Exhibit 99.1
------------
STOCK PURCHASE AGREEMENT
By and Between
SOUTHWIRE COMPANY,
as PURCHASER
and
CI HOLDINGS, LLC,
as SELLER
Relating to the Sale of
ALFLEX CORPORATION
Dated as of June 4, 2004
AO 1089178.15
CONTENTS
Page
ARTICLE 1 PURCHASE AND SALE OF STOCK.......................................1
1.1 Agreement to Sell and Purchase Stock........................1
1.2 Payment of Purchase Price...................................1
1.3 Adjustments to the Purchase Price...........................1
1.4 Closing.....................................................3
1.5 Deliveries..................................................4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER..........................4
2.1 Ownership of Purchased Shares...............................4
2.2 Authority; Validity of Contemplated Transactions............4
2.3 The Company's Organization, Standing and Foreign
Qualifications..........................................5
2.4 Capital Stock...............................................5
2.5 Subsidiaries and Investments................................6
2.6 Financial Statements........................................6
2.7 Absence of Liabilities......................................6
2.8 No Liabilities as Guarantor.................................6
2.9 [Intentionally Omitted.]....................................6
2.10 Absence of Changes........................................6
2.11 Indebtedness..............................................8
2.12 Tax Matters...............................................8
2.13 Real Property.............................................9
2.14 Personal Property........................................11
2.15 Intellectual Property....................................11
2.16 Computer Software and Databases..........................12
2.17 Intangible Property......................................12
2.18 Inventories..............................................12
2.19 Insurance................................................13
2.20 Bonds, Letters of Credit, Etc............................13
2.21 Licenses; Compliance with Laws...........................13
2.22 Environmental............................................14
2.23 Litigation and Claims....................................16
2.24 Employee Benefits........................................16
2.25 Contracts................................................18
2.26 Suppliers and Customers..................................20
2.27 Labor Matters............................................20
2.28 Brokers and Finders......................................21
2.29 Officers, Directors and Bank Accounts....................21
2.30 Compliance with the Immigration Reform and Control Act...21
2.31 Interested Transactions..................................22
2.32 Schedules................................................22
2.33 Disclosure; Statements True and Correct..................22
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PURCHASER......................22
3.1 Organization and Standing..................................22
3.2 Authority and Binding Effect...............................22
3.3 Validity of Contemplated Transactions; Restrictions........23
3.4 Brokers and Finders........................................23
3.5 Financing..................................................23
3.6 Statements True and Correct................................23
ARTICLE 4 COVENANTS AND ADDITIONAL AGREEMENTS OF SELLER AND PURCHASER......23
4.1 Operation of Business Pending Closing......................23
4.2 Right of Access............................................25
4.3 Relationships with Employees and Customers.................25
4.4 Confidentiality............................................25
4.5 Public Announcements.......................................26
4.6 Schedules..................................................26
4.7 Other Offers and Exclusive Dealing.........................26
4.8 Certain Tax Matters........................................26
4.9 Consents and Approvals.....................................27
4.10 Supplying Financial Statements...........................27
4.11 Efforts to Cause Consummation of Transactions............27
4.12 Expenses.................................................27
4.13 Delivery of Books and Records............................27
4.14 Qualification and Corporate Existence....................27
4.15 Repayment of Debts to the Company........................28
4.16 HSR Act Filings..........................................28
4.17 Transition Matters.......................................28
4.18 Employee Benefit Matters.................................28
4.19 Election Under Section 338(h)(10)........................30
4.20 Certain Employee Terminations at Closing; ▇▇▇▇▇▇ ▇▇▇▇▇▇..31
4.21 Transfer of Seller's Interest in Mexican Subsidiary......31
4.22 Purchaser's Obligations with Respect to Environmental
Remediation.........................................31
4.23 Employee Injuries Incurred Prior to Closing..............31
4.24 Certain Environmental Agreements.........................32
ARTICLE 5 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.................33
5.1 Representations True and Covenants Performed at Closing....33
5.2 No Injunction, Etc.........................................34
5.3 No Material Adverse Change.................................34
5.4 Opinion of Counsel.........................................34
5.5 Consents and Approvals.....................................34
5.6 Licenses...................................................34
5.7 Delivery of Documents......................................34
5.8 Good Standing Certificates.................................34
5.9 Supply Agreement...........................................34
5.10 Non-Compete Agreement....................................35
5.11 Resignations.............................................35
5.12 Title Insurance..........................................35
5.13 [Intentionally Omitted.].................................35
5.14 [Intentionally Omitted.].................................35
5.15 Subordination and Non-Disturbance Agreements.............35
5.16 Estoppel Certificates of Real Property Lessors...........35
5.17 Evidence of Repayment of Debts...........................35
5.18 No Indebtedness or Liens.................................36
5.19 Option to Extend Long Beach Lease........................36
5.20 Confirmation of Guaranty.................................36
5.21 Rancho ▇▇▇▇▇▇▇▇▇ Distribution Center Lease...............36
ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER....................37
6.1 Representations True and Covenants Performed at Closing....37
6.2 No Injunction, Etc.........................................37
6.3 Opinion of Counsel.........................................37
6.4 Payment of the Purchase Price..............................37
6.5 Consents and Approvals.....................................37
6.6 Supply Agreement...........................................37
6.7 Non-Compete Agreement......................................37
ARTICLE 7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION...38
7.1 Survival of Representations and Warranties.................38
7.2 Obligation of Seller to Indemnify..........................39
7.3 Obligation of Purchaser to Indemnify.......................41
7.4 Notice of Loss or Asserted Liability.......................41
7.5 Opportunity to Contest.....................................41
7.6 Disputes with Customers or Suppliers; Equitable Relief.....42
7.7 Limitations on Indemnification.............................43
7.8 Subrogation Rights.........................................44
7.9 Adjustment of Purchase Price...............................44
7.10 Indemnification Payments.................................44
7.11 Sole and Exclusive Remedy................................44
ARTICLE 8 TERMINATION......................................................45
8.1 Method of Termination......................................45
8.2 Notice of Termination......................................45
8.3 Effect of Termination......................................45
8.4 Risk of Loss...............................................45
ARTICLE 9 DEFINITIONS......................................................46
ARTICLE 10 MISCELLANEOUS...................................................56
10.1 Notices..................................................56
10.2 Entire Agreement.........................................57
10.3 Modifications, Amendments and Waivers....................58
10.4 Successors and Assigns...................................58
10.5 Table of Contents; Captions; References..................58
10.6 Governing Law............................................58
10.7 Pronouns.................................................58
10.8 Severability.............................................59
10.9 Remedies Not Exclusive...................................59
10.10 Counterparts.............................................59
10.11 Interpretations..........................................59
10.12 Consent to Jurisdiction, Etc.............................59
viii
AO 1089178.15
EXHIBITS AND SCHEDULES
Exhibit A - Form of Opinion of Seller's Special Delaware Counsel
Exhibit B - Form of Supply Agreement
Exhibit C - Form of Non-Compete Agreement
Exhibit D - Title Insurance Commitments
Exhibit E - Form of Subordination and Non-Disturbance Agreement
Exhibit F - Form of Estoppel Certificate
Exhibit G - Form of Option to Extend Long Beach, California Lease
Exhibit H - Form of Confirmation of Guaranty of Commonwealth Industries, Inc.
Exhibit I - Form of Opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Exhibit J - Example of Calculations of Working Capital and Property, Plant
& Equipment
Schedule 2.2(b) - Governmental and Third Party Consents Required with
Respect to Seller (or the Company)
Schedule 2.3(a) - List of the Company's Foreign Qualifications
Schedule 2.3(b) - Company's Certificate of Incorporation, as amended
Schedule 2.3(c) - Company's By-Laws, as amended
Schedule 2.5 - Subsidiaries and Investments
Schedule 2.6 - Financial Statements
Schedule 2.7 - Liabilities
Schedule 2.8 - Guarantees
Schedule 2.10 - Absence of Changes
Schedule 2.11 - Indebtedness
Schedule 2.12 - Tax Matters
Schedule 2.13(a) - Owned Real Property
Schedule 2.13(b) - Leased Real Property
Schedule 2.14(a) - Owned Personal Property
Schedule 2.14(b) - Leased Personal Property
Schedule 2.15 - Intellectual Property
Schedule 2.16 - Computer Software and Databases
Schedule 2.17 - Intangible Property
Schedule 2.18 - Contracts to Purchase or Sell Inventory
Schedule 2.19 - Insurance Policies
Schedule 2.20 - Obligations
Schedule 2.21 - Licenses
Schedule 2.22 - Environmental Matters
Schedule 2.22A - List of Environmental Surveys, Notices of Violations
and Reports Regarding the Long Beach Facility
Schedule 2.23 - Litigation and Claims
Schedule 2.24(a) - Company Plans
Schedule 2.24(c) - Multiemployer Plans, Etc.
Schedule 2.24(d) - Employees on Leave of Absence
Schedule 2.24(e) - Exceptions to Employee Benefit Compliance Issues
Schedule 2.24(i) - Exceptions to No Benefits to Prior Employees
Schedule 2.25(a)(i) - Contracts Affecting Real Property
Schedule 2.25(a)(ii) - Contracts Affecting Personal Property
Schedule 2.25(a)(iii) - Purchase Orders
Schedule 2.25(a)(iv) - Sales Contracts
Schedule 2.25(a)(v) - Employment Contracts
Schedule 2.25(a)(vi) - Other Contracts
Schedule 2.25(c) - Assurances Regarding Listed Contracts
Schedule 2.26(a) - List of Large Suppliers
Schedule 2.26(b) - List of Large Customers
Schedule 2.27 - Labor Matters
Schedule 2.29(a) - Officers and Directors of the Company
Schedule 2.29(b) - Bank Accounts of the Company
Schedule 2.31 - Interested Transactions
Schedule 4.1 - Permissible Exceptions
59
AO 1089178.15
AO 1089178.15
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made this 4th day
of June, 2004, by and between Southwire Company, a Delaware corporation
("Purchaser"), and CI Holdings, LLC, a Delaware limited liability company
("Seller"). Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in Article 9 of this Agreement.
R E C I T A L S
Seller owns all of the issued and outstanding shares (the "Purchased
Shares") of common stock of Alflex Corporation, a Delaware corporation (the
"Company"). The parties hereto desire to enter into this Agreement pursuant to
which Purchaser will acquire the Purchased Shares from Seller upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
1.1 Agreement to Sell and Purchase Stock. For the consideration
hereinafter provided and subject to the terms and conditions of this Agreement,
at the Closing, Seller shall sell, assign, transfer, convey and deliver to
Purchaser, free and clear of all Liens other than Liens resulting from
Purchaser's ownership thereof, and Purchaser shall purchase and acquire from
Seller, the Purchased Shares. At the Closing, Seller shall deliver to Purchaser
certificates representing the Purchased Shares, together with accompanying stock
powers or instruments of assignment, duly endorsed in blank for the transfer of
the Purchased Shares to Purchaser, with signatures guaranteed, if required, and
with all necessary transfer taxes, if any, paid and any revenue stamps, if any,
affixed thereto.
1.2 Payment of Purchase Price. Subject to adjustment as set forth in
this Agreement, Purchaser agrees to pay for the Purchased Shares the sum of
$63,300,000 (the "Base Purchase Price"). The Base Purchase Price, subject to
adjustment prior to Closing as provided in Section 1.3(a) and 1.3(c), shall be
paid by Purchaser to Seller at Closing by wire transfer of immediately available
funds.
1.3 Adjustments to the Purchase Price.
(a) Seller represents and warrants to Purchaser that the net book value
of the Company's Property Plant & Equipment on January 31, 2004 was not less
than $14,306,000. If Final Closing Date PP&E, determined as provided in this
Section 1.3, is less than $14,306,000, then the Purchase Price shall be adjusted
by deducting therefrom the Property, Plant & Equipment Adjustment Amount; and if
Final Closing Date PP&E, determined as provided in this Section 1.3, is greater
than $14,306,000, then the Purchase Price shall be increased by the Property,
Plant & Equipment Adjustment Amount. Not earlier than four days prior to the
Closing Date, Seller and Purchaser shall work together to determine a best
estimate of the net book value of the Company's Property, Plant & Equipment as
of the Closing Date (the "Closing Date Estimated PP&E") and the Closing Date
PP&E Adjustment Amount. For purposes of calculating the Closing Date Estimated
PP&E, the net book value of the Company's Property, Plant & Equipment as of
January 31, 2004 shall be assumed to be equal to $14,306,000 and shall be
adjusted only to reflect (i) additions of the net book value of Property, Plant
& Equipment purchased or otherwise acquired by the Company between January 31,
2004 and the Closing Date, (ii) deductions of the net book value of Property,
Plant & Equipment sold or otherwise disposed of by the Company between January
31, 2004 and the Closing Date, and (iii) deductions for ordinary course
depreciation of the Company's Property, Plant & Equipment between January 31,
2004 and the Closing Date, determined consistently with the Company's past
practice. The Closing Date PP&E Adjustment Amount shall be deducted from or
added to, as the case may be, the Base Purchase Price paid at Closing. In the
event that Purchaser and Seller are unable to agree upon the Closing Date PP&E
Adjustment Amount prior to Closing, then, subject to Section 1.3(d) below,
Seller's proposed Closing Date PP&E Adjustment Amount shall be used for the
purpose of adjusting the Base Purchase Price paid with respect to Property Plant
& Equipment at Closing.
(b)......If Final Closing Date Working Capital, determined as provided
in this Section 1.3, is less than $29,729,000, then the Purchase Price shall be
adjusted by deducting therefrom the Working Capital Adjustment Amount; and if
Final Closing Date Working Capital, determined as provided this Section 1.3, is
greater than $29,729,000, then the Purchase Price shall be increased by the
Working Capital Adjustment Amount.
(c)......Not earlier than four days prior to the Closing Date, Seller
and Purchaser shall jointly conduct a physical count and determine the Inventory
component of the Company's Working Capital. Immediately upon completion of such
Inventory count, Seller and Purchaser shall work together to determine a best
estimate of the actual amount of the other components of the Company's Working
Capital as of the Closing Date (the "Closing Date Estimated Working Capital")
and the Closing Date Working Capital Adjustment Amount. The Closing Date Working
Capital Adjustment Amount shall be deducted from or added to, as the case may
be, the Base Purchase Price paid at Closing. In the event that Purchaser and
Seller are unable to agree upon the Closing Date Working Capital Adjustment
Amount prior to Closing, then subject to Section 1.3(d) below, Seller's proposed
Closing Date Working Capital Adjustment Amount shall be used for the purpose of
adjusting the Base Purchase Price paid with respect to Working Capital at
Closing.
(d)......In the event that the aggregate of Closing Date Working
Capital Adjustment Amount and Closing Date PP&E Adjustment Amount results in an
increase in the Base Purchase Price of more than $20,000,000, Purchaser shall
have the option to terminate this Agreement.
(e)......Within 30 days after the Closing Date, Purchaser shall notify
Seller of any disagreement that Purchaser may have with either the Closing Date
Working Capital Adjustment Amount or the Closing Date PP&E Adjustment Amount
that, in either case, was used to adjust the Base Purchase Price paid at
Closing, specifying in detail the reasons for such disagreement. If Purchaser
does not notify Seller of any such disagreement by the end of such 30-day
period, the amounts for such items used at Closing shall be deemed to be final,
conclusive, and binding upon the parties hereto. If, within 30 days after the
receipt by Seller of Purchaser's notice of any such disagreement, Seller and
Purchaser are unable to agree upon the actual adjustment amounts that should
have been used on and as of the Closing Date with respect to such items, such
actual adjustment amounts shall, upon the demand of either party, be determined
by the Designated Accountants within 45 days after the engagement of such
Designated Accountants. Any such determinations so made by the Designated
Accountants (the "Adjusted Working Capital Adjustment Amount" and the "Adjusted
PP&E Adjustment Amount") shall be final, conclusive, and binding upon the
parties hereto. The aggregate net of such final adjustments shall be promptly
paid, in immediately available funds, by the party who was overpaid or the party
who underpaid, as the case may be, at the Closing. Seller and Purchaser shall
share equally the cost of the Designated Accountants. (The net book value as of
the Closing Date of Company's Property, Plant & Equipment as finally adjusted
pursuant to this paragraph (or if there are no adjustments made pursuant to this
paragraph, as determined prior to Closing pursuant to Section 1.3(a)) shall be
herein referred to as "Final Closing Date PP&E" and the Company's Working
Capital as finally adjusted pursuant to this paragraph (or if there are no
adjustments made pursuant to this paragraph, as determined prior to Closing
pursuant to Section 1.3(c)) shall be herein referred to as "Final Closing Date
Working Capital.")
(f)......In addition to the foregoing, the Base Purchase Price will be
reduced, as reasonably promptly as possible following the 180th day after the
Closing Date, by the amount, if any, that (i) the Company's Accounts Receivable
that were included in the Closing Working Capital ("Pre-Closing Receivables")
exceed (ii) the Company's Accounts Receivable that were actually collected by
the Company by the end of such 180th day after the Closing Date. Any adjustment
required by this paragraph shall be paid in cash by Seller to Purchaser within
30 days after the receipt of the final monthly status report referred to in the
following sentence. During the 180-day period following the Closing Date (the
"Collection Period"), Purchaser shall cause the Company (A) to use its
reasonable commercial efforts to collect the Pre-Closing Receivables, but
neither Purchaser nor the Company shall be required to institute legal
proceedings for the purpose of collecting any such uncollected Pre-Closing
Receivable, (B) not to compromise, set-off or write-off any Pre-Closing
Receivable without Seller's prior written consent and (C) to provide monthly
status reports (including a final report at the end of the 180-day period) to
Seller of the status of collections of Pre-Closing Receivables. Upon expiration
of the Collection Period, Purchaser shall cause the Company to assign (without
any representation or warranty) to Seller any uncollected Pre-Closing
Receivables and Seller shall have all legal rights available to it to collect
such assigned Pre-Closing Receivables, including the right, notwithstanding
Section 7.6 hereof, to institute legal proceedings for the purpose of collecting
such uncollected Pre-Closing Receivables.
1.4 Closing. The Closing shall take place at the offices of ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ on the
Closing Date.
1.5 Deliveries. All deliveries, payments and other transactions and
documents relating to the Closing (i) shall be interdependent and none shall be
effective unless and until all are effective (except to the extent that the
party entitled to the benefit thereof has waived satisfaction or performance
thereof as a condition precedent to Closing), and (ii) shall be deemed to be
consummated simultaneously.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF SELLER
As a further inducement to cause Purchaser to purchase the Purchased
Shares from Seller and to perform Purchaser's other obligations hereunder,
Seller represents and warrants to Purchaser that:
2.1 Ownership of Purchased Shares. Seller is the record and beneficial
owner of all right, title and interest, in and to the Purchased Shares, free and
clear of all Liens. The delivery to Purchaser of the Purchased Shares as
contemplated in this Agreement will transfer to Purchaser valid title thereto,
free and clear of all Liens other than Liens existing as a result of Purchaser's
ownership of the Purchased Shares.
2.2 Authority; Validity of Contemplated Transactions.
(a)......Seller has the full power and authority necessary (i) to enter
into and perform its obligations under this Agreement and the Other Agreements
to which it is a party, (ii) to sell, assign, transfer and convey the Purchased
Shares to Purchaser pursuant to this Agreement, and (iii) to perform the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Other Agreements to which Seller is a
party have been duly approved by all necessary action of the member of Seller.
