SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): June 1, 1999
FLORIDA ROCK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of incorporation)
1-07159 59-0573002
(Commission File Number) (I.R.S. Employer
Identification Number)
155 East 21st Street, Jacksonville, Florida
(Address of principal executive offices)
Registrant's telephone number, including area code (904) 355-1781
Item 2. Acquisition or Disposition of Assets
On June 1, 1999, Florida Rock Industries, Inc. (the "Registrant") completed
the acquisition of all the common stock of Harper Bros., Inc., an aggregate
mining and highway and heavy construction company located in Fort Myers, Florida
in a cash transaction for $87 million.
The purchase price is subject to certain post-closing adjustments related
to working capital. The Registrant financed this transaction with its existing
$75 million revolving credit and term loan facility and its short term lines of
credit. The Registrant did not assume any long-term debt of Harper Bros., Inc.
as part of the transaction.
The Registrant is under a six month consent order with the Department of
Justice to divest the Registrant's existing Alico Road quarry lease and plant
operation located in Fort Myers, Florida as well as Harper Bros., Inc.'s
Palmdale sand mine lease and plant operation located in Glades County, Florida.
The Registrant is in discussions with a buyer for the sale of the highway and
heavy construction operations of Harper Bros., Inc.
Except as described above, the Registrant intends to continue the use of
Harper Bros., Inc.'s plants, equipment and physical property.
A copy of the Stock Purchase Agreement is attached hereto as Exhibit 2.1
and is incorporated in its entirety herein. The foregoing description is
modified by such reference.
Reference is made to the press releases filed as Exhibits 99.1 and 99.2
hereto. The information set forth in Exhibits 99.1 and 99.2 is hereby
incorporated by reference herein.
In a separate transaction, the Registrant purchased Commercial Testing,
Inc. for $500,000 in cash from the former shareholders of Harper Bros., Inc.
Commercial Testing, Inc. performs testing and laboratory services on property
owned or leased by Harper Bros., Inc.
Item 5. Other Events
On May 28, 1999, the Registrant obtained an unsecured $50,000,000 revolving
line of credit from First Union National Bank. This line of credit is a short
term credit facility that may be used for general corporate purposes and was
used, in part, to fund the Registrant's acquisition of Harper Bros., Inc. The
interest rate on this line of credit is a 1-month LIBOR rate plus .40%. The line
of credit has the same covenants as the Registrant's $75 million revolving
credit and term loan agreement.
Prior to entering into the $50,000,000 revolving line of credit with First
Union National Bank, certain covenants of the Registrant's $75 million revolving
credit and term loan agreement were amended to permit the Registrant to enter
into this new short term credit facility.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of business acquired:
Not required.
(b) Pro forma financial information.
Not required.
(c) Exhibits:
(2.1) Stock Purchase Agreement dated as of May 21, 1999 by and between
Daniel K. Harper, Quinton B. McNew, Florida Rock Industries, Inc.,
and Harper Bros., Inc.
(2.2) Supplemental Agreement dated as of May 21, 1999 by and between
Daniel K. Harper, Quinton B. McNew and Florida Rock Industries, Inc.
(4.1) Fifth Amendment dated as of May 14, 1999 to the Amended and Restated
Revolving Credit and Term Loan Agreement dated as of December 5,
1990 among Florida Rock Industries, Inc., Bank of America National
Trust and Savings Association, NationsBank, N.A., Suntrust Bank,
Central Florida, N.A., Crestar Bank, N.A., First Union National
Bank, and The First National Bank of Maryland.
(4.2) Promissory Note dated May 28, 1999 from Florida Rock Industries,
Inc. to First Union National Bank.
(99.1) Press Release dated May 21, 1999.
(99.2) Press Release dated June 1, 1999.
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.
Date: June 8, 1999 FLORIDA ROCK INDUSTRIES, INC.
/s/ James J. Gilstrap
-----------------------------
James J. Gilstrap
Vice President
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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
by and between
DANIEL R. HARPER
AND
QUINTON B. McNEW
as Sellers,
and
FLORIDA ROCK INDUSTRIES, INC.
as Buyer
and
HARPER BROS., INC.
as the Transferred Company
Dated as of May 21, 1999
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS................................................................... 1
1.1 Defined Terms......................................................1
1.2 Other Defined Terms................................................6
ARTICLE II
PURCHASE AND SALE OF STOCK.....................................................8
2.1 Transfer of Stock..................................................8
2.2 Purchase Price.....................................................8
2.3 Payment of Purchase Price.........................................10
2.4 Delivery of the Shares............................................10
2.5 Closing; Closing Date.............................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS AND TRANSFERRED COMPANY.............10
3.1 Status............................................................10
3.2 Authorization.....................................................10
3.3 Conflict or Violation.............................................11
3.4 Consents and Approvals............................................11
3.5 Capital Stock.....................................................11
3.6 Absence of Certain Changes or Events..............................12
3.7 Assets............................................................14
3.8 Owned and Leased Real Property....................................14
3.9 Computer Software.................................................14
3.10 Year 2000.........................................................14
3.11 Contracts and Commitments.........................................15
3.12 Financial Statements..............................................16
3.13 Undisclosed Liabilities...........................................16
3.14 Legal Matters.....................................................16
3.15 Compliance with Law; Permits and Licenses.........................17
3.16 Employees.........................................................17
3.17 Collective Bargaining; Labor Disputes; Compliance.................17
3.18 Employee Benefit Plans; ERISA.....................................18
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3.19 Transactions with Certain Persons.................................19
3.20 Taxes.............................................................19
3.21 Insurance.........................................................22
3.22 Environmental Laws................................................22
3.23 No Brokers........................................................22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER.......................................23
4.1 Status............................................................23
4.2 Authorization.....................................................23
4.3 Conflict or Violation.............................................23
4.4 Consents and Approvals............................................23
4.5 SEC Reports; Financial Statements.................................24
4.6 No Brokers........................................................24
4.7 Investment Intent.................................................24
4.8 No Financing Contingency..........................................24
ARTICLE V
CERTAIN COVENANTS OF SELLERS AND BUYER........................................25
5.1 Maintenance of Business and Preservation of Permits and
Services..........................................................25
5.2 Investigation by Buyer............................................25
5.3 Regulatory Matters; Third Party Consents..........................26
5.4 Use of Name .....................................................27
5.5 Intercompany Payments and Contracts...............................27
5.6 Maintenance of Records............................................27
5.7 Release of Liens..................................................28
5.8 Employment Matters................................................28
5.9 Employment and Consulting Agreements..............................29
5.10 Further Assurance.................................................30
5.11 Best Efforts .....................................................30
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS............................................30
6.1 Purchase Price Paid...............................................30
6.2 Representations, Warranties, and Covenants........................30
6.3 Opinion of Counsel................................................31
6.4 Certificates .....................................................31
6.5 Employment and Consulting Contracts...............................31
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ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS.............................................31
7.1 Receipt of Shares.................................................31
7.2 Representations, Warranties and Covenants.........................31
7.3 Opinion of Counsel................................................32
7.4 Certificates .....................................................32
7.5 Books and Records.................................................32
7.6 Resignation of Directors and Officers.............................32
7.7 Tax Election .....................................................32
ARTICLE VIII
CONDITIONS OF BUYER AND SELLERS...............................................32
8.1 No Litigation, Injunction or Restraint............................32
8.2 Consents..........................................................32
ARTICLE IX
INDEMNIFICATION...............................................................33
9.1 Survival of Representations, Etc..................................33
9.2 Indemnification...................................................33
9.3 Indemnification Procedures........................................34
9.4 Exclusive Remedy..................................................35
9.5 Claims Limitations................................................35
9.6 Tax Effect and Insurance..........................................36
9.7 Subrogation.......................................................37
9.8 Allocation of Indemnification Between Sellers.....................37
9.9 Asphalt Site .....................................................37
ARTICLE X
TAX MATTERS...................................................................37
10.1 Codess.338(h)(10) Election........................................37
10.2 Tax Periods Ending on or Before the Closing Date..................38
10.3 Tax Periods Beginning Before and Ending After the Closing
Date..............................................................38
10.4 Cooperation on Tax Matters........................................39
10.5 Transfer Taxes....................................................39
10.6 Tax Indemnification...............................................39
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10.7 Notification of Proceedings; Control..............................40
10.8 Refunds...........................................................41
ARTICLE XI
MISCELLANEOUS.................................................................41
11.1 Termination .....................................................41
11.2 No Third Party Beneficiaries......................................42
11.3 Assignment .....................................................42
11.4 Notices .....................................................42
11.5 Choice of Law.....................................................44
11.6 Entire Agreement; Amendments and Waivers..........................44
11.7 Counterparts .....................................................44
11.8 Invalidity .....................................................44
11.9 Expenses .....................................................44
11.10 Publicity.........................................................44
11.11 Interpretation....................................................44
11.12 Severability......................................................45
11.13 Specific Performance..............................................45
11.14 Sellers' Responsibilities.........................................45
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EXHIBITS
Exhibit A Form of Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P.,
Counsel to Buyer
Exhibit B Form of Opinion of Henderson, Franklin, Starnes & Holt, P.A.,
Counsel to Sellers
Exhibit C Allocation Schedule
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of May ____,
1999, is by and among DANIEL R. HARPER ("Harper") and QUINTON B. McNEW ("McNew"
and, together with Harper, the "Sellers"), and FLORIDA ROCK INDUSTRIES, INC. , a
Florida corporation ("Buyer") and joined by HARPER BROS., INC., a Florida
corporation (the "Transferred Company").
W I T N E S S E T H:
WHEREAS, Sellers own, beneficially and of record, all of the issued and
outstanding shares of capital stock (the "Shares") of the Transferred Company;
and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers desire to sell
to Buyer, all of the Shares, upon the terms and subject to the conditions of
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration the receipt and
sufficiency of which are 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:
"Affiliate" means any Person that, directly or indirectly, through one or
more intermediaries controls, is controlled by or is under common control with
the Person specified.
"Agreement" means this Stock Purchase Agreement, together with all
Schedules and Exhibits referenced herein.
"Applicable Law" means any domestic or foreign federal, state or local
statute, law, ordinance, rule, regulation, order, writ, injunction, judgment or
decree applicable to Sellers, Transferred Company, Buyer or any of their
respective Subsidiaries, properties, assets, officers, directors or employees.
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"Business Day" means any day other than a Saturday, Sunday or day on which
banking institutions in the City of New York or the City of Jacksonville are
permitted or obligated by law to close.
"Buyer Disclosure Memorandum" means the document delivered by Buyer to
Sellers which sets forth the exceptions to the representation and warranty
contained in Section 4.4 hereof.
"Buyer Material Adverse Effect" means (i) a material adverse effect on the
assets, liabilities, business or financial condition of Buyer and its
Subsidiaries taken as a whole, or (ii) an event that would prevent or materially
delay the performance by Buyer of its obligations under this Agreement or would
materially interfere with the ability of the parties hereto to consummate the
transactions contemplated hereby; provided, however, that a Buyer Material
Adverse Effect shall not include an effect resulting from any change (i) in
Applicable Law or GAAP or interpretations thereof that apply to Buyer, (ii) in
general economic, governmental or business conditions or industry-wide financial
market conditions generally, (iii) in local, regional, national or international
conditions affecting the business of Buyer, or (iv) affecting the business of
Buyer generally.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Contracts" (or "Contract" as the context may require) means all
agreements, contracts, commitments and undertakings, indentures, notes, bonds,
loans, instruments, leases, mortgages or other binding arrangements.
"Encumbrances" means any claim, lien, pledge, option, right of first
refusal, preemptive right, charge, easement, security interest, right-of-way,
encumbrance or other similar rights of third parties.
"Environmental Laws" means any statute, rule, regulation, ordinance, code,
order, judgment, writ, injunction or decree which relates to or otherwise
imposes liability or standards of conduct concerning environmental protection,
discharges, emissions, releases or threatened releases of any noises, odors or
Hazardous Materials into ambient air, water or land, or otherwise relating to
the manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of Hazardous Materials, including the
Comprehensive Environmental Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act, as amended, the
Occupational Safety and Health Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Toxic Substances Control Act, as amended, the
Federal Water Pollution Control Act, as amended, the Clean Water Act, as
amended, any so-called "Superlien" law, and any other similar federal, state or
local law.
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"Environmental Permits" means all Permits required under any Environmental
Law.
"Executive Officer" means, with respect to any Person, the Chief Executive
Officer, Chief Financial Officer, President or General Counsel of such Person.
"GAAP" means generally accepted accounting principles used in the United
States as in effect at the time any applicable financial statements were
prepared.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including any governmental or quasi-governmental authority, agency, department,
board, commission or instrumentality of the United States, any foreign
government, any state of the United States or any political subdivision thereof,
and any court or tribunal of competent jurisdiction, and any governmental or
non-governmental self-regulatory organization, agency or authority.
"Hazardous Material" means any (i) hazardous substance, toxic substance,
hazardous waste or pollutant (as such terms are defined by or within the meaning
of any Environmental Law), (ii) material or substance which is regulated or
controlled as a hazardous substance, toxic substance, pollutant or other
regulated or controlled material, substance or matter pursuant to any
Environmental Law, (iii) petroleum, crude oil or fraction thereof, (iv)
asbestos-containing material, (v) polychlorinated biphenyls, (vi) lead-based
paint or (vii) radioactive material.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Knowledge of Buyer" means (i) with respect to matters relating to Buyer,
actual knowledge after reasonable inquiry of any Executive Officer of Buyer and
(ii) with respect to any matters relating to any Subsidiary of Buyer, actual
knowledge after reasonable inquiry of any Executive Officer of Buyer or the
respective Subsidiary.
"Knowledge of Sellers" means actual knowledge after reasonable inquiry of
any Sellers.
"Material Adverse Effect" means a Buyer Material Adverse Effect or a
Sellers Material Adverse Effect.
"Nondisclosure and Confidentiality Agreement" means the Confidentiality
Agreement between Sellers and Buyer, which Agreement was signed by the Sellers
on June 9, 1998 and which Agreement was signed by the Buyer on June 11, 1998.
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"Permits" means all licenses, permits, orders, consents, approvals,
registrations, authorizations, inspections, qualifications and filings under all
federal, state, local or foreign laws and with all Governmental Authorities and
all industry or other non-governmental self-regulatory organizations.
"Permitted Encumbrances" means the following:
(a) Statutory and Good Faith Deposits. (i) Pledges of deposits under
workmen's compensation laws, employment insurance laws or similar legislation;
(ii) good faith deposits in connection with bids, tenders, contracts, licenses,
franchises, permits, or leases to which the Transferred Company is party,
including rent security deposits; and (iii) deposits to secure public or
statutory obligations of the Transferred Company or surety, custom or appeal
bonds;
(b) Statutory Liens. (i) Any Encumbrance which is imposed by law, such as
those of carriers, warehousemen and mechanics, if payment of the obligation
secured thereby is not yet due, or the validity or amount of which is being
contested by appropriate legal proceedings and with respect to which adequate
reserves have been set up; and (ii) any Encumbrance for taxes, assessments or
other governmental charges or levies not yet subject to penalties for nonpayment
or the validity or amount of which is being contested by appropriate legal
proceedings and with respect to which adequate reserves have been set up;
(c) Minor Title Defects. Minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, rights of way, sewers,
electric lines, pipelines, telegraph and telephone lines and other similar
purposes;
(d) Landlord and Governmental Liens. (i) Statutory landlord's liens under
leases to which the Transferred Company is a party or other Encumbrances on
leased property reserved in leases thereof for rent or for compliance with the
terms of such leases; (ii) rights reserved to or vested in any municipality or
governmental, statutory or public authority to control or regulate any property
of the Transferred Company; (iii) obligations or duties to any municipality or
public authority with respect to any Permit and the rights reserved or vested in
any governmental authority or public utility to terminate any such Permit or to
condemn or expropriate any property; and (iv) zoning laws and ordinances and
municipal regulations;
(e) Disclosed Encumbrances. Encumbrances disclosed in the Transferred
Company Disclosure Memorandum; and
(f) Miscellaneous. Other Encumbrances that do not materially detract from
the value of the encumbered property or materially impair their use in the
operation of the business of the Transferred Company.
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"Person" means any individual, partnership (limited or general), joint
venture, corporation, company, limited liability company, trust, association,
unincorporated organization, Governmental Authority or other entity.
