Stock Purchase Agreement (225K)
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STOCK PURCHASE AGREEMENT
________________________
This Stock Purchase Agreement is entered into as of
July 2, 2003 by and between LAFARGE NORTH AMERICA INC., a
Maryland corporation ("Seller"), and FLORIDA ROCK INDUSTRIES,
INC., a Florida corporation ("Buyer"; and, together with Seller,
the "Parties").
R E C I T A L S
_______________
WHEREAS, Seller owns all of the issued and outstanding
capital stock of Lafarge Florida Inc., a Florida corporation (the
"Company"); and
WHEREAS, Seller desires to sell, and Buyer desires to
purchase, all of the issued and outstanding stock of the Company
for the consideration described herein.
A G R E E M E N T
_________________
In consideration of the mutual promises contained
herein and intending to be legally bound, the Parties agree as
follows:
ARTICLE I
DEFINITIONS
___________
1.1 Definitions.
________________
For all purposes of this Agreement and the Exhibits and
Schedules delivered pursuant to this Agreement, and except as
otherwise expressly provided, the following definitions shall
apply:
"AAA" has the meaning set forth in Section 12.20(a).
"Accounting Firm" means PricewaterhouseCoopers LLP (or,
if such firm shall decline or is unavailable or is not, at the
time of such submission, independent of each of the Parties,
another independent nationally recognized accounting firm
mutually acceptable to the Parties).
"Action" means any action, arbitration, audit, hearing,
complaint, petition, investigation, suit or other proceeding,
whether civil, criminal, administrative, investigative or
informal, in law or in equity, before any arbitrator or
Governmental Entity.
"Adjusted Working Capital" means, as of any date, the
assets of the Company that are identified on SCHEDULE 1 to
EXHIBIT A minus the liabilities of the Company that are
identified on SCHEDULE 1 to EXHIBIT A, which shall be prepared in
accordance with GAAP (except as noted on EXHIBIT A) and in a
manner consistent with the policies and principles used in
preparing the Reference Balance Sheet, after giving effect to the
exclusions and adjustments set forth on EXHIBIT A.
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"Affiliate" means, with respect to a specified Person,
a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the specified Person. For the purposes of this
definition, "control" means the power to direct or cause the
direction of the management or policies of such Person, whether
through the ownership of voting securities, by contract or
otherwise.
"Affiliated Group" means any affiliated group as
defined under 1504(a) of the Code or any similar group as
defined under a similar provision of Law.
"Agreement" means this Agreement as amended or
supplemented together with all Exhibits and Schedules attached
hereto or expressly incorporated herein by reference.
"Allocation" has the meaning set forth in Section
7.9(b).
"Approval" means any approval, authorization, license,
permit, consent, qualification, registration or other
authorization, or any extension, modification, amendment or
waiver of any of the foregoing, required to be obtained from any
Governmental Entity.
"Business" means the business of the Company, taken as
a whole, but excluding the Tampa Terminal Facility.
"Business Day" means a day (excluding Saturday and
Sunday) on which banks generally are open for the transaction of
business in New York City.
"Buyer" has the meaning set forth in the Preamble
hereto.
"Buyer DB Plan" has the meaning set forth in Section
6.1(b).
"Buyer DC Plan" has the meaning set forth in Section
6.1(b).
"Buyer Union DC Plan" has the meaning set forth in
Section 6.1(b).
"Buyer Group" has the meaning set forth in Section 7.5.
"Buyer's Representatives" has the meaning set forth in
Section 4.2.
"Closing" has the meaning set forth in Section 2.4(a).
"Closing Date" has the meaning set forth in Section
2.4(b).
"Closing Date Statement" has the meaning set forth in
Section 2.2(c).
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" has the meaning set forth in the Recitals
hereto.
"Company Benefit Plans" has the meaning set forth in
Section 6.1(d).
"Company Employee" has the meaning set forth in Section
3.1(j)(1).
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"Competing Business" means any of the following: (i)
operation of a terminal that imports Portland cement or slag,
(ii) the sale of Portland cement or slag; or (iii) the operation
of a facility for manufacturing cement.
"Confidentiality Agreement" has the meaning set forth
in Section 4.1.
"Contract" means any legally binding agreement,
contract, obligation, arrangement, purchase and sale order, bond,
commitment, franchise, indemnity, indenture or lease (whether or
not written).
"Disclosure Schedules" means the Schedules dated the
date of this Agreement and delivered contemporaneously herewith
or on or before the Closing Date relating to this Agreement, as
they may be amended from time to time in accordance with the
terms of this Agreement.
"Employee Plans" has the meaning set forth in Section
3.1(j)(3).
