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EXHIBIT 2.1
THIS EXHIBIT CONTAINS CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED. THE CONFIDENTIAL INFORMATION ON PAGES 37 AND 39 HAVE BEEN
REPLACED WITH ASTERISKS.
STOCK PURCHASE AGREEMENT
by and among
▇▇▇▇▇ ▇▇▇▇▇▇
as "Seller,"
▇▇▇▇▇▇ Steel Company
as "Buyer,"
and
Six Industries, Inc.
as the "Company"
as of August 12, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS...........................................................1
1.1 Defined Terms. ..............................................1
1.2 Other Defined Terms..........................................4
ARTICLE II
SALE AND TRANSFER OF SHARES...........................................5
2.1 Transfer of Shares. .........................................5
2.2 Purchase Price...............................................5
2.3 Holdback Note................................................6
2.4 Transfer Taxes and Fees......................................6
ARTICLE III
CLOSING...............................................................6
3.1 Closing. ....................................................6
3.2 Conveyances at Closing.......................................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE
COMPANY...............................................................7
4.1 Organization of the Company. ................................7
4.2 Subsidiaries. ..............................................7
4.3 Authorization................................................8
4.4 No Violation; Consents.......................................8
4.5 Capitalization...............................................9
4.6 Financial Statements. ......................................10
4.7 No Change in the Assets.....................................10
4.8 Liabilities.................................................10
4.9 Assets; Absence of Encumbrances.............................10
4.10 Real Property...............................................11
4.11 Receivables.................................................12
4.12 Inventory and Equipment. ...................................12
4.13 Contracts and Commitments...................................12
4.14 Books and Records...........................................13
4.15 Litigation. ................................................14
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4.16 Labor Matters. .............................................14
4.17 Compliance with Law. .......................................14
4.18 No Brokers. ................................................15
4.19 No Other Agreements to Sell the Company. ...................15
4.20 Proprietary Rights..........................................15
4.21 Tax Matters.................................................16
4.22 Employees and Employee Benefits.............................18
4.23 ERISA Representations.......................................20
4.24 Compliance With Environmental Laws..........................22
4.25 Insurance...................................................25
4.26 Affiliate Transactions......................................26
4.27 Disclosure..................................................26
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER..............................27
5.1 Representations and Warranties of Buyer. ...................27
ARTICLE VI
GENERAL COVENANTS OF BUYER, THE COMPANY AND SELLER...................28
6.1 Further Assurances..........................................28
6.2 Environmental Assessments and Remediation. ................28
6.3 Notification. .............................................28
ARTICLE 7
CONDUCT OF COMPANY AND BUYER PENDING THE CLOSING.....................29
7.1 Company and Seller Covenants................................29
7.2 Certain Closing Covenants...................................30
7.3 No Negotiations.............................................31
7.4 Public Announcements........................................31
7.5 Confidentiality.............................................31
7.6 Tax Matters.................................................31
ARTICLE VIII
CONDITIONS TO SELLERS' OBLIGATIONS...................................32
8.1 Representations, Warranties and Covenants...................32
8.2 No Proceedings, Litigation or Laws..........................32
8.3 Certificates................................................32
8.4 Ancillary Agreements. ......................................32
8.5 Buyer Corporate Documents...................................32
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ARTICLE IX
CONDITIONS TO BUYER'S OBLIGATIONS....................................33
9.1 Representations, Warranties and Covenants...................33
9.2 Consents. ..................................................33
9.3 No Proceedings or Litigation................................33
9.4 Opinions of Counsel.........................................33
9.5 Certificates. ..............................................35
9.6 Ancillary Agreements........................................35
9.7 Release of Encumbrances.....................................35
9.8 No Material Changes. .......................................35
9.9 Corporate Documents. .......................................35
9.10 Completion of Environmental Remediation.....................35
9.11 Financial Statement Deliveries..............................36
9.12 Affiliate Loans.............................................36
9.13 Resignations................................................36
9.14 Repayment of Indebtedness...................................36
9.15 Title Matters...............................................36
9.16 Spousal Consent.............................................36
ARTICLE X
REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION......................37
10.1 Survival of Representations, Etc. ..........................37
10.2 Indemnification.............................................37
ARTICLE XI
ACTIONS BY SELLER AND BUYER AFTER THE CLOSING........................40
11.1 Cooperation and Records Retention...........................40
ARTICLE XII
MISCELLANEOUS........................................................40
12.1 Termination.................................................40
12.2 In the Event of Termination.................................41
12.3 Assignment. ................................................41
12.4 Notices. ...................................................41
12.5 Choice of Law. .............................................42
12.6 Entire Agreement; Amendments and Waivers....................43
12.7 Multiple Counterparts. .....................................43
12.8 Expenses. ..................................................43
12.9 Invalidity. ................................................43
12.10 Titles. ....................................................43
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12.11 Cumulative Remedies.........................................43
12.12 Arbitration. ...............................................43
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of
August 12, 1998, by and among ▇▇▇▇▇▇ Steel Company, a Delaware corporation
("Buyer"), ▇▇▇▇▇ ▇▇▇▇▇▇ ("Seller") and Six Industries, Inc., a Texas corporation
(the "Company").
RECITALS
A. The Company is engaged in the businesses of steel fabrication.
B. Seller owns of record and beneficially all of the issued and
outstanding shares of capital stock of the Company (the "Shares").
C. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all of the Shares upon the terms and subject to the conditions of this
Agreement, whereupon Buyer will own all of the capital stock in the Company. As
a result of such purchase, Buyer will acquire indirect ownership of the assets
of the Company held by it at the Closing Date, including all of the Company's
stock ownership in the Subsidiaries (as hereinafter defined) listed on Schedule
4.2.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
1.1.1 "Affiliate" of any specified person means any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For purposes of this
definition, "control," when used with respect to a specified person, means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
1.1.2 "Agreement" shall have the meaning specified in the
first paragraph of this Agreement.
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1.1.3 "Ancillary Agreements" shall mean the Employment and
Noncompetition Agreement of ▇▇▇▇▇ ▇▇▇▇▇▇ in the form of Exhibit B and the
Holdback Note in the form of Exhibit A.
1.1.4 "Buyer" shall have the meaning specified in the first
paragraph of this Agreement.
1.1.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
1.1.6 "Commission" shall mean the Securities and Exchange
Commission.
1.1.7 "Company" shall have the meaning specified in the first
paragraph of this Agreement, and shall include its Subsidiaries, except where
the context requires otherwise or except where otherwise defined.
1.1.8 "Contract" shall mean any agreement, contract, note,
bond, mortgage, indenture, loan, evidence of indebtedness, lease, sublease,
purchase order, letter of credit, franchise arrangement, undertaking, covenant
not to compete, employment agreement, license, instrument, arrangement,
obligation or commitment to which the Company is a party or is bound or to which
its assets or properties are subject, whether oral or written.
1.1.9 "Encumbrance" shall mean any claim, lien, pledge,
charge, easement, security interest, deed of trust, mortgage, option, right of
first refusal, preemptive right, license right, right-of-way, patent
reservation, encroachment, building or use restriction, conditional sales
agreement or encumbrance, whether voluntarily incurred or arising by operation
of law, and includes, without limitation, any agreement to give any of the
foregoing in the future, and any contingent sale or other title retention
agreement or lease in the nature thereof.
1.1.10 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.1.11 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
1.1.12 "Facilities" shall mean the buildings, offices,
maintenance and storage facilities, shops, plants, warehouses, improvements and
other structures, together with all related fixtures, located at or on the Real
Property.
1.1.13 "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
1.1.14 "including" shall mean including without limitation by
reason of enumeration.
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1.1.15 "Knowledge" as used in this Agreement in the phrase "to
the knowledge of the Company," or words of similar import, means the knowledge,
after having conducted a reasonable investigation, of the executive officers of
the Company and of the persons within the Company responsible for the matters
addressed, and the Seller.
1.1.16 "Leased Real Property" shall mean all real property and
improvements thereon leased, subleased or otherwise occupied under assignment or
subassignment of a lease by the Company, including all rights, easements and
privileges appertaining or relating thereto.
1.1.17 "Material Adverse Effect" or "Material Adverse Change"
shall mean any material adverse effect or change in the condition (financial or
other), business, results of operations, assets, liabilities, operations or
customer, supplier or employee relations of the Company or on the ability of the
Seller to consummate the transactions contemplated hereby, or any event,
condition or state of facts which could be reasonably expected, with the passage
of time, to constitute a "Material Adverse Effect" or "Material Adverse Change."
1.1.18 "Owned Real Property" shall mean all real property and
improvements thereon owned by the Company, including all rights, easements and
privileges appertaining or relating thereto.
1.1.19 "Permits" shall mean all licenses, permits, franchises,
approvals, notifications, authorizations, consents or orders of, or filings
(including, without limitation, periodic reports) with (including timely
renewals thereof), any governmental agency or authority, whether foreign,
federal, state or local, necessary or desirable for the conduct of, or relating
to the operation of, the Company, its business or assets.
1.1.20 "Permitted Liens" shall mean: (i) easements, covenants,
rights of way or other restrictions which do not individually or in the
aggregate materially adversely affect the use or value of the property to which
they relate or to the operation of the business thereon; or (ii) liens for
taxes, assessments and other governmental charges which are not due and payable
or which may thereafter be paid without penalty and which have been
appropriately reserved for in the Financial Statements or the Closing Date
Balance Sheet.
1.1.21 "person" shall mean any natural person, corporation,
general or limited partnership, limited liability company, trust, sole
proprietorship, or other entity, organization or association of any kind.
1.1.22 "Real Property" shall mean the Leased Real Property and
Owned Real Property (as such terms are herein defined).
1.1.23 "Representative" shall mean any officer, director,
principal, partner, manager, member, attorney, agent or other representative.
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1.1.24 "Securities Act" shall mean the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
1.1.25 "Seller" shall have the meaning specified in the first
paragraph of this Agreement.
1.1.26 "Shares" shall have the meaning specified in Recital B.
1.1.27 "Subsidiary" shall mean any entity or person in which
the Company owns, directly or indirectly, a controlling equity interest.
1.1.28 "Tax or Taxes" shall mean any federal, state,
provincial, local, foreign, or other income, alternative minimum, accumulated
earnings, personal holding company, franchise, capital stock, net worth,
capital, profits, windfall profits, gross receipts, value added, privilege,
sales, use, goods and services, excise, customs duties, transfer, conveyance,
mortgage, registration, stamp, documentary, recording, premium, severance,
environmental (including taxes under Section 59A of the Code), real property,
personal property, escheat, ad valorem, intangibles, rent, occupancy, license,
occupational, employment, unemployment insurance, social security, disability,
workers' compensation, payroll, health care, registration, withholding,
estimated, or other tax, duty, or other governmental charge or assessment or
deficiencies relating thereto (including all interest and penalties thereon and
additions thereto, whether disputed or not).
1.1.29 "Tax Return" shall mean any return, report,
declaration, form, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
1.2 Other Defined Terms. The following terms shall have the meanings
ascribed to them in the Sections set forth below:
Term Section
---- -------
Purchase Price..................................................2.2.1
Holdback Note...................................................2.3
GAAP............................................................2.2
Closing.........................................................3.1
Closing Date....................................................3.1
Financial Statements............................................4.6
Leases..........................................................4.10.3
Action..........................................................4.15
Proprietary Rights..............................................4.20.1
Benefit Arrangement.............................................4.22.1
Employee Plans..................................................4.22.1
ERISA Affiliate.................................................4.22.1
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Multiemployer Plan..............................................4.22.1
PBGC............................................................4.22.1
Pension Plan....................................................4.22.1
Welfare Plan....................................................4.22.1
Release.........................................................4.24.3
Hazardous Substance.............................................4.24.4
CERCLA..........................................................4.24.5
Environmental Laws..............................................4.24.5
Environmental Conditions........................................4.24.13
Closing Certificate.............................................9.11
SEC.............................................................9.12
Pending Claims..................................................10.2.1
Damages.........................................................11.2.1
Claim...........................................................11.2.4
Claim Notice....................................................11.2.4
ARTICLE II
SALE AND TRANSFER OF SHARES
2.1 Transfer of Shares. Upon the terms and subject to the conditions
contained herein, at the Closing, Seller will sell, convey, transfer, assign and
deliver to Buyer, and Buyer will acquire from Seller, the Shares, free and clear
of all Encumbrances, for the consideration specified in Section 2.2.
2.2 Purchase Price.
2.2.1 Purchase Price. At the Closing, upon the terms and
subject to the conditions set forth herein, Buyer shall pay to Sellers in
consideration for and against delivery of the Shares, the sum of (i) $16.0
million, plus (ii) the amount of the Company's cash on hand at the Closing as
shown on the Closing Date Balance Sheet and less (iii) the long-term
indebtedness of the Company (including the current portion thereof), capital
leases and other similar long-term obligations as shown on the Closing Date
Balance Sheet (the sum of clauses (i), (ii) and (iii) are referred to herein as
the "Purchase Price"); provided, that the Purchase Price shall be subject to
reduction on a dollar for dollar basis based upon any transfer or build up of
cash in violation of Section 7.1.1 hereof which has the effect of increasing
cash on hand at closing. For purposes hereof, cash shall mean cash and cash
equivalents, as determined in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis with the Financial Statements.