This Agreement has been, and the Other Agreements to which Seller is a party
will be, duly executed and delivered by Seller and each constitutes, or when
duly executed and delivered will constitute, the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, or
by the availability of equitable remedies. Neither the execution and delivery of
this Agreement and the Other Agreements to which Seller is a party by Seller,
nor the performance by Seller of the transactions contemplated hereby or
thereby, will violate any provision of Seller's Certificate of Formation or
Limited Liability Company Agreement or the Company's Certificate of
Incorporation or Bylaws. Except as to matters that would not reasonably be
expected to have a Material Adverse Effect upon the Company, neither the
execution and delivery of this Agreement and the Other Agreements to which
Seller is a party by Seller, nor the performance by Seller of the transactions
contemplated hereby or thereby, will (A) violate any Law or Order to which
Seller or the Company is subject, (B) result in a breach of, or constitute a
Default under, any Contract or License to which Seller or the Company is a party
or by which any of them is bound, (C) result in the creation of any Lien upon
the Purchased Shares or any of the Company's assets, or (D) result in the
acceleration of the maturity of any payment date of any of the Company's
obligations.
(b)......Except as set forth on Schedule 2.2(b), no consent,
authorization, order or approval of, or filing or registration with, any
Governmental Authority or Third Party is required for or in connection with the
execution and delivery of this Agreement or any of the Other Agreements to which
Seller is a party by Seller or the performance by Seller of the transactions
contemplated hereby and thereby. No consent, authorization or approval of the
stockholders of CII is required in connection with (or to validate) the sale by
Seller of the Purchased Shares to Purchaser.
2.3 The Company's Organization, Standing and Foreign Qualifications.
The Company is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and has the corporate power
and authority to carry on its business in the manner in which such business is
now being conducted and to own, lease and operate the assets which it now owns
and leases. The Company is duly qualified or licensed to transact business and
in good standing as a foreign corporation in the jurisdictions listed in
Schedule 2.3(a) hereto; and neither the character of the assets owned or leased
by the Company nor the nature of the Company's business requires the Company to
be qualified or licensed in any other jurisdiction. The copies of the Company's
(i) Certificate of Incorporation and all amendments thereto (certified by the
Secretary of State of the State of Delaware) attached hereto as Schedule 2.3(b);
and (ii) Bylaws, as amended (certified by the Secretary of the Company),
attached hereto as Schedule 2.3(c), are true and complete on the date of this
Agreement. The copies of the Company's director and stockholder minutes that
have been made available to Purchaser for review are true and complete and
accurately reflect all proceedings of the directors of the Company (and all
committees thereof) and stockholders of the Company. The Company's stock record
books, which have been made available to Purchaser for review, contain true and
complete records of the Company's stock ownership.
2.4 Capital Stock. The authorized capital stock of the Company consists
of 1,000 shares of Common Stock, par value $0.01 per share, 1,000 of which
(constituting the Purchased Shares) are issued and outstanding as of the date of
this Agreement and none of which are issued and held by the Company as treasury
stock. The Company has no other authorized class of capital stock. All of the
Purchased Shares have been duly and validly issued, are fully paid and
nonassessable, and were issued pursuant to valid exemptions from registration
under the Securities Act of 1933, as amended. There are no outstanding warrants,
options, rights, calls or other commitments of any nature relating to the
Purchased Shares or any other capital stock of the Company, and there are no
outstanding securities of the Company convertible into or exchangeable for
capital stock of, or other ownership or equity interests in, the Company. The
Company is not obligated to issue any shares of its capital stock for any
purpose, and no Person has entered into any Contract or option or any right or
privilege (whether pre-emptive or contractual) capable of becoming a Contract or
option for the purchase, subscription or issuance of any of the authorized but
unissued capital stock of the Company.
2.5 Subsidiaries and Investments. Except as set forth on Schedule 2.5,
the Company has no Subsidiaries and does not own, directly or indirectly, any
capital stock or other equity, ownership, proprietary or voting interest in any
Person.
2.6 Financial Statements. The Financial Statements (copies of which are
attached hereto as Schedule 2.6) (i) have been prepared in accordance with the
books and records of the Company, (ii) present fairly the financial condition,
assets and liabilities of the Company as of their respective dates and the
results of the Company's operations for the respective periods then-ended, (iii)
except as set forth on Schedule 2.6, reflect adequate reserves for all known
liabilities and reasonably anticipated Losses and (iv) have been prepared in
accordance with GAAP consistently applied throughout the periods involved,
subject to normal year-end adjustments (which will not, individually or in the
aggregate, have a Material Adverse Effect upon the Company and the absence of
notes. The Financial Statements do not contain any untrue statement of any
material fact or fail to state any material fact required to be stated therein
in order to make the Financial Statements not misleading.
2.7 Absence of Liabilities. The Company has no Liabilities required to
be recorded on a financial statement prepared in accordance with GAAP (including
in the notes thereto), other than Liabilities (i) reflected or reserved on the
Latest Balance Sheet, (ii) set forth in Schedule 2.7, or (iii) incurred since
December 31, 2003 in the ordinary course of business, consistent with past
practice, of the Company and not involving Indebtedness for Money Borrowed.
2.8 No Liabilities as Guarantor. Except as set forth in Schedule 2.8,
the Company is not, directly or indirectly, liable, by guaranty, indemnity,
endorsement or otherwise, upon or with respect to, or obligated, by discount or
repurchase agreement or in any other way, to provide funds in respect to, or
obligated to guarantee or assume any debt, dividend or other obligation of any
Person.
2.9 [Intentionally Omitted.]
2.10 Absence of Changes. Except as disclosed on Schedule 2.10, since
December 31, 2003, the Company has not:
(a)......issued or delivered or agreed to issue or deliver any of its
capital stock or other securities (whether stock, bonds, debentures or other
corporate securities) or granted or agreed to grant any options or rights to
purchase any of its securities;
(b)......incurred or become subject to, or agreed to incur or become
subject to, any Liability other than in the ordinary course of business and
consistent with past practice;
(c)......declared, set aside or made, or agreed to declare, set aside
or make any payments, dividends or distributions to its stockholders or
purchased, redeemed or otherwise acquired, directly or indirectly, or agreed to
purchase, redeem or acquire, any Purchased Shares or other securities;
(d)......mortgaged, pledged, subjected or agreed to subject, any of its
assets to any Lien, except Permitted Liens;
(e)......sold, assigned, transferred (or agreed so to do), any of its
tangible or intangible assets, or cancelled or agreed to cancel any debts or
claims, except, in each case, in the ordinary course of business and consistent
with past practice;
(f)......suffered any damage, destruction or Loss, whether or not
covered by insurance, which had or is reasonably expected to have a Material
Adverse Effect upon the Company, or suffered any extraordinary Losses or waived
any rights of substantial value, whether or not in the ordinary course of
business;
(g)......increased the rate of compensation payable or to become
payable by it to any of its officers, directors or employees over the rate being
paid to them as of December 31, 2003, or agreed so to do, except general hourly
rate increases and normal merit increases in each case in the ordinary course of
business and consistent with past practices;
(h)......made or agreed to make any payment of any bonus or special
compensation of any kind to any officer, director or employee, other than in the
ordinary course of business consistent with past practices;
(i)......directly or indirectly paid or entered into a Contract to pay
any severance or termination pay to any officer, director or employee;
(j)......terminated or amended any material Contract, License or other
instrument to which it is a party or suffered any loss or termination (or, to
Seller's knowledge, threatened loss or termination) of any Large Customer or
Large Supplier;
(k)......through negotiation or otherwise, entered into or made any
commitment or incurred any Liability, whether or not enforceable, to any labor
organization;
(l)......introduced any new method of management or operation that has
had or is reasonably likely to have a Material Adverse Effect upon the Company;
(m)......changed any of the accounting principles followed by it or the
methods of applying such principles, other than as required by GAAP;
(n)......reclassified its shares of capital stock into a different
number of shares;
(o)......made or agreed to make any charitable contributions;
(p)......offered or extended (except for immaterial variances) more
favorable prices, discounts or advertising, promotional, display or other
allowances than were previously offered or extended during the 24 months prior
to the date hereof;
(q)......made or approved the making of any single capital expenditure
exceeding $100,000 or any capital expenditures exceeding $500,000 in the
aggregate;
(r)......paid or agreed to pay any service charges, interest charges or
investment charges or similar fees to any stockholder or any Affiliate of any
stockholder;
(s)......entered into any other transaction, or incurred or agreed to
incur any expense, other than in the ordinary course of business and consistent
with past practices; or
(t)......suffered or experienced any other event or condition which
could reasonably be expected to have a Material Adverse Effect upon the Company.
2.11 Indebtedness. Schedule 2.11 lists all Indebtedness for Money
Borrowed of the Company, setting forth as to each item the principal amount
outstanding, the per annum interest rate and the maturity date. All such
Indebtedness for Money Borrowed is reflected on the Financial Statements in
accordance with GAAP, and the Company is not in Default under any of the terms
or conditions set forth in any document or other instrument governing such
Indebtedness for Money Borrowed. Except as set forth on Schedule 2.11, (i) all
such Indebtedness for Money Borrowed is prepayable at any time without penalty
or premium at the option of the Company and (ii) the transactions contemplated
in this Agreement will not result in any penalty or incurrence of any additional
obligation or change of any terms with respect to any such Indebtedness. Except
as disclosed on Schedule 2.11, the Company does not have any Liabilities or
Indebtedness to Seller or any Affiliate of Seller.
2.12 Tax Matters. Except as set forth on Schedule 2.12:
(a)......Schedule 2.12 (i) lists the fiscal years and periods through
which the Company has filed federal and state income Tax returns (or in which
the Company has been included in a consolidated tax return with Seller or
Seller's Affiliates), (ii) states whether the returns for such years and periods
have been examined by the applicable taxing authority, (iii) states whether
there are any deficiencies that have been proposed as a result of such
examinations and whether such deficiencies have been paid or settled, and (iv)
lists any powers of attorney given by the Company empowering any Person to act
on behalf of the Company in connection therewith. The Company has not received
notice of any Tax claim or any proposed assessment by any taxing authority. The
Company is not presently under audit with respect to any fiscal year or period;
and the Company has not received notice of any contemplated investigation or
audit by any taxing authority concerning any fiscal year or period ended prior
to the date hereof.
(b)......As of the date hereof, the Company has filed, and as of the
Closing Date will have filed, all Tax returns required to be filed on or prior
to the Closing Date, taking into account any extensions of the filing deadlines
which have been validly granted to the Company, and such returns are and will be
true and correct in all material respects and properly reflect the Tax
liabilities of the Company for the periods, property or events covered thereby,
and the Company has paid, or by the Closing Date will have paid, all Taxes that
have become or are due with respect to any period ended on or prior to the
Closing Date whether shown on such returns or not.
(c)......Provision has been made in the Financial Statements for all
accrued Tax liabilities not required to be paid prior to the date of such
Financial Statements and for all current and deferred Taxes.
(d)......The Company has withheld or collected from each payment made
to each of its employees the amount of all Taxes required to be withheld or
collected therefrom and the Company paid the same to the proper Tax depositories
or collecting authorities.
(e)......All ad valorem property Taxes for years prior to 2004 imposed
on the Company or its assets and each of its predecessors or their assets have
been paid in full.
(f)......The Company has not waived any statute of limitations in
respect of Taxes or agreed to a Tax assessment or deficiency.
(g)......The Company is a member of an affiliated group (within the
meaning of Section 1504 of the Code) that files consolidated Federal income tax
returns and of which CII is the common parent. The Company and CII have the
right to make and file the Section 338(h)(10) election described in Section 4.19
hereof.
2.13 Real Property.
(a).....Schedule 2.13(a) contains a list and description of all of the
Company's Owned Real Property. Except as disclosed on Schedule 2.13(a), the
Company has good and marketable title to all of the Owned Real Property, free
and clear of all Liens other than Permitted Liens. Copies of all documents
evidencing any Liens upon the Owned Real Property and copies of all title
insurance policies previously issued to the Company with respect thereto have
been provided to Purchaser. Seller warrants that, at the Closing, all such Liens
disclosed on Schedule 2.13(a) shall have been released and that the Company's
assets will be free and clear of all such Liens.
(b)......Schedule 2.13(b) contains a list and description of all of the
Company's Leased Real Property. Each Contract governing the Company's Leased
Real Property is listed and described on Schedule 2.13(b). Each such Contract is
in full force and effect on the date hereof and will be in full force and effect
on the Closing Date. No Default under any of the terms or conditions set forth
in any of such Contracts has occurred or been asserted by any party thereto. The
continuation, validity and effectiveness of such Contracts will not be adversely
affected by Seller's performance of its obligations under this Agreement. Except
as set forth on Schedule 2.13(b), the Company is not the lessor or sub-lessor of
any Real Property.
(c)......All Improvements on the Real Property owned by, leased to, or
used by the Company substantially conform to all applicable state and local
Laws, zoning and building ordinances and health and safety ordinances in all
material respects. Such Real Property is zoned for the various purposes for
which the Real Property and Improvements thereon are presently being used, and,
to Seller's knowledge, no such present use violates any applicable zoning laws
or building, health and safety ordinances or permits or certificates of
occupancy issued with respect to such Real Property or the Improvements thereon.
(d)......Each of the Improvements on the Real Property is in good
condition and repair, reasonable wear and tear excepted.
(e)......Any and all rights and easements for public vehicular ingress
to and egress from (including curb cut rights from all adjacent public streets)
the Company's Real Property necessary for the Company to conduct its business as
currently conducted are available to the Real Property. To Seller's Knowledge,
there are no facts or circumstances that could reasonably be expected to have a
Material Adverse Effect on any such rights of ingress and egress, and there is
no pending or, to Seller's Knowledge, threatened denial, revocation,
modification or restriction of such access.
(f)......All public and private utilities required for the operation of
the Company's Real Property and the Company's business either enter the Real
Property through adjoining public streets or, if they enter through adjoining
private land, do so in accordance with valid recorded public or private
easements; and all of such public and private utilities are installed and
operating.
(g)......No zoning or similar land use restrictions are currently in
effect or, to Seller's Knowledge, proposed by any Governmental Authority that
would impair the operation of the Company's business as currently conducted or
which would impair the use, occupancy and enjoyment of any of the Company's Real
Property in any material respect. To the Knowledge of Seller, all of the
Company's Real Property is in material compliance with all applicable zoning or
similar land use restrictions of all Governmental Authorities having
jurisdiction thereof and with all recorded restrictions, covenants and
conditions affecting any of the Company's Real Property. The Company has not
received any notice from any Person with regard to (i) encroachments on or off
the Company's Real Property, (ii) violations of building codes, zoning
regulations, subdivision covenants, or (iii) material defects in the good, valid
and marketable title of the Company's Real Property.
(h)......There are no Persons in possession of the Company's Real
Property or any part thereof other than the Company.
(i)......No claim or right of adverse possession by any Third Party has
been claimed or, to Seller's Knowledge, threatened with respect to the Company's
Real Property. No portion of the Company's Real Property is subject to any Order
for its sale, condemnation, expropriation or taking (by eminent domain or
otherwise) by any Governmental Authority, and no such sale, condemnation,
expropriation or taking been proposed or, to Seller's Knowledge, threatened.
2.14 Personal Property.
(a)......Schedule 2.14(a) contains a list of each item of the Company's
Owned Personal Property, except for items having a fair market value of less
than $5,000. Said Schedule 2.14(a) also sets forth a listing of any Liens
attached to such Owned Personal Property.
(b)......Schedule 2.14(b) contains a list of all of the Company's
Leased Personal Property (except miscellaneous leases of office equipment having
an aggregate value if capitalized of less than $50,000). Each of the Company's
Contracts relating to its Leased Personal Property is identified and described
on Schedule 2.14(b) and each such Contract is in full force and effect on the
date hereof and will be in full force and effect on the Closing Date. No Default
under any of the terms and conditions set forth in any such Contract has
occurred or been asserted by any Person. The continuation, validity and
effectiveness of the Contracts set forth in Schedule 2.14(b) will not be
adversely affected by Seller's performance of its obligations under this
Agreement. The Company is not the lessor or sub-lessor of any Personal Property.
(c)......All of the Company's Owned Personal Property and Leased
Personal Property is in good operating condition, ordinary wear and tear
excepted, and is in a state of reasonable maintenance and repair. The Company's
Owned Personal Property and Leased Personal Property is considered by the
Company adequate and usable for the continued operation of the Company's
business as the same is presently conducted.
2.15 Intellectual Property.
(a)......Schedule 2.15 contains a list of all items of Intellectual
Property owned by, leased to, or used by the Company, and sets forth, as to each
such item, (i) whether such item is owned by the Company or licensed by another
Person to the Company and (ii) if licensed (A) whether such License is paid up
or is subject to a royalty or fee and (B) the duration of such License. All
patents, trademarks, trade names, service marks, assumed names, and copyrights
and all registrations thereof included in the Company's Intellectual Property
are, to Seller's Knowledge, valid, subsisting and in full force and effect. To
Seller's Knowledge, the Company owns or has a valid and subsisting paid-up
License to all Intellectual Property that is necessary to enable the Company to
conduct its business as presently conducted. All material Licenses included in
the Company's Intellectual Property are in full force and effect, are not in
Default, and constitute legal, valid and binding obligations of the respective
parties thereto, enforceable against such parties in accordance with their
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, or
by the availability of equitable remedies. Seller's performance of its
obligations hereunder will not alter or impair any material Intellectual
Property rights of the Company or result in a Default under any material License
to any such Intellectual Property. Except as set forth in Schedule 2.15, the
Company has not incurred any Liability to make any payments for royalties, fees
or otherwise to any Person in connection with any of the Company's Intellectual
Property.
(b)......To Seller's Knowledge, the Company has not violated, infringed
upon, or unlawfully or wrongfully used the Intellectual Property of any other
Person, and Seller has no Knowledge of any threat or allegation of any such
violation, infringement, or unlawful or wrongful use having been made during the
past three years. There is no reexamination procedure pending or threatened with
respect to any of the Company's patents or other Intellectual Property. The
Company has all right, title and interest in and to the Intellectual Property
identified on Schedule 2.15 as being owned by the Company free and clear of any
Liens other than Permitted Liens. To Seller's Knowledge, no Person is infringing
upon, or violating any of the Company's rights to, the Company's Intellectual
Property, except as would not reasonably be expected to have a Material Adverse
Effect upon the Company.
(c)......Expect as set forth on Schedule 2.15, no present or former
Affiliate, stockholder, officer, director, employee, agent, consultant or
partner of the Company owns or has any proprietary, financial or other interest,
direct or indirect, in any of the Company's Intellectual Property.
2.16 Computer Software and Databases. Schedule 2.16 contains a list of
all Computer Software and Databases (except for off-the-shelf Computer Software)
owned by, licensed to, or used by, the Company, and sets forth as to each such
item (i) whether such item is owned by the Company or licensed by another Person
to the Company and (ii) if licensed (A) whether such License is paid-up or is
subject to a royalty or fee and (B) the duration of such License. The Company
has sufficient rights in all Computer Software and Databases that are necessary
to enable the Company to conduct its business as currently conducted. To
Seller's Knowledge, the Company's continued use of its Computer Software and the
Databases after the Closing will not violate the rights of any other Person, and
the Company has not received any communication from any Third Party alleging
such a violation during the past three years. The Company has not sold,
licensed, leased or otherwise transferred or granted any interest in or rights
to any of the Computer Software and Databases.