"Environmental Laws" means all federal, state, local,
and foreign statutes, regulations, ordinances, and other
provisions having the force or effect of law, all judicial and
administrative orders and binding determinations and all common
law concerning pollution or protection of the environment or the
protection of human health from pollution, including all those
relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials,
substances, or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls or
radiation.
"Equity Securities" means any capital stock or other
equity interest or any securities convertible into or
exchangeable for capital stock, or any other rights, warrants or
options to acquire any of the foregoing securities.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section
3.1(j)(3).
"Estimated Adjusted Working Capital" has the meaning
set forth in Section 2.2(b).
"Exercise Price" has the meaning set forth in Section
5.10.
"E&Y" means Ernst & Young LLP, independent auditors.
"Final Adjusted Working Capital" has the meaning set
forth in Section 2.2(c).
"Final Determination" means the final resolution of
liability for any Tax for a taxable period: (i) by IRS Form 870
or 870-AD (or any successor forms thereto), on the date of
acceptance by or on behalf of the taxpayer, or by a comparable
form under the laws of other jurisdictions, except that a Form
870 or 870-AD or comparable form that reserves (whether by its
terms or by operation of law) the right of the taxpayer to file a
claim for refund and/or the right of the taxing authority to
assert a further deficiency shall not constitute a Final
Determination; (ii)
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by a decision, judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable; (iii) by a
closing agreement or accepted offer in compromise under Section 7121
or 7122 of the Code, or comparable agreements under the laws of
other jurisdictions; (iv) by any allowance of a refund or credit
in respect of an overpayment of Tax, but only after the expiration
of all periods during which such refund may be recovered (including
by way of offset) by the Tax imposing jurisdiction; or (v) by any other
final disposition, including by reason of the expiration of the
applicable statute of limitations or by mutual agreement of the
Parties.
"GAAP" means generally accepted accounting principles
in effect from time to time in the United States, as consistently
applied by Seller.
"Governmental Entity" means any government or any
governmental or quasi-governmental agency, bureau, board,
commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether
federal, state or local, domestic or foreign, or any other Person
exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the related
regulations and published interpretations.
"Included Claims" has the meaning set forth in Section
11.5(a).
"Indemnifiable Claim" means any claim of an
Indemnifiable Loss for or against which any party is entitled to
indemnification under this Agreement.
"Indemnifiable Loss" means any claim, judgment, cost,
damage, disbursement, expense, liability, loss, deficiency,
obligation, Tax, Lien, penalty, fine or settlement of any kind or
nature, including reasonable legal, accounting and other
professional fees and expenses and amounts paid in settlement,
that are actually imposed on or otherwise actually incurred or
suffered by the specified Person.
"Indemnified Party" means the party entitled to
indemnification hereunder.
"Indemnifying Party" means the party obligated to
provide indemnification hereunder.
"Intellectual Property" has the meaning set forth in
Section 3.1(t).
"IRB Indenture" has the meaning set forth in Section
4.10.
"IRS" means the Internal Revenue Service or any
successor entity.
"Law" means any constitutional provision, statute or
other law, rule, regulation, principle of common law, treaty or
interpretation of any Governmental Entity and any Order.
"Leases" has the meaning set forth in Section
3.1(e)(2).
"Lien" means any lien, pledge, charge, equitable
interest, option, mortgage, hypothecation, deed of trust,
security interest, right of first refusal or first offer or
restriction of any kind, including any restriction on use,
voting, transfer, receipt of income or exercise of any
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other attribute of ownership, or other encumbrance, except for any
restrictions on transfer generally arising under any applicable
federal or state securities law.
"Material Adverse Effect" means a material adverse
change in or effect on the business, operations, assets, results
of operations or financial condition of the Company, the Tampa
Grinding Site and the Port Manatee Site, taken as a whole, but
excluding any such effect caused by, resulting from or arising as
a result of any fact, circumstance or condition that (i) is
generally applicable to the industry in which the Company
operates but that does not have a materially disproportionate
effect on the Company, taken as a whole, (ii) is generally
applicable to the United States economy or securities markets,
(iii) is set forth in a Schedule hereto as of the date of this
Agreement, or (iv) except with respect to Approvals and Permits,
results from the execution of this Agreement, the announcement of
this Agreement, the consummation of the transactions contemplated
hereby or the identity of Buyer.
"Material Contract" has the meaning set forth in
Section 3.1(d).
"Multiemployer Plan" has the meaning set forth in
Section 3.1(j)(4).
"Noncompete Period" has the meaning set forth in
Section 5.7(a).
"Nonsolicitation Period" has the meaning set forth in
Section 5.7(b).
"Option" has the meaning set forth in Section 5.10.
"Order" means any binding and enforceable award,
decision, decree, injunction, judgment, order, ruling, subpoena,
assessment or writ issued by a Governmental Entity.
