EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered
into as of October 4, 2000 (the "Effective Date") by and between Summa
Industries, a Delaware corporation (the "Company"), and the individuals and
entities listed on EXHIBIT A attached hereto, who are all the shareholders and
other holders of direct and indirect interests in or claims to the equity
(individually, a "Shareholder" and collectively, "Shareholders") of Plastic
Specialties, Inc., a California corporation ("PSI").
WHEREAS, certain Shareholders are the sole record and beneficial owners
of all of the issued and outstanding shares of capital stock of PSI, consisting
of an aggregate of Five Hundred (500) shares of PSI common stock (the "Shares");
WHEREAS, other Shareholders are the sole beneficial owners of all
direct and indirect interests in or claims of any type to PSI equity, as such
interests and claims are described on EXHIBIT A attached hereto (the "Other
Interests"); and
WHEREAS, Shareholders desire to sell to the Company, and the Company
desires to purchase from Shareholders, all of the Shares and Other Interests on
the terms, subject to the conditions and for the consideration hereinafter set
forth (the "Purchase").
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE I
THE PURCHASE
1.1 PURCHASE AND SALE OF THE SHARES AND OTHER INTERESTS. On the terms
and subject to the conditions set forth in this Agreement, at the Closing (as
defined in SECTION 3.1 below), Shareholders will sell, assign, transfer and
deliver to the Company or its designee the number of Shares listed after each
Shareholder's name on EXHIBIT A attached hereto and the Other Interests
described therein, and the Company will purchase from Shareholders, all of their
right, title and interest in and to such Shares and Other Interests.
ARTICLE II
THE PURCHASE PRICE
2.1 PURCHASE PRICE. At the Closing, the Company shall cause to be
paid and delivered to Shareholders Six Million Two Hundred Eighty Six Thousand
Five Hundred Forty Nine Dollars ($6,286,549.00) in cash in the aggregate,
payable to each Shareholder in the amount set forth after each Shareholder's
name on EXHIBIT A attached hereto (the "Purchase Price").
2.2 DEBT PREPAYMENT.
(a) At the Closing, the Company shall, or as the sole shareholder
of all the issued and outstanding equity of PSI shall cause PSI to, prepay in
full (i) that certain promissory note in the original face amount of
$1,770,875.00 (with current principal amount due not to exceed
$750,000.00 and accrued interest), payable to former PSI shareholders ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, dated March 31, 1997, and (ii) all amounts due by PSI to
AmSouth Bank (formerly First American National Bank) under that certain loan
agreement and deed of trust, security agreement and assignment of leases, each
dated December 6, 1995, and that certain business loan agreement dated April 26,
2000.
(b) Promptly after Closing, the Company, as the sole shareholder
of all the issued and outstanding equity of PSI, shall cause PSI to prepay in
full that certain promissory note due from PSI to The Ljubo and ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Family Trust U/D/T March 31, 1999 (the "Trust"), under which $2,113,451
is owed to the Trust as of March 31,2000 (the "Trust Note"), at which time that
certain Stockholders' Agreement, dated April 7, 1978, as amended, between
certain of the Shareholders and PSI shall automatically terminate.
ARTICLE III
THE CLOSING
3.1 CLOSING. The Purchase shall be consummated at a closing (the
"Closing") to be held at 10:00 a.m. Pacific Standard Time on October 5, 2000, or
on such earlier or later date and time as may be mutually agreed by the parties
(the "Closing Date") at the offices of ▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
3.2 DELIVERIES TO OR BETWEEN THE PARTIES. At the Closing the
Company shall cause to be delivered to each Shareholder by wire transfer (to an
account designated by them in writing to the Company not less than three (3)
business days prior to the Closing) of immediately available funds such
Shareholder's portion of the Purchase Price. At the Closing, each Shareholder
shall deliver to the Company certificates representing the Shares, duly endorsed
in blank or accompanied by stock powers duly endorsed in blank in proper form
for transfer, with appropriate transfer stamps, if any, affixed thereto, or
documents evidencing the transfer and/or cancellation of the Other Interests. In
addition, at the Closing the Company and Shareholders shall deliver to and
receive from each other all documents required to be delivered and received
pursuant to ARTICLE VIII hereof (Conditions Precedent to Closing).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders, jointly and severally, represent and warrant to the
Company as of the date hereof and as of the Closing Date the following:
4.1 ORGANIZATION OF PSI. PSI is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, and has
its principal place of business at ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇. A true and complete copy of the Articles of Incorporation of PSI and
all amendments thereto certified by the Secretary of State of California, and a
true and complete copy of the Bylaws of PSI, as amended, certified by the
Secretary of PSI, will be delivered to the Company prior to the Closing. PSI is
not qualified to do business in any jurisdictions other than California and
Mississippi and its failure to be so qualified will not have a material adverse
effect on its business, its prospects, its results of operations or its
financial condition.
4.2 ORGANIZATION OF SUBSIDIARIES.
(a) PSI WEST. PSI West, Inc., a California corporation
("PSI West"), is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, and has its principal place
of business at ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇. A true and
complete copy of the Articles of Incorporation of PSI West and all amendments
thereto certified by the Secretary of State of California, and a true and
complete copy of the Bylaws of PSI West, as amended, certified by the Secretary
of PSI ▇▇▇▇, ▇▇▇▇ be delivered to the Company prior to the Closing. PSI West is
not qualified to do business in any jurisdictions other than California and its
failure to be so qualified will not have a material adverse effect on its
business, its prospects, its results of operations or its financial condition.
(b) PSI SOUTH. PSI South, Inc., a Mississippi corporation ("PSI
South"), is a corporation duly organized, validly existing and in good standing
under the laws of the State of Mississippi, and has its principal place of
business at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇. A true and complete
copy of the Articles of Incorporation of PSI South and all amendments thereto
certified by the Secretary of State of Mississippi, and a true and complete copy
of the Bylaws of PSI South, as amended, certified by the Secretary of PSI South,
will be delivered to the Company prior to the Closing. Except as set forth on
SCHEDULE 4.2(b) hereto, PSI South is not qualified to do business in any
jurisdictions other than Mississippi and its failure to be so qualified will not
have a material adverse effect on its business, its prospects, its results of
operations or its financial condition.
4.3 OWNERSHIP OF SHARES AND OTHER INTERESTS; AUTHORITY. Each
Shareholder owns, beneficially and of record, the Shares (or beneficially the
Other Interests) set forth after each Shareholder's name on EXHIBIT A attached
hereto, free and clear of all liens, pledges, charges, claims, equities,
restrictions or encumbrances of any kind (collectively, "Liens") other than as
disclosed on EXHIBIT A, and each Shareholder has and will have the full right,
power, capacity and authority to enter into this Agreement and all related
agreements and to sell, transfer and deliver the Shares and Other Interests to
the Company at the Closing. This Agreement has been duly and validly executed
and delivered by each Shareholder and, assuming this Agreement constitutes a
valid and binding obligation of the Company, this Agreement constitutes a valid
and binding agreement of Shareholders, enforceable against each of them in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights or by general
principles of equity. Upon delivery of the Shares and Other Interests to the
Company at the Closing and upon receipt by Shareholders of the Purchase Price,
good and valid title to the Shares and Other Interests will pass to the Company
free and clear of all Liens. Except as set forth on SCHEDULE 4.3 hereto, the
sale by Shareholders of the Shares and Other Interests does not constitute a
breach or violation of, or default under, any will, deed, trust, agreement or
other instrument, whether written or oral, express or implied, by which either
Shareholder is bound.
4.4 OWNERSHIP OF SUBSIDIARY SHARES. PSI has good and valid title
to all of the issued and outstanding shares of common stock of PSI South and PSI
West, free and clear of all Liens (the "Subsidiary Shares"). (PSI South and PSI
West are sometimes referred to herein individually as a "Subsidiary" and
collectively as the "Subsidiaries".) Other than this Agreement, the Subsidiary
Shares are not subject to any voting trust agreement or other contractual
obligation
restricting or otherwise relating to the voting, dividend rights, ownership or
disposition of the Subsidiary Shares. The certificates representing the
Subsidiary Shares to be delivered at the Closing will constitute all of the
outstanding Subsidiary Shares.
4.5 AUTHORIZED CAPITAL OF PSI. PSI has an authorized capital of
2,500 shares of common stock, no par value, of which Five Hundred (500) shares
were duly authorized and validly issued and are outstanding, fully paid and
nonassessable, all of which are held of record and beneficially by Shareholders
in the respective amounts set forth on EXHIBIT A attached hereto. Other than the
Other Interests, there are no (i) outstanding stock options, warrants,
privileges or rights of any kind to purchase or subscribe for any capital stock
or other equity of PSI, (ii) obligations or securities convertible into or
exchangeable for capital stock or other equity of PSI, (iii) agreements
providing for or relating to any options, warrants, privileges, rights,
convertible obligations or securities to which PSI is a party, (iv) voting trust
agreements or other contractual obligations restricting or otherwise relating to
the voting, dividend rights, ownership or disposition of any capital stock or
other equity of PSI, or (v) any agreements by PSI to issue, sell, or acquire any
of its capital stock or other equity.