2.17 Intangible Property. Except as set forth in Schedule 2.15
(Intellectual Property) and Schedule 2.16 (Computer Software and Databases), the
Company does not own any intangible property (including securities) material to
its business or financial condition, except (i) the Company's customer, supplier
and mailing lists, and (ii) any other intangible property reflected in the
Financial Statements or in Schedule 2.17.
2.18 Inventories.
(a)......All items of Inventory of the Company consist of items of a
quality, quantity and condition usable and saleable in the ordinary course of
the Company's business without discount or reduction, and conform to generally
accepted standards in the industry of which the Company is a part. The value of
the Inventory reflected on the Company's December 31, 2003 balance sheet and on
the Latest Balance Sheet, was, in each instance, (i) prepared from the Company's
books and records in accordance with GAAP, (ii) not subject to any write-down or
write-off in excess of the Inventory reserves stated in the Latest Balance Sheet
and (iii) net of adequate reserves for damages, excess, slow moving, obsolete
and unsalable items.
(b)......Schedule 2.18 is a correct and complete list of all Contracts
for the purchase of Inventory and the sale of finished goods. True and complete
copies of all such contracts have been delivered to Purchaser. No such Contract
commits the Company to purchase Inventory at a price in excess of the prevailing
market price at the time that such Contract was entered into. No such Contract
relating to the sale by the Company of finished goods would require the Company
to sell finished goods at prices that are reasonably likely to result in a
negative gross margin with respect to such Contract.
2.19 Insurance. All of the properties and business of the Company of an
insurable nature are insured in such amounts and against such Losses, casualties
or risks as are (i) usual and customary for companies engaged in businesses
similar to the Company's business, (ii) required by any applicable Law, or (iii)
required by any Contract binding upon the Company. Schedule 2.19 contains a list
of all insurance policies held by the Company and in force on the date hereof
(including, without limitation, fire, property damage, public liability,
worker's compensation, fidelity bond, errors and omissions, theft, forgery and
other coverage), and indicates the name of the insurer, the nature of each
policy, the risks covered thereby, the amount of the premiums and the term of
the policy. All such policies are in full force and effect and enforceable in
accordance with their terms, and the Company is not in Default of any provision
of any such policy, including, without limitation failure to make timely payment
of all premiums due thereon. The Company has not been refused or denied any
insurance coverage for which it has applied (including renewal of current
insurance coverage).
2.20 Bonds, Letters of Credit, Etc. Schedule 2.20 contains (i) a list
of all bonds (whether those denominated as bid, litigation, performance,
fidelity, AD&D, or otherwise), letters of credit, and similar instruments issued
by the Company or others for the benefit of the Company in force or outstanding
("Performance Bonds") and (ii) a summary of the terms, amount, cost and reason
for issuance of each such Performance Bond. True and complete copies of these
Performance Bonds have been delivered to Purchaser by the Company on or before
the date of this Agreement. The Performance Bonds listed on Schedule 2.20
satisfy in all material respects all requirements for such Performance Bonds set
forth in (i) any Law applicable to the Company or its business and (ii) any
Contract of the Company. All such Performance Bonds are in full force and effect
and enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting creditors' rights generally, or by the availability of
equitable remedies. Neither the Company nor, to the Knowledge of Seller, any
other party thereto, is in Default regarding the provisions of any Performance
Bond, including the failure to make timely payment of all premiums and fees due
thereon; and the Company has not failed to give any notice or present any claim
under or with respect to any such Performance Bond in a due and timely fashion.
2.21 Licenses; Compliance with Laws.
(a)......Schedule 2.21 contains a complete list of Licenses necessary
for the ownership of the Company's assets and the conduct of its business. The
Company is in compliance with all Laws, Licenses and Orders applicable to,
required of, or binding on the Company, its assets or its business, other than
any non-compliance that would not reasonably be expected to have a Material
Adverse Effect upon the Company, and Seller has no Knowledge of any basis for
any claim of current or past material non-compliance or Default with any such
Law, License or Order. Since January 1, 2002, no notice from any Governmental
Authority with respect to any failure or alleged failure of the Company, its
assets or its business to comply with any Law, License or Order has been
received by the Company, nor, to Seller's Knowledge, has any such notice been
proposed or threatened.
(b)......All Licenses necessary for the ownership of the Company's
assets and the conduct of its business are renewable in the ordinary course of
business without the need to comply with any special qualification procedures or
to pay any amounts other than routine filing fees. None of the Company's
Licenses will be adversely affected by Seller's performance of its obligations
hereunder.
(c)......Seller has no Knowledge of capital expenditures in excess of
$50,000 in the aggregate that are, or will be, required to be made by the
Company in order to effect compliance with any Law applicable to the Company,
its assets or its business as now conducted or any Contract of the Company.
(d)......The Company has not been debarred or otherwise prohibited from
doing business with any Governmental Authority.
2.22 Environmental. Except as set forth in Schedule 2.22:
(a)......There are no Environmental Claims pending or, to Seller's
Knowledge, threatened against or affecting the Company with respect to (i) the
ownership, use, condition or operation of the Company, its assets or its
business, or (ii) any violation or alleged violation of any Environmental Law or
any Order related to Environmental Matters. There are no existing violations of
(i) any Environmental Law, or (ii) any Order related to Environmental Matters,
with respect to the ownership, use, condition or operation of the Company's
business, its assets or any asset formerly held for use or sale by the Company.
To Seller's Knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including any Environmental
Matter, that could form the basis of (i) any Environmental Claim against the
Company, or (ii) any Litigation against any Person whose Liability (or any
portion thereof) for Environmental Matters or violation of Environmental Laws
the Company has or may have retained or assumed, either contractually or by
operation of law. Neither the Company nor anyone known to the Company has used
any assets of the Company for the handling, treatment, storage, shipment, or
disposal of any Hazardous Substances in violation of any applicable Law. Neither
the disclosure of facts in Schedule 2.22 nor the fact that any representation or
warranty contained herein is qualified by reference to Seller's Knowledge shall
relieve Seller of any obligation under clause (vii) of Section 7.2 of this
Agreement.
(b)......To Seller's Knowledge, no release, discharge, spillage or
disposal of any Hazardous Substances has occurred or is occurring at, or with
respect to, any Real Property of the Company in violation of any Environmental
Law.
(c)......To Seller's Knowledge, no soil or water in, under or adjacent
to any assets or premises of the Company or formerly held for use or sale by the
Company has been contaminated by any Hazardous Substance while or before such
assets or premises were owned, leased, operated or managed, directly or
indirectly, by the Company in a manner that would require remediation under any
applicable Environmental Law.
(d)......To Seller's Knowledge, all waste containing any Hazardous
Substances generated, used, handled, stored, treated or disposed of by the
Company has been released or disposed of in compliance with all applicable
reporting requirements under any Environmental Laws, and Seller has no Knowledge
of any Environmental Claim with respect to any such release or disposal.
(e)......All underground tanks and other underground storage facilities
presently or previously located upon any Real Property owned, leased, operated
or managed by the Company or any such tanks or facilities located upon any such
Real Property while such Real Property was owned, leased, operated, or managed
by the Company are listed, together with the capacity and contents (former and
current) of each such tank or facility, on Schedule 2.22. To Seller's Knowledge,
none of such underground tanks or facilities is leaking or has ever leaked.
(f)......To Seller's Knowledge, the Company has complied with all
applicable reporting requirements under all Environmental Laws concerning the
disposal or release of Hazardous Substances.
(g)......To Seller's Knowledge, no Improvement on any Real Property
owned, leased, operated or managed by the Company contains any
asbestos-containing materials.
(i)......Without limiting the generality of any of the foregoing, (i)
all on-site and off-site locations where the Company or, to Seller's Knowledge,
any of its predecessors, has stored, disposed or arranged for the disposal of
Hazardous Substances are identified in Schedule 2.22 and (ii) no polychlorinated
biphenyls (PCB's) are being or have been used or stored on any Real Property
owned, leased, operated or managed by the Company or any of its predecessors.
(j)......Schedule 2.23A is a complete and correct list of (i) all
environmental surveys, assessments and other tests analyses that either Seller,
CII, or the Company has in its possession (of which such entities have
Knowledge) that have, at any time, been prepared with respect to the Long Beach
Facility, (ii) all notices of violations or other demands or correspondence that
Seller, CII, or Alflex have received from any Governmental Authority with
respect to any violations or alleged violations of Environmental Matters or
Environmental Laws, and (iii) copies of internal memoranda or reports that have
been prepared assessing the scope or nature of any such Environmental Matters or
violations of Environmental Laws. Seller has delivered true and complete copies
of all documents referred to in the preceding sentence.
2.23 Litigation and Claims. Except as disclosed on Schedule 2.23 and
except as would not reasonably be expected to have a Material Adverse Effect
upon the Company:
(a)......there is no Litigation pending or, to the Seller's Knowledge,
threatened against the Company, and Seller has no Knowledge of any basis for
such Litigation; and
(b)......there are no pending or, to the Seller's Knowledge, threatened
investigations or inquiries regarding the Company, its assets or its business by
or before any Governmental Authority. Schedule 2.23 describes all inspection
reports, questionnaires, inquiries, demands, requests for information, and
claims of violations or noncompliance with any Law received by the Company from
any Governmental Authority since January 1, 2002 and all written statements or
responses of the Company with respect thereto.
2.24 Employee Benefits.
(a) Schedule 2.24(a) contains a complete list of all Company Plans.
Except as disclosed on Schedule 2.24(a), there are no other material benefits to
which any Company Employee is entitled or Employee Plans for which the Company
has any obligation or Liability or for which the Company or Purchaser will have
any obligation or Liability after the Closing Date.
(b) The Company has made available to Purchaser with respect to each
Company Plan listed on Schedule 2.24(a) correct and complete copies of the
current plan documents, including all amendments.
(c) Except as set forth on Schedule 2.24(c), no Company Plan is, and
the Company does not currently maintain, contribute to or participate in, nor
does the Company have any obligation to maintain, contribute to or otherwise
participate in or have any Liability or other obligation under a (i)
"multiemployer plan" (within the meaning of section 3(37) of ERISA), (ii)
"multiple employer plan" (within the meaning of section 413(c) of the Code),
(iii) "multiple employer welfare arrangement" (within the meaning of section
3(40) of ERISA), or (iv) plan that is subject to the provisions of Title IV of
ERISA. Neither the Company nor any ERISA Affiliate has withdrawn (in full or in
part) or announced its intention to withdraw but has not completed its
withdrawal from any multiemployer or multiple employer plan with respect to
which the Company has any existing Liability. The Company is not liable for any
contribution, Tax, Lien, penalty, cost, interest, claim, loss, action, suit,
damage, cost, assessment or other Liability or expense of any ERISA Affiliate
(including predecessors thereof) with regard to any Employee Plan maintained,
sponsored or contributed to by such ERISA Affiliate, including withdrawal
liability arising under Title IV, Subtitle E, Part 1 of ERISA, Liabilities to
the PBGC or Liabilities under section 412 of the Code or section 302(a)(2) of
ERISA.
(d) Schedule 2.24(d) lists the name of each Company Employee who is on
a leave of absence (whether or not pursuant to FMLA) and is receiving or
entitled to receive health coverage under an Employee Plan, whether pursuant to
FMLA, COBRA or otherwise.
(e) With respect to each Company Plan and except as otherwise set forth
in Schedule 2.24(e):
(i) each Company Plan described in section 3(2) of ERISA qualifies
under section 401(a) of the Code and has received a determination letter or is
entitled to rely on an opinion letter from the IRS to the effect that it is
qualified under section 401 of the Code and that any trust maintained pursuant
thereto is exempt from federal income taxation under section 501 of the Code,
and nothing has occurred or is expected to occur that has caused or would
reasonably be expected to cause the loss of such qualification or exemption or
the imposition of any penalty or Tax;
(ii) all amendments required to bring the Company Plan into conformity
with applicable law, including ERISA and the Code, have been timely adopted;
(iii) the Company Plan complies in all material respects with and has
been maintained and operated substantially in accordance with its terms and the
terms and provisions of applicable Law, including ERISA and the Code, and the
Company has performed all obligations required to be performed by it with
respect to the foregoing on a timely basis;
(iv) other than claims for benefits arising in the ordinary course of
the operation and administration of the Company Plan, no material claims,
investigations, lawsuits, arbitrations or other controversies are pending or, to
Seller's Knowledge, threatened against any Company Plan or, to Seller's
Knowledge, any trustee, fiduciary, custodian, administrator or other Person
holding or controlling assets of any Company Plan, and, to Seller's Knowledge,
no basis for any such claim exists;
(v) no "prohibited transaction" (within the meaning of section 4975 of
the Code and section 406 of ERISA) has occurred with respect to the Company Plan
(and the transactions contemplated by this Agreement will not constitute or
directly or indirectly result in such a "prohibited transaction") that has
subjected or is reasonably expected to subject the Company, or any officer,
director or employee of the Company to a material Tax or penalty pursuant to
section 502 of ERISA or section 4975 of the Code or any other material Liability
with respect thereto;
(vi) To Seller's Knowledge, the Company Plan is not under audit or
investigation by the IRS, the DOL or any other Governmental Authority nor is it
the subject of a voluntary compliance, amnesty, closing agreement or other
similar program, and no completed audit, compliance filing or closing agreement
has resulted in the imposition of any material Tax, interest or penalty that has
not been satisfied; and
(vii) if the Employee Plan purports to be a VEBA, a request for a
determination letter for the VEBA has been submitted to and approved by the IRS
that it is exempt from federal income tax under section 501(c)(9) of the Code,
and nothing has occurred or is expected to occur that caused or would cause the
loss of such qualification or exemption or the imposition of any Tax, interest
or penalty with respect thereto.
(f) All payments by the Company or any ERISA Affiliate required by any
Company Plan, any collective bargaining agreement or by Law (including all
contributions, insurance premiums, premiums due to the PBGC or intercompany
charges) have been timely made.
(g) The Company is not subject to any Lien or excise or other Taxes
under ERISA, the Code or other Law applicable to any Company Plan.
(h) The sale of the Purchased Shares by Seller to Purchaser will not
give rise to any Liability on behalf of the Company or Purchaser for severance
pay, unemployment compensation, termination pay or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount of compensation
or benefits due to any Company Employee.
(i) Except as provided in Schedule 2.24(i), no Company Plan provides
for any benefits (other than under COBRA, the Federal Social Security Act or any
Company Plan qualified under section 401(a) of the Code) to any Company Employee
who, at the time the benefit is to be provided, is a former director, officer or
employee of, or other provider of services to the Company or an ERISA Affiliate
(or a beneficiary of any such person), nor have any representations, agreements,
covenants or commitments been made to provide such benefits to any such person.
(j) The Company has no Liability arising from the recharacterization
under applicable Laws of any Person engaged by the Company or an ERISA Affiliate
as an independent contractor, leased employee or similar service provider as an
employee of the Company or any ERISA Affiliate.
2.25 Contracts.
(a)......Description.
(i) Real Property. Schedule 2.25(a)(i) lists all Contracts affecting or
relating to the Company's Real Property, other than (A) Contracts affecting or
relating to the Company's Real Property which either (I) are terminable by the
Company upon no more than 30 days notice with no obligation on the Company's
behalf, or (II) do not involve the payment by the Company of more than $12,000
per year or (B) Contracts evidencing Liens, which are disclosed on Schedule
2.13(a), and Contracts for Leased Real Property, which are disclosed on Schedule
2.13(b).
(ii) Personal Property. Schedule 2.25(a)(ii) lists all Contracts
affecting or relating to the Company's Personal Property, other than (A)
Contracts affecting or relating to the Company's Personal Property which either
(I) are terminable by the Company upon no more than 30 days notice with no
obligation on the Company's behalf, or (II) do not involve the payment by the
Company of more than $12,000 per year or (B) Contracts evidencing Liens, which
are disclosed on Schedule 2.14(a) and Contracts for Leased Personal Property,
which are disclosed on Schedule 2.13(b).
(iii) Purchase Orders. Schedule 2.25(a)(iii) lists all outstanding
Contracts binding upon the Company which relate to the acquisition of goods,
services or capital assets, other than those (A) pursuant to which the Company
is obligated to pay less than $12,000 or (B) which are terminable by the Company
upon no more than 30 days notice with no obligation on the Company's behalf. All
such Contracts were executed in the ordinary course of business consistent with
past practice by the Company.
(iv) Sales. Schedule 2.25(a)(iv) lists all Contracts for the sale,
production or supply of goods, services, or capital assets by the Company, other
than those (A) pursuant to which the amount remaining to be paid to the Company
is less than $50,000 or (B) which are terminable by the Company on no more than
30 days notice with no obligation on the Company's behalf. To Seller's
Knowledge, all products sold or delivered in connection with such Contracts have
been in material conformity with such Contracts. All sales made to customers
since January 1, 2002 have arisen as a result of bona fide sales transactions
involving the delivery of goods, the performance of services or other business
transactions engaged in or entered into by the Company in the ordinary course of
business consistent with past practices. All sales reflected on the Financial
Statements have been recorded in accordance with GAAP consistently applied
throughout the periods presented. All such sales have been made to Persons who,
at the time of such sales, were in the Company's reasonable discretion
creditworthy entities. No deliveries of products on consignment have been
recorded as sales on the Financial Statements.
(v) Employment; Other Affiliate Contracts. Schedule 2.25(a)(v) lists
all Contracts (including employment, non-competition and loan agreements) with
(I) any current or former employee, officer or director of the Company (or any
Related Person to any such individual); (II) any professional currently retained
or employed by the Company, including attorneys, accountants, consultants and
contractors; and (III) any agent, sales representative, distributor, dealer or
Affiliate of the Company.
(vi) Other Contracts. Schedule 2.25(a)(vi) lists any other Contract of
the Company, which is not terminable by the Company on no more than 30 days
notice with no obligation on the Company's behalf and which: (A) provides for
monthly payments by or to the Company in excess of $1,000, (B) provides for
payments by or to the Company in any calendar year exceeding $12,000, (C)
evidences, creates, guarantees or services Indebtedness for Money Borrowed, or
(D) provides for the guarantee or endorsement of the Liabilities of any other
Person.
(b)......No Default. Except as would not reasonably be expected to have
a Material Adverse Effect upon the Company, neither the Company nor, to Seller's
Knowledge, any other Person is in Default under any of the Contracts referred to
or described in this Section 2.25 (the "Listed Contracts"), and, to Seller's
Knowledge, there is no basis for any claim of Default under any such Listed
Contract.
(c)......Assurances. Except as set forth on Schedule 2.25(c), (i) each
Listed Contract is in full force and effect and valid, binding and enforceable
against the Company and, to the Knowledge of Seller, the other party or parties
thereto, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally, or
by the availability of equitable remedies, (ii) the continuation, validity and
effectiveness of each Listed Contract will not be adversely affected by Seller's
performance of its obligations under this Agreement or the Other Agreements,
(iii) no Listed Contract requires the consent of any party thereto as a result
of the change in control of the Company will be terminable by any party as a
result of such change in control, and (iv) the Company is not a party to or
bound by any Contract or Contracts that, either separately or in the aggregate,
has or will have a Material Adverse Effect upon the Company.