"Records" means all records and original documents which pertain to or are
utilized primarily by Transferred Company to administer, reflect, monitor,
evidence or record information relating to the business or conduct of
Transferred Company and all such records and original documents, including all
such records maintained on electronic or magnetic media, or in any electronic
database system of Transferred Company, or necessary to comply with any
Applicable Law with respect to the business of Transferred Company.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Sellers Material Adverse Effect" means (i) a material adverse effect on
the assets, liabilities, business or financial condition of Transferred Company
taken as a whole, or (ii) an event that would prevent or materially delay the
performance by Sellers of their obligations under this Agreement or would
materially interfere with the ability of the parties hereto to consummate the
transactions contemplated hereby; provided, however, that a Sellers Material
Adverse Effect shall not include an effect resulting from any change (i) in
Applicable Law or GAAP or interpretations thereof that apply to Transferred
Company, (ii) in general economic, governmental or business conditions or
industry-wide financial market conditions generally, (iii) in local, regional,
national or international conditions affecting the business of Transferred
Company, or (iv) affecting the business of Transferred Company generally; it
being understood that any matter undisclosed at closing not in the ordinary
course of business which reduces assets or increases liabilities of Transferred
Company in excess of $100,000 shall be deemed to be a Sellers Material Adverse
Effect.
"Shares" means all of the issued and outstanding shares of capital stock of
Transferred Company.
"Transferred Company Disclosure Memorandum" means the document delivered by
Sellers to Buyer which sets forth exceptions to the representations and
warranties contained in Article III hereof and certain other information called
for by Article III hereof and other provisions of this Agreement.
"Subsidiaries" (or "Subsidiary" as the context may require) means each
entity as to which a Person, directly or indirectly, has the power to (i) vote,
or to exercise a controlling influence with respect to, 50% or more of the
securities of any class of such entity the holders of which are ordinarily, in
the absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such entity or (ii) direct or cause the
direction of the management and policies of such entity, whether by contract or
otherwise.
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"Tax" (or "Taxes" as the context may require) means (i) any federal,
foreign, state or local income, business, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, value added, transfer,
transfer gains, net worth, franchise, profits, license, social security,
withholding, payroll, employment, salaries, interest, unemployment, disability,
production, excise, severance, stamp, capital stock, estimated, occupation,
premium, property (real or personal), environmental or windfall profit tax,
custom, duty or other tax, levy, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest, penalty, addition to
tax or additional amount imposed by any governmental or taxing authority and
(ii) any liability of the relevant Person or any subsidiary of the relevant
Person for the payment of any amounts of the type described in (i) as a result
of being a member of an affiliated, consolidated, combined or unitary group, or
being a party to any agreement or arrangement whereby liability of the relevant
Person or any subsidiary of the relevant Person for payment of such amounts was
determined or taken into account with reference to the liability of any other
Person.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Transferred Company" means Harper Bros., Inc., a Florida corporation.
"Working Capital" means, as of 11:59 p.m. on the date prior to the Closing
Date, the sum of all current assets of the Company minus the sum of all current
liabilities of the Company, each as determined in accordance with GAAP applied
on a basis consistent with the balance sheet of the Company included as a part
of the GAAP Financial Statements.
"Working Capital Adjustment Amount" means an amount equal to the Final
Working Capital minus $2,641,699.
1.2 Other Defined Terms. The following terms shall have the meanings
defined for such terms in the Sections set forth below:
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Term Section
---- -------
Actions 3.15
Allocation Schedule 10.1(b)
Buyer Preamble
Buyer Indemnitee 9.2
Closing 2.5
Closing Date 2.5
Company Returns 3.20(a)
Damages 9.2
ERISA 3.18(a)
Final Working Capital 2.2(b)
GAAP Financial Statements 3.12
Harper Preamble
Indemnified Person 9.3(a)
Indemnifying Person 9.3(a)
Liabilities 3.13
Licensed Software 3.9
McNew Preamble
Owned Software 3.9
PBGC 3.18(b)
Plans 3.18(a)
Pre-Closing Taxes 10.6(a)
Purchase Price 2.2
Real Property 3.8
SEC 4.5(a)
SEC Reports 4.5(a)
Section 338(h)(10) Election 10.1(a)
Sellers Preamble
Sellers Indemnitee 9.2
Sellers' Post-Closing Taxes 10.3
Tax Ruling 3.21(h)
Transfer Taxes 10.5
Transferred Company Preamble
Transferred Employees 3.16
Working Capital Statement 2.2(b)
90 Day ARS 2.2(c)
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ARTICLE II
PURCHASE AND SALE OF STOCK
2.1 Transfer of Stock. Upon the terms and subject to the conditions
contained herein, on the Closing Date, Harper and McNew shall sell, transfer and
deliver to Buyer, and Buyer shall purchase, acquire and accept from Harper and
McNew, 360 and 270 Shares, respectively, for the Purchase Price specified in
Section 2.2.
2.2 Purchase Price.
(a) The purchase price for the 360 Shares to be sold by Harper shall be
$49,428,572 ($137,301.58 per share) and the purchase price (together with the
purchase price for the Shares to be sold by Harper, the "Purchase Price") for
the 270 Shares to be sold by McNew shall be $37,071,428 ($137,301.58 per Share).
Such Purchase Price, aggregating $86,500,000, is net of the sum of $500,000 to
be paid separately to Sellers by Buyer to purchase from Sellers all of the
outstanding shares of capital stock of Commercial Testing, Inc., a Florida
corporation.
(b) No later than 60 days after the Closing Date, Buyer shall cause to be
prepared and delivered to Sellers (i) a balance sheet for the Transferred
Company as of 11:59 p.m. on the date immediately prior to the Closing Date,
which shall be reviewed by Gilbert Wallace & Stewart, together with any related
review report of such firm and (ii) a statement of Working Capital as determined
from such balance sheet (the "Working Capital Statement"). The balance sheet
shall be prepared in accordance with GAAP, applied in a manner consistent with
the preparation of the GAAP Financial Statements. If within 20 days following
delivery of the Working Capital Statement to the Sellers, neither Seller has
given the Buyer written notice of his objection to the Working Capital Statement
(such notice must contain a statement describing the basis of such objection),
then the Working Capital reflected on the Working Capital Statement shall be
deemed final and conclusive and shall be the "Final Working Capital." If either
Seller gives such written notice of objection within such 20 day period and if
the parties are unable to resolve the Seller's objection, then the issues in
dispute will be submitted for resolution to a "big five" accounting firm to be
selected jointly by the Sellers and Buyer (the "Referee"). The Referee shall
determine the Final Working Capital within thirty days after the dispute is
submitted to it. If issues in dispute are submitted to the Referee for
resolution, (A) each party will furnish to the Referee such work papers and
other documents and information relating to the disputed issues as the Referee
may request and are available to that party (or its independent public
accountants) and will be afforded the opportunity to present to the Referee any
material relating to the determination of Final Working Capital and to discuss
such determination with the Referee; (B) the determination by the Referee of
Final Working Capital, as set forth in a written notice delivered to each party
by the Referee, will be binding and conclusive on the parties; and (C) the
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Sellers, on the one hand, and the Company, on the other, will each bear one-half
of the fees and expenses of the Referee for such determination.
If the Final Working Capital minus $2,641,699 (the estimated working
capital at September 30, 1998) is a positive number, then Buyer shall pay to the
Sellers an amount equal to the Working Capital Adjustment Amount. If the Final
Working Capital minus $2,641,699 is a negative number, then the Sellers shall
pay such Working Capital Adjustment Amount to Buyer. Such payment shall be made
by Buyer or the Sellers, as the case may be, on the third Business Day following
the determination of the Final Working Capital, in immediately available funds
by wire transfer to such bank account as the other party shall specify. Any
payment to be made to or by the Sellers shall be made by or to Harper and McNew
in the following percentages:
Name Percentage
---- ----------
Harper 57.143%
McNew 42.857%
(c) Accounts Receivable. On the Business Day preceding the Closing Date,
the Transferred Company shall deliver to Buyer and each Seller a statement
specifying the unpaid accounts receivables of the Transferred Company that were
due and payable as of the 90th day preceding the Closing Date (collectively, the
"90 Day ARs"). On the Closing Date, an amount equal to the 90 Day ARs shall be
withheld from the Purchase Price and placed in escrow with Henderson, Franklin,
Starnes & Holt, P.A. Until the first anniversary of the Closing Date, Buyer
shall use its commercially reasonable efforts, consistent with its customary
collection practices for its own accounts receivable, without compensation, to
collect each 90 Day AR. Buyer shall not be required to refer any 90 Day AR to a
collection agency or an attorney for collection, nor shall it compromise,
settle, or adjust any 90 Day AR without receiving the approval of Sellers.
Until the first anniversary of the Closing Date, Buyer shall provide to
Sellers a detailed monthly statement of the 90 Day ARs showing amounts collected
to the date of such monthly statement, and amounts outstanding as of the same
date, and, within 15 days of the end of the monthly period covered by such
statement, Buyer shall withdraw from escrow and deliver to Sellers an amount
equal to the amount of the 90 Day ARs collected during such monthly period. On
the first anniversary of the Closing Date, the amount remaining in escrow and
not payable to Sellers in accordance with the preceding sentence shall be paid
to the Buyer and Buyer shall cause the Transferred Company to assign its right,
title and interest to each of the then outstanding 90 Day ARs to the Sellers.
Upon such assignment, Sellers may take such action as they deem desirable to
collect the outstanding 90 Day ARs from the account debtors, including
litigation.
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All payments or assignments to be made to the Sellers pursuant to this
Section 2.2(c) shall be made to Harper and McNew in the percentages specified in
the last sentence of Section 2.2(b).
2.3 Payment of Purchase Price. On the Closing Date, Buyer shall pay to each
Seller the Purchase Price owed to such Seller by wire transfer of immediately
available funds to an account or accounts designated in writing by Sellers to
Buyer. Such designation shall be made at least three Business Days prior to the
Closing Date.
2.4 Delivery of the Shares. At the Closing, each Seller shall deliver to
Buyer stock certificates representing the Shares to be sold by such Seller, free
and clear of any Encumbrances (except Encumbrances arising as a result of any
action taken by Buyer or any of its Affiliates), duly endorsed in blank or
accompanied by stock powers duly executed in blank, in proper form for transfer.
2.5 Closing; Closing Date. The closing of the sale and purchase of the
Shares contemplated hereby (the "Closing") shall take place at the offices of
Henderson, Franklin, Starnes & Holt, P.A., 1715 Monroe Street, Fort Myers,
Florida 33901, at 10:00 a.m., local time, on the later of June 3, 1999 or the
fifth Business Day following satisfaction or (if permissible) waiver of the
conditions set forth in Articles VI, VII and VIII (excluding those conditions
which by their nature are to be satisfied as a part of the Closing), or at such
other time or date as Buyer and Sellers shall agree upon in writing. The time
and date on which the Closing occurs is referred to herein as the "Closing
Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS AND TRANSFERRED COMPANY
Each Seller and Transferred Company hereby severally represent and warrant
to Buyer as follows:
3.1 Status.
(a) Such Seller is a resident of the State of Florida.
(b) Transferred Company is incorporated and its status is active under the
laws of the State of Florida and has full corporate power and authority to own,
operate and lease its properties and to conduct its business as it is presently
being conducted and to enter into and to perform its obligations under this
Agreement and under the other Contracts provided for herein to which it is a
party. Transferred Company has no Subsidiaries.
3.2 Authorization. Each of this Agreement and the other Contracts provided
for herein to which such Seller is or will be a party has been or will be duly
executed and delivered by such Seller and, assuming the due execution by the
other parties
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hereto and thereto, constitutes or will constitute the legal, valid and binding
obligation of such Seller enforceable against each of them, respectively, in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting creditors' rights generally or by general equitable
principles.
3.3 Conflict or Violation. Neither the execution and delivery of this
Agreement or any other Contract contemplated hereby by such Seller of the
Transferred Company, nor the consummation of the transactions contemplated
hereby or thereby, will result in (a) a violation of or a conflict with any
provision of the certificate of incorporation or bylaws of the Transferred
Company (b) a breach of, or a default under, any term or condition of, or
otherwise cause any impairment of, any material Contract, indebtedness,
Encumbrance, franchise, Permit, authorization or concession to which such Seller
or Transferred Company is a party or is subject or by which any of its assets
are bound which could result in a Sellers Material Adverse Effect, (c) a
violation by such Seller or Transferred Company of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction, decree or award
applicable to such Seller or the Transferred Company, or (d) the imposition of
any material Encumbrance or other restriction on the business of Transferred
Company or on any of its assets.
3.4 Consents and Approvals. Except as set forth in the Transferred Company
Disclosure Memorandum, no consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Authority or any other Person is
required to be made or obtained by such Seller or Transferred Company on or
prior to the Closing Date in connection with the execution, delivery and
performance by such Seller or the Transferred Company of this Agreement or any
other Contract related hereto or the consummation of the transactions
contemplated hereby or thereby.
3.5 Capital Stock.
(a) The authorized capital stock of the Transferred Company consists of
100,000 shares of common stock, without nominal or par value, of which 630
shares are issued and outstanding.
(b) All of the Shares have been duly authorized and validly issued, are
fully paid and non-assessable and represent the only shares of capital stock of
Transferred Company which are issued and outstanding. No shares of capital stock
of Transferred Company are held in treasury. Daniel R. Harper owns 360 Shares
and Quinton B. McNew owns 270 Shares. There are no other shareholders of the
Transferred Company. Other than this Agreement, there are no subscriptions,
options, warrants, calls, commitments, preemptive rights or other rights of any
kind outstanding for the purchase of, nor any securities convertible or
exchangeable for, any equity interests of Transferred Company. There are no
restrictions upon the voting or transfer of any of the Shares pursuant to the
certificate of incorporation or
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bylaws of Transferred Company or any Contract to which such Seller is a party or
by which such Seller is bound. Upon consummation of the transactions
contemplated by this Agreement, Buyer will acquire from such Seller good and
marketable title to the Shares sold by such Seller, free and clear of any
Encumbrances.
3.6 Absence of Certain Changes or Events. Except as set forth in and
authorized by the Transferred Company Disclosure Memorandum, since September 30,
1998, Transferred Company has not:
(a) declared or paid or set aside dividends or other distributions on its
capital stock;
(b) except for this Agreement, issued, redeemed, sold or disposed of, or
created any obligation to issue, redeem, sell or dispose of, any shares of the
capital stock of Transferred Company (whether authorized but unissued or held in
treasury) or issued any option, warrant or other right to acquire any shares of
its capital stock.
(c) effected any stock split, reclassification or combination;
(d) adopted a plan of complete or partial liquidation, dissolution,
restructuring, recapitalization or other reorganization;
(e) amended or modified its certificate of incorporation or bylaws (or
equivalent charter documents);
(f) merged or consolidated with any corporation or other entity;
(g) other than the employment and consulting contracts referred to in
Section 5.9, hired any executive employee at or above the level of 'vice
president', or entered into, adopted, modified or amended in any material
respect any written employment, severance, consulting, "change of control",
"parachute payment", bonus, incentive compensation, deferred compensation,
profit sharing, stock option, stock purchase, employee benefit, welfare benefit
or other Contract, plan or arrangement providing for compensation or benefits to
employees or directors or stockholders which would have effect after the Closing
Date;
(h) incurred or contracted for any capital expenditures other than in the
ordinary course of business or any capital expenditure in excess of $150,000;
(i) amended, terminated or waived any right of value material to its
business, other than with respect to the settlement of insured claims in the
ordinary course of business in a manner consistent with past practice;
(j) revalued any material portion of its assets, properties or business;
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(k) other than the employment and consulting contracts referred to in
Section 5.9, made any material wage or salary increase or bonus, or increase in
any other direct or indirect compensation, for or to any of its officers,
directors, or employees or any accrual for or Contract to make or pay the same
(other than in the ordinary course of business in a manner consistent with past
practices and other than increases, bonuses, accounts or Contracts which will
not be in effect after the Closing Date);
(l) made any loan or advance to any of its officers, directors or employees
(other than trade payables and travel advances made in the ordinary course of
business in a manner consistent with past practice) or made any other material
loan or advance;
(m) made any payment or commitment to pay severance or termination pay to
any of its officers, directors, employees or other representatives (other than
in the ordinary course of business in a manner consistent with past practices);
(n) entered into any material lease (as lessor or lessee); sold, abandoned
or made any other disposition of any of its material investments or other
material assets, properties or business, other than in the ordinary course of
business consistent with past practice; granted or suffered any material
Encumbrance on any of its assets, properties or business, other than Permitted
Encumbrances; entered into, amended or terminated any material Contract to which
it is a party or by or to which it or its assets, properties or business are
bound or subject, except in the ordinary course of business in a manner
consistent with past practice; or entered into or amended any material Contract
pursuant to which it agrees to indemnify any person or to refrain from competing
with any person;
(o) incurred or assumed any Liability (other than trade payables or
obligations to employees or any other Liability less than $10,000, in each case
incurred in the ordinary course of business), or issued any debt securities or
assumed, guaranteed, endorsed or otherwise as an accommodation became
responsible for material Liabilities of any other person;
(p) failed to pay any creditor any amount owed to such creditor when due
(after the expiration of any applicable grace periods, except to the extent
being contested in good faith);
(q) made any acquisition of all or any material part of the assets,
properties, capital stock or business of any other Person;
(r) except in the ordinary course of business in a manner consistent with
past practice, amended, terminated or entered into any other material
transaction;
(s) changed any of its accounting methods or practices; or
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(t) entered into any Contract to do any of the foregoing.