"Original Schedules" has the meaning set forth in
Section 4.4.
"Other Party" has the meaning set forth in Section 7.7.
"Other Taxes" has the meaning set forth in Section
7.2(a).
"Other Tax Returns" has the meaning set forth in
Section 7.1(a).
"Parties" has the meaning set forth in the Preamble
hereto.
"PBGC" means the Pension Benefit Guaranty Corporation
or any successor thereto.
"Permit" means any license, permit, franchise,
certificate of authority or order, or any extension,
modification, amendment or waiver of the foregoing, required to
be issued by any Governmental Entity.
"Permitted Liens" means: (i) Liens for current Taxes
not yet due and payable; (ii) mechanics', materialmen's,
carriers', workers', repairers', maritime and statutory liens and
rights in rem and other similar Liens arising or incurred in the
ordinary and usual course of business for amounts that are not
yet due and payable as of the Closing Date; (iii) zoning,
entitlement and other land use and environmental regulations by
Governmental Entities; (iv) such easements, covenants,
conditions, restrictions, agreements, states of fact, rights of
way and other matters or encumbrances of record that do not
materially adversely affect the current use of the
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real or personal property of the Company; (v) the leases and related
tenancy matters set forth on SCHEDULE 1.1A hereto; and (vi) Liens
reflected in those Material Contracts listed on SCHEDULE 3.1(d).
"Person" means an association, a corporation, an
individual, a partnership, a joint venture, a limited liability
company, a limited liability partnership, a trust or any other
entity or organization, including a Governmental Entity.
"Personal Property" has the meaning set forth in
Section 3.1(f).
"Port Authority Lease" means the Lease Agreement dated
April 27, 1978 between Manatee County Port Authority and the
Company, as amended by the Port Manatee Lease Modification
Agreement, dated May 3, 1990, between Manatee County Port
Authority and the Company and the Port Manatee Lease Modification
Agreement, dated January 20, 2000, between Manatee County Port
Authority and the Company, pursuant to which the Company leases
the Port Manatee Site.
"Port Manatee Site" means the site leased by the
Company pursuant to the Port Authority Lease, located in Port
Manatee, Florida as more fully described on SCHEDULE 1.1B hereto.
"Post-Closing Taxable Period" has the meaning set forth
in Section 7.1(c).
"Pre-Closing Covenants" has the meaning set forth in
Section 11.4.
"Pre-Closing Taxable Periods" has the meaning set forth
in Section 7.1.
"Property" means, collectively or individually, the
Tampa Grinding Site and the Port Manatee Site.
"Proposed Final Adjusted Working Capital" has the
meaning set forth in Section 2.2(c).
"Purchase Price" has the meaning set forth in Section
2.2(a).
"Reference Balance Sheet" means the balance sheet of
the Company at December 31, 2002, a copy of which is attached to
SCHEDULE 3.1(b)(1) hereto.
"Responsible Party" has the meaning set forth in
Section 7.7.
"Rinker Entity" has the meaning set forth in Section
5.8.
"Section 338(h)(10) Election" has the meaning set forth
in Section 7.9(a).
"Securities Act" means the Securities Act of 1933, as
amended.
"Seller" has the meaning set forth in the Preamble
hereto.
"Seller Affiliated Group" has the meaning set forth in
Section 3.1(c)(5).
"Seller DB Plan" has the meaning set forth in Section
6.1(b).
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"Seller DC Plan" has the meaning set forth in Section
6.1(b).
"Seller Group" has the meaning set forth in Section
7.5.
"Seller Marks" has the meaning set forth in Section
5.3(a).
"Seller Patents" has the meaning set forth in Section
5.4.
"Seller's Representatives" has the meaning set forth in
Section 4.2.
"Stock" means the capital stock of the Company.
"Straddle Periods" has the meaning set forth in Section
7.1.
"Subsidiary" means, with respect to any Person, any
Person in which such Person has a direct or indirect equity or
ownership interest in excess of 50%, including all Subsidiaries
of such Subsidiary.
"Supply Contract" means a Portland Cement and New Cem
Supply Contract dated as of the Closing Date, substantially in
the form attached hereto as EXHIBIT B.
"Tampa Grinding Site" means the site owned by Seller,
located in Tampa, Florida as more fully described on SCHEDULE
1.1C hereto.
"Tampa Terminal Facility" means the import terminal
facility owned by Seller, located in Tampa, Florida as more fully
described on SCHEDULE 1.1D hereto.
"Target Adjusted Working Capital" means
U.S.$12,500,000.