2.26 Suppliers and Customers. Schedule 2.26(a) sets forth a list of the
20 largest suppliers to whom payments were made for the Company's fiscal year
ended December 31, 2003 (the "Large Suppliers") and the percentage of the
Company's cost of goods sold purchased from each such Large Supplier for the
fiscal year ended December 31, 2003. Except as reflected in Schedule 2.26(a), no
supplier is a sole source of supply of any good or service to the Company.
Schedule 2.26(b) sets forth a list of the 20 largest customers (determined by
gross sales revenue) from whom payments were received for the Company's fiscal
year ended December 31, 2003 (the "Large Customers") and the percentage of the
Company's gross sales made to each of such Large Customers for the fiscal year
ended December 31, 2003. The relationships of the Company with its Large
Suppliers and Large Customers are good commercial working relationships and,
except as set forth on Schedule 2.26(a) or (b), respectively, neither any of the
Large Suppliers nor any of the Large Customers, has terminated, threatened to
terminate or otherwise adversely modify, its relationship with the Company. The
consummation of the transactions contemplated by this Agreement will not, to
Seller's Knowledge, adversely affect the relationship between the Company and
any of the Large Suppliers or any of the Large Customers; provided, however,
that the foregoing specifically excludes any effect resulting from acts or
omissions of the Purchaser after the Closing.
2.27 Labor Matters. Schedule 2.27 contains a list of all employees
whose direct annual compensation exceeds $40,000. Except as disclosed on
Schedule 2.25(a)(v), the employment of all employees of the Company is
terminable at will by the Company without any penalty or severance obligation
incurred by the Company. No unpaid salary, other than for the immediately
preceding pay period and other than pursuant to any existing deferred
compensation plans of the Company (copies of which have been delivered to
Purchaser), is now, or will be on or after the Closing, payable to any of such
officers, directors or employees. Except as set forth on Schedule 2.27, the
Company is not a party to any union agreement or collective bargaining
agreement, and there are no work rules or practices agreed to between the
Company, on the one hand, and any labor organization or employee association, on
the other hand. No attempt to organize any of the employees of the Company has
been made, proposed or threatened within the last five years. No labor strike,
dispute, slowdown, stoppage or lockout is pending or, to Seller's Knowledge,
threatened against or affecting the Company, its assets or its business, and
during the past five years there has not been any such action. No unfair labor
practice charge or complaint against the Company is pending or, to Seller's
Knowledge, threatened before the National Labor Relations Board or any similar
Governmental Authority. Since the enactment of the Worker Adjustment and
Retraining Notification Act (the "WARN Act"), the Company has not effectuated
(i) a "plant closing" (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of the Company; or (ii) a "mass layoff" (as defined in
the WARN Act) affecting any site of employment or facility of the Company; nor
has the Company engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar applicable state or local Law.
Except as set forth in Schedule 2.27, none of the Company's employees has
suffered an "employment loss" (as defined in the WARN Act) since June 30, 2003.
2.28 Brokers and Finders. No finder, agent, broker or other Person
acting pursuant to authority of the Company or Seller is entitled to any
commission or finder's fee in connection with the transactions contemplated by
this Agreement and the Other Agreements.
2.29 Officers, Directors and Bank Accounts.
(a)......Schedule 2.29(a) lists the names of all directors and officers
of the Company.
(b)......Schedule 2.29(b) lists the name and location of each bank or
other institution in which the Company has any deposit account or safe deposit
box, all account numbers, and the names of all Persons authorized to act in
connection therewith.
2.30 Compliance with the Immigration Reform and Control Act. The
Company is in material compliance with and has not violated the terms and
provisions of applicable Laws relating to immigration, including the Immigration
Reform and Control Act of 1986, and all related regulations promulgated
thereunder (collectively, the "Immigration Laws"). With respect to each employee
of the Company for whom compliance with the Immigration Laws by an employer is
required, the Company has supplied to Purchaser such employee's Form I-9
(Employment Eligibility Verification Form) and all other records, documents or
other papers which are retained with the Form I-9 by the employer pursuant to
the Immigration Laws. Since January 1, 2002, the Company has not been the
subject of any inspection or investigation relating to its compliance with or
violation of the Immigration Laws, nor has it been warned, fined or otherwise
penalized by reason of any failure to comply with the Immigration Laws, nor is
any such proceeding pending or threatened.
2.31 Interested Transactions. Except as set forth in Schedule 2.31, the
Company is not a party to any Contract, loan, or other transaction with any
officer, director, employee or Affiliate of the Company or any Person who is a
Related Person to any such officer, director, employee or Affiliate. Each item
listed on Schedule 2.31 was negotiated on an arm's length basis, contains
pricing terms that reflected fair market value at the time entered into, and
otherwise contains terms and conditions comparable to those customarily
contained in similar transactions between unrelated parties. Except as described
in Schedule 2.31, none of the Persons described in the first sentence of this
Section owns, or during the last three years has owned, directly or indirectly,
beneficially or legally (individually or in the aggregate), five percent (5%) or
more of the equity or voting interests of any Person that competes with the
Company or its business.
2.32 Schedules. Matters disclosed on each Schedule shall be deemed
disclosed only for purposes of the matters to be disclosed on such Schedule and
shall not be deemed to be disclosed for any other purpose unless expressly
provided therein. The disclosure of any matter on a Schedule shall not be deemed
to imply that such matter was required to be disclosed on such Schedule.
2.33 Disclosure; Statements True and Correct. No written representation
or warranty (as the same may be updated pursuant to any supplements to the
Schedules delivered pursuant to Section 4.6 hereto) made to Purchaser by Seller,
nor any certificate or instrument furnished or to be furnished to Purchaser by
Seller or CII pursuant to this Agreement contains or will contain any untrue
statement of material fact or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading. Purchaser
acknowledges that neither Seller, the Company nor any other person has made any
representation or warranty, expressed or implied, as to the accuracy or
completeness of any information regarding the Company, except as expressly set
forth in this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As a further inducement to cause Seller to sell the Purchased Shares to
Purchaser and to perform Seller's other obligations hereunder, Purchaser hereby
represents and warrants to Seller that:
3.1 Organization and Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with the corporate power and authority to carry on its business and to
own, lease and operate its assets.
3.2 Authority and Binding Effect. Purchaser has the full power and
authority necessary to enter into and perform its obligations under this
Agreement and the Other Agreements to which it is a party and to perform the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Other Agreements to which Purchaser is a
party have been duly approved by all necessary action of the board of directors
of Purchaser. This Agreement has been, and the Other Agreements to which
Purchaser is a party will be, duly executed and delivered by Purchaser and each
constitutes, or when executed and delivered will constitute, the legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally, or by the availability of equitable remedies.
3.3 Validity of Contemplated Transactions; Restrictions. Neither the
execution and delivery of this Agreement and the Other Agreements to which
Purchaser is a party by Purchaser, nor the performance by Purchaser of the
transactions contemplated hereby or thereby, will (a) violate any provision of
Purchaser's Certificate of Incorporation or Bylaws, (b) violate any Law or Order
to which Purchaser is subject, (c) result in a breach of, or constitute a
Default under, or require the consent or approval of any party to, any Contract
or License to which Purchaser is a party or by which Purchaser is bound, or (d)
result in the creation of any Lien upon any of Purchaser's assets.
3.4 Brokers and Finders. No finder or any agent, broker or other Person
acting pursuant to authority of Purchaser is entitled to any commission or
finder's fee in connection with the transactions contemplated by this Agreement
and the Other Agreements.
3.5 Financing. Purchaser has available to it, either in the form of
cash-on-hand or borrowing facilities with unconditional availability on not less
than three days notice, cash in an amount in excess of the Purchase Price.
3.6 Statements True and Correct. No written representation or warranty
made to Seller by Purchaser, nor any certificate or instrument furnished or to
be furnished by Purchaser to Seller pursuant to this Agreement contains or will
contain any untrue statement of material fact or omits or will omit to state a
material fact necessary to make the statements contained therein not misleading.
ARTICLE 4
COVENANTS AND ADDITIONAL AGREEMENTS OF
SELLER AND PURCHASER
4.1 Operation of Business Pending Closing. From and after the date
hereof and prior to the Closing Date, other than as described on Schedule 4.1,
except with the prior written consent of Purchaser and except as necessary to
effect the transactions contemplated by this Agreement, Seller shall cause the
Company to:
(a) conduct its business in substantially the same manner as presently
conducted and refrain from (i) entering into any transaction or Contract which
is not in the ordinary course of business and consistent with past practice, and
(ii) making changes in its methods of management, marketing or operations;
(b) consult with Purchaser prior to undertaking any new business
opportunity not in the ordinary course of business and consistent with past
practice, and not undertake such new business opportunity without the prior
written consent of Purchaser;
(c) confer on a regular and frequent basis with one or more designated
representatives of Purchaser to report material operational matters and to
report the general status of ongoing operations;
(d) notify Purchaser of any unexpected emergency or other change in the
normal course of the Company's business or in the operation of its properties,
and of any governmental complaints, investigations, hearings (or communications
indicating that the same may be contemplated) or adjudicatory proceedings
involving any material property of the Company, and keep Purchaser fully
informed of such events and permit its representatives prompt access to all
materials prepared in connection therewith;
(e) not enter into any new employment Contract or, except in the
ordinary course of business, and consistent with past practice, any commitment
to employees (including any commitment to pay retirement or other benefits);
(f) not increase the compensation (including fringe benefits) payable
or to become payable to any officer, director or employee of the Company, except
general hourly rate increases and normal merit increases for employees (other
than officers) made in the ordinary course of business and consistent with past
practice;
(g) not change the banking or safe deposit arrangements of the Company,
except for the deposit and withdrawal of funds in the ordinary course of
business;
(h) (i) not create or incur any Indebtedness for Money Borrowed, (ii)
not create or incur any other Indebtedness, except in the ordinary course of
business, (iii) not enter into or terminate any lease of Real Property, or (iv)
not create any Lien on any of its assets other than Permitted Liens;
(i) not redeem, purchase or otherwise acquire any shares of Common
Stock or split, combine or otherwise similarly change the outstanding shares of
Common Stock, or authorize the creation or issuance of or issue or sell any
shares of its capital stock, or any securities or obligations convertible into
or exchangeable for, or give any Person any right to acquire from it, any shares
of its capital stock;
(j) not make or commit to make any capital expenditures in excess of
$100,000 individually or $500,000 in the aggregate, or enter into any lease of
capital equipment as lessee or lessor;
(k) not sell any asset or make any commitment relating to the sale of
its assets other than in the ordinary course;
(l) not make any changes in the accounting methods or practices of the
Company, except for changes in its accounting methods or practices that may be
necessary or appropriate as a result of changes in applicable accounting
principles or Laws;
(m) not take any action, or omit to take any action, which would cause
the representations and warranties contained in Article 2 hereof to be untrue or
incorrect in any material respect at Closing; and
(n) not make any agreement or commitment which will result in or cause
to occur a violation of any of the items contained in paragraphs (a) through
(m).
4.2 Right of Access. From and after the date hereof, subject to
applicable Laws, Seller shall cause the Company, at reasonable times upon
reasonable notice (i) to give to Purchaser and its representatives full access
to the Company's assets and Contracts and accounting, financial, legal, and
other business information; (ii) to arrange for Purchaser and its
representatives to have the opportunity to consult with the Company's officers,
directors, employees, attorneys, accountants and other agents; (iii) to instruct
such individuals to cooperate fully with Purchaser and its designees; and (iv)
to permit Purchaser and its designees to make copies of any of the records
referred to above. Seller and Purchaser agree to cooperate in good faith with
each other and to take such actions as may be reasonably necessary and
appropriate to effect an orderly transition of the ownership of the Company from
Seller to Purchaser.
4.3 Relationships with Employees and Customers. At all times prior to
the Closing Date, Seller shall cause the Company to use its reasonable
commercial efforts to (i) preserve its business organization intact, (ii) keep
available to the Company its present key officers and employees (except
Terminated Employees), and (iii) preserve the present relationships of the
Company with its suppliers and customers and others having business
relationships with the Company.
4.4 Confidentiality. Each party hereto agrees that, for a period of
three years from and after the date hereof, it will not, and will use reasonable
commercial efforts to ensure that its Affiliates will not, use (except as
contemplated by this Agreement), or disclose to any other Person, any
confidential or non-public information relating to the other party; provided,
however, that the foregoing prohibitions shall not apply to (i) disclosures that
are required by Law (including any rule or regulation of the SEC which may, in
the written opinion of counsel to such party, require such disclosure) or by a
Governmental Authority; (ii) information that is ascertainable or obtained from
public or published information; (iii) information received from a Third Party
not known to the disclosing party to be under an obligation to keep such
information confidential; (iv) information independently developed by the
disclosing party; or (v) information disclosed to or filed with any Person for
the purpose of obtaining consents to, or the financing of, the transactions
contemplated by this Agreement, including (A) filings pursuant to the HSR Act
and (B) disclosures to Purchaser's lenders or lessors.
4.5 Public Announcements. Neither Purchaser nor Seller shall make any
public announcements with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other party hereto,
unless required by Law (including any rule or regulation of the SEC which may,
in the written opinion of counsel to such party, require such disclosure) or
judicial process (in which case notification shall be given to the other parties
hereto prior to such disclosure).
4.6 Schedules. Between the date hereof and the Closing Date, Seller
shall have the continuing obligation to supplement any of the Schedules referred
to in Article 2 hereof with respect to any matter arising after the date hereof
that, if existing or occurring on the date hereof, would have been required to
have been set forth or described in such Schedules. Purchaser shall have the
right unilaterally to extend the Closing Date if necessary to permit Purchaser
to have five Business Days to review such supplemented Schedules prior to the
Closing Date. If, in Purchaser's reasonable determination, any such supplements
reveal any Material Adverse Change with respect to the Company, or any condition
or event which is reasonably expected to result in such a Material Adverse
Change, Purchaser may terminate this Agreement in accordance with Section
8.1(d).
4.7 Other Offers and Exclusive Dealing. Unless and until this Agreement
is terminated prior to Closing pursuant to Article 8, Seller shall not (and
shall cause the Company to not) directly or indirectly, through any officer,
director, employee, agent or otherwise, (i) solicit, initiate, encourage or
entertain submission of proposals or offers from any Person relating to (A) any
purchase of the Purchased Shares or any portion thereof, (B) any merger or sale
of substantial assets of the Company, or (C) any similar transaction involving
Seller, (ii) participate in any discussions or negotiations regarding, furnish
to any other Person any information with respect to, or otherwise facilitate or
encourage any effort or attempt by any other Person to consummate any of the
transactions described in clause (i) above, or (iii) approve or undertake any
such transaction. Seller shall promptly communicate to Purchaser the terms of
any such proposal or offer upon knowledge or receipt thereof or upon knowledge
that such a proposal or offer is likely to be made.
4.8 Certain Tax Matters.
(a)......Seller shall cause all Tax Returns of the Company required to
be filed on or before the Closing Date, taking into account any extensions of
the filing deadlines granted to the Company that had not yet been filed prior to
the date hereof (including those relating to periods after the Closing Date), to
be prepared by the Company but not to be filed without prior examination by or
on behalf of Purchaser. Seller agrees to use its reasonable commercial efforts
to obtain all extensions of time from Governmental Authorities necessary to
effect this provision. Further, subsequent to such examination by Purchaser,
Seller shall cause the Company to file all Tax Returns required to be filed by
it on or before the Closing Date and shall pay all Taxes shown as due and
payable thereon.
(b)......Subsequent to the Closing Date, Seller shall provide Purchaser
and the Company with such assistance (including the provision of records) as may
reasonably be requested by either of them in connection with (i) the preparation
of any Tax Return, (ii) the response to any audit or other examination by any
Governmental Authority, or (iii) any judicial or administrative proceeding
relating to any Liability for Taxes.
4.9 Consents and Approvals. Seller shall use its reasonable commercial
efforts to cause the Company to obtain all waivers, consents and approvals of,
and provide all notices to, all Persons whose waiver, consent or approval is
required by any Contract, Order, Law or License relating to the Company in order
to permit the parties to perform the transactions contemplated by this
Agreement. All written waivers, consents and approvals obtained by, and all
notices provided by, the Company shall be delivered to Purchaser at or before
the Closing in form, scope and substance reasonably satisfactory to Purchaser.
4.10 Supplying Financial Statements. Within 25 days following the end
of each month, Seller shall cause the Company to deliver to Purchaser unaudited
balance sheets of the Company as of the end of each calendar month ending
subsequent to the date hereof and prior to the Closing Date and the related
statements of income for each month then ended.
4.11 Efforts to Cause Consummation of Transactions. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to take,
or cause to be taken, all commercially reasonable actions which may be necessary
or appropriate to consummate the transactions contemplated by this Agreement and
the Other Agreements and to satisfy the conditions precedent to Closing set
forth in Articles 5 and 6 of this Agreement.
4.12 Expenses.
(a)......Except as provided in Section 4.12(b), the parties to this
Agreement shall bear their respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, including, without limitation, all fees and expenses of
agents, representatives, counsel and accountants. In no event shall the Company
be liable for the payment of any fees or expenses incurred by Seller in
connection with the transactions contemplated hereby.
(b)......Notwithstanding the foregoing, Seller and Purchaser shall
share equally the filing fees required to be paid in connection with any
necessary filings pursuant to the HSR Act.
4.13 Delivery of Books and Records. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser all original documents, books and
records relating to the Company. Seller may retain copies of any of the
foregoing for its own use.
4.14 Qualification and Corporate Existence. On the Closing Date, Seller
shall deliver to Purchaser (i) a certificate of the Secretary of State of the
State of Delaware, dated not more than ten days before the Closing Date, stating
that the Company is a corporation in existence under the laws of such state and
has paid all applicable Taxes due to such state; and (ii) certificates of the
appropriate officials of the jurisdictions listed on Schedule 2.3(a), each dated
not more than ten days before the Closing Date, stating that the Company is duly
qualified and in good standing to transact business as a foreign corporation and
has paid all applicable Taxes due in each such jurisdiction.
4.15 Repayment of Debts to the Company. On or before the Closing Date,
(i) all loans and advances (other than routine travel advances and expense
advances) from the Company to any Affiliate of the Company, or any Related
Person of any such Affiliate, shall be repaid to the Company in full, (ii) all
guaranties by the Company of loans obtained by any of such Persons from Third
Parties shall have been released, and (iii) the Company shall have delivered to
Purchaser appropriate instruments or writings to evidence the receipt of such
repayments and releases.
4.16 HSR Act Filings. Seller and Purchaser shall each promptly prepare
and file with the FTC and the DOJ the notifications and reports required to be
filed pursuant to the HSR Act and shall undertake in good faith to file promptly
any supplemental information which may be requested or required by the FTC or
the DOJ, whether informally or in a supplemental request for information. Seller
and Purchaser shall each furnish to the other such information as either may
reasonably request to enable it to make such filings and provide such
information.
4.17 Transition Matters.
(a).....Employees. Prior to Closing, Seller and Purchaser shall
negotiate in good faith to agree upon a procedure pursuant to which certain
Company Employees ("Transition Employees") shall be transferred to Seller at the
Closing, but shall continue to provide services (at Purchaser's or the Company's
cost) to the Company for a transitional period after the Closing not to exceed
90 days. Seller shall be Liable to each Transition Employee for all severance
and other benefits.
(b).....Certain Equipment of Seller or its Affiliates. Seller agrees
that, for a period of 45 days subsequent to the Closing, Seller will use its
commercially reasonable efforts to permit the Company to continue to use the
computers, cell phones and software that are currently being used by the Company
in its business operations and which are currently provided to the Company by
Seller or its Affiliates.