2.2.2 Form of Consideration. The Purchase Price shall be paid
to Seller in immediately available funds at the Closing, except for $1.5
million, which shall be paid to Seller in the form of the Holdback Note as
described in Section 2.3.
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2.3 Holdback Note. Of the Purchase Price, $1.5 million shall be in the
form of a promissory note payable to the Seller in the form of Exhibit A hereto
(the "Holdback Note"). The Holdback Note shall be due and payable to the Seller
as follows: (i) on the first anniversary of the Closing, Buyer shall make an
initial principal payment to the Seller in an amount equal to $750,000, and (ii)
on the second anniversary of the Closing, Buyer shall make a second principal
payment to the Seller in an amount equal to $750,000, in each case subject to
any unresolved pending claims made by Buyer in accordance with Article X hereof,
any claims under Article X resolved in favor of Buyer, or any Purchase Price
adjustments under Article X in favor of Buyer. Interest on the Holdback Note
shall accrue at the floating prime rate of ▇▇▇▇▇ Fargo Bank, N.A., as such rate
shall exist from time to time. Accrued and unpaid interest on the Holdback Note
on amounts not subject to claims, pending or resolved, shall be paid annually on
each anniversary of the Closing. Any amounts held back by Buyer but ultimately
paid to the Seller shall also include interest at the rate specific in the
Holdback Note through the date of payment. No interest shall be due on the
principal of the Holdback Note to the extent the principal is reduced pursuant
to a claim or purchase price adjustment.
2.4 Transfer Taxes and Fees. The parties contemplate that no
documentary or transfer taxes or sales, use, transaction privilege or other
similar taxes will be imposed by reason of the transfer of Shares provided
hereunder. If any such tax is imposed, however, Seller shall bear the
responsibility for such tax. Seller shall pay the fees and costs of recording or
filing all UCC termination statements and other releases of Encumbrances, and
any fees or costs in obtaining any necessary consents.
ARTICLE III
CLOSING
3.1 Closing. The Closing of the transactions contemplated herein (the
"Closing") shall be held at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., One Arizona
Center, Phoenix, Arizona on August 31, 1998 or at a time and place as the
parties shall mutually agree (the "Closing Date").
3.2 Conveyances at Closing.
3.2.1 Seller's Delivery Obligations. To effect the sale and
transfer of the Shares, Seller will, at the Closing, execute (or cause to be
executed by any other party thereto other than Buyer) and deliver to Buyer:
3.2.1.1 certificates evidencing the Shares, free and
clear of any Encumbrances, duly endorsed in blank for transfer or accompanied by
stock powers duly executed in blank;
3.2.1.2 all Ancillary Agreements, including those
required to be executed by the Seller;
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3.2.1.3 all certificates, opinions of counsel and
other documents described in Article IX; and
3.2.1.4 all Permits and any other third party
consents required for the valid transfer of the Shares as contemplated by this
Agreement, or for the continued operation of the business of the Company
following such transfer.
3.2.2 Buyer's Delivery Obligations. To effect the sale and
transfer referred to in Section 2.1 hereof, Buyer will, at the Closing, execute
and deliver to Seller:
3.2.2.1 the Purchase Price, including the Holdback
Note;
3.2.2.2 all Ancillary Agreements required to be
executed by Buyer; and
3.2.2.3 all certificates, opinions of counsel and
other documents described in Article VIII.
3.2.3 Form of Instruments. To the extent that a form of any
document to be delivered hereunder is not attached as an Exhibit hereto, such
documents shall be in form and substance, and shall be executed and delivered in
a manner, reasonably satisfactory to the recipient.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY
Seller hereby represents and warrants to Buyer as follows, which
representations and warranties are, as of the date hereof, true and correct
(except with respect to representations and warranties which are qualified by
reference to Schedules, which shall not be deemed to be made until such
Schedules are delivered in accordance with Section 9.17):
4.1 Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. Copies of the Articles of Incorporation and Bylaws of the Company, and
all amendments thereto, heretofore delivered to Buyer are accurate and complete
as of the date hereof and are currently in effect without further amendment
thereto, except as set forth therein. The Company is duly qualified or licensed
to do business as a foreign corporation in good standing in the states set forth
in Schedule 4.1, which are the only jurisdictions in which ownership of
property, the employment of personnel or the conduct of its business requires
such qualification, except where the failure to be so qualified or licensed
would not have a Material Adverse Effect on the Company.
4.2 Subsidiaries.
4.2.1 List of Subsidiaries. Schedule 4.2 sets forth a complete
and accurate list of all Subsidiaries. Except as set forth on Schedule 4.2, all
of the Subsidiaries are, directly or
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indirectly, wholly-owned by the Company, free and clear of all Encumbrances.
Schedule 4.2 also sets forth the jurisdiction of incorporation of each of the
Subsidiaries, each jurisdiction in which each such Subsidiary is qualified or
licensed to do business, the number of shares of capital stock of such
Subsidiary outstanding, and the ownership thereof.
4.2.2. Capital Stock. Except as set forth on Schedule 4.2,
there are no outstanding (i) securities convertible into or exchangeable or
exercisable for any Subsidiary's capital stock; (ii) options, warrants, calls or
other rights with respect to the issued capital stock of any Subsidiary; (iii)
contracts, commitments, agreements, understandings or arrangements of any kind
relating to the issuance, sale, transfer, or assignment of any capital stock,
convertible or exchangeable securities or options, warrants or rights of any
Subsidiary; or (iv) voting trust agreements or other contracts, agreements,
arrangements, commitments, plans, proxies or understanding restricting or
otherwise relating to conveyance, voting or dividend rights with respect to such
capital stock.
4.2.3 Due Incorporation. Each Subsidiary has been duly
incorporated and is validly existing and in good standing under the laws of the
state of its incorporation and is duly licensed or qualified to do business and
in good standing in each state in which the ownership of property, the
employment of personnel or the character of its business requires it to do so,
except where the failure to be so qualified or licensed would not have a
Material Adverse Effect on the Company.
4.3 Authorization. Each of the Seller and the Company has full power
and authority (corporate or other) to enter into this Agreement and the
Ancillary Agreements, as the case may be, and to carry out the transactions
contemplated hereby and thereby, and the board of directors, trustees, or any
governing body or person of the Company and the Seller has taken all action
required by law, its charter or other governing documents, as the case may be,
or otherwise, to be taken by it to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements, as the case may be,
and the consummation of the transactions contemplated hereby and thereby. This
Agreement is, and the Ancillary Agreements, when executed will be, the legal,
valid and binding obligations of each of the Seller and the Company or other
parties thereto (other than Buyer), enforceable against each of them in
accordance with their respective terms, except as limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally or by equitable principles (whether considered in an
action at law or in equity), and (ii) limitations imposed by federal or
applicable state law or equitable principles upon the availability of specific
performance, injunctive relief or other equitable remedies. A copy of the
resolutions of the Company's board of directors authorizing this Agreement and
the related transactions are attached hereto as Schedule 4.3.
4.4 No Violation; Consents. None of the execution, delivery and
performance of this Agreement and the Ancillary Agreements nor the consummation
of the transactions contemplated hereby and thereby will (i) violate any
provision of the Articles of Incorporation or Bylaws of the Company, (ii)
violate, result in a breach of, conflict with, or constitute a default (or an
event which, with the giving of notice or lapse of time or both, would
constitute a default) or require any consent under, or give to others any right
of termination, amendment, acceleration, suspension, revocation
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or cancellation with respect to, any Contract to which the Seller or the Company
is a party or by which any of the Shares or any of the assets or properties of
the Company or the Seller are bound or affected (other than any instrument
creating, evidencing or securing indebtedness which will be repaid by the
Company prior to Closing), (iii) result in the creation or imposition of any
Encumbrance upon any of the Shares or any property or assets of the Company or
the Seller under any agreement, commitment or other Contract to which the
Company or the Seller is a party or by which the Company or the Seller is bound
or affected, or to which the property of the Company or the Seller is subject
(other than any instrument creating, evidencing or securing indebtedness to be
repaid prior to Closing), or (iv) violate, conflict with or result in the breach
of any statute or law or any judgment, decree, order, regulation or rule of any
court or governmental authority to which the Seller, the Company, or any of
their properties or assets are subject. Except as required under the HSR Act,
and except as set forth on Schedule 4.4, no action, consent, approval or
authorization by or filing with any person or entity, including, without
limitation, any governmental authority, is required in connection with the
execution, delivery and performance by the Seller and the Company of this
Agreement and the Ancillary Agreements, as the case may be, or the consummation
by the Seller and the Company of the transactions contemplated by each of them
herein and therein.
4.5 Capitalization.
4.5.1 The authorized equity securities of the Company consist
solely of 200,000 shares of common stock, no par value, of which 8,000 shares
are issued and outstanding and constitute the Shares, and 140,244 are in
treasury. Seller is and will be on the Closing Date the only record and
beneficial owner and holder of the Shares, as set forth on Schedule 4.5 (which
Schedule also sets forth the address of the Seller and the certificate numbers
of the certificates representing the Shares), free and clear of all Encumbrances
(other than a legend indicating only that the Shares have not been registered
under the Securities Act and any applicable state securities laws).
4.5.2 There are no shares of capital stock of the Company
issued and outstanding (other than the Shares). All Shares are validly issued,
fully paid and nonassessable. None of the issued and outstanding Shares was
issued in violation of any preemptive rights. There are no outstanding (i)
securities convertible into or exchangeable or exercisable for any of the
Company's capital stock; (ii) options, warrants, calls or other rights,
including, without limitation, rights to demand registration or to sell
securities in connection with any registration by the Company under the
Securities Act, with respect to the capital stock of the Company, or to purchase
or subscribe to capital stock of the Company or securities convertible into or
exchangeable or exercisable for capital stock of the Company; (iii) contracts,
commitments, agreements, understandings or arrangements of any kind relating to
the issuance, sale, transfer, or assignment of any capital stock, any
convertible or exchangeable securities or any options, warrants or rights of the
Company; or (iv) Shares or other securities of the Company pledged as collateral
to secure any agreement or obligation. Except as set forth on Schedule 4.5,
there are no voting trust agreements or other contracts, agreements,
arrangements, commitments, plans, proxies or understandings restricting or
otherwise relating to conveyance, voting or dividend rights with respect to the
Shares. Upon consummation of the transactions contemplated by this Agreement
Buyer will own all of the issued and outstanding
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equity securities of the Company of every sort whatsoever, free and clear of all
Encumbrances.
4.6 Financial Statements. Attached hereto as Schedule 4.6 are the
consolidated balance sheet, statement of income, and statement of cash flows for
each of the years ended March 31, 1998, 1997 and 1996 (collectively the
"Financial Statements"). The Financial Statements (a) are in accordance with the
underlying books and records of the Company, (b) have been prepared in
accordance with GAAP consistently applied throughout the periods covered
thereby, and (c) fairly present the assets, liabilities (including all reserves)
and financial position of the Company as of the respective dates thereof and the
results of operations and changes in cash flows for the periods then ended. The
Financial Statements for the years ended March 31, 1998 and 1997 have been
audited by Wood Harper & Associates, P.C., independent public accountants. At
the respective dates of the Financial Statements, there were no liabilities of
the Company which, in accordance with GAAP, should have been shown or reflected
in the Financial Statements or the notes thereto, which are not shown or
reflected in the Financial Statements or the notes thereto.
4.7 No Change in the Assets. Except as set forth in Schedule 4.7, since
March 31, 1998:
4.7.1 There has been no Material Adverse Change in the
Company;
4.7.2 Except in the ordinary course, there has not been any
sale or other disposition of any assets of the Company, or any Encumbrance
placed on its assets, or any purchase of assets, including inventory or
equipment, of the Company;
4.7.3 The Company has operated its business in the ordinary
course consistent with the Company's past practice so as to preserve its
business intact, to keep available to it the services of its employees, and to
otherwise preserve the Company's goodwill and its relationships with suppliers,
customers, distributors and others having business relations with it;
4.7.4 The Company has not changed its accounting methods or
practices (including any change in depreciation or amortization policies or
rates) or revalued any of its assets.
4.7.5 The Company has not taken any action that would violate
Section 7.1.
4.8 Liabilities. The Company has no liabilities or obligations
(absolute, accrued, contingent or otherwise) except (i) liabilities which are
reflected on the Financial Statements or which are not required under GAAP to be
reflected on the Financial Statements as of March 31, 1998; (ii) liabilities
incurred or arising in the ordinary course of business since ▇▇▇▇▇ ▇▇, ▇▇▇▇,
(▇▇▇) liabilities arising in the ordinary course of business under Contracts to
which the Company is a party (excluding specifically any claim for breach of
contract); and (iv) liabilities expressly described in a Schedule hereto.