4.6 AUTHORIZED CAPITAL OF SUBSIDIARIES.
(a) PSI WEST. PSI has an authorized capital of 5,000 shares of
common stock, no par value, of which one hundred (100) shares were duly
authorized and validly issued and are outstanding, fully paid and nonassessable,
all of which are held of record and beneficially by PSI. There are no (i)
outstanding stock options, warrants, privileges or rights of any kind to
purchase or subscribe for any capital stock or other equity of PSI West, (ii)
obligations or securities convertible into or exchangeable for capital stock or
other equity of PSI West, (iii) agreements providing for or relating to any
options, warrants, privileges, rights, convertible obligations or securities to
which PSI West is a party, (iv) voting trust agreements or other contractual
obligations restricting or otherwise relating to the voting, dividend rights,
ownership or disposition of any capital stock or other equity of PSI West, or
(v) any agreements by PSI to issue, sell, or acquire any of its capital stock or
other equity.
(b) PSI SOUTH. Except as set forth in SCHEDULE 4.6(b), PSI South
has an authorized capital of 1,000 shares of common stock, no par value, of
which one hundred (100) shares were duly authorized and validly issued and are
outstanding, fully paid and nonassessable, all of which are held of record and
beneficially by PSI. There are no (i) outstanding stock options, warrants,
privileges or rights of any kind to purchase or subscribe for any capital stock
or other equity of PSI South, (ii) obligations or securities convertible into or
exchangeable for capital stock or other equity of PSI South, (iii) agreements
providing for or relating to any options, warrants, privileges, rights,
convertible obligations or securities to which PSI South is a party, (iv) voting
trust agreements or other contractual obligations restricting or otherwise
relating to the voting, dividend rights, ownership or disposition of any capital
stock or other equity of PSI South, or (v) any agreements by PSI South to issue,
sell, or acquire any of its capital stock or other equity.
4.7 NO OTHER EQUITY INTERESTS. Except as set forth on SCHEDULE 4.7
hereto, other than its ownership of the Subsidiary Shares, PSI previously has
had and currently has no investments, directly or indirectly, or other financial
interests in any other corporation or business organization, joint venture or
partnership of any kind whatsoever. Neither Subsidiary has previously or
currently has any investments, directly or indirectly, or other financial
interests in
any other corporation or business organization, joint venture or partnership of
any kind whatsoever.
4.8 NO BREACH OR DEFAULT; CONSENTS AND APPROVALS.
(a) NO BREACH OR DEFAULT. Except as set forth on SCHEDULE 4.8
hereto, The execution and delivery by Shareholders of this Agreement and other
documents referenced herein to which any Shareholder, PSI or any Subsidiary is a
party, and the consummation of the transactions contemplated hereby and thereby,
will not result in or constitute any of the following: (i) a default or an event
that, with the giving of notice or lapse of time, or both, would be a default,
breach or violation of any contractual obligation or agreement of any
Shareholder, PSI or any Subsidiary or the Articles of Incorporation or Bylaws of
PSI or any Subsidiary, (ii) an event that would permit any party to terminate
any contract, agreement or understanding or to accelerate the maturity of any
indebtedness or other obligation of any Shareholder, PSI or any Subsidiary,
(iii) the creation or imposition of any lien or other obligation of any type on
any of the properties of any Shareholder, PSI or any Subsidiary, or (iv) a
violation of any order, writ, injunction, decree, statute, rule or regulation
applicable to any Shareholder, PSI or any Subsidiary, all except to the extent
that any such matter or item would not have a material adverse effect on PSI or
its Subsidiaries or the ability of the Shareholders to execute, deliver and
perform this Agreement.
(b) CONSENTS AND APPROVALS. Except as set forth in SCHEDULE 4.8
hereto, no authorization, consent or approval of any governmental authority or
any third party is necessary or required for the consummation by Shareholders of
the transactions contemplated by this Agreement and the other documents
referenced herein to which any will be a party, including consents and approvals
necessary or required by PSI and/or the Subsidiaries, except to the extent that
any such matter or item would not have a material adverse effect on PSI or its
Subsidiaries or the ability of the Shareholders to execute, deliver and perform
this Agreement.
4.9 PERMITS. Except to the extent that any such matter or item
would not have a material adverse effect on PSI or its Subsidiaries, and except
as set forth on SCHEDULE 4.9 hereto, PSI and each Subsidiary holds all permits,
licenses, franchises, certificates and authorizations that are required by any
governmental agency to permit it to conduct its business as now conducted and as
previously conducted by it, and all such permits, licenses, franchises,
certificates and authorizations are valid and in full force and effect and will
remain so upon consummation of the transactions contemplated by this Agreement.
No suspension, cancellation or termination of any of such permits, licenses,
franchises, certificates and authorizations is pending or, to the Knowledge of
the Shareholders, threatened or imminent.
4.10 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) FINANCIAL STATEMENTS. Shareholders have caused PSI to furnish
to the Company audited consolidated balance sheets of PSI and its Subsidiaries
as of March 31, 2000, 1999 and 1998 and related consolidated statements of
income and retained earnings and cash flows for the three years in the period
ended March 31, 2000, and its unaudited consolidated balance sheet (the "Balance
Sheet") as of, and unaudited consolidated statements of income and retained
earnings and cash flows for the five-months in the period ended August 31, 2000
(collectively, the "Financial Statements"), as such Financial Statements are
attached to SCHEDULE 4.10 hereto. Except as set forth on SCHEDULE 4.10, the
Financial Statements fairly present the consolidated
financial condition of PSI as of the respective dates indicated, and the
consolidated results of its operations for the respective periods indicated, and
were prepared in accordance with generally accepted accounting principles
consistently applied, except for (i) the absence of complete footnotes, (ii) the
use of Modified Accelerated Cost Recovery System depreciation on machinery,
equipment and tooling, and (iii) as otherwise stated within the Financial
Statements.
(b) UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 4.10,
PSI and its Subsidiaries have no indebtedness, obligations or liabilities,
whether accrued, absolute, contingent or otherwise and whether due or to become
due, known or unknown, including without limitation tax liabilities due or to
become due, as of date of the Balance Sheet, which are not reflected or
adequately reserved for in the Balance Sheet. From the date of the Balance Sheet
until Closing, other than in the ordinary course of business, PSI and its
Subsidiaries will not incur or become obligated to pay for any such
indebtedness, obligations or liabilities.
4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Balance Sheet, (i) PSI and its Subsidiaries have conducted their businesses only
in, and since such date, have not engaged in any transaction other than
according to, the ordinary and usual course of such business, and, (ii) except
as set forth in SCHEDULE 4.11, there has not been (a) any event, circumstance,
condition, development or occurrence causing, resulting in or having a material
adverse effect on the financial condition, business, properties or results of
operations of PSI or any Subsidiary (a "Material Adverse Change"); (b) any
material change in accounting principles, practices or methods; (c) any labor
dispute which may result in any Material Adverse Change, and to the Knowledge of
Shareholders, PSI and the Subsidiaries, no such dispute is now threatened; (d)
any asset material to the businesses sold or disposed of (except inventory sold
in the ordinary course of business), or any material asset mortgaged, pledged or
subjected to any lien, charge or other encumbrance; (e) any increase in excess
of $5,000, individually or in the aggregate, in the compensation payable or
which could become payable to employees, distributors, dealers or sales
representatives of the businesses; (f) any amendment of any employee benefit
plan; (g) any additional indebtedness incurred with respect to the businesses;
(h) any loan made or agreed to be made by PSI or any Subsidiary with respect to
the businesses, nor has PSI or any Subsidiary become liable or agreed to become
liable as a guarantor with respect to any such loan; or (i) any waiver by PSI or
any Subsidiary of any right or rights of material value related to the
businesses. Neither any Shareholder nor PSI nor any Subsidiary has taken any
action that, if taken after the date hereof, would constitute a breach of any of
the covenants set forth in SECTION 7.2 (Conduct of Business) below.
4.12 TAXES. Except as set forth in SCHEDULE 4.12:
(a) PSI and the Subsidiaries ("Filers") have timely filed all
returns, declarations, reports, or information returns or statements relating to
Taxes (as defined below) with respect to their businesses, including any
schedule or attachment thereto and including any amendment thereof ("Tax
Returns") that are required to be filed under federal, state, local or foreign
law as of the date of this Agreement. All such Tax Returns were complete in all
material respects. All Taxes owed by Filers with respect to their businesses
(whether or not shown on any of said Tax Returns) have been paid for all periods
for which Tax Returns have been filed. Neither PSI nor any Subsidiary is
currently the beneficiary of any extension of time within which to file any Tax
Return. No outstanding claim has been made by any authority in a jurisdiction
where Filers do not file Tax Returns that PSI or any Subsidiary may be subject
to taxation by that jurisdiction.
(b) PSI and each Subsidiary have each withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, creditor, independent contractor, or other third party.
(c) There is no dispute or claim concerning any Tax liability
relating in any manner to PSI or any Subsidiary either (i) claimed or raised by
any authority or (ii) as to which any Shareholders, PSI or any Subsidiary have
Knowledge based upon personal contact or correspondence with any agent of such
authority. Shareholders have caused PSI and each subsidiary to provide to the
Company all federal, state, local and foreign Tax Returns filed with respect to
their businesses for the last five (5) years, and has disclosed to the Company
those of such Tax Returns, if any, that have been audited, and those of such Tax
Returns, if any, that currently are the subject of audit. Shareholders have
caused PSI and each subsidiary to deliver correct and complete copies of all Tax
Returns, examination reports and statements of deficiencies assessed against or
agreed to by PSI or any Subsidiary for the last five (5) years.
(d) Neither PSI nor any Subsidiary has waived in writing any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency pertaining to it, which waiver or
extension is still in effect. Neither PSI nor any Subsidiary has received notice
or become aware of any pending increase in real or personal property taxes
applicable to their businesses. All of the Tax information set forth in the
financial records of PSI and its Subsidiaries relating to Tax matters is true
and complete in all material respects.
