Exhibit 2.1
STOCK PURCHASE AND SUBSCRIPTION AGREEMENT
by and among
▇▇▇▇ CORP.,
SULLAIR ARGENTINA S.A.
and
ALL OF THE SHAREHOLDERS
of
SULLAIR ARGENTINA S.A.
June 29, 1998
EXECUTION COPY
ARTICLE I - SUBSCRIPTION AND SALE AND PURCHASE OF SHARES
1.01 SUBSCRIPTION OF COMPANY COMMON
STOCK BY BUYER................................................................................. 1
1.02 SALE AND PURCHASE OF COMPANY
COMMON STOCK FROM THE STOCKHOLDERS
1.03 PURC14ASF, PRICE AND PAYMENT.......................................................................2
1.04EAPN-OUT................................................................................................3
ARTICLE II - CLOSING.........................................................................................
2.01 CLOSING............................................................................................7
2.02 DELIVERIES BY STOCKHOLDERS TO THE BUYER............................................................8
2-03 DELIVERIES BY THE COMPANY TO THE BUYER.............................................................8
2.04 DELIVERIES BY THE BUYER............................................................................8
2.05 TERMINATION IN ABSENCE, OF CLOSING I............................................................. 11.19
ARTICLE III - REPRESENTATIONS AND
WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS...............................................................
3.01 CORPORATE- EXISTENCE AND QUALIFICATION:
CORPORATE DOCUMENTS...............................................................................10
3.02 AUTHORITY, APPROVAL AND ENFORCEABILITY............................................................11
3.03 CAPITALIZATION AND OWNERSHIP......................................................................11
3.04 PREEMPTIVE- RIGHTS; REGISTRATION RIGHTS...........................................................12
3.05 No COMPANY DEFAULTS OR CONSENTS.....................................................................
3.06 No PROCEEDINGS....................................................................................13
3.07 FINANCIAL STATEMENTS..............................................................................13
3.08 LIABILITIES AND OBLIGATIONS.......................................................................13
3.09 ACCOUNTS RECEIVABLE...............................................................................14
3.10 EMPLOYEE MATTERS..................................................................................14
3.11 EMPLOYEE: BENEFIT MATTERS.........................................................................17
3.12 ABSENCE OF CERTAIN CHANGES........................................................................11-.1, I
3.13 COMMITMENTS I......................................................................................1-119
3.14 INSURANCE.........................................................................................21
3.15 USE OF NAME AND LOCO..............................................................................21
3.16 TRADE, SECRETS AND CUSTOMER LISTS.................................................................22
3.17 TITLE TO ASSETS., CONDITION OF ASSETS.............................................................22
3-18 COMPLIANCE wiTi4 LAWS.............................................................................22
3.19 LITIGATION, DEFAULT...............................................................................33
3.20 ENVIRONMENTAL MATTERS.............................................................................23
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3.21 BANKS..........................................................................................I I24
3.22 SUPPLIERS AND CUSTOMERS SALES.....................................................................24
3.23 BROKERAGE ........................................................................................24
3.24 DISCLOSURE; DUE DILIGENCE.........................................................................24
3.25 OWNERSHIP INTERESTS OF INTERESTED PERSONS.........................................................25
3.26 INVESTMENTS IN COMPETITORS......................................................................1125
3-27 CERTAIN PAYMENTS..................................................................................25
3.28 GOVERNMENT INQUIRIES..............................................................................25
3.29 OTHER, TRANSACTIONS...............................................................................25
3.30 TAX MATTERS.......................................................................................26
3.31 APPLICABILITY OF THE REPRESENTATIONS
AND WARRANTIES....................................................................................26
ARTICLE IV - REPRESENTATIONS AND
WARRANTIES OF EACH STOCKHOLDER.............................................................................27
4.01 TITLE TO THE SHARES...............................................................................17
4.02 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT........................................................27
4.03 No STOCKHOLDERS DEFAULTS OR CONSENTS..............................................................28
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE BUYER....................................................28
5.01 CORPORATE EXISTENCE AND QIIALIF7CATION..............................................................
5.02 AUTHORITY, APPROVAL AND ENFORCEABILITY..............................................................
5.03 NO DEFAULT OR CONSENTS............................................................................28
5.04 No PROCEEDINGS....................................................................................29
5.05 BROKERAGE.........................................................................................29
ARTICLE VI - OBLIGATIONS PRIOR TO CLOSING....................................................................