4.9 Assets; Absence of Encumbrances. The assets reflected on the
Financial Statements and leased or otherwise used by the Company (for which the
Company possesses the necessary
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rights to use the same) constitute all assets necessary for the conduct of the
Company's business. All of the assets reflected on the Financial Statements as
of March 31, 1998 as owned by the Company and all assets acquired by the Company
since March 31, 1998 (other than assets disposed of in the ordinary course of
business since such date) are owned by the Company free and clear of all
Encumbrances, other than (i) Permitted Liens or (ii) Encumbrances reflected or
reserved against on the Company's March 31, 1998 balance sheet included in the
Financial Statements (as of the date thereof) or (iii) Encumbrances set forth on
Schedule 4.9.
4.10 Real Property.
4.10.1 Description. Schedule 4.10 sets forth complete and
accurate legal descriptions of all Owned Real Property and all Leased Real
Property.
4.10.2 Title. The Company has good and indefeasible title in
fee simple to the Owned Real Property, free and clear of all Encumbrances,
except for Permitted Liens and as disclosed in Schedule 4.10. Except as set
forth on Schedule 4.10, with respect to any Contracts, covenants, conditions,
deeds, deeds of trust, rights-of-way, easements, mortgages, restrictions,
surveys, title insurance policies, and other documents granting to the Company
title to or an interest in or otherwise affecting the Owned Real Property
(copies of which have been delivered to Buyer), no breach or event of default
exists on the part of the Company or, to the knowledge of the Company, on the
part of any other party, and no condition or event has occurred that with the
giving of notice, the lapse of time, or both would constitute a breach or event
of a default by the Company or, to the Company's knowledge, any other person.
4.10.3 Leases. The Seller and the Company have delivered to
Buyer an accurate copy of the leases and subleases covering the Leased Real
Property, including all amendments thereto and assignments thereof ("Leases").
All of such Leases are listed on Schedule 4.10.3. All of the Leases are valid
and in full force and effect. The Company has duly performed all of its
obligations under the Leases to the extent those obligations to perform have
accrued, and no violation of or default or breach under any Leases by the
Company or, to the Company's knowledge, any other party has occurred and neither
the Company nor, to the Company's knowledge, any other party has repudiated any
provisions thereof. All of the Leases will be enforceable by the Company after
the Closing to the same extent as if the transactions contemplated by this
Agreement had not been consummated.
4.10.4 No Unpaid Charges. Except as set forth on Schedule
4.10, there are no unpaid charges, debts, liabilities, claims, or obligations
arising from the construction, occupancy, ownership, use, or operation of the
Real Property and no charges or assessments for public improvements or otherwise
made against the Real Property are unpaid, including without limitation those
for construction of sewer lines, water lines, storm drainage systems, electric
lines, natural gas lines, streets (including perimeter streets), roads and
curbs. No Real Property is subject to any condition or obligation to any
governmental entity or other person requiring the owner or any transferee
thereof to donate land, money or other property or to make off-site public
improvements.
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4.10.5 Compliance with Laws. Except as set forth on Schedule
4.15, no litigation, arbitration, or similar proceeding is pending or, to
knowledge of the Company, threatened which affects or is reasonably likely to
affect the Company's use or enjoyment of any of the Real Property. All of the
Real Property is in compliance with all applicable zoning and subdivision
ordinances. The Real Property is zoned (if applicable) to permit operation of
the business presently conducted thereon. No condemnation, eminent domain, or
similar proceeding is pending or, to the knowledge of the Company, is threatened
against the Real Property.
4.10.6 Facilities. The Facilities and the equipment and other
tangible assets owned or leased by the Company at the Facilities, are (i)
adequately insured, (ii) structurally sound with no known defects, (iii) in good
operating condition and repair, subject to ordinary wear and tear, (iv) not
subject to any deferred maintenance, (v) maintained in accordance with
applicable leases or other agreements, and (vi) in conformity with all
applicable laws, ordinances, orders, regulations and other requirements relating
thereto currently in effect. The Facilities are supplied with utilities and
other services necessary for the operation of the business. None of the
Facilities or equipment thereat is subject to any commitment or other
arrangement for their sale or use by any person. The Company has not granted to
any person any contract or other right to the use of any portion of the Real
Property, or to the use of any Facility or amenity on or relating to any such
property.
4.10.7 No Foreign Owners. Neither the Company nor any Seller
is other than a "United States person" within the meaning of Section 7701 of the
Code.
4.11 Receivables. The accounts receivable, other receivables and all
restricted funds on deposit reflected in the Financial Statements represent
valid obligations or amounts to which the Company is entitled arising from sales
actually made in the ordinary course of business and are due and payable to the
Company, and the accounts receivable, other receivables (and allowance for
doubtful accounts) and restricted funds on deposit reflected on the Company's
financial statements have been established in accordance with GAAP.
4.12 Inventory and Equipment. The inventory of the Company reflected in
the Financial Statements was purchased in the ordinary course of business, and
the inventory (and reserves therefor) reflected in the Financial Statements have
been established in accordance with GAAP. The equipment of the Company reflected
on the Financial Statements is in good working condition and suitable for its
intended use, normal wear and tear excepted. The equipment reflected on the
Company's financial statements has been established in accordance with GAAP.
4.13 Contracts and Commitments.
4.13.1 Contracts. Schedule 4.13 sets forth a complete and
accurate list of all Contracts of the following categories:
4.13.1.1 Contracts not made in the ordinary course of
the Company's conduct of the business;
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4.13.1.2 Employment contracts, employment handbooks
or policies, bonus plans, programs and agreements, and severance agreements;
4.13.1.3 Supply, purchase, distribution, franchise,
license, sales or commission contracts related to the Company involving payments
made by or to the Company of $50,000 or more;
4.13.1.4 Contracts involving expenditures or
liabilities, actual or potential, in excess of $50,000 or otherwise material to
the Company, and not cancelable (without liability) within 30 calendar days;
4.13.1.5 Contracts or commitments relating to
commission arrangements with others;
4.13.1.6 Promissory notes, loans, agreements,
evidences of indebtedness, letters of credit, guarantees, or other instruments
relating to an obligation to pay money, whether the Company shall be the
borrower, lender or guarantor thereunder or whereby any assets are pledged
(excluding credit provided by the Company in the ordinary course of business to
its customers);
4.13.1.7 Leases of personal property not cancelable
(without liability) within 30 calendar days;
4.13.1.8 Contracts containing covenants limiting the
freedom of the Company or any officer, director or shareholder of the Company to
engage in any line of business or compete with any person; and
4.13.1.9 Contracts relating to the Shares
Seller and Company have provided Buyer true, correct and complete
copies of all of the Contracts listed on Schedule 4.13.
4.13.2 Absence of Breaches or Defaults. All of the Contracts
listed on Schedule 4.13 are valid and in full force and effect. The Company has
duly performed all of its obligations under the Contracts to the extent those
obligations to perform have accrued; no violation of, or default or breach under
any Contracts by the Company or, to its knowledge, any other party has occurred;
no condition or event has occurred that with the giving of notice or lapse of
time, or both, would constitute a breach or default by the Company or, to the
Company's knowledge, any other person; and neither the Company nor, to its
knowledge, any other party has repudiated any provisions thereof. All of the
Contracts will be enforceable by the Company after the Closing to the same
extent as if the transactions contemplated by this Agreement had not been
consummated.
4.14 Books and Records. The Company has made and kept (and given Buyer
access to) books and records and accounts, which, in reasonable detail,
accurately and fairly reflect the
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financial transactions and other material activities of the Company. The minute
books of the Company previously delivered to Buyer accurately and adequately
reflect all action previously taken by the shareholders, board of directors and
committees of the board of directors of the Company. The stock book records of
the Company previously delivered to Buyer are true, correct and complete, and
accurately reflect all transactions effected in the Company's stock through and
including the date hereof.
4.15 Litigation. Except as set forth on Schedule 4.15, there is no
action, order, writ, injunction, judgment or decree outstanding or any claim,
suit, litigation, proceeding, labor dispute, or arbitral action pending or, to
the Company's knowledge, any governmental audit or investigation (collectively,
with items listed above, an "Action") threatened (a) against the Company or its
assets; (b) against any officer, director or employee in their capacity as such,
or (c) seeking to delay, limit, enjoin or obtain damages in respect of the
transactions contemplated by this Agreement. The Company is not in default with
respect to or subject to any judgment, order, writ, injunction or decree of any
court or governmental agency, and there are no unsatisfied judgments against the
Company.
4.16 Labor Matters. The Company is not a party to any labor agreement
with respect to its employees with any labor organization, union, group or
association and no employees of the Company are represented by a labor
organization, union, group or association in connection with their employment by
the Company. The Company has not experienced any attempt by organized labor or
its representatives to make the Company conform to demands of organized labor
relating to its employees or to enter into a binding agreement with organized
labor that would cover the employees of the Company. Schedule 4.16 (i) contains
a list of all employees of the Company and their wage rates or salaries as of
the date of this Agreement, (ii) sets forth the dates of employment for such
employees and (iii) accurately characterizes them as exempt or non-exempt.
Except as set forth on Schedule 4.16, the employment of all persons presently
employed or retained by the Company is terminable at will by the Company.
4.17 Compliance with Law. The Company, the conduct of its business and
the operation of its Facilities have not violated (except where such violation
has been fully cured as of the date hereof), and are in compliance with all
laws, statutes, ordinances, regulations, rules and orders of any foreign,
federal, state or local government and any other governmental department or
agency, and any judgment, decision, decree or order of any court or governmental
agency, department or authority. The Company and the conduct of its business and
the operation of the Facilities are in conformity with all energy, public
utility, and health codes, regulations and ordinances, the Americans with
Disabilities Act, OSHA and all other foreign, federal, state, and local
governmental and regulatory requirements. Except as disclosed on Schedule 4.17,
the Company has not received any notice to the effect that, or otherwise been
advised that, it is in violation of any such statutes, regulations, rules,
judgments, decrees, orders, ordinances or other laws (except where such
violation has been fully cured as of the date hereof). Except as disclosed on
Schedule 4.17, the Company has all Permits required to conduct its business. All
material Permits are listed on Schedule 4.17. All
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Permits will be in force and effect after the Closing to the same extent as if
the transactions contemplated by this Agreement had not been consummated.
4.18 No Brokers. None of the Seller, the Company or any of the
Company's officers, directors, employees or Affiliates has employed or made any
agreement with any broker, finder or similar agent or any person or firm which
will result in an obligation on the part of the Buyer or, except as set forth in
Schedule 4.18, the Company, to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
4.19 No Other Agreements to Sell the Company. Neither any Seller nor
the Company has any commitment or legal obligation, absolute or contingent, to
any other person or firm other than the Buyer to sell, assign, transfer or
effect a sale of any of the Shares or any other shares of the Company's capital
stock (authorized or unauthorized), or to effect any merger, consolidation,
liquidation, dissolution or other reorganization of the Company, or to effect
any sale of the Company's assets (other than the sale of inventory of the
Company in the ordinary course of business).
4.20 Proprietary Rights.
4.20.1 Proprietary Rights. Schedule 4.20 lists all of the
Company's federal, state and foreign registrations of patents, trademarks,
service marks and trade names, and all pending applications for any such
registrations and all other trademarks and trade names which the Company uses.
Such rights, together with all trade secrets and other proprietary rights,
whether or not registered, and all computer software created by or on behalf of
the Company are hereinafter referred to collectively as "Proprietary Rights".
4.20.2 Royalties and Licenses. No person has a right to
receive a royalty or similar payment in respect of any Proprietary Rights.
Except as set forth on Schedule 4.20, the Company is not a party to any licenses
granted, sold or otherwise transferred by or to it or other agreements to which
it is a party, relating in whole or in part to any of the Proprietary Rights
other than object code end-user licenses granted to it in the ordinary course of
business that permit use of software products without a right to modify,
distribute or sublicense the same.
4.20.3 Ownership and Protection of Proprietary Rights. The
Company owns or licenses, and has the sole right to use or (if it so elects) to
sublicense each of the Proprietary Rights. None of the Proprietary Rights is
involved in any pending or, to the Company's knowledge, threatened Action. The
Company has not received any notice of invalidity with respect to such
Proprietary Rights. The Company has taken all reasonable and prudent steps to
protect the Proprietary Rights from infringement by any other person. To the
knowledge of the Company, the Company's use of the Proprietary Rights is not
infringing upon or otherwise violating the rights of any third party in or to
such Proprietary Rights. No such infringement been alleged by any third party.
All of the Proprietary Rights are validly owned by or licensed to the Company
and will not cease to be validly owned or licensed and in full force and effect
by reason of the execution, delivery
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and performance of this Agreement or the consummation of the transactions
contemplated by this Agreement.