3.7 Assets. Transferred Company owns (or leases in the case of leased
assets), and has good and marketable title to, all of the assets material to the
operation of its business as now operated. None of such assets is subject to any
Encumbrance, except for Permitted Encumbrances.
3.8 Owned and Leased Real Property. All real property owned or leased by
Transferred Company (the "Real Property") is described in the Transferred
Company Disclosure Memorandum. All material leases currently in effect relating
to the Real Property, together with all amendments and modifications thereto
(the "Leases"), are listed in the Transferred Company Disclosure Memorandum. To
the knowledge of Sellers, except as described in the Transferred Company
Disclosure Memorandum, Transferred Company is not in default under any of the
material terms and provisions of any of the Leases and has not received any
written notice of any default, in either case which would, individually or in
the aggregate, have a Sellers Material Adverse Effect. Transferred Company has
not granted or created any Encumbrances on the Real Property, including, without
limitation, mortgages of the Real Property other than Permitted Encumbrances.
Neither such Seller or Transferred Company has received any written notice from
any Governmental Authority advising of a violation of any applicable building
code, zoning, subdivision, land development or land use laws, regulations or
ordinances or any other applicable local, state or federal laws, regulations or
ordinances that could be reasonably be expected to have a Sellers Material
Adverse Effect. Such Seller has neither Knowledge of nor received any notice of
any existing or proposed material assessments for public improvements imposed or
to be imposed upon the Real Property which will remain unpaid at Closing.
3.9 Computer Software. Sellers have set forth in the Transferred Company
Disclosure Memorandum a complete and accurate list of all computer software
programs material to the conduct of the businesses of Transferred Company . The
Transferred Company Disclosure Memorandum sets forth whether each such computer
software program is (i) owned by Transferred Company (the "Owned Software"),
(ii) licensed by Transferred Company from a third party, or (iii) licensed by a
third party and assigned by such third party to Transferred Company in
accordance with the terms of such licenses (the software referred to in clauses
(ii) and (iii) hereof is referred to herein as the "Licensed Software"). With
respect to Owned Software and Licensed Software, there are no Actions pending
or, to the Knowledge of such Seller, threatened against Transferred Company with
respect to any such software which if determined adversely to Transferred
Company would, individually or in the aggregate, have a Sellers Material Adverse
Effect.
3.10 Year 2000. Transferred Company has established a strategic plan and
provided Buyer with a schedule of the amount of capital and resources estimated
by the Transferred Company necessary to institute software systems that are
intended to protect the Transferred Company from experiencing, as a result of
its own
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software system, invalid or incorrect results or abnormal software operation
related to calendar year 2000.
3.11 Contracts and Commitments.
(a) The Transferred Company Disclosure Memorandum sets forth a complete and
accurate list of all Contracts to which Transferred Company is a party or by
which any of its respective assets are bound which are material to the business
of Transferred Company taken as a whole. Each of the Contracts listed in the
Transferred Company Disclosure Memorandum is a legal, valid and binding
obligation of Transferred Company enforceable against Transferred Company in
accordance with its respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization and
other laws affecting creditors' rights generally or by general equitable
principles. Neither such Seller nor Transferred Company has received written
notice of a cancellation of or an intent to cancel any Contract listed in the
Transferred Company Disclosure Memorandum. To the knowledge of such Seller,
there exists no breach or event of default related to any Contract in the
Transferred Company Disclosure Memorandum on the part of Transferred Company or
on the part of any other party to any Contract listed in the Transferred Company
Disclosure Memorandum, other than defaults that could not reasonably be expected
to have a Sellers Material Adverse Effect.
(b) Except as set forth in the Transferred Company Disclosure Memorandum,
Transferred Company is not a party to any material Contract: (i) containing
covenants limiting the freedom of Transferred Company to engage in any line of
business in any geographic area or to compete with any Person or to incur
indebtedness for borrowed money; (ii) containing "change of control" or similar
provisions the failure to comply with which could be reasonably expected to
have, either individually or in the aggregate, a Sellers Material Adverse
Effect; (iii) containing provisions providing for the indemnification by
Transferred Company of any Person for any liability which is reasonably likely
to exceed $10,000; (iv) other than the employment and consulting contracts
referred to in Section 5.9, relating to the employment of Transferred Employees
and other Contracts with directors or Transferred Employees of Transferred
Company which cannot be terminated by Transferred Company upon notice of sixty
days or less without penalty or premium; (v) relating to management, management
services, investment management or consulting agreements (other than those which
will be terminated prior to the Closing); (vi) for the purchase or sale of
personal property with a value in excess of $10,000 other than Contracts entered
into in the ordinary course of business; (vii) relating to patent, trademark,
service mark, trade name, and copyright and franchise licenses, royalty
agreements or similar Contracts that are material to the operation of the
business of Transferred Company; (viii) forming joint ventures (other than among
Sellers and its Affiliates); (ix) under which Transferred Company has guaranteed
the obligations of any Person (other than Transferred Company), which
obligations are reasonably likely to exceed $10,000; or (x) with any
Governmental
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Authority affecting the business of Transferred Company and not made in the
ordinary course of business.
3.12 Financial Statements. Sellers have previously furnished Buyer with
copies of the audited consolidated financial statements for Transferred Company
as of and for the years ended September 30, 1998, 1997, 1996 and 1995, and the
unaudited condensed consolidated financial statements as of and for the quarters
ended December 31, 1998 and March 31, 1999 (collectively, the "GAAP Financial
Statements"). Each of the balance sheets included in the GAAP Financial
Statements fairly presents in all material respects the financial position of
Transferred Company as of its date and each of the statements of operations
included in the GAAP Financial Statements fairly presents in all material
respects the results of operations of Transferred Company for the period therein
set forth, in each case in accordance with GAAP (subject to any exceptions as to
consistency specified therein or as may be indicated in the notes thereto and
subject, in the case of the unaudited financial statements, to normal year-end
adjustments).
3.13 Undisclosed Liabilities. Since September 30, 1998, except for (i)
those Liabilities or items set forth in the Transferred Company Disclosure
Memorandum and (ii) any Liability incurred in the ordinary course of business
consistent with past practice since such date, Transferred Company has not
incurred or become liable for, directly or indirectly, any indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, choate or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise ("Liabilities"), required
by GAAP to be included on a balance sheet or in the notes thereto (and, to the
Knowledge of Sellers, there is no existing condition or set of circumstances
which would reasonably be expected to result in such a Liability), other than
Liabilities that would not, individually or in the aggregate, have a Sellers
Material Adverse Effect.
3.14 Legal Matters. Except as set forth in the Transferred Company
Disclosure Memorandum, there is no action, order, writ, injunction, judgment or
decree outstanding or suit, litigation, proceeding, labor dispute, arbitral
action, investigation or reported claim (collectively, "Actions"), pending or,
to the Knowledge of such Seller, threatened against or relating to (i)
Transferred Company, (ii) any benefit plan for officers, directors, or employees
of Transferred Company or any fiduciary or administrator thereof or (iii) the
transactions contemplated by this Agreement, except for Actions which, if
adversely determined, could not reasonably be expected to have, individually or
in the aggregate, a Sellers Material Adverse Effect. Transferred Company is not
in default with respect to any judgment, order, writ, injunction or decree of
any Governmental Authority, and there are no unsatisfied judgments against
Transferred Company. The Transferred Company Disclosure Memorandum sets forth a
true and complete list of all pending litigation relating to or involving
Transferred Company or the assets or properties of Transferred Company, the
liability and loss for which is not fully insured.
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3.15 Compliance with Law; Permits and Licenses.
(a) To the knowledge of such Seller, except as set forth in the Transferred
Company Disclosure Memorandum, Transferred Company is not in violation of and is
not under investigation with respect to, and has not been threatened to be
charged with or given notice of violation of, any Applicable Law, except for
violations that have not had and could not reasonably be expected to have,
individually or in the aggregate, a Sellers Material Adverse Effect. Neither
such Seller or Transferred Company has received any written notice to the effect
that, or otherwise been advised that, Transferred Company is not in compliance
with any material Applicable Laws.
(b) To the knowledge of such Seller, except as set forth in the Transferred
Company Disclosure Memorandum, Transferred Company holds all Permits material to
the ownership and conduct of its business in each of the jurisdictions in which
it conducts or operates its business, the absence of which would have a Sellers
Material Adverse Effect and such Permits are in full force and effect. To the
Knowledge of such Seller, the Permits listed with issue dates and expiration or
renewal dates in the Transferred Company Disclosure Memorandum include all
Permits which are material to the ownership and conduct of its business,
including the present use and occupancy of the Real Property by Transferred
Company, and each has been duly issued. To the knowledge of such Seller, the
consummation of the transactions contemplated by this Agreement or any other
Contract related hereto will not result in any revocation, cancellation or
suspension of any such Permit, and there are no pending or, to the Knowledge of
such Seller, threatened Actions with respect to revocation, cancellation,
suspension or nonrenewal thereof, and, to the Knowledge of such Seller, there
has occurred no event which (whether with notice or lapse of time or both) will
result in such a revocation, cancellation, suspension or nonrenewal thereof.
3.16 Employees. The Transferred Company Disclosure Memorandum sets forth an
accurate and complete list of all employees of Transferred Company (the
"Transferred Employees"), together with each such employee's position and
present salary or compensation arrangement. All Contracts between any
Transferred Employee and Transferred Company are listed in the Transferred
Company Disclosure Memorandum.
3.17 Collective Bargaining; Labor Disputes; Compliance. No general work
stoppage or other significant labor dispute with respect to Transferred Company
is pending or, to the Knowledge of such Seller, threatened, and no application
for certification of a collective bargaining agent is pending or, to the
Knowledge of Sellers, threatened with respect to the business of Transferred
Company. No employees of Transferred Company are covered by a collective
bargaining agreement. To the knowledge of such Seller, Transferred Company has
complied in all material respects with all Applicable Laws relating to the
employment and safety of labor, including provisions relating to wages, hours,
benefits, collective bargaining, the
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payment of social security and similar Taxes, and all Applicable Laws regarding
occupational safety and health with respect to employees employed by it, the
failure to comply with which would have a Sellers Material Adverse Effect.
3.18 Employee Benefit Plans; ERISA. (a) Each "employee benefit plan" (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), bonus, deferred compensation, equity-based, severance or
other plan or written agreement relating to employment, compensation or fringe
benefits for employees, maintained or contributed to by Transferred Company
(collectively, the "Plans") is listed in the Transferred Company Disclosure
Memorandum, is in substantial compliance with all applicable laws and has been
administered and operated in all material respects in accordance with its terms.
(b) Each Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Code, has received a favorable determination letter from
the IRS or is still within the remedial amendment period, as described in
Section 401(b) of the Code, for such Plan and, to the knowledge of Sellers or
Transferred Company, no event has occurred and no condition exists which could
reasonably be expected to result in the revocation of any such determination. No
event which constitutes a "reportable event" (as defined in Section 4043(c) of
ERISA) for which the 30-day notice requirement has not been waived by the
Pension Benefit Guaranty Corporation (the "PBGC") has occurred with respect to
any Plan. No Plan subject to Title IV of ERISA has been terminated or is or has
been the subject of termination proceedings pursuant to Title IV of ERISA. Full
payment has been made of all amounts which Transferred Company was required
under the terms of the Plans to have paid as contributions to such Plans on or
prior to the date hereof (excluding any amounts not yet due) and no Plan which
is subject to Part 3 of Subtitle B of Title I of ERISA has incurred any
"accumulated funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived.
(c) Neither the Sellers, Transferred Company nor to the knowledge of
Sellers or Transferred Company, any other "disqualified person" or "party in
interest" (as defined in Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively), has engaged in any transaction in connection with any Plan
that could reasonably be expected to result in the imposition of a material
penalty pursuant to Section 502(i) of ERISA, damages pursuant to Section 409 of
ERISA or a tax pursuant to Section 4975(a) of the Code. Transferred Company has
not maintained any Plan (other than a Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code) which provides benefits with
respect to employees or former employees of Transferred Company following their
termination of service with such Transferred Company (other than as required
pursuant to Section 601 of ERISA). Each Plan subject to the requirements of
Section 601 of ERISA has been operated in substantial compliance therewith.
(d) Except as set forth in the Transferred Company Disclosure Memorandum,
no individual shall accrue or receive additional benefits, service or
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accelerated rights to payment of benefits as a direct result of the transactions
contemplated by this Agreement. To the knowledge of Sellers, no material
liability, claim, investigation, audit, action or litigation has been incurred,
made, commenced or, to the knowledge of Sellers, threatened, by or against any
Plan or Transferred Company with respect to any Plan (other than for benefits
payable in the ordinary course and PBGC insurance premiums).
(e) No Plan is a "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA) and Transferred Company has not been obligated to contribute to any
multiemployer plan. No material liability has been, or could reasonably be
expected to be, incurred under Title IV of ERISA (other than for benefits
payable in the ordinary course or PBGC insurance premiums) or Section 412(f) or
(n) of the Code by any entity required to be aggregated with Transferred
Company, pursuant to Section 4001(b) of ERISA and/or Section 414(b) or (c) of
the Code (and the regulations promulgated thereunder) with respect to any
"employee pension benefit plan" (as defined in Section 3(2) of ERISA).
3.19 Transactions with Certain Persons.
(a) Except as set forth in the Transferred Company Disclosure Memorandum,
neither such Seller, nor any officer, director, employee or member of any such
Person's immediate family is presently a party to any material transaction with
Transferred Company, including, without limitation, any Contract or other
arrangement (i) providing for the furnishing of material services by, (ii)
providing for the rental of material real or personal property from, or (iii)
otherwise requiring material payments to (other than for services as officers,
directors or employees of such Transferred Company) any such Person.
(b) The Transferred Company Disclosure Memorandum identifies (i) all
material Contracts or other arrangements in existence or effect as of the date
hereof between Transferred Company, on the one hand, and such Seller or any of
his Affiliates (other than Transferred Company), on the other hand, and (ii) any
payments, reimbursements and other distributions of any nature whatsoever made
since June 30, 1998 by Transferred Company, on the one hand, to such Seller or
any of his Affiliates (other than Transferred Company), on the other hand. All
such payments, reimbursements and other distributions were made in compliance
with any Applicable Laws and the terms of any applicable Contracts.
3.20 Taxes. For purposes of this Section 3.20, any reference to Transferred
Company shall include any corporation which merged or was liquidated with and
into Transferred Company. Except as set forth in the Transferred Company
Disclosure Memorandum:
(a) All Tax Returns which are required to be filed by, or with respect to,
Transferred Company thereof on or prior to the Closing Date (the "Company
Returns") have been, or will be, timely filed.
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(b) Transferred Company Returns are true, complete and accurate in all
material respects.
(c) All Taxes due and payable by or with respect to Transferred Company
have been, or prior to the Closing Date will be, timely paid.
(d) There is no claim, audit, Action, suit, proceeding or investigation now
pending or, to the Knowledge of Sellers, threatened against Transferred Company
with respect to any Tax for which Transferred Company should be liable. To the
knowledge of Sellers, no claim has ever been made by a taxing authority within
the last six years in a jurisdiction where Transferred Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.
(e) Transferred Company is not delinquent in the payment of any Tax. No
extension of time within which to file any Company Return (which Company Return
has not yet been filed) has been requested by or with respect to Transferred
Company.
