EXHIBIT 2
December 11, 1996
AXSYS Technologies, Inc. (formerly
Vernitron Corporation) and
Precision Aerotech
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Re: Stock Purchase Agreement dated as of November 27, 1996 regarding L&S
Aerotech, Inc.
Dear ▇▇. ▇▇▇▇▇▇▇:
Reference is hereby made to that certain Stock Purchase Agreement dated as
of November 27, 1996 by and between Tru-Circle Corporation, Tru-Circle
Manufacturing, Inc., Vernitron Corporation and Precision Aerotech, Inc. (the
"Stock Purchase Agreement"). This letter is intended to evidence the agreement
of the parties to the Stock Purchase Agreement to amend the "Closing" (as such
term is defined in the Stock Purchase Agreement) to December 11, 1996 at the
offices of Buyer's counsel at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ at 10:00
a.m. (local time).
The parties also acknowledge that AXSYS Technologies, Inc., as successor to
Vernitron Corporation, shall be substituted for Vernitron Corporation in the
Stock Purchase Agreement, which substitution shall be reflected in the documents
to be delivered by Sellers in connection with the Closing. The other terms and
conditions of the Stock Purchase Agreement remain unchanged.
Please indicate your agreement to the amendment of the Stock Purchase
Agreement as described in this letter by executing a copy of this letter and
returning the same to ▇▇▇ ▇▇▇▇▇▇▇ at ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. via telecopier
number ▇▇▇-▇▇▇-▇▇▇▇.
We look forward to closing this transaction next week.
Very truly yours,
TRU-CIRCLE CORPORATION
By:______________________________
Name:____________________________
Title:___________________________
AXSYS Technologies, Inc.
Precision Aerotech, Inc.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
December 11, 1996
Page 2
TRU-CIRCLE MANUFACTURING, INC.
By:______________________________
Name:____________________________
Title:___________________________
cc: ▇▇▇ ▇. ▇▇▇▇▇▇▇
The undersigned agrees to the above-described amendment of the Stock
Purchase Agreement dated as of November 27, 1996 on this _____ day of December,
1996.
AXSYS Technologies, Inc. (formerly
Vernitron Corporation)
By:______________________________
Name:____________________________
Title:___________________________
PRECISION AEROTECH, INC.
By:______________________________
Name:____________________________
Title:___________________________
STOCK PURCHASE AGREEMENT
BY
TRU-CIRCLE CORPORATION,
AS BUYER,
TRU-CIRCLE MANUFACTURING, INC.
AS BUYER,
VERNITRON CORPORATION,
AS SELLER,
AND
PRECISION AEROTECH, INC.,
AS SELLER
TABLE OF CONTENTS
1. DEFINITIONS...............................................................1
2. SALE AND TRANSFER OF SHARES; CLOSING......................................9
2.1 SHARES..............................................................9
2.2 PURCHASE PRICE......................................................9
2.3 CLOSING.............................................................9
2.4 CLOSING OBLIGATIONS.................................................10
2.5 ADJUSTMENT AMOUNT...................................................11
2.6 ADJUSTMENT PROCEDURE................................................11
2.7 APPORTIONMENTS......................................................13
3. REPRESENTATIONS AND WARRANTIES OF SELLERS................................13
3.1 ORGANIZATION AND GOOD STANDING......................................13
3.2 AUTHORITY; NO CONFLICT..............................................14
3.3 CAPITALIZATION......................................................15
3.4 FINANCIAL STATEMENTS................................................16
3.5 BOOKS AND RECORDS...................................................16
3.6 TITLE TO PROPERTIES; ENCUMBRANCES...................................17
3.7 CONDITION AND SUFFICIENCY OF ASSETS.................................18
3.8 ACCOUNTS RECEIVABLE.................................................18
3.9 INVENTORY...........................................................18
3.10 NO UNDISCLOSED LIABILITIES..........................................18
3.11 TAXES...............................................................19
3.12 NO MATERIAL ADVERSE CHANGE..........................................20
3.13 EMPLOYEE BENEFITS...................................................20
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS;
GOVERNMENTAL AUTHORIZATIONS.........................................27
3.15 LEGAL PROCEEDINGS; ORDERS...........................................29
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS...............................30
3.17 CONTRACTS; NO DEFAULTS..............................................31
3.18 INSURANCE...........................................................34
3.19 ENVIRONMENTAL MATTERS...............................................35
3.20 EMPLOYEES...........................................................37
3.21 LABOR RELATIONS; COMPLIANCE.........................................38
3.22 INTELLECTUAL PROPERTY...............................................38
3.23 CERTAIN PAYMENTS....................................................41
3.24 DISCLOSURE..........................................................42
3.25 RELATIONSHIPS WITH RELATED PERSONS..................................42
3.26 BROKERS OR FINDERS..................................................42
4. REPRESENTATIONS AND WARRANTIES OF BUYERS..................................43
4.1 ORGANIZATION AND GOOD STANDING......................................43
4.2 AUTHORITY; NO CONFLICT..............................................43
4.3 INVESTMENT INTENT...................................................44
4.4 CERTAIN PROCEEDINGS.................................................44
4.5 BROKERS OR FINDERS..................................................44
4.6 TAXES...............................................................44
4.7 BUYERS' KNOWLEDGE OF BUSINESS.......................................46
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE................................46
5.1 ACCESS AND INVESTIGATION............................................46
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY..........................46
5.3 NEGATIVE COVENANT...................................................47
5.4 REQUIRED APPROVALS..................................................47
5.5 NOTIFICATION........................................................47
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS..........................48
5.7 NO NEGOTIATION......................................................48
5.8 BEST EFFORTS........................................................48
5.9 EMPLOYEE BENEFITS...................................................48
6. COVENANTS OF BUYERS PRIOR TO CLOSING DATE.................................49
6.1 APPROVALS OF GOVERNMENTAL BODIES....................................49
6.2 BEST EFFORTS........................................................49
6.3 NOTIFICATION........................................................49
6.4 LEASE GUARANTEE AGREEMENTS..........................................50
7. CONDITIONS PRECEDENT TO BUYERS' OBLIGATION TO CLOSE.......................50
7.1 ACCURACY OF REPRESENTATIONS.........................................50
7.2 SELLERS' PERFORMANCE................................................50
7.3 CONSENTS............................................................51
7.4 ADDITIONAL DOCUMENTS................................................51
7.5 NO PROCEEDINGS......................................................51
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR
SALE PROCEEDS.......................................................51
7.7 NO PROHIBITION......................................................52
7.8 FINANCING...........................................................52
7.9 RELEASE OF LIENS....................................................52
8. CONDITIONS PRECEDENT TO SELLERS'
OBLIGATION TO CLOSE......................................................52
8.1 ACCURACY OF REPRESENTATIONS.........................................52
8.2 BUYERS' PERFORMANCE.................................................53
8.3 CONSENTS............................................................53
8.4 ADDITIONAL DOCUMENTS................................................53
8.5 NO INJUNCTION.......................................................53
8.6 NO PROCEEDINGS......................................................54
8.7 NO PROHIBITION......................................................54
8.8 BUYERS' FINANCING...................................................54
9. TERMINATION...............................................................55
9.1 TERMINATION EVENTS..................................................55
9.2 EFFECT OF TERMINATION...............................................55
10. INDEMNIFICATION; REMEDIES.................................................55
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT
AFFECTED BY KNOWLEDGE...............................................55
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES
BY SELLERS..........................................................55
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
SELLERS-- ENVIRONMENTAL MATTERS.....................................56
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES
BY BUYERS...........................................................59
10.5 TIME LIMITATIONS....................................................59
10.6 LIMITATIONS ON AMOUNT--SELLERS......................................59
10.7 LIMITATIONS ON AMOUNT--BUYERS.......................................60
10.8 LIMITATIONS ON CLAIMS--BUYERS AND SELLERS...........................60
10.9 PROCEDURE FOR INDEMNIFICATION--THIRD
PARTY CLAIMS........................................................60
10.10 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.........................61
10.11 NOTWITHSTANDING PROVISION...........................................61
11. GENERAL PROVISIONS........................................................62
11.1 EXPENSES............................................................62
11.2 PUBLIC ANNOUNCEMENTS................................................63
11.3 [OMITTED]...........................................................63
11.4 NOTICES.............................................................63
11.5 JURISDICTION; SERVICE OF PROCESS....................................64
11.6 FURTHER ASSURANCES..................................................64
11.7 WAIVER..............................................................64
11.8 ENTIRE AGREEMENT AND MODIFICATION...................................65
11.9 DISCLOSURE LETTER...................................................65
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY
RIGHTS..............................................................65
11.11 SEVERABILITY........................................................66
11.12 SECTION HEADINGS, CONSTRUCTION......................................66
11.13 GOVERNING LAW.......................................................66
11.14 COUNTERPARTS........................................................66
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of November 27,
1996, by TRU-CIRCLE CORPORATION, a Kansas corporation ("TCC"), TRU-CIRCLE
MANUFACTURING, INC., a Kansas corporation ("TCMI") (TCC and TCMI, collectively,
"Buyers") and VERNITRON CORPORATION, a Delaware corporation ("Vernitron") and
PRECISION AEROTECH, INC., a Delaware corporation ("Precision") (Vernitron and
Precision, collectively the "Sellers").
RECITALS
Sellers desire to sell, and Buyers desire to purchase, all of the issued
and outstanding shares (the "Shares") of capital stock of L&S AEROTECH, INC.
d/b/a L&S MACHINE CO., INC., a Kansas corporation (the "Company"), for the
consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACQUIRED COMPANIES"--the Company and its Subsidiaries and their
predecessors, collectively, except that, for purposes of matters relating to
taxes, the term "Acquired Companies" shall mean the Company and its Subsidiaries
and their predecessors to the extent that (i) they were merged or liquidated
into the Company or its predecessors or (ii) they filed a consolidated tax
return with the Company.
"ACTUAL VALUE"--as defined in Section 2.6(a).
"ADJUSTMENT AMOUNT"--as defined in Section 2.5.
"APPLICABLE CONTRACT"--any Contract (a) under which the Company has or may
acquire any rights, (b) under which the Company has or may become subject to any
obligation or liability, or (c) by which the Company or any of the assets owned
or used by it is bound.
"APRIL BALANCE SHEET"--as defined in Section 3.4.
"BEST EFFORTS"--the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible; PROVIDED, HOWEVER, that an obligation to use Best
Efforts under this Agreement does not require the Person subject to that
obligation to take actions that would result in a materially adverse change in
the benefits to such Person of this Agreement and the Contemplated Transactions.
"BREACH"--a "Breach" of a representation, warranty, covenant, obligation,
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is (a) any inaccuracy in
or breach of, or any failure to perform or comply with, such representation,
warranty, covenant, obligation, or other provision, or (b) any claim (by any
Person) or other occurrence or circumstance that is inconsistent with such
representation, warranty, covenant, obligation, or other provision, and the term
"Breach" means any such inaccuracy, breach, failure, claim, occurrence, or
circumstance.
"BUYERS"--as defined in the first paragraph of this Agreement.
"CLOSING"--as defined in Section 2.3.
"CLOSING DATE"--the date and time as of which the Closing actually takes
place.
"COMPANY"--as defined in the Recitals of this Agreement.
"CONSENT"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated by this
Agreement, including, but not limited to:
(a) the sale of the Shares by Sellers to Buyers and the payment of the
Purchase Price therefor by Buyers;
(b) the execution, delivery, and performance of the Sellers' Releases;
(c) the performance by Buyers and Sellers of their respective covenants
and obligations under this Agreement; and
(d) Buyers' acquisition and ownership of the Shares at the Closing.
"CONTRACT"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"DAMAGES"--as defined in Section 10.2.
"DISCLOSURE LETTER"--the disclosure letter designated as such and delivered
by Sellers to Buyers concurrently with the execution and delivery of this
Agreement and initialled by the parties hereto.
"ENCUMBRANCE"--any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"ENVIRONMENT"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES"--any actual cost (including
reasonable fees of consultants and counsel), damages, expense, liability,
obligation, or other responsibility arising from or under Environmental Law or
Occupational Safety and Health Law and consisting of or relating to:
(a) any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types
of activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA").
"ENVIRONMENTAL LAW"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used so
that they do not present unreasonable risks to human health or the Environment
when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"FACILITIES"--any real property, leaseholds, or other real property
interests currently or formerly owned or operated by any Acquired Company and
any buildings, plants or structures currently or formerly owned or operated by
any Acquired Company.
"GAAP"--generally accepted United States accounting principles, applied on
a basis consistent with the basis on which the balance sheets and the other
financial statements referred to in Section 3.4(a) were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"HAZARDOUS ACTIVITY"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the Acquired
Companies.
"HAZARDOUS MATERIALS"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"HIGH VALUE"--as defined in Section 2.6(a).
"INCOME TAX"--means any federal, state, local or foreign income tax,
including any interest, penalty or addition thereto, whether disputed or not.
"INCOME TAX RETURN"--means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"INTELLECTUAL PROPERTY ASSETS"--as defined in Section 3.22.
"INTERIM BALANCE SHEET"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"KNOWLEDGE"--an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.
The Knowledge of Sellers means the Knowledge of the Sellers' and Company's
directors and officers, which for Company are ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇ (determined after giving effect to parts 9(a) and (b) of the
definition of Knowledge) holding such positions at the time this Agreement is
executed.
The Knowledge of Buyers means the Knowledge of Buyers' directors and
officers (determined after giving effect only to part (a) of the definition of
Knowledge) holding such positions at the time this Agreement is executed.
"LEGAL REQUIREMENT"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"LOW VALUE"--as defined in Section 2.6(a).
"OCCUPATIONAL SAFETY AND HEALTH LAW"--any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards.
"ORDER"--any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator naming
the Company as a defendant or other party.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and
is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) such action (other than leases of personal property) is not required
by law (without giving effect to the Company's bylaws) to be authorized by the
board of directors of such Person (or by any Person or group of Persons (other
than the officers of Vernitron) exercising similar authority); and
(c) such action is similar in nature and magnitude to actions customarily
taken, without any authorization by the board of directors (or by any Person or
group of Persons exercising similar authority), in the ordinary course of the
normal day-to-day operations of other Persons that are in the same line of
business as such Person.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"PERSON"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PLAN"--as defined in Section 3.13.