"Tax" or "Taxes" means any federal, state, local, or
foreign income, gross receipts, license, payroll, employment,
excise, severance stamp, occupation, premium, windfall profits,
environmental (including taxes under 459A of the Code), customs
duties, capital stock, franchise, profits, withholding, social
security (or similar tax), unemployment, disability, real
property, personal property sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not and including any
obligations to indemnify or otherwise assume or succeed to the
Tax liability of any other Person.
"Tax Deficiency" means an assessment of Taxes as a
result of a Final Determination.
"Tax Item" shall mean any item of income, gain, loss,
deduction, credit, provisions for reserves, recapture of credit
or any other item which increases or decreases Taxes paid or
payable, including an adjustment under Code Section 481 resulting
from a change in accounting method.
"Tax Refund" shall mean a refund of Taxes as the result
of a Final Determination.
"Tax Return" means any return, declaration, report or
similar statement required to be filed with respect to any Taxes
(including any attached schedules), including any
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information return, claim for refund, declaration of estimated Tax,
and any amendment to any of the foregoing.
"Territory" means the following counties in Florida:
Brevard, Charlotte, Collier, De Soto, Glades, Hardee, Hendry,
Hernando, Higlands, Hillsborough, Lee, Manatee, Monroe, Orange,
Osceola, Pasco, Pinellas, Polk, Sarasota and Seminole.
"Union" has the meaning set forth in Section 6.1(a).
"U.S.$" means the lawful currency of the United States
of America.
"WARN" means the Worker Adjustment and Retraining
Notification Act.
ARTICLE II
PURCHASE AND SALE/CLOSING
_________________________
2.1 Purchase and Sale.
______________________
Upon the terms and subject to the conditions
hereinafter set forth, Seller agrees to sell the issued and
outstanding Stock, and to deliver the certificate evidencing the
Stock, to Buyer, and Buyer agrees to purchase such Stock from
Seller, for the consideration hereinafter set forth. The
certificates will be properly endorsed for transfer to or
accompanied by a duly executed stock power in favor of Buyer or
its nominee as Buyer may have directed at least two Business Days
prior to the Closing Date and otherwise in a form acceptable for
transfer on the books of the Company.
2.2 Purchase Price and Adjustments.
___________________________________
(a) Subject to the terms and conditions of this Agreement
(including adjustments to the Purchase Price described in this
Section 2.2), the aggregate purchase price for the Stock shall be
an amount equal to U.S.$122,240,000 (the "Purchase Price"). At
the Closing, the Purchase Price shall be adjusted as provided
herein to reflect the difference between the Target Adjusted
Working Capital and the Estimated Adjusted Working Capital. Any
payments under this Section 2.2 made on the Closing Date shall be
made by wire transfer of immediately available funds in U.S.
Dollars on the Closing Date to an account designated by Seller to
Buyer at least one Business Day prior to the Closing Date.
(b) Not less than two Business Days prior to the Closing Date,
Seller will give to Buyer a good faith estimate of the Adjusted
Working Capital as of the Closing Date, which shall be prepared
in accordance with GAAP (except as noted on EXHIBIT A) and in a
manner consistent with the policies and principles used in
connection with the preparation of the Reference Balance Sheet
(the "Estimated Adjusted Working Capital"). If the Estimated
Adjusted Working Capital is (i) greater than the Target Adjusted
Working Capital, the Purchase Price payable at the Closing will
be increased by the difference between the Estimated Adjusted
Working Capital and the Target Adjusted Working Capital or (ii)
less than the Target Adjusted Working Capital, the Purchase Price
payable at the Closing will be decreased by the difference
between the Estimated Adjusted Working Capital and the Target
Adjusted Working Capital.
(c) Promptly following the Closing Date, but in no event later
than sixty days after the Closing Date, Seller shall prepare and
submit to Buyer a statement (the "Closing Date Statement")
setting forth, in reasonable detail, Seller's calculation of the
Adjusted Working
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Capital as of the Closing Date which shall be prepared in accordance
with GAAP (except as noted on EXHIBIT A) and in a manner consistent with
the policies and principles used in connection with the preparation
of the Reference Balance Sheet (provided, however, that in determining
the Closing Date Statement, the exclusions and adjustments set forth
on EXHIBIT A shall be given effect) (the "Proposed Final Adjusted Working
Capital"). The Closing Date Statement will be accompanied by a
report of E&Y based upon a review of the Closing Date Statement
stating that such statement presents fairly, in all material
respects, the Adjusted Working Capital presented on such
statement as provided for in this Agreement as of the Closing
Date applied in accordance with GAAP (except as noted on EXHIBIT
A) and on a basis consistent with the policies and principles
used in connection with the preparation of the Reference Balance
Sheet after giving effect to the exclusions and adjustments set
forth on EXHIBIT A. All fees and expenses of E&Y in reviewing
the Closing Date Statement shall be borne by Seller. Buyer shall
and shall cause the Company and their respective employees and
agents to assist Seller and E&Y in the preparation of the Closing
Date Statement and shall provide Seller and E&Y access at all
reasonable times to the personnel, properties, books and records
of the Company for such purpose and for the other purposes set
forth in this Section 2.2, in each case, without cost to Seller.