4.21 Tax Matters.
4.21.1 Filing of Tax Returns, Payment of Taxes. Except as set
forth in Schedule 4.21.1, the Company has filed all Tax Returns that the Company
was required to file prior to the date hereof. All such Tax Returns were correct
and complete in all material respects and were prepared and filed in accordance
with applicable law. Except as set forth in Schedule 4.21.1, all Taxes due and
payable by or with respect to the Company (whether or not shown on any Tax
Return) with respect to all taxable periods ending prior to the date hereof have
been paid. All other Taxes due and payable by the Company with respect to
periods ending on or before the Closing Date (whether or not a Tax Return is due
on such date) or in respect of transactions entered into or any state of facts
existing as of the Closing Date have been or will be paid on or before Closing
Date or will be accrued as liabilities consistent with past practice. Except as
set forth in Schedule 4.21.1, all Tax Returns the due date of which (determined
without extensions) is on or after the date hereof but on or before the Closing
Date will be correct and complete in all material respects and filed in
accordance with applicable law.
4.21.2 Taxing Jurisdictions. Schedule 4.21.2 lists (i) all
countries, states, cities, or other jurisdictions in which the Company is
currently subject to an obligation to file Tax Returns or to collect sales or
use Taxes, (ii) all elections for income Taxes made by the Company that are
currently in force or to which the Company is bound, and (iii) (x) all
countries, states, cities, or other jurisdictions in which the Company is a
beneficiary of any real or personal property Tax exemptions or concessions,
reduced rates, or Tax credits (y) the estimated annual benefit of each such
item, and (z) the terms governing expiration or phase-out of each such item.
4.21.3 General Tax Matters. Except as set forth in Schedule
4.21.3, with respect to each taxable period for the Company ending on or before
the Closing Date (or as of such other date as set forth below), (i) either such
taxable period has been audited by the relevant taxing authority or the time for
assessing or collecting Taxes with respect to each such taxable period has
closed and each taxable period is not subject to review by a relevant taxing
authority; (ii) no deficiency or proposed adjustment that has not been settled
or otherwise resolved for any amount of Taxes has been asserted or assessed by
any taxing authority against the Company; (iii) the Company has not consented to
extend the time in which any Taxes may be assessed or collected by any taxing
authority; (iv) the Company has not requested or been granted an extension of
the time for filing any Tax Return; (v) there is no action, suit, taxing
authority proceeding, or audit or claim for refund now in progress, pending, or
threatened against or with respect to the Company regarding Taxes; (vi) the
Company has not made an election or filed a consent under Section 341(f) of the
Code (or any corresponding provision of state, local or foreign law) or agreed
to have Section 341(f)(2) of the Code (or any corresponding provision of state,
local or foreign law) apply to any disposition of subsection (f) assets (as
defined in Section 341(f)(4) of the Code) owned by the Company; (vii) there are
no Encumbrances on the assets of the Company relating or attributable to Taxes
(other than liens
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for Taxes not yet due and payable) and the Company has no knowledge of any
reasonable basis for the assertion of any claim relating or attributable to
Taxes, which, if adversely determined, would result in any lien, pledge, charge,
claim, security interest, or other Encumbrance on the assets of the Company;
(viii) the Company will not be required (A) as a result of a change in method of
accounting for a taxable period ending on or prior to the Closing Date, to
include any adjustment under Section 481 of the Code (or any corresponding
provision of state, local, or foreign law) in taxable income for any taxable
period (or portion thereof) beginning after the Closing Date or (B) as a result
of any "closing agreement," as described in Section 7121 of the Code (or any
corresponding provision of state, local, or foreign law) to include any item of
income or exclude any item of deduction from any taxable period (or portion
thereof) beginning after the Closing Date; (ix) the Company has not been a
member of an affiliated group (as defined in Section 1504 of the Code) or filed
or been included in a combined, consolidated, or unitary income Tax Return; (x)
the Company is not a party to or bound by any tax allocation or tax sharing
agreement and, has no current or potential contract or other obligation to
indemnify any other person with respect to any Tax or pay the Taxes of any other
person under Treasury Regulations Section 1.1502-6 (or any similar provisions of
state, local, or foreign law) as a transferee or successor, by contract or
otherwise; (xi) no claim has ever been made by a taxing authority in a
jurisdiction where the Company does not file Tax Returns that the Company is or
may be subject to Taxes assessed by such jurisdiction; (xii) the Company does
not have a permanent establishment in any foreign country, as defined in the
relevant tax treaty between the United States of America and such foreign
country; (xiii) the Company has not been a "U.S. real property holding
corporation" (within the meaning of Code Section 897(c)(2)) during the
applicable period specified in Code Section 897(c)(1)(A)(ii); (xiv) the Company
has disclosed on each Tax Return filed by the Company all positions taken
thereon that could give rise to a penalty for substantial understatement of
federal income Taxes within the meaning of Code Section 6662; (xv) the Company
was not acquired in a qualified stock purchase under Code Section 338(d)(3) and
no elections under Code Section 338(g), protective carryover basis elections, or
offset prohibition elections are applicable to the Company; (xvi) the Company
has made no payments, is not obligated to make any payments, and is not a party
to any agreement that under any circumstances could obligate it to make any
payments, that will not be deductible under Code Section 280G or 162; (xvii)
none of the Company's assets is property required to be treated as being owned
by any other person under the "safe harbor lease" provisions of former Section
168(f)(8) of the Internal Revenue Code of 1954, as amended, or (B) has been
financed with or directly or indirectly secures any bond or debt the interest of
which is tax-exempt under Section 103(a) of the Code; (xviii) the Company has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to an employee, independent contractor,
shareholder, or other third party; (xix) no income under any arrangement or
understanding to which the Company is a party will be attributed to the Company
which is not represented by income to which the Company is legally entitled; and
(xx) the Company owns no interest in any "controlled foreign corporation"
(within the meaning of Code Section 957), "passive foreign investment company"
(within the meaning of Code Section 1296) or other entity the income of which is
required to be included in the income of the Company whether or not distributed.
For purposes of clause (xvi) the term "payments" means payments in the nature of
compensation.
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4.21.4 Tax Attributes. Set forth in Schedule 4.21.4 is a list
reflecting the following information with respect to the Company as of the date
hereof as well as on an estimated pro forma basis as of the Closing Date: (i)
the basis of the Company in its assets, (ii) the amount of any net operating
loss, net capital loss, unused investment or other tax credit, unused foreign
tax or tax credit, or excess charitable contribution allocable to the Company
assets, and (iii) with respect to the preceding clause (ii) any limitations on
use of any of such attributes including any limitations arising by reason of the
transactions contemplated by this Agreement.
4.21.5 Copies of Tax Returns. Except as otherwise set forth in
Schedule 4.21.5 the Company has furnished to Buyer copies of all income and
sales Tax Returns filed by or with respect to the Company relating to the period
encompassing the three taxable years of the Company preceding the date hereof.
4.21.6 Retention of Tax Credits, Etc. The Seller acknowledges
and agrees that any refunds or benefits obtained from any Tax carryback or
carryforward or other realization of such Tax attributes of Company or its
successors shall remain as sole property of the Company.
4.21.7 Definition. Any reference to the term "the Company" in
this Section 4.21 shall refer to the Company, any predecessor entity, and any
Subsidiary of the Company (whether or not such Subsidiary entity qualifies as a
"qualified subchapter S subsidiary" within the meaning of Code Section
1361(b)(3)(B) or any other entity disregarded or intended to be disregarded for
Tax purposes under the Code or under any provision of state, local, or foreign
law). Further, any reference to any action of "the Company" in this Section 4.21
shall encompass any action or actions taken by or at the direction of the
Company whether or not such actions taken by or at the direction of the Company
were properly authorized.
4.22 Employees and Employee Benefits.
4.22.1 As used in this Section 4.22 and in Section 4.23, the
following terms have the meanings set forth below.
"Benefit Arrangement" shall mean any employment, consulting,
severance or other similar contract, arrangement or policy and each plan,
arrangement (written or oral), program, agreement or commitment providing for
insurance coverage (including without limitation any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits, life, health, disability or accident
benefits (including without limitation any "voluntary employees' beneficiary
association" as defined in Section 501(c)(9) of the Code providing for the same
or other benefits) or for deferred compensation, profit sharing bonuses, stock
options, stock appreciation rights, stock purchases or other forms of incentive
compensation or postretirement insurance, compensation or benefits which (A) is
not a Welfare Plan, Pension Plan or Multiemployer Plan, (B) is entered into,
maintained, contributed to or required to be contributed to, as the case may be,
by the Company or an ERISA Affiliate or under which the Company or any ERISA
Affiliate may incur any liability, and (C) covers any employee or former
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employee of the Company or any ERISA Affiliate (with respect to their
relationship with such entities).
"Employee Plans" shall mean all Benefit Arrangements,
Multiemployer Plans, Pension Plans and Welfare Plans.
"ERISA Affiliate" shall mean any entity which is (or at any
relevant time was) a member of a "controlled group of corporations" with, under
"common control" with, or a member of an "affiliated service group" with, the
Company as defined in Section 414(b), (c), (m) or (o) of the Code, or under
"common control" with the Company, within the meaning of Section 4001(b)(1) of
ERISA.
"Multiemployer Plan" shall mean any "multiemployer plan," as
defined in Section 4001(a)(3) of ERISA, under which the Company or any ERISA
Affiliate has or may incur any liability.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any "employee pension benefit plan"
as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) which (A)
the Company or any ERISA Affiliate has or may incur any liability; (B) covers
any employee or former employee of the Company or any ERISA Affiliate (with
respect to their relationship with such entities); and (C) is not a
Multiemployer Plan.
"Welfare Plan" shall mean any "employee welfare benefit plan"
as defined in Section 3(1) of ERISA, which (A) the Company or any ERISA
Affiliate has or may incur any liability; (B) covers any employee or former
employee of the Company or any ERISA Affiliate (with respect to their
relationship with such entities); and (C) is not a Multiemployer Plan.
4.22.2 Disclosure; Delivery of Copies of Relevant Documents
and Other Information. Schedule 4.22 contains a complete list of all Employee
Plans. True and complete copies of each of the following documents have been
delivered or made available by the Company to Buyer: (i) each Welfare Plan and
Pension Plan (and, if applicable, related trust agreements) and all amendments
thereto, all written interpretations thereof and written descriptions thereof
which have been distributed to the Company's employees and all annuity contracts
or other funding instruments; (ii) each Benefit Arrangement including written
interpretations thereof and written descriptions thereof which have been
distributed to the Company's employees (including descriptions of the number and
level of employees covered thereby) and a brief description of any Benefit
Arrangement which is not in writing; (iii) the most recent determination or
opinion letter, if any, issued by the Internal Revenue Service with respect to
each Pension Plan; (iv) for the three most recent plan years, Annual Reports on
Form 5500 Series required to be filed with any governmental agency for each
Pension Plan and each Welfare Plan; (v) all actuarial reports prepared for the
last three plan years for each Pension Plan; (vi) all correspondence with the
Internal Revenue
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Service, the Department of Labor or the PBGC regarding each Employee Plan; and
(xiii) all correspondence regarding any pending or threatened claim against any
Employee Plan or the Company or any ERISA Affiliate regarding any matter related
to any Employee Plan.
4.23 ERISA Representations.
4.23.1 Pension Plans. No Pension Plan is a defined benefits
plan as defined in Section 414 of the Code and no Pension Plan is subject to the
minimum funding requirements of Title IV of ERISA or Section 412 of the Code.
Each Pension Plan which is intended to be qualified (and each related trust
agreement, annuity contract or other funding instrument) satisfies in all
material respects requirements for qualified and tax-exempt status under the
provisions of Code Sections 401(a) (or 403(a), as appropriate) and 501(a) and
has so satisfied such requirement during the period from its adoption to date.
4.23.2 Multiemployer Plans. Neither the Company nor any ERISA
Affiliate has ever had any obligation to contribute to any Multiemployer Plans.
4.23.3 Welfare Plans. Each Welfare Plan which is a "group
health plan," as defined in Section 607(1) of ERISA, has been operated in
compliance in all material respects with the health care continuation provisions
of Part 6 of Title I, Subtitle B of ERISA and Section 4980B of the Code at all
times and, but for compliance with such provisions, no Welfare Plan provides
post-retirement benefits for employees.
4.23.4 Compliance with Law. Each Employee Plan has been
maintained in all material respects in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations
which are applicable to such Employee Plan, including without limitation ERISA
and the Code.
4.23.5 Unrelated Business Taxable Income. No Employee Plan (or
trust or other funding vehicle pursuant thereto) has any liability for Tax
imposed under Code Section 511.
4.23.6 Deductibility of Payments. There is no contract,
agreement, plan or arrangement covering any employee or former employee of the
Company (with respect to its relationship with such entities) that, individually
or collectively, provides for the payment by the Company of any amount (i) for
which the deduction by the Company would be disallowed under Section 162(m) of
the Code, or (ii) that is or would be an "excess parachute payment" pursuant to
Section 280G of the Code.
4.23.7 Fiduciary Duties and Prohibited Transactions. Neither
the Company nor, to the knowledge of the Company, any plan fiduciary or party in
interest (as such terms are defined in Section 3(21) and 3(14) of ERISA) of any
Welfare Plan or Pension Plan has engaged in any transaction in violation of
Sections 404 or 406 of ERISA or any "prohibited transaction," as defined in
Section 4975(c)(1) of the Code, for which no exemption exists under Section 408
of ERISA or
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Section 4975(c)(2) or (d) of the Code, or has otherwise violated the provisions
of Part 4 of Title I, Subtitle B of ERISA. The Company has not knowingly
participated in a violation of Part 4 of Title I, Subtitle B of ERISA by any
plan fiduciary of any Welfare Plan or Pension Plan (or other employee benefit
plan subject to ERISA) and has not been assessed any civil penalty under Section
502(i) or Section 502(l) of ERISA.
