real Estate, one of Northern California's most
respected industrial real estate firms with 11 transaction
professionals.
- Crane Realty & Management Company and LaCagnina & Associates, two
well-known property management firms in Southern California with a
total of 8.5 million square feet under management.
- Aequus Property Management Company, one of San Antonio's oldest and
largest privately held commercial real estate services firms with
nine transaction professionals and 2.5 million square feet under
management.
- Eagle Western Management Company, Phoenix's premier independent
property management firm with 8 million square feet of property
under management.
Headquartered in Northbrook, Ill., Grubb & Ellis is one of the nation's
largest publicly traded commercial real estate service firms. Through its
company-owned offices and affiliates in 85 markets, the company provides
transaction services, management services, financial services and strategic
services to clients worldwide.
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