4.18 Employee Benefit Matters.
(a)......Seller Plans. Effective as of the Closing, Seller shall cause
the Company to cease to be a participating employer in each Company Plan listed
in Schedule-2.24(a). Seller will cause all Company Employees who are employed by
the Company at the Closing ("Current Employees") to be vested in any unvested
accrued benefit under the Company Plans listed in Schedule 2.24(a). Seller shall
pay and be and remain responsible for all Controlled Group Liability other than
(i) accrued vacation pay, but only to the extent that such accrued vacation was
included as a current liability in calculating Final Closing Date Working
Capital, (ii) current payroll obligations, but only to the extent that such
current payroll obligations were included as a current liability in calculating
Final Closing Date Working Capital and (iii) Liabilities arising after the
Closing under the employment arrangements or contracts between the Company on
the one hand, and ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ on the other
hand, unless such individuals are either Terminated Employees or Transition
Employees.
(b) .....Benefits. Purchaser will cause each employee benefit plan of
Purchaser in which Current Employees are eligible to participate to take into
account for all purposes thereunder (other than benefit accruals under any
pension plan) the service of such employees with the Company and its ERISA
Affiliates as if such service were with Purchaser, to the same extent that such
service would otherwise be credited under the Purchaser's plan; provided,
however, that nothing in this sentence shall require a duplication of benefit
for any period. Seller shall provide Purchaser with all information necessary to
credit the foregoing service.
(c) .....Savings and Pension Plans. As of the Closing Date, Current
Employees will be eligible to participate in Purchaser's tax-qualified defined
contribution plan ("Purchaser Savings Plan") and in the Purchaser's
tax-qualified defined benefit pension plan provided they meet the eligibility
requirements of such plans (taking into consideration the past service credit
granted under Section 4.18(b) for purposes of eligibility and vesting).
Purchaser will cause the Purchaser Savings Plan to accept a rollover of the
portion of a Current Employee's distribution from the Seller's 401(k) Plan which
constitutes an eligible rollover distribution, including any outstanding loans
and related promissory notes.
(d) .....Welfare Plans. As of the Closing Date, all Current Employees
will be eligible to participate in the employee welfare benefit plans maintained
by Purchaser providing medical, dental, accident, life, disability, and other
employee welfare benefits (the "Purchaser's Welfare Plans"). Purchaser will
cause Purchaser's Welfare Plans to (i)-impose no restrictions or limitations
with respect to pre-existing conditions; and (ii)-honor any deductible and
out-of-pocket expenses incurred by Current Employees and their beneficiaries
under the applicable medical, health or dental plans of Seller during the
portion of the calendar year preceding the Closing Date. Seller shall retain
responsibility for all dental, accident, life, disability or medical claims
incurred on or prior to the Closing Date by Company Employees and their
dependents and beneficiaries under the Employee Plans. Purchaser shall be
responsible only for payment of dental, accident, life, disability or medical
claims that arise or first occur after the Closing Date. For purposes of this
paragraph, a claim shall be deemed to have been incurred when the medical or
other service giving rise to the claim is performed, except that disability
claims shall be deemed to have been incurred on the date the employee becomes
disabled.
(e) .....Vacation. Subsequent to the Closing, Purchaser or the Company
shall, at Purchaser's election, either (i) honor all vacation and paid time off
that was earned by Current Employees but unused prior to the Closing, or (ii)
pay to such Current Employees the amount of such vacation and paid time off,
provided that (A) in the case of either clause (i) or (ii), neither Purchaser
nor the Company shall have any Liability for such vacation and paid time off
unless such vacation and paid time off has been included as a current liability
in calculating Final Closing Date Working Capital and (B) in the event that such
vacation or paid time off is not so included as a current liability in
calculating Final Closing Date Working Capital, then Seller shall reimburse
Purchaser or the Company, as the case may be, within 30 days after written
notice, for any amounts so honored or paid.
(f) ....WARN. Seller shall be responsible for providing or discharging
any and all notifications, benefits and liabilities required by the WARN Act or
by any other applicable law relating to plant closings or employee separations
or severance pay that are required to be provided before the Closing. Purchaser
shall be responsible for such notifications, benefits and liabilities that are
required to be provided after the Closing. Seller shall cooperate in
distributing any notices that Purchaser may desire to provide prior to the
Closing, in connection with actions by Purchaser after the Closing that would
result in a notice requirement under such laws.
(g)......COBRA. Seller shall retain all obligations with respect to
continued coverage under COBRA (and any similar state law), and the regulations
thereunder for all Company Employees, including all Terminated Employees (as
defined in Section 4.20), and their "qualified beneficiaries" (as defined in
Section 4980B(g)(1)(A)) who first experience a "qualifying event" (as defined in
Section 4980B(f)(3) of the Code) on or before the Closing, and shall provide
such coverage for the maximum period required pursuant to Section 4980B(f)(2)(B)
of the Code (determined without regard to subparagraph (ii) thereof).
(h)......Incentive Pay/Bonus/Deferred Compensation. On or prior to
Closing, Seller shall pay any incentive pay, bonuses, deferred compensation or
similar amounts which have accrued or which may otherwise be owed to Company
Employees prior to the Closing.
(i)......Employment of ▇▇▇▇▇▇▇ ▇▇▇▇. On or prior to Closing, Seller
shall employ ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇. ▇▇▇▇ shall have released the Company from all
Liability with respect to his employment by the Company.
4.19 Election Under Section 338(h)(10). Seller and Purchaser shall make
a joint election under Section 338(h)(10) of the Code and comparable provisions
of applicable state, local or foreign law with respect to the purchase and sale
of the Purchased Shares, and shall timely file executed copies of Internal
Revenue Form 8023, the required schedules thereto and any similar state, local
or foreign forms with the proper authorities. Within 60 days following the
Closing Date, Purchaser shall prepare and deliver to Seller a draft schedule
allocating the "aggregate deemed sales price" for purposes of Section 338(h)(10)
among the assets of the Company in accordance with the applicable Treasury
regulations. Within 30 days of its receipt of such draft allocation schedule,
Seller shall provide Purchaser with a written notice of any proposed changes
thereto, together with a detailed explanation of the basis for such proposed
changes. In the event that the parties cannot agree on an allocation schedule
within 10 days after Purchaser's receipt of Seller's notice of proposed changes,
the dispute shall be resolved by the Designated Accountants. The allocation
determined in accordance with the procedures set forth in this Section shall be
conclusive and binding upon Purchaser, the Company and Seller, and all such
Persons shall file their Tax Returns in accordance with such allocation
schedule. Seller shall cause CII to take such actions and execute such documents
as may be reasonably necessary or appropriate to cause the filing of said
Section 338(h)(10) election.
4.20 Certain Employee Terminations at Closing; ▇▇▇▇▇▇ ▇▇▇▇▇▇.
(a).....Not less than five Business Days prior to the Closing,
Purchaser will notify Seller as to which Company Employees Purchaser does not
wish to employ after the Closing ("Terminated Employees"). In making such
determinations, Purchaser agrees to comply with all applicable Law, and shall
indemnify Seller for any Liability arising out of or relating to Purchaser's
failure to so comply. Seller agrees that it will, at or prior to the Closing,
terminate the employment of each Terminated Employee and will pay to each such
Terminated Employee all severance or other benefits to which such Terminated
Employee would be required to receive upon such termination.
(b)......Not less than five Business Days prior to the Closing,
Purchaser will notify Seller as to whether Purchaser desires to continue to
retain in place that certain Agreement dated July 15, 1998 between ▇▇▇▇▇▇ ▇▇▇▇▇▇
and Alflex Corporation, as amended, in which event Purchaser shall become, or
shall cause the Company to remain, responsible for all Liabilities under such
Agreement, notwithstanding anything to the contrary in Section 4.18(a). If
Purchaser does not elect to retain such agreement, on or prior to Closing the
Company shall either assign such agreement to Seller and obtain a release of the
Company therefrom or cause such agreement to be terminated and the Company
released from all Liability thereunder. Further, in the event that Purchaser
shall elect to cause Seller to cause the Company to assign said agreement to
Seller, Seller shall use commercially reasonable efforts to enforce the
noncompete and nondisclosure provisions of such agreement.
4.21 Transfer of Seller's Interest in Mexican Subsidiary. On or prior
to Closing, Seller shall transfer to the Company Seller's entire interest in
Alflex S. de ▇.▇. de C.V. (SRL), a Mexican company formed to operate a facility
in Tecate, Mexico.
4.22 Purchaser's Obligations with Respect to Environmental Remediation.
Purchaser agrees that, in the event that it is necessary to remediate any
Environmental Matter as to which Seller is responsible to indemnify Purchaser or
the Company pursuant to clause (vii) of Section 7.2 hereof, Purchaser will
consult with Seller prior to determining the remediation to be undertaken and
shall afford Seller the right to participate in the determination of the scope,
manner and extent of such remediation; provided, however, that in the event that
Purchaser and Seller are unable to agree upon the scope, manner or extent of
such remediation, (i) Purchaser's reasonable and good faith decision as to such
matters shall ultimately control if such remediation is reasonably anticipated
to cost less than $1,000,000.00 and (ii) Seller's reasonable and good faith
decision as to such matters shall ultimately control if such remediation is
reasonably anticipated to cost $1,000,000.00 or more.
4.23 Employee Injuries Incurred Prior to Closing. Except with respect
to matters covered by Section 4.18(d), Seller agrees that it shall be and remain
Liable for any costs, expenses or Losses that may be imposed upon or incurred by
the Company or Purchaser with respect to or as a result of injuries to Seller's
employees prior to the Closing (regardless of whether such Liability for such
costs, expenses or Losses (i) arises before or after Closing or (ii) is imposed
upon the Company directly by an employee, by or through a third party, or as a
result of a worker's compensation claim). Seller agrees to pay (or, if already
paid by the Company or Purchaser, reimburse) the Company or Purchaser, as the
case may be, within 30 days after written demand for any such costs, expenses or
Losses so imposed or incurred.
4.24 Certain Environmental Agreements.
(a).....Seller shall (i) either obtain all Applicable Environmental
Permits prior to the Closing or (ii) reimburse the Company or the Purchaser, as
the case may be, for reasonable costs incurred by Purchaser or the Company to
obtain such permits after Closing.
(b) Seller acknowledges that Purchaser's environmental investigation of
Seller's Long Beach Facility has disclosed the presence of trichloroethene
("TCE"), tetrachloroethene ("PCE"), 1, 2 - dichloroethane, benzene and selenium
in quantities that, in some instances, exceed the maximum contaminant level
permitted by applicable Law (including 22 Cal. Code Regulations sections 64431
and 64444, Tables 64431-A and 64444-A). The presence of these substances in such
levels on the Long Beach Facility shall be herein referred to as the
"PCE/TCE/Selenium Environmental Condition." Without limiting Seller's other
obligations at Law or pursuant to this Agreement (including those contained in
clause (vii) of Section 7.2), Seller acknowledges and agrees that it is
obligated to the extent required by applicable law to remediate and resolve the
PCE/TCE/Selenium Environmental Condition, and Seller agrees that in furtherance
of the performance of such obligations Seller will to the extent required by
applicable law, among other things, (i) further investigate, characterize and
delineate the scope of the PCE/TCE/Selenium Environmental Condition; (ii) inform
the appropriate Governmental Authorities of the existence and extent of the
PCE/TCE/Selenium Environmental Condition, and (iii) perform such additional
investigation, groundwater monitoring, remediation, clean-up or removal actions
in connection with the PCE/TCE/Selenium Environmental Condition as may be
required by the applicable Governmental Authorities or applicable Law.
(c)......Seller agrees and warrants that it will now and hereafter
comply with all reporting requirements of applicable Governmental Authorities or
applicable Laws with respect to the PCE/TCE/Selenium Environmental Condition.
Except to the extent Purchaser reasonably believes that it has separate
reporting requirements under applicable Law, and as long as Seller diligently
pursues its obligations pursuant to this Section 4.24, Seller shall have the
right to control all communications and discussions with applicable Governmental
Authorities related to the PCE/TCE/Selenium Environmental Condition; provided,
however, that Seller shall timely advise Purchaser as to (i) Seller's
communications with such Governmental Authorities and of such Governmental
Authorities' communications to Seller regarding the PCE/TCE/Selenium
Environmental Condition, and (ii) Seller's compliance with its obligations
pursuant to this Section 4.24. In the event that Purchaser determines that it
has separate reporting requirements with respect to the PCE/TCE/Selenium
Environmental Condition, Purchaser shall, to the extent practicable, provide
Seller with advance notice of any proposed report and provide Seller with a copy
of any information proposed to be submitted to the applicable Governmental
Authority.
(d)......Subsequent to the Closing, upon reasonable notice and at
reasonable times, Purchaser will or will cause the Company to grant Seller and
its representatives reasonable access to the Long Beach Facility to enable
Seller to perform its obligations described in Section 4.24; provided, however,
that the performance by Seller of such obligations shall not interfere with the
operation of the Long Beach Facility and the conduct of the Company's or the
Purchaser's business at the Long Beach Facility. Seller shall be responsible for
obtaining, at its expense, any environmental or other Licenses as may be
required to perform such obligations; and Seller shall perform all such
obligations in compliance with all applicable Laws and shall not cause the
Company or the Purchaser to be in violation of any applicable Law. Upon the
completion of such obligations, Seller shall promptly repair and restore the
areas of the Long Beach Facility upon which investigatory, removal, clean-up or
other remediation activities were conducted to a condition approximating that
which existed thereon prior to conducting such activities. Without limiting the
generality of the foregoing, Seller will, as appropriate, abandon all borings
and ▇▇▇▇▇ in accordance with applicable Laws. Seller shall provide Purchaser and
the Company with copies of any reports, data and correspondence to and from
Governmental Authorities relating to Seller's investigatory, removal, clean-up
or other remediation activities. In performing its obligations pursuant to this
Section 4.24, Seller and its representatives will, when on the Long Beach
Facility, conform to the rules and regulations of the Company concerning health,
safety and security. Seller shall indemnify, defend and hold Purchaser and the
Company harmless from and against any and all Losses which may be asserted
against, imposed upon or incurred by Purchaser, the Company or any of their
respective agents, employees, or invitees that may result from or arise in
connection with (i) the conduct by Seller or its representatives of
investigatory, removal, clean-up or other remediation activities, or (ii) damage
to persons or property as a result of or in connection with Seller's performance
of any of its obligations contained in this Section 4.24 or any other
remediation activities.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each of the following conditions, any of which may
be waived, in whole or in part, by Purchaser for purposes of consummating such
transactions, but without prejudice to any other right or remedy which Purchaser
may have hereunder as a result of any misrepresentation by, or breach of any
agreement, covenant or warranty of, Seller contained in this Agreement or in the
Other Agreements:
5.1 Representations True and Covenants Performed at Closing. The
representations and warranties made by Seller in this Agreement and the Other
Agreements shall be true and correct in all material respects on the Closing
Date with the same force and effect as if this Agreement had been executed on
and as of the Closing Date (other than representations and warranties which are
made as of a specified date, which shall be true and correct as of such date);
provided, however, that the determination pursuant to this sentence will
disregard any materiality qualifiers in such representations and warranties.
Seller shall have duly performed or complied with in all material respects all
of the agreements and covenants to be performed or complied with by it on or
prior to the Closing Date (including agreements of Seller to cause the Company
to take or refrain from taking certain actions). Seller shall have executed and
delivered to Purchaser a certificate dated as of the Closing Date certifying as
to the fulfillment of the conditions contained in this Section 5.1.
5.2 No Injunction, Etc.. No Litigation, Law or Order shall have been
instituted, enacted or entered before any Governmental Authority to enjoin,
restrain or prohibit the consummation of the transactions contemplated hereby.
5.3 No Material Adverse Change. There shall not have occurred, between
the date of the Latest Balance Sheet and the Closing Date, any Material Adverse
Change with respect to the Company, or any condition or event which is
reasonably expected to result in such a Material Adverse Change. Seller shall
have executed and delivered to Purchaser a certificate dated as of the Closing
Date certifying as to the foregoing statement.
5.4 Opinion of Counsel. Purchaser shall have received an opinion, dated
the Closing Date, of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, special Delaware counsel to the
Seller, in the form of Exhibit A hereto.
5.5 Consents and Approvals.
(a)......There shall have been delivered to Purchaser the written
consents and approvals of Governmental Authorities and Third Parties referred to
in Section 2.2(b) hereof, which consents shall be in form, scope and substance
reasonably satisfactory to Purchaser.
(b)......All waiting periods applicable to this Agreement and the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated and neither the FTC nor the DOJ shall have sought to restrain, enjoin
or otherwise prevent the consummation of the transactions contemplated hereby.
5.6 Licenses. Purchaser shall have received all Licenses necessary to
operate the Company's business and to own and operate the assets as currently
operated by the Company or Purchaser shall have received adequate assurances
that the change in control of the Company that will be caused by the
consummation of the transactions contemplated hereby will not cause the
suspension or loss of any such License.
5.7 Delivery of Documents. Seller shall have delivered or caused to be
delivered to Purchaser the Company's minute books, stock books, stock registers,
books of account, leases and Contracts, deeds, title documents, customer lists,
and Financial Statements.
5.8 Good Standing Certificates. Purchaser shall have received the good
standing and other certificates referred to in Section 4.14 hereof.
5.9 Supply Agreement. Commonwealth Aluminum Metals, LLC shall have
executed and delivered a Supply Agreement in the form of Exhibit B hereto.
5.10 Non-Compete Agreement. Seller shall have executed and delivered to
and in favor of Purchaser a Non-Compete Agreement in the form of Exhibit C
hereto.
5.11 Resignations. Purchaser shall have received a written resignation
from each officer and director of the Company from such position effective the
Closing Date.
5.12 Title Insurance. Attached hereto as Exhibit D are the title
insurance commitments (the "Title Insurance Commitments") received by Purchaser
with respect to Company's Owned Real Property and Leased Real Property prior to
the date hereof. Seller shall have executed and delivered (or shall have caused
to be executed and delivered) as of the Closing Date such additional
documentation and instruments as Purchaser's title insurance company or
companies may require (including without limitation (i) owner's affidavits, (ii)
gap indemnities, (iii) authority documentation, and (iv) affidavits and
indemnities necessary for non-imputation purposes) in order to cause such title
company or companies to issue new title insurance policies in the name of the
Company, which (A) have an effective date not earlier than the Closing Date, (B)
contain non-imputation endorsements, and (C) are subject only to the exceptions
or defects to title set forth: (i) on Schedule B-2, with respect to the Title
Insurance Commitment for the Company's Owned Real Property, and (ii) in the
Company's existing policy of leasehold owner's title insurance issued by Chicago
Title Insurance Company and numbered 6135215, as modified by Endorsement CTI
Form 2842 attached hereto as part of Exhibit D, with respect to the Company's
Leased Real Property, excluding in all events, with respect to both the
Company's Owned Real Property and Leased Real Property, any monetary Liens
(except for the lien of any mortgage imposed on the Leased Real Property by the
owner of the fee interest in such property provided the Purchaser receives a
Subordination and Nondisturbance Agreement substantially in the form of Exhibit
E hereto).
5.13 [Intentionally Omitted.]
5.14 [Intentionally Omitted.]