4.23.8 Validity and Enforceability. Each Welfare Plan, Pension
Plan, related trust agreement, annuity contract or other funding instrument and
Benefit Arrangement is legally valid and binding and in full force and effect.
4.23.9 Litigation. There is no action, order, writ,
injunction, judgment or decree outstanding or claim, suit, litigation,
proceeding, arbitral action, governmental audit or investigation relating to or
seeking benefits under any Employee Plan have been filed, or to the Company's
knowledge, threatened or anticipated against the Company, any ERISA Affiliate or
any Employee Plan, the sponsor or administrator of any Employee Plan or against
any fiduciary of any of the Employee Plans with respect to the operation of any
such plan.
4.23.10 No Amendments. Neither the Company nor any ERISA
Affiliate has any announced plan or legally binding commitment to create any
additional Employee Plans or to amend or modify any existing Employee Plan.
4.23.11 No Other Liability. No event has occurred in
connection with which the Company or any ERISA Affiliate or any Employee Plan,
directly or indirectly, could be subject to any liability (A) under any statute,
regulation or governmental order relating to any Employee Plans or (B) pursuant
to any obligation of the Company to indemnify any person against liability
incurred under any such statute, regulation or order as they relate to the
Employee Plans.
4.23.12 Unpaid Contributions. Neither the Company nor any
ERISA Affiliate has any liability for unpaid contributions under Section 515 of
ERISA with respect to any Pension Plan or Welfare Plan.
4.23.13 Insurance Contracts. Neither the Company nor any
Employee Plan holds as an asset of any Employee Plan any interest in any annuity
contract, guaranteed investment contract or any other investment or insurance
contract issued by an insurance company that is the subject of bankruptcy,
conservatorship or rehabilitation proceedings.
4.23.14 No Acceleration or Creation of Rights. Neither the
execution and delivery of this Agreement by the Company nor the consummation of
the transactions contemplated hereby will result in the acceleration or creation
of any rights of any person to benefits under any Employee Plan (including,
without limitation, the acceleration of the vesting or exercisability of any
stock options, the acceleration of the vesting of any restricted stock, the
acceleration of the accrual or vesting of any benefits under any Pension Plan or
the acceleration or creation of any rights under any severance, parachute or
change in control agreement).
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4.23.15 Termination. Each Welfare Plan and Benefit Arrangement
may be terminated by the Company without penalty upon 30 days advance notice and
without causing the Company to incur any additional liability.
4.24 Compliance With Environmental Laws.
4.24.1 Definitions. The following terms, when used in this
Section 4.24, shall have the following meanings. Unless the context otherwise
requires, any of these terms may be used in the singular or the plural depending
on the reference.
4.24.2 "Company" and "Facility" or "Facilities". For purposes
of this Section 4.24 only, the term (i) "Company" shall include (A) the Company
and the Subsidiaries and all of their Affiliates, and the Seller and their
Affiliates, (B) all partnerships, joint ventures and other entities or
organizations in which the Company was at any time or is a partner, joint
venturer, member or participant and (C) all predecessor or former corporations,
partnerships, joint ventures, organizations, trusts, businesses or other
entities, whether in existence as of the date hereof or at any time prior to the
date hereof, the assets or obligations of which have been acquired or assumed by
the Company or to which the Company has succeeded; and (ii) for purposes hereof,
"Facilities" or "Facility" shall mean all facilities and real property, owned,
leased or otherwise used by the Company, now or in the past.
4.24.3 "Release" shall mean and include any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
migrating, leaching, dumping or disposing into the environment or the work place
of any Hazardous Substance, and otherwise as defined in any Environmental Law.
4.24.4 "Hazardous Substance" shall mean any material, element,
compound, or mixture, whether solid, liquid, or gaseous:
(i) the presence of which requires investigation or remediation under
any Environmental Law or pursuant to the unappealed decision of any governmental
authority with responsibility for protection of the environment; or
(ii) which is defined as "hazardous waste," "hazardous substance,"
"toxic substance," "toxic material," "pollutant," or "contaminant" under any
Environmental Law including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Sections 9601, et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., the Federal Insecticide, Fungicide and Rodenticide Act, any laws
regulating the transportation of such materials, any analogous state or local
laws, and any rules, regulations, policies, and guidances promulgated
thereunder; or
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(iii) Which is or is suspected to be, pursuant to the determination of
any governmental authority, toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or is currently subject to regulation by
any governmental authority; or
(iv) the presence of which causes or threatens to cause a nuisance as
defined by an applicable Environmental Law, to property owned, leased,
subleased, operated, managed, occupied or otherwise controlled by Company, or to
adjacent or nearby properties; or
(v) which contains or in which has been detected, in violation of an
Environmental Law, gasoline, diesel fuel or other petroleum hydrocarbons or
volatile organic compounds; or
(vi) which contains or in which has been detected, in violation of an
Environmental Law, PCBs or asbestos or asbestos-containing materials or urea
formaldehyde foam insulation or lead or lead-containing paint; or
(vii) which is radon gas.
4.24.5 Compliance With Environmental Laws. Except as set forth
on Schedule 4.24, the Facilities have been owned, leased, operated and
maintained in compliance with all federal, state, local or foreign laws,
statutes, ordinances, regulations, rules, nonappealable judgments, nonappealable
orders, or notice requirements, nonappealable court decisions, agency guidelines
or principles of law (including common law), restrictions or licenses, as
currently in effect and as currently interpreted and enforced, which (i)
regulate or relate to the protection or clean-up of the environment, the use,
treatment, storage, transportation, handling or disposal of Hazardous Substances
or other hazardous, toxic or otherwise dangerous substances, wastes or materials
(whether gas, liquid or solid), the preservation or protection of waterways,
groundwater, drinking water, air, wildlife, plants or other natural resources,
or the health and safety of persons or property, including without limitation
protection of the health and safety of employees or (ii) impose liability with
respect to any of the foregoing, including without limitation the Federal Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), Resource Conservation &
Recovery Act (42 U.S.C. Section 6901 et seq.) ("RCRA"), Safe Drinking Water Act
(21 U.S.C. Section 349, 42 U.S.C. Sections 201, 300f), Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), Clean Air Act (42 U.S.C. Section
7401 et seq.), the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"), or any other similar
federal, state or local law of similar effect, each as amended to the date
hereof (collectively, "Environmental Laws"). To the best of the Company's
knowledge, the Real Property does not contain wetlands or a level of radon above
action levels of the U.S. Environmental Protection Agency and it is not located
within a "critical," "preservation," "conservation" or similar type of area.
4.24.6 Permits. Except as set forth on Schedule 4.24, the
Company has, and at all times has had, and has timely renewed, all Permits
required under any Environmental Law and the Facilities are, and at all times
have been, in compliance with all such Permits.
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4.24.7 Permits Required. The consummation of any of the
transactions contemplated by this Agreement will not require an application for
issuance, renewal, transfer or extension of, or any other administrative action
regarding, any Permit required under any Environmental Law.
4.24.8 Notice of Violation. The Company has not received any
notice at any time that it or the Facilities is or were claimed to be in
violation of the provisions of any Environmental Law or in non-compliance with
the conditions of any Permit, and there is no pending, or to the Company's
knowledge, threatened lawsuit, governmental or other legal action to that
effect.
4.24.9 Pending Actions. There is not now pending, or to the
Company's knowledge, threatened, nor except as set forth in Schedule 4.24 is
there or has there been any basis for, nor has there ever been, any Action
against the Company under any Environmental Law or otherwise with respect to any
Release or mishandling of any Hazardous Substance.
4.24.10 Judgments. There are no outstanding, nonappealable
consent decrees, judgments, judicial or administrative orders or agreements
with, or liens by, any governmental authority or quasi-governmental entity
relating to any Environmental Law which regulate, obligate, bind or in any way
affect the Company or the Facilities currently owned or operated by the Company
or others with respect to which liability or obligations of the type described
herein could be imposed upon the Company.
4.24.11 Hazardous Substances. Except as set forth on Schedule
4.24, there is not and has not been any Hazardous Substance used, generated,
treated, stored, transported, disposed of, handled by Seller or Company or
otherwise existing on, under, about or from any Facility, except for quantities
of any such Hazardous Substances stored or otherwise held on, under or about any
such Facility in full compliance with all Environmental Laws and necessary for
the operation of the Company's business.
4.24.12 Handling of Hazardous Substances. The Company has at
all times used, generated, treated, stored, transported, disposed of or
otherwise handled Hazardous Substances in compliance with all Environmental Laws
and in a manner that will not result in liability of the Company or Buyer under
any Environmental Law.
4.24.13 Environmental Conditions. Except as set forth on
Schedule 4.24, there are no present or past Environmental Conditions (as defined
below) in any way relating to Company, its business or the Facilities.
"Environmental Conditions" means the introduction into the soil, groundwater or
environment of or near the Facilities (through leak, spill, release, discharge,
escape, emission, dumping, disposal or otherwise) of any pollution, including
without limitation any contaminant, irritant or pollutant or Hazardous Substance
(whether or not upon the property of the business and whether or not such
pollution constituted at the time thereof a violation of any Environmental Law)
as a result of which either the Company or, after the Closing, Buyer has
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become, or may become, liable to any federal, state, or local governmental
authority or person or by reason of which any of the assets may suffer or be
subjected to any lien.
4.24.14 CERCLA or RCRA. No current or past use, generation,
treatment, transportation, storage, disposal or handling practice of the Company
with respect to any Hazardous Substance has or will result in any liability,
under the CERCLA or RCRA or any state or local law of similar effect.
4.24.15 Storage Tank or Pipeline. Except as set forth on
Schedule 4.24, there is not now and has not been at any time in the past any
underground or above-ground storage tank or pipeline at any Facility where the
installation, use, maintenance, repair, testing, closure or removal of such tank
or pipeline was not in compliance with all Environmental Laws and there has been
no Release from or rupture of any such tank or pipeline, including without
limitation any Release from or in connection with the filling or emptying of
such tank or pipeline.
4.24.16 Environmental Audits or Assessments. True, complete
and correct copies of the written reports, and all parts thereof, to the extent
such reports are in the possession or control of the Company, of all
environmental audits or assessments which have been conducted at any Facility
within the past five years, either by the Company or any attorney, environmental
consultant or engineer engaged for such purpose, have been delivered to Buyer
and a list of all such reports, audits and assessments and any other similar
report, audit or assessment of which the Company or Sellers have knowledge is
included on Schedule 4.24.
4.24.17 Indemnification Agreements. The Company is not a
party, whether as a direct signatory or as successor, assign or third party
beneficiary, or, to the Company's knowledge, otherwise bound, to any lease or
other Contract under which the Company is obligated by or entitled to the
benefits of, directly or indirectly, any representation, warranty,
indemnification, covenant, restriction or other undertaking concerning
Environmental Conditions.
4.24.18 Releases or Waivers. The Company has not released any
other person from any claim under any Environmental Law or waived any rights
concerning any Environmental Condition.
4.24.19 Notices, Warnings and Records. Except as disclosed on
Schedule 4.24, the Company has given all notices and warnings, made all reports,
and has kept and maintained all records required by and in compliance with all
Environmental Laws.
4.25 Insurance.
4.25.1 Schedule 4.25 describes all policies of insurance
(including the insurer, type of insurance and period of coverage) to which the
Company is a party or under which the Company or any employee, officer or
director of the Company (in his or her capacity as such) is insured or has been
insured at any time within the three years preceding the date of this Agreement,
and any self-
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insurance arrangement by or affecting the Company, including any reserves
established thereunder. All such policies, together with such self-insurance,
(i) provide adequate insurance coverage for the Company, its business, assets
and operations for all risks normally insured against by a person or entity
carrying on the same business or businesses as the Company, (ii) are sufficient
for compliance with all legal requirements and Contracts to which the Company is
a party or by which it is bound, and (iii) will continue in full force and
effect following the Closing.
4.25.2 Schedule 4.25 sets forth, by year, for the current
policy year and each of the three preceding policy years, a summary of the loss
experience under each policy, and a summary of the loss experience for all
claims that were self-insured, including the number and aggregate cost of such
claims;
4.25.3 Except as set forth on Schedule 4.25, the Company has
not received (i) with respect to any insurance claims made in the past three
years, any refusal of coverage or any notice that a defense will be afforded
with reservation of rights, or (ii) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or effect or
will not be renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder.
4.25.4 The Company has paid all premiums due, and has
otherwise performed in all material respects all of its obligations under each
insurance policy described above.