"PROCEEDING"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator, provided, however, an audit or
investigation shall be included only if the Person shall have actual Knowledge
thereof.
"RELATED PERSON"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor, or
trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse and former spouses, (iii) any
other natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 10% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in a Person.
"RELEASE"--any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SELLERS"--as defined in the first paragraph of this Agreement.
"SELLERS' RELEASES"--as defined in Section 2.4.
"SHARES"--as defined in the Recitals of this Agreement.
"SUBSIDIARY"--with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"TAXES"--means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, capital
stock, franchise, profits, withholding, unemployment, disability, real property,
personal property, sales, use transfer, alternative minimum, estimated or other
similar tax.
"TAX RETURN"--any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE"--a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"THREATENED"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing,
Sellers will sell and transfer the Shares to Buyers, and Buyers will purchase
the Shares from Sellers.
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares will be the sum of
(x) Ten Million Five Hundred Thousand Dollars ($10,500,000.00) plus (y) the
Adjustment Amount, provided, however, the Purchase Price may not exceed
$12,500,000. At the Closing, Buyers will pay to Seller, as an estimate of the
Purchase Price, $11,532,000 (the "Estimated Purchase Price"), which is the sum
of (x) $10,500,000 plus (y) the amount by which (A) the consolidated
stockholders' equity of the Company as of August 24, 1996, as shown on the
August Balance Sheet (as defined in Section 3.4), exceeds (B) the consolidated
stockholders' equity of the Company as of June 29, 1996 as shown on the June
Balance Sheet (as defined in Section 3.4), plus (z) $390,000.
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement will
take place at the offices of Buyers' counsel at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, at 10:00 a.m. (local time) on the later of (i) December 3, 1996 or
(ii) the date that is two business days following the date of the satisfaction
or waiver of all conditions of the parties to consummate the transaction
contemplated hereby (other than conditions with respect to actions the parties
will take at the Closing itself), or at such other time and place as the parties
may agree. Subject to the provisions of Section 9, failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at the
place
determined pursuant to this Section 2.3 will not result in the termination of
this Agreement and will not relieve any party of any obligation under this
Agreement.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers will deliver (collectively, the "Sellers' Closing Documents")
to Buyers:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures guaranteed by a
commercial bank or by a member firm of the New York Stock Exchange, for
transfer to Buyers;
(ii) releases in the form of Exhibit 2.4(a)(ii) executed by Sellers
(collectively, "Sellers' Releases");
(iii) a certificate executed by Sellers representing and warranting to
Buyers that each of Sellers' representations and warranties in this
Agreement was accurate in all respects as of the date of this Agreement and
is accurate in all respects as of the Closing Date as if made on the
Closing Date (giving full effect to any supplements to the Disclosure
Letter that were delivered by Sellers to Buyers prior to the Closing Date
in accordance with Section 5.5), except that any such representation or
warranty that is specifically stated to be accurate only as of a specified
date shall remain accurate as of such date;
(iv) Documentation establishing compliance with the requirements of
Section 7.3 and Section 7.9; and
(v) the Additional Documents specified in Section 7.4.
(b) Buyers will deliver (collectively, the "Buyers' Closing
Documents") to Sellers:
(i) the Estimated Purchase Price in immediately available funds by
wire transfer to accounts specified by Sellers;
(ii) a certificate executed by Buyers to the effect that each of
Buyers' representations and warranties in this Agreement was accurate in
all respects as of the date of this Agreement and is accurate in all
respects as of the Closing Date as if made on the Closing Date;
(iii) the opinion specified in Section 8.4; and
(iv) The Additional Documents specified in Section 8.4.
2.5 ADJUSTMENT AMOUNT
The Adjustment Amount (which may be a positive or negative number) equals
(a) the consolidated stockholders' equity of the Company as of the Closing Date
determined in accordance with GAAP, minus (b) $4,810,000.00.
2.6 ADJUSTMENT PROCEDURE
(a) Buyers at their expense will prepare financial statements
("Closing Financial Statements") of the Company as of the Closing Date and for
the period from the date of the April Balance Sheet through the Closing Date
(the balance sheet as of the Closing Date, the "Closing Date Balance Sheet"),
including a computation of consolidated stockholders' equity as of the Closing
Date and a schedule setting forth a computation of the Purchase Price. The
Closing Financial Statements will be prepared as of the close of business on the
Closing Date without regard to the Contemplated Transaction. They will be
prepared in accordance with GAAP applied on a basis consistent with the
preparation of the August Balance Sheet; provided, however, that assets,
liabilities, gains, losses, revenues and expenses in interim periods or as of
dates other than year end (which normally are determined through the application
of so-called interim accounting conventions or procedures) will be determined,
for purposes of the Closing Date Financial Statements, through full application
of the procedures used in preparing the most recent unaudited balance sheet of
the Company included within the audited balance sheet as of April 30, 1995
described in Section 3.4(a) hereto and the Closing Date Balance Sheet shall not
include any asset or liability (including income taxes, which are the
responsibility of Sellers) of the Company otherwise required to be presented
which Sellers retain or are responsible for under the terms of this Agreement
after the Closing. Buyers will deliver the Closing Financial Statements to
Seller within sixty days after the Closing Date. If within thirty days following
delivery of the Closing Financial Statements, Sellers have not given Buyers
notice of their objection to the Closing Financial Statements (such notice must
contain a reasonably detailed statement of the basis of Sellers' objection) or
at such earlier time as Sellers give to Buyers notice that they do not object to
the Closing Financial Statements, then the consolidated stockholders' equity
reflected in the Closing Financial Statements will be used in computing the
Adjustment Amount. If Sellers give such notice of objection, the Buyers and the
Sellers will use reasonable efforts to resolve any such objections themselves.
If the Buyers and the Sellers do not obtain a final resolution within 30 days,
then the issues in dispute will be submitted within two (2) business days to the
Kansas City, Missouri office of KPMG Peat Marwick, certified public accountants
(the "Accountants"), for resolution. If the issues in dispute are submitted to
the Accountants for resolution, (i) the Buyers will revise the Closing Financial
Statements as appropriate to reflect the resolution of any objections thereto
pursuant to this Section 2.6(a), (ii) each party will furnish to the Accountants
such workpapers and other documents and information relating to the disputed
issues as the Accountants may request and are available to that party or its
subsidiaries (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (iii) the
determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties; and
(iv) Buyers and
Sellers will share responsibility for the fees and expenses of the Accountants
for such determination as follows:
(A) if the Accountants resolve all of the remaining objections in favor
of the Buyers (the consolidated stockholders' equity so determined is
referred to herein as the "Low Value"), the Sellers will be responsible for
all of the fees and expenses of the Accountants;
(B) if the Accountants resolve all of the remaining objections in
favor of the Sellers (the consolidated stockholders' equity so determined
is referred to herein as the "High Value"), the Buyers will be responsible
for all of the fees and expenses of the Accountants; and
(C) if the Accountants resolve some of the remaining objections in
favor of the Buyers and the rest of the remaining objections in favor of
the Sellers (the consolidated stockholders' equity so determined is
referred to herein as the "Actual Value"), the Sellers will be responsible
for that fraction of the fees and expenses of the Accountants equal to (x)
the difference between the High Value and the Actual Value over (y) the
difference between the High Value and the Low Value, and the Buyers will be
responsible for the remainder of the fees and expenses.
(b) On the fifth business day following the final determination of the
Adjustment Amount, if the Purchase Price (plus any amount owed to Buyers
pursuant to Section 2.7) is greater than the Estimated Purchase Price, Buyers
will pay the difference to Sellers, and if the Purchase Price (plus any amount
owed to Buyers pursuant to Section 2.7) is less than such amount, Sellers will
pay the difference to Buyers. All payments will be made in immediately
available funds with interest thereon at the prime rate of Boatmen's Bank as in
effect from time to time from the Closing Date and ending on the date of
payment. Payments must be made by wire transfer to such bank account as Buyers
or Sellers, as applicable, will specify.
(c) For a period commencing on the Closing and ending at such time as the
Purchase Price is finally determined, Buyers shall provide Sellers and its
accountants and other representatives access to the books and records of the
Company (all of which shall be in the possession of Company at Closing as
represented and warranted in Section 3.5) for the purpose of obtaining
information concerning the Adjustment Amount. In the event that the calculation
of Purchase Price is submitted to the Accountants for their determination,
Buyers and Seller shall use their best efforts to cause the Accountants to make
a final determination of Purchase Price within 30 days of the date such matter
is submitted to them for their final determination. The payment obligations
under this Section 2.6 and Section 2.7 of Buyers or Sellers, as the case may be,
shall be subject to any set-off for any claim for the breach of any
representation and warranty or for indemnification under this Agreement.
2.7 APPORTIONMENTS
To the extent such items are not reflected on the Closing Date Balance
Sheet, the following items shall be apportioned as of 11:59 P.M. on the day
immediately preceding the Closing Date:
(a) rents and other charges and fees payable or receivable under the Applicable
Contract relating to real property Applicable Contracts and permits; (b) real
estate and personal property taxes, sewer rents and charges and other state,
county and municipal taxes and charges affecting the real properties of the
Company or any portion thereof, on the basis of the fiscal year for which the
same are levied, imposed or assessed; and (c) charges for water, electricity,
gas, oil, steam, telephone and all other utilities. Such apportionment shall be
reviewed by Buyers and Sellers, or, if the final determination of Purchase Price
shall be submitted to the Accountants, then the Accountants, and any amount
owing in respect of such apportionment, plus $200,000 (representing Buyers' and
Sellers' stipulated agreement as to the value of tax assets not reflected on the
Closing Balance Sheet) shall be paid at the same time as and together with, or
offset against, as the case may be, the payment in respect of the Purchase Price
pursuant to Section 2.6 hereof.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyers as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Part 3.1 of the Disclosure Letter contains a complete and accurate
list for each Acquired Company of its name, its jurisdiction of incorporation,
other jurisdictions in which it is authorized to do business, and its
capitalization (including the identity of each stockholder and the number of
shares held by each). The Company is a corporation duly organized, validly
existing, and in good standing under the laws of Kansas, with full corporate
power and authority to conduct its business as it is now being conducted, to own
or use the properties and assets that it purports to own or use, and to perform
all its obligations under Applicable Contracts. The Company is duly qualified
to do business as a foreign corporation and is in good standing under the laws
of each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification, except to the extent that lack of such
qualification would not have a material adverse effect on the financial
condition, results of operations, business, properties, assets or liabilities (a
"Material Adverse Effect"). There currently is not a Subsidiary of the Company,
however, all previous Subsidiaries are listed in Part 3.1 of the Disclosure
Letter.
(b) Sellers have delivered to Buyers copies of the Organizational
Documents of the Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
Sellers, enforceable against Sellers in accordance with its terms, except as
such enforcement may be limited by general principles of equity or by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally. Upon the execution and delivery by Sellers of the Sellers' Closing
Documents, the Sellers' Closing Documents will constitute the legal, valid, and
binding obligations of Sellers, enforceable against Sellers in accordance with
their respective terms, except as such enforcement may be limited by general
principles of equity or by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally. Sellers have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and the Sellers' Closing Documents and to perform their obligations
under this Agreement and the Sellers' Closing Documents. The execution,
delivery and performance by Sellers of this Agreement and Sellers' Closing
Documents and the consummation by Sellers of the transactions contemplated
hereby or thereby have been duly authorized by all necessary corporate action on
the part of Sellers.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions by Sellers
will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any
provision of the Organizational Documents of the Company, or (B) any
resolution adopted by the board of directors or the stockholders of the
Company which is now in effect;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which the Company or
either Seller, or any of the assets owned or used by the Company, is
subject;
(iii) contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by the Company or that otherwise directly
relates to the business of, or any of the assets owned or used by, the
Company;
(iv) cause the Company to become subject to, or to become liable
for the payment of, any Tax;
(v) except as listed in Part 3.2(b)(v) of the Disclosure Letter,
contravene, conflict with, or result in a violation or breach of any
provision of, or give any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any Applicable Contract listed or required to
be listed on Part 3.17(a) of the Disclosure Letter; or
(vi) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by the Company;
except (A) in the case of clauses (iv), (v) and (vi), as set forth in Part
3.2(b)(iv), (v) and (vi) of the Disclosure Letter, (B) for any required Consent,
filing or notice under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act (the
"HSR Act"), as to which Sellers make no representation or warranty, and (C) in
the case of clauses (ii)-(vi), such other contraventions, conflicts, violations,
rights, subjections to liability, breaches, impositions and creations as do not
have a Material Adverse Effect.
Except as set forth in Part 3.2 of the Disclosure Letter, no Seller is or
will be required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions, except for any Consent
from, notice to or filing with a Governmental Authority in respect of the HSR
Act which may be required, as to which Sellers' make no representation or
warranty, and such other failures to give any such notices or obtain any such
Consents which do not have a Material Adverse Effect.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of one million
shares of common stock, par value $0.25 per share, of which 466,940 shares are
issued and outstanding and constitute the Shares. Precision is and will be on
the Closing Date the record and a beneficial owner and holder of the Shares,
free and clear of all Encumbrances, except for restrictions on transfer as may
be imposed by the Securities Act and except as created by this Agreement.