5.15 Subordination and Non-Disturbance Agreements. Purchaser shall have
obtained a subordination and non-disturbance agreement substantially in the form
of Exhibit E hereto from the holder of any mortgage on any of the Company's
Leased Real Property.
5.16 Estoppel Certificates of Real Property Lessors. Seller shall have
caused to be delivered to Purchaser an estoppel certificate from the landlord of
the Company's Long Beach, California Leased Real Property substantially in the
form of Exhibit F hereto.
5.17 Evidence of Repayment of Debts. Seller shall have delivered to
Purchaser evidence of the repayment to the Company of all loans and advances and
release of all guaranties as required by Section 4.15 of this Agreement, such
evidence shall be in form, scope and substance satisfactory to Purchaser and its
counsel.
5.18 No Indebtedness or Liens. At the Closing, the Company shall have
been released of any Indebtedness for Money Borrowed and there shall be no Liens
(other than Permitted Liens) which shall continue to attach to the Company's
assets. Without limiting the generality of the foregoing, the Company shall be
released and discharged from all Liability pursuant or with respect to (i) that
certain Third Amended and Restated Credit Agreement, dated as of March 21, 2002,
as amended, among CII, Seller, the Company and other Affiliates of Seller, on
the one hand, and the Lenders named therein, on the other hand, and the
Company's assets shall have been released from any Liens securing such credit
facility, (ii) that certain Indenture, dated as of September 20, 1996, as
amended and supplemented, between CII (formerly Commonwealth Aluminum
Corporation), each of the Subsidiary Guarantors named therein (including the
Company) and ▇▇▇▇▇▇ Trust and Savings Bank, and the Company's assets shall have
been released from any Liens securing its obligations thereunder, (iii) that
certain Receivables Purchase Agreement, dated as of September 29, 1997, as
amended, among Commonwealth Financing Corp., CII, Market Street Funding
Corporation and PNC Bank, National Association, and the Company's assets shall
have been released from any Liens granted thereunder and (iv) that certain
Purchase and Sale Agreement, dated as of September 29, 1997, among the
Originators named therein (including the Company), Commonwealth Funding Corp.
and CII, and the Company's assets shall have been released from any Liens
granted thereunder.
5.19 Option to Extend Long Beach Lease. The Company shall have
delivered to Purchaser a fully executed option granting the Company the right to
amend and extend the Company's lease for its Long Beach, California Leased Real
Property, substantially in the form attached hereto as Exhibit G.
5.20 Confirmation of Guaranty. Commonwealth Industries, Inc. shall have
executed a Confirmation of Guaranty in the form of Exhibit H hereto.
5.21 Rancho ▇▇▇▇▇▇▇▇▇ Distribution Center Lease. That certain Standard
Industrial/Commercial Single-Tenant Lease (American Industrial Real Estate
Association form), dated as of June 2, 1994, between ▇▇▇▇ ▇.▇. ▇▇▇▇▇, ▇▇.
Article Third Trust-B, as landlord, and the Company (the "California
Distribution Center Lease") and that certain sublease to Quik Pick Express, LLC
(the "Quik Pick Sublease") each shall have been assigned from the Company to the
Seller, the Seller shall have assumed all liabilities and obligations of the
Company under each of the California Distribution Center Lease and the Quik Pick
Sublease, the landlord under the California Distribution Center Lease shall have
released the Company from all liabilities and obligations under the California
Distribution Center Lease, and the subtenant under the Quik Pick Sublease shall
have released the Company from all liabilities and obligations under the Quik
Pick Sublease. The preceding sentence shall not apply if the California
Distribution Center Lease and the Quik Pick Sublease shall have expired or been
terminated without Liability to the Company prior to the Closing.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions, any of which may be waived, in whole
or in part, by Seller for purposes of consummating such transactions, but
without prejudice to any other right or remedy which Seller may have hereunder
as a result of any misrepresentation by, or breach of any agreement, covenant or
warranty of, Purchaser contained in this Agreement or the Other Agreements:
6.1 Representations True and Covenants Performed at Closing. The
representations and warranties made by Purchaser in this Agreement and the Other
Agreements shall be true and correct in all material respects on the Closing
Date with the same force and effect as if this Agreement had been executed on
and as of the Closing Date (other than representations and warranties which are
made as of a specified date, which shall be true and correct as of such date);
provided, however, that the determination pursuant to this sentence will
disregard any materiality qualifiers in such representations and warranties.
Purchaser shall have duly performed or complied with in all material respects
all of the agreements and covenants to be performed or complied with by it on or
prior to the Closing Date. Purchaser shall have executed and delivered to Seller
a certificate dated as of the Closing Date certifying as to the fulfillment of
the conditions contained in this Section 6.1.
6.2 No Injunction, Etc. No Litigation, Law or Order shall have been
instituted, enacted or entered before any court or Governmental Authority to
enjoin, restrain or prohibit the consummation of the transactions contemplated
hereby.
6.3 Opinion of Counsel. Seller shall have received an opinion, dated
the Closing Date, of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to Purchaser, in
the form of Exhibit I hereto.
6.4 Payment of the Purchase Price. The Purchase Price shall have been
paid to Seller in the manner described in Article 1 hereof.
6.5 Consents and Approvals. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received by Seller. All waiting
periods applicable to this Agreement and the transactions contemplated hereby
under the HSR Act shall have expired or been terminated and neither the FTC nor
the DOJ shall have sought to restrain, enjoin or otherwise prevent the
consummation of the transactions contemplated hereby.
6.6 Supply Agreement. Purchaser shall have executed and delivered a
Supply Agreement in the form of Exhibit B hereto.
6.7 Non-Compete Agreement. Purchaser shall have executed and delivered
a Non-Compete Agreement in the form of Exhibit C hereto.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION
7.1 Survival of Representations and Warranties.
(a)......All representations, warranties, agreements and covenants made
or undertaken by Seller and Purchaser in this Agreement are material, have been
relied upon by the other parties hereto, shall survive the Closing hereunder,
shall not merge in the performance of any obligation by any party hereto, and
shall terminate and expire (i) with respect to any "General Claim" (as herein
defined) with respect to which a Claims Notice has not been given pursuant to
Section 7.4, on the second anniversary of the Closing Date, (ii) with respect to
any "Tax Claim" (as herein defined), on the date upon which the Liability to
which any such Tax Claim may relate is barred by all applicable statutes of
limitation, (iii) with respect to any "Environmental Claim" (as herein defined)
with respect to which a Claims Notice has not been given pursuant to Section
7.4, on the tenth anniversary of the Closing Date, other than Environmental
Claims relating to the PCE/TCE/Selenium Environmental Condition, which shall
survive without limit of time; and (iv) with respect to any "Ownership Claim",
"Employee Plan Claim" or "Breach of Covenant Claim" (as those terms are defined
below), such representations, warranties, covenants and agreements shall survive
without limit of time. As used in this Agreement, the following terms have the
following meanings:
(1) "General Claim" means any claim based upon, arising out of or
otherwise in connection with any matter described in clauses (i), (iii), and
(iv) of Section 7.2 and any matter described in Section 7.3, provided that a
"General Claim" shall not include any claim described in clauses (2) through (6)
of this Section 7.1.
(2) "Tax Claim" means any claim based upon, arising out of or otherwise
in connection with (i) any matter described in clause (vi) of Section 7.2 or
(ii) any inaccuracy in or breach of any representation or warranty or any breach
of any covenant or agreement contained in, made or to be performed by Seller
pursuant to this Agreement related to any Taxes, including those representations
and warranties made by Seller in Section-2.12.
(3) "Environmental Claim" means (i) any claim relating to a Loss or
matter described in clause (vii) of Section 7.2 or (ii) any claim arising out of
or otherwise in respect of any inaccuracy in any representation or warranty made
by Seller in Section 2.22.
(4) "Ownership Claim" means any claim arising out of or in respect of
any inaccuracy in any representation or warranty made by Seller in Sections 2.1
or 2.4.
(5) "Employee Plan Claim" shall mean any claim based upon, arising out
of or otherwise in connection with (i) any inaccuracy in any representation or
warranty made by Seller in Section 2.24, (ii) any breach of any covenant or
agreement contained in, made or to be performed by Seller pursuant to Section
4.18 or Section 4.20, or (iii) any Liability to any Terminated Employee (other
than Liabilities expressly excluded in Section 4.20).
(6) "Breach of Covenant Claim" shall mean any claim based upon, arising
out of or otherwise in connection with any matter described in clause (ii) of
Section 7.2.
(b)......The representations and warranties made by Seller and
contained in Article 2 of this Agreement and the representations and warranties
made by Purchaser and contained in Article 3 of this Agreement are deemed by the
parties hereto to have been made by Seller and Purchaser, as the case may be, on
and as of both the date hereof and the Closing Date with the same force and
effect as if this Agreement were executed by Seller and Purchaser on each of the
date hereof and the Closing Date. Seller acknowledges and agrees that prior to
the Closing Date, Purchaser intends to perform such investigation of the
Company, its assets and its business as it may deem necessary or appropriate;
provided, however, no investigation by Purchaser will diminish or obviate any of
the representations, warranties, covenants or agreements made or to be performed
by Seller pursuant to this Agreement or Purchaser's right to rely fully upon
such representations, warranties, covenants and agreements.
7.2 Obligation of Seller to Indemnify. Subject to the limitations
contained in Sections 7.1 and 7.7, Seller agrees to indemnify, defend and hold
Purchaser and the Company (and each of their respective officers, directors,
employees, Affiliates and assigns) harmless from and against all Losses which
may be asserted against, imposed upon or incurred by any of them by reason of,
resulting from, or in connection with the following:
(i) any inaccuracy in or breach of any representation or warranty of
Seller contained in or made pursuant to this Agreement; provided, however, that
(A) the determination of whether such an inaccuracy or breach has occurred will
disregard (I) materiality qualifiers, (II) knowledge qualifiers (other than
those involving knowledge of contemplated or threatened acts or omissions of
third parties) and (III) time limitations that limit disclosure in any
representation and warranty to acts or omissions or facts or circumstances after
a specified date; and (B) Seller shall not be required to indemnify Purchaser or
the Company with respect to any representation or warranty relating to the
collectibility of any Accounts Receivable of the Company provided that the
Seller has paid Purchaser for such uncollected Accounts Receivable pursuant to
Section 1.3(f) of this Agreement.
(ii) any breach of any covenant or agreement contained in, made, or to
be performed by Seller pursuant to this Agreement (including but not limited to
any failure of Seller (A) to perform any of its obligations pursuant to Article
4 thereof or (B) to have caused the Company to take any action or to omit to
take any action required pursuant to this Agreement);
(iii) any Undisclosed Liability;
(iv) the operation of the Company prior to the Closing Date (including
but not limited to Losses arising by reason of (A) goods and services provided
and sold by the Company prior to the Closing Date; and (B) acts or omissions of
the Company and its employees occurring prior to the Closing Date);
(v) [intentionally omitted;]
(vi) any Tax Losses; or
(vii)....any of the following conditions or occurrences: (A) any
cleanup, remedial action, or Loss arising out of any Environmental Matter
existing on or with respect to any of the Company's properties prior to the
Closing Date to the extent remediation is required or reasonably necessary to
avoid enforcement or Litigation with respect to any Environmental Law; (B) any
Environmental Litigation (including any Third Party claim for personal injury),
whether filed or commenced before or after Closing, arising out of or with
respect to an Environmental Matter or violation of an Environmental Law, which
occurred or existed on or prior to the Closing Date; (C) any transportation,
treatment, storage, disposal or recycling, on or before the Closing Date, by or
on behalf of the Company or any Affiliate of the Company of any Hazardous
Substance that is not in compliance with Environmental Law; (D) any fine or
penalty on account of, or with respect to, any violation or alleged violation of
any Environmental Law arising out of the ownership, use, condition or operation
of any of the Company's properties prior to the Closing Date; (E) any Liability
existing on or as of the Closing Date to modify, restore, change or improve any
of the Company's properties in order to effectuate compliance with any
applicable Environmental Law or environmental Order; or (F) the removal of any
and all asbestos or asbestos-containing materials which were located on any of
the Company's properties in violation of any Environmental Law on or prior to
the Closing Date. Without limiting the generality of the foregoing, and anything
to the contrary in this Agreement notwithstanding, it is the intention and
agreement of the parties hereto that Seller shall be and remain strictly Liable
with respect to any Loss to the Company or Purchaser which may result from any
Environmental Matter existing on or with respect to any of the Company's
properties in violation of any Environmental Law on or prior to the Closing Date
and any Environmental Litigation which may now exist or which may hereafter
arise with respect thereto, and that such Liability shall be strictly imposed on
Seller regardless of any investigation or environmental audit or survey that may
have been conducted by or on behalf of Purchaser prior to the Closing Date.
Since following the Closing, the Company will be owned by the
Purchaser, Seller acknowledges and agrees that (x) any Loss sustained by the
Company with respect to a matter indemnifiable pursuant to this Section 7.2 may
be recoverable against Seller by either the Company or Purchaser and (y) any
recovery against the Company by Purchaser after Closing will be against Seller
and that in no such case shall Seller have any right of reimbursement or
contribution, by subrogation or otherwise, against the Company. Further, Losses
suffered by the Company by reason of or in connection with breaches of
representations, warranties, covenants or agreements of Seller contained in or
made pursuant to this Agreement or the Other Agreements shall be specifically
actionable by the Company (as well as by Purchaser) to the same extent as if the
Company were a party to this Agreement.
7.3 Obligation of Purchaser to Indemnify. Subject to the limitations
contained in Sections 7.1 and 7.7, Purchaser agrees to indemnify, defend and
hold Seller (and each of its officers, directors, employees, Affiliates and
assigns) harmless from and against all Losses which may be asserted against,
imposed upon or incurred by any of them by reason of, resulting from, or in
connection with the following:
(i) any inaccuracy in or breach of any representation or warranty of
Purchaser contained in or made pursuant to this Agreement; and
(ii) any breach of any covenant or agreement contained in, made, or to
be performed by Purchaser pursuant this Agreement.
7.4 Notice of Loss or Asserted Liability. Promptly after (i) becoming
aware of circumstances that have resulted in a Loss for which any Person
entitled to indemnification pursuant to Section 7.2 or Section 7.3 (an
"Indemnified Party") intends to seek indemnification under either such Section,
or (ii) receipt by an Indemnified Party of written notice of any demand, claim
or circumstances which, with the lapse of time, the giving of notice or both,
would give rise to a claim or the commencement (or threatened commencement) of
any Litigation that may result in a Loss (an "Asserted Liability"), the
Indemnified Party shall give notice thereof (a "Claims Notice") to any other
party or parties obligated to provide indemnification pursuant to Section 7.2 or
Section 7.3 (an "Indemnifying Party"). The Claims Notice shall describe the Loss
or the Asserted Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary) of the Loss that has been or which may be suffered by
the Indemnified Party. The Claims Notice may be amended on one or more occasions
with respect to the amount of the Asserted Liability or the Loss at any time
prior to final resolution of the obligation to indemnify relating to the
Asserted Liability or the Loss. If a Claims Notice is not provided promptly as
required by this Section 7.4, the Indemnified Party nonetheless shall be
entitled to indemnification by the Indemnifying Party to the extent that the
Indemnifying Party is unable to establish that it has been prejudiced by such
late receipt of a Claims Notice. Notwithstanding the foregoing sentence,
however, if a Claims Notice is not provided prior to compromise or payment of
any Asserted Liability by the Indemnified Party, the Indemnified Party shall
only be entitled to indemnification by the Indemnifying Party to the extent that
the Indemnified Party is able to establish that the Indemnifying Party has not
been prejudiced by such late receipt of the Claims Notice.
7.5 Opportunity to Contest. Subject to the provisions of Section 7.6,
the Indemnifying Party may, provided that it has acknowledged its responsibility
to indemnify with respect to an Asserted Liability, elect to compromise or
contest, at its own expense and with counsel of its choice reasonably acceptable
to the Indemnified Party, such Asserted Liability. If the Indemnifying Party
elects to compromise or contest such Asserted Liability, it shall, within 30
days (or sooner, if the nature of the Asserted Liability so requires), notify
the Indemnified Party of its intent to do so by sending a notice to the
Indemnified Party (a "Contest Notice"); and, in any such event, the Indemnified
Party shall cooperate, at the expense of the Indemnifying Party, in the
compromise or contest of such Asserted Liability. If the Indemnifying Party
elects not to compromise or contest the Asserted Liability, fails to notify, in
a timely manner, the Indemnified Party of its election as herein provided or
contests its obligation to indemnify under this Agreement with respect to such
Asserted Liability, the Indemnified Party shall have the right to pay,
compromise or contest such Asserted Liability on behalf of and for the account
and risk of the Indemnifying Party. Anything in this Section 7.5 to the contrary
notwithstanding, (i) the Indemnified Party shall have the right, at its own cost
and for its own account (except as provided in Section 7.6), to compromise or
contest any Asserted Liability, and (ii) the Indemnifying Party shall not,
without the Indemnified Party's written consent, settle or compromise any
Asserted Liability or consent to entry of any judgment which does not include an
unconditional term releasing the Indemnified Party from all Liability in respect
of such Asserted Liability. In any event, the Indemnified Party and the
Indemnifying Party may participate, at their own expense, in the contest of such
Asserted Liability. Seller and Purchaser shall cooperate fully with each other
as to all Asserted Liabilities, shall make available to each other as reasonably
requested all information, records, and documents relating to all Asserted
Liabilities and shall preserve all such information, records, and documents
until the termination of any Asserted Liability. Seller and Purchaser also shall
make available to each other, as reasonably requested, their respective
personnel, agents, and other representatives who are responsible for preparing
or maintaining information, records, or other documents, or who may have
particular knowledge with respect to any Asserted Liability.
7.6 Disputes with Customers or Suppliers; Equitable Relief.
(a) Anything in Section 7.5 to the contrary notwithstanding, except as
provided in Section 1.3(f), in the case of any Asserted Liability by any present
customer of the Company in connection with which Purchaser or the Company may
make a claim hereunder against Seller for indemnification pursuant to Section
7.2:
(i) Purchaser or the Company (as Purchaser may determine) shall have
the exclusive right, at its option, to negotiate and compromise, at its own
expense, any such Asserted Liability, subject to the duty of Purchaser to
consult with the Indemnifying Party and its attorneys in connection with such
negotiation and compromise and provided that no such matter shall be compromised
by Purchaser (other than compromises at Purchaser's expense and for its account)
without the prior consent of the Indemnifying Party, which consent shall not be
unreasonably withheld; and
(ii) in the event that any such Asserted Liability shall result in
litigation, Seller shall have the right, at its option, to defend, at its own
expense, such Asserted Liability on the same basis as is set forth in Section
7.5.
All Losses incurred (other than Purchaser's expenses) in connection
with any such Asserted Liability pursuant to the determination of any court,
Governmental Authority or arbitrator, and all amounts required to be paid in
connection with any such compromise or settlement consented to by the
Indemnifying Party, shall be borne and paid by the Indemnifying Party.
(b) Anything in Section 7.5 to the contrary notwithstanding, the
Indemnifying Party shall not be entitled to assume the defense of any Asserted
Liability (and shall be liable for the fees and expenses of counsel reasonably
acceptable to Indemnifying Party incurred by the Indemnified Party in defending
such Asserted Liability) if the Asserted Liability seeks an order, injunction or
other equitable relief against the Indemnified Party that would materially
adversely affect the business of the Company. The Indemnifying Party shall also
be entitled to participate in the defense of such claim at its own expense.