4.26 Affiliate Transactions. Except as set forth on Schedule 4.26, no
officer or director of the Company, or any Seller, or any member of the
immediate family of any such officer, director, or Seller, or any entity in
which any of such persons owns any beneficial interest (other than a publicly
held corporation whose stock is traded on a national securities exchange or in
the over-the-counter market and less than 1% of the stock of which is
beneficially owned by any of such persons) has any agreement with the Company or
any interest in any agreement of the Company or in any property (real, personal,
or mixed, tangible or intangible) owned or used by the Company or otherwise
pertaining to the Company or its business or assets. For purposes of the
preceding sentence, the members of the immediate family of an officer or
director of the Company or Seller shall consist of the spouse, parents,
children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and
brothers- and sisters-in-law of such officer, director or Seller.
4.27 Disclosure. To the knowledge of Seller, neither this Agreement nor
any of the Schedules or Exhibits hereto contains or shall contain when delivered
at Closing any untrue statement of a material fact or shall omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading, and there is
no fact which has not been disclosed to Buyer that has had or is reasonably
likely to have a Material Adverse Effect on the Company.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller as follows, which representations and warranties are, as
of the date hereof, and will be, as of the Closing Date, true and correct:
5.1.1 Organization of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
5.1.2 Authorization. Buyer has all requisite corporate power
and authority, and has taken all corporate action necessary, to execute and
deliver this Agreement and each of the Ancillary Agreements to which it is a
party, to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. This Agreement has been duly
executed and delivered by Buyer and is (and following their execution and
delivery by Buyer and the other parties thereto, as applicable, each of the
Ancillary Agreements to which Buyer is a party will be) a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
5.1.3 No Conflict or Violation. Neither the execution,
delivery or performance of this Agreement or the Ancillary Agreements to which
Buyer is a party nor the consummation of the transactions contemplated hereby or
thereby, nor compliance by Buyer with any of the provisions hereof or thereof,
will (i) violate or conflict with any provision of the Certificate of
Incorporation or Bylaws of Buyer, (ii) violate any statute, rule, regulation,
ordinance, code, order, judgment, ruling, writ, injunction, decree or award
binding upon Buyer, or (iii) violate any contract or agreement to which Buyer is
a party, in each case to the extent that such violation or conflict would
prevent Buyer from consummating the transactions contemplated hereby or result
in any liability to Seller.
5.1.4 Consents and Approvals. No notice to, declaration,
filing or registration with, or authorization, consent or approval of, or permit
from, any governmental or regulatory body or authority, or any other person or
entity, is required to be made or obtained by Buyer in connection with the
execution, delivery and performance of this Agreement or the Ancillary
Agreements and the consummation of the transactions contemplated hereby or
thereby, except (i) as may be required by Buyer to operate the Company's
business after the Closing, (ii) as has been obtained on or prior to the date
hereof, or (iii) as required under the HSR Act.
5.1.5 No Brokers. Neither Buyer nor any of its respective
officers, directors, or employees have employed or made any agreement with any
broker, finder or similar agent or any person or firm which will result in an
obligation to pay any finders fees, brokerage fees or commission or similar
payment in connection with the transactions contemplated hereby for which Seller
or the Company will bear any responsibility.
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5.1.6 Litigation. No legal action is pending or, to the
knowledge of Buyer, threatened against Buyer which seeks to delay, limit or
enjoin the transactions contemplated by this Agreement.
5.1.7 Financing. Buyer has available funds, or committed
credit facilities through which such funds may be provided, without material
condition, in order to pay the Purchase Price, and will maintain such
availability until the Closing or termination of this Agreement.
ARTICLE VI
GENERAL COVENANTS OF BUYER, THE COMPANY AND SELLER
Buyer, the Company and Seller each covenant with the others as follows:
6.1 Further Assurances. Upon the terms and subject to the conditions
contained herein, each of the parties hereto agrees, both before and after the
Closing, (i) to use all commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement, (ii) to execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing, including using their respective commercially
reasonable efforts (A) to obtain all necessary waivers, consents and approvals
from third parties; provided, however, that neither party shall be required to
make any material payments, commence litigation or agree to modifications of the
terms of Contracts in order to obtain any such waivers, consents or approvals,
(B) to obtain all necessary Permits as are required to be obtained under any
federal, state, local or foreign law or regulations, (C) to effect all necessary
registrations and filings, including without limitation required filings under
the HSR Act and all other submissions of information requested by governmental
authorities, and (D) to fulfill all conditions to this Agreement.
6.2 Environmental Assessments and Remediation. Buyer has conducted at
the Company's cost and expense environmental assessments of the Company's
properties by a qualified and reputable environmental consulting firm approved
by Buyer. Prior to the Closing, Seller shall perform all remediation work or
other corrective measures as have been agreed upon by Seller and Buyer and
listed on Schedule 6.2.
6.3 Notification. Prior to the Closing, each of the parties hereto
agrees to use good faith efforts to notify the other parties in the event that
such party obtains actual knowledge of any material breach of any representation
or warranty of such other party; provided, however, that the foregoing shall in
no way affect or mitigate the representations, warranties, covenants or
indemnities contained herein.
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ARTICLE 7
CONDUCT OF COMPANY AND BUYER PENDING THE CLOSING
7.1 Company and Seller Covenants. The Company and Seller hereby jointly
and severally covenant and agree that from the date hereof to the Closing Date:
7.1.1 Conduct of Business Pending the Closing. Except as
specifically contemplated in this Agreement or as disclosed in any schedule
hereto, the business of the Company shall be conducted only in, and the Company
shall take no action except in, the ordinary course, on an arm's length basis,
and in accordance with past custom and practice and all applicable laws, rules,
and regulations; and the Company shall maintain its Facilities and equipment in
good operating condition, ordinary wear and tear accepted; and the Company will
not, directly or indirectly, and Seller will not cause, or take any action or
omit to take any action to permit, the Company to:
(i) Cancel or terminate or permit to be canceled or
terminated its current insurance (or reinsurance) policies or permit any of the
coverage thereunder to lapse, unless simultaneous with such termination,
cancellation, or lapse, replacement policies providing coverage equal to or
greater than the coverage under the canceled, terminated, or lapsed policies are
in full force and effect;
(ii) Default under any material contract, agreement
or commitment;
(iii) Violate or fail to comply in any material
respect with any laws applicable to it;
(iv) Fail to maintain its assets and properties in
accordance with good standards of maintenance and as required in any leases or
other agreements pertaining thereto;
(v) Enter into or modify any employment, severance,
or similar agreements or arrangements with, or grant any bonuses, salary
increases, or severance or termination pay to, any officers, directors,
consultants or, except in the ordinary course of business consistent with
historical practices, employees, or adopt or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment, or other benefit plan, trust, fund, or group arrangement for the
benefit or welfare of any officers, directors, or employees;
(vi) Directly or indirectly enter into or modify any
material contract, agreement, or understanding or enter into any transaction not
in the ordinary course of business;
(vii) Cancel, without full payment, any note, loan,
or other material obligation owing to the Company, or waive or compromise any
material right or claim except the write-off of accounts receivable in the
ordinary course of business;
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(viii) Acquire (by merger, exchange, consolidation,
acquisition of stock or assets, or otherwise) any corporation, partnership,
joint venture, or other business organization or division or assets thereof;
(ix) Issue any shares of its capital stock, issue or
create any warrants, obligations, subscriptions, options, convertible
securities, or other commitments under which any additional shares of capital
stock or other securities may be issued, or effect any transfer of outstanding
shares of its capital stock, including shares of any class that might be
directly or indirectly authorized, issued, or transferred from treasury, or
otherwise permit the transfer of any outstanding shares of capital stock or
declare any dividends or distributions whether in cash, stock or other property;
(x) Incur any indebtedness for borrowed money or
issue any debt securities except the borrowing of working capital in the
ordinary course of business and consistent with past practice;
(xi) Pay any obligation or liability, fixed or
contingent, except in the ordinary course of business; and
(xii) Enter into any transactions with Seller or any
other Affiliate of the Company other than payment of benefits and reimbursement
of expenses in the normal course of business consistent with past practice, and
except as disclosed on Schedule 4.26.
7.1.2 Business Relationships. The Company will exercise its
reasonable efforts to preserve intact its business organization and goodwill,
keep available the services of its officers and employees as a group, and
maintain satisfactory relationships with suppliers, distributors, customers, and
others having business relationships with it.
7.1.3 Notification of Certain Matters. The Company shall (i)
confer on a regular basis with representatives of Buyer and report operational
matters and the general status of ongoing operations, (ii) promptly notify Buyer
of any Material Adverse Change in the normal course of its business or in the
operation of its properties and of any Actions or other governmental or third
party complaints, investigations, or hearings (or communications indicating that
the same may be contemplated); and (iii) promptly notify Buyer if the Company
shall discover that any representation or warranty made by it or the Seller in
this Agreement was when made, or has subsequently become, untrue in any material
respect or if it or they have failed to or will fail to satisfy or perform in
any material respect any covenant or agreement of the Company or Seller
contained herein.
7.2 Certain Closing Covenants.
(a) Company and Buyer Covenants. Company shall use its
commercially reasonable efforts to cause the conditions specified in Article IX
hereof, and Buyer shall use its commercially reasonable efforts to cause the
conditions specified in Article VIII hereof, to be
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satisfied at or prior to the Closing Date.
(b) Seller's Covenants. Seller shall use his commercially
reasonable efforts to (i) cause the conditions to Closing applicable to him, to
be satisfied and (ii) to cause the Company to satisfy the conditions to Closing
applicable to him, in each case on or before the Closing Date.
7.3 No Negotiations. Neither the Company nor Seller shall, directly or
indirectly, through any officer, director, agent, or otherwise, solicit,
initiate, or encourage submission of any proposal or offer from any person or
entity (including any of its or their officers or employees) relating to the
sale or other transfer or disposition of the Shares or any liquidation,
dissolution, recapitalization, merger, consolidation, or acquisition or purchase
of all or a portion of the assets (except sales of inventory in the ordinary
course of business) of, or any equity interest in, the Company or other similar
transaction or business combination involving the Company, or participate in any
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with, or assist, participate in,
facilitate, or encourage, any effort or attempt by any other person or entity to
do or seek any of the foregoing. The Company and Seller shall promptly notify
Buyer if any such proposal or offer, or any inquiry from or contact with any
person with respect thereto, is made and shall promptly provide Buyer with such
information regarding such proposal, offer, inquiry, or contact as Buyer may
request.
7.4 Public Announcements. The parties hereto shall not issue any press
release or public announcement, including announcements by any party for general
reception by or dissemination to employees, agents, or customers, with respect
to this Agreement and the other transactions contemplated by this Agreement
without the prior written consent of the other parties hereto (which consent
shall not be withheld unreasonably); provided, however, that Buyer may make any
disclosure or announcement of information it is obligated to make pursuant to
applicable law or regulation, including any applicable law or regulation of the
Nasdaq Stock Market or any other national securities exchange or self regulatory
organization, as applicable; provided, further, however, that the Company will
have the opportunity to review and provide comments on any such disclosure or
announcement prior to its release; and provided further, that Seller and the
Company acknowledge that Buyer may make disclosures to lenders, investment
bankers, rating agencies and their agents regarding the transaction and the
Company.
7.5 Confidentiality. The parties shall continue to be bound by that
Confidentiality Agreement dated February 3, 1998. Notwithstanding the foregoing,
the Seller and the Company consent to the dissemination of relevant information
regarding the Company to facilitate the consent of its lenders in respect of the
transaction contemplated hereby, provided the recipients thereof are bound by
appropriate obligations of confidentiality. Subject to limitations above,
nothing herein or in the Confidentiality Agreement shall preclude a party from
developing or offering products or services competitive with those of the other
party.
7.6 Tax Matters. Buyer shall cause the Company to prepare and file all
Tax Returns for the Company for (i) all periods ending on or prior to the
Closing Date which are filed after the
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Closing Date and (ii) all periods which began before the Closing Date and end
after the Closing Date. Buyer shall cause such Tax Returns to be prepared on a
basis reasonably consistent with the Tax Returns filed by the Company for prior
periods (so long as not inconsistent with applicable law), shall permit Seller
to review and comment on each such Tax Return prior to filing, and shall make
such revisions to such Tax Returns as are reasonably requested by Seller. Any
disputes with taxing authorities that may result in the imposition of Taxes for
which Seller is responsible hereunder shall be subject to the provisions of
Article X hereof. Buyer shall cause the Company to retain all books and records
with respect to Taxes for which Seller is responsible hereunder until the
expiration of the statutes of limitations of the respective taxable periods.
ARTICLE VIII
CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of Seller to consummate the transactions provided for
hereby are subject to the satisfaction, on or prior to the Closing Date, of each
of the following conditions, any of which may be waived by Seller:
8.1 Representations, Warranties and Covenants. All representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects at and as of the date of this Agreement and at and as of the
Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Buyer shall have performed and
satisfied in all material respects all agreements and covenants required hereby
to be performed by it prior to or on the Closing Date.
8.2 No Proceedings, Litigation or Laws. No Action by any governmental
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to materially damage Seller if the
transactions contemplated hereunder are consummated. The waiting period under
the HSR Act shall have expired or been terminated.