6.01 BUYER'S ACCESS TO INFORMATION AND ASSETS..........................................................30
6.02 COMPANY'S CONDUCT OF BUSINESS AND OPERATIONS......................................................30
6.03 GENERAL RESTRICTIONS..............................................................................31
6.04 NOTICE REGARDING CHANGES..........................................................................33
6.05 PREFERENTIAL PURCHASE RIGHTS......................................................................33
6.06 CONSENTS AND BEST EFFORTS.........................................................................33
6.07 TERMINATION OF INSURANCE POLICIES.................................................................34
6.08 CASUALTY LOSS.....................................................................................34
6.09 EMPLOYEE MATTERS..................................................................................34
6.10 NO SOLICITATION...................................................................................34
6-11 -EMPLOYMENT AGREEMENT.............................................................................35
6.12 STOCKHOLDERS' AGREEMENT...........................................................................35
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ARTICLE VII - CONDITIONS TO STOCKHOLDERS AND
BUYER'S OBLIGATIONS........................................................................................35
7.01 CONDITIONS TO OBLIGATION OF ALL PARTIES...........................................................35
7.02 CONDITIONS TO OBLIGATIONS OF STOCK HOLDERS........................................................36
7.03 CONDITIONS TO OBLIGATIONS OF THE BUYER............................................................37
ARTICLE VIII - SURVIVAL ...................................................................................39
ARTICLE IX - INDEMNIFICATION ..............................................................................40
9.01 OBLIGATION OF THE STOCKHOLDERS TO INDEMNIFY.......................................................40
9.02 OBLIGATION OF THE BUYER TO INDEMNIFY..............................................................40
9.03 NOTICE AND OPPORTUNITY TO DEFEND..................................................................41
9.04 SET-OFF RIGHTS....................................................................................42
ARTICLE X - POST-CLOSING OBLIGATIONS.......................................................................42
10.01 FURTHER ASSURANCES................................................................................43
10-02 PUBLICITY.........................................................................................43
10.03 ACCESS To RECORDS.................................................................................43
ARTICLE XI - MISCELLANEOUS.................................................................................43
11.01 SULLAIR NAME......................................................................................43
11.02 BROKERS...........................................................................................43
11.03 COSTS AND EXPENSES................................................................................44
11.04 NOTICES...........................................................................................44
11-05 GOVERNING LAW.....................................................................................44
11-06 REPRESENTATIONS AND WARRANTIES....................................................................46
11.07 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS..........................................................47
11-08 BINDING EFFECT AND ASSIGNMENT.....................................................................47
11-09 REMEDIES..........................................................................................47
11-10 EXHIBITS AND SCHEDULES............................................................................47
11.11 MULTIPLE COUNTERPARTS.............................................................................48
11.12 REFERENCES........................................................................................48
11.13 SURVIVAL..........................................................................................48
11.14 ATTORNEYS' FEES...................................................................................48
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ARTICLE XII - DEFINITIONS.................................................................................48