(e) For purposes of this Agreement, "Tax" or "Taxes" means any
federal, state, county, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code Section 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
4.13 ASSETS OTHER THAN REAL PROPERTY INTERESTS. Except for (a)
property acquired and disposed of in the ordinary course of business since the
date of the Balance Sheet, and (b) all property not required by GAAP to be
reflected on the Financial Statements, set forth in SCHEDULE 4.13 is a complete
list of all items of tangible personal property (including without limitation
all items of tooling) owned, leased or otherwise used by PSI and its
Subsidiaries in the current conduct of its business, wherever located, where the
original cost was in excess of $1,000.00, and the original cost, location and
ownership or lease of each such asset is indicated on the Schedule. Except as
set forth in SCHEDULE 4.13, PSI and its Subsidiaries have, and at the Closing
Date will have, good and marketable title to, or in the case of leased equipment
a valid leasehold interest in, and are in the possession of, all such items of
personal property owned or leased by them, free and clear of all Liens, title
defects, mortgages, pledges, security interests, conditional sales agreements,
restrictions or encumbrances whatsoever. Included in SCHEDULE 4.13 is a list of
all outstanding equipment leases and maintenance agreements to which PSI or any
Subsidiary is a party as lessee and which individually provide for future lease
payments in excess of $1,000 per month, with the identities of the other parties
to all such leases and agreements shown thereon. All leases of tangible personal
property to which PSI or any Subsidiary is a party and which are
material to the business of PSI or such Subsidiary are fully effective in
accordance with their respective terms, and there exists no material default on
the part of PSI or any Subsidiary or termination thereof, except as may be set
forth in SCHEDULE 4.13. Each item of capital equipment reflected in the Balance
Sheet which is used in the current conduct of PSI's or any Subsidiary's business
is in good operating and usable condition and repair, ordinary wear and tear
excepted, has been properly maintained, is suitable for use in the ordinary
course of business and conforms with all applicable ordinances, regulations and
other laws in all material respects.
4.14 REAL PROPERTY. Set forth in SCHEDULE 4.14 is a complete and
accurate description of each parcel of real property owned by and/or leased or
occupied by PSI or any Subsidiary, including any easements, covenants,
rights-of-way or similar restrictions (collectively the "Real Property"), and,
except as set forth in SCHEDULE 4.14, neither PSI nor any Subsidiary leases,
subleases, owns nor occupies any other real property nor is any other real
property used in or related to their businesses. Except as indicated in SCHEDULE
4.14:
(a) PSI and each Subsidiary has, and at the Closing Date will have,
good and marketable fee simple absolute title in and to all Real Property owned
by it, free and clear of all Liens, title defects, mortgages, pledges, security
interests, easements, conditional sales agreements, transfer restrictions and
other restrictions or encumbrances of any kind whatsoever, except as set forth
on SCHEDULE 4.14, and except for (i) liens for all applicable taxes which are
not yet payable, (ii) easements for the erection and maintenance of public
utilities, (iii) secured indebtedness reflected on the Financial Statements, and
(iv) minor encumbrances which are not material in amount and zoning laws and
other land use restrictions that do not materially detract from the present or
intended use of the Real Property;
(b) PSI and each Subsidiary has, and at the Closing Date will have,
good and valid title to the leasehold estates in all leased Real Property, free
and clear of all Liens, easements, covenants, rights-of-way, transfer
restrictions and other restrictions of any nature whatsoever;
(c) Each of the buildings and all roofs, fixtures and improvements
located on the Real Property are in good operating condition, ordinary wear and
tear excepted, and have been properly maintained and repaired as necessary;
(d) Neither PSI nor any Subsidiary has received any notice, nor is
it aware, that any of the buildings, structures or other improvements erected on
the Real Property, or the present use thereof, (i) do not conform in all
respects with all applicable zoning and building laws (or does not constitute a
legal nonconforming use), ordinances, regulations or other laws and applicable
deed restrictions, or (ii) encroach on property of others;
(e) Neither PSI nor any Subsidiary has received any written or oral
notice of any pending (i) change of such zoning and building laws, ordinances,
regulations or other laws affecting any of such properties, or (ii) partial or
full condemnation of any such properties; and
(f) Neither PSI nor any Subsidiary has received any notice from any
municipal body or other public authority requiring work to be done or
improvements to be made upon any of the Real Property and has no Knowledge of
the enactment or adoption of any ordinance or resolution by any such body or
authority authorizing work or improvements for which any of the Real Property
may be assessed.
4.15 INTELLECTUAL PROPERTY.
(a) Except as set forth in SCHEDULE 4.15, PSI and its Subsidiaries do
not have any right, title or interest in any Intellectual Property (as defined
below) and no such Intellectual Property is necessary for or used in their
businesses as now conducted. With respect to registered
patents and trademarks, SCHEDULE 4.15 contains a list of all jurisdictions in
which such patents and trademarks are registered or applied for and all
registration and application numbers.
(b) "Intellectual Property" includes United States and foreign
inventions, invention disclosures, patents, inventors' certificates, utility
models, trademarks, service marks, trade names, service names, copyrights, mask
work registrations, trade secrets (including processes and software programs),
registrations and applications therefor and works in progress, and past, present
and future causes of action and remedies therefor, and customer lists.
(c) PSI and its Subsidiaries own or have the unrestricted perpetual
right to use, free and clear of any rights of others and without payment to any
other party, the Intellectual Property listed on SCHEDULE 4.15, and the
consummation of the transactions contemplated hereby will not alter or impair
any such items nor the right of their businesses to use such items.
(d) Neither PSI nor any Subsidiary has received any communications
alleging that it has violated any other person's Intellectual Property rights or
has engaged in unfair competition against any such person. To the Knowledge of
Shareholders, PSI and its Subsidiaries, neither PSI nor any Subsidiary infringes
or misappropriates any third party's Intellectual Property rights and none have
any liability for any past infringement or misappropriation. No dispute or
disagreement involving PSI or any Subsidiary exists or is, to the Knowledge of
Shareholders, PSI and its Subsidiaries, threatened with regard to any third
party's Intellectual Property rights, including any allegation of Intellectual
Property infringement or misappropriation or of any breach or default of an
Intellectual Property license or similar agreement. There exists no dispute
regarding the ownership of or unrestricted right to use the following names in
any jurisdiction: Plastic Specialties, Inc., PSI, PSI West and PSI South.
(e) To the Knowledge of Shareholders, PSI and its Subsidiaries, (i)
no third party is now infringing or misappropriating any Intellectual Property
rights of PSI or its Subsidiaries or their businesses, and (ii) there has not
been any past such infringement or misappropriation.
4.16 CONTRACTS. PSI and its Subsidiaries have no contract,
agreement, obligation or commitment, written or oral, expressed or implied,
which involves a commitment or liability in excess of $10,000 or is for a term
of more than one year or whose terms do not permit cancellation without
liability on thirty (30) days' notice or less (other than obligations which are
included in accounts payable), and no union contracts, employee or consultant
contracts, loan, credit or other financing agreements, inventory flooring
arrangements, debtor or creditor arrangements, security agreements, licenses,
franchise, manufacturing, distributorship or dealership agreements, leases, or
bonus, health or stock option plans, except for those described in SCHEDULE
4.16, copies of all of which have been delivered to the Company prior to the
execution hereof. To Shareholders' Knowledge, as of the date hereof, there
exists no circumstances which would affect the validity or enforceability of any
such contracts and other agreements in accordance with their respective terms.
PSI and its Subsidiaries have performed and complied in all material respects
with all obligations required to be performed by them to date under, and are not
in default (without giving effect to any required notice or grace period) under,
or in breach of, the terms, conditions or provisions of any of such contracts
and other agreements. Except for consents to assignment required as set forth on
SCHEDULE 4.8, the validity and enforceability of every contract and other
agreement described herein has not been and shall not in any manner be affected
by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby. Neither PSI nor any
Subsidiary has any contract, agreement, obligation or commitment which requires
or will require future expenditures (including internal costs and overhead) in
excess of reasonably anticipated receipts, nor which, to Shareholders'
Knowledge, is likely to be adverse to their businesses, assets or condition
(financial and otherwise).
4.17 ACCOUNTS RECEIVABLE. The accounts receivable reflected in the
Balance Sheet constituted all accounts receivable of PSI and its Subsidiaries as
of the date thereof, other than accounts receivable fully written off as
uncollectible as of such date in accordance with consistently applied prior
practice. All such accounts receivable arose from valid sales made (as opposed
to consignments) or services rendered in the ordinary course of business, and
are not subject to any return privileges, set-offs or counterclaims. Except as
disclosed on SCHEDULE 4.17, such accounts receivable have been collected in full
since the date of the Balance Sheet or are collectible at their full respective
amounts (net of allowance for doubtful accounts established in accordance with
consistently applied prior practice). All accounts receivable created after the
date of the Balance Sheet up to the Closing will arise from valid transactions
in the ordinary course of business, and will be valid, binding and legally
enforceable obligations at their full respective amounts (net of the allowance
for doubtful accounts established with consistently applied prior practice). The
"allowance for doubtful accounts" shown on the Balance Sheet is sufficient to
cover all doubtful accounts resulting from the accounts receivable set forth in
the Balance Sheet. The Company agrees that it will use due diligence and
reasonable efforts to collect the accounts receivable existing as of the
Closing, short of filing litigation. Payments received from a customer on
accounts receivable where such customer had a balance at Closing will first be
applied against old undisputed balance(s). In the event the Company is to be
indemnified for uncollectible accounts receivable over and above the allowance
for doubtful accounts existing immediately prior to Closing, the uncollectible
accounts will be assigned to Shareholders at no additional consideration or cost
to Shareholders so that Shareholders may pursue the same.