(f) No extension or waiver of the statute of limitations period applicable
to any Taxes or any Company Return, which period (after giving effect to such
extension or waiver) has not yet expired, has been granted by or with respect to
Transferred Company.
(g) The statute of limitations for the assessment of all Taxes has expired
for all applicable Tax Returns of Transferred Company or those Tax Returns have
been examined by the appropriate taxing authorities except for the tax returns
set forth on the Transferred Company Disclosure Memorandum and no deficiency for
any Taxes has been proposed, asserted or assessed against Transferred Company
that has not been resolved or paid in full.
(h) No Tax Ruling has been received and no Closing Agreement has been
entered into by or with respect to Transferred Company that would have a
continuing adverse effect after the Closing Date. "Tax Ruling" means a written
ruling of a taxing authority relating to Taxes. "Closing Agreement" means a
written and legally binding agreement with a taxing authority relating to Taxes.
There are no requests for rulings or determinations in respect of any Tax
pending between Transferred Company and any taxing authority.
(i) Except as set forth in the Transferred Company Disclosure Memorandum,
Transferred Company has not been a member of an affiliated, consolidated,
combined or unitary group.
(j) Transferred Company is not a party to any Tax allocation or sharing
agreement. Transferred Company is not currently under any obligation to pay any
amounts as a result of being party, or having been party, to any Tax sharing
agreement.
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(k) Except as set forth in the Transferred Company Disclosure Memorandum,
Transferred Company is not currently under any express or implied obligation to
indemnify any other person for Taxes.
(l) There are no Encumbrances for Taxes upon the assets of Transferred
Company.
(m) Transferred Company will not be required to include any adjustment in
taxable income for any tax period ending after the Closing Date under Section
481(a) of the Code (or any similar provision of the Tax laws of any
jurisdiction) as a result of a voluntary change in method of accounting for a
taxable period ending before, or beginning before and ending after, the Closing
Date or pursuant to the provisions of any agreement entered into with any taxing
authority with regard to the Tax liability of Transferred Company and, to the
Knowledge of Sellers, the Internal Revenue Service has not proposed any such
adjustment or change in accounting method.
(n) Taxes which Transferred Company is required by law to withhold, collect
and pay over with respect to amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party have been duly withheld
or collected, and have been or will be paid over to the proper authorities to
the extent due and payable within the time and in the manner prescribed by law,
rules and regulations relating to the payment and withholding of Taxes.
(o) Transferred Company has not filed (nor will file prior to Closing) a
consent pursuant to Section 341(f) of the Code nor has agreed to have Section
341(f)(2) of the Code apply to any disposition of a "subsection (f) asset" (as
that term is defined in Section 341(f)(4) of the Code) owned by Transferred
Company.
(p) Transferred Company is not a party to any Contract that would result,
separately, or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(q) No power of attorney currently in force has been granted by Transferred
Company concerning any Tax matter.
(r) Transferred Company has made available to Buyer complete and accurate
copies of all Tax Returns, and any amendments thereto, filed by or on behalf of
Transferred Company for all taxable years from the formation of Transferred
Company through the fiscal year ended September 30, 1997.
(s) No property of Transferred Company is property that Transferred Company
or any other party to this transaction is or will be required to treat as being
owned by another person pursuant to the provisions of Section 168(f)(8) (as in
effect prior to its amendment by the Tax Reform Act of 1986) or is "tax-exempt
use property" within the meaning of Section 168 of the Code.
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(t) Transferred Company (and any predecessor of Transferred Company) has
been a validly electing S corporation within the meaning of Code ss.ss.1361 and
1362 at all times after August 1, 1983 and Transferred Company will be an S
corporation up to and including the Closing Date
(u) Transferred Company has no Subsidiaries and therefore has no "qualified
subchapter S subsidiaries" within the meaning of Code ss.1361(b)(3)(B).
(v) Transferred Company will not be liable for any Tax under Code ss.1374
in connection with the deemed sale of Transferred Company's assets (including
the assets of any qualified subchapter S subsidiary) caused by the Section
338(h)(10) Election. Transferred Company has not, in the past 10 years, (A)
acquired assets from another corporation in a transaction in which Transferred
Company's Tax basis for the acquired assets was determined, in whole or in part,
by reference to the Tax basis of the acquired assets (or any other property) in
the hands of the transferor or (B) acquired the stock of any corporation which
is a qualified subchapter S subsidiary.
3.21 Insurance. The Transferred Company Disclosure Memorandum sets forth,
as of the date hereof, an accurate and complete list of all material policies of
insurance maintained by the Transferred Company relating to (i) the assets,
properties, business, and operations of Transferred Company, and (ii) all
employees, officers or directors of Transferred Company. As of the date hereof,
Transferred Company is covered by valid and currently effective insurance
policies issued in favor of Transferred Company that are believed by the
Transferred Company to be customary for companies of similar size in the
industry and locale in which it operates.
3.22 Environmental Laws. To the Knowledge of Sellers, but without
independent inquiry or investigation, except as set forth in the Transferred
Company Disclosure Memorandum and as would not reasonably be expected to have,
individually or in the aggregate, a Sellers Material Adverse Effect: (i)
Transferred Company is in compliance with all applicable Environmental Laws, and
possesses and is in compliance with all Environmental Permits required under
such laws for the conduct of its business and operations, and (ii) there are and
have been no conditions at any property owned, operated or otherwise used by
Transferred Company now or in the past that would reasonably be expected to give
rise to Liability of Transferred Company under any Environmental Law.
3.23 No Brokers. None of Sellers or any of their Affiliates has employed,
or is subject to any valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated by this Agreement
other than FMI Corporation whose fees and expenses shall be paid by Sellers.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
4.1 Status. Buyer is incorporated and its status is active under the laws
of the State of Florida and has requisite corporate power and authority to own,
operate and lease its properties and to conduct its business as it is presently
being conducted and to enter into and to perform its obligations under this
Agreement and under the other Contracts provided for herein to which it is a
party.
4.2 Authorization. The execution, delivery and performance of this
Agreement and the other Contracts provided for herein to which Buyer or any of
its Subsidiaries is or will be a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of Buyer or such Subsidiary, as the case
may be, and no other corporate proceedings on the part of Buyer or any of its
Subsidiaries are necessary to authorize this Agreement and such other Contracts
and the transactions contemplated hereby and thereby. Each of this Agreement and
the other Contracts provided for herein to which Buyer or any of its
Subsidiaries is or will be a party has been or will be duly executed and
delivered by Buyer or such Subsidiary, as the case may be, and, assuming the due
execution by the other parties hereto and thereto, constitutes or will
constitute the legal, valid and binding obligation of Buyer or such Subsidiary,
as the case may be, enforceable against it in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles.
4.3 Conflict or Violation. Neither the execution and delivery of this
Agreement or any other Contract contemplated hereby, nor the consummation of the
transactions contemplated hereby or thereby, will result in (a) a violation of
or a conflict with any provision of the certificate of incorporation or bylaws
of Buyer or any of its Subsidiaries, (b) a breach of, or a default under, any
term or condition of, or otherwise cause any impairment of, any material
Contract, indebtedness, Encumbrance, franchise, Permit, authorization or
concession to which Buyer or any of its Subsidiaries is a party or is subject or
by which any of its assets are bound which could result in a Buyer Material
Adverse Effect, (c) a violation by Buyer or any of its Subsidiaries of any
statute, rule, regulation, ordinance, code, order, judgment, writ, injunction,
decree or award applicable to the Buyer or any of its Subsidiaries, or (d) the
imposition of any material Encumbrance or other restriction on the business of
Buyer or any of its Subsidiaries or on any of its assets.
4.4 Consents and Approvals. Except as set forth in the Buyer Disclosure
Memorandum, no consent or authorization of, or declaration, filing or
registration with, any Governmental Authority or any other Person is required to
be made or
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obtained by Buyer on or prior to the Closing Date in connection with the
execution, delivery and performance of this Agreement or any other Contract
related hereto or the consummation of the transactions contemplated hereby or
thereby.
4.5 SEC Reports; Financial Statements.
(a) Buyer has timely filed all reports, registration statements, proxy
statements or information statements and all other documents, together with any
amendments required to be made thereto, required to be filed on or prior to the
date hereof with the Securities and Exchange Commission ("SEC") under the
Securities Act or the Securities Exchange Act of 1934, as amended (collectively,
the "SEC Reports").
(b) All of the financial statements included in the SEC Reports fairly
presented in all material respects the consolidated financial position of Buyer
and its Subsidiaries as at the dates mentioned and the consolidated results of
operations, changes in stockholders' equity and cash flows for the periods then
ended in conformity with GAAP consistently applied (subject to any exceptions as
to consistency specified therein or as may be indicated in the notes thereto or
in the case of the unaudited statements, as may be permitted by Form 10-Q, and
subject, in the case of unaudited statements, to normal, recurring audit
adjustments). As of their respective dates, the SEC Reports complied in all
material respects with all applicable rules and regulations promulgated by the
SEC.
4.6 No Brokers. None of Buyer or any of its Affiliates has employed, or is
subject to any valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated by this Agreement.
4.7 Investment Intent. Buyer is acquiring the Shares for its own account
and not with a view to their distribution within the meaning of Section 2.11 of
the Securities Act in any manner that would be in violation of the Securities
Act. Buyer has not, directly or indirectly, offered the Shares to anyone or
solicited any offer to buy the Shares from anyone, so as to bring such offer and
sale of the Shares by Buyer within the registration requirements of the
Securities Act. Buyer will not sell, convey, transfer or offer for sale any of
the Shares except upon compliance with the Securities Act and any applicable
state securities laws or pursuant to any exemption therefrom.
4.8 No Financing Contingency. Buyer has available, and on the Closing Date
will have available, sufficient funds, available lines of credit or other
sources of immediately available funds to enable it to purchase the Shares on
the terms and conditions of this Agreement. Buyer's obligations hereunder are
not subject to any conditions regarding Buyer's ability to obtain financing for
the consummation of the transactions contemplated herein.
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ARTICLE V
CERTAIN COVENANTS OF SELLERS AND BUYER
Sellers and Buyer covenant and agree as follows for the period from the
date hereof to the Closing Date:
5.1 Maintenance of Business and Preservation of Permits and Services. From
the date of this Agreement until the earlier of the Closing Date or the
termination of this Agreement in accordance with Section 11.1, each Seller shall
use reasonable efforts to:
(a) cause Transferred Company to conduct its business in the ordinary
course and consistent with past practice and to use reasonable commercial
efforts to (i) preserve intact its business organization, (ii) preserve the
goodwill and business relationships with suppliers, customers, licensees,
licensors, franchisees and all others having business relationships with it,
(iii) keep available the services of its respective present officers and
employees, (iv) defend and protect its assets from infringement or usurpation,
(v) perform all of its material obligations under all material Contracts
relating to or affecting its assets or its business, (vi) maintain its books,
accounts and records in the usual manner consistent with past practice and (vii)
comply in all material respects with all Applicable Laws the failure to comply
with which would have a Sellers Material Adverse Effect; and
(b) not permit Transferred Company to undertake any of the actions
specified in Section 3.6 hereof without Buyer's prior consent, except those
described in the Transferred Company Disclosure Memorandum as exceptions.
5.2 Investigation by Buyer.
(a) Between the date of this Agreement and the Closing Date, each Seller
shall, and shall cause Transferred Company to allow Buyer and its authorized
agents and representatives reasonable access, upon reasonable notice and during
normal business hours, to all Contracts and information of or relating to the
assets, Liabilities, operations, personnel and other aspects of the business of
Transferred Company in connection with the Buyer's review of matters related to
the purchase of the Shares and Buyer's examination of the condition of
Transferred Company, in each case to verify the representations and warranties
of Sellers hereunder including, without limiting the foregoing verification, by
drilling of aggregate reserves on the real property owned by the Transferred
Company; provided, however, that any information obtained from Sellers or any of
its Affiliates in connection with such investigation and examination shall be
deemed to be subject to the Nondisclosure and Confidentiality Agreement referred
to in Section 1.1 (the "Confidentiality Agreement"). Each Seller shall use his
reasonable efforts to cause its employees and the employees of Transferred
Company and its agents and representatives to provide reasonable assistance to
Buyer in connection with its investigation and examination.
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(b) In addition to the parties' respective obligations under the
Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein, each party hereto shall, and shall cause its
advisers and agents to, maintain the confidentiality of all confidential
information furnished to it by the other Parties and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Closing, each party shall promptly return or certify the destruction of all
documents and copies thereof, and all work papers containing confidential
information received from the other party.
(c) Each such Seller and his Affiliates shall use their reasonable efforts
to exercise their rights under confidentiality agreements entered into with
Persons which were considering an acquisition proposal with respect to
Transferred Company, if any, to preserve the confidentiality of the information
relating to the Transferred Company provided to such Persons and their
Affiliates and Representatives.
5.3 Regulatory Matters; Third Party Consents. (a) Buyer and each Seller
shall cooperate with each other and use their respective best efforts promptly
to prepare and file all necessary documentation with, and to obtain as promptly
as practicable all Permits of, all third parties and Governmental Authorities
which are necessary or advisable to consummate the transactions contemplated by
this Agreement, including, without limitation, any filings under the HSR Act.
Buyer shall pay all fees relating to the filing of the notification and report
form pursuant to the HSR Act. Buyer and Sellers shall have the right to review
in advance, and shall consult with the other on, in each case subject to any
laws relating to the exchange of information, all the information relating to
Sellers, Transferred Company or Buyer, as the case may be, and any of their
respective Affiliates, which appear in any filing made with, or written
materials submitted to, any third party or any Governmental Authority in
connection with the transactions contemplated by this Agreement. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all Permits of all third parties and Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement, and each party shall keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein. The party
responsible for any such filing shall promptly deliver to the other party
evidence of the filing of all applications, filings, registrations and
notifications relating thereto, and any supplement, amendment or item of
additional information in connection therewith. The party responsible for a
filing shall also promptly deliver to the other party a copy of each material
notice, order, opinion and other item of correspondence received by such filing
party from any Governmental Authority in respect of any such application. In
exercising the foregoing rights and obligations, Buyer and Sellers shall act
reasonably and as promptly as practicable.
(b) Buyer and Sellers shall promptly advise each other upon receiving any
communication from any Governmental Authority whose consent or approval is
required for consummation of the transactions contemplated by this Agreement,
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which causes such party to believe that there is a reasonable likelihood that
the requisite consent or approval will not be obtained or that the receipt of
such consent or approval will be materially delayed.
5.4 Use of Name. On the Closing Date, each Seller shall execute an
assignment to Buyer and Transferred Company of all rights held by such Seller or
any of his Affiliates (other than Transferred Company), to all of the logos,
names, marks or other proprietary rights, if any, used primarily or exclusively
in the business of Transferred Company in form reasonably satisfactory to
counsel for the Buyer.
5.5 Intercompany Payments and Contracts. (a) Notwithstanding any other
provision of this Agreement to the contrary, except as set forth in Section
5.5(b) or in the Transferred Company Disclosure Memorandum, neither Seller shall
permit Transferred Company to make any payments, reimbursements or any other
distributions of any nature whatsoever to such Seller or any of his Affiliates
without the prior written consent of Buyer. Any expenses allocated by Sellers
during the period from the date hereof to the Closing Date to Transferred
Company shall be allocated in a fair and reasonable manner consistent with past
practice.
(b) All outstanding intercompany account balances (other than those
relating to Taxes) between Transferred Company on the one hand, and Sellers and
any of their Affiliates (other than Transferred Company), on the other hand, as
of the Closing shall be settled in accordance with the financial terms of such
intercompany accounts (but irrespective of the terms of payment of such
intercompany accounts) in the manner provided in this Section. At least five
business days prior to the Closing, Sellers shall prepare and deliver to Buyer a
statement setting out in reasonable detail the calculation of all such
intercompany account balances based upon the latest available financial
information as of such date and, to the extent reasonably requested by Buyer,
provide Buyer with supporting documentation to verify the underlying
intercompany charges and transactions. All such intercompany account balances
shall be paid in full in cash prior to the Closing. All intercompany accounts
relating to Taxes will be governed by Article X.
(c) Except as set forth on the Transferred Company Disclosure Memorandum,
all intercompany Contracts between any of Transferred Company, on the one hand,
and Sellers or any of their Affiliates (other than Transferred Company), on the
other hand, shall have been terminated in accordance with their terms.