Vernitron is the only other beneficial owner of the Shares. No legend or other
reference to any purported Encumbrance appears upon any certificate representing
equity securities of the Company, except as set forth thereon with respect to
the Securities Act and except as created by this Agreement. The outstanding
shares of the Company have been duly authorized and validly issued and are fully
paid and nonassessable. There are no Contracts relating to the issuance, sale,
or transfer of any equity securities or other securities of the Company. None
of the outstanding equity securities or other securities of the Company was
issued in violation of the Securities Act or any other Legal Requirement. The
Company does not own, or have any Contract to acquire, any equity securities or
other securities of any Person or any direct or indirect equity or ownership
interest in any other business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyers: (a) the unaudited consolidated balance
sheet of the Company as included in the audited consolidated balance sheets of
Precision as at April 30 in each of the years 1994 and 1995, and the related
unaudited consolidated statements of income, changes in stockholders' equity,
and cash flow for each of the fiscal years then ended, together with the report
thereon of McGladrey & ▇▇▇▇▇▇, independent certified public accountants, which
is attached hereto as Exhibit 3.4(a), (b) the unaudited consolidated balance
sheet of the Company as at April 24, 1996 (the "April Balance Sheet"), and the
related unaudited consolidated statement of income for the fiscal year then
ended, attached as Exhibit 3.4(b) hereto; (c) the unaudited consolidated balance
sheet of the Company
as at June 29, 1996 (the "June Balance Sheet"), which is a part of and attached
as Exhibit 3.4(c) hereto; (d) the unaudited consolidated balance sheet of the
Company as at August 24, 1996 (the "August Balance Sheet"), which is a part of
and attached as Exhibit 3.4(c) hereto; (e) the unaudited consolidated balance
sheet of the Company as at September 28, 1996 (the "September Balance Sheet"),
which is a part of and attached as Exhibit 3.4(c) hereto and (f) the unaudited
consolidated balance sheet of the Company as at October 26, 1996 (the "October
Balance Sheet"), attached as Exhibit 3.4(c) hereto. Such financial statements
(and the notes, to the extent they apply to the balance sheets as of April 30,
1994 and 1995) fairly present the financial condition and, to the extent
applicable, the results of operations, changes in stockholders' equity, and cash
flow of the Company as at the respective dates of and for the periods referred
to in such financial statements, all in accordance with GAAP, subject, in the
case of interim financial statements, to normal recurring year-end adjustments
(the effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that, if presented, would not differ
materially from those included in the April Balance Sheet and in the case of the
June Balance Sheet, certain adjustments made in connection with Vernitron's
application (after the preparation of the June Balance Sheet) of purchase
accounting to record its acquisition on April 25, 1996 of Precision) and that
income Taxes are not reflected, which are the responsibility of Sellers; the
financial statements referred to in this Section 3.4 reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements. No financial
statements of any Person other than the Company are required by GAAP to be
included in the consolidated financial statements of the Company. The parties
agree that the cost of the AOC's (as defined in Section 10.3) shall not be
reflected on the Closing Date Balance Sheet.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other records
of the Company, all of which have been made available to Buyers, are complete
and correct and have been maintained in accordance with sound business
practices. The minute books of the Company contain accurate and complete
records in all material respects of all meetings held of, and corporate action
taken by, the stockholders, the Board of Directors, and committees of the Board
of Directors of the Company, and no material meeting of any such stockholders,
Board of Directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete and accurate list of
all real property, leaseholds, or other interests therein owned by the Company.
Sellers have delivered or made available to Buyers copies of the deeds and other
instruments evidencing the Company's interest in such real property and
interests, and copies of all title insurance policies, opinions, abstracts, and
surveys in respect of owned real properties obtained by Vernitron in connection
with its financing of the acquisition of Precision in April 1996 relating to
such owned interests. The Company owns (with good and marketable title in the
case of owned real property and good and valid title to leased real property,
subject only to the matters permitted by the following sentence) all the
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) that they purport to own located in the facilities owned or operated
by the Company or that are reflected as owned in the books and records of the
Company, including all of the properties and assets reflected in the June
Balance Sheet, (except for personal property sold since the date of the June
Balance Sheet, in the Ordinary Course of Business), and all of the properties
and assets purchased or otherwise acquired by the Company since the date of the
June Balance Sheet (except for personal property acquired and sold since the
date of the June Balance Sheet in the Ordinary Course of Business and consistent
with past practice), which subsequently purchased or acquired properties and
assets (other than inventory, short-term investments, accounts receivable and
prepaid expenses) are listed in Part 3.6 of the Disclosure Letter. All material
properties and assets to be reflected in the Closing Date Balance Sheet will be
at the Closing free and clear of all Encumbrances and are not, in the case of
real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except, with
respect to all such properties and assets, (a) such Encumbrances as are set
forth in the title policies delivered by Sellers to Buyers as contemplated by
the second sentence of this Section 3.6, (b) liens for Taxes, assessments, water
and sewer charges, license fees, and all other fees, special assessments and
charges assessed or imposed by a public body upon or thereof, provided such
fees, assessments, Taxes or other charges are not yet due and payable, (c) a
leasehold interest Encumbrance created by the Company, as landlord, in favor of
the tenant relating to the property at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, (d) with
respect to real property, (i) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the property subject thereto, or impairs the operations of the
Company, and (ii) zoning laws and other land use restrictions that do not impair
the present or anticipated use of the property subject thereto, and (e) in the
case of real and personal property leased or licensed by the Company as tenant,
lessee or licensee, Encumbrances created by the leasehold agreement or license
between the landlord or owner of such property and the Company.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
Except as set forth in Part 3.7 of the Disclosure Letter, to Sellers'
actual Knowledge, the buildings, plants, structures, and material equipment of
the Company are structurally sound, are in good operating condition and repair,
are adequate for the uses to which they are being put, and none of such
buildings, plants, structures, or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost. Except as set forth in Part 3.7 of the Disclosure Letter, the
building, plants, structures, and equipment of the Acquired Companies are
sufficient for the continued conduct of the Company's businesses after the
Closing in substantially the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that will be reflected on the
balance sheet of the Closing Date Financial Statements or on the accounting
records of the Company as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
Other than with Cessna, as supplier, and in respect of progress payments
reflected on the Closing Date Balance Sheet as a reduction of accounts
receivable or inventory, there is no contest, claim, or right of set-off (other
than as may be created by Legal Requirements or Applicable Contracts), other
than returns in the Ordinary Course of Business, under any Applicable Contract
with any obligor of an Accounts Receivable relating to the amount or validity of
such Accounts Receivable in excess of reserves shown on the Closing Date Balance
Sheet.
3.9 INVENTORY
All inventory of the Company reflected in the Closing Date Balance Sheet,
subject to the inventory reserve listed on the Closing Date Balance Sheet,
consists of a quality and quantity usable and salable in the Ordinary Course of
Business. The quantities of each item of inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable in the
present circumstances of the Company.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the Disclosure Letter, the Company has
no liabilities or obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise) except for (i) liabilities
or obligations reflected or reserved against in the June Balance Sheet or the
Closing Date Balance Sheet and (ii) liabilities and obligations under any
Applicable Contract, incurred in the Ordinary Course of Business, whether or not
required to be disclosed in the Disclosure Letter because of any applicable
dollar or other threshold set forth in this Agreement.
3.11 TAXES
(a) The Acquired Companies have filed or caused to be filed (on a timely
basis) all Income Tax Returns and all material non-Income Tax Returns that are
or were required to be filed by or with respect to any of them, for taxable
periods beginning in or after 1989, either separately or as a member of a group
of corporations, pursuant to applicable Legal Requirements. Sellers have
delivered or made available to Buyers copies of, and Part 3.11 of the Disclosure
Letter contains a complete and accurate list of, all such Tax Returns relating
to income or franchise taxes filed for taxable periods beginning in or after
1989. The Acquired Companies have paid, or made provision for the payment of,
all Taxes that have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received in writing by Sellers or any
Acquired Company, except such Taxes, if any, as are listed in Part 3.11 of the
Disclosure Letter and are being contested in good faith and as to which adequate
reserves determined in accordance with GAAP have been provided in the June
Balance Sheet and the September Balance Sheet.
(b) Except as set forth in Part 3.11 of the Disclosure Letter, the United
States federal and state income Tax Returns of each Acquired Company subject to
such Taxes have been audited by the IRS or relevant state tax authorities or are
closed by the applicable statute of limitations for all taxable
years through 1992. Part 3.11 of the Disclosure Letter contains a complete and
accurate list of all audits of all such Tax Returns, including a reasonably
detailed description of the nature and outcome of each audit. All deficiencies
proposed as a result of such audits have been paid, reserved against, settled,
or, as described in Part 3.11 of the Disclosure Letter, are being contested in
good faith by appropriate proceedings. Part 3.11 of the Disclosure Letter
describes all adjustments to the United States federal income Tax Returns filed
by any Acquired Company or any group of corporations including any Acquired
Company (to the extent such adjustments relate to any such Acquired Company or
for which any such Acquired Company may be liable) for all taxable periods
ending in or after 1992, and the resulting deficiencies proposed by the IRS.
Except as described in Part 3.11 of the Disclosure Letter, no Seller or Acquired
Company has given or been requested to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of any Acquired Company
or for which any Acquired Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes (other than
income Taxes) on the books of the Company have been determined in accordance
with GAAP and are at least equal to that Acquired Company's liability for such
Taxes. There exists no proposed tax assessment against the Company except as
disclosed in the August Balance Sheet or in Part 3.11 of the Disclosure Letter.
No consent to the application of Section 341(f)(2) of the IRC has been filed
with respect to any property or assets held, acquired, or to be acquired by the
Company. All Taxes that any Acquired Company is or was required by Legal
Requirements to withhold or collect have been duly withheld or collected and, to
the extent required, have been paid to the proper Governmental Body or other
Person.
(d) All Tax Returns filed by (or that include on a consolidated basis) any
Acquired Company are true, correct, and complete; provided, however, that in the
case of Tax Returns filed on a consolidated basis, only to the extent relating
to the Acquired Companies. There is no tax sharing agreement that will require
any payment by any Acquired Company after the date of this Agreement. Except as
set forth in Part 3.11 of the Disclosure Letter, at all times since January 1,
1991, none of the Acquired Companies has been a member of an affiliated group
filing a consolidated federal Income Tax Return other than a group the common
parent of which was Precision or Vernitron.
3.12 NO MATERIAL ADVERSE CHANGE
Since the date of the June Balance Sheet, there has not been any material
adverse change in the business, operations, properties, assets, or condition of
the Company.
3.13 EMPLOYEE BENEFITS
(a) As used in this Section 3.13, the following terms have the meanings
set forth below.
"COMPANY OTHER BENEFIT OBLIGATION" means an Other Benefit Obligation owed
or adopted by the Company or an ERISA Affiliate of the Company.
"COMPANY PLAN" means all Plans in which any current or former employee of
the Company participates or participated of which the Company or an ERISA
Affiliate of the Company is or was a Plan Sponsor, or to which the Company or an
ERISA Affiliate of the Company otherwise contributes or has contributed, or in
which the Company or an ERISA Affiliate of the Company otherwise participates or
has participated. All references to Plans are to Company Plans unless the
context requires otherwise.
"COMPANY VEBA" means a VEBA whose members include employees of the Company
or any ERISA Affiliate of the Company, in which any current or former employee
of the Company participates or participated.
"ERISA AFFILIATE" means, with respect to the Company, any other person
that, together with the Company, would be treated as a single employer under IRC
Section 414.
"MULTI-EMPLOYER PLAN" has the meaning given in ERISA Section 3(37)(A).
"OTHER BENEFIT OBLIGATIONS" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary and bonus, as compensation for services rendered, to present
or former directors, employees, or agents, other than obligations, arrangements,
and practices that are Plans, in which any current or former employee of the
Company participates or participated. Other Benefit Obligations include
consulting agreements under which the compensation paid does not depend upon the
amount of service rendered, sabbatical policies, severance payment policies, and
fringe benefits within the meaning of IRC Section 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PENSION PLAN" has the meaning given in ERISA Section 3(2)(A).
"PLAN" has the meaning given in ERISA Section 3(3).
"PLAN SPONSOR" has the meaning given in ERISA Section 3(16)(B).
"QUALIFIED PLAN" means any Plan that meets or purports to meet the
requirements of IRC Section 401(a).
"TITLE IV PLANS" means all Pension Plans that are subject to Title IV of
ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC
Section 501(c)(9).
"WELFARE PLAN" has the meaning given in ERISA Section 3(1).
(b) The Disclosure Letter contains the following with respect to this
Section 3.13:
(i) Part 3.13(i) of the Disclosure Letter contains a complete and
accurate list of all Company Plans, Company Other Benefit Obligations, and
Company VEBAs, and identifies as such all Company Plans that are (A)
defined benefit Pension Plans, (B) Qualified Plans, (C) Title IV Plans, or
(D) Multi-Employer Plans.
(ii) Part 3.13(ii) of the Disclosure Letter contains a complete and
accurate list of (A) all ERISA Affiliates of the Company, and (B) all Plans
of which any such ERISA Affiliate is or was a Plan Sponsor, in which any
such ERISA Affiliate participates or has participated, or to which any such
ERISA Affiliate contributes or has contributed.
(iii) Part 3.13(iii) of the Disclosure Letter sets forth, for each
Multi-Employer Plan, as of its last valuation date, the amount of potential
withdrawal liability of the Company and the Company's other ERISA
Affiliates, calculated according to information made available pursuant to
ERISA Section 4221(e).
(iv) Part 3.13(iv) of the Disclosure Letter sets forth a
calculation of the liability of the Company for post-retirement benefits
other than pensions, made in accordance with Financial Accounting Statement
106 of the Financial Accounting Standards Board, regardless of whether the
Company is required by this Statement to disclose such information.
(v) Part 3.13(v) of the Disclosure Letter sets forth the financial
cost of all obligations owed under any Company Plan or Company Other
Benefit Obligation that is not subject to the disclosure and reporting
requirements of ERISA and is not accounted for in the Company's financial
statements.
(vi) Part 3.13(vi) of the Disclosure Letter sets forth any
exceptions to the representations made in subsection (d) of this Section
3.13.