4.18 INVENTORIES. PSI and its Subsidiaries have good and marketable
title to all of their inventories of raw materials, work-in-process and finished
goods, including models and samples, free and clear of all Liens, security
interests, liens, claims, restrictions and encumbrances of any nature
whatsoever. Except as set forth on SCHEDULE 4.18, all such inventories consist
of items that are usable and saleable in the ordinary course of business for an
amount at least equal to the book value thereto, plus the costs of disposition
thereof, and represent quantities, individually and in the aggregate, not in
excess of six (6) month's requirements for their businesses as currently
conducted. The Company acknowledges that a portion of the inventory is first
generation re-grind that is valued at the cost of virgin resin.
4.19 LITIGATION. Except as set forth in SCHEDULE 4.19, there are no
actions, suits or proceedings pending or threatened against or affecting PSI,
and/or any Subsidiary or any Shareholder (including actions, suits or
proceedings where liabilities may be adequately covered by insurance) at law or
in equity or before or by any federal, state, municipal or other governmental
department, commission, court, board, bureau, agency or instrumentality,
domestic or foreign, or affecting any of the officers, directors or Shareholders
in connection with the businesses, operations or affairs of PSI and its
Subsidiaries, and Shareholders, PSI and its Subsidiaries know of no facts which
given the passage of time are likely to result in any such an action, suit or
proceeding. Except as set forth in SCHEDULE 4.19, neither Shareholders nor PSI
nor
any of its Subsidiaries have, during the past five (5) years, been threatened
with any action, suit, proceedings or claim (including actions, suits,
proceedings or claims where its liabilities may be adequately covered by
insurance), including, without limitation, claims of personal injuries allegedly
attributable to products sold or services performed by PSI or any of its
Subsidiaries asserting a particular defect or hazardous property in any of their
products, services or business practices or methods, nor have Shareholders, PSI
or any Subsidiary been a party to or threatened with proceedings brought by or
before any federal or state agency; and Shareholders, PSI and the Subsidiaries
have no Knowledge of any defect or hazardous property, claimed or actual, in any
such product, service, business practice or method. Neither Shareholders nor PSI
nor any Subsidiary is subject to any voluntary or involuntary proceeding under
the United States Bankruptcy Code and none have made an assignment for the
benefit of creditors.
4.20 ENVIRONMENTAL MATTERS.
(a) Except as set forth in SCHEDULE 4.20:
(i) PSI and each Subsidiary has complied in all material respects
with all applicable Environmental Laws, or has fully cured any violations (as
such violations and cures are described in SCHEDULE 4.20);
(ii) All Property (including soils, groundwater, surface water,
buildings or other structures) is not contaminated with any Hazardous Substances
that may subject PSI, any Subsidiary or the Company to liability under any
Environmental Law. PSI has not created, caused or contributed to any
contamination by any Hazardous Substance that may subject PSI, any Subsidiary or
the Company to liability under any Environmental Law;
(iii) All properties formerly owned or operated by PSI or any
Subsidiary were not contaminated with Hazardous Substances during the period of
ownership or operation by PSI or such Subsidiary that may subject PSI, any
Subsidiary or the Company to liability under any Environmental Law;
(iv) Neither PSI nor any Subsidiary are subject to liability under
any Environmental Law for any Hazardous Substance disposal or contamination on
any third party property;
(v) Neither PSI nor any Subsidiary nor their officers, employees,
agents or invitees have created, caused or contributed in any manner to any
release or threat of release of any Hazardous Substance that may subject PSI,
any Subsidiary or the Company to liability under any Environmental Law;
(vi) Neither PSI nor any Subsidiary have received any notice,
demand, letter, claim or request for information alleging that PSI or any
Subsidiary may be in violation of, or liable under, any Environmental Law;
(vii) Neither PSI nor any Subsidiary are subject to any orders,
decrees, injunctions or other arrangements with any governmental entity, nor is
PSI or any Subsidiary a party to any agreement or contract, nor has PSI or any
Subsidiary taken any action or failed to take any action, which would obligate
it to indemnify any third party relating to liability under any Environmental
Law or relating to Hazardous Substances;
(viii) There are no circumstances or conditions that could reasonably
be expected to result in any claims, liability, investigations, costs or
restrictions on the ownership, use or transfer of any of the Property pursuant
to any Environmental Law; and
(ix) The Property does not contain any underground storage tanks,
asbestos-containing material, lead-based products or polychlorinated biphenyls.
(b) "Environmental Law" means any federal, state, local or foreign
law, statute, ordinance, rule, regulation, or treaty; all judicial
administrative, and regulatory orders, judgments, decrees, permits, and
authorizations; and common law relating to: (1) the protection, investigation,
remediation or restoration of the environment or natural resources, (2) the
handling, use, storage, treatment, disposal, release or threatened release of
any Hazardous Substance; or (3) any injury or threat of injury to persons or
property caused by those items set forth in (1) and/or (2) above.
(c) "Hazardous Substance" means any substance, material or waste
that is: (1) listed, classified or regulated in any concentration pursuant to
any Environmental Law; (2) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive materials or radon; or (3) any other substance, material
or waste which may be the subject of regulatory action by any governmental
entity pursuant to any Environmental Law.
(d) "Property" means any real property and improvements owned,
leased, used, operated or occupied by PSI or any Subsidiary.
4.21 COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 4.21, PSI
and its Subsidiaries have complied in all material respects with, and are
complying with, all applicable laws, orders, rules and regulations promulgated
by any federal, state, municipal or other governmental authority relating to the
operation and conduct of the property and businesses of PSI and the
Subsidiaries, and there are no material violations of any such law, order, rule
or regulation existing or threatened. Neither PSI nor any Subsidiary has
received any oral or written notices of violation of any applicable zoning
regulation or order, or other law, order, regulation or requirement relating to
the operation of their businesses or to their properties.
4.22 INSURANCE. PSI and its Subsidiaries maintain insurance with
reputable insurance companies on such of their equipment, tools, machinery,
inventory and properties that PSI's insurance broker has advised are of the
types and in the amounts as are usually insured by companies similarly situated
in the same geographic location and to the extent customarily insured, and
maintain products and personal liability insurance, worker's compensation, and
such other insurance against hazards, risks and liability to persons and
property as is customary for companies similarly situated in the same geographic
location. A true and complete listing and general description of each insurance
policy as currently in force, including all policies of life, group medical
and/or dental insurance, is set forth in SCHEDULE 4.22, copies of all of which
have previously been made available to the Company. Such policies will be in
full force and effect through the Closing Date and such policies, or other
policies covering the same risks, have been in full force and effect, without
gaps, continuously for the past five (5) years. Neither PSI nor any
Subsidiary is in default under any of such policies or binders and has not
failed to give any notice or to present any claim under any such policy or
binder in a due and timely fashion.
4.23 EMPLOYEE AND LABOR MATTERS.
(a) EMPLOYEE. No shareholder, director, officer or employee of PSI
or any Subsidiary is presently a party to any transaction, contract or
arrangement with PSI or any Subsidiary, including without limitation any
contract, loan or other agreement or arrangement providing for the furnishing of
services by, the rental of real or personal property from or to, or otherwise
requiring loans or payments to, any such shareholder, director, officer or
employee, or to any member of the family of any of the foregoing, or to
Shareholders' Knowledge, to any corporation, partnership, trust or other entity
in which any shareholder, director, officer or employee or any member of the
family of any of them has a substantial interest or is an officer, director,
trustee, partner or employee. There is set forth in SCHEDULE 4.23 a list showing
(i) the name, title, date and amount of last compensation increase, and
aggregate compensation, including amounts paid or accrued pursuant to any bonus,
pension, profit sharing, commission, deferred compensation or other plans or
arrangements in effect as of the date of this Agreement, of each officer or
employee of PSI and/or its Subsidiaries whose salary and other compensation, in
the aggregate, received or accrued is at an annual rate (or aggregated for the
most recently completed fiscal year) in excess of $40,000, as well as any
employment and/or severance agreements relating to any such persons; (ii) a
description of any and all bonus, pension, profit sharing, commission, deferred
compensation or other plans or arrangements in effect for any employees as of
the date of this Agreement; (iii) a description of any noncompetition or similar
agreements to which PSI, any Subsidiary, or any shareholder, director, officer
or employee of PSI or a Subsidiary is a party; (iv) all powers of attorney from
PSI and/or any Subsidiary to any person or entity; and (v) the name of each
person or entity authorized to borrow money or incur or guarantee indebtedness
on behalf of PSI and/or any Subsidiary. PSI has delivered to the Company copies
of all written personnel policies, including without limitation vacation,
severance, bonus, profit sharing and commission policies, applicable to any PSI
and Subsidiary employees. Neither the execution and delivery of this Agreement,
nor the consummation of any of the transactions contemplated hereby, or
compliance with any of the provisions hereof, shall create any obligation or
liability on the part of PSI or any Subsidiary under any bonus, profit sharing,
deferred compensation or other plan or arrangement in effect as of the date of
this Agreement and the Closing Date. To the Knowledge of Shareholders, except as
set forth on SCHEDULE 4.23, no officer or employee of PSI or any Subsidiary has
indicated his or her intention to leave employment with PSI or any Subsidiary.
(b) LABOR. None of the facilities or operations of PSI and its
Subsidiaries has been the subject of any strike, work stoppage, boycott, union
organizational effort, unfair labor practice charge or employment discrimination
charge; and no such action is pending or, to the Knowledge of Shareholders,
threatened.