12.01 AFFILIATE........................................................................................49
12.02 COLLATERAL AGREEMENTS............................................................................49
12.03 COMPANY ASSETS...................................................................................49
12.04 DAMAGES..........................................................................................49
12.05 GOVERNMENTAL AUTHORITIES.........................................................................49
12.06 KNOWLEDGE........................................................................................50
12.07 LEGAL REQUIREMENTS ................................................................
12.08 PERMITS .................................................................................50
12.09 PROPERTIES.......................................................................................50
12.10 PROPORTIONAL SHARE .................................................................
12.11 USED .........................................................................................50
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LIST OF SCHEDULES
Schedule 1.03(b)(1)..................................... Calculation of the Shares' premium
Schedule 1.03(b)(ii).................................... Shareholders Agreement
Schedule 1.04(c)........................................ List of Accounting Firms
Schedule 1.05........................................... Letter of Credit
Schedule 2.04(a)(i)..................................... Stockholders' Account
Schedule 2.04(b)(i)..................................... Company's Account
Schedule 3.01(a)........................................ By-laws of the Company, the controlled Companies
and the Related Company
Schedule 3.03........................................... Agreements Relating to Company Capital Stock,
and Accrued and Unpaid Dividends
Schedule 3.05........................................... Company Defaults or Consents
Schedule 3.07........................................... Financial Statements
Schedule 3.09........................................... Accounts Receivable
Schedule 3.10(a(i)...................................... Employees
Schedule 3.10(a)(ii).................................... Employment Agreements
Schedule 3.10(a)(iii)................................... Key Employees
Schedule 3.10(i)........................................ Labor Proceedings
Schedule 3.12........................................... Absence of Certain Changes
Schedule 3.13........................................... Commitments
Schedule 3.15........................................... License Agreements
Schedule 3.17(a)........................................ Real Property Owned
Schedule 3.17(b)........................................ Title to Assets
Schedule 3.19........................................... Litigation and Defaults
Schedule 3.21........................................... Banks Accounts
Schedule 3.22........................................... Suppliers and Customers
Schedule 3.30........................................... Tax Matters
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LIST OF EXHIBITS
Exhibit A - Stockholders
Exhibit B - Employment Agreement between the company and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Exhibit C - Shareholders' Agreement Exhibit D - Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Exhibit E - Opinion of the law firm Basiliro, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇.
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STOCK PURCHASE A-ND SUBSCRIPTION AGREEMENT
This STOCK PURCHASE AND SUBSCRIPTION AGREEMENT (the "Agreement") is
made and entered into as of June 29, 1998, by and among (i) ▇▇▇▇ CORP., a
Delaware corporation (the "Buyer"), (ii) SULLAIR ARGENTINA, S.A., a corporation
organized under the laws of the Republic of Argentina (the "Company"), and (iii)
each of the stockholders listed on EXHIBIT A hereto (the "Stockholders") of the
Company.
PRELIMINARY STATEMENT:
A. The Buyer desires to become the owner of 65% of the outstanding
stock and votes of the Company through (A) the purchase from the Stockholders of
54,638 shares (the "Stockholder Shares") and (B) the subscription of 3,608
shares to be issued by the Company through a capital contribution by Buyer (the
"Company Shares"), upon the terms and subject to the conditions set forth
herein.
B. The Stockholder Shares and the Company Shares shall be jointly
referred to as the "Shares".
C. Capitalized terms used herein which have not been defined prior to
such use shall have the respective meanings given such terms in Article XII
hereof.
AGREEMENT
In consideration of the premises and the respective mutual agreements,
covenants, representations and warranties herein contained, the parties hereto
agree as follows:
ARTICLE I
SUBSCRIPTION AND SALE AND PURCHASE OF SHARES
SECTION 1. 01. SUBSCRIPTION OF COMPANY COMMON STOCK BY BUYER.
(a) On the terms and subject to the conditions of this Agreement, at
the Closing referred to in Section 2.01 hereof, the Company shall issue,
transfer, convey and deliver to the Buyer, and the Buyer shall subscribe and
accept from the Company 3,609 Company Shares.
(b) To effect the transfers contemplated by Section 1.01 (a), at the
Closing, the Company shall issue and deliver to the Buyer stock certificates
representing the Company Shares being issued by the Company and subscribed by
the Buyer hereunder, against payment of the capital contribution in accordance
with Section 1.03 hereof.
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SECTION 1.02 SALE AND PURCHASE OF COMPANY COMMON STOCK -FROM THE STOCKHOLDERS.
(a) On the terms and subject to the conditions of this Agreement at the
Closing, each Stockholder shall sell, transfer, convey and deliver to the Buyer,
and the Buyer shall purchase, acquire and accept from each Stockholder, the
number of Stockholder Shares set forth opposite the name of each such
Stockholder on EXHIBIT A hereto under the heading "Number of Stockholder Shares
Purchased."