In the event Buyer disputes the correctness of the Proposed Final
Adjusted Working Capital, Buyer shall notify Seller in writing of
its objections within thirty (30) days after receipt of the
Closing Date Statement and shall set forth, in writing and in
reasonable detail, the reasons for Buyer's objections. Buyer
agrees that any adjustments proposed in accordance with the
foregoing will not involve changes in or challenges to Seller's
accounting methodologies, policies or procedures that have been
consistently applied with respect to the Reference Balance Sheet
and the Closing Date Statement and that are identified on EXHIBIT
A. Any proposed adjustments by Buyer shall be accompanied by a
certificate of an independent public accounting firm that is
nationally recognized in the United States (other than the
Accounting Firm), stating that such adjustments are required for
the Closing Date Statement to comply with the accounting
methodologies used in the preparation of the Reference Balance
Sheet after giving effect to the exclusions and adjustments set
forth on EXHIBIT A. If Buyer fails to deliver its notice of
objections within thirty (30) days after receipt of the Closing
Date Statement, Buyer shall be deemed to have accepted Seller's
calculation. To the extent Buyer does not object, in writing in
accordance with and within the time period contemplated by this
Section 2.2(c), to a matter in the Closing Date Statement, Buyer
shall be deemed to have accepted Seller's calculation and
presentation in respect of the matter and the matter shall not be
considered to be in dispute. Seller and Buyer shall endeavor in
good faith to resolve any disputed matters within fifteen days
after receipt of Buyer's notice of objections. If Seller and
Buyer are unable to resolve the disputed matters, Seller and
Buyer shall refer the disputed matters to the Accounting Firm,
and the determination of the Accounting Firm in respect of the
correctness of each matter remaining in dispute shall be
conclusive and binding on Seller and Buyer. The Accounting Firm
shall prepare and deliver to Seller and Buyer a written report
explaining its determination within thirty days after the dispute
has been referred to the Accounting Firm. The determination of
the Accounting Firm shall be based solely on written submissions
by Seller and Buyer and shall not be by independent review. The
Adjusted Working Capital as of the Closing Date, as finally
determined pursuant to this Section 2.2(c) (whether by failure of
Buyer to deliver notice of objection, by agreement of Seller and
Buyer or by determination of the Accounting Firm), is referred to
herein as the "Final Adjusted Working Capital."
(d) If the Final Adjusted Working Capital exceeds the
Estimated Adjusted Working Capital, Buyer shall pay to Seller the
amount of such difference, with simple interest thereon from the
Closing Date to the date of payment at a fixed rate per annum equal
to 3%. If the Estimated Adjusted Working Capital exceeds the Final
Adjusted Working Capital, Seller shall pay to Buyer the amount of
such difference, with simple interest thereon from the Closing
Date to
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the date of payment at a fixed rate per annum equal to
3%. Such payment shall be made in immediately available funds
not later than ten Business Days after the determination of the
Final Adjusted Working Capital by wire transfer to a bank account
designated in writing to the Party entitled to receive the
payment.
(e) Subject to any applicable privileges (including the
attorney-client privilege), Seller shall make available to Buyer and,
upon request, to the Accounting Firm retained in accordance with
Section 2.2(c), the books, records, documents and work papers
underlying the preparation of the Closing Date Statement.
Subject to any applicable privileges (including the attorney-
client privilege), Buyer shall make available to Seller and, upon
request, to the Accounting Firm retained in accordance with
Section 2.2(c), the books, records, documents and work papers
created or prepared by or for Seller in connection with the
review of the Closing Date Statement.
(f) The fees and expenses, if any, of the Accounting Firm
retained in accordance with Section 2.2(c) to resolve any dispute
shall be paid one-half by Buyer and one-half by Seller.
(g) In the event that the Accounting Firm is requested to
resolve any dispute pursuant to this Section 2.2, any hearings in
connection with such dispute resolution shall be held in Herndon,
Virginia.
2.3 Intentionally Omitted.
__________________________
2.4 The Closing.
________________
(a) Unless this Agreement shall have been terminated
pursuant to Article X hereof, the transactions contemplated by this
Agreement shall take place at a closing (the "Closing") to be held
at the offices of O'Melveny & Myers LLP, 1650 Tysons Boulevard, Suite
1150, McLean, Virginia, or at such other location as may be
agreed upon in writing by Seller and Buyer.