4.24 ERISA PLANS.
(a) Each employee pension benefit plan, program, agreement or
arrangement maintained or contributed to by PSI or any Subsidiary and related in
any manner to their businesses ("Plan") which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), is set forth on
SCHEDULE 4.24 and such Plan(s) conform in all material
respects to all applicable federal laws; no liability under ERISA or the
Internal Revenue Code of 1986, as amended, has been or prior to Closing will be
incurred by PSI, any Subsidiary or the Company with respect to any Plan (other
than for benefits under such Plan); full payment has been made of all amounts
required to have paid as contributions to such Plan(s) prior to Closing; the
cost of providing all retirement and post-termination benefits has been properly
accrued and is reflected in the Financial Statements in accordance with GAAP,
including without limitation, Statements of Financial Accounting Standards 87,
106 and 112; there is not in the aggregate any accumulated funding deficiency
with respect to such Plan(s); and the current value of accrued benefits of each
such Plan(s) does not exceed the current value of such Plans' assets.
(b) Shareholders have caused PSI to provide the Company with copies
of the following documents relating to Plans, or any other plan terminated by
PSI or any Subsidiary during its existence, which are subject to ERISA: (i)
copies of the plan documents and all amendments relating thereto; (ii) the most
recent Form 5500 filed with respect to such plans, including all schedules and
attachments relating thereto; (iii) where applicable, the most recent
determination letters received with respect thereto from the Internal Revenue
Service; (iv) the most recent financial statements and actuarial reports, where
applicable, prepared with respect to such plans; and (v) copies of all
correspondence with the Internal Revenue Service, Pension Benefit Guaranty
Corporation, Department of Labor, or any other governmental agency regarding any
pending dispute or any pending or threatened audit or investigation relating to
any such plan.
4.25 WARRANTIES; PRODUCT RETURNS. Except as described in SCHEDULE
4.25, PSI and its Subsidiaries do not offer any express warranties for their
products and services. Warranty reserves reflected in the Financial Statements
are and shall be adequate to cover all pending warranty claims, whether known or
unknown. Except where: (i) PSI or a Subsidiary has a contractual right of return
and full refund with the suppliers of such products; (ii) the terms of routine
sales documentation (which contain provision for a restocking charge upon
return); and (iii) items which cannot be resold on PSI premises in the "Demo"
section thereof, PSI and its Subsidiaries do not currently hold inventory, nor
are they obligated to take back into inventory, products having an aggregate
cost to PSI and its Subsidiaries of more than five thousand dollars ($5,000.00).
In the past five (5) years, none of the products manufactured by PSI and its
Subsidiaries have been subject to recall.
4.26 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS. Except as set
forth on SCHEDULE 4.26, no present customer or supplier to PSI and/or any
Subsidiary has indicated to PSI and/or any Subsidiary an intention to terminate
or adversely alter its existing business relationship therewith, and PSI and
each Subsidiary has no reason to believe that any of the present customers of or
suppliers to PSI and its Subsidiaries intends to do so.
4.27 BANK ACCOUNTS. All bank and savings accounts, and other
accounts at similar financial institutions, of PSI and its Subsidiaries are
listed in SCHEDULE 4.27, and a list of all authorized signatories to each such
account is set forth therein.
4.28 MINUTE BOOKS. The minute books of PSI and the Subsidiaries
accurately reflect all actions and proceedings taken to date by shareholders and
by the Boards of Directors of such entities, and such minute books contain true
and complete copies of the Articles of Incorporation and Bylaws of such entities
and all related amendments.
4.29 BROKERAGE. Neither any Shareholder nor PSI nor any Subsidiary
has any obligation to any person or entity for brokerage commissions, finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement.
4.30 THIRD PARTY BENEFITS. Neither Shareholders nor any other
related third party has provided, directly or indirectly, any benefit, service,
good or product to the businesses of PSI and its Subsidiaries other than as has
been fully and fairly allocated to such businesses and expensed by such entities
at fair value in the cost of sales or selling, general and administrative
sections of their income statements.
4.31 DISCLOSURE; KNOWLEDGE. Neither this Agreement nor any
certificate, exhibit or other written document or statement required to be
furnished by this Agreement, furnished to the Company by or on behalf of any
Shareholder, PSI or any Subsidiary in connection with the transactions
contemplated by this Agreement contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to be
stated in order to make the statements contained herein or therein, in the light
of the circumstances in which they were made, not misleading. Neither any
Shareholder nor PSI nor any Subsidiary has any Knowledge of any fact which has
not been disclosed in writing to the Company which may reasonably be expected to
materially and adversely affect the business, operations, properties, assets,
condition (financial or other), and/or results of operations of PSI and its
Subsidiaries or the ability of any Shareholder or PSI or any Subsidiary to
perform all of the obligations to be performed under this Agreement and/or the
obligations under any other agreement between the Company and Shareholders or
PSI or any Subsidiary to be entered into pursuant to any provision of this
Agreement. As used in this Agreement, "Knowledge" means, with respect to an
entity, such knowledge as would be obtained after reasonable inquiry by the
officers of that entity and, with respect to an individual, such knowledge as
would be obtained by that individual after reasonable inquiry.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Shareholders as of the date
hereof and as of the Closing Date the following:
5.1 ORGANIZATION; AUTHORITY. The Company is a duly organized and
validly existing corporation under the laws of the State of Delaware, has all of
the corporate powers and authority necessary to carry on the business it now
conducts, and has the power and authority to purchase the Shares and Other
Interests from Shareholders on the terms, conditions and for the Purchase Price
set forth herein. This Agreement has been duly and validly executed and
delivered by the Company and, assuming this Agreement constitutes a valid and
binding obligation of the Shareholders, this Agreement constitutes a valid and
binding agreement of the Company, enforceable against it in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights or by general principles of equity.
5.2 AVAILABILITY OF FUNDS. The Company has a commitment as to the
availability of all funds necessary to consummate the transactions contemplated
hereby.
5.3 LITIGATION. There are no actions, suits or proceedings pending
or, to the Company's knowledge, threatened against or affecting the Company
(including actions, suits or proceedings where liabilities may be adequately
covered by insurance) at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, court, board, bureau,
agency or instrumentality, domestic or foreign, or affecting any of the
stockholders, officers or directors of the Company in connection with the
business, operations or affairs of the Company, which could reasonably be
expected to have a material adverse effect on the ability of the Company to
consummate the transactions contemplated hereby. The Company is not subject to
any voluntary or involuntary proceeding under the United States Bankruptcy Code
and has not made an assignment for the benefit of creditors.
5.4 BROKERAGE. The Company has no obligation to any person or
entity for brokerage commissions, finder's fees or similar compensation in
connection with the transactions contemplated by this Agreement.
ARTICLE VI
MUTUAL COVENANTS
6.1 CONFIDENTIALITY. The parties hereto acknowledge the continuing
existence and enforceability of that certain Secrecy Agreement dated August 1,
2000 between the Company and PSI (the "Secrecy Agreement"). Shareholders each
agree to be bound by the Secrecy Agreement in the same manner as PSI as if they
were parties thereto. The Secrecy Agreement shall survive the Closing or
abandonment of the Purchase provided for in this Agreement for its original
term. From and after the Closing, the Secrecy Agreement shall be deemed to
require each Shareholder to keep confidential and not use all Confidential
Information relating to PSI as well as the Company. In addition, the parties
hereto agree that no party shall, without the prior written consent of the
others as to substance, existence and timing, disclose publicly or to any third
party (except such party's professional advisors) the existence of this
Agreement or the terms and conditions hereof, or any prior correspondence or any
subsequent negotiations between the parties, including any confidential
information obtained thereby, except to the extent required by law or as may be
required in connection with the due diligence or financing of the proposed
transaction. The parties will agree in advance on any and all public statements
and releases with respect to this Agreement and the transactions contemplated
hereby. From the date hereof until the Closing, neither any Shareholder, PSI,
any Subsidiary, nor any representatives thereof shall purchase, directly or
indirectly, in the public marketplace or otherwise, any of the Company's
securities.
6.2 CONSENTS; BEST EFFORTS. Each of the parties shall use best
efforts to obtain any and all necessary permits, approvals, qualifications,
consents or authorizations from third parties and governmental authorities which
are required to be obtained prior to the Closing Date, and shall use best
efforts to make or complete all filings, proceedings and waiting periods
required to be made or completed prior to the Closing Date.
6.3 NO EQUITABLE CONVERSION. Prior to the Closing Date, neither the
execution of this Agreement nor the performance of any provision contained
herein shall cause either the Company, on the one hand, or PSI and its
Subsidiaries, on the other hand, to be or become liable for or in respect of the
operations or business of the other, for the cost of any labor or materials
furnished to or purchased by the other, for compliance with any laws,
requirements or regulations of, or taxes, assessments or other charges now or
hereafter due to, any governmental authority, or for any other charges or
expenses whatsoever pertaining to the conduct of the business or the ownership,
title, possession, use or occupancy of the property of the other.
6.4 RETENTION OF RECORDS; ACCESS. From and after the Closing, the
Company shall cause PSI and its Subsidiaries to retain copies of material
corporate documents such as articles of incorporation, bylaws, minutes and
similar documents for at least seven years after Closing, and shall cause PSI
and its Subsidiaries to retain all other material records for the time periods
designated in the Company's policies and procedures of subsidiary record
retention. Upon reasonable prior notice, Shareholders shall, at their expense,
have the right to reasonable access to such documents and records for the sole
purposes of (a) responding to a tax audit(s), and (b) preparing or responding to
a claim for indemnification made or to be made under this Agreement.