5.6 Maintenance of Records. Through the Closing Date, Transferred Company
shall maintain the Records in all material respects in the same manner and with
the same care that the Records have been maintained prior to the execution of
this Agreement. From and after the Closing Date, each of the parties shall
permit the other party reasonable access to any applicable Records in its
possession, and the right to duplicate such Records, to prepare and file tax
returns, to prepare for and participate in any investigation or litigation
relating to the Transferred Company, to contest or defend any claims made under
this Agreement and to the extent that the
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requesting party has any other reasonable business purpose for requesting such
access or duplication. Each party hereto shall notify the other party of any
extension of any applicable statute of limitations related to such Records and
neither party shall permit the destruction of any such Records without obtaining
the prior written consent of the other party. Notwithstanding any other
provision of this Section 5.6, access to any Records may be denied to the
requesting party if the other party is required under Applicable Law to deny
such access.
5.7 Release of Liens. At the Closing, Sellers shall obtain such required
consents, releases or waivers to enable the Shares to be sold free and clear of
all Encumbrances which relate to any relevant debt instruments.
5.8 Employment Matters.
(a) Subject to the rights of the Transferred Company at any time to
terminate employment because of economic conditions generally or for cause,
Buyer shall cause the Transferred Company or assigns to continue to employ the
Transferred Employees who are not terminated for such reasons at substantially
the same salaries and wages and with employee benefits which are no less
favorable in the aggregate to the Transferred Employees than those in effect
prior to the Closing Date for a period commencing on the Closing Date and ending
no earlier than the first anniversary of the Closing Date.
(b) Sellers do not believe that, except as set forth in the Transferred
Company Disclosure Memorandum, any Transferred Employees will be entitled to
receive any severance or other comparable benefit as a direct or indirect result
of the transactions contemplated by this Agreement. If, after the Closing Date,
the Transferred Company terminates the employment of any Transferred Employee,
then the Transferred Company shall pay to such terminated Transferred Employee
severance or other benefits comparable to the severance or benefits that other
employees of Buyer, occupying a position comparable to that occupied by the
terminated Transferred Employee, would receive under Buyer's employment
practices and policies or under Buyer's employee benefit plans.
(c) Until the Closing Date, Seller shall be responsible for complying with
the WARN Act and, after the Closing Date, Buyer shall be responsible for
complying with the WARN Act with respect to Transferred Employees.
(d) Buyer agrees to cause the Transferred Company to continue to maintain
any Plans of the Transferred Company that currently provide life insurance,
disability, medical or dental benefits or, alternatively, Buyer shall maintain
comparable life insurance, disability, medical and dental plans that provide a
level of benefits no less favorable than the level of benefits provided under
the current Plans at a cost to the Transferred Employee no greater than the cost
of the current Plans. In that connection, Buyer agrees that any such life
insurance, disability, medical or dental
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plan will cover spouses and dependents of Transferred Employees who were
participating in the Plans immediately prior to the Closing Date on
substantially similar terms as such individuals were covered under the Plans. If
Buyer elects to cause the Transferred Employees to be covered by benefit plans
maintained by Buyer rather than continue the Plans, each Transferred Employee,
(i) shall be given service credit, for time employed by the Transferred Company,
for the purpose of determining eligibility under the plans maintained by Buyer;
and (ii) will be given credit under the health plan maintained by the Buyer for
the deductibles paid since January 1, 1999, under the health plan maintained by
the Transferred Company. Additionally, Buyer shall cause any preexisting
conditions restrictions under Buyer's health or other welfare benefit plan to be
waived to the extent necessary to provide immediate coverage under Buyer's plan,
unless subject to such restrictions on the Closing Date under the Transferred
Company's plans.
(e) Buyer shall also cause the Transferred Company to continue to maintain
the 401(k) plan of the Transferred Company currently in force or shall permit
the Transferred Employees to participate in a retirement plan of Buyer providing
benefits no less favorable than those provided by the current 401(k) plan. Each
Transferred Employee shall be given service credit, for time employed by the
Transferred Company, for the purpose of determining eligibility and determining
the vested percentage of accounts under the 401(k) retirement plan maintained by
Buyer.
(f) In addition to the foregoing, Buyer shall permit the Transferred
Employees to participate, on such terms and conditions as Buyer may determine as
are consistent with this Section 5.8, in any other employee benefit plan
maintained by Buyer for the benefit of other comparable employees of
Subsidiaries of Buyer (including, without limitation, Buyer's current Amended
Medical Reimbursement Plan, Management Incentive Compensation Plan, Management
Security Plan, 1996 Stock Option Plan, savings/profit sharing plans and defined
benefit retirement plan).
(g) Each such Seller agrees that it shall cause the Transferred Company to
pay to each Transferred Employee his or her salary or comparable compensation
which is accrued and owed as of the date on which such salary or other
compensation is customarily paid occurring prior to the Closing Date. The Buyer
shall cause the Transferred Company to pay all salaries and other compensation
(including, but not limited to, bonuses, retirement payments, vacation pay or
sick pay) payable after such date. Sellers shall not be responsible for any
vacation pay, sick pay, bonuses or comparable payments that may have accrued but
shall not have been payable prior to the Closing Date or any claims by a
Transferred Employee arising under an employee benefit plan, whether made
before, on or after the Closing Date.
5.9 Employment and Consulting Agreements. Prior to the execution of this
Agreement, the Transferred Company, Denis J. Roza, Daniel Shawn Harper and
Ronald E. Inge, have entered into employment contracts for a term of three
years, and Transferred Company and Sellers Daniel R. Harper and Quinton B. McNew
have entered into Consulting Contracts. Copies of such contracts have been
provided to
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Buyer. Buyer shall cause the Transferred Company to perform its obligations
under such contracts after the Closing Date.
5.10 Further Assurance. In addition to the actions required to be taken,
and the Contracts and other documents and papers specifically required to be
delivered, pursuant to this Agreement, each of the parties hereto shall execute
such Contracts and other documents and papers and take such further actions as
may be reasonably required to carry out the provisions hereof and the
transactions contemplated hereby. Each such party shall, on or prior to the
Closing Date, use its reasonable best efforts to fulfill or obtain the
fulfillment of the conditions precedent to the consummation of the transactions
contemplated hereby, including the execution and delivery of any documents,
certificates, instruments or other papers that are reasonably required for the
consummation of the transactions contemplated hereby.
5.11 Best Efforts. Between the date of this Agreement and the Closing Date,
each of the parties hereto shall use their respective best efforts to cause the
conditions in Articles VI, VII and VIII to be satisfied.
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
In addition to the conditions set forth in Article VIII, the obligations of
Sellers to consummate the transactions contemplated hereby on the Closing Date
are subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any of which may be waived by Sellers in writing:
6.1 Purchase Price Paid. Sellers shall have received the Purchase Price, in
accordance with Article II.
6.2 Representations, Warranties, and Covenants. All representations and
warranties of Buyer contained in this Agreement shall be true and correct on and
as of the Closing Date as if such representations and warranties were made on
and as of the Closing Date (except for any representation or warranty made or
given as of a specified date, which shall have been true and correct as of such
specified date, and except for any changes expressly permitted by Sellers),
provided, however, that, notwithstanding anything herein to the contrary, this
Section 6.2 shall be deemed to have been satisfied even if such representations
or warranties are not true and correct unless the failure of any such
representations or warranties to be so true and correct, whether individually or
in the aggregate, has had, or is reasonably likely to have, a Buyer Material
Adverse Effect. Buyer shall have performed in all material respects all
agreements and covenants required by this Agreement to the performed by it on or
prior to the Closing Date.
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6.3 Opinion of Counsel. Sellers shall have received an opinion from
LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel to Buyer, substantially to the
effect set forth in Exhibit A.
6.4 Certificates. Sellers shall have received from Buyer such certificates
of the respective officers of Buyer and others to evidence compliance with the
conditions set forth in this Article VI as may be reasonably requested by
Sellers.
6.5 Employment and Consulting Contracts. The employment and consulting
contracts referred to in Section 5.9 shall remain in full force and effect.
6.6 Other Agreements. Contemporaneous with the Closing, the transactions
contemplated by the Real Estate Purchase and Sale Agreement among Sellers and
Buyer, the Real Estate Purchase and Sale Agreement between Daniel S. Harper and
Buyer, and the Stock Purchase Agreement among Sellers, Buyer and Commercial
Testing, Inc., each dated the date of this Agreement, shall have been completed.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
In addition to the conditions set forth in Article VIII, the obligations of
Buyer to consummate the transactions contemplated hereby are subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions, any of which may be waived by Buyer in writing:
7.1 Receipt of Shares. Buyer shall have received all of the share
certificates representing, and all other evidence of ownership of, the Shares,
in accordance with Article II.
7.2 Representations, Warranties and Covenants. All representations and
warranties of Sellers contained in this Agreement shall be true and correct on
and as of the Closing Date as if such representations and warranties were made
on and as of the Closing Date (except for any representation or warranty made or
given as of a specified date which shall have been true and correct as of such
specified date, and except for any changes expressly permitted by Buyer),
provided, however, that, notwithstanding anything herein to the contrary, this
Section 7.2 shall be deemed to have been satisfied even if such representations
or warranties are not true and correct unless the failure of any such
representations or warranties to be so true and correct, whether individually or
in the aggregate, has had, or is reasonably likely to have, a Sellers Material
Adverse Effect. Sellers shall have performed in all material respects all
agreements and covenants required by this Agreement to be performed by them on
or prior to the Closing Date.
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7.3 Opinion of Counsel. Buyer shall have received an opinion from
Henderson, Franklin, Starnes & Holt, P.A., counsel to Sellers and Transferred
Company, substantially to the effect set forth in Exhibit B.
7.4 Certificates. Buyer shall have received from Sellers such certificates
of the Sellers and others to evidence compliance with the conditions set forth
in this Article VII as may be reasonably requested by Buyer.
7.5 Books and Records. Buyer shall have received the corporate minute
books, bylaws (or other organizational document) and stock transfer books of
Transferred Company.
7.6 Resignation of Directors and Officers. Each Person who is a director of
Transferred Company shall have resigned such directorship. Additionally, each
Person who is an officer of Transferred Company whose principal employment is
not as an officer of Transferred Company shall resign such office.
7.7 Tax Election. Sellers shall have executed and delivered to Buyer an
effective, irrevocable election under Section 338(h)(10) of the Code in form and
substance satisfactory to Buyer and Seller. Buyer and Seller shall have
delivered all documents in connection therewith as Buyer may reasonably request.
ARTICLE VIII
CONDITIONS OF BUYER AND SELLERS
The obligations of each of Buyer and Sellers to consummate the transactions
contemplated hereby are subject to the satisfaction on or prior to the Closing
Date of each of the following conditions, any of which may be waived in writing
by either party, as to itself, to the extent permitted by law:
8.1 No Litigation, Injunction or Restraint. No order, injunction or decree
issued by any Governmental Authority or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this Agreement
shall be in effect. No proceeding initiated by any Governmental Authority or any
third party seeking an injunction against any of the transactions contemplated
by this Agreement shall be pending. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or enforced
by any Governmental Authority which prohibits, restricts or makes illegal the
consummation of any of the transactions contemplated by this Agreement.
8.2 Consents. (a) All consents to the acquisition by Buyer of Transferred
Company required to be obtained prior to the Closing Date from any Governmental
Authority or third party in connection with the consummation of the transactions
contemplated hereby for the continuation and validity of all Permits and
Environmental Permits of Transferred Company shall have been obtained without
any terms,
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limitations or conditions which Buyer determines in good faith would,
individually or in the aggregate, have a Material Adverse Effect, and such
Permits shall be in full force and effect and all statutory waiting periods in
respect thereof shall have expired.
(b) The waiting period prescribed by the HSR Act shall have expired or been
terminated.
ARTICLE IX
INDEMNIFICATION
This Article IX shall govern the indemnification procedures for all claims
other than claims relating to tax matters. Article X of this Agreement shall
govern the indemnification procedures for claims arising out of tax matters.
9.1 Survival of Representations, Etc.
(a) Subject to the further provisions of this Article IX hereof, the
representations and warranties respectively made by Sellers, the Transferred
Company and Buyer in this Agreement or in any certificate required to be
delivered pursuant to this Agreement will survive the Closing (i) until the
third anniversary of the Closing Date in the case of the representations and
warranties of Sellers set forth in Sections 3.5 and 3.20 hereof, and (ii) until
the first anniversary of the Closing Date, in the case of all other
representations and warranties.
(b) Any breach of any representation or warranty as to which a bona- fide
claim for indemnification has not been asserted in accordance with this Article
IX during the applicable survival period set forth in Section 9.1(a) hereof may
not be pursued, and hereby is irrevocably waived, except that if a claim for
indemnification is made in accordance with this Article IX before the expiration
of the applicable survival period set forth in Section 9.1(a), then
(notwithstanding such survival period) the representation or warranty applicable
to such claim will survive until, but only for the purpose of, the resolution of
such claim by final, nonappealable judgment or settlement.
9.2 Indemnification. In addition to and not in limitation of the
indemnification provided in Section 10.1 and Section 10.6 but subject to
Sections 9.5 and 9.6 and Section 11.1(c), Sellers shall indemnify Buyer and its
Affiliates (including, after the Closing, Transferred Company) (each, a "Buyer
Indemnitee") against, and hold each Buyer Indemnitee harmless from, any damage,
claim, liability or expense, including, without limitation, interest, penalties
and reasonable attorneys' fees (collectively "Damages"), arising out of the
breach by Sellers of any of its representations, warranties, covenants or
agreements contained herein (other than representations and warranties contained
in Section 3.20 which shall be governed by Article X rather than this Article
IX). Buyer shall indemnify Sellers and their Affiliates (including, prior to
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the Closing, Transferred Company) (each, a "Sellers Indemnitee") against, and
hold each Sellers Indemnitee harmless from, any Damages arising out of the
breach by Buyer of any of its representations, warranties, covenants or
agreements contained herein.
9.3 Indemnification Procedures. (a) Upon any Person entitled to be
indemnified under this Article IX (the "Indemnified Person") becoming aware of a
fact, condition or event for which indemnification is provided under this
Article IX, the Indemnified Person will with reasonable promptness notify the
Person from whom indemnification is sought (the "Indemnifying Person") in
writing of such fact, condition or event, but in any event within thirty days
after such Indemnified Person has actual knowledge of the facts constituting the
basis for indemnification; provided that the failure to provide such notice
shall not prejudice the Indemnified Person's right to indemnification hereunder
except to the extent that the Indemnifying Person is actually prejudiced
thereby. Such notice shall (i) provide (with reasonable specificity) the basis
on which indemnification is being asserted; (ii) set forth actual or good-faith
estimated amount of Damages for which indemnification is being asserted, if
known; and (iii) be accompanied by copies of all relevant pleadings, demands,
and other papers served on the Indemnified Person. If such fact, condition or
event is the assertion of a claim by a third party, the Indemnifying Person will
be entitled to participate in or take charge of the defense against such claim;
provided, that the Indemnifying Person and their counsel shall proceed with
diligence and in good faith with respect thereto. Notwithstanding the
Indemnifying Person's election to assume the defense or investigation of such
claim, the Indemnified Person shall have the right to employ separate counsel
and to participate in the defense or investigation of such claim, action or
proceeding, and the Indemnifying Person shall bear the expense of such separate
counsel, if (i) in the written opinion of counsel to the Indemnified Person
reasonably satisfactory to the Indemnifying Person, use of counsel of the
Indemnifying Person's choice would be expected to give rise to a conflict of
interest, (ii) the Indemnifying Person shall not have employed counsel to
represent the Indemnified Person within a reasonable time after notice of the
assertion of any such claim or institution of any such action or proceeding, or
(iii) the Indemnifying Person shall authorize the Indemnified Person in writing
to employ separate counsel at the expense of the Indemnifying Person. An
Indemnifying Person who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all Indemnified Persons with respect to such claim, unless in the
written opinion of counsel to the Indemnified Person reasonably satisfactory to
the Indemnifying Person, use of one counsel would be expected to give rise to a
conflict of interest between such Indemnified Person and any other of such
Indemnified Persons with respect to such claim, in which event the Indemnifying
Person shall be obligated to pay the fees and expenses of one additional
counsel.