Notwithstanding the foregoing, if such claim for an order, injunction or other
equitable relief can be so separated from other claims, if any, included in such
Asserted Liability, then if such other claims are, in fact, so separated, the
Indemnifying Party shall be entitled to assume the defense of such other claims.
7.7 Limitations on Indemnification.
(a)......Pursuant to Section 7.2, Seller shall not be required to
indemnify Purchaser, the Company or the other Persons specified in Section 7.2
with respect to a Loss related to a General Claim unless the amount of such
Loss, when aggregated with all other such Losses of Purchaser, the Company and
such other Persons, shall exceed $250,000 (the "Minimum Aggregate Liability
Amount") at which time the Indemnified Party or Parties may claim
indemnification for all Losses theretofore incurred including the Minimum
Aggregate Liability Amount; provided, however, that the foregoing Minimum
Aggregate Liability Amount shall not apply to any Loss which results from or
arises out of fraud, intentional misrepresentation or an intentional breach of
warranty on the part of Seller in this Agreement.
(b)......Notwithstanding Section 7.7(a), Seller shall be required to
indemnify all Indemnified Parties specified in Section 7.2 for each dollar of
Loss arising out of any Tax Claim, Environmental Claim, Ownership Claim,
Employee Plan Claim and Breach of Covenant Claim.
(c)......No party otherwise entitled to indemnification under this
Agreement shall be indemnified pursuant to this Agreement to the extent that
such party's Losses are increased or extended by the willful misconduct,
violation of Law or bad faith of such party.
(d)......The maximum aggregate liability of Seller pursuant to this
Article 7 shall be as follows:
(i) For Environmental Claims, except as provided below - $20,000,000
(ii) For General Claims - $18,000,000 with respect to any Claims Notice
given during the first 12 months following the Closing Date and $9,000,000 with
respect to any Claims Notice given thereafter.
There shall be no limit on the Seller's liability for (A) Tax Claims,
(B) Ownership Claims, (C) Employee Plan Claims or (D) Breach of Covenant Claims
(including without limitation Seller's obligations contained in Section 4.24).
Notwithstanding the foregoing, in the event that any Loss results from or arises
out of fraud, intentional misrepresentation or an intentional breach of warranty
on the part of Seller, there shall be no limitation on the amount of Seller's
Liability for any claim arising out of such fraud, intentional misrepresentation
or an intentional breach of warranty.
(e)......Pursuant to Section 7.3, Purchaser shall not be required to
indemnify Seller or the other Persons specified in Section 7.3 with respect to a
Loss related to a General Claim unless the amount of such Loss, when aggregated
with all other such Losses of Seller and such other Persons, shall exceed
Minimum Aggregate Liability Amount, at which time the Indemnified Party or
Parties may claim indemnification for all Losses theretofore incurred including
the Minimum Aggregate Liability Amount; provided, however, that the foregoing
Minimum Aggregate Liability Amount shall not apply to any Loss which results
from or arises out of fraud, intentional misrepresentation or an intentional
breach of warranty on the part of Purchaser in this Agreement.
(f)......The maximum aggregate liability of Purchaser pursuant to this
Article 7 shall be $18,000,000 with respect to any Claims Notice given during
the first 12 months following the Closing Date and $9,000,000 with respect to
any Claims Notice given thereafter.
7.8 Subrogation Rights. In the event that the Indemnifying Party shall
be obligated to indemnify the Indemnified Party pursuant to this Article 7, the
Indemnifying Party shall, upon payment of such indemnity in full, be subrogated
to all rights of the Indemnified Party with respect to the Loss to which such
indemnification relates; provided, however, that the Indemnifying Party shall
only be subrogated to the extent of any amount paid by it pursuant to this
Article 7 in connection with such Loss; and further provided, that no such right
of subrogation shall arise in favor of an Indemnifying Party if such right would
give such Indemnifying Party the right to be reimbursed or further indemnified
by the Company.
7.9 Adjustment of Purchase Price. For Tax and basis purposes only, any
payments of indemnification made pursuant to this Article 7 shall represent a
retrospective adjustment to the Purchase Price.
7.10 Indemnification Payments. Subject to the terms hereof, an
Indemnifying Party shall pay to the Indemnified Party (i) the full amount of any
and all Losses (other than Losses resulting from an Asserted Liability) under
this Article 7, either (A) within ten days after receipt of the Claims Notice
thereof or (B) if the Indemnifying Party contests its obligation to pay such
Loss, within ten days after such Loss shall have been finally determined to be
payable (by adjudication, settlement or otherwise) and (ii) the full amount of
any Loss resulting from an Asserted Liability within ten days after the date
that any Litigation with respect to such Asserted Liability, is finally
terminated (by adjudication, settlement or otherwise). If any such payment is
not made within such applicable ten-day period, the amount so unpaid shall bear
interest from the date such payment was due until the date paid at a rate equal
to the lesser of twelve percent (12%) per annum or the then applicable legal
rate for unpaid judgments.
7.11 Sole and Exclusive Remedy. If the Closing occurs, the
indemnification provided in this Article 7 shall be the exclusive remedy of any
party in respect of inaccuracy in any representations and warranties contained
herein.
ARTICLE 8
TERMINATION
8.1 Method of Termination. This Agreement and the transactions
contemplated by it may be terminated at any time prior to the Closing Date:
(a)......By the mutual consent of Seller and Purchaser at any time;
(b)......By Seller, upon a breach of or failure to perform in any
material respect any representation, warranty, covenant or agreement on the part
of Purchaser set forth in this Agreement, such that the conditions set forth in
Article 6 of this Agreement cannot be satisfied on or prior to August 31, 2004;
(c)......By Purchaser, upon a breach of or failure to perform in any
material respect any representation, warranty, covenant or agreement on the part
of Seller set forth in this Agreement, such that the conditions set forth in
Article 5 of this Agreement cannot be satisfied on or prior to August 31, 2004;
(d)......By Purchaser at any time, if Purchaser determines in good
faith that there has occurred any Material Adverse Change, or any condition or
event which is reasonably expected to result in a Material Adverse Change, with
respect to the Company, if Seller and Company do not cure such Material Adverse
Change or conditions or event within 30 days after notice thereof;
(e)......By Purchaser, pursuant to Section 1.3(d); or
(f)......By Seller or Purchaser, if the Closing shall not have occurred
on or prior to August 31, 2004.
8.2 Notice of Termination. Notice of termination of this Agreement, as
provided for in this Article 8, shall be given by the party so terminating to
the other parties hereto in accordance with Section 10.1 of this Agreement.
8.3 Effect of Termination. In the event of a termination of this
Agreement pursuant to Section 8.1 hereof, this Agreement, other than Section
4.4, shall become void and of no further force and effect, and each party shall
pay the costs and expenses incurred by it in connection with this Agreement, and
no party (or any of its agents, counsel, representatives, Affiliates or assigns)
shall be liable to any other party for any Loss hereunder. It is agreed that
time is of the essence in the performance and satisfaction of this Agreement and
each of the conditions specified in Articles 5 and 6 of this Agreement are
material for purposes of this Agreement.
8.4 Risk of Loss. Seller assumes all risk of condemnation, destruction
or Loss due to fire or other casualty from the date of this Agreement until the
Closing.
ARTICLE 9
DEFINITIONS
The following terms (in their singular and plural forms as appropriate)
as used in this Agreement shall have the meanings set forth below unless the
context requires otherwise:
"Accounts Receivable" shall mean and include all accounts receivable,
notes receivable and other monies due to the Company for sales and deliveries of
goods, performance of services and other business transactions (whether or not
on the books of the Company).
"Adjusted PP&E Adjustment Amount" shall have the meaning ascribed to it
in Section 1.3(e).
"Adjusted Working Capital Adjustment Amount" shall have the meaning
ascribed to it in Section 1.3(e).
"Affiliate" shall mean, with respect to any Person, any other Person
(i) who is an officer, director or manager of such first Person, (ii) who owns,
directly or indirectly, ten percent or more of the equity or ownership interests
in such first Person, or (iii) who, directly or indirectly, controls, is
controlled by, or is under common control with such first Person. For purposes
of this definition, "control", when used with respect to any 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; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Agreement" shall mean this Stock Purchase Agreement, including the
Exhibits and Schedules delivered pursuant hereto or referred to herein.
"Applicable Environmental Permits" shall mean and include all permits
required by any Environmental Law applicable to the Company's Real Property or
operations, including but not limited to the following (to the extent required
by any such Environmental Law):
(i) In California - a Spill Prevention Control & Counter-Measures Plan;
and
(ii) In North Carolina - a Storm Water Discharge Permit, a Spill
Prevention Control & Counter-Measures Plan, a Storm Water Pollution Prevention
Plan, and an Air Emissions Permit.
"Asserted Liability" shall have the meaning ascribed to it in Section
7.4.
"Base Purchase Price" shall have the meaning ascribed to it in Section
1.2.
"Breach of Covenant Claim" shall have the meaning ascribed to it in
Section 7.1.
"Business Day" shall mean and include any day other than a Saturday,
Sunday or any other day on which banks in Atlanta, Georgia, Louisville, Kentucky
or New York, New York are authorized or required to be closed.
"California Distribution Center Lease" shall have the meaning ascribed
to it in Section 5.21.
"CII" shall mean Commonwealth Industries, Inc., a Delaware corporation.
"Closing" shall mean the consummation of the transactions contemplated
by this Agreement and shall be deemed to have occurred at 11:59 P.M. on the date
of receipt of the Purchase Price by Seller and satisfaction or waiver of the
conditions precedent contained in Articles 5 and 6.
"Closing Date" shall mean the date on which the Closing occurs.
"Closing Date Estimated PP&E" shall have the meaning ascribed to it in
Section 1.3(a).
"Closing Date Estimated Working Capital" shall have the meaning
ascribed to it in Section 1.3(c).
"Closing Date PP&E Adjustment Amount" shall mean the difference, if
any, between $14,306,000 and the Company's Closing Date Estimated PP&E
determined as provided in Section 1.3(a).
"Closing Date Working Capital Adjustment Amount" shall mean the
difference, if any, between $29,729,000 and the Company's Closing Date Estimated
Working Capital determined as provided in Section 1.3(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985, as codified at section 4980B of the Code and section 601 et seq. of
ERISA, and the rules and regulations promulgated thereunder.
"Company" shall mean Alflex Corporation, a Delaware corporation.
"Collection Period" shall have the meaning ascribed to it in Section
1.3(f).
"Common Stock" shall mean the common stock of the Company, par value
$0.01 per share.
"Company Employee" shall mean and include any (i) employee of the
Company or any other person performing services for the Company; (ii) former
employee of the Company or any other person formerly performing services for the
Company; or (iii) beneficiary of anyone described in clauses (i) or (ii) above.
"Company Plan" shall mean and include any Employee Plan for the benefit
of Company Employees.
"Computer Software and Databases" shall mean and include all computer
software, computer programs and electronic databases, including Internet web
sites of the Company (as such items have been updated, corrected, enhanced,
replaced and modified), and all documentation related thereto.
"Contest Notice" shall have the meaning ascribed to it in Section 7.5.
"Contract" shall mean and include any written or oral contract,
mortgage, deed of trust, bond, indenture, lease, sublease, license, note,
certificate, option, warrant, right, or other instrument, document or agreement.
"Controlled Group Liability" shall mean and include any Liability
arising under or with respect to any Employee Plan.
"Current Employee" shall have the meaning ascribed to it in Section
4.18(a).
"Default" shall mean and include (1) a breach of, or default under, any
Contract or License, (2) the occurrence of an event that, with the passage of
time or the giving of notice or both, would constitute such a breach or default,
or (3) the occurrence of an event that, with or without the passage of time or
the giving of notice or both, would give rise to a right to terminate, change
the terms of, or renegotiate, any Contract or License or to accelerate,
increase, or impose any Liability under any Contract or License, or create a
Lien upon any property or asset.
"Designated Accountants" shall mean KPMG LLP or such other accounting
firm that may hereafter be mutually agreed upon by the parties hereto.
"DOJ" shall mean the Antitrust Division of the United States Department
of Justice.
"DOL" shall mean the United States Department of Labor.
"Employee Plan" shall mean and include all employee benefit plans (as
defined by section 3(3) of ERISA) and any other profit sharing, pension, cash
balance, compensation, deferred compensation, stock option, stock purchase,
incentive, fringe benefit, severance, post-retirement, scholarship, disability,
sick leave, vacation, individual employment, consulting or compensation,
commission, bonus, payroll practice, retention or other plan, agreement, policy,
trust fund or arrangement maintained, sponsored, participated in or contributed
to by the Company or any ERISA Affiliate at any time preceding the Closing Date
or that has been approved by the Company or any ERISA Affiliate before the
Closing Date but is not yet effective, or with respect to which the Company or
any ERISA Affiliate has any Liability or other obligation at any time preceding
the Closing Date. Without limiting the generality of the foregoing, "Employee
Plan" shall include that certain Employment Agreement, dated July 15, 1998,
between Alflex Corporation and ▇▇▇▇▇▇ ▇▇▇▇▇▇, as amended.
"Employee Plan Claim" shall have the meaning ascribed to it in clause
(5) of Section 7.1(a).
"Environmental Claim" shall have the meaning ascribed to it in clause
(3) of Section-7.1(a).
"Environmental Laws" shall mean and include all Laws relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata). Without
limiting the generality of the foregoing, "Environmental Laws" shall include the
Comprehensive Environmental Response Compensation and Liability Act, as amended,
42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act as
amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases or threatened releases of any Hazardous Substance, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any Hazardous Substance.
"Environmental Litigation" shall mean and include any Litigation
against the Company or any of its assets (including written or oral notices
alleging or asserting responsibility or Liability for investigatory costs,
cleanup costs, private or governmental response or remedial costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based upon, or resulting from (i) any Environmental Matter, or (ii) any
violation of any Environmental Law.
"Environmental Matter" shall mean and include any matter or
circumstances arising out of (i) the emission, discharge, disposal, release or
threatened release of any Hazardous Substance into the environment, or (ii) the
treatment, storage, recycling or other handling of any Hazardous Substance,
(iii) the disposal or discharge of materials into waters of the United States,
or (iv) the presence of any Hazardous Substance, including asbestos, in any
building, structure or workplace or on any Real Property.
"ERISA" shall mean Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean and include any trade or business, whether
or not incorporated, other than the Company, that has employees who are or have
been on any date within the six years preceding the Closing Date treated,
pursuant to section 4001(a)(14) of ERISA or section 414 of the Code, as
employees of a single employer that includes the Company.
"Final Closing Date PP&E" shall have the meaning ascribed to it in
Section 1.3(e).
"Final Closing Date Working Capital" shall have the meaning ascribed to
it in Section 1.3(e).
"Financial Statements" shall mean and include (i) the unaudited balance
sheet of the Company as of March 31, 2004, and the related statements of income
for the three month period then-ended, and (ii) the unaudited balance sheets of
the Company as of December 31, 2001, December 31, 2002 and December 31, 2003 and
the related statements of income for each of the fiscal years
then-ended.
"FMLA" shall mean the Family Medical Leave Act of 1993, as amended, and
the rules and regulations promulgated thereunder.
"FTC" shall mean the United States Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"General Claim" shall have the meaning ascribed to it in clause (1) of
Section-7.1(a).
"Governmental Authority" shall mean and include any federal, state,
county, local, foreign or other governmental or public agency, instrumentality,
court, commission, authority, board or body or any executive authority.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, 15-U.S.C.A. title 18(a), as amended, and the rules and regulations
promulgated thereunder.
"Hazardous Substance" shall mean and include (i) any hazardous
substance, hazardous material, hazardous waste, regulated substance or toxic
substance (as those terms are defined by any applicable Environmental Law) and
(ii) any chemicals, pollutants, contaminants, petroleum, petroleum products, or
oil.
"Immigration Laws" shall have the meaning ascribed to it in Section
2.30.
"Improvements" shall mean and include all buildings, structures,
fixtures and other improvements included in any Real Property.
"Indebtedness," with respect to any Person, shall mean and include all
obligations which, in accordance with GAAP, should be classified on a balance
sheet of such Person as liabilities, and in any event shall include (a)-all
indebtedness of such Person for (i) borrowed money or (ii) the deferred purchase
price of property, (b)-all obligations of such Person evidenced by notes, bonds,
debentures, guarantees, reimbursement agreements, or other similar instruments,
(c)-all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person,
(d)-all obligations of such Person as lessee under leases that have been or
should be, in accordance with GAAP, recorded as capital leases, and (e)-all
obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities.
"Indebtedness for Money Borrowed" shall mean all Indebtedness included
in clause (a) or (b) of the definition thereof.
"Indemnified Party" shall have the meaning ascribed to it in Section
7.4.
"Indemnifying Party" shall have the meaning ascribed to it in Section
7.4.
"Intellectual Property" shall mean and include all (i) patents and
pending patent applications together with any and all continuations, divisions,
reissues, extensions and renewals thereof, (ii) trade secrets, know-how,
inventions, designs, formulae and processes, whether trade secrets or not, (iii)
trade names, trademarks, service marks, Internet domain names, logos, domain
names, assumed names, brand names and all registrations and applications
therefor together with the goodwill of the business symbolized thereby, (iv)
copyrights and any registrations and applications therefor, (v) technology
rights and licenses, and (vi) all other intellectual property owned by,
registered in the name of, or used in the business of a Person or in which a
Person or its business has any interest.
"Inventory" shall mean and include all inventories of raw materials,
supplies, purchased parts to be incorporated in finished products, operating
parts and supplies, work-in-process, finished products, advertising materials,
and other inventories.
"IRS" shall mean the Internal Revenue Service of the United States of
America.
"Knowledge," with respect to any Person, shall mean such information
either actually known by such Person or which such Person reasonably should have
known had such Person, in the exercise of reasonable care and diligence under
the circumstance, made reasonable inquiry. Whenever "Knowledge" refers or
relates to Seller's Knowledge, it shall include knowledge of the matter in
question possessed by any Person who is an officer, director or managerial
employee of the Company or CII.
"Large Customer" shall have the meaning ascribed to it in Section 2.26.
"Large Supplier" shall have the meaning ascribed to it in Section 2.26.
"Latest Balance Sheet" shall mean the latest balance sheet of the
Company included in the Financial Statements.
"Law" shall mean and include any code, law, Order, ordinance,
regulation, rule, or statute of any Governmental Authority.
"Leased Personal Property" shall mean and include all Personal Property
that a Person either uses or has the right to use but that is not owned by such
Person.
"Leased Real Property" shall mean and include all Real Property that a
Person either occupies or uses or has the right to occupy or use but that is not
owned by such Person.
"Liability" shall mean and include any direct or indirect, primary or
secondary, liability, Indebtedness, obligation, penalty, expense (including
costs of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills and
checks presented to banks for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute, contingent, liquidated,
unliquidated, matured, unmatured or otherwise.
"License" shall mean and include any license, franchise, notice,
permit, easement, right, certificate, authorization, approval or filing that is
binding on any Person or its assets.
"Lien" shall mean and include any mortgage, deed of trust, deed to
secure debt, lien, pledge, hypothecation, attachment, levy, charge, conditional
sale agreement, title retention or other security interest or encumbrance of any
kind or nature whatsoever on, or with respect to, any property or property
interest.
"Listed Contracts" shall have the meaning ascribed to it in Section
2.25(b).