(c) Sellers have delivered or made available to Buyers, or will deliver or
make available to Buyers on the date of this Agreement:
(i) all documents that set forth the terms of each Company Plan,
Company Other Benefit Obligation, or Company VEBA and of any related trust,
including (A) all plan descriptions and summary plan descriptions of
Company Plans for which Sellers or the Company is required to prepare,
file, and distribute plan descriptions and summary plan descriptions, and
(B) all summaries and descriptions furnished to participants and
beneficiaries regarding Company Plans, Company Other Benefit Obligations,
and Company VEBAs for which a plan description or summary plan description
is not required;
(ii) all personnel, payroll, and employment manuals and policies;
(iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both
pension and welfare benefits) by the Acquired Companies and the ERISA
Affiliates of the Acquired Companies, and all collective bargaining
agreements pursuant to which contributions are being made or obligations
are owed by such entities;
(iv) a written description of any Company Plan or Company Other
Benefit Obligation that is not otherwise in writing;
(v) all registration statements filed with respect to any Company
Plan;
(vi) all insurance policies purchased by or to provide benefits
under any Company Plan;
(vii) all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent contractors that
relate to any Company Plan, Company Other Benefit Obligation, or Company
VEBA;
(viii) all reports submitted within the four years preceding the date
of this Agreement by third party administrators, actuaries, investment
managers, consultants, or other independent contractors with respect to any
Company Plan, Company Other Benefit Obligation, or Company VEBA;
(ix) all notifications to employees of their rights under ERISA
Section 601 et seq. and IRC Section 4980B;
(x) the Form 5500 filed in each of the most recent three plan
years with respect to each Company Plan, including all schedules thereto
and the opinions of independent accountants;
(xi) all notices that were given by the Company or any ERISA
Affiliate of the Company or any Company Plan to the IRS and the PBGC,
and/or the form of any notices given to any participant or beneficiary,
pursuant to statute, within the four years preceding the date of this
Agreement, including notices that are expressly mentioned elsewhere in this
Section 3.13;
(xii) all notices that were given by the IRS, the PBGC, or the
Department of Labor to the Company, any ERISA Affiliate of the Company, or
any Company Plan within the four years preceding the date of this
Agreement;
(xiii) with respect to Qualified Plans and VEBAs, the most recent IRC
Section 401(a) determination letter for each Plan of the Company that is a
Qualified Plan; and
(xiv) with respect to Title IV Plans, the Form PBGC-1 filed for each
of the three most recent plan years.
(d) Except as set forth in Part 3.13(vi) of the Disclosure Letter:
(i) The Company has performed all of its respective obligations
under all Company Plans, Company Other Benefit Obligations, and Company
VEBAs. The Company has made appropriate entries in its financial records
and statements for all obligations and liabilities under such Plans, VEBAs,
and Obligations that have accrued but are not due.
(ii) No statement, either written or oral, has been made by the
Company to any Person with regard to any Plan or Other Benefit Obligation
that was not in accordance with the Plan or Other Benefit Obligation and
that could have an adverse economic consequence to the Company or to
Buyers.
(iii) The Acquired Companies, with respect to all Company Plans,
Company Other Benefits Obligations, and Company VEBAs, are, and each
Company Plan, Company Other Benefit Obligation, and Company VEBA is, in
full compliance with ERISA, the IRC, and other applicable Laws including
the provisions of such Laws expressly mentioned in this Section 3.13, and
with any applicable collective bargaining agreement.
(A) No transaction prohibited by ERISA Section 406 and no
"prohibited transaction" under IRC Section 4975(c) have occurred with
respect to any Company Plan.
(B) Neither of the Sellers nor the Company has any
liability to the IRS with respect to any Plan, including any liability
imposed by Chapter 43 of the IRC.
(C) Neither of the Sellers nor the Company has any
liability to the PBGC with respect to any Plan or has any liability
under ERISA Section 502 or Section 4071.
(D) All filings required by ERISA and the IRC as to each
Plan have been timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have been timely
provided.
(E) All contributions and payments made or accrued with
respect to all Company Plans, Company Other Benefit Obligations, and
Company VEBAs are deductible under IRC Section 162 or Section 404,
except for any deferred compensation arrangements accrued on the
Closing Date Balance Sheet, which will be deductible when paid. No
amount, or any asset of any Company Plan or Company VEBA, is subject
to tax as unrelated business taxable income.
(iv) Each Company Plan can be terminated within thirty days,
without payment of any additional contribution or amount and, except as set
forth in Part 3.13(vi) of the Disclosure Letter without the vesting or
acceleration of any benefits promised by such Plan.
(v) Since April 30, 1995, there has been no establishment or
amendment of any Company Plan, Company VEBA, or Company Other Benefit
Obligation.
(vi) No event has occurred or circumstance exists that could result
in a material increase in premium costs of Company Plans and Company Other
Benefit Obligations that are insured, or a material increase in benefit
costs of such Plans and Obligations that are self-insured.
(vii) Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving, any Company
Plan, Company Other Benefit Obligation, or Company VEBA is pending or, to
Sellers' Knowledge, is Threatened.
(viii) Except as set forth in Part 3.13 of the Disclosure Letter, no
Company Plan is a stock bonus, pension, or profit-sharing plan within the
meaning of IRC Section 401(a).
(ix) Each Qualified Plan of the Company is qualified in form and
operation under IRC Section 401(a); each trust for each such Plan is exempt
from federal income tax under IRC Section 501(a). Each Company VEBA is
exempt from federal income tax. No event has occurred or circumstance
exists that will or could give rise to disqualification or loss of
tax-exempt status of any such Company Plan or trust.
(x) The Company and each ERISA Affiliate of the Company has met
the minimum funding standard, and has made all contributions required,
under ERISA Section 302 and IRC Section 402.
(xi) No Company Plan is subject to Title IV of ERISA.
(xii) The Company has paid all amounts due to the PBGC pursuant to
ERISA Section 4007.
(xiii) Neither the Company nor any ERISA Affiliate of the Company has
ceased operations at any facility or has withdrawn from any Title IV Plan
in a manner that would subject to any entity or Sellers to liability under
ERISA Section 4062(e), Section 4063, or Section 4064.
(xiv) Neither the Company nor any ERISA Affiliate of the Company has
filed a notice of intent to terminate any Plan or has adopted any amendment
to treat a Plan as terminated. The PBGC has not instituted proceedings to
treat any Company Plan as terminated. No event has occurred or circumstance
exists that may constitute grounds under ERISA Section 4042 for the
termination of, or the appointment of a trustee to administer, any Company
Plan.
(xv) No amendment has been made, or is reasonably expected to be
made, to any Plan that has required or could require the provision of
security under ERISA Section 307 or IRC Section 401(a)(29).
(xvi) No accumulated funding deficiency, whether or not waived,
exists with respect to any Company Plan; no event has occurred or
circumstance exists that may result in an accumulated funding deficiency as
of the last day of the current plan year of any such Plan.
(xvii) The actuarial report for each Pension Plan of the Company and
each ERISA Affiliate of the Company fairly presents the financial condition
and the results of operations of each such Plan in accordance with GAAP.
(xviii) Except as set forth in Part 3.13(vi) of the Disclosure
Letter, since the last valuation date for each Pension Plan of the Company
and each ERISA Affiliate of the Company, no event has occurred or
circumstance exists that, would increase the amount of benefits under any
such Plan or that would cause the excess of Plan assets over benefit
liabilities (as defined in ERISA Section 4001) to decrease, or the amount
by which benefit liabilities exceed assets to increase.
(xix) No reportable event (as defined in ERISA Section 4043 and in
regulations issued thereunder) has occurred.
(xx) Neither of the Sellers nor the Company has Knowledge of any
facts or circumstances that may give rise to any liability of any Seller,
the Company, or Buyers to the PBGC under Title IV of ERISA.
(xxi) Neither the Company nor any ERISA Affiliate of the Company has
ever established, maintained, or contributed to or otherwise participated
in, or had an obligation to maintain, contribute to, or otherwise
participate in, any Multi-Employer Plan.
(xxii) Neither the Company nor any ERISA Affiliate of the Company has
withdrawn from any Multi-Employer Plan with respect to which there is any
outstanding liability as of the date of this Agreement. No event has
occurred or circumstance exists that presents a risk of the occurrence of
any withdrawal from, or the participation, termination, reorganization, or
insolvency of, any Multi-Employer Plan that could result in any liability
of either the Company or Buyers to a Multi-Employer Plan.
(xxiii) Neither the Company nor any ERISA Affiliate of the Company
has received notice from any Multi-Employer Plan that it is in
reorganization or is insolvent, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of any
excise tax, or that such Plan intends to terminate or has terminated.
(xxiv) No Multi-Employer Plan to which the Company or any ERISA
Affiliate of the Company contributes or has contributed is a party to any
pending merger or asset or liability transfer or is subject to any
proceeding brought by the PBGC.
(xxv) Except to the extent required under ERISA Section 601 et seq.
and IRC Section 4980B, the Company does not provide health or welfare
benefits for any retired or former employee or is obligated to provide
health or welfare benefits to any active employee following such employee's
retirement or other termination of service.
(xxvi) The Company has the right to modify and terminate benefits to
retirees (other than pensions) with respect to both retired and active
employees.
(xxvii) Sellers and the Company have complied with the provisions of
ERISA Section 601 et seq. and IRC Section 4980B with respect to current and
former employees of the Company.
(xxviii) No payment that is owed or may become due to any director,
officer, employee, or agent of the Company will be non-deductible to the
Company or subject to tax under IRC Section 280G or Section 4999; nor will
the Company be required to "gross up" or otherwise compensate any such
person because of the imposition of any excise tax on a payment to such
person.
(xxix) With respect to each Company Plan, Qualified Plan, Title IV
Plan, Multi-Employer Plan, Company Other Benefit Obligation and Welfare
Plan, the consummation of the Contemplated Transactions will not result in
the payment, vesting, or acceleration of any benefit which results in an
increased contribution under any Company Plan, Qualified Plan, Title IV
Plan, Multi-Employer Plan, Company Other Benefit Obligation or Welfare
Plan. With respect to a Qualified Plan maintained by the Company, the
consummation of the Contemplated Transactions will result in the payment,
vesting or acceleration of certain benefits, as set forth in Part 3.13 of
the Disclosure Letter.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times since November 30, 1994 and,
to Sellers' Knowledge, since April 30, 1991 has been, in full compliance
with each Legal Requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership or use of any of its
assets;
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) would reasonably be expected to
constitute or result in a violation by the Company of, or a failure on the
part of the Company to comply with, any Legal Requirement,
or (B) may give rise to any obligation on the part of the Company to
undertake, or to bear all or any portion of the cost of, any remedial
action of any nature; and
(iii) the Company has not received, at any time since November 30,
1994 and, to Sellers' Knowledge, since April 30, 1991, any notice or other
communication (whether written or, to Sellers' Knowledge, oral) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential obligation
on the part of the Company to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and accurate
list of each Governmental Authorization that is held by the Company or that
otherwise directly relates to the business of, or to any of the assets owned or
used by, the Company. Each Governmental Authorization listed or required to be
listed in Part 3.14 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times since November 30, 1994 and
to Sellers' Knowledge, since April 30, 1991 has been, in full compliance
with all of the terms and requirements of each Governmental Authorization
identified or required to be identified in Part 3.14 of the Disclosure
Letter;
(ii) no event has occurred or circumstance exists that would
reasonably be expected (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure
to comply with any term or requirement of any Governmental Authorization
listed or required to be listed in Part 3.14 of the Disclosure Letter, or
(B) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in Part 3.14 of
the Disclosure Letter;
(iii) the Company has not received, at any time since November 30,
1994 and to Sellers' Knowledge, since April 30, 1991, any notice or other
communication (whether written or to Sellers' Knowledge oral) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible, or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
(iv) all applications required to have been filed for the renewal
of the Governmental Authorizations listed or required to be listed in Part
3.14 of the Disclosure Letter currently in effect have been duly filed on a
timely basis with the appropriate Governmental Bodies, and all other
filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the Disclosure
Letter collectively constitute all of the Governmental Authorizations necessary
to permit the Company to lawfully conduct and operate its businesses in the
manner it currently conducts and operates such businesses and to permit the
Company to own and use its assets in the manner in which it currently owns and
uses such assets.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.15 of the Disclosure Letter, there is no
pending Proceeding by or against the Company:
(i) that relates to or may affect the business of, or any of the
assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
Exept as set forth in Part 3.15 of the Disclosure Letter, to the Knowledge
of Sellers, (1) no such Proceeding has been Threatened since January 1, 1995,
and (2) no event has occurred or circumstance exists that would reasonably be
expected to give rise to or serve as a valid basis for the commencement of any
such Proceeding. Sellers have delivered to Buyers copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in Part
3.15 of the Disclosure Letter. The Proceedings listed in Part 3.15 of the
Disclosure Letter will not have a material adverse effect on the business,
operations, assets, condition, or prospects of the Company except as set forth
in Part 3.15 of the Disclosure Letter.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which the Company is a defendant or other
party (including any Order with respect to any of the assets owned or used
by the Company);
(ii) neither Seller is subject to any Order that relates to the
business of, or any of the assets owned or used by, the Company; and
(iii) to the Knowledge of Sellers and the Company, no officer,
director, agent, or key employee of the Company is subject to any Order
that prohibits such officer, director, agent, or key employee from engaging
in or continuing any conduct, activity, or practice relating to the
business of the Company.
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) the Company is, and at all times since November 30, 1994 and,
to Sellers' Knowledge, since April 30, 1991 has been, in full compliance
with all of the terms and requirements of each Order to which it is a
defendant or other party (including any order with respect to any of the
assets owned or used by it);
(ii) no event has occurred or circumstance exists that would
reasonably be expected to constitute or result in (with or without notice
or lapse of time) a violation of or failure to comply with any term or
requirement of any Order to which the Company, or any of the assets owned
or used by the Company, is subject; and
(iii) the Company has not received, at any time since November 30,
1994 and, to Sellers' Knowledge, since April 30, 1991, any notice or other
communication (whether written or, to the Sellers' Knowledge, oral) from
any Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any term or
requirement of any Order to which the Company is a defendant or other party
(including any Order with respect to any of the assets owned or used by the
Company).