(b) Neither the Indemnified Person nor the Indemnifying Person shall make
any settlement of any claim which would give rise to liability on the part of
the Indemnifying Person under this Article IX without the prior written consent
of the
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other, which consent shall not be unreasonably withheld, provided that an
Indemnified Person shall not be required to consent to any settlement involving
the imposition of equitable remedies or involving the imposition of any material
obligations on such Indemnified Person other than financial obligations for
which such Indemnified Person will be indemnified hereunder. No Indemnifying
Person will be required to consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the Indemnified Person of a release from all
liability in respect to such claim or litigation. Whenever the Indemnified
Person or the Indemnifying Person receives a firm offer to settle a claim for
which indemnification is sought under this Article IX, it shall promptly notify
the other of such offer. If the Indemnifying Person refuses to accept such offer
within 20 Business Days after receipt of such offer (or of notice thereof), such
claim shall continue to be contested and, if such claim is within the scope of
the Indemnifying Person's indemnity contained in this Article IX, the
Indemnified Person shall be indemnified pursuant to the terms hereof. If the
Indemnifying Person notifies the Indemnified Person in writing that the
Indemnifying Person desires to accept such offer, but the Indemnified Person
refuses to accept such offer within twenty Business Days after receipt of such
notice, the Indemnified Person may continue to contest such claim and, in such
event, the total maximum liability of the Indemnifying Person to indemnify or
otherwise reimburse the Indemnified Person hereunder with respect to such claim
shall be limited to and shall not exceed the amount of such offer, plus
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and disbursements) to the date of notice that the Indemnifying Person
desires to accept such offer, provided that this sentence shall not apply to any
settlement of any claim involving the imposition of equitable remedies or to any
settlement imposing any material obligations on such Indemnified Person other
than financial obligations for which such Indemnified Person will be indemnified
hereunder.
9.4 Exclusive Remedy. This Article IX and Section 10.6 shall provide the
sole and exclusive remedy for any and all Damages sustained or incurred by any
Indemnified Person, except for Damages sustained or incurred by Indemnified
Person as a result of fraud by Indemnifying Person.
9.5 Claims Limitations. Notwithstanding the foregoing provisions of this
Article IX, and except as set forth in Section 9.9,
(a) Neither Sellers nor Buyer shall be liable for indemnification under
this Article IX for (i) consequential damages of the other party; or (ii) any
breach of any representation or warranty by such party if such party can
demonstrate that the other party had actual knowledge of such breach prior to
Closing and did not notify such breaching party of such breach prior to Closing;
(b) Sellers shall have no liability for indemnification for any Damages
under Section 9.2 hereof until and unless the cumulative total of such Damages
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exceeds in the aggregate $100,000, at which time all amounts of Damages in
excess of $50,000 may be claimed and recovered as provided in this Agreement;
(c) The aggregate amount which Sellers may be required to pay for
indemnification pursuant to Section 9.2 hereof, excluding the amount of
indemnification paid by Sellers pursuant to Article X, shall not exceed the sum
of $2,000,000 plus all out-of-pocket costs incurred by Buyer (including
reasonable fees of attorneys, accountants, actuaries and other experts) in
connection with the transactions contemplated by this Agreement or any disputes
relating hereto;
(d) No Indemnification Claim may be made by Buyer against one Seller unless
a Indemnification Claim is made, at approximately the same time, against the
other Seller in accordance with Section 9.8; and
(e) The Indemnifying Persons will have no Liability to the Indemnified
Persons under or in connection with a breach of any of the representations,
warranties, covenants or agreements made or to be performed by the Companies or
the Indemnifying Persons contained in this Agreement unless written notice
asserting an indemnification claim based thereon is given to the Indemnifying
Persons prior to the third anniversary of the Closing Date in the case of
representations and warranties contained in Sections 3.5 and 3.20 and prior to
the first anniversary of the Closing Date in the case of all other
representations, warranties, covenants or agreements.
9.6 Tax Effect and Insurance.
(a) The Liability of the Indemnifying Persons with respect to any
Indemnification Claim shall be reduced by the tax benefit actually realized and
any insurance proceeds received by the Indemnified Persons as a result of any
Damages upon which such Indemnification Claim is based, and shall include any
tax detriment actually suffered by the Indemnified Persons as a result of such
Damages. The amount of any such tax benefit or detriment shall be determined by
taking into account the effect, if any and to the extent determinable, of timing
differences resulting from the acceleration or deferral of items of gain or loss
resulting from such Damages and shall otherwise be determined so that payment by
the Indemnifying Persons of the Indemnification Claim, as adjusted to give
effect to any such tax benefit or detriment, will make the Indemnified Person as
economically whole as is reasonably practical with respect to the Damages upon
which the Indemnification Claim is based. Any dispute as to the amount of such
tax benefit or detriment shall be resolved by arbitration as provided in this
Agreement.
(b) If an Indemnified Person recovers from any third party (including
insurers) all or any part of any amount previously paid to it by and
Indemnifying Person pursuant to this Article IX, such Indemnified Person will
promptly pay over to the Indemnifying Person the amount so recovered (after
deducting therefrom the full amount of the expenses incurred by it in procuring
such recovery), but not in excess of any amount previously so paid by the
Indemnifying Person.
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9.7 Subrogation. Upon payment in full of any Indemnification Claim, whether
such payment is effected by set-off or otherwise, or the payment of any judgment
or settlement with respect to a Third Party Claim, the Indemnifying Persons
shall be subrogated to the extent of such payment to the rights of the
Indemnified Person against any person or entity with respect to the subject
matter of such Indemnification Claim or Third Party Claim.
9.8 Allocation of Indemnification Between Sellers.
(a) The liability of Harper and McNew with respect to any Indemnification
Claim or claim for indemnification pursuant to Article X shall be pro rata in
the same proportion as the Purchase Price received by such Person bears to the
aggregate Purchase Price. Accordingly, such liability shall be borne by the
Sellers in the following percentages: Harper - 57.143%; McNew - 42.857%.
(b) If a Seller fails to pay his allocable share of an Indemnification
Claim or claim for indemnification made pursuant to this Article IX or Article X
owed to Buyer, then, subject to the limitations set forth in this Article IX or
Article X, Buyer may recover the amount of such allocable share from the other
Seller and such other Seller shall be entitled to recover the amount so paid to
the Buyer from the delinquent Seller.
9.9 Asphalt Site. Transferred Company has recently conveyed or before
Closing will convey to Sellers approximately 40 acres of land containing
Transferred Company's asphalt plants and other improvements ("Asphalt Site").
Sellers and Transferred Company are aware of certain environmental issues
affecting the Asphalt Site ("Asphalt Site Environmental Issues"). In addition to
indemnification made and notwithstanding any limitations contained elsewhere in
this Article IX, Sellers shall indemnify each Buyer Indemnitee against, and hold
each Buyer Indemnitee harmless from, any Damages relating to the Asphalt Site
Environmental Issues.
ARTICLE X
TAX MATTERS
10.1 Code ss.338(h)(10) Election.
(a) Code ss.338(h)(10) Election. At Buyer's request Transferred Company and
each of the Sellers will join with Buyer in making an election under Code
ss.338(h)(10) of the Code (and any corresponding election under state, local and
foreign tax law) with respect to the purchase and sale of the stock of
Transferred Company hereunder (a "Section 338(h)(10) Election"). Sellers will
include any income, gain, loss, deduction, or other tax item resulting from the
Section 338(h)(10) Election on their Tax Returns to the extent permitted by
applicable law. Sellers shall also pay any Tax imposed on Transferred Company
attributable to the making of the Section 338(h)(10) Election, including, but
not limited to, (i) any Tax imposed under
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Treasury Regulation ss.1.338(h)(10)-1(e)(5), or (iii) any state, local or other
Tax imposed on Transferred Company's gain, and Sellers shall indemnify Buyer and
Transferred Company against any Tax liability, penalty, interest or other loss.
The indemnification contained in the preceding sentence shall be subject to the
limitations, conditions and provisions of Section 10.6 (d).
(b) Allocation of Purchase Price. Buyer, Transferred Company and Sellers
agree that the Purchase Price and the liabilities of Transferred Company (plus
other relevant items) will be allocated to the assets of Transferred Company for
all purposes (including Tax and financial accounting) in a manner consistent
with the fair market values set forth in the allocation schedule (the
"Allocation Schedule") attached hereto as Exhibit C. Buyer, Transferred Company
and Sellers will file all Tax Returns (including amended returns and claims for
refund) and information reports in a manner consistent with such values.
(c) S Corporation Status. Transferred Company and Sellers will not revoke
Transferred Company's election to be taxed as an S corporation within the
meaning of Code ss.1361 and 1362. Transferred Company and Sellers will not take
or allow any action that would result in the termination prior to the
consummation of the transactions contemplated by this Agreement of Transferred
Company's status as a validly electing S corporation within the meaning of Code
ss.ss.1361 and 1362.
10.2 Tax Periods Ending on or Before the Closing Date. Buyer shall prepare
or cause to be prepared and file or cause to be filed all Tax Returns for the
Transferred Company for all periods ending on or prior to the Closing Date which
are filed after the Closing Date. Buyer shall permit Sellers to review, comment,
and approve on each such Tax Return described in the preceding sentence prior to
filing. To the extent permitted by applicable law, Sellers shall include any
income, gain, loss, deduction or other tax items for such periods on their Tax
Returns in a manner consistent with the Schedule K-1's furnished by Transferred
Company to the Sellers for such periods. Sellers shall reimburse Buyer for any
Taxes of the Transferred Company with respect to such periods within fifteen
(15) days after payment by Buyer or the Transferred Company of such Taxes.
10.3 Tax Periods Beginning Before and Ending After the Closing Date. Buyer
shall prepare or cause to be prepared and file or cause to be filed any Tax
Returns of Transferred Company for Tax periods which begin before the Closing
Date and end after the Closing Date. Sellers shall pay to the Buyer within five
days after the date on which Taxes are paid with respect to such periods an
amount equal to Sellers' allocable portion of such Taxes ("Sellers' Post-Closing
Taxes"). Sellers' Post-Closing Taxes shall be:
(a) in the case of any real or personal property Tax, an amount equal to
the Tax for the entire period multiplied by a fraction the numerator of which is
the number of days in the period for which such Taxes are paid ending on the
Closing Date and the denominator of which is the number of days in the entire
period; and
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(b) in the case of any other Tax, the amount that would be payable by
Transferred Company if the taxable year ended on the Closing Date.
The remainder of Post-Closing Taxes shall be Buyer's Post-Closing Taxes.
10.4 Cooperation on Tax Matters. Buyer, Sellers and Transferred Company
shall cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of Tax Returns pursuant to this Article X
and any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Buyer and Sellers agree (i) to retain all books
and records with respect to Tax matters pertinent to Transferred Company
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Transferred Company or Sellers, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered into
with any taxing authority, and (ii) to give the other party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, Transferred Company or Sellers, as
the case may be, shall allow the other party to take possession of such books
and records.
10.5 Transfer Taxes. All state and local transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees, including any penalties and
interest, ("Transfer Taxes") incurred in connection with this Agreement shall be
paid by Buyers when due, and Sellers will, at their own expense, file all
necessary Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees.
10.6 Tax Indemnification.
(a) After the Closing Date and except as set forth in Section 10.1(b),
Sellers will indemnify and hold harmless Buyer from and against any and all
claims, actions, causes of action, liabilities, losses, damages, and reasonable
out-of-pocket expenses and costs resulting from, arising out of or relating to
Pre-Closing Taxes and Sellers's Post-Closing Taxes or any breach by the Sellers
of the representations and warranties contained in Section 3.20. The term
Pre-Closing Taxes means Taxes of Transferred Company related to Pre-Closing Tax
Periods including any Tax incurred as the result of the Section 338(h)(10)
Election. Pre-Closing Tax Period means any Tax period ending on or before the
Closing Date; and, with respect to a Tax period that begins on or before the
Closing Date and ends thereafter, the portion of such Tax period ending on the
Closing Date.
(b) After the Closing Date and in addition to Buyer's obligations as set
forth in Section 10.1(b), Buyer will indemnify and hold harmless Sellers from
and
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against any and all claims, actions, causes of action, liabilities, losses,
damages, and reasonable out-of-pocket expenses and costs resulting from, arising
out of or relating to Buyer's Post-Closing Taxes and Transfer Taxes.
(c) The amount of any payment to Buyer or Sellers or Transferred Company
pursuant to this Section 10.6 shall be reduced by the amount of any
corresponding federal, state or local income tax benefit derived or to be
derived by the Indemnified Party from payment of the liability upon which the
claim for indemnity is based.
(d) The indemnifications contained in Section 10.1 and this Section 10.6
shall be subject to the following limitations, conditions and provisions:
(i) Neither Sellers nor Buyer shall be liable for indemnification under
this Article X for (A) consequential damages of the other party; or (B) any
breach of any representation or warranty by such party if such party can
demonstrate that the other party had actual knowledge of such breach prior to
Closing and did not notify such breaching party of such breach prior to Closing;
(ii) Sellers have no liability for indemnification under Section 10.1 or
this Section 10.6 until and unless the cumulative total of the claims, actions,
liabilities, losses, damages, penalties, interest or expenses exceeds in the
aggregate $50,000, at which time all amounts of such claims, actions,
liabilities, losses, damages, penalties, interest or expenses in excess of
$25,000 may be claimed and recovered as provided in this Agreement;
(iii) The aggregate amount which Sellers may be required to pay for
indemnification pursuant to Section 10.1 or this Section 10.6, excluding the
amount of Indemnification Claims paid by Sellers pursuant to Article IX, shall
not exceed the sum of $2,000,000 plus all out-of-pocket costs incurred by Buyer
(including reasonable fees of attorneys, accountants, actuaries and other
experts) in connection with the transactions contemplated by this Agreement or
any disputes relating thereto; and
(iv) No claim for indemnification may be made by Buyer against one
Seller pursuant to this Article X unless a claim is made, at approximately the
same time, against the other Seller in accordance with Section 9.8.
10.7 Notification of Proceedings; Control.
(a) In the event that Buyer or Transferred Company receives notice, whether
orally or in writing, of any pending or threatened federal, state, local or
foreign tax examinations, claims settlements, proposed adjustments or related
matters with respect to Taxes that could affect Sellers or any Sellers's
Affiliate, or if Sellers or any Sellers's Affiliate receives notice of such
matters that could affect Buyer or Transferred Company, the party receiving such
notice shall notify in writing the
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potentially affected party (and shall provide a copy of such notice to such
party) within ten days thereof. The failure of either party to give the notice
required by this Section shall not impair such party's rights under this
Agreement except to the extent that the other party demonstrates that it has
been damaged thereby.
(b) Sellers shall have the responsibility for, and shall be entitled, at
their expense, to contest, control, compromise, settle or appeal all proceedings
with respect to Pre-Closing Taxes and Sellers's Post Closing Taxes.
10.8 Refunds. Any refund or credit of Taxes (including any statutory
interest thereon) received by Buyer, Sellers or Transferred Company attributable
to periods ending on or prior to or including the Closing Date that were paid by
Sellers (including without limitation the deposit of $412,310 with Internal
Revenue Service under Code Sections 444 and 7519) shall be for the benefit of
Sellers, and Buyer shall cause any such refund or credit to be paid to Sellers
within ten business days after Buyer or Transferred Company receives such refund
or actually realizes the benefit of such credit.
ARTICLE XI
MISCELLANEOUS
11.1 Termination. (a) This Agreement may be terminated and the transactions
contemplated hereby abandoned on or prior to the Closing Date only as follows:
(i) by written consent of Buyer and Sellers; or
(ii) at the election of either Buyer or Sellers, if the Closing Date
shall not have occurred on or before June 3, 1999, provided that no party
shall be entitled to terminate this Agreement pursuant to this clause (ii)
of this Section 11.1(a) if such party's failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of
the Closing to occur on or before such date; or
(iii) at the election of either Buyer or Sellers, if either party has
been notified that the applicable Governmental Authority intends to take
action under the HSR Act with respect to the transaction contemplated by
this Agreement other than the consent for divestiture of Buyer's Fort
Myers, Florida Quarry and Transferred Company's Glades County, Florida Sand
Mine; or
(iv) at the election of either Buyer or Sellers, if a final and
unappealable order, judgment, writ, injunction, decree or award has been
issued prohibiting the consummation of the transaction contemplated by this
Agreement.
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(b) Notwithstanding any termination of this Agreement pursuant to Section
11.1(a), the provisions of Sections 11.9 and 11.10 and the Confidentiality
Agreement shall continue in full force and effect.