"Litigation" shall mean and include any lawsuit, action, claim,
arbitration or other legal proceeding (including governmental investigations or
criminal prosecutions) and notices (oral or written) received, threatening or
advising as to any of the foregoing proceedings. Without limiting the generality
of the foregoing, "Litigation" shall include any form of notification from a
Third Party to the effect that the recipient of such notification may be
violating or infringing upon the Intellectual Property rights of such Third
Party.
"Long Beach Facility" shall mean that certain facility operated by the
Company in Long Beach, California and commonly known as ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Loss" shall mean and include any loss, Liability, obligation, claim,
demand, lawsuit, action, assessment, damage (including punitive, exemplary,
consequential, lost profits and business interruption), or expenses whatsoever
(including interest, penalties, fines, attorneys' fees and expenses (including
those incurred to enforce rights to indemnification hereunder, and consultant's
fees and other costs of defense or investigation), and interest on amounts
payable as a result of any of the foregoing.
"Material Adverse Change" or "Material Adverse Effect" shall mean, with
respect to any Person, any material adverse change in or effect upon (i) the
business, operations, assets, Liabilities, condition (financial or otherwise),
or results of operations of such Person, or (ii) the ability of such Person to
perform any of its obligations under this Agreement or any of the Other
Agreements to which it is or will be a party, if such change or effect
materially impairs the ability of such party to perform its obligations
hereunder or thereunder, taken as a whole. Without limiting the generality of
the foregoing, any act of terrorism, any outbreak of war, or any consequence
thereof that materially adversely affects the ability of the Company or
Purchaser to operate any of the Real Property or Personal Property of the
Company shall be deemed to be a Material Adverse Change or shall be deemed to
have a Material Adverse Effect, as the case may be, upon Purchaser or the
Company. Notwithstanding the foregoing, "Material Adverse Change" and Material
Adverse Effect" shall not include any change or effect resulting from (A) the
taking of any action contemplated by this Agreement (B) changes in general
economic or political conditions (including (except as provided in the preceding
sentence) any effect that acts of terrorism or outbreak of war may have upon
such conditions) or legal, governmental or regulatory factors affecting Persons
engaged in the electrical flexible conduit or prewired armor cable businesses
generally, or (C) the loss of less than 25% of the revenue from the Company's
sale agents or distributors or any other non-material effect resulting from the
announcement of this Agreement.
"Minimum Aggregate Liability Amount" shall have the meaning ascribed to
it in Section-7.7.
"Non-Compete Agreement" shall mean an agreement substantially in the
form attached as Exhibit C hereto.
"Order" shall mean and include any decree, injunction, judgment, order
(including any executive order), ruling, writ, quasi-judicial decision or award
or administrative decision or award of any federal, state, local, foreign or
other court, arbitrator, mediator, tribunal, administrative agency or
Governmental Authority to which any Person is a party or that is or may be
binding on any Person or its securities, assets or business.
"Other Agreements" shall mean and include the agreements, documents,
assignments and instruments (including the Supply Agreement and the Non-Compete
Agreement) to be executed and delivered by the Company, Seller, or Purchaser
pursuant to or in connection with this Agreement.
"Owned Personal Property" shall mean and include all Personal Property
other than Leased Personal Property.
"Owned Real Property" shall mean and include all Real Property other
than Leased Real Property.
"Ownership Claim" shall have the meaning ascribed to it in clause (4)
of Section-7.1(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PCE/TCE/Selenium Environmental Condition" shall have the meaning
ascribed to it in Section 4.24(b).
"Performance Bonds" shall have the meaning ascribed to it in Section
2.20.
"Permitted Liens" shall mean and include (i) Liens for current real
property Taxes not yet due and payable, (ii) Liens that do not effect the value
or use of the property subject thereto, (iii) Liens, if any, relating to
Purchaser's financing to which the Company's assets are contemplated to be
subject at Closing and (iv) any other Liens which may be approved by Purchaser.
"Person" shall mean and include any individual, partnership,
association, corporation, joint venture, trust, limited liability company,
unincorporated organization or any other entity (including a Governmental
Authority).
"Permitted Exceptions" shall have the meaning ascribed to it in Section
5.12.
"Personal Property" shall mean, collectively, all of the personal
property or interests therein owned, leased, used or controlled by a Person
including, without limitation, machinery, tools, equipment (including office
equipment and supplies), furniture, furnishings, fixtures, vehicles, leasehold
improvements, and all other tangible personal property other than Inventory
(which is specifically excluded from Personal Property).
"Pre-Closing Receivables" shall have the meaning ascribed to it in
Section 1.3(f).
"Property, Plant & Equipment" shall mean and include all of those items
which, in accordance with GAAP, would be classified on a corporation's balance
sheet as property, plant and equipment. An example of the calculation of the
Company's Property, Plant & Equipment, assuming that the Closing Date took place
on January 31, 2004, is set forth on Exhibit J attached hereto.
"Property, Plant & Equipment Adjustment Amount" shall mean the
difference, if any, between $14,306,000 and the net book value of the Company's
Property, Plant & Equipment on the Closing Date determined as provided in
Section 1.3.
"Purchase Price" means the total consideration to be paid to Seller by
Purchaser for the purchase of the Purchased Shares pursuant to this Agreement
and which shall be calculated and paid in accordance with Article 1 of this
Agreement.
"Purchased Shares" shall mean the 1,000 shares of the Company's Common
Stock that are issued and outstanding on the date hereof.
"Purchaser Savings Plan" shall have the meaning ascribed to it in
Section 4.17(c).
"Purchaser's Welfare Plan" shall have the meaning ascribed to it in
Section 4.18(d).
"Quik Pick Sublease" shall have the meaning ascribed to it in Section
5.21.
"Real Property" shall mean, collectively, all the real property or
interests therein owned, leased, occupied, used or controlled by a Person,
together with (i) all rights, easements, tenements, hereditaments,
appurtenances, privileges, immunities, mineral rights and other benefits
belonging or appertaining thereto, (ii) all buildings, structures, fixtures and
other improvements located thereon, (iii) all right, title and interest, if any,
of any Person in and to (A) any land lying in the bed of any adjoining street
(B) any abutting or adjoining strips and rights-of-way and (C) any
condemnations, property damage or other award made or proposed to be made with
respect thereto. Without limiting the generality of the foregoing the term "Real
Property" shall include all Owned Real Property and all Leased Real Property.
"Related Person" shall mean and include, with regard to any natural
Person, his ancestors, descendants or siblings, any Persons married to any of
such individuals and any trustees or other fiduciaries acting for such Person's
benefit or for the benefit of any such individual.
"SEC" shall mean the United States Securities and Exchange Commission.
"Seller" shall mean CI Holdings, LLC, a Delaware limited liability
company.
"Subsidiary" shall mean any Person of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such Person is, at the time of determination, directly
or indirectly owned or controlled by another Person, or by any one or more
Subsidiaries of such other Person, or by such other Person and one or more of
its Subsidiaries or Affiliates.
"Tax" shall mean and include any federal, state, county, local, foreign
or other tax, assessment, charge, deficiency, fee, or imposition (including all
income, unemployment compensation, social security, payroll, sales, use, excise,
privilege, property, ad valorem, franchise, license, school or other tax or
similar governmental charge or imposition), plus all interest and penalties
thereon or with respect thereto, whether disputed or not.
"Tax Claim" shall have the meaning ascribed to it in clause (2) of
Section-7.1(a).
"Tax Losses" shall mean and include (i) any Taxes relating to the
Company, its assets or operations for or with respect to any period up to and
including the Closing Date, which are or will be required to be paid by the
Company after the Closing Date (including amounts for which the Company may be
liable pursuant to or in connection with any consolidated tax return of the
Seller or any of Seller's Affiliates in which the Company may have been
included) and (ii) any increases in Taxes of the Company relating to any period
after the Closing Date arising out of or in connection with any breach or
inaccuracy in any representation or warranty or any breach of any covenant or
agreement made or to be performed by Seller pursuant to this Agreement
(including the failure of Seller or its ultimate parent entity to take any of
the actions required by Section 4.19 [Section 338(h)(10) Election]). For
purposes of the preceding sentence, Taxes paid by the Company shall include
amounts offset by a taxing authority against any claim, refund or credit
otherwise due the Company.
"Tax Returns" shall mean and include all returns, reports, filings,
declarations and statements relating to Taxes that are required to be filed,
recorded, or deposited with any Governmental Authority, including any attachment
thereto or amendment thereof.
"Terminated Employee" shall have the meaning ascribed to it in Section
4.20.
"Third Party" or "Third Parties" shall mean and include any Person that
is not the Purchaser or the Seller, or an Affiliate of Purchaser or Seller.
"Title Insurance Commitments" shall have the meaning ascribed to it in
Section 5.12.
"Transition Employees" shall have the meaning ascribed to it in Section
4.17(a).
"Undisclosed Liability" shall mean and include any Liability that is
not fully reflected or reserved against in the Financial Statements or fully
disclosed in a Schedule.
"VEBA" shall mean any voluntary employees' beneficiary association
within the meaning of section 501(c)(9) of the Code.
"WARN Act" shall have the meaning ascribed to it in Section 2.27.
"Working Capital" shall mean the excess of current assets over current
liabilities, with current assets and current liabilities having the normal
meaning ascribed to such terms by GAAP; provided, however, that for purposes of
calculating Working Capital, (i) the Inventory component of Working Capital
shall be valued at the lower of the Company's cost therefor or at the
then-current market value thereof and shall not include items that are obsolete
or unmerchantable, (ii) no deduction for bad debts shall be made and (iii)
Working Capital shall not include any amount for workers compensation
liabilities or Employee Plans to the extent that such liabilities are retained
by Seller. An example of the calculation of the Company's Working Capital,
assuming that the Closing Date took place on January 31, 2004, is set forth on
Exhibit J attached hereto. The current assets and current liabilities included
in the calculation of Working Capital shall be of the types and calculated
consistently with those current assets and current liabilities set forth on
Exhibit J.
"Working Capital Adjustment Amount" shall mean the difference, if any,
between $29,729,000 and the Company's Final Closing Date Working Capital
determined as provided in Section 1.3.
ARTICLE 10
MISCELLANEOUS
10.1 Notices.
(a)......All notices, requests, demands and other communications
hereunder shall be either (i) delivered in person, (ii) mailed by registered or
certified mail, return receipt requested, with first class postage prepaid and
properly addressed, (iii) sent by overnight courier service, or (iv) sent by
facsimile and, in each case, addressed as follows:
If to Seller:
CI Holdings, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
PNC Plaza - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with copies to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser:
Southwire Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b)......All notices, requests, instructions or documents given to any
party in accordance with this Section 10.1 shall be deemed to have been given
(i) on the date of receipt, if delivered by hand, if sent by overnight courier
service, or if sent by facsimile, or (ii) on the date that is three Business
Days after mailing, if mailed in the manner described and addressed as set forth
above.
(c)......Any party hereto may change its address specified for notices
herein by designating a new address by notice given in accordance with this
Section 10.1.
10.2 Entire Agreement. This Agreement, the Schedules, the Exhibits and
the Other Agreements constitute the entire agreement between the parties
relating to the subject matter hereof and thereof and supersede all prior oral
and written understandings, all contemporaneous oral negotiations and
discussions, and all other writings and agreements relating to the subject
matter of this Agreement.
10.3 Modifications, Amendments and Waivers.
(a)......At any time prior to or subsequent to the Closing, the parties
hereto may, by mutual written agreement and in no other manner, (a) extend the
time for the performance of any of the obligations or other acts of the parties
hereto other than the conditions contained in Articles 5 and 6, the time for
completion of which may be extended unilaterally or which may be waived
unilaterally by Purchaser and Seller, respectively, (b) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant hereto, (c) waive compliance with any of the
covenants or agreements contained in this Agreement, or (d) make any other
modifications of this Agreement approved by each of the parties hereto.
(b)......The failure or delay of any party at any time or times to
require performance of any provision of this Agreement shall in no manner affect
its right to enforce that provision. No single or partial waiver by any party of
any condition of this Agreement, or the breach of any term, agreement or
covenant or the inaccuracy of any representation or warranty of this Agreement,
whether by conduct or otherwise, in any one or more instances shall be construed
or deemed to be a further or continuing waiver of any such condition, breach or
inaccuracy or a waiver of any other condition, breach or inaccuracy.
10.4 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the parties hereto, and
their respective successors and assigns, but no assignment shall relieve any
party of such party's obligations hereunder. This Agreement cannot be assigned
by any party without the prior written consent of the other party hereto.
10.5 Table of Contents; Captions; References. The table of contents and
the captions and other headings contained in this Agreement as to the contents
of particular articles, sections, paragraphs or other subdivisions contained
herein are inserted for convenience of reference only and are in no way to be
construed as part of this Agreement or as limitations on the scope of the
particular articles, sections, paragraphs or other subdivisions to which they
refer and shall not affect the interpretation or meaning of this Agreement. All
references in this Agreement to "Section," "Subsection" or "Article" shall be
deemed to be references to a Section, Subsection or Article of this Agreement.
10.6 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the substantive Laws of the State of Delaware,
without regard to choice of Law rules.
10.7 Pronouns. All pronouns used herein shall be deemed to refer to the
masculine, feminine or neuter gender as the context requires.
10.8 Severability. Should any one or more of the provisions of this
Agreement be determined to be invalid, illegal or unenforceable, such invalid,
illegal or unenforceable provisions shall be deemed severed herefrom, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby. To the extent such determination
is reasonably likely to give rise to a Material Adverse Effect upon any party
hereto, the parties shall endeavor in good faith to replace the invalid, illegal
or unenforceable provisions with valid provisions, the economic effect of which
comes as close as practicable to that of the invalid, illegal or unenforceable
provisions.
10.9 Remedies Not Exclusive. Except as otherwise provided in Section
7.11, no remedy conferred by any of the specific provisions of this Agreement is
intended to be, nor shall it be, exclusive of any other remedy available at law,
in equity or otherwise.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
counterparts shall together constitute one and the same instrument.
10.11 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Purchaser or Seller,
whether under any rule of constitution or otherwise. No party to this Agreement
shall be considered the draftsman. On the contrary, this Agreement has been
reviewed, negotiated and accepted by all parties and their attorneys and shall
be construed and interpreted according to the ordinary meaning of the words used
so as fairly to accomplish the purposes and intentions of all parties hereto.
10.12 Consent to Jurisdiction, Etc. Except as set forth in Section
1.3(c) and Section 4.19, the parties acknowledge and agree that, notwithstanding
anything to the contrary contained in any applicable Law (including Section 2708
of Title 6 of the Delaware Code), the state courts of North Carolina located in
Mecklenburg County, North Carolina shall have exclusive jurisdiction to
adjudicate any dispute or disagreement arising out of or in connection with this
Agreement. Each party hereto (i) consents to the exercise by such courts of
personal jurisdiction over it, (ii) waives and agrees not to assert any
objection it might otherwise have to venue, personal jurisdiction, inconvenience
of forum, and any other defense to the adjudication of any such dispute or
disagreement in any such court, and (iii) agrees to execute such documents
(including consents and waivers) as may be necessary or appropriate to ensure
the adjudication of any such dispute or disagreement in such courts.
32
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
SELLER:
CI HOLDINGS, LLC
By: COMMONWEALTH INDUSTRIES, INC., as member
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
PURCHASER:
SOUTHWIRE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
AO 1089178.15
AO 1089178.15
GUARANTY
BY
COMMONWEALTH INDUSTRIES, INC.
(All capitalized terms appearing in the Guaranty below that are not
otherwise defined in such Guaranty shall have the meanings assigned to them in
the Stock Purchase Agreement between Southwire Company and CI Holdings, LLC to
which this Guaranty is attached (the "Stock Purchase Agreement")).
For good and valuable consideration (including the execution and
delivery by Southwire Company of the Stock Purchase Agreement concurrently
herewith), the receipt, adequacy and sufficiency of which are hereby
acknowledged by Commonwealth Industries, Inc., a Delaware corporation ("CII"),
CII agrees with and in favor of Purchaser as follows:
(a) CII has the power and authority to execute, deliver and perform
this Guaranty. The execution, delivery and the performance of this Guaranty have
been duly authorized by all corporate action necessary on the part of CII, and
this Guaranty constitutes a valid and binding obligation of CII, enforceable
against CII in accordance with its terms. The performance by CII of its
obligations hereunder will not violate, or constitute a breach of or a default
under, CII's certificate of incorporation or bylaws or any Contract to which CII
is a party or any Law or Order binding upon CII.
(b) CII agrees to the obligations contained in Section 4.4 of the
foregoing Stock Purchase Agreement (Confidentiality).
(c) CII hereby absolutely, unconditionally and irrevocably guarantees
the full payment and performance as and when due of all of the Seller's
obligations under or pursuant to the Stock Purchase Agreement and any Other
Agreement executed and delivered in connection therewith (all such obligations
are hereinafter referred to as the "Obligations"). This Guaranty may be enforced
by Purchaser directly against CII without any requirement that Purchaser first
bring suit against Seller or any other Person or resort to or exhaust any other
guaranty or collateral now or hereafter pledged to Purchaser. CII acknowledges
and agrees that no change in the nature or terms of the Stock Purchase Agreement
or the Obligations, whether by operation of Law or otherwise, shall operate to
discharge all or any part of the liabilities and obligations of CII pursuant to
this Guaranty. This Guaranty constitutes a guarantee of payment and not of
collection or performance and no forbearance or indulgence granted by Purchaser
to Seller and no waiver of any right to proceed promptly against Seller (whether
or not such action or failure to act varies or increases the risk of, or affects
the rights or remedies of, CII) shall operate to release CII from any of its
liabilities or obligations hereunder. Without limiting the generality of the
foregoing, CII agrees that no extension of time or indulgence granted by
Purchaser to Seller will in any manner affect, impair, limit, modify, or release
any of the liabilities or obligations of CII under this Guaranty.
(d) CII expressly waives: (i) notice of acceptance of this Guaranty;
(ii) notice of any modification of the Stock Purchase Agreement or the
Obligations, and (iii) presentment, protest, notice of dishonor, demand for
payment, notice of extension of time of payment, notice of non-payment when due
of such Obligations, and notice of indulgences granted to Seller by Purchaser.
(e) CII agrees that its liability under this Guaranty is continuing and
shall only be discharged by the full performance of all of the Obligations.
(f) This Guaranty shall be binding upon CII and its successors, and
assigns and shall inure to the benefit of, and be enforceable by, Purchaser and
its successors and assigns. This Guaranty shall be governed by, and construed in
accordance with, the substantive laws of the State of Delaware, without regard
to such state's laws related to choice or conflicts of laws. CII agrees that,
notwithstanding anything to the contrary contained in any applicable Law
(including Section 2708 of Title 6 of the Delaware Code), the state courts of
North Carolina located in Mecklenburg County, North Carolina shall have
exclusive jurisdiction to adjudicate any dispute or disagreement arising out of
or in connection with this Agreement. CII hereby (i) consents to the exercise by
such courts of personal jurisdiction over it, (ii) waives and agrees not to
assert any objection it might otherwise have to venue, personal jurisdiction,
inconvenience of forum, and any other defense to the adjudication of any such
dispute or disagreement in any such court, and (iii) agrees to execute such
documents (including consents and waivers) as may be necessary or appropriate to
ensure the adjudication of any such dispute or disagreement in such courts.
COMMONWEALTH INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
* * * *