8.3 Certificates. Buyer shall furnish Seller with such certificates of
Buyer to evidence compliance with the conditions set forth in this Article VIII
as may be reasonably requested by Seller.
8.4 Ancillary Agreements. Buyer shall have executed and delivered the
Ancillary Agreements to which it is a party.
8.5 Buyer Corporate Documents. Buyer shall have delivered to Seller a
copy of its Certificate of Incorporation certified by the Delaware Secretary of
State, a good standing certificate dated not more than ten days prior to Closing
by the Delaware Secretary of State and a copy of the resolutions adopted by
Buyer in connection with this Agreement, certified by its corporate secretary.
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ARTICLE IX
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions provided for
hereby are subject, in the discretion of Buyer, to the satisfaction, on or prior
to the Closing Date, of each of the following conditions, any of which may be
waived by Buyer:
9.1 Representations, Warranties and Covenants. All representations and
warranties of Seller and the Company contained in this Agreement shall be true
and correct in all material respects at and as of the date of this Agreement and
at and as of the Closing Date, except as and to the extent that the facts and
conditions upon which such representations and warranties are based are
expressly required or permitted to be changed by the terms hereof, and Seller
and the Company shall have performed and satisfied in all material respects all
agreements and covenants required hereby to be performed by them prior to or on
the Closing Date.
9.2 Consents. All Permits and waivers necessary to the consummation of
the transactions contemplated hereby and for the continued operation of the
business after the Closing by Buyer shall have been obtained including, without
limitation (i) all required third party consents, and (ii) the waiting period
under the HSR Act shall have expired or been terminated.
9.3 No Proceedings or Litigation. No Action by any governmental
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to materially damage Buyer if the
transactions contemplated hereby are consummated, including without limitation
any limitation or restriction on the right or ability of the Buyer to own or
transfer the Shares or of the Company to own, possess or transfer its assets
after the Closing. There shall not be any statute, rule or regulation that makes
the purchase and sale of the Shares or the Company contemplated hereby illegal
or otherwise prohibited.
9.4 Opinions of Counsel. The Company and the Seller shall have
delivered to Buyer the opinion of Eastham, Meyer & ▇▇▇▇▇▇▇ or such other counsel
as may be reasonably acceptable to Buyer, dated as of the Closing Date, in form
and substance reasonably satisfactory to Buyer, to the effect that:
9.4.1 Incorporation. The Company and its Subsidiaries have
been duly incorporated and are validly existing and in good standing under the
laws of their respective states of incorporation and are qualified to do
business and are in good standing in each state in which the ownership or lease
of its properties, the employment of its personnel or character of its business
requires it to do so, except where the failure to be so qualified would not have
a Material Adverse Effect.
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9.4.2 Corporate Power and Authority. The Company has the
necessary corporate power and authority to enter into this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby and the Company and the Subsidiaries own, lease
and operate their respective assets and properties and to conduct their
respective businesses as presently conducted.
9.4.3 Corporate Action. The execution, delivery and
performance of this Agreement and the Ancillary Agreements to which the Company,
or any Subsidiary is a party have been duly authorized by all necessary
corporate or other action, and this Agreement and the Ancillary Agreements have
been duly executed and delivered by the Company, the Subsidiaries, or the
Seller, as applicable.
9.4.4 Obligation of the Company or Seller. This Agreement and
each Ancillary Agreement constitutes a legally valid and binding obligation of
the Company, the Subsidiaries, or the Seller, as applicable, enforceable against
the Company, the Subsidiaries, or the Seller in accordance with its terms,
except as limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally or by equitable
principles (whether considered in an action at law or in equity), (ii)
limitations imposed by federal or applicable state law or equitable principles
upon the availability of specific performance, injunctive relief or other
equitable remedies, and (iii) other appropriate exceptions to enforceability.
9.4.5 No Breach. Neither the execution and delivery of this
Agreement or the Ancillary Agreements by the Company, the Subsidiaries, or the
Seller, as applicable, nor the consummation of the transactions contemplated
hereby or thereby will (i) violate or conflict with any provision of the
Articles of Incorporation or Bylaws of the Company or any Subsidiaries, or (ii)
breach, or cause a default under, any term or provision of any Contract listed
on any Schedule to this Agreement relating to the Company or any Seller.
9.4.6 No Permits Required. No Permit or filing with or consent
of any governmental authority or any other person is required to be obtained by
the Company or the Seller for the execution and delivery of this Agreement or
the Ancillary Agreements by the Company, the Subsidiaries, or the Seller, as
applicable, or the consummation by the Company, the Subsidiaries, or the Seller
of the transactions contemplated hereby or thereby, except such as have been
obtained or the failure to obtain would not materially adversely affect the
Company's or the Seller's ability to consummate the transactions contemplated
hereby or thereby.
9.4.7 No Actions Pending. To the knowledge of such counsel,
except as set forth in the Schedules hereto, no Action is pending or threatened
(i) against the Company or its Subsidiaries, or (ii) against any of the officers
or directors of the Company or its Subsidiaries as such, or (iii) seeks to
delay, limit, enjoin or obtain damages in respect of the transactions
contemplated hereby.
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9.4.8 No Violation of Law. Neither the execution and delivery
of this Agreement or any Ancillary Agreement by the Company or the Seller, as
applicable, nor the consummation of the transactions contemplated hereby or
thereby will violate any statute, law, ordinance, regulation, rule or, to the
knowledge of such counsel, order of any federal or state government or any other
federal or state governmental department or agency, or any judgment, decree or
order of any court known to such counsel to be applicable to the Company, the
Subsidiaries or the Seller.
9.4.9 Title to Shares. The authorized capital stock of the
Company consists solely of 200,000 shares of common stock, no par value per
share, and the issued and outstanding common stock of the Company consists
solely of the Shares, all of which are owned of record and beneficially by the
Sellers free and clear of all Encumbrances other than restrictions on transfer
imposed by the federal and state securities laws. The Company owns all of the
capital stock of the Subsidiaries, free and clear of all Encumbrances other than
restrictions on transfer imposed by federal and state securities laws. To the
knowledge of such counsel, there are no outstanding warrants, options or other
rights to acquire, or securities convertible into or exercisable or exchangeable
for, shares of capital stock of the Company or any Subsidiary, nor any
commitments or agreements by the Company or any Subsidiary to issue any such
rights or securities or shares of capital stock. Upon Closing, Buyer will
acquire good and valid title to all of the Shares, free and clear of all
Encumbrances.
9.5 Certificates. Seller and the Company shall furnish Buyer with such
certificates of Seller, the officers of the Company and others to evidence
compliance with the conditions set forth in this Article IX as may be reasonably
requested by Buyer.
9.6 Ancillary Agreements. Each of the Seller and the Company, as
appropriate, shall have entered into the Ancillary Agreements.
9.7 Release of Encumbrances. The Company shall have filed or recorded
(where necessary) and delivered to Buyer all documents necessary to release the
Shares and assets of the Company from all Encumbrances (except for Encumbrances
permitted under Section 9.15), which documents shall be in a form reasonably
satisfactory to Buyer's counsel.
9.8 No Material Changes. Except as otherwise approved by Buyer, there
shall not have been any Material Adverse Change in the Company since the date of
this Agreement.
9.9 Corporate Documents. Buyer shall have received from the Company
resolutions adopted by its board of directors as it reasonably deems appropriate
approving this Agreement and the Ancillary Agreements to which it is a party,
and the transactions contemplated hereby and thereby.
9.10 Completion of Environmental Remediation. Seller shall have
completed any required remediation listed on Schedule 6.2.
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9.11 Financial Statement Deliveries. The Company shall have provided
Buyer with (a) consolidated audited and unaudited interim financial statements
that satisfy applicable regulations of the Securities and Exchange Commission
("SEC"), and the Company's independent accountants shall have agreed to consent
to inclusion of their reports on such audited financial statements in the
filings made by Buyer with the SEC and to deliver appropriate "comfort letters",
including audited financial statements for the most recent fiscal year, and (b)
a certificate setting forth the cash and long-term debt of the Company as of the
Closing Date (the "Closing Certificate") determined in good faith and in
accordance with GAAP, applied on a basis consistent with the Financial
Statements (as defined in Section 4.6) certified by the President and Chief
Financial Officer of the Company. The Closing Certificate shall be used to
calculate the amount of the Company's cash on hand pursuant to Section 2.2.1.
Such certificate shall be subject to the representations and warranties of
Section 4.6 of this Agreement.
9.12 Affiliate Loans. All indebtedness owed to the Company by any
Seller, or Affiliates of the Company or Seller, shall have been paid and
satisfied in full.
9.13 Resignations. Except as provided in the Ancillary Agreements, the
officers and directors of the Company (including its Subsidiaries) shall have
resigned from such offices, and the officers and directors shall have released
the Company from all liabilities up through Closing.
9.14 Repayment of Indebtedness. All long-term debt of the Company shall
have been repaid and all pledges and guaranties related thereto shall have been
released, or will be repaid and released concurrently with the Closing.
9.15 Title Matters. Within fifteen (15) days of the date hereof, Buyer
shall have obtained commitments for title insurance from a title insurance
company acceptable to Buyer for each parcel of real property owned by the
Company and with the leasehold interest in each material property leased by the
Company, naming the Buyer as insured, in an amount equal to the fair market
value (or such lesser amount as Buyer may determine in Buyer's sole discretion)
of such real property or leasehold interest therein, which commitments shall
only be subject to (a) ad valorem and real property taxes for the current tax
year that have not yet become due, (b) Permitted Liens, and (c) such other
matters as are approved in writing prior to Closing by Buyer.
9.16 Spousal Consent. The spouse of Seller shall have executed and
delivered a Spousal Consent in the form of Exhibit "C", after having consulted
counsel regarding its purpose and effect.
9.17 Due Diligence. Within five (5) days of the date hereof, Seller
shall have delivered to Buyer Schedules to this Agreement reasonably acceptable
to Buyer and within ten (10) days thereof, subject to Section 9.15, Buyer shall
have completed to its reasonable satisfaction its due diligence investigation of
Seller (the satisfaction of this condition to be evidenced by a notice from
Buyer to Seller delivered within the ten-day period stating that the Schedules
are reasonably acceptable to Buyer and due diligence is complete). If this
condition is not satisfied, either Buyer or Seller may terminate this Agreement
without liability to the other, provided that nothing herein
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*Confidential information has been omitted and filed seperately with the
Securities and Exchange Commission pursuant to a confidential treatment request.
shall affect Seller's or the Company's obligations under Sections 7.3, 7.4 and
7.5.
ARTICLE X
REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
10.1 Survival of Representations, Etc. The representations, warranties,
covenants and agreements of Seller, the Company, and Buyer contained in this
Agreement and the certificates delivered hereunder shall survive the
consummation of the transactions contemplated hereby and the Closing Date,
without regard to any investigation made by any of the parties hereto; provided,
however, that any representations and warranties of the Company shall terminate
as of the Closing. [*] There shall be no limitation in respect of any Claim
based upon fraud or intentional misrepresentation or omission. The termination
of the representations and warranties provided herein shall not affect the
rights of a party in respect of any Claim made by such party in a writing
received by the other party prior to the expiration of the applicable survival
period provided herein.
10.2 Indemnification.
10.2.1 By Seller. Seller shall indemnify, defend, save and
hold harmless Buyer, its Affiliates and subsidiaries (including the Company from
and after the Closing Date), and its and their respective Representatives, from
and against any and all claims, damages, costs, losses (including without
limitation diminution in value), Taxes, liabilities, judgments, penalties,
fines, obligations, lawsuits, deficiencies, demands and expenses (whether or not
arising out of third-party claims), including without limitation interest,
penalties, costs of mitigation, clean-up or remedial action), lost profits and
other losses resulting from any shutdown or curtailment of operations, damages
to the environment, attorneys' fees, experts' fees and all amounts paid in
investigation, defense, audit or settlement of any of the foregoing (herein,
"Damages"), incurred in connection with, arising out of, resulting from or
incident to (i) any breach or inaccuracy of any representation or warranty, made
by the Company or Seller in this Agreement or in any agreement or certificate
delivered hereunder; (ii) any breach of any covenant or agreement made by the
Company or Seller in this Agreement or in any agreement or certificate delivered
hereunder, (iii) the Claims or Actions disclosed on Schedules 4.15 or 6.2 to
this Agreement or any agreement or certificate delivered hereunder (the "Pending
Claims") and, (iv) the contingencies, remediation, clean up, Actions or Claims,
pending, potential or threatened, set forth in Schedule 4.24 (other than those
set forth in Schedule 6.2, which is governed by subsection (iii) above).
10.2.2 By Buyer. Buyer shall indemnify and save and hold
harmless Seller, their Affiliates (other than the Company) and their
Representatives from and against any and all Damages incurred in connection
with, arising out of, resulting from or incident to (i) the breach or inaccuracy
of any representation or warranty made by Buyer in this Agreement or in any
agreement or certificate delivered hereunder; or (ii) any breach of any covenant
or agreement made by Buyer in this Agreement or any agreement or certificate
delivered hereunder.