(b) To effect the transfers contemplated by Section 1.02(a), at the
Closing, each Stockholder shall deliver, or cause to be delivered, to the Buyer,
stock certificates representing the Stockholder Shares being sold by such
Stockholder hereunder, together with a notice to the Company for transfer of the
Shares to the Buyer on the books of the Company, against payment therefor in
accordance with Section 1.03 hereof.
SECTION 1.03 PURCHASE PRICE AND PAYMENT
(a) The aggregate price for (i) the Company Shares being subscribed by
the Buyer pursuant to Section 1.01 and (ii) the Stockholder Shares being
purchased by the Buyer from the Stockholders pursuant to Section 1.02, shall be
an amount equal to thirty five million six hundred and eighty six thousand two
hundred and seventy four dollars (U.S.$35,686,274) (the "Stock Price"). Starting
May 15, 1998 and until Closing, Buyer shall pay monthly interest on the Stock
Price calculated at an annual rate equal to 8.5%.
(b) At the Closing, the following payments shall be made by the Buyer
as indicated below;
(i) the Buyer shall deliver and pay to the Company for the
Company Shares an aggregate amount of three million dollars (U.S. $3,000,000) as
a capital contribution to the Company. Through this payment, the Company shall
conduct an extraordinary shareholders meeting On the Closing Date in order to
capitalize such payment under a premium as described in Schedule 1.03. (b) (i);
and
(ii) the Buyer shall deliver and pay to the Stockholders for
the Stockholder Shares, an aggregate amount equal to thirty two million six
hundred and eighty six thousand two hundred and seventy four dollars
(U.S.$32,686,274) to be allocated among the Stockholders as set forth on EXHIBIT
A.
The Parties hereto acknowledge that the price per share
established for the Company Shares may differ from the price per share
established for the Stockholder Shares. This difference may be due to the effect
of the Earn-Out Payments (as defined in Section 1.04 hereinbelow) on the
purchase price for the Stockholder Shares. Furthermore, the parties, having been
duly advised by their respective legal counsel, fully agree and consent thereon
and hereby waive any right they may have to file claims on the basis of a
difference in price.
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In exchange for the payments described in (i) and (ii), the
Buyer shall receive, on the Closing Date, Shares representing 65% of the capital
and votes of the Company.
For purposes of the capital contribution and the corresponding
issuance of Company Shares, the Stockholders hereby explicitly waive in this act
their right of first refusal to subscribe for and purchase said Company Shares.
The Stockholders also waive the preemptive and accruing subscription rights
granted to them in the Company's by-laws, as well as the right of first refusal
that the Stockholders granted to each other through the Shareholders' Agreement
dated August 25, 1987 and attached hereto as Schedule 1.03 (b) (ii). As of the
Closing Date, said Shareholders' Agreement shall be terminated and be of no
further force or effect.
SECTION 1.04 EARN-OUT. (a) As additional consideration for the sale of
the Stockholder Shares, subject to the provisions of Section 1.04(c), the Buyer
shall deliver to the Stockholders for allocation among the Stockholders in
accordance with their respective Proportionate Share in cash by wire transfer of
immediately available funds, additional payments for the Stockholder Shares
being purchased by the Buyer (the "Earn-Out Payments"), subject to reduction as
provided in Section 1.04(c), determined as follows:
(i) on or before April 30, 1999, an aggregate amount equal to
82-843% of the Company's Net Income (as defined and determined pursuant to
Section 1.04 (b) hereof) for the year ended December 31, 1998, as determined by
reference to the 1998 financial statements of the Company audited by Price
Waterhouse and prepared 'm accordance with U-S. generally accepted accounting
principles applied in a consistent manner ("GAAP"). The Stockholders acknowledge
that they have been duly advised by their own counsels on the meaning of the
GAAP and are fully aware of its use for conventional purposes which do as not
exclude the compliance by the Company of Argentine accounting laws and
regulations.
(ii) on or before April 30, 2000, an aggregate amount equal to
82.943% of the Company's Net Income for the year ended December 31, 1999, as
determined by reference to the 1999 financial statements of the Company audited
by Price Waterhouse and prepared in accordance with GAAP.