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure Letter, since the date
of the June Balance Sheet, the Company has conducted its business only in the
Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued capital stock; grant of
any stock option or right to purchase shares of capital stock of the Company;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
the Company of any shares of any such capital stock; or declaration or payment
of any dividend or other distribution or payment in respect of shares of capital
stock; provided, however, that notwithstanding any provision hereof to the
contrary, no representation herein is made as to, and nothing herein shall
prevent, the repayment by the Company of inter-company loans and advances prior
to the Closing;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries, or other
compensation to any director, officer, or (except in the Ordinary Course of
Business) employee or entry into any employment, severance, or similar Contract
with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of the
Company;
(e) damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and adversely affecting
the properties, assets, business, financial condition, or prospects of the
Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination of (i)
any license, distributorship, dealer, sales representative, joint venture,
credit, or similar agreement, or (ii) any Applicable Contract or transaction
involving a total remaining commitment by or to the Company of at least $50,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of the Company
or mortgage, pledge, or imposition of any lien or other encumbrance on any
material asset or property of the Company, including the sale, lease, or other
disposition of any of the Intellectual Property Assets, except for (i)
disposition of leased equipment pursuant to the lease agreements under which
such equipment was leased, and (ii) the mortgage, pledge and imposition of
Encumbrances pursuant to the Credit Documents, which Encumbrances shall be
released at the Closing;
(h) cancellation or waiver of any claims or rights with a value to the
Company in excess of $10,000;
(i) material change in the accounting methods used by the Company; or
(j) agreement, whether written or, to the Sellers' Knowledge, oral, by the
Company to do any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter contains a complete and accurate
list, and Sellers have made available to Buyers true and complete copies, of:
(i) each Applicable Contract that involves the remaining
performance of services or delivery of goods or materials by the Company of
an amount or value in excess of $50,000;
(ii) each Applicable Contract that involves the remaining
performance of services or delivery of goods or materials to the Company of
an amount or value in excess of $50,000;
(iii) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves the remaining expenditure or
receipt by the Company in excess of $10,000;
(iv) each lease, rental or occupancy agreement, license and
installment and conditional sale agreement affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest in, any
real or personal property (except personal property leases
and installment and conditional sales agreements having a value per item or
aggregate payments of less than $10,000 and with terms of less than one
year);
(v) except for the provisions contained in an Applicable Contract
providing for the sale of goods or provisions of services by the Company,
each licensing agreement or other Applicable Contract with respect to
patents, trademarks, copyrights, or other intellectual property, including
agreements with current or, since January 1, 1995, former employees,
consultants, or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property Assets;
(vi) each collective bargaining agreement and other Applicable
Contract with any labor union or other employee representative of a group
of employees;
(vii) each joint venture, partnership, and other Applicable Contract
(however named) involving a sharing of profits, losses, costs, or
liabilities by the Company with any other Person;
(viii) each Applicable Contract containing covenants that in any way
purport to restrict the business activity of the Company or any Affiliate
of the Company or limit the freedom of the Company or any Affiliate of the
Company to engage in any line of business or to compete with any Person;
(ix) each Applicable Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct payments
for goods or services;
(x) each power of attorney that is currently effective and
outstanding;
(xi) each Applicable Contract for capital expenditures in excess of
$25,000;
(xii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the Company
other than in the Ordinary Course of Business; and
(xiii) other than for sales and purchase orders, each amendment,
supplement, and modification (whether written or to Sellers' Knowledge,
oral) in respect of any of the foregoing.
Part 3.17(a) of the Disclosure Letter sets forth the parties to the Applicable
Contracts, the amount of the remaining commitment of the Company under the
Applicable Contracts, and the customer purchase order related to such Applicable
Contracts.
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter:
(i) neither Seller (and no Related Person of either Seller other
than the Company or employees of the Company) has or may acquire any rights
under, and neither Seller has or may become subject to any obligation or
liability under, any Applicable Contract that relates to the business of,
or any of the assets owned or used by, the Company; and
(ii) to Sellers' Knowledge, no officer, director, agent or key
employee of the Company is bound by any Contract that purports to limit the
ability of such officer, director, agent or key employee to (A) engage in
or continue any conduct, activity, or practice relating to the business of
the Company, or (B) assign to the Company or to any other Person any rights
to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure Letter, each
Contract identified or required to be identified in Part 3.17(a) of the
Disclosure Letter is in full force and effect and is valid and enforceable in
accordance with its terms, assuming due authorization, execution and delivery by
the other parties thereto, and subject to equitable and other similar
exceptions.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter:
(i) the Company is in full compliance with all applicable terms
and requirements of each Applicable Contract under which the Company has or
had any obligation or liability or by which the Company or any of the
assets owned or used by the Company is or was bound;
(ii) to Sellers' Knowledge, each other Person that has or had any
obligation or liability under any Applicable Contract under which the
Company has or had since April 30, 1995 any rights is, and at all times
since April 30, 1995 has been, in full compliance with all applicable terms
and requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) would be reasonably be expected to
contravene, conflict with, or result in a violation or breach of, or give
the other Person or, to Sellers' Knowledge, the Company, the right to
declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any
Applicable Contract; and
(iv) the Company has not given to or received from any other
Person, at any time since April 30, 1995, any notice or other communication
(whether written or to the Sellers' Knowledge, oral) regarding any actual,
alleged, possible, or potential violation or breach of, or default under,
any Contract.
(e) Except as set forth in Part 3.17(e) of the Disclosure Letter, there
are no renegotiations of, attempts to renegotiate, or outstanding rights to
renegotiate any material amounts paid or payable to the Company under current or
completed Applicable Contracts with any Person and no such Person has made
written demand for such renegotiation.
(f) The Applicable Contracts relating to the sale, design, manufacture, or
provision of products or services by the Company have been entered into in the
Ordinary Course of Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in violation of any Legal
Requirement.
3.18 INSURANCE
(a) The assets owned by the Company are insured against loss, damage or
injury in amounts listed in Part 3.18(a) of the Disclosure Letter which shows
all insurance policies held by or for the benefit of the Company, together with
the policy limits and the type of coverage. All such insurance policies shall
be maintained in full force and effect until 12:01 a.m. on the day immediately
following the Closing Date.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting the Company,
including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of insurance,
for the transfer or sharing of any risk by the Company; and
(iii) all obligations of the Company to third parties with respect
to insurance (except for customary obligations under leases and service
agreements) and identifies the policy under which such coverage is
provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year, for the
current policy year and each of the three preceding policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance policy
for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance, and period of coverage; and
(C) the amount and a brief description of the claim; and
(iii) a statement describing the loss experience for all claims that
were self-insured, including the number and aggregate cost of such claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure Letter:
(i) Neither Seller (with respect to the Company) nor the Company
has received (A) any refusal of coverage or any notice that a defense will
be afforded with reservation of rights, or (B) any notice of cancellation
or any other indication that any insurance policy is no longer in full
force or effect or will not be renewed or that the issuer of any policy is
not willing or able to perform its obligations thereunder.
(ii) The Company has given notice to the insurer of all claims that
may be insured thereby.
3.19 ENVIRONMENTAL MATTERS
Notwithstanding any other provision of this Agreement, this Section 3.19
contains the exclusive representations and warranties of Sellers with respect to
environmental matters.
Except as set forth in Part 3.19 of the disclosure letter:
(a) The Company is, and at all times since January 1, 1991, has been, in
full compliance with, and has not been since January 1, 1991 and is not in
violation of or liable under, any Environmental Law. Neither Seller nor the
Company has any basis to expect, nor has any of them or to Sellers' Knowledge
any other Person for whose conduct they are or may be held to be responsible
received, any actual or Threatened order, notice, or other communication from
(i) any Governmental Body or private citizen entitled to act in the public
interest, or (ii) the current or prior owner or operator of any Facilities, of
any actual or potential violation or failure to comply with any Environmental
Law, or of any actual or Threatened obligation to undertake or bear the cost of
any Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or to Sellers' Knowledge any other properties or assets (whether
real, personal, or mixed) in which Sellers or any Acquired Company has had an
interest, or with respect to any property or Facility at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported, used, or
processed by Sellers, any Acquired Company, or any other Person for whose
conduct they are or may be held responsible, or from which Hazardous Materials
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(b) There are no pending or, to the Knowledge of Sellers, Threatened
claims, Encumbrances, or other restrictions of any nature, resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant to
any Environmental Law, with respect to or affecting any of the Facilities or any
other properties and assets (whether real, personal, or mixed) in which Sellers
or any Acquired Company has or had an interest other than restrictions imposed
by Environmental Law.
(c) Neither of the Sellers nor the Company has any basis to expect, nor
has any of them or to Sellers' Knowledge any other Person for whose conduct they
are or may be held responsible, received, any citation, directive, inquiry,
notice, Order, summons, warning, or other communication that relates to
Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, or of any alleged,
actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which Sellers or any Acquired Company had an interest, or to Sellers'
Knowledge with respect to any property or facility to which Hazardous Materials
generated, manufactured, refined, transferred, imported, used, or processed by
Sellers, any Acquired Company, or any other Person for whose conduct they are or
may be held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) No Seller or Acquired Company, or to Sellers' Knowledge any other
Person for whose conduct they are or may be held responsible, has any
Environmental, Health, and Safety Liabilities with respect to the Facilities or,
to the Knowledge of Sellers, with respect to any other properties and assets
(whether real, personal, or mixed) in which Sellers or any Acquired Company (or
any predecessor), has or had an interest, or, to Sellers' actual Knowledge, at
any property geologically or hydrologically adjoining the Facilities or any such
other property or assets.
(e) There are no Hazardous Materials present on or in the Environment at
the Facilities or to Sellers' actual Knowledge at any geologically or
hydrologically adjoining property, including any Hazardous Materials contained
in barrels, above or underground storage tanks, landfills, land deposits, dumps,
equipment (whether moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps, or any other part of
the Facilities or such adjoining property, or incorporated into any structure
therein or thereon. No Seller, Acquired Company, to Sellers' actual Knowledge
any other Person for whose conduct they are or may be held responsible, or any
other Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to the Facilities or any other properties or assets
(whether real, personal, or mixed) in which Sellers or any Acquired Company has
or had an interest.
(f) There has been no Release or, to the Knowledge of Sellers and the
Acquired Companies, Threat of Release, of any Hazardous Materials at or from the
Facilities or to Sellers' actual Knowledge at any other locations where any
Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed from or by the Facilities, or from or by
any other properties and assets (whether real, personal, or mixed) in which
Sellers or any Acquired Company has or had an interest, or to the actual
Knowledge of Sellers and the Acquired Companies any geologically or
hydrologically adjoining property, whether by Sellers, any Acquired Company, or
any other Person.
(g) Sellers have delivered to Buyers true and complete copies and results
of any reports, studies, analyses, tests, or monitoring possessed or initiated
by Sellers or any Acquired Company pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning
compliance by Sellers, any Acquired Company, or any other Person for whose
conduct they are or may be held responsible, with Environmental Laws. Except as
required by any Environmental Law, such reports shall not be disclosed to any
Governmental Body or any other third party and shall be treated as confidential
by Buyers.
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Letter contains a complete and accurate
list of the following information for each employee or director of the Company,
including each employee on leave of absence or layoff status: employer; name;
job title; current compensation paid or payable and any change in compensation
since April 30, 1995; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under the Company's pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock ownership (including investment credit or
payroll stock ownership), severance pay, insurance, medical, welfare, or
vacation plan, other Employee Pension Benefit Plan or Employee Welfare Benefit
Plan, or any other employee benefit plan or any Director Plan.
(b) To Sellers' Knowledge, no director or key employee of the Company is a
party to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of the Company, or (ii) the ability of the Company to
conduct its business, including any Proprietary Rights Agreement with Sellers or
the Company by any such employee or director. To Sellers' Knowledge, no
director, officer, or other key employee of the Company intends to terminate his
employment with the Company, except as disclosed to Buyers.
(c) Part 3.20 of the Disclosure Letter also contains a complete and
accurate list of the following information for each retired employee or director
of the Company, or their dependents, receiving benefits or scheduled to receive
benefits from the Company in the future: name, pension benefit, pension option
election, retiree medical insurance coverage, retiree life insurance coverage,
and other benefits.
3.21 LABOR RELATIONS; COMPLIANCE
Since April 30, 1995, the Company has not been and is not a party to any
collective bargaining or other labor Contract. Since April 30, 1995, there has
not been, there is not presently pending or existing, and there is not
Threatened, (a) any strike, slowdown, picketing, work stoppage, or similar
employee grievance process, (b) except as set forth in Part 3.21 of the
Disclosure Letter, any Proceeding against or affecting the Company relating to
the alleged violation of any Legal Requirement pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, organizational activity, or
other labor or employment dispute against or affecting the Company or its
premises, or (c) any application for
certification of a collective bargaining agent. No event has occurred or
circumstance exists that could reasonably be expected to provide the basis for
any work stoppage or other labor dispute. There is no lockout of any employees
by any Acquired Company, and no such action is contemplated by the Company. The
Company has complied in all respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing. The Company
is not liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY
(a) INTELLECTUAL PROPERTY ASSETS--The term "Intellectual Property Assets"
means:
(i) the names L&S AEROTECH, INC., L&S MACHINE CO., INC., all
fictional business names, trading names, registered and unregistered
trademarks, service marks, and applications owned by the Company
(collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries owned by the Company that are patentable (collectively,
"Patents");
(iii) all copyrights in both published works and unpublished works
owned by the Company (collectively, "Copyrights");
(iv) all rights in mask works owned by the Company (collectively,
"Rights in Mask Works"); and
(v) all know-how, trade secrets, or other confidential information
(including customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints) (collectively, "Trade
Secrets") owned, used, or licensed by the Company as licensee or licensor.
(b) AGREEMENTS--Part 3.22(b) of the Disclosure Letter contains a complete
and accurate list and summary description, including any royalties paid or
received by the Company, of all Contracts relating to the Intellectual Property
Assets to which the Company is a party or by which the Company is bound, except
for any license implied by the sale of a product and perpetual, paid-up licenses
for commonly available software programs with a value of less than $500 under
which the Company is the licensee. There are no outstanding and, to Sellers'
Knowledge, no Threatened disputes or disagreements with respect to any such
agreement.
(c) KNOW-HOW NECESSARY FOR THE BUSINESS
(i) The Intellectual Property Assets are all those necessary for
the operation of the Company's business as it is currently conducted. The
Company is a licensee of Intellectual Property Assets owned by other
Persons and used by the Company and is the owner of all right, title, and
interest in and to each of the owned Intellectual Property Assets, free and
clear of all liens, security interests, charges, encumbrances, equities,
and other adverse claims, and has the right to use, without payment to a
third party, except under licenses, royalty and similar agreements all of
the Intellectual Property Assets.
(ii) Except as set forth in Part 3.22(c) of the Disclosure Letter,
since January 1, 1995 all former and current employees of the Company have
executed written Contracts with the Company that assign to the Company all
rights to any inventions, improvements, discoveries, or confidential
information relating to the business of the Company. To Sellers'
Knowledge, no key employee of Company has entered into any Contract that
restricts or limits in any way the scope or type of work in which the
employee may be engaged or requires the employee to transfer, assign, or
disclose information concerning his work to anyone other than the Company.