ARTICLE VII
COVENANTS OF SHAREHOLDERS
7.1 ACCESS TO PROPERTIES AND RECORDS. Until the Closing or
abandonment hereof, Shareholders shall cause PSI and its Subsidiaries to give
the Company and its authorized representatives full access, during reasonable
business hours, in such a manner as to not unduly disrupt normal business
activities, to any and all of their premises, properties, contracts, books,
records and affairs, and will cause their officers to furnish any and all data
and information pertaining to their businesses that the Company may from time to
time reasonably require, excepting customer lists, supplier lists and pricing
information. Shareholders shall cause PSI to make its customer lists, supplier
lists and pricing information available to the Company after the Company has
substantially completed all other due diligence and has confirmed in writing
that (a) based on the due diligence performed up to such time, the Company
intends to proceed with the transactions contemplated hereby, and (b) the
Company has available at such time any necessary financing for the Purchase. If
the transactions contemplated hereby are not consummated, the Company will
return or destroy all documents (and copies thereof) obtained pursuant to this
Agreement or the Secrecy Agreement.
7.2 CONDUCT OF BUSINESS. Until the Closing or prior abandonment
hereof, unless Shareholders shall have first obtained the Company's written
consent, which consent will not be unreasonably withheld, Shareholders shall
cause PSI and its Subsidiaries (a) to conduct their businesses only in the
ordinary course as presently conducted, (b) to maintain their books and records
in accordance with existing practices, (c) to not pay dividends, royalties or
other distributions, (d) to not hire additional employees of senior management
nor become obligated for additional material rental payments, (e) to not modify
the compensation or benefits paid to any employee except as consistent with past
practice, (f) to not undertake any material expenditures, including, without
limitation, the purchase of equipment, (g) to not enter into any material
long-term agreements, and (h) to not incur any material amount of additional
debt. For purposes of this SECTION 7.2 only, "material" shall mean any amount
greater than $25,000. Notwithstanding anything to the contrary in this Section,
Messr. Rothschild, in his sole discretion, may purchase that certain Cadillac
owned by PSI which he currently uses at its then book value at any time at or
before the Closing.
7.3 EXCLUSIVE NEGOTIATIONS. From the date hereof until the earlier
of the Closing or the Termination Date (as defined in SECTION 10.1 below),
Shareholders will negotiate exclusively with the Company for the acquisition of
the Shares and will not, directly or indirectly, whether through any of
Shareholders' representatives or agents or otherwise, encourage, solicit or
entertain any inquiries or proposals by, or engage in any discussions or
negotiations with, or furnish any non-public information to, any person
concerning the sale or other disposition of the Shares or any material portion
thereof, or the merger, consolidation, sale of assets or other acquisition
involving PSI or any Subsidiary or any material portion thereof, and will
promptly notify the Company of the substance of any inquiry or proposal
concerning any such transactions which may be received.
7.4 CORPORATE EXISTENCE, RIGHTS AND FRANCHISES. Shareholders shall
cause PSI and its Subsidiaries to take all necessary actions to maintain in full
force and effect their corporate existence, rights, franchises and good
standing. No change shall be made to the Articles of Incorporation or Bylaws of
PSI or any Subsidiary.
No additional equity of any type shall be issued by PSI after the date hereof.
7.5 INSURANCE. Shareholders shall cause PSI and its Subsidiaries to
take all necessary actions to maintain in full force all of their existing
insurance policies (or replacements therefor), subject only to variations in
amounts required by the ordinary operation of its business.
7.6 RESIGNATIONS. On the Closing Date, Shareholders shall cause to
be delivered to the Company duly signed resignations, effective immediately
after the Closing, of all directors of PSI and of each Subsidiary, and of each
officer position held by any Shareholder.
7.7 CONSULTING. Messr. Rothschild agrees to give consideration to
any request made by the Company for transition and/or on-going consulting
services to PSI on mutually agreeable terms.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
8.1 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of
the Company to purchase the Shares shall be subject to the fulfillment at or
prior to the Closing of all of the following, one or more of which may be waived
in writing in whole or in part by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Shareholders contained in this Agreement shall be true and correct
on the date hereof and as of the Closing with the same force and effect as
though made at such time, except with respect to representations and warranties
which, by their terms, speak as of a different time, which shall have been or
will be true and correct as of that time. Shareholders shall have the right to
update one or more of the disclosure schedules attached to this Agreement at any
time prior to Closing. In the event that any disclosure schedule update contains
information deemed materially adverse by the Company in its sole discretion, the
Company may terminate this Agreement. Disclosures set forth any disclosure
schedule attached hereto shall be deemed to be disclosures made for all
applicable representations and warranties. Shareholders shall have performed all
obligations and complied with all covenants and conditions required by this
Agreement to be performed or complied with by Shareholders at or prior to the
Closing.
(b) REGULATORY APPROVALS. There shall have been obtained any and
all permits, approvals and qualifications of, and there shall have been made or
completed all filings, proceedings and waiting periods, required by any
governmental body, agency or regulatory
authority which, in the reasonable opinion of counsel to the parties, are
required for the consummation of the transactions contemplated hereby.
(c) NO ACTION OR PROCEEDING. No claim, action, suit, investigation
or other proceeding shall be pending or threatened before any court or
governmental agency, and no statute, rule or regulation shall have enacted or
entered by a governmental body of competent jurisdiction, which presents a
substantial risk of the restraint or prohibition of the transactions
contemplated by this Agreement or the obtaining of material damages or other
relief in connection therewith. No law or order shall have been enacted,
entered, issued, promulgated or enforced by any governmental entity, nor shall
any claim have been instituted and remain pending or threatened and remain so at
what would otherwise be the Closing, which would not permit the business of PSI
or any Subsidiary as presently conducted to continue unimpaired in any material
aspect following the Closing.
(d) NO MATERIAL ADVERSE CHANGE. Prior to the Closing, there shall
not have been any material adverse change in the business of PSI or any
Subsidiary.
(e) STOCK CERTIFICATES, STOCK LEDGER AND MINUTE BOOK. Shareholders
shall have delivered to the Company the stock certificates representing the
Shares, each duly executed in blank or accompanied by duly executed instruments
of transfer, all remaining blank certificates, PSI's stock ledger(s), PSI's
minute book(s), and all of the stock certificates, stock ledgers and minute
books of each Subsidiary.
(f) CONSENTS. Shareholders shall have obtained all necessary third
party and/or governmental consents, waivers and approvals to the transaction
contemplated hereunder, including, without limitation, the consent of PSI's
landlord for the City of Industry, California facility.
(g) DEBT; GUARANTEES. There shall be no agreements or instruments
evidencing loans to or interest bearing indebtedness incurred by PSI or any
Subsidiary other than as set forth in the Balance Sheet. There shall be no
guarantees of any third party debts.
(h) OTHER INTERESTS. The Company shall have received satisfactory
documentation that all of the Other Interests have been cancelled or transferred
to the Company.
(i) DUE DILIGENCE. The Company shall have completed its due
diligence investigations, and the results of such investigations shall be
acceptable to the Company in its sole discretion.
(j) BOARD APPROVAL. The Board of Directors of Summa shall have
approved consummation of the transactions contemplated hereby in its sole
discretion.
(k) LEGAL OPINION. The Company shall have received opinions dated
as of the Closing Date of ▇▇▇▇ & ▇▇▇▇ LLP, counsel to Shareholders and PSI, as
to the matters set forth in EXHIBIT B hereto.
(l) RESIGNATIONS. Shareholders shall have submitted their
resignations as officers and directors of PSI and each Subsidiary in writing to
the Company, effective as of the Closing, and
each other director shall submit his or her resignation. PSI, its Subsidiaries
and the Company shall not incur any cost or expense in connection with, or as a
result of, the termination of employment of Shareholders, including, but not
limited to, severance benefits; provided that, ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall be paid all
accrued vacation by PSI prior to or at Closing.
(m) EXECUTION. Each Shareholder (and, if applicable, their spouse
as to consent) shall have executed a counterpart of this Agreement and
consummated the transactions to be completed by such Shareholder pursuant to the
terms of this Agreement.
8.2 CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS. The obligations of
Shareholders to sell the Shares shall be subject to the fulfillment at or prior
to the Closing of all of the following, one or more of which may be waived in
writing by in whole or in part by Shareholders:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in this Agreement shall be true and correct
on the date hereof and as of the Closing with the same force and effect as
though made at such time, except with respect to representations and warranties
which, by their terms, speak as of a different time, which shall have been or
will be true and correct as of that time. The Company shall have performed all
obligations and complied with all covenants and conditions required by this
Agreement to be performed or complied with by the Company at or prior to the
Closing.
(b) REGULATORY APPROVALS. There shall have been obtained any and
all permits, approvals and qualifications of, and there shall have been made or
completed all filings, proceedings and waiting periods, required by any
governmental body, agency or regulatory authority which, in the reasonable
opinion of counsel to the parties, are required for the consummation of the
transactions contemplated hereby.
(c) NO ACTION OR PROCEEDING. No claim, action, suit, investigation
or other proceeding shall be pending or threatened before any court or
governmental agency, and no statute, rule or regulation shall have enacted or
entered by a governmental body of competent jurisdiction, which presents a
substantial risk of the restraint or prohibition of the transactions
contemplated by this Agreement or the obtaining of material damages or other
relief in connection therewith.
(d) PAYMENT OF PURCHASE PRICE. Shareholders shall have received the
Purchase Price in cash.