10.2.3 Cooperation. In connection with third party Actions,
the indemnified party
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shall cooperate in all reasonable respects with the indemnifying party and such
attorneys in the investigation, trial and defense of such Action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost (except as provided in Section 11.2.5 hereof), participate in the
investigation, trial and defense of such Action and any appeal arising
therefrom. The parties shall cooperate with each other in any notifications to
insurers.
10.2.4 Defense of Claims. If a claim for Damages (a "Claim")
is to be made by a party entitled to indemnification hereunder against the
indemnifying party, the party claiming such indemnification shall give written
notice (a "Claim Notice") to the indemnifying party as soon as practicable after
the party entitled to indemnification becomes aware of any fact, condition or
event which may give rise to Damages for which indemnification may be sought
here under. The Claim Notice shall include the amounts the indemnified party
believes in good faith are subject to indemnification and a brief basis of the
claim. The indemnified party may revise its estimate of any claim by notice to
the other party.
10.2.5 Third Party Claims. If any Action is filed against any
party entitled to the benefit of indemnity hereunder, written notice thereof
shall be given to the indemnifying party as promptly as practicable (and in any
event within 10 calendar days after the service of the citation or summons). The
failure of any indemnified party to give timely notice hereunder shall not
affect rights to indemnification hereunder, except to the extent that the
indemnifying party demonstrates actual damage caused by such failure. After such
notice, if the indemnifying party shall acknowledge in writing to the
indemnified party that the indemnifying party shall be obligated under the terms
of its indemnity hereunder in connection with Action, then the indemnifying
party shall be entitled, if it so elects, (i) to take control of the defense and
investigation of Action, (ii) to employ and engage attorneys of its own choice
(which shall be reasonably acceptable to the indemnified party) to handle and
defend the same, at the indemnifying party's cost, risk and expense unless the
named parties to such Action include both the indemnifying party and the
indemnified party and the indemnified party has been advised in writing by
counsel that there may be one or more legal defenses available to such
indemnified party that are different from or additional to those available to
the indemnifying party, in which case the indemnified party shall be able to
retain its own counsel (in the absence of conflict of interest, limited to one
firm for all such indemnified parties in each relevant jurisdiction) at the
reasonable expense of the indemnifying party), and (iii) to compromise or settle
such Action, which compromise or settlement shall be made only with the written
consent of the indemnified party, such consent not to be unreasonably withheld;
unless such resolution, compromise, or settlement would in any way materially
and adversely affect the indemnified party or its operations or occur at its
Facilities, in which case such consent may be withheld in the discretion of such
party. If the indemnifying party fails to assume the defense of such Action
within 10 calendar days after receipt of the written notice, the indemnified
party against which such Action has been asserted will (upon delivering notice
to such effect to the indemnifying party) have the right to undertake, at the
indemnifying party's cost and expense, the defense, compromise or settlement of
such Action on behalf of and for the account and risk of the indemnifying party.
In the event the indemnified party assumes the defense of the Action, the
indemnified party will keep the indemnifying party reasonably informed of the
progress of any such defense, compromise or
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*Confidential information has been omitted and filed seperately with the
Securities and Exchange Commission pursuant to a confidential treatment request.
settlement.
10.2.6 Rights of Offset. All Purchase Price adjustments and
amounts as to which the Seller are obligated to indemnify Buyer shall be
satisfied first by set off against the outstanding principal amount of the
Holdback Note.
10.2.7 Limits on Indemnity.
(i) [*] Notwithstanding the preceding sentence, the
foregoing limitation shall not apply with respect to (A) Claims arising out of a
breach of a representation or warranty contained in Sections 4.5 and 4.21, (B)
any Claims based on fraud or intentional misrepresentation or omission of the
Seller or the Company, (C) the Pending Claims, or (D) the calculation of the
Purchase Price pursuant to Sections 2.2.1 and 9.11(b).
(ii) [*] Notwithstanding the preceding sentence, the
foregoing limitation shall not apply with respect to (A) Claims arising out of a
breach of a representation or warranty contained in Section 4.5, (B) any Claims
based on fraud or intentional misrepresentation or omission of the Seller or the
Company, (C) the Pending Claims, or (D) the calculation of the Purchase Price
pursuant to Sections 2.2.1 and 9.11(b).
(iii) The indemnifications provided for in this
Article X are the sole remedies available to a party for claims against the
other party for any breach of any representation or warranty in this Agreement
or the other matters referred to in clauses (i) to (iv) of Section 10.2.1 and
all other remedies under law or equity with respect to such matters are hereby
waived; provided, however, that the foregoing limitation with respect to
equitable remedies shall not apply with respect to claims based on fraud or
intentional misrepresentation or omission.
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ARTICLE XI
ACTIONS BY SELLER AND BUYER AFTER THE CLOSING
11.1 Cooperation and Records Retention. Seller, the Company and Buyer
shall (i) each provide the other with such assistance as may reasonably be
requested by any of them in connection with the preparation of any Tax Return,
audit, or other examination by any taxing authority or judicial or
administrative proceedings relating to liability for Taxes, (ii) each retain and
provide the other with any records or other information that may be relevant to
any such Tax Return, audit or examination, proceeding or determination, and
(iii) each provide the other with any final determination of any such audit or
examination, proceeding, or determination that affects any amount required to be
shown on any Tax Return of the other for any period.
ARTICLE XII
MISCELLANEOUS
12.1 Termination. This Agreement may be terminated at any time prior to
Closing:
12.1.1 By mutual written consent of Buyer and the Seller;
12.1.2 By Buyer or Seller if the Closing shall not have
occurred on or before October 30, 1998; provided, however, that this provision
shall not be available to Buyer if Seller has the right to terminate this
Agreement under Section 12.1.4, and this provision shall not be available to
Seller if Buyer has the right to terminate this Agreement under Section 12.1.3;
12.1.3 By Buyer if there is a material breach of any
representation or warranty of Seller or the Company of any covenant or agreement
to be complied with or performed by Seller or the Company pursuant to the terms
of this Agreement or the failure of a condition set forth in Article IX to be
satisfied (and such condition is not waived in writing by Buyer) on or prior to
the Closing Date, or the occurrence of any event which results or would result
in the failure of a condition set forth in Article IX to be satisfied on or
prior to the Closing Date, provided that Buyer may not terminate this Agreement
prior to the Closing Date if Seller or the Company have not had an adequate
opportunity to cure such failure by such time; or
12.1.4 By Seller if there is a material breach of any
representation or warranty of Buyer or of any covenant or agreement to be
complied with or performed by Buyer pursuant to the terms of this Agreement or
the failure of a condition set forth in Article VIII to be satisfied (and such
condition is not waived in writing by Seller) on or prior to the Closing Date,
or the occurrence of any event which results or would result in the failure of a
condition set forth in Article VIII to be satisfied on or prior to the Closing
Date; provided that Seller may not terminate this Agreement prior to the Closing
Date if Buyer has not had an adequate opportunity to cure such failure by such
time.
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12.2 In the Event of Termination. In the event of termination of this
Agreement:
12.2.1 Each party will redeliver all documents, work papers
and other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; and
12.2.2 No party hereto shall have any liability or further
obligation to any other party to this Agreement, except as stated in Sections
7.5 or this Section 12.2.2, and except for any willful breach of this Agreement
occurring prior to the proper termination of this Agreement.
12.3 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior written
consent of the other parties; except that Parent or Buyer may, without such
consent, assign all such rights to any lender as collateral security, and Buyer
may assign all such rights and obligations to a wholly-owned subsidiary or
subsidiaries of Buyer (or a partnership controlled by Buyer) which shall assume
all obligations and liabilities of Buyer under this Agreement, but no such
assignment shall relieve Buyer of its obligations hereunder or under the
Holdback Note. Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, and, except in the case of indemnification expressly
extended to other persons pursuant to Article X, no other person shall have any
right, benefit or obligation under this Agreement as a third party beneficiary
or otherwise.
12.4 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., Federal Express); and
upon receipt, if sent by certified or registered mail, return receipt requested.
In each case notice shall be sent to:
If to the Company, addressed to:
Six Industries, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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with a copy to:
C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to Seller, addressed to:
▇▇▇▇▇ ▇▇▇▇▇▇
Six Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to Buyer, addressed to:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
▇▇▇▇▇▇ Steel Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
12.5 Choice of Law. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
Texas (without reference to the choice of law provisions thereof), except with
respect to matters of law concerning the internal affairs of any person (other
than a natural person) which is a party to or the subject of this Agreement, and
as
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to those matters the law of the jurisdiction under which the respective person
derives its powers shall govern.
12.6 Entire Agreement; Amendments and Waivers. This Agreement, together
with all exhibits and schedules hereto and the Ancillary Agreements, constitutes
the entire agreement among the parties pertaining to the subject matter hereof
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
12.7 Multiple Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.8 Expenses. Except as otherwise specified in this Agreement, each
party hereto shall pay its own legal, accounting, out-of-pocket and other
expenses incident to this Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
12.9 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
12.10 Titles. The titles, captions or headings of the Articles,
Sections and subsections herein are inserted for convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement.
12.11 Cumulative Remedies. Subject to provisions of Section 12.12 and
10.2.7, all rights and remedies of either party hereto are cumulative of each
other and of every other right or remedy such party may otherwise have at law or
in equity, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies. Subject to Section 10.2.7(iii), nothing herein shall limit a party's
rights to seek equitable relief, including specific performance, injunctive
relief or recission, from a court of law.
12.12 Arbitration.
(a) Except as specifically provided herein, any unresolved
dispute or controversy arising under or in connection with this Agreement, or
the breach thereof, shall be exclusively and
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finally settled by binding arbitration pursuant to this Section 12.12. The
arbitration proceedings shall be conducted in accordance with the terms of this
Section 12.12 and the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time (the "Arbitration Rules").
(b) Any party hereto may invoke arbitration under Section
12.12 at any time by serving on the other interested parties a written notice of
arbitration, which shall specify with reasonable details (1) the matter in
dispute, (2) the relief requested and (3) the grounds therefor. The arbitration
shall be heard and determined by a single arbitrator who shall be impartial and
independent of the parties to the dispute. The single arbitrator shall be
appointed by the unanimous consent of the parties. If the parties cannot reach
agreement on an arbitrator within thirty (30) days of the submission of a notice
of arbitration, the arbitrator shall be selected by the Phoenix Office of the
American Arbitration Association. If an arbitrator should die, withdraw or
otherwise become incapable of serving, a replacement shall be selected and
appointed in a like manner as the original arbitrator.
(c) (i) Unless the parties and the arbitrator agree otherwise,
the arbitration proceedings shall be held in Phoenix, Arizona, at a place
determined by the arbitrator.
(ii) The parties may offer such evidence as is relevant and
material to the dispute and shall produce such additional evidence as
the arbitrator may deem necessary to the determination of the dispute.
(d) The prevailing party in any such arbitration proceedings shall be
entitled to attorneys' fees and other out-of-pocket expenses reasonably and
necessarily incurred in connection with such proceeding the amounts of which
shall be contained in the award of the arbitrator.
(e) This Section 12.12 shall survive the termination or expiration of
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be duly executed on their respective behalf, where appropriate by
their respective officers or fiduciaries thereunto duly authorized, all as of
the day and year first above written.
(the "Company")
Six Industries, Inc.
By:_________________________________________
Name:_______________________________________
Its:________________________________________
("Buyer")
▇▇▇▇▇▇ Steel Company
By:_________________________________________
Name:_______________________________________
Its:________________________________________
("Seller")
____________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
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SCHEDULES
Organizaton of the Company...................................................4.1
List of Subsidiaries.........................................................4.2
Capital Stock................................................................4.2
Authorization................................................................4.3
No Violation; Consents ......................................................4.4
Capitalization...............................................................4.5
Financial Statements. .......................................................4.6
No Change in the Assets......................................................4.7
Assets; Absence of Encumbrances. ............................................4.9
Description ................................................................4.10
Title ....................................................................4.10.2
Leases....................................................................4.10.3
No Unpaid Charges.........................................................4.10.4
Receivables.................................................................4.11
Contracts ..................................................................4.13
Litigation..................................................................4.15
Labor Matters...............................................................4.16
Compliance with Laws........................................................4.17
No Brokers..................................................................4.18
Proprietary Rights..........................................................4.20
Royalties and Licenses......................................................4.20
Filing of Tax Returns; Payment of Taxes...................................4.21.1
Taxing Jurisdictions......................................................4.21.2
General Tax Matters.......................................................4.21.3
Tax Attributes............................................................4.21.4
Copies of Tax Returns.....................................................4.21.5
Employees and Employee Benefits.............................................4.22
Compliance With Environmental Laws..........................................4.24
Permits.....................................................................4.24
Environmental Conditions....................................................4.24
Storage Tank................................................................4.24
Environmental Audits or Assessments......................................4.24.16
Notices, Warnings and Records............................................4.24.19
Insurance...................................................................4.25
Affiliate Transactions......................................................4.26
Environmental Assessments and Remediation....................................6.2
* The registrant hereby agrees to furnish the above Schedules to the Securities
and Exchange Commission upon request.