(d) PATENTS
(i) Part 3.22(d) of the Disclosure Letter contains a complete and
accurate list and summary description of all Patents (other than inventions
and discoveries that are patentable). The Company is the owner of all
right, title, and interest in and to each of the Patents, free and clear of
all liens, security interests, charges, encumbrances and other adverse
claims.
(ii) All of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), are valid and enforceable,
and are not subject to any maintenance fees or taxes or actions falling due
within ninety days after the Closing Date, except for such fees and taxes
reflected in the Closing Date Balance Sheet.
(iii) No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding. To Sellers' Knowledge,
there is no potentially interfering patent or patent application of any
third party.
(iv) No Patent is infringed or, to Sellers' Knowledge, has been
challenged or threatened in any way. None of the products manufactured and
sold, nor any process or know-how used, by the Company infringes or is
alleged to infringe any patent or other proprietary right of any other
Person.
(v) Where appropriate, all products made, used, or sold under the
Patents have been marked with the proper patent notice.
(e) TRADEMARKS
(i) Part 3.22(e) of Disclosure Letter contains a complete and
accurate list and summary description of all Marks. The Company is the
owner of all right, title, and interest in and to each of the Marks, free
and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) All Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all formal
legal requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications), are valid
and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date, except for
such fees and taxes reflected in the Closing Date Balance Sheet.
(iii) No ▇▇▇▇ has been since January 1, 1991 or is now involved in
any opposition, invalidation, or cancellation and, to Sellers' Knowledge,
no such action is Threatened with the respect to any of the Marks.
(iv) To Sellers' Knowledge, there is no potentially interfering
trademark or trademark application of any third party.
(v) No ▇▇▇▇ is infringed or, to Sellers' Knowledge, has been
challenged or threatened in any way. None of the Marks used by the Company
infringes or is alleged to infringe any trade name, trademark, or service
▇▇▇▇ of any third party.
(vi) Where appropriate, all products and materials containing a
▇▇▇▇ ▇▇▇▇ the proper federal registration notice where permitted by law.
(f) COPYRIGHTS
(i) Part 3.22(f) of the Disclosure Letter contains a complete and
accurate list and summary description of all Copyrights. The Company is
the owner of all right, title, and interest in and to each of the
Copyrights, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims.
(ii) All the Copyrights have been registered and are currently in
compliance with formal legal requirements, are valid and enforceable, and
are not subject to any maintenance fees or taxes or actions falling due
within ninety days after the date of Closing.
(iii) No Copyright is infringed or, to Sellers' Knowledge, has been
challenged or threatened in any way. None of the subject matter of any of
the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a derivative
work based on the work of a third party.
(iv) Where appropriate, all works encompassed by the Copyrights
have been marked with the proper copyright notice.
(g) TRADE SECRETS
(i) With respect to each Trade Secret, the documentation relating
to such Trade Secret is kept in accordance with sound business practices.
(ii) Sellers and the Company have taken all reasonable precautions
to protect the secrecy, confidentiality, and value of their Trade Secrets.
(iii) The Company has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets. To Sellers'
Knowledge, the Trade Secrets are not part of the public knowledge or
literature, and, to Sellers' Knowledge, have not been used, divulged, or
appropriated either for the benefit of any Person (other than the Company)
or to the detriment of the Company. No Trade Secret is subject to any
adverse claim or, since January 1, 1991, has been challenged or threatened
in any way.
3.23 CERTAIN PAYMENTS
Since April 30, 1995, neither the Company nor a director, officer, agent,
or employee of the Company, or any other Person associated with or acting for or
on behalf of any Acquired Company, has in violation of Legal Requirements
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business for the Company, (ii) to pay for
favorable treatment for business secured for the Company, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Company or any Affiliate of the Company, or (iv) in violation of
any Legal Requirement, (b) established or maintained any fund or asset that has
not been recorded in the books and records of the Company.
3.24 DISCLOSURE
(a) No representation or warranty of Sellers in this Agreement and no
statement in the Disclosure Letter omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any untrue
statement or omit to state a material fact necessary to make the statements
therein or in this Agreement, in light of the circumstances in which they were
made, not misleading.
3.25 RELATIONSHIPS WITH RELATED PERSONS
No Seller or any Related Person of Sellers or of the Company has, or since
May 1, 1994 has had, any interest in any property (whether real, personal, or
mixed and whether tangible or intangible), used in or pertaining to the
Company's businesses. No Seller or any Related Person (which is not an
individual) of Sellers (other than the Company) or of the Company and, to
Sellers' Knowledge, no officer, director or key employee of Sellers or Company
is, or since May 1, 1994 has owned (of record or as a beneficial owner) an
equity interest or any other financial or profit interest in, a Person that has
(i) had business dealings or a material financial interest in any transaction
with the Company, except for such business dealings arising out of Precision's
direct and Vernitron's indirect ownership of the Shares, or (ii) engaged in
competition with the Company with respect to any line of the products or
services of the Company (a "Competing Business") in any market presently served
by the Company, except for certain production employees of the Company who
occasionally may work part-time as a production employee for other companies who
may be involved in Competing Businesses and except as set forth in Part 3.25 of
the Disclosure Letter. Except as set forth in Part 3.25 of the Disclosure
Letter, no Seller or any Related Person of Sellers or of the Company is a party
to any Contract with, or has any claim or right against, the Company. It shall
be understood that for the purpose of the previous sentence, Related Persons
shall not include individuals who will continue as employees of the Company
after Closing.
3.26 BROKERS OR FINDERS
Sellers and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyers represent and warrant to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyers are corporations duly organized, validly existing, and in good
standing under the laws of the State of Kansas, with full corporate power and
authority to conduct their businesses as now being conducted, to own or use the
properties and assets that they purport to own or use, and to execute and to
deliver this Agreement and Buyers' Closing Documents and to perform all their
obligations under this Agreement and Buyers' Closing Documents.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement and all Buyers' Closing Documents constitute the legal,
valid, and binding obligation of Buyers, enforceable against Buyers in
accordance with their terms, except as such
enforcement may be limited by general principles of equity or by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally. The
execution, delivery and performance by Buyers of this Agreement and Buyers'
Closing Documents and the consummation by Buyers of the transactions
contemplated hereby or thereby have been duly authorized by all necessary
corporate action on the part of Buyers. Buyers have the full corporate power
and authority to execute and deliver this Agreement and Buyers' Closing
Documents and to perform their obligations under this Agreement and Buyers'
Closing Documents.
(b) Except as set forth in Schedule 4.2, neither the execution and
delivery of this Agreement or Buyers' Closing Documents by Buyers nor the
consummation or performance of any of the Contemplated Transactions by Buyers
will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of any
provision of Buyers' Organizational Documents or any resolution adopted by
the board of directors or the stockholders of Buyers;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which the Buyers, or
any of the assets owned or used by the Buyers, are subject;
(iii) any Legal Requirement or Order to which Buyers may be subject
including the HSR Act; or
(iv) contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Contract to which Buyers are a
party or by which Buyers are bound; or
(v) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by the Buyers;
(vi) contravene, conflict with, or result in a violation of the
financing documents entered into by Buyers and Company in connection with
this transaction.
Except as set forth in Schedule 4.2, Buyers are not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions. Without limiting the generality of the foregoing, no filing or
notice is required under the HSR Act.
(c) Schedule 4.2(c) sets forth the capitalization of Buyers immediately
after the Closing on a consolidated basis in accordance with GAAP.
4.3 INVESTMENT INTENT
Buyers are acquiring the Shares for their own account and not with a view
to their distribution within the meaning of Section 2(11) of the Securities Act.
4.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyers and
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the Contemplated Transactions. To Buyers'
Knowledge, no such Proceeding has been Threatened.
4.5 BROKERS OR FINDERS
Buyers and their officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Sellers harmless from any such payment alleged to be due by
or through Buyers as a result of the action of Buyer or their officers or
agents.
4.6 TAXES
(a) RETURNS. Sellers shall have the exclusive obligation and authority to
file or cause to be filed all Income Tax Returns that are required to be filed
by or with respect to the income (including any deferred income triggered into
income by IRC Reg. Sec. 1.1502-13 and Reg. Sec. 1.1502-14 and any excess loss
accounts taken into income under Reg. Sec. 1.1502-19), assets, or operations of
the Acquired Companies for all taxable years or other taxable periods ending on
or prior to the Closing Date ("Pre-Closing Periods") and pay any Taxes
attributable thereto. The Company will furnish Tax Information to Sellers for
inclusion in Sellers' federal consolidated Income Tax Returns for the period
which includes the Closing Date in accordance with Company's past customs and
practice. Sellers will allow the Buyers an opportunity to review and comment
upon such Tax Returns (including any amended returns) to the extent they relate
to the Company. Except as required by law or consistent with past practice,
Sellers will take no position on such returns that relate to the Company that
would adversely affect the Company after the Closing Date. Except as provided
in the preceding sentence, Buyers shall have the exclusive obligation and
authority to file or cause to be filed all Tax Returns that are required to be
filed by or with respect to the income, assets, or operations of the Acquired
Companies for any taxable year or other taxable period ending after the Closing
Date. Buyers shall cause the Company after the Closing to cooperate with
Sellers in connection with Sellers' obligations under this Section 4.6.
(b) CONTESTS. Sellers will allow Buyers and their counsel to participate
therein, however, Sellers and their duly appointed representatives shall have
the exclusive authority to control any audit or examination by any taxing
authority, initiate any claim for refund, amend any Tax Return, and contest,
resolve and defend against any assessment for additional Taxes, notice of Tax
deficiency or
other adjustment for Taxes of or relating to any Acquired Company reflected on
any Tax Return filed with respect to any taxable year or other taxable period or
portion thereof ending on or before the Closing Date. Sellers will not settle
any such audit or examination in a manner which would adversely affect the
Company after the Closing Date if Sellers shall have received from its outside
counsel or counsel recommended by Buyers and acceptable to Sellers in their sole
discretion an unqualified opinion that if the matter proceeded to litigation the
matter would be expected to be resolved on a basis that is materially
advantageous to Sellers compared to the proposed settlement. Sellers shall be
entitled to any Tax refund relating to any Acquired Company to the extent such
Tax refund relates to any taxable year or other taxable period or portion
thereof ending on or prior to the Closing Date. The Company shall be entitled
to all other Tax refunds relating to an Acquired Company.
(c) OVERLAP PERIOD TAXES. Taxes of an Acquired Company that relate to any
taxable year or other taxable period of the Company beginning before the Closing
Date and ending after the Closing Date (the "Overlap Period") shall be
apportioned between the portion of such period ending on the Closing Date and
the portion of such period ending after the Closing Date on the basis of (i) an
interim closing of the books as to Taxes based upon measure with reference to
income, sales, receipts, or the like, or (ii) a per diem allocation reflecting
the number of days in the applicable Tax period (A) through and including the
Closing Date and (B) after the Closing Date in all other cases. Buyers shall be
responsible for Taxes allocable to the portion of the Overlap Period that ends
after the Closing Date. If the amount of Taxes previously paid by the Sellers
or the Company on or prior to the Closing Date with respect to the portion of
the Overlap Period that ends on the Closing Date exceeds the actual amount of
Taxes due with respect to such period, then Buyers shall promptly pay any excess
to Sellers.
(d) TAX SHARING AGREEMENTS. Any Tax sharing agreement between the Company
and either of the Sellers is terminated as of the Closing Date and will have no
further effect for any taxable year (whether the current year, a future year or
a past year).
4.7 BUYERS' KNOWLEDGE OF BUSINESS
Buyers hereby agree that, to the extent any representation or warranty of
Sellers made herein, in any Sellers' Closing Document, or in Sellers' Disclosure
Letter is, to the Knowledge of Buyers at the time the representation or warranty
was made, untrue or incorrect, (i) Buyers will have no rights under this
Agreement or Sellers' Disclosure Letter or otherwise by reason of such untruth
or inaccuracy and (ii) any such representation or warranty by Sellers shall be
deemed to be amended to the extent necessary to render it consistent with the
Knowledge of Buyers, provided, however, Buyers shall not be required to prove
that it did not have such Knowledge at the relevant time when making any claims
against Sellers pursuant to this Agreement and Sellers shall have the entire
burden of establishing any such Knowledge.
5. COVENANTS OF SELLERS
PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Sellers will, and
will cause the Company and its Representatives to, (a) afford Buyers and their
Representatives and prospective lenders and their Representatives (collectively,
"Buyers' Advisors") full and free access to the Company's personnel, properties
(including subsurface testing), contracts, books and records, and other
documents and data, as Buyers may reasonably request, (b) furnish Buyers and
Buyers' Advisors with copies of all such contracts, books and records, and other
existing documents and data as Buyers may reasonably request, and (c) furnish
Buyers and Buyers' Advisors with such additional financial, operating, and other
data and information as Buyers may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY
Except as otherwise permitted by this Agreement, between the date of this
Agreement and the Closing Date, Sellers will, and will cause the Company to:
(a) conduct the business of the Company only in the Ordinary Course of
Business;
(b) use their Best Efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with the Company;
(c) confer with Buyers concerning operational matters of a material
nature; and
(d) otherwise report periodically to Buyers concerning the status of the
business, operations, and finances of the Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between the date
of this Agreement and the Closing Date, Sellers will not, and will cause the
Company not to, without the prior consent of Buyers, take any affirmative
action, or fail to take any reasonable action within their or its control, as a
result of which any of the changes or events listed in Section 3.16(a), (c), (d)
or (i) is likely to occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers will,
and will cause the Company to, make all filings required by Legal Requirements
to be made by them in order to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause the Company to, (a) cooperate with Buyers with respect to all filings that
Buyers elect to make (unless any elective filing is adverse to Sellers) or are
required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyers in obtaining all consents identified in Schedule 4.2,
provided this Section 5.4 will not require Sellers or the Company to dispose of
or make any change in any portion of its business or to incur any other burden.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date, each Seller will
promptly notify Buyers in writing if such Seller or the Company becomes aware of
any fact or condition that causes or constitutes a Breach of any of Sellers'
representations and warranties as of the date of this Agreement, or if such
Seller or the Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a Breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in the Disclosure Letter if the Disclosure Letter
were dated the date of the occurrence or discovery of any such fact or
condition, Sellers will promptly deliver to Buyers a supplement to the
Disclosure Letter specifying such change. During the same period, each Seller
will promptly notify Buyers of the occurrence of any Breach of any covenant of
Sellers in this Section 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 impossible or unlikely.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Except as expressly provided in this Agreement, Sellers will cause all
indebtedness owed to the Company by either Seller or any Related Person of
either Seller (other than the Company or any individuals who are employees of
the Company) to be paid in full prior to Closing.