ARTICLE IX
COVENANT NOT TO COMPETE
9.1 COVENANT NOT TO COMPETE. Messr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (as used in this ARTICLE IX, "Promissors") each
severally but not jointly agree that they will not, directly or indirectly, own,
manage, operate, join, control, or participate in the ownership, management,
operation or control of, or be employed or connected in any manner with or by,
any business or operation which engages in or competes with the manufacture
and/or design and/or distribution of plastic lighting products, including
without limitation, plastic lenses, refractors and reflectors, worldwide (the
"Restricted Territory") for a period of five (5) years from the date hereof (the
"Term"). Ownership by a Promissor of up to two percent (2%) of
the securities of any publicly traded entity shall not be a violation of this
Article IX. In addition, during the Term Promissors will not, directly or
indirectly, solicit any employees of PSI and/or its Subsidiaries to leave their
current positions.
9.2 CONSIDERATION. Consideration for the covenants made by
Promissors in SECTION 9.1 above shall be the execution of this Agreement and the
consummation of the transactions contemplated herein. Promissors acknowledge and
agree that they will receive a direct, material and substantial benefit for
their covenant not to compete and that such direct, material and substantial
benefit is good and sufficient consideration to them for the performance of
their obligations under this ARTICLE IX.
9.3 REASONABLENESS OF COVENANT. Promissors recognize and
acknowledge that the Covenant Not to Compete together with their performance
thereunder is necessary in order to protect and maintain the proprietary
interests and other legitimate business interests of the Company and to afford
the Company the benefit of its bargain under this Agreement and that such
covenants are reasonable in all respects.
9.4 SEPARATE COVENANTS. The parties intend for the covenants
contained in this ARTICLE IX to comply with the provisions of the laws of each
state in the United States and each foreign country and to be construed as a
series of separate covenants, one for each city, county, market area, business
area, region or country in the Restricted Territory, for each year. Except for
geographic coverage, each such covenant shall be deemed identical in terms to
the covenants contained herein.
9.5 EQUITABLE RELIEF. The parties hereto agree that the obligations
contained in this ARTICLE IX are of a special and unique character which gives
them a peculiar value, and that the Company may not be reasonably or adequately
compensated in damages in an action at law in the event that Promissors, or
either of them, breach such obligations. Promissors therefore expressly agree
that the Company shall be entitled to preliminary and permanent injunctive and
other equitable relief to prevent a breach of said obligations, without the
necessity of posting a bond, in addition to any other rights and remedies that
the Company may have.
ARTICLE X
TERMINATION OF OBLIGATIONS; NO SURVIVAL OF LIABILITIES
10.1 TERMINATION OF AGREEMENT. Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated by this
Agreement may be terminated by either party in writing if the Closing does not
occur on or before the close of business on October 30, 2000 ("Termination
Date"), and may otherwise be terminated at any time before the Closing as
follows and in no other manner:
(a) MUTUAL CONSENT. By mutual written consent of Shareholders and
the Company.
(b) CONDITIONS TO THE COMPANY'S PERFORMANCE NOT MET. By the Company
in writing if any event beyond its reasonable control occurs which would render
impossible the satisfaction of one or more conditions to the obligations of the
Company to consummate the transaction contemplated by this Agreement as set
forth in SECTION 8.1.
(c) CONDITIONS TO SHAREHOLDERS' PERFORMANCE NOT MET. By
Shareholders in writing if any event beyond its reasonable control occurs which
would render impossible the satisfaction of one or more conditions to the
obligation of Shareholders to consummate the transaction contemplated by this
Agreement as set forth in SECTION 8.2.
(d) BREACH OF REPRESENTATION, WARRANTY OR COVENANT. By Shareholder
or the Company in writing if there has been a material misrepresentation or
material breach on the part of the other party in its representations,
warranties and covenants set forth herein, which, if curable, has not been cured
within ten (10) business days after receipt of notice from the other party of
its intention to terminate if such misrepresentation or breach continues.
10.2 EFFECT OF TERMINATION. If this Agreement is terminated and the
transactions contemplated hereby are abandoned as described in this ARTICLE X,
this Agreement shall become void and of no further force and effect, except for
the provisions of (i) SECTION 6.1 relating to the obligations to keep
confidential certain information and data, (ii) SECTION 12.5 relating to certain
expenses, (iii) SECTION 12.6 relating to attorneys' fees and expenses, (iv)
SECTIONS 4.29 and 5.4 relating to finder's fees and broker's fees, (v) SECTION
12.13 relating to jurisdiction and forum selection, and (vi) this ARTICLE X;
provided, however, that if any party hereto intentionally fails to perform its
obligations in this Agreement or intentionally fails to perform acts that are
necessary to the fulfillment of conditions hereof or intentionally prevents the
fulfillment of a condition in this Agreement, the other party may seek any
available legal and equitable remedies in addition to those provided herein.
ARTICLE XI
INDEMNIFICATION AND REMEDIES
11.1 OBLIGATION TO INDEMNIFY.
(a) INDEMNIFICATION.
(1) Shareholders, jointly and severally, agree to indemnify and hold
harmless the Company, PSI, the Subsidiaries, and their directors, officers,
employees, affiliates, agents and
assigns (each, a "Company Party") from and against any and all damages, losses,
payments and expenses (including, without limitation, attorneys' fees and costs,
costs of investigation, judgments and settlement payments) of any such parties
as a result of, or based upon, arising from or in connection with (i) any
inaccuracy in or breach or nonperformance of any of the representations,
warranties, covenants or agreements made by Shareholders in or pursuant to this
Agreement, or (ii) the operation of the businesses of PSI and the Subsidiaries
prior to the Closing Date (including, without limitation, all liability for
pre-closing tax periods, including amounts not paid or provided for through
estimated taxes or deposits for the partial period ending at the close of
business on the day preceding the Closing Date but excluding all ordinary
operating expenses of PSI and its Subsidiaries incurred in the normal course
prior to the Closing Date), or (iii) any claims or demands by any governmental
authority or third party arising under any Environmental Law to the extent
attributable to use and/or occupancy of any premises owned or used by PSI or any
Subsidiary prior to the Closing Date, or to Hazardous Substances transported by
or on behalf of PSI or any Subsidiary prior to the Closing Date.
(2) Except as provided in SECTION 11.1(a) above, the Company agrees
to indemnify and hold harmless the Shareholders and their successors, heirs and
assigns (each, a "Shareholder Party") from and against any and all damages,
losses, payments and expenses (including, without limitation, attorneys' fees
and costs, costs of investigation, judgments and settlement payments) of any
such parties as a result of, or based upon, arising from or in connection with
(i) any inaccuracy in or breach or nonperformance of any of the representations,
warranties, covenants or agreements made by the Company in or pursuant to this
Agreement, or (ii) the operation of the businesses of PSI and the Subsidiaries
after the Closing Date.
(b) WAIVER OF CERTAIN INDEMNIFICATION. Shareholders agrees that,
from and after the Closing, they shall waive any and all rights that they may
have for indemnification or advancement of expenses by PSI and the Subsidiaries
(or the Company as successor in interest) under any law, the Articles of
Incorporation, Bylaws or any agreement with PSI or any Subsidiary.
11.2 CERTAIN INDEMNIFICATION PROCEDURES.
(a) NOTICE OF CLAIM. If and whenever a party to this Agreement (the
"Indemnified Party") shall claim indemnification under SECTION 11.1, such party
shall send written notice of the same to the other parties (the "Indemnifying
Parties") at such persons' address set forth in SECTION 12.2 below (a "Notice of
Claim"). A Notice of Claim hereunder (which in the case of third party claims
shall be delivered within a reasonable time after the Indemnified Party receives
actual written notice of such third party claim) shall state the basis for such
claim supported by relevant information and documentation with respect thereto
and the total amount claimed, and if such claim is based upon an action,
proceeding or claim by a third party, offer the Indemnifying Parties the right
to participate in (but not control) the defense of such action, proceeding or
claim at the Indemnifying Parties' own expense insofar as such action,
proceeding or claim is the basis on which indemnity is sought.
(b) CLAIM RESPONSE. Within twenty (20) days after receipt of a
Notice of Claim, the Indemnifying Parties shall give written notice to the
Indemnified Party as to whether they object to or acquiesces in the claim, in
whole or in part (the "Claim Response"). If the Indemnifying Parties acquiesces
to the claim, in whole or in part, they shall state their acquiescence, or the
extent thereof, in the Claim Response and shall pay the claim in whole, or that
part to which they acquiesce, within such twenty (20) day period. If the
Indemnifying Parties objects to the claim, in whole or in part, within such
twenty (20) day period, their Claim Response shall set forth with reasonable
particularity the grounds, amount of, and basis upon which the claim is
disputed. If the Indemnifying Parties fail to object to the claim, in whole or
in part, within twenty (20) days after receipt of the Notice of Claim, they
shall pay the same in whole, or that portion of the claim to which they failed
to object, within ten (10) days after the expiration of such twenty (20) day
period.
(c) MEET AND CONFER. In the event the Indemnifying Parties disputes
the whole or a portion of a claim as set forth in this SECTION 11.2, the
Indemnifying and Indemnified Parties shall meet within twenty (20) days of the
Indemnifying Parties' delivery of the Claim Response and attempt in good faith
to resolve the dispute without third party intervention. The parties shall have
ten (10) days in which to resolve their dispute. If the parties cannot resolve
their dispute within such ten (10) day period, then the dispute may be submitted
to binding arbitration only by mutual agreement.