(c) If this Agreement is terminated as permitted by clause (a) of this
Section 11.1, such termination shall be without liability of any party (or any
stockholder, director, officer, employee, agent, consultant or representative of
such party) to any other party to this Agreement.
11.2 No Third Party Beneficiaries. Nothing in this Agreement is intended or
shall be construed to give any person, other than the parties hereto, any legal
or equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
11.3 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by Sellers without the prior written
consent of Buyer, or by Buyer without the prior written consent of Sellers.
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.
11.4 Notices. All notices and other communications required or permitted
hereunder or under any other document relating hereto shall be in writing
(including telefax communication) and shall be delivered personally, telefaxed
(with confirmation of receipt immediately thereafter by telephone), sent by
nationally recognized overnight courier (marked for overnight delivery), or sent
by registered, certified or express mail, postage prepaid, return receipt
requested, addressed as follows or to such other address as may be hereafter
designated in writing hereunder by the respective parties:
(a) If to Sellers:
Daniel R. Harper
Quinton B. McNew
c/o John A. Noland
1715 Monroe Street
Fort Myers, Florida 33901
Telephone: 941/334-4121
Telefax: 941/332-4494
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with a copy to:
Henderson, Franklin, Starnes & Holt, P.A.
Mail Post Office Box 280
Fort Myers, Florida 33902
Attention: John A. Noland
Hand 1715 Monroe Street
Delivery: Fort Myers, Florida 33901
Telephone: 941/334-4121
Telefax: 941/332-4494
(b) If to Buyer:
Florida Rock Industries, Inc.
Post Office Box 4667 (Zip 32201)
155 East 21st Street
Jacksonville, Florida 32206
Attention: John D. Baker II
President and Chief Executive Officer
Telephone: 904/355-1781 - Extension 227
Telefax: 904/355-0817
with a copy to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
50 North Laura Street
Suite 2800
Jacksonville, FL 32202
Attention: Lewis S. Lee
Telephone: 904/354-8000 (Main number)
904/630-5322 (Direct number)
Telefax: 904/353-1673
Such notices and communications shall (i) when delivered in person on any
Business Day between the hours of 9:00 AM to 5:00 PM. (Eastern time), be
effective when delivered (or if delivered after 5:00 PM, be effective on the
next Business Day to occur), (ii) when telefaxed (provided receipt is
immediately thereafter confirmed by telephone) on any Business Day between the
hours of 9:00 AM to 5:00 PM (Eastern time), be effective when telefaxed (or if
telefaxed after 5:00 PM, be effective on the next Business Day to occur), or
(iii) if mailed, be effective three (3) Business Days after the same has been
deposited in the mails, postage prepaid, by registered or certified mail, return
receipt requested, or (iv) if sent by a nationally recognized
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overnight courier service, be effective one (1) Business Day after the same has
been delivered to such courier service marked for overnight delivery; in each
case addressed as aforesaid.
11.5 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 Florida, without regard to the conflict of law principles thereof.
11.6 Entire Agreement; Amendments and Waivers. This Agreement constitutes
the entire agreement among the parties pertaining to the subject matter hereof
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof, nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
11.7 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
11.9 Expenses. Sellers and Buyer will each be liable for its own costs and
expenses, including, without limitation, the costs and expenses of any of its
independent advisors, actuaries, accountants and counsel, incurred in connection
with the negotiation, preparation and execution of this Agreement and the
performance of the transactions contemplated hereby.
11.10 Publicity. Each party agrees to notify the other prior to issuing any
press release or making any public statement regarding the transactions
contemplated hereby, and will attempt to obtain the reasonable approval of the
other party prior to making such release or statement, except where such release
or statement is required by Applicable Law or pursuant to any listing agreement
with, or the rules or regulations of, any securities exchange or any other
regulatory requirement, in which case the disclosing party shall endeavor to
provide the other party with as much prior notice of the content of such release
or statement as is reasonably practicable under the circumstances.
11.11 Interpretation. When reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference is to the Sections, Exhibits or Schedules
of this Agreement unless otherwise indicated. The table of contents and
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headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The phrases
"the date of this Agreement," "the date hereof" and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to the date set
forth in the first paragraph of this Agreement. The words "hereof", "herein",
"hereby" and other words of similar import refer to this Agreement as a whole
unless otherwise indicated. Whenever the singular is used herein, the same shall
include the plural, and whenever the plural is used herein, the same shall
include the singular, where appropriate.
11.12 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, that provision shall be
interpreted to be only so broad as is enforceable.
11.13 Specific Performance. Each of the parties hereto acknowledges and
agrees that the other parties hereto would be irreparably damaged in the event
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, each of the
parties hereto agrees that they each shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
subject matter jurisdiction, in addition to any other remedy to which any of the
parties may be entitled, at law or in equity.
11.14 Sellers' Responsibilities. The representations, warranties and
covenants made by Harper and McNew in this Agreement are several and, subject to
the provisions of Article IX, neither Harper nor McNew shall be responsible for
the representations, warranties or covenants of the other.
11.15 No Prejudice. This Agreement has been jointly prepared by the parties
hereto and the terms hereof shall not be construed in favor of or against any
party on account of its participation in such preparation.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement,
or has caused this Agreement to be duly executed on its respective behalf, as of
the Day and year first above written.
45
<PAGE>
/s/ Daniel R. Harper
-----------------------------------
Daniel R. Harper
/s/ Quinton B. McNew
-----------------------------------
Quinton B. McNew
("Sellers")
FLORIDA ROCK INDUSTRIES, INC.
By /s/ John D. Baker II
--------------------------------------
Name: John D. Baker II
Title: President and CEO
("Buyer")
HARPER BROS., INC.
By /s/ Denis J. Roza
--------------------------------------
Name: Denis J. Roza
Title: President
("Transferred Company")
<PAGE>
EXHIBITS
EXHIBIT A - Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P.
EXHIBIT B - Opinion of Henderson, Franklin, Starnes & Hold, P.A.
EXHIBIT C - Allocation Schedule
Florida Rock Industries, Inc. agrees to supplementally furnish copies of the
foregoing exhibits and schedules to the Securities and Exchange Commission upon
request.
EXHIBIT 2.2
SUPPLEMENTAL AGREEMENT
This Supplemental Agreement is entered into this 21st day of May 1999, by
and between DANIEL R. HARPER and QUINTON B. McNEW, as Sellers, and FLORIDA ROCK
INDUSTRIES, INC., a Florida corporation, as Buyer.
1. Sellers, Buyer and Harper Bros., Inc., as Transferred Company, have
simultaneously entered into a Stock Purchase Agreement ("Stock Purchase
Agreement") of even date herewith. Terms used but not defined herein shall have
the meaning set forth in the Stock Purchase Agreement.
2. In accordance with Section 10.1(a) of the Stock Purchase Agreement,
Transferred Company and each of the Sellers will join with Buyer in making an
election under ss. 338(h)(10) of the Code (and any corresponding election under
state, local and foreign tax law) with respect to the purchase and sale of the
stock of Transferred Company.
3. To the extent that the Sellers incur in the aggregate in excess of $2
million of taxes as the result of the sale of the Shares over the amount they
would have incurred had the 338(h)(10) Election not been made (the "Excess
Tax"), then Sellers shall report the Excess Tax to Buyer.
4. In the event a Seller incurs and reports Excess Tax to Buyer, the amount
thereof shall be contingent additional purchase price for the Shares and shall
be paid by Buyer to Seller within 30 days of notification by Seller to Buyer.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement,
or has caused this Agreement to be duly executed on its respective behalf, as of
the day and year first above written.
/s/ Daniel R. Harper
------------------------------
Daniel R. Harper
/s/ Quinton B. McNew
------------------------------
Quinton B. McNew
("Sellers")
FLORIDA ROCK INDUSTRIES, INC.
By: /s/ John D. Baker
--------------------------
Name: John D. Baker
Title: President & CEO
("Buyer")
<PAGE>
May 21, 1999
Florida Rock Industries, Inc.
155 East 21st Street
Jacksonville, Florida 32206
ATTN: John D. Baker, II
President and Chief Executive Officer
Re: Stock Purchase Agreement of Harper Bros., Inc.
Dear Sirs:
Reference is made to Article IX of the Harper Bros., Inc. Stock Purchase
Agreement to which we are parties as well as to the consent and order to be
filed in the United States District Court, middle District, Florida, by the
United States of America through the Department of Justice concerning the
transactions contemplated by the Stock Purchase Agreement (the "Consent").
We hereby agree that to the extent Harper Bros, Inc. realizes less than
$4,000,000 upon the sale of the Harper Bros., Inc. Palmdale Sand Mine and
royalty agreements to a bona fide third party purchaser in accordance with the
Consent, upon your providing to us notice thereof, the shortfall from $4,000,000
shall be considered Damages under such Article IX, subject, however, to all the
terms thereof.
Very truly yours,
/s/ Daniel R. Harper
-------------------------------
Daniel R. Harper
/s/ Quinton B. McNew
-------------------------------
Quinton B. McNew
EXHIBIT 4.1
FIFTH AMENDMENT DATED AS OF MAY 14, 1999
TO THE
AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
DATED AS OF DECEMBER 5, 1990
AS AMENDED BY
THE FIRST AMENDMENT DATED AS OF SEPTEMBER 30, 1992,
THE SECOND AMENDMENT DATED AS OF JUNE 30, 1994 AND
THE THIRD AMENDMENT DATED AS OF JUNE 30, 1997
THE FOURTH AMENDMENT DATED AS OF JULY 15, 1998
- - - - - - - - - -
THIS FIFTH AMENDMENT dated as of May 14, 1999, TO THE AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT DATED AS OF DECEMBER 5, 1990, as
amended (the "Agreement"), is entered into among FLORIDA ROCK INDUSTRIES, INC.,
a Florida corporation (the "Company"), BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, a national bank, with its principal office at 555
California Street, San Francisco, California 94104 (in its individual capacity,
"BA"), as agent (in such capacity, the "Agent"), NATIONSBANK, N.A.
("NationsBank") as successor to Barnett Bank, N.A., SUNTRUST BANK, CENTRAL
FLORIDA, N.A. ("SunTrust"), CRESTAR BANK, N.A. ("Crestar"), FIRST UNION NATIONAL
BANK, (successor by merger to First Union National Bank of Florida) ("FUNB"),
and THE FIRST NATIONAL BANK OF MARYLAND ("FNBM"). BA, NationsBank, SunTrust,
Crestar, FUNB and FNBM are hereinafter collectively referred to as the "Banks"
and individually as a "Bank".
Recitals:
The Company has requested that the Banks modify the Agreement as set forth
herein. Capitalized terms not otherwise defined herein have the meanings
assigned to them in the Agreement.
Therefore, in consideration of any loan or advance or grant of credit
heretofore or hereafter made to the Company by the Banks, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree that the Agreement is hereby amended as follows:
1. Section 8.1(b) is hereby amended to read as follows:
"(b) Short Term Indebtedness of the Company, provided that such
indebtedness in an aggregate amount does not at any time exceed 35% of
Consolidated Tangible Net Worth and is not outstanding for more than 365
days in the aggregate during any 12-month period; provided, further, that
if there is an unused portion of the Commitment which in the aggregate is
equal to or greater than such outstanding Short Term Indebtedness of the
Company for a period of 90 consecutive days, then, only for purposes of
determining the number of days that Short Term Indebtedness is outstanding,
such Indebtedness shall be deemed to have been reduced by the amount of
such unused Commitment during such period;"
1
<PAGE>
2. Section 8.3(d) is hereby amended to read as follows:
"(d) additional guaranties of Indebtedness in the principal amount not
at any time to exceed 10% of Consolidated Tangible Net Worth;"
3. Section 8.9 is hereby amended to read as follows:
"8.9 Current Ratio. Permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities to be at any time less than 1.25 to one
(for the purposes of this provision, Consolidated Current Liabilities shall
be defined in accordance with GAAP except that Short Term Indebtedness
shall be excluded from Consolidated Current Liabilities for this
calculation).
4. This Amendment shall become effective as of May 14, 1999.
5. As modified herein, all provisions of the Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to
be duly executed by their duly authorized officers, all as of the day and year
first above written.
FLORIDA ROCK INDUSTRIES, INC.
By: /s/ James J. Gilstrap
Title: Vice President
Address:
Post Office Box 4667
Jacksonville, Florida 32201
Facsimile No.: 904/355-0817
Telephone No.: 904/355-1781
2
<PAGE>
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
AND NATIONSBANK, N.A.
By: /s/ Richard M. Starke
Title: Senior Vice President
Address:
100 Southeast 2nd Street
14th Floor
FL7-950-14-02
Miami, FL 33131
Attention: Richard M. Starke
Sr. Vice President
Facsimile No.: 305/533-2435
Telephone No.: 305/533-2437
3
<PAGE>
SUNTRUST BANK, CENTRAL
FLORIDA, N.A.
By: /s/ Michael H. Palmer
Title: Corporate Banking Officer
Address:
200 South Orange Avenue Tower
6th Floor
Orlando, Florida 32801
Attn: Scott G. Balke
Vice President
Facsimile No.: 407/237-4076
Telephone No.: 407/237-5879
4
<PAGE>
CRESTAR BANK, N.A.
By: /s/ Diane E. Bauman
Title: Vice President
Address:
1445 New York Avenue, N.W.
5th Floor
Washington, D.C. 20005
Attn: Diane E. Bauman
Vice President
Facsimile No.: 202/879-6137
Telephone No.: 202/879-6107
5
<PAGE>
FIRST UNION NATIONAL BANK
By: /s/ Mike Carlin
Title: Senior Vice President
Address:
225 Water Street
Jacksonville, Florida 32202
Attn: Charles N. Kauffman
Vice President - Commercial
Banking
Facsimile No.: 904/361-2417
Telephone No.: 904/361-3662
6
<PAGE>
THE FIRST NATIONAL BANK OF
MARYLAND
By: /s/ Robert M. Beaver
Title: Vice President
Address:
25 South Charles Street, 18th Floor
National Division
Post Office Box 1596
Baltimore, Maryland 21203
Attn: Robert M. Beaver
Vice President
Facsimile No.: 410/545-2047
Telephone No.: 410/244-4206
7
EXHIBIT 4.2
PROMISSORY NOTE
$50,000,000.00
May 28, 1999
FLORIDA ROCK INDUSTRIES, INC.
155 East 21st Street
Jacksonville, Florida 32206
(Individually and collectively "Borrower")
First Union National Bank
214 North Hogan Street - FL0070
Jacksonville, Florida 32202
(Hereinafter referred to as "Bank")
Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of Fifty Million and No/100 Dollars ($50,000,000.00) or such
sum as may be advanced and outstanding from time to time, with interest on the
unpaid principal balance at the rate and on the terms provided in this
Promissory Note (including all renewals, extensions or modifications hereof,
this "Note").
INTEREST RATE DEFINITIONS.
LIBOR. 1-month LIBOR plus 0.40% per annum ("LIBOR-Based Rate"). "LIBOR" is the
rate for U.S. dollar deposits of that many months maturity as reported on
Telerate page 3750 as of 11:00 a.m., London time, on the second London business
day before the relevant Interest Period begins (or if not so reported, then as
determined by the Bank from another recognized source or interbank quotation).
INTEREST RATE TO BE APPLIED.
Interest Rate. The unpaid principal balance of each Advance (as defined herein)
shall bear interest from the date such Advance is made available to the Borrower
at the LIBOR-Based Rate, as determined by Bank prior to the commencement of each
consecutive interest period of 1-month (each an "Interest Period") during the
term of the Note; provided, the first Interest Period shall commence on the date
of such Advance and end on the first date thereafter that interest in respect of
such Advance is due. Each LIBOR-Based Rate applicable to a particular Advance
shall remain in effect for that Advance for the entire Interest Period until
redetermined for the next successive Interest Period.
Indemnification. Borrower shall indemnify Bank against Bank's loss or expense in
employing deposits as a consequence of (a) Borrower's failure to make any
payment when due under this Note, or (b) any payment, prepayment or conversion
of any loan on a date other than the last day of the Interest Period
("Indemnified Loss or Expense"). The amount of such Indemnified Loss or Expense
shall be determined by Bank based upon the assumption that Bank funded 100% of
that portion of the loan in the London interbank market.
Default Rate. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations shall bear interest at the LIBOR-Based Rate plus 3% per
annum ("Default Rate"). The Default Rate shall also apply from acceleration
until the Obligations or any judgment thereon is paid in full.
INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective yield by taking the stated (nominal) rate for a
year's period and then dividing said rate by 360 to determine the daily periodic
rate to
<PAGE>
be applied for each day in the applicable period. Application of the Actual/360
Computation produces an annualized effective interest rate exceeding that of the
nominal rate.
REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly
payments of accrued interest only, commencing on June 28, 1999, and continuing
on the same day of each month thereafter until fully paid. In any event, all
principal and accrued interest shall be due and payable on May 26, 2000.
FACILITY FEE. Upon execution of this Promissory Note, Borrower shall pay to Bank
a facility fee equal to $60,000.00 (i.e., 0.12% of the principal amount of this
Note).
AVAILABILITY FEE. Borrower shall pay to Bank monthly, on each interest payment
date, an availability fee equal to 0.10% per annum on the average daily unused
principal amount available under the Note for the monthly period ending on such
date, with a final payment due and payable on the date that all principal and
accrued interest is paid in full.
APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.
If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.
DEFINITIONS. Loan Documents. The term "Loan Documents" used in this Note and the
other Loan Documents refers to all documents executed in connection with the
loan evidenced by this Note and any prior notes which evidence all or any
portion of the loan evidenced by this Note, and any letters of credit issued
pursuant to any loan agreement to which this Note is subject, any applications
for such letters of credit and any other documents executed in connection
therewith, and may include, without limitation, a commitment letter that
survives closing, a loan agreement, this Note, guaranty agreements, security
agreements, security instruments, financing statements, mortgage instruments,
any renewals or modifications, whenever any of the foregoing are executed, but
does not include swap agreements (as defined in 11 U.S.C. ss. 101). Obligations.
The term "Obligations" used in this Note refers to any and all indebtedness and
other obligations under this Note, all other obligations under any other Loan
Document(s), and all obligations under any swap agreements (as defined in 11
U.S.C. ss. 101) between Borrower and Bank whenever executed. Certain Other
Terms. All terms that are used but not otherwise defined in any of the Loan
Documents shall have the definitions provided in the Uniform Commercial Code.
LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 10 or more days.
Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.
ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Obligations
including, without limitation, reasonable arbitration, paralegals', attorneys'
and experts' fees and expenses, whether incurred without the commencement of a
suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.
USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.
2
<PAGE>
DEFAULT. If any of the following occurs, a default ("Default") under this Note
shall exist: Nonpayment; Nonperformance. The failure of timely payment or
performance of the Obligations or Default under this Note or any other Loan
Documents. False Warranty. A warranty or representation made or deemed made in
the Loan Documents or furnished Bank in connection with the loan evidenced by
this Note proves materially false, or if of a continuing nature, becomes
materially false. Cross Default. Any default in payment or performance of any
obligation under any other loans, contracts or agreements of Borrower, any
Subsidiary or Affiliate of Borrower, any general partner of or the holder(s) of
the majority ownership interests of Borrower with Bank or its affiliates
("Affiliate" shall have the meaning as defined in 11 U.S.C. ss. 101, except that
the term "Borrower" shall be substituted for the term "Debtor" therein;
"Subsidiary" shall mean any business in which Borrower holds, directly or
indirectly, a controlling interest), including, without limitation, that certain
Amended and Restated Revolving Credit and Term Loan Agreement dated as of
December 5, 1990, as amended from time to time and most recently amended by that
certain Fifth Amendment dated as of May 14, 1999 (as so amended, the "Syndicated
Credit Agreement"), among Borrower, Bank of America National Trust and Savings
Association, as agent, NationsBank, N.A. (as successor to Barnett Bank, N.A.),
SunTrust Bank, Central Florida, N.A., Crestar Bank, N.A., The First National
Bank of Maryland, and Bank, whether or not such default has been declared or
waived. Cessation; Bankruptcy. The death of, appointment of a guardian for,
dissolution of, termination of existence of, loss of good standing status by,
appointment of a receiver for, assignment for the benefit of creditors of, or
commencement of any bankruptcy or insolvency proceeding by or against Borrower,
its Subsidiaries or Affiliates, if any, or any general partner of or the
holder(s) of the majority ownership interests of Borrower, or any party to the
Loan Documents.
REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: Bank
Lien. Foreclose its security interest or lien against Borrower's accounts
without notice. Acceleration Upon Default. Accelerate the maturity of this Note
and, at Bank's option, any or all other Obligations, whereupon this Note and the
accelerated Obligations shall be immediately due and payable. Cumulative.
Exercise any rights and remedies as provided under the Note and other Loan
Documents, or as provided by law or equity.
FINANCIAL STATEMENTS. Borrower shall deliver to Bank the financial statements
required pursuant to Section 7.4 of the Syndicated Credit Agreement within the
timeframes set forth therein.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
COVENANTS. Borrower hereby agrees that all of the affirmative and negative
covenants set forth in the Sections 7 and 8 of the Syndicated Credit Agreement,
as in effect on the date hereof, shall apply to, and be a part of, this Note and
are hereby included in this Note by reference as though fully restated herein,
with Bank having all rights of the "Banks" and the "Agent", as defined in the
Syndicated Credit Agreement. Borrower agrees that, so long as any amounts are
owing to Bank hereunder or Bank has any obligation to advance monies hereunder,
Borrower will comply with all of such covenants.
YEAR 2000 COMPATIBILITY. Borrower shall take all action necessary to assure that
Borrower's computer based systems are able to operate and effectively process
data including dates on and after January 1, 2000. At the request of Bank,
Borrower shall provide Bank assurance acceptable to Bank of Borrower's Year 2000
compatibility.
LINE OF CREDIT ADVANCES. Borrower may borrow, repay and reborrow, and Bank may
advance and readvance under this Note respectively from time to time until the
maturity hereof (each an "Advance" and together the "Advances"), so long as the
total principal balance outstanding under this Note at any one time does not
exceed the principal amount stated on the face of this Note, subject to the
limitations described in any loan agreement to which this Note is subject.
Bank's obligation to make Advances under this Note shall terminate if Borrower
is in Default. As of the date of each proposed Advance, Borrower shall be deemed
to represent that each representation made in the Loan Documents is true as of
such date.
3
<PAGE>
If Borrower subscribes to Bank's cash management services and such services are
applicable to this line of credit, the terms of such service shall control the
manner in which funds are transferred between the applicable demand deposit
account and the line of credit for credit or debit to the line of credit.
WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank and by an officer of Borrower. No waiver by Bank of any Default shall
operate as a waiver of any other Default or the same Default on a future
occasion. Neither the failure nor any delay on the part of Bank in exercising
any right, power, or remedy under this Note and other Loan Documents shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.
Each Borrower or any person liable under this Note waives presentment, protest,
notice of dishonor, demand for payment, notice of intention to accelerate
maturity, notice of acceleration of maturity, notice of sale and all other
notices of any kind. Further, each agrees that Bank may extend, modify or renew
this Note or make a novation of the loan evidenced by this Note for any period,
and grant any releases, compromises or indulgences with respect to any
collateral securing this Note, or with respect to any other Borrower or any
other person liable under this Note or other Loan Documents, all without notice
to or consent of each Borrower or each person who may be liable under this Note
or any other Loan Document and without affecting the liability of Borrower or
any person who may be liable under this Note or any other Loan Document.
MISCELLANEOUS PROVISIONS. Assignment. This Note and the other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Note and the other Loan Documents are freely
assignable, in whole or in part, by Bank. In addition, nothing in this Note or
any of the other Loan Documents shall prohibit Bank from pledging or assigning
this Note or any of the other Loan Documents or any interest therein to any
Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Bank, and any attempt by Borrower
to assign without Bank's prior written consent is null and void. Any assignment
shall not release Borrower from the Obligations. Applicable Law; Conflict
Between Documents. This Note and the other Loan Documents shall be governed by
and construed under the laws of the state named in Bank's address shown above
without regard to that state's conflict of laws principles. If the terms of this
Note should conflict with the terms of the Loan Agreement or any commitment
letter that survives closing, the terms of this Note shall control. Borrower's
Accounts. Except as prohibited by law, Borrower grants Bank a security interest
in all of Borrower's accounts with Bank and any of its affiliates. Jurisdiction.
Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state
named in Bank's address shown above. Severability. If any provision of this Note
or of the other Loan Documents shall be prohibited or invalid under applicable
law, such provision shall be ineffective but only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note or other such document. Notices. Any
notices to Borrower shall be sufficiently given, if in writing and mailed or
delivered to the Borrower's address shown above or such other address as
provided hereunder, and to Bank, if in writing and mailed or delivered to Bank's
office address shown above or such other address as Bank may specify in writing
from time to time. In the event that Borrower changes Borrower's address at any
time prior to the date the Obligations are paid in full, Borrower agrees to
promptly give written notice of said change of address by registered or
certified mail, return receipt requested, all charges prepaid. Plural; Captions.
All references in the Loan Documents to Borrower, guarantor, person, document or
other nouns of reference mean both the singular and plural form, as the case may
be, and the term "person" shall mean any individual, person or entity. The
captions contained in the Loan Documents are inserted for convenience only and
shall not affect the meaning or interpretation of the Loan Documents. Advances.
Bank may, in its sole discretion, make other advances which shall be deemed to
be advances under this Note, even though the stated principal amount of this
Note may be exceeded as a result thereof. Posting of Payments. All payments
received during normal banking hours after 2:00 p.m. local time at the office of
Bank first shown above shall be deemed received at the opening of the next
banking day. Joint and Several Obligations. Each person who signs this Note is a
Borrower and is jointly and severally obligated. Fees and Taxes. Borrower shall
promptly pay all documentary, intangible recordation and/or similar taxes on
this transaction whether assessed at closing or arising from time to time.
4
<PAGE>
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of
or relating to the Loan Documents between parties hereto (a "Dispute") shall be
resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may include, without limitation, tort claims, counterclaims, a dispute as to
whether a matter is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A judgment upon the award
may be entered in any court having jurisdiction. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements. Special Rules. All arbitration hearings shall be conducted in the
city named in the address of Bank first stated above. A hearing shall begin
within 90 days of demand for arbitration and all hearings shall conclude within
120 days of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then for no more than a total of 60
days. The expedited procedures set forth in Rule 51 et seq. of the Arbitration
Rules shall be applicable to claims of less than $1,000,000.00. Arbitrators
shall be licensed attorneys selected from the Commercial Financial Dispute
Arbitration Panel of the AAA. The parties do not waive applicable Federal or
state substantive law except as provided herein. Preservation and Limitation of
Remedies. Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that any party
may exercise before or after an arbitration proceeding is brought. The parties
shall have the right to proceed in any court of proper jurisdiction or by
self-help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other security
by exercising a power of sale or under applicable law by judicial foreclosure
including a proceeding to confirm the sale; (ii) all rights of self- help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment. Any
claim or controversy with regard to any party's entitlement to such remedies is
a Dispute. Waiver of Exemplary Damages. The parties agree that they shall not
have a remedy of punitive or exemplary damages against other parties in any
Dispute and hereby waive any right or claim to punitive or exemplary damages
they have now or which may arise in the future in connection with any Dispute
whether the Dispute is resolved by arbitration or judicially. Waiver of Jury
Trial. THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE
IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY TRIAL WITH REGARD TO A
DISPUTE.
IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be executed under seal.
FLORIDA ROCK INDUSTRIES, INC.
Taxpayer Identification Number:
-----------------
CORPORATE By: /s/ James J. Gilstrap
SEAL ---------------------------------------------
James J. Gilstrap
Vice President, Treasurer and
Chief Financial Officer
5
Exhibit 99.1
[Florida Rock Logo]
FLORIDA ROCK INDUSTRIES, INC/NEWS
Contact: James J. Gilstrap
Vice President, Treasurer & CFO 904/355/1781, Ext. 263
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FLORIDA ROCK INDUSTRIES, INC. ANNOUNCES AGREEMENT TO PURCHASE HARPER BROS., INC.
Jacksonville, Florida; May 21, 1999 - Florida Rock Industries, Inc. (NYSE-FRK)
FLORIDA ROCK INDUSTRIES, INC. announced today that it had signed a contract to
acquire all the common stock of Harper Bros., Inc., an aggregate mining and
highway and heavy construction company located in Fort Myers, Florida in a cash
transaction for $87 million. The purchase price is subject to certain closing
adjustments related to working capital. The transaction is scheduled to close
within the next 30 days.
Prior to closing, Florida Rock Industries will enter into a consent with the
Department of Justice to divest Florida Rock's existing Fort Myers quarry as
well as Harper Bros., Inc.'s sand mine located in adjacent Glades County,
Florida. In addition, Florida Rock anticipates divesting the highway and heavy
construction business acquired in the transaction.
Harper Bros., Inc. is a leading supplier of aggregates in southwest Florida and
is in the process and has virtually completed the process of doubling the size
of its aggregates finishing plant. The transaction, when completed, will add net
of divestitures, approximately 120 million tons of aggregate reserves to
existing reserves.
Commenting on the transaction, John D. Baker II, President and Chief Executive
Officer of Florida Rock Industries, Inc. stated, "The Harper Bros., Inc.
acquisition will give the Company a state of the art modern plant, with
substantial permitted reserves adjacent to other non-permitted reserves owned or
leased by the Company, and represents a significant long-term strategic move by
the Company assuring our ability to compete aggressively in Southwest Florida
for the long-term."
Florida Rock Industries, Inc. is a major provider of construction aggregates and
concrete and concrete products in the Southeastern and Mid-Atlantic States.
Investors are cautioned that any statements in this press release which relate
to the future are, by their nature, subject to risks and uncertainties that
could cause actual results and events to differ materially from those indicated
in such forward-looking statements. These include general business conditions,
competitive factors, political, economic, regulatory, climatic, pricing, energy
costs and technological contingencies. Additional information regarding these
and other risk factors and uncertainties may be found in the Company's filings
with the Securities and Exchange Commission.
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155 East 21st Street / P. O. Box 4667 /
Jacksonville, Florida 32201 / (904) 355-1781
Exhibit 99.2
[Florida Rock Logo]
FLORIDA ROCK INDUSTRIES, INC/NEWS
Contact: James J. Gilstrap
Vice President, Treasurer & CFO 904/355/1781, Ext. 263
- --------------------------------------------------------------------------------
FLORIDA ROCK INDUSTRIES, INC. COMPLETES ACQUISITION OF HARPER BROS., INC.
Jacksonville, Florida; June 1, 1999 - Florida Rock Industries, Inc. (NYSE-FRK)
FLORIDA ROCK INDUSTRIES, INC. ("Company") today announced that it has completed
the purchase of all the outstanding common stock of Harper Bros., Inc., an
aggregate mining and highway and heavy construction company located in Fort
Myers, Florida for $87,000,000 in cash. The purchase price is subject to certain
post-closing adjustments related to working capital. The Company financed this
transaction with its $75 million revolving credit facility and short term lines
of credit. Florida Rock did not assume any long-term debt of Harper Bros. as
part of the transaction.
The Company is under a six month consent order with the Department of Justice to
divest Florida Rock's existing Fort Myers Alico Road quarry lease and plant
operation as well as Harper Bros., Inc.'s Palmdale sand mine lease and plant
operation located in adjacent Glades County, Florida. The Company is in
discussions with a buyer for the highway and heavy construction operations of
Harper Bros., Inc.
Harper Bros., Inc. is a leading supplier of aggregates in southwest Florida and
has substantially completed the process of doubling the size of its existing
aggregates finishing plant. The transaction, net of divestitures, adds in excess
of 120 million tons of permitted aggregate reserves to the Company's existing
adjacent reserves.
Commenting on the transaction, John D. Baker II, President and Chief Executive
Officer of Florida Rock Industries, Inc. stated, "The acquisition of Harper
Bros., Inc. represents a significant strategic move by the Company assuring our
ability to compete in Southwest Florida for the long-term."
Florida Rock Industries, Inc. is the nation's fifth largest producer of
construction aggregates and a leading provider of concrete and concrete producer
in the Southwestern and Mid-Atlantic States.
Investors are cautioned that any statements in this press release which relate
to the future are, by their nature, subject to risks and uncertainties that
could cause actual results and events to differ materially from those indicated
in such forward-looking statements. These include general business conditions,
competitive factors, political, economic, regulatory, climatic, pricing, energy
costs and technological contingencies. Additional information regarding these
and other risk factors and uncertainties may be found in the Company's filings
with the Securities and Exchange Commission.