5.7 NO NEGOTIATION
Until such time as this Agreement is terminated pursuant to Section 9
(subject to Section 10.11), Sellers will not, and will cause the Company and
each of their Representatives not to, directly or indirectly solicit, initiate,
or encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyers) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of the Company, or any of the capital stock of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company.
5.8 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Sellers will use
their Best Efforts to cause the conditions in Sections 7 (other than Section
7.8) and 8 to be satisfied, provided, however,
that as a result of this Section 5.8, Sellers and the Company shall not be
required to dispose of or make any change in any portion of their business or to
incur any burden.
AFTER THE CLOSING DATE
5.9 EMPLOYEE BENEFITS
With respect to the 401(k) Plan listed in Part 3.3(i) of the Disclosure
Letter, which is maintained by Precision and in which the Company is a
participating employer, Precision agrees to cause all the Plan assets and
liabilities attributable to active employees of the Company on the Closing Date,
both vested and nonvested, to be transferred to the Trustee of Buyers' 401(k)
plan as soon as reasonably practicable after Buyers furnish Precision with (i) a
copy of the favorable I.R.C. Section 401(a) notification letter for the Buyers'
regional prototype standardized 401(k) plan and (ii) an unqualified opinion of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel to Buyers, that active employees of the
Company have the same rights and benefits with respect to the transferred assets
under the Buyers' regional prototype standardized 401(k) plan as each such
employee had under the 401(k) plan. Buyers agree to hold Sellers harmless from
any liability (including reasonable attorney's fees) they may incur as a result
of and in connection with such transfer of 401(k) Plan assets and liabilities.
6. COVENANTS OF BUYERS PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyers will,
and will cause each of its stockholders and their respective Related Persons to,
make all filings required by Legal Requirements to be made by them to consummate
the Contemplated Transactions. Between the date of this Agreement and the
Closing Date, Buyers will, and will cause each of its stockholders and their
Related Persons to, cooperate with Sellers with respect to all filings that
Sellers elect to make (unless any elective filing is adverse to Buyers) are
required by Legal Requirements to make in connection with the Contemplated
Transactions, and (ii) cooperate with Sellers in obtaining all consents
identified in Part 3.2 and 4.2 of the Disclosure Letter; provided that this
Section 6.1 will not require Buyers to dispose of or make any change in any
portion of its business or to incur any other burden.
6.2 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the date of this
Agreement and the Closing Date, Buyers will use its Best Efforts to cause the
conditions in Sections 7 and 8 to be satisfied, provided, however, that as a
result of this Section 6.2, Buyers shall not be required to dispose of or make
any change in any portion of its business or to incur any burden.
6.3 NOTIFICATION
Between the date of this Agreement and the Closing Date, Buyers will
promptly notify Sellers in writing if such Buyers become aware of any fact or
condition that causes or constitutes a Breach of any of Buyers' representations
and warranties as of the date of this Agreement, or if Buyers become aware of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in Buyers'
representations or warranties if this Agreement were dated the date of the
occurrence or discovery of any such fact or condition, Buyers will promptly
deliver to Sellers a supplement to Buyers' representations or warranties
specifying such change. During the same period, Buyers will promptly notify
Sellers of the occurrence of any Breach of any covenant of Buyers in this
Section 6 or of the occurrence of any event that may make the satisfaction of
the conditions in Section 8 impossible or unlikely.
6.4 LEASE GUARANTEE AGREEMENTS
Precision is a party to guarantee agreements (the "Guarantee Agreements")
with respect to certain leases of equipment by the Company. The Guarantee
Agreements are listed on Part 6.4 of the Disclosure Letter. Commencing on the
date hereof and continuing after the Closing, if permitted by the other party to
the Guarantee Agreements, Buyers shall enter into guarantee agreements,
substantially in the form of the Guarantee Agreements, replacing Precision,
effective the Closing. If the other party to the Guarantee Agreements shall not
release Precision, Buyers shall nevertheless enter into guarantee agreements,
substantially in the form of the Guarantee Agreements, by the Closing, and
Buyers hereby agree to hold Precision harmless of any Damages which it may
suffer arising from the enforcement of the Guarantee Agreements in respect of
events arising after the Closing Date.
7. CONDITIONS PRECEDENT TO BUYERS' OBLIGATION TO CLOSE
Buyers' obligation to purchase the Shares and to take the other actions
required to be taken by Buyers at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyers, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
(a) All of Sellers' representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Letter.
(b) Each of Sellers' representations and warranties in Sections 3.3, 3.4,
3.12, and 3.24 must have been accurate in all respects
as of the date of this Agreement, and must be accurate in all respects as of the
Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Letter.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
(b) Each document required to be delivered pursuant to Section 2.4 must
have been delivered, and each of the other covenants and obligations in
Sections 5.4 and 5.8 must have been performed and complied with in all respects.
7.3 CONSENTS
Each of the Consents identified in Part 3.2 of the Disclosure Letter, and
each Consent identified in Schedule 4.2, must have been obtained and must be in
full force and effect.
7.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to Buyers:
(a) an opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., dated the Closing Date, in the
form of Exhibit 7.4(a);
(b) estoppel certificates executed on behalf of the lessor of ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇., dated as of a date not more than five days prior to the Closing
Date; and
(c) such other documents as Buyers may reasonably request for the purpose
of (i) enabling their counsel to provide the opinion referred to in
Section 8.4(a), (ii) evidencing the accuracy of any of Sellers' representations
and warranties, (iii) evidencing the performance by either Seller of, or the
compliance by either Seller with, any covenant or obligation required to be
performed or complied with by such Seller, (iv) evidencing the satisfaction of
any condition referred to in this Section 7, or (v) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Buyers, or against any Person affiliated with Buyers, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any claim
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, any of the Acquired Companies,
or (b) is entitled to all or any portion of the Purchase Price payable for the
Shares.
7.7 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyers or any Person affiliated with Buyers to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise proposed by or before any Governmental Body.
7.8 FINANCING
Buyers must receive sufficient funds from its lender pursuant to the
commitment letter attached hereto as Exhibit 7.8 to fund the Purchase Price,
including the Adjustment Amount.
7.9 RELEASE OF LIENS
Sellers must cause its lenders to release all liens on the assets of the
Company and cancel all related agreements involving obligations of the Company.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
(a) All of Buyers' representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.
(b) Buyers' representation and warranty in Sections 4.2(b)(vi) and 4.2(c)
must have been accurate in all respects as of the date of this Agreement, and
must be accurate in all respects as of the Closing Date as if made on the
Closing Date, without giving effect to any supplement to the representation and
warranty.
8.2 BUYERS' PERFORMANCE
(a) All of the covenants and obligations that Buyers are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyers must have delivered each of the documents required to be
delivered by Buyers pursuant to Section 2.4 and must have made the cash payment
required to be made by Buyers pursuant to Section 2.4(b)(i) and each of the
other covenants and obligations in Sections 6.1 and 6.2 must have been performed
and complied with in all respects.
8.3 CONSENTS
Each of the Consents identified in Part 4.2 and Part 3.2 of the Disclosure
Letter must have been obtained and must be in full force and effect.
8.4 ADDITIONAL DOCUMENTS
Buyers must have caused the following documents to be delivered to Sellers:
(a) an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., dated the Closing Date, in the
form of Exhibit 8.4(a); and
(b) such other documents as Sellers may reasonably request for the purpose
of (i) enabling their counsel to provide the opinion referred to in
Section 7.4(a), (ii) evidencing the accuracy of any representation or warranty
of Buyers, (iii) evidencing the performance by Buyers of, or the compliance by
Buyers with, any covenant or obligation required to be performed or complied
with by Buyers, (ii) evidencing the satisfaction of any condition referred to in
this Section 8, or (v) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.5 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the sale of the Shares by Sellers to Buyers, and
(b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
8.6 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Sellers, or against any Person affiliated with Sellers, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
8.7 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with,
or result in a material violation of, or cause Sellers or any Person affiliated
with Sellers to suffer any material adverse consequence under, (a) any
applicable Legal Requirement or Order, or (b) any Legal Requirement or Order
that has been published, introduced, or otherwise proposed by or before any
Governmental Body.
8.8 BUYERS' FINANCING
Sellers shall be satisfied with the terms of Buyers' financing in
connection with the Contemplated Transactions.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Buyers or Sellers if a material Breach of any provision of
this Agreement has been committed by the other party and such Breach has not
been waived;
(b) subject to Section 10.11, (i) by Buyers if any of the conditions in
Section 7 has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the failure of
Buyers to comply with its obligations under this Agreement) and Buyer has not
waived such condition on or before the Closing Date; or (ii) by Sellers, if any
of the conditions in Section 8 has not been satisfied on or before the Closing
Date or if satisfaction of such a condition is or becomes impossible (other than
through the failure of Sellers to comply with their obligations under this
Agreement) and Sellers have not waived such condition on or before the Closing
Date;
(c) by mutual consent of Buyers and Sellers; or
(d) by either Buyers or Sellers if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before the close
of business Kansas City time on December 6, 1996, or such later date as the
parties may agree upon.
9.2 EFFECT OF TERMINATION
Subject to Section 10.11, each party's right of termination under Section
9.1 is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 9.1, all further
obligations of the parties under this Agreement will terminate, except that the
obligations in Sections 11.1 and 11.3 will survive; provided, however, that if
this Agreement is terminated by a party because of the Breach of the Agreement
by the other party or because one or more of the conditions to
the terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
Except as otherwise specifically set forth herein, (i) all representations
and warranties contained in this Agreement the Disclosure Letter, or in any
Sellers' Closing Documents or Buyers' Closing Documents will survive the Closing
and continue in effect for a period of eighteen months after the date hereof,
and (ii) all covenants, agreements and obligations contained in this Agreement
or in any Sellers' Closing Documents or Buyers' Closing Documents shall continue
in effect until such time as such covenants, agreements and obligations are
performed or satisfied in accordance with their terms. Except as provided in
Section 4.7, the right to indemnification, payment of Damages or other remedy
based on such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. Subject to Section 10.11, the waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Sellers, jointly and severally, will indemnify and hold harmless Buyers,
the Company, and their respective Representatives, stockholders, controlling
persons, and affiliates (collectively, the "Buyer Indemnified Persons") for, and
will pay to the Buyer Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Sellers in this
Agreement (without giving effect to any supplement to the Disclosure Letter),
the Disclosure Letter, the supplements to the Disclosure Letter, or any other
certificate or document delivered by Sellers pursuant to this Agreement;
(b) any Breach of any representation or warranty made by Sellers in this
Agreement as if such representation or warranty were made on and as of the
Closing Date without giving effect to any supplement to the Disclosure Letter,
other than any such Breach that is disclosed in a supplement to
the Disclosure Letter and is expressly identified in the certificate delivered
pursuant to Section 2.4(a)(iii) as having caused the condition specified in
Section 7.1 not to be satisfied;
(c) any Breach by either Seller of any covenant or obligation of such
Seller in this Agreement;
(d) any product shipped or manufactured by, or any services provided by,
any Acquired Company at any time during the two years prior to the Closing Date;
(e) (OMITTED); or
(f) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged to have
been made by any such Person with either Seller or the Company (or any Person
acting on their behalf) in connection with any of the Contemplated Transactions;
provided that any Damages shall be calculated net of any reserves in respect of
such Damages required to be reserved against as a liability on the Closing Date
Balance Sheet.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS--ENVIRONMENTAL
MATTERS
In addition to the provisions of Section 10.2, Sellers, jointly and
severally, will indemnify and hold harmless Buyers, the Company, and the other
Buyer Indemnified Persons for, and will pay to Buyers, the Company, and the
other Buyer Indemnified Persons the amount of, any Damages (including costs of
cleanup, containment, or other remediation) arising, directly or indirectly,
from or in connection with:
(a) any Environmental, Health, and Safety Liabilities arising out of or
relating to: (i) (A) the ownership, operation, or condition at any time on or
prior to the Closing Date of the Facilities or any other properties and assets
(whether real, personal, or mixed and whether tangible or intangible) in which
Sellers or any Acquired Company has or had an interest, or (B) any Hazardous
Materials or other contaminants that were present on the Facilities or such
other properties and assets at any time on or prior to the Closing Date; or (ii)
(A) any Hazardous Materials or other contaminants, wherever located, that were,
or were allegedly, generated, transported, stored, treated, Released, or
otherwise handled by Sellers or any Acquired Company or by any other Person for
whose conduct they are or may be held responsible at any time on or prior to the
Closing Date, or (B) any Hazardous Activities that were, or were allegedly,
conducted at any time on or prior to the Closing Date by Sellers or any Acquired
Company or by any other Person for whose conduct they are or may be held
responsible; or
(b) any bodily injury (including illness, disability, and death, and
regardless of when any such bodily injury occurred, was incurred, or manifested
itself), personal injury, property damage (including trespass, nuisance,
wrongful eviction, and deprivation of the use of real property), or other
damage of or to any Person, including any employee or former employee of Sellers
or any Acquired Company or any other Person for whose conduct they are or may be
held responsible, in any way arising from or allegedly arising from any
Hazardous Activity conducted or allegedly conducted with respect to the
Facilities or the operation of the Acquired Companies prior to the Closing Date,
or from Hazardous Material that was (i) present or suspected to be present on or
before the Closing Date on or at the Facilities (or present or suspected to be
present on any other property, if such Hazardous Material emanated or allegedly
emanated from any of the Facilities and was present or suspected to be present
on any of the Facilities on or prior to the Closing Date) or (ii) Released or
allegedly Released by Sellers or any Acquired Company or any other Person for
whose conduct they are or may be held responsible, at any time on or prior to
the Closing Date.