(b) The Closing shall take place at 10:00 a.m. on the
third Business Day following the satisfaction or waiver of the
conditions to the transactions contemplated by this Agreement
contained in Article VIII (other than conditions which, by their
nature, are to be satisfied on the Closing Date), or on such
other date as may be agreed upon in writing by Buyer and Seller
(the date on which the Closing occurs is herein referred to as
the "Closing Date").
(c) All proceedings to be taken and all documents to be
executed and delivered by all Parties at the Closing shall be deemed
to have been taken and executed simultaneously, and no proceedings
shall be deemed taken nor any documents executed or delivered
until all have been taken, executed and delivered.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
______________________________
3.1 Representations and Warranties of Seller.
_____________________________________________
Except as otherwise indicated on the Disclosure
Schedules hereto, Seller represents and warrants as of the date
hereof and as of the Closing Date as follows:
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(a) Organization and Related Matters; Stock.
_______________________________________
(1) Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Maryland
and the Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Florida.
Seller has all necessary corporate power and authority to
execute, deliver and perform this Agreement and the Supply
Contract. The Company has no Subsidiaries. The Company has all
necessary corporate power and authority to own its properties and
assets and to carry on its business as now conducted (including
performing its obligations under all Material Contracts) and is
duly qualified to do business in all jurisdictions in which the
nature of its business requires it to be so qualified, except
where the failure to be so qualified would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect. Seller has made available to Buyer copies of the
Certificate of Incorporation and Bylaws of the Company as in
effect as of the date hereof. No business activities related to
the Business are currently conducted by the Company at the Tampa
Terminal Facility.
(2) Seller owns, beneficially and of record, all of
the issued and outstanding Stock. Other than the Stock, there are no
outstanding Equity Securities of the Company. All of such Equity
Securities of the Company are owned by Seller free and clear of
any Lien except as set forth on SCHEDULE 3.1(a). The authorized
capital stock of the Company and the number of shares of capital
stock of the Company outstanding is set forth on SCHEDULE 3.1(a).
Except as contemplated hereby, there are no outstanding Contracts
or other rights to subscribe for or purchase, or Contracts or
other obligations to issue or transfer or grant any rights to
acquire, any Equity Securities of the Company. Except as
contemplated hereby, there are no outstanding Contracts of Seller
or the Company to repurchase, redeem or otherwise acquire, or
affecting the voting rights of, or requiring the registration for
sale of, any Equity Securities of the Company. All outstanding
Equity Securities of the Company are duly authorized, validly
issued and outstanding and are fully paid and nonassessable.
There are no preemptive rights in respect of any Equity
Securities of the Company. Seller is not a party to any voting
trust, proxy or other agreement or understanding with respect to
the voting of the Stock.
(b) Financial Statements; Changes.
_____________________________
(1) FINANCIAL STATEMENTS. The financial statements
that are attached hereto as SCHEDULE 3.1(b)(1), consisting of financial
statements at and for the year ended December 31, 2002 (including
the Reference Balance Sheet) were prepared in accordance with
GAAP (except as noted on EXHIBIT A), and present fairly, in all
material respects, the financial position of the Company as at
December 31, 2002 and the results of operations and cash flows of
the Company for the year ended December 31, 2002, on a basis
consistent with such accounting methodologies, policies and
procedures.
(2) CERTAIN CHANGES. Except as set forth on SCHEDULE
3.1(b)(2), from December 31, 2002 to the date hereof, there has not been,
occurred or arisen any change in or event, fact or circumstance
that has had a Material Adverse Effect or a material adverse
effect on the ability of Seller to perform its obligations
hereunder.
(c) Tax Returns.
___________
(1) Except as set forth on SCHEDULE 3.1(c), all material
Tax Returns required to be filed on or prior to the Closing Date by
or on behalf of the Company have been or will be filed prior to
the Closing Date, are complete and accurate in all material
respects and have
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been prepared in substantial compliance with all applicable laws and
regulations, and all Taxes due or claimed to be due pursuant thereto
(whether or not reflected on any Tax Return) have been or will be
paid prior to the Closing Date.
(2) There are no Liens with respect to any Taxes upon
any of the assets or properties of the Company, other than with respect
to Taxes not yet due and payable.
(3) Except as set forth on SCHEDULE 3.1(c), no extension
of time to file any Tax Return has been granted to the Company. No claim
has ever been made by an authority in any jurisdiction where the
Company does not file Tax Returns that it is or may be subject to
taxation by such jurisdiction. Neither the Company nor Seller
expects any authority to assess any additional Taxes for any
period for which the Tax Returns have been filed.
(4) The Company has withheld and paid all Taxes required
to have been withheld and paid in connection with any amounts paid or
owing to any employee, independent contractor, creditor,
stockholder or other third party.