(b) For purposes of this Section 1.04, "Net Income" shall mean the net
income of the Company after income tax, modified as follows:
(i) to the extent included in the net income of the Company,
excluding the effect of the following items-
(A) the gain or loss from any sale, exchange or other
disposition of assets other than in the ordinary course of business consistent
with past practice or in arms length conditions;
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(B) the gain or loss from the sale or exchange of
securities, or any increase or reduction in the carrying value of such
securities;
(C) any extraordinary gain or loss;
(D) any expenses directly or indirectly incurred in
connection with the acquisition by the Buyer of the Shares and the other
transactions contemplated under this Agreement; first-out basis;
(E) the effect of valuing inventories on a
first-in-first-out basis;
(F) any gain, loss, income or expense resulting from
a change in the Company's accounting methods, principles or practices or a
change in GAAP or any GAAP election or treatment not made or utilized by the
Company in its audited 1997 financial statements;
(G) any employee termination or other costs arising
out of a consolidation of services or facilities or other reorganization of the
Company subsequent to the consummation by the Buyer of the Stock Purchase;
(H) any reserves or adjustments to reserves which are
not consistent with past practices of the Company; and
(I) any loss suffered by the Company and having a
negative effect on the net income of the Company, as a result of, and to the
extent of, any indemnification claim which was paid by the Stockholders under
the provisions of Article 9 hereof; and
(ii) any other adjustments agreed to in writing by the Buyer
and the Stockholders.
All adjustments described herein from (A) to (ii) included, shall be considered
net of taxes.
(c) On or before each of March 15, 1999 and 2000, the Buyer shall cause
the Company to prepare and deliver to the Stockholders the consolidated balance
sheet and income statement for the immediately preceding calendar year (the
"Financial Statements") which statements shall be prepared in accordance with
GAAP, applied in a manner consistent with the Company's past practices, if any,
along with a statement setting forth in reasonable detail the computation of Net
Income, including identification of all excluded items and adjustments and all
necessary calculations in accordance with Section 1.04(b) hereof The calculation
of Net Income shall be used in determining the amounts to be paid under Section
1.04 unless any of the Stockholders give the Buyer notice (the "Net Income
Dispute Notice") that such Stockholders dispute the Buyer's calculation of Net
Income within thirty (30) days after the initial determination of Net Income has
been given to the Stockholders, which notice shall set forth in reasonable
detail the exclusions or calculations being disputed in good faith (the
"Disputed Net Income Matters"). In the event a Net Income Dispute Notice is
timely given to the Buyer, the Stockholders shall
4
elect an internationally recognized accounting firm from the list attached as
Schedule 1.04 (c) hereto ( "Stockholders' Accounting ▇▇▇▇"), within fifteen (15)
days of receipt of the Net Income Dispute Notice by Buyer. Stockholders"
Accounting ▇▇▇▇ and the accounting firm that determined the Net Income for Buyer
("Buyer's Accounting Firm") shall settle the dispute within thirty (30) days
from their appointment. If the Disputed Net Income Matters are not settled
within the period of time mentioned above, the dispute shall be submitted by the
Stockholders' and Buyer's Accounting Firms to a third accounting firm to be
taken from the list contained in Schedule 1.04 (c) (the "Net Income
Arbitrator"), which shall be instructed to arbitrate such disputed item(s) and
determine Net Income within thirty (30) days of their appointment. The Net
Income Arbitrator shall consider only the Disputed Net Income Matters. The
resolution of disputes by the Net Income Arbitrator shall be set forth in
writing and shall be conclusive and binding upon and non-appealable by the
parties, and the determination of Net Income shall become final upon the date of
such resolution, and may be entered as a final judgment in any court of proper
jurisdiction. The fees and expenses of the Net Income Arbitrator with respect to
settlement of each Disputed Matter shall, to the extent such fees and expenses
are allocable, be borne in each such instance by the party against whom the
award of the Net Income Arbitrator is made, and if allocation is not feasible in
any such instance, then such fees and expenses shall be borne by the parties in
reverse proportion to the number of Disputed Net Income Matters settled in their
respective favor by the Net Income Arbitrator. If the Financial Statements are
delivered later than March 30, 1999 and March 30, 2000 the payment dates
described in paragraphs (a) (i) and (ii) shall be extended for a thirty day
period counted as from the delivery date of the Financial Statements.