11.3 ADJUSTMENT TO PURCHASE PRICE. Any indemnification received
under this ARTICLE XI shall be, to the extent permitted by law, an adjustment to
the Purchase Price.
11.4 OFFSETS FOR INSURANCE, ETC. The amount of any and all damages
for which indemnification is provided pursuant to this Article XI shall be net
of any amounts actually received by the Indemnified Party under insurance
policies or from Third Party Contributors (as hereinafter defined) with respect
to such damages. In the event that any claim for indemnification asserted under
this Article XI is, or may be, the subject of the Indemnified Party's insurance
coverages or other right of the Indemnified Party to indemnification or
contribution from any third party (a "Third Party Contributor"), the Indemnified
Party agrees to timely notify the insurance carrier of any such claim, and shall
also timely notify any potential Third Party Contributor. Each Indemnified Party
agrees to pursue and cooperate, at the sole cost of the Indemnifying Parties,
such claims diligently and to reasonably cooperate, at the sole cost of the
Indemnifying Parties, with any claim the Indemnifying Parties may have against
any insurance carrier or contribution from any Third Party Contributor, and to
make no claim for indemnification under this Article XI for a period of 60 days
after making a claim for such insurance or contribution (unless the time for
making a claim under SECTION 11.6 expires before the end of the 60-day period).
If insurance coverage or contribution is denied in whole or part, or if no
resolution of an insurance or contribution claim is shall have occurred within
such 60 days, the Indemnified Party may proceed for indemnification under this
Article XI. Upon full payment of the claim by the Indemnifying Parties, the
Indemnifying Parties shall be subrogated to the rights of the Indemnified Party
against such insurance carrier or Third Party Contributor.
11.5 LIMITATIONS ON INDEMNIFICATION. The Indemnified Party shall
have no right to recover based upon claims for indemnification made under this
Article XI unless and until the aggregate losses attributable to such claims
exceed $50,000.00 (the "Floor") (other than claims based solely on fraud for
which the Floor shall not apply); provided that, once such aggregate claims
exceed the Floor, the Indemnified Party shall recover for the entire amount of
all such claims subject (notwithstanding anything in this Agreement to the
contrary) only to a maximum aggregate recovery from the Indemnifying Parties
equal to $500,000.00 (the "Ceiling") (other than claims based solely on fraud
for which the Ceiling shall not apply).
11.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Regardless of the
investigations, if any, made by any party prior to the Closing, the
representations and warranties and covenants contained in this Agreement are
made as of the date hereof and as of the Closing Date and shall survive the
Closing for the following periods: (a) two (2) years for all claims other than
those based in subsections (b) and (c) and (d) of this SECTION 11.6; (b) five
(5) years for all claims made under ARTICLE IX; (c) the shorter of indefinitely
or the applicable statute of limitations for claims made under Sections 4.1
through 4.6, 4.12, 4.29, 6.1 and claims for fraud, claims for breach of contract
(solely for failure to consummate the transactions contemplated hereby within
the time periods set forth herein and after all conditions to closing in ARTICLE
VIII above have been satisfied or waived), and (d) the shorter of three (3)
years or the applicable statute of limitations for claims made under Sections
4.20 and 4.21; provided that, a representation or warranty related to any claim
asserted pursuant to ARTICLE XI within the applicable time period set forth in
this Section shall survive as to such claim until resolved. The rights of
indemnification set forth in this ARTICLE XI shall be the sole and exclusive
remedy under this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 BEST EFFORTS; FURTHER ASSURANCES. Both before and after the
Closing, each party will use its reasonable best efforts to cause all conditions
to its obligations under this Agreement to be timely satisfied and to perform
and fulfill all covenants and obligations on its part to be performed and
fulfilled under this Agreement, to the end that the transaction contemplated by
this Agreement shall be effected substantially in accordance with its terms as
soon as reasonably practicable. The parties shall cooperate with each other in
such actions and in securing requisite approvals. Each party shall execute and
deliver both before and after the Closing such further certificates, agreements
and other documents and take such other actions as may be reasonably necessary
or appropriate to consummate or implement the transactions contemplated hereby
or to evidence such events or matters.
12.2 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one Business Day in the case
of express mail or overnight courier service), as follows:
(i) if to the Company:
Summa Industries
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(ii) if to Shareholders:
The Ljubo and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Family Trust U/D/T March 31, 1999
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
c/o Hahn & ▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. and ▇▇▇▇ ▇▇▇▇▇▇, Esq.
12.3 ASSIGNMENT. This Agreement and the rights and obligations
hereunder shall be binding upon each party hereto and shall inure to the benefit
of and be binding upon each party's successors, heirs and permitted assigns
prior to the Closing. Following the Closing, this Agreement and the rights and
obligations hereunder may not be assigned nor transferred (including transfers
by operation of law) by Shareholders without the prior written consent of the
Company in its sole and absolute discretion other than transfers caused by the
death of a Shareholder. In the event the Company assigns its interests in this
Agreement, it shall not be relieved of its obligations under this Agreement.
12.4 NO THIRD-PARTY BENEFICIARIES. Except as provided in ARTICLE XI
as to Company Parties and Shareholder Parties, this Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any person or entity,
other than the parties hereto and such assigns, any legal or equitable rights
hereunder.
12.5 EXPENSES. Whether or not the transactions contemplated hereby
are consummated, and except as otherwise provided in this Agreement, all fees,
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees,
costs or expenses.
12.6 ATTORNEYS' FEES. Should any litigation be commenced concerning
this Agreement or the rights and duties of any party with respect to it
(including indemnity claims), the party prevailing shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum for such
party's attorneys' fees and expenses determined by the court in such litigation
or in a separate action brought for that purpose.
12.7 AMENDMENTS. No amendment to this Agreement shall be effective
unless it shall be in writing and signed by all parties hereto.
12.8 INTERPRETATION; EXHIBITS AND SCHEDULES. The headings contained
in this Agreement, in any Exhibit or Schedule hereto, are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Schedule or Exhibit, but not otherwise
defined therein, shall have the meaning as defined in this Agreement. This
Agreement shall not be interpreted against any party hereto as the drafter of
the Agreement.
12.9 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
12.10 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto and the Secrecy AgreemenT contain the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior oral and written agreements and understandings relating to
the subject matter hereof.
12.11 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof or the portion, if any, of such provision that may be
enforceable.
12.12 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
12.13 CONSENT TO JURISDICTION: FORUM SELECTION. The parties agree
that all actions or proceedings arising in connection with this Agreement shall
be tried and litigated exclusively in the Federal or state courts located in the
County of Los Angeles, State of California. The aforementioned choice of venue
is intended by the parties to be mandatory and not permissive in nature, thereby
precluding the possibility of litigation between the parties with respect to or
arising out of this Agreement in any jurisdiction other than those specified in
this section. Each party hereby waives any right it may have to assert the
doctrine of forum non conveniens or similar doctrine or to object to venue with
respect to any proceeding brought in accordance with this section, and
stipulates that the Federal and state courts located in the County of Los
Angeles, State of California shall have in personam jurisdiction and venue over
each of them for the purpose of litigating any dispute, controversy or
proceeding arising out of or related to this Agreement. Each party hereby
authorizes and accepts service of process sufficient for personal jurisdiction
in any action against it as contemplated by this paragraph by registered or
certified mail, return receipt requested, postage prepaid, to its address for
the giving of notices as set forth in this Agreement, or in the manner set forth
in SECTION 12.2 of this Agreement for the giving of notice. Any final judgment
rendered against a party in any action or proceeding shall be conclusive as to
the subject of such final judgment and may be enforced in other jurisdictions in
any manner provided by law.
12.14 TIME OF THE ESSENCE. Time is of the essence of each section of
this Agreement.
[remainder of page intentionally blank]
IN WITNESS WHEREOF, the parties hereto, intending legally to be bound
hereby, have each caused this Agreement to be duly executed as of the date first
above written.
"THE COMPANY" "SHAREHOLDERS"
SUMMA INDUSTRIES, The Ljubo and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
a Delaware corporation Family Trust U/D/T March 31, 1999
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
The ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Family Trust
Dated August 4, 1999
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Trustee
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, an individual
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual
CONSENT OF SPOUSE
I hereby acknowledge that I have read the foregoing Agreement in its entirety
and fully understand the terms and effects thereof, after having consulted with
my independent legal counsel and my other advisors to the extent I deemed
necessary. I acknowledge that I am not an intended beneficiary of the Agreement,
except that I agree to be bound by the Agreement and to consummate the
transactions set forth therein per the terms of SECTION 12.3 if necessary.
Effective at Closing, I waive for all time any and all rights I may have in and
to the Shares and any other interests in PSI, including without limitation any
and all rights to receive consideration in any form from the Company and/or PSI.
I agree that my sole recourse, if any, will be against my Shareholder spouse.
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SCHEDULES
4.2(b) Organization of Subsidiaries
4.3 Ownership of Shares and Other Interests
4.6(b) Authorized Capital of Subsidiaries
4.7 No Other Equity Interests
4.8 No Breach or Default; Consents and Approvals
4.9 Permits
4.10 Financial Statements; Undisclosed Liabilities
4.11 Absence of Certain Changes or Events
4.12 Taxes
4.13 Assets Other than Real Property
4.14 Real Property
4.15 Intellectual Property
4.16 Contracts
4.17 Accounts Receivable
4.18 Inventories
4.19 Litigation
4.20 Environmental Matters
4.21 Compliance with Laws
4.22 Insurance
4.23 Employee and Labor Matters
4.24 ERISA Plan
4.25 Warranties; Product Returns
EXHIBITS
A. The Shareholders
B. Form of Legal Opinion