(5) Except as set forth on SCHEDULE 3.1(c), no material
issue relating to Taxes of the Company (A) has been raised in writing
by any taxing authority in any audit or examination, or (B) is a
material issue with respect to which Seller has knowledge that
would result in a proposed adjustment or assessment by a
Governmental Entity in a taxable period (or portion thereof)
ending on or before the Closing Date.
(6) Except as set forth on SCHEDULE 3.1(c), no audit or
other proceeding by any Governmental Entity has formally commenced and
no written notification has been given to the Company or the
Seller that such an audit or other proceeding is pending or
threatened with respect to any material Taxes due from the
Company or any Tax Return filed by or with respect to the Company
for any material amount of Taxes. Except as set forth on
SCHEDULE 3.1(c), no assessment of Tax has been proposed in
writing against the Company or any of its assets or properties.
No waiver or extension of any statute of limitations is in effect
with respect to Taxes or Tax Returns of the Company. There is no
dispute or claim with any taxing authority concerning any Tax
liability of the Company either (A) claimed or raised by any
taxing authority in writing or (B) as to which Seller has
knowledge.
(7) Except as set forth on SCHEDULE 3.1(c), the Company
has not been a member of an affiliated group filing a consolidated
federal income Tax Return for which any statute of limitations
has not expired (other than a group of which Seller is or was the
common parent (the "Seller Affiliated Group")) and no claim for
liability has been asserted against the Company for the Taxes of
any Person pursuant to Treasury Regulation Section 1.1502-6(a)
(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract or otherwise, which claim
has not been finally resolved as of the date hereof.
(8) The Company is not (nor has it ever been) a party
to any tax sharing agreement and has not assumed the liability of any
other Person under contract or otherwise.
(9) No member of the Seller Affiliated Group is a party
to any safe harbor lease within the meaning of Section 168(f)(8) of the
Code, as in effect prior to amendment by the Tax Equity and
Fiscal Responsibility Act of 1982.
(10) Neither the Company nor Seller is a "foreign person"
(as that term is defined in Section 1445 of the Code).
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(11) Neither Seller nor the Company has entered into any
compensatory agreements with respect to the performance of
services for which payment thereunder would result in a
nondeductible expense pursuant to Section 280G of the Code or an
excise tax to the recipient of such payment pursuant to Section
4999 of the Code.
(12) The Company is not a party to any agreement,
contract, arrangement or plan that has resulted or would result,
whether separate from or in the aggregate with the Seller Affiliated
Group, in the payment of any amount that will not be fully
deductible as a result of Section 162(m) of the Code (or any
corresponding provision of state, local or foreign Tax law).
(13) The Company has not agreed, nor is it required to
make, any adjustment under Code Section 481(a) by reason of a change in
accounting method or otherwise.
(14) SCHEDULE 3.1(c) contains an accurate and complete
description of the Company's basis in its assets, the Company's
current and accumulated earnings and profits, the Company's Tax
carryovers, excess loss accounts in the Company group, and any
Tax elections made by any member of the Seller Affiliated Group
affecting the Company.
(15) Neither Seller nor the Company has been a party
to a distribution of stock intended to qualify as a spin-off
transaction under Section 355 of the Code during the past three
years.
(d) Material Contracts.
__________________
SCHEDULE 3.1(d) contains a list, as of the date of this
Agreement, of each Contract (each of which shall be deemed a
"Material Contract") to which the Company is a party (or, with
respect to Contracts to be assigned to the Company by any of its
Affiliates, will prior to the Closing be a party):
(1) that evidences indebtedness of the Company for
borrowed money (other than indebtedness related to trade credit
advanced to the Company in the ordinary course of business in connection
with the purchase of products or services, such as customer
notes) or the guarantee of any indebtedness by the Company;
(2) that is a lease or agreement under which it is
lessee of, or holds or operates, any real property owned by any
other party;
(3) that is a lease or agreement under which it is
lessee of, or holds or operates, any personal property owned by any
other party calling for payments in excess of U.S.$50,000 annually;
(4) that is a lease or agreement under which it is
lessor of or permits any third party to hold or operate any property,
real or personal, owned or controlled by it;
(5) that is a Contract or group of related Contracts
with the same party for the purchase or sale of raw materials,
commodities, supplies, products or other personal property or for
the furnishing or receipt of services: (A) the performance of
which will extend over a period of more than one year following
the date hereof or (B) involves consideration in excess of
U.S.$100,000 over the life of such Contract or more than
U.S.$50,000 in any year;
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(6) that creates a partnership or joint venture;
(7) that is a license, sublicense or royalty agreement
with respect to Intellectual Property (other than license agreements
with respect to commercially available software) either (x)
calling for payments in excess of U.S.$25,000 annually or (y)
that relate to any trademarks to be owned by the Company as of
the Closing;
(8) that limits the ability of the Company to engage in
any line of business or to compete with any Person; or
(9) whose termination would reasonably be expected to
have a Material Adverse Effect.