(d) Notwithstanding anything in this Agreement to the contrary, if a
Net Income Dispute Notice has been delivered with respect to any payment to be
made under this Section 1.04, and the dispute has not been resolved by the
payment due date, (i) the amount not in dispute shall be paid as required
hereunder, and (ii) the Buyer shall have no obligation to pay any amount until
ten (10) days after the date on which the dispute is resolved, provided,
however, that the amounts resolved to have been incorrectly unpaid by Buyer
under this Section 1.04 shall bear interest at an annual rate of Prime plus
five, from the payment due date until the date of actual payment.
(e) Notwithstanding anything to the contrary in this Section 1.04, the
aggregate Earn-Out Payments shall not exceed twelve million seven hundred and
forty five thousand and ninety seven dollars (U.S-$12,745,097).
SECTION 1.05. GUARANTEE. AS a guarantee for the additional
consideration which may be paid pursuant to Section 1.04 (a) above, the Buyer
shall, on the Closing Date, open a letter of credit (the "Letter of Credit") for
a maximum amount of US$ 10,000,000 (ten million dollars of the United States of
America) substantially in the form of Schedule 1.05 hereto, to the satisfaction
of the Stockholders. The Stockholders will be able to draw on the Letter of
Credit the amount of the Earn-out Payments which are not paid, upon the later to
occur of (i) within ten business days after the date such Earn-out Payments are
due or (ii) if there shall be Disputed Net Income Matters, within ten business
days following the final resolution of the dispute by the Net Income Arbitrator
up to a maximum amount Of US$ 10,000,000. The cost of the Letter of Credit shall
5
be borne entirely by the Buyer, however, if the aggregate amount paid by the
Buyer under the Earn-Out Payments is less than US$ 1.0,000,000, then the
Stockholders shall bear the cost of the Letter of Credit with respect to the
difference between US$ 10,000,000 and the aggregate amount that was actually
paid by Buyer as Earn-Out Payments; and the Buyer shall be permitted to deduct
such cost from the amount due as Earn-Out Payments by the Buyer to the
Stockholders, if any. After payment by J3uyer of the first installment of the
Earn-Out Payments, contemplated in Section 1.04 (a) (i), the letter of credit
shall be reduced in the amount necessary to guarantee the difference between US$
12,745,097 and what was paid under Section 1.04 (a) (i).
SECTION 1. 06. CURRENCY PAYMENT. All payments under this Agreement
shall be made -in freely available U.S. Dollars. In the event that payment in
freely available U.S. Dollars is legally impracticable, payments hereunder shall
be made in Argentine currency in the amount necessary to purchase in New York or
Montevideo, the amount of U.S. Dollar denominated Argentine securities as
elected by the Stockholders, to purchase, net of taxes, commissions and
expenses, the amounts due in U.S. Dollars.
ARTICLE II
CLOSING
SECTION 2.01. Subject to the satisfaction of the conditions stated in
Article VII of -this Agreement, the closing of the transactions contemplated
hereby (the "Closing") shall be held at 10:00 a.m., Buenos Aires time, on June
29, 1998 or, if the conditions set forth in Sections 7.01 through 7.03 have not
been satisfied or waived on such date, no later than seven (7) days after all
such conditions shall have been satisfied or waived, at the offices of ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, Avenida ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
unless another date or place is agreed to in writing by the parties hereto. The
date upon which the Closing occurs is hereinafter referred to as the "Closing
Date." The Closing shall be deemed completed as of 11:59 p.m. Buenos Aires time
on the night of the Closing Date, and all transactions described in Article I
hereof shall be deemed to have occurred concurrently.
SECTION 2.02 DELIVERIES BY STOCKHOLDERS TO BUYER. At or prior to the
Closing, the Stockholders shall deliver to the Buyer:
(i) certificates representing 54,638 Stockholder Shares;
(ii) the resignations of all members of the board of directors of the
Company to their positions and fees as set forth in Section 7,03(h) (subject to
appointment as provided in the Stockholders' Agreement referred to in Section
6.12 hereof);
(iii) a certificate executed by the