(c) Sellers' indemnification obligations under this Section 10.3 and under
Section 10.2 to the extent such obligations relate to environmental matters
shall apply only to the extent such Environmental, Health and Safety Liabilities
or Damages result from the acts or omissions of the Acquired Companies prior to
the Closing Date. Sellers shall have no indemnification obligations under this
Section 10.3 and under Section 10.2 to the extent such obligations relate to
environmental matters for Environmental, Health and Safety Liabilities or
Damages directly attributable to the following Areas of Concern or potential
environmental concerns (collectively, the "AOCs") identified in the letter
report, dated April 17, 1996, from Enviro-Sciences, Inc. to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
((i) AOC1 (the bare soil area) at the Facility located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, and (ii) AOC1 (the courtyard area) at the Facility
located at ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇) or any AOCs in the
environmental matters reports initiated by Buyers or its financing sources. Any
Environmental, Health and Safety Liabilities or Damages shall be calculated net
of any reserves in respect of such Environmental, Health and Safety Liabilities
and Damages required to be reserved against as a liability on the Closing
Balance Sheet.
(d) Sellers shall have no indemnification obligations for Environmental,
Health and Safety Liabilities pursuant to this Section 10.3 or Damages related
to environmental matters pursuant to Section 10.2 unless such Environmental,
Health and Safety Liabilities or Damages are actually expensed or incurred, or
are the subject of a claims notice pursuant to Section 10.9 below, by a Buyer
Indemnified Person on or before the third anniversary of the Closing Date.
(e) The Buyer Indemnified Person's rights with respect to Environmental,
Health and Safety Liabilities pursuant to Section 10.3 or Damages related to
environmental matters pursuant to Section 10.2 shall be reduced to the extent
that actions undertaken by it are not conducted in a Commercially Reasonably
Manner and such actions (A) increase the amount of Environmental Health and
Safety Liabilities or Damages, or (B) result in Environmental, Health and Safety
Liabilities or Damages, which but for such actions would not have been expended
or incurred. "Commercially Reasonable Manner" shall be determined from the
perspective of a reasonable business person acting (without regard to the
availability of indemnification hereunder) to achieve compliance (based on
reasonable reliance on the advance of expert third-party consultants or counsel)
with Environmental Law or to avoid or mitigate a loss or liability or potential
loss or liability with respect to Environmental Law. Sellers' indemnification
obligations pursuant to Section 10.3 with respect to any Environmental,
Health and Safety Liabilities and pursuant to Section 10.2 with respect to
Damages relating to environmental matters shall be reduced to the extent that
any act, omission or negligence of any of the Buyer Indemnified Persons (or
their agents) on or after the Closing Date adversely affects such obligations.
(f) Sellers shall have no indemnification obligations pursuant to Section
10.3 with respect to any Environmental, Health and Safety Liabilities and
pursuant to Section 10.2 with respect to Damages relating to environmental
matters resulting, in whole or in part, from any disclosure, report,
communication (whether oral or written) from any of the Buyer Indemnified
Persons (or their agents) to any Governmental Body or other third party
("Notification"), unless such Notification was required by Environmental Law at
the time it was made. The Buyer Indemnified Persons (or their agents) shall
provide notice to Sellers seven days prior to any Notification; provided,
however, that in the event any such Notification is necessary to ▇▇▇▇▇ promptly
any immediate threat to human health or the environment. Notification to
Sellers shall be by telephone or similar means at the earliest possible
opportunity.
Buyers will be entitled to control any Cleanup, any related Proceeding,
and, except as provided in the following sentence, any other Proceeding with
respect to which indemnity may be sought under this Section 10.3. The procedure
described in Section 10.9 will apply to any claim solely for monetary damages
relating to a matter covered by this Section 10.3. Buyers will give Sellers
prompt notice of any claim that is not for monetary damages.
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYERS
Buyers, and after the Closing, the Company, jointly and severally, will
indemnify and hold harmless Sellers and their respective Representatives,
stockholders, controlling persons and affiliates (collectively, "Seller
Indemnified Persons"), and will pay to the Seller Indemnified Persons the amount
of any Damages arising, directly or indirectly, from or in connection with (a)
any Breach of any representation or warranty made by Buyers in this Agreement or
in any Buyers Closing Document, (b) any Breach by Buyers of any covenant,
agreement or obligation of Buyers in this Agreement or any Buyers Closing
Document, or (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyers (or any Person acting on
its behalf) in connection with any of the Contemplated Transactions.
10.5 TIME LIMITATIONS
Subject to the next sentence hereof, the representations and warranties
contained in Section 3.3 shall survive the Closing without limitation; the
representations and warranties contained in Section 3.4 shall survive the
Closing and terminate at such time as the Purchase Price is required to be
finally determined under the terms of this Agreement; the representations and
warranties relating to owned real property interests contained in Section 3.6
and the representations and warranties contained in Section 3.12 shall terminate
sixty days after Closing; the representations and warranties contained in
Section 3.11 and 3.13 shall survive the Closing until thirty days after the
closing of the applicable statute of limitations, if any, to which such
representations and warranties relate. To the extent a written notice asserting
a claim for breach of any representation or warranty shall have been given prior
to its date of expiration to the party which made such representation or
warranty, such representation and warranty shall survive, to the extent of such
claim only, until such claim is resolved, whether or not the amount of the
damages or expenses resulting from such breach has been finally determined at
the time the notice is given, if, but only if, in the case of any claim made by
Buyers other than by reason of a third party claim, (i) some damages or expense
shall have been incurred in good faith at or prior to the date of such notice,
or (ii) a reserve would be required to be provided on a balance sheet prepared
in accordance with GAAP.
10.6 LIMITATIONS ON AMOUNT--SELLERS
Sellers will have no liability (for indemnification or otherwise) until the
total of all Damages exceeds $200,000 at which point Sellers shall be
responsible only for Damages in excess of $200,000. However, this Section 10.6
will not apply to (i) any intentional Breach by either Seller of any covenant or
obligation, and Sellers will be jointly and severally liable for all Damages
with respect to such Breaches or (ii) Sellers' obligations pursuant to Section
2.6 and 2.7 hereof.
10.7 LIMITATIONS ON AMOUNT--BUYERS
Buyers will have no liability (for indemnification or otherwise) until the
total of all Damages exceeds $200,000 at which point Buyers shall be responsible
only for Damages in excess of $200,000. However, this Section 10.7 will not
apply to (i) any Breach of any of Buyers' representations and warranties of
which Buyers had Knowledge at any time prior to the date on which such
representation and warranty is made or any intentional Breach by Buyers of any
covenant or obligation, and Buyers will be liable for all Damages with respect
to such Breaches or (ii) Buyers' obligations pursuant to Sections 2.6 and 2.7
hereof.
10.8 LIMITATIONS ON CLAIMS--BUYERS AND SELLERS
In case any event shall occur which would otherwise entitle any party to
assert any claim for indemnification hereunder, no Damages or Environmental,
Health and Safety Liabilities shall be deemed to have been sustained by such
party to the extent of (a) any Tax savings actually realized by such party with
respect thereto, or (b) any proceeds actually received by such party from any
insurance policies with respect thereto, net of any increase in premiums or
other costs associated with such insurance recovery. The indemnification
provisions of this Section 10 shall be the sole and exclusive remedy of the
parties against one another with respect to any Damage (including Damages
resulting from Environmental, Health and Safety Liabilities) suffered by the
parties hereto.
10.9 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section 10.2,
10.4, or (to the extent provided in the last sentence of Section 10.3) Section
10.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's failure to give
such notice.
(b) If any Proceeding referred to in Section 10.9(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) no compromise or
settlement of such claims may be effected by the indemnifying party without the
indemnified party's consent unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person and
no effect on any other claims that may be made against the indemnified party,
and (B) the sole relief provided is monetary damages that are paid in full by
the indemnifying party; and (ii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within ten business days after
the indemnified party's notice is given, give notice to the indemnified party of
its election to assume the defense of such Proceeding, the indemnifying party
will be bound by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines in
good faith that there is a reasonable probability that a Proceeding will
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party, assume the exclusive
right to defend, compromise, or settle such Proceeding, but the indemnifying
party will not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent.
(d) Sellers hereby consent to the non-exclusive jurisdiction of any court
in which a Proceeding is brought against any Indemnified Person for purposes of
any claim that an Indemnified
Person may have under this Agreement with respect to such Proceeding or the
matters alleged therein, and agree that process may be served on Sellers with
respect to such a claim anywhere in the world.
10.10 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
10.11 NOTWITHSTANDING PROVISION
Notwithstanding anything to the contrary contained herein, Sellers may, at
any time prior to the Closing, deliver to Buyers in writing one or more
supplements to the Disclosure Letter and inform Buyers in writing of any Breach
of any of Sellers' representations and warranties, covenants, obligations or
other agreements contained in this Agreement. Notwithstanding anything to the
contrary contained herein, including without limitation, Sections 9, 10 and 11.1
hereof and the last sentence of Section 2.3 hereof:
(a) in the event any of the conditions precedent to Buyers' obligation to
close contained in Section 7 hereof (including, without limitation, Sections 7.1
and 7.2 (other than as a result of a failure by Sellers to comply with its
obligations under Sections 5.7 and 11.2)) shall not be satisfied prior to the
close of business, Kansas City time, on December 6, 1996, for any reason (with
respect to each such failure of a condition to be satisfied, a "Failure of
Condition"), including, without limitation, a Breach of any of Sellers'
representations and warranties, covenants, obligations or other agreements
contained in this Agreement (as in effect on the date hereof determined before
giving effect to any disclosure made pursuant to the immediately preceding
sentence), then unless Buyers shall have waived in writing each such Failure of
Condition and the Closing shall occur prior to the close of business, Kansas
City time, on December 6, 1996 (A) Buyers shall have no remedy or claim for
Damages under this Agreement or otherwise, and (B) this Agreement shall
immediately terminate without liability to the parties hereto and each party
shall pay its own expenses arising from the negotiation and execution of this
Agreement and the Contemplated Transactions; and
(b) If Buyers shall deliver to Sellers prior to the Closing a written
waiver of each Failure of Condition and the Closing shall occur prior to the
close of business, Kansas City time, on December 6, 1996, then, from and after
the Closing, Sellers' representations and warranties, covenants, obligations and
other agreements contained herein (other than Sections 3.3, 5.7 and 11.2 hereof)
shall be deemed to be amended as of the date of this Agreement and as of the
Closing Date to the extent necessary to render them consistent with disclosures
made pursuant to the first sentence of this Section 10.11; and
(c) If, prior to the Closing, (A) Buyers shall deliver to Sellers a
written waiver of each Failure of Condition, (B) all other conditions precedent
to Buyers' obligation to close shall be satisfied or waived by Buyers, and (C)
Sellers shall fail to close by the close of business, Kansas City time, on
December 6, 1996 and such failure is in violation of Sellers' obligation to
close under this Agreement, the Sellers shall pay Buyers, within five business
days thereafter, as Buyers' liquidated damages and
Buyers' sole and exclusive remedy under this Agreement or otherwise, an amount
equal to the sum of (x) Buyers' reasonable out-of-pocket expenses incurred in
connection with the negotiation and execution of the Agreement and the
Contemplated Transaction, up to a maximum of $75,000, and (y) $200,000, and this
Agreement shall immediately terminate without liability to the parties hereto.
11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights
of such party arising from a breach of this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS
Neither Sellers nor Buyers shall make any public statements, including,
without limitation, any press releases, with respect to this Agreement and the
transactions contemplated hereby without the prior written consent of the other
party (which consent shall not be unreasonably withheld) except as may be
required by law or the rules of the NASD or any applicable stock exchange. If a
public statement is required to be made by law or the rules of the NASD or any
applicable stock exchange, the parties shall consult with each other in advance
as to the contents and timing thereof.
11.3 JOINT AND SEVERAL
The obligations of each Buyer are joint and several and the obligations of
each Seller are joint and several.
11.4 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by Federal Express or another nationally recognized overnight
delivery service, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers: VERNITRON CORPORATION
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman and CEO
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President and General Counsel
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Buyers: TRU-CIRCLE CORPORATION
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
11.5 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Kansas, County of Sedgwick, or, if it has
or can acquire jurisdiction, in the United States District Court for the
District of Kansas, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
11.6 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.7 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by any party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,
and no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Agreement, the Sellers' Closing Documents or
the Buyers' Closing Documents, or the documents referred to in this Agreement
can be discharged by one party, in whole or in part, by a waiver or renunciation
of the claim or right unless in writing signed by the other party; (b) no
waiver that may be given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on one party will
be deemed to be a waiver of any obligation of such party or of the right of the
party giving such notice or demand to take further action without notice or
demand as provided in this Agreement, the Sellers' Closing Documents or the
Buyers' Closing Documents or the documents referred to in this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including the Letter of Intent between Buyers and
Sellers dated September 19, 1996) and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment. The Confidentiality Agreement executed by the
parties shall remain in effect if the Closing does not occur. No party is
relying on any representations and warranties, except as set forth in this
Agreement, the Disclosure Letter, Sellers' Closing Documents or Buyers' Closing
Documents.
11.9 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter, and those in any Supplement
thereto, must relate only to the representations and warranties in the Section
of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the body
of this Agreement and those in the Disclosure Letter (other than an exception
expressly set forth as such in the Disclosure Letter with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties except that Buyers may assign any of their
rights under this Agreement to any Subsidiary of Buyers so long as (a) the
representations and warranties of Buyers made herein are equally true of such
assignee and (b) such assignment does not have any adverse consequences to
Sellers or any of their affiliates (including, without limitation, any adverse
Tax consequences), but no such assignment of this Agreement or any of the rights
or obligations hereunder shall relieve Buyers of their obligations
under this Agreement. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and permitted assigns.
11.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All references to "herein" or "hereof" shall mean this Agreement.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
11.13 GOVERNING LAW
This Agreement will be governed by the laws of the State of Kansas without
regard to conflicts of laws principles.
11.14 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
BUYERS: SELLERS:
TRU-CIRCLE CORPORATION VERNITRON CORPORATION
By:__________________________________ By:_____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President _____________________________
TRU-CIRCLE MANUFACTURING, INC. PRECISION AEROTECH, INC.
By:__________________________________ By:_____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President _____________________________