Material Contracts shall be deemed not to include the contracts
set forth on SCHEDULE 3.1(j)(2) or SCHEDULE 3.1(j)(3).
Except as set forth on SCHEDULES 3.1(d) hereto, and
other than any such invalidity, failure, breach, default or
waiver, as applicable, which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse
Effect, (i) each of the Material Contracts is valid, binding, in
full force and effect, and enforceable by the Company in
accordance with its terms; (ii) the Company has performed any
accrued obligations thereunder in all material respects and is
not in breach or default and has not received written notice
alleging a default (other than letters of default that have been
rescinded or with respect to defaults that have been cured or
waived) or breach under any such Material Contract; (iii) the
Company has not modified any of the terms thereof; and (iv) to
the knowledge of the Company, no other party to any Material
Contract is in breach or default thereunder. True copies of the
Material Contracts, including all substantive amendments, waivers
and modifications thereto but excluding information identifying
customers (which will be provided at Closing), have been made
available to Buyer. Except as set forth on SCHEDULE 3.1(d),
consummation of the transactions contemplated by this Agreement
will not require any consent of any party to any Material
Contract (and will not give any Person a right to) terminate or
modify any rights or obligations of the Company under any
Material Contract.
(e) Real Property; Liens.
____________________
(1) The Company does not own or lease, other than
pursuant to a lease that is a Material Contract, any real property
other than the Property and the Tampa Terminal Facility. The Company
or Seller has good, marketable and insurable fee title or leasehold
interest, as applicable, in and to the Property, free and clear
of all Liens except for Permitted Liens. No condemnation or
expropriation proceeding is pending, or to the knowledge of
Seller, threatened against the Property. There are no parties
other than the Company in possession of the Property, except as
described in SCHEDULE 3.1(e). There are no leases, subleases,
licenses, concessions or other agreements, written or oral, to
any party or parties for use or occupancy of any portion of the
Property, except as described on SCHEDULE 3.1(e). To Seller's
knowledge, the Property and the operation of the Business is not
subject to Development of Regional Impact review under applicable
Florida law.
(2) All leases or subleases with respect to the real
property owned or leased by the Company, including all amendments and
modifications in connection therewith, which currently pertain
exclusively to the Business are disclosed on SCHEDULE 3.1(e) (the
"Leases"). The Company has paid all rents and other charges to
the extent due and payable under
14
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the Leases, except as otherwise disclosed on SCHEDULE 3.1(e). The Leases
are in full force and effect. The Company is not in default under the
Leases, and to Seller's knowledge, no other party to any of the Leases
is in default thereunder, and there are no circumstances known to
Seller that with the passage of time or the giving of notice
would constitute a default under any of the Leases. No written
notice has been given or received by Seller of any default under
any of the Leases that has not been cured. To Seller's
knowledge, no other party to any of the Leases has any defense to
its obligations under the Leases or has any charge, claim or
right of offset against rent or other charges due under the
Leases. No party has any option to renew or extend any of the
Leases, or to expand or contract the leased premises, or to
purchase or sell the leased premises, except as set forth in the
Leases. No party has exercised in writing any option or right to
extend or renew the Lease beyond its current term, or to expand
the premises leased thereunder, or to purchase or sell the leased
premises or any part thereof, except as disclosed on Schedule
3.1(e). No security deposits are held by the lessor under any of
the Leases, except as disclosed on Schedule 3.1(e) hereof. All
improvements required to be made by either lessor or lessee under
any of the Leases have been completed and Seller has no further
obligation to pay or reimburse any cost or expense in connection
therewith.
(f) Personal Property.
_________________
The Company has good and valid title to, or an adequate
leasehold interest in, all tangible assets and properties that are
used in the Business (except for real property, which is
addressed in Section 3.1(e) above), including all such tangible
assets and properties that it purports to own or have the right to
use as reflected in the Reference Balance Sheet, except for
assets disposed of in the ordinary course of business since
December 31, 2002 (the "Personal Property"), so as to allow the
Business to be conducted as and where currently conducted. The
Personal Property is free of Liens other than Permitted Liens and
the consummation of the transactions contemplated hereby will not
alter or impair such ability in any respect which, individually
or in the aggregate, would reasonably be expected to have a Material
Adverse Effect. Each item of Personal Property that had
an original cost greater than U.S.$50,000 has been maintained in
accordance with normal industry practice.
(g) Authorization; No Conflicts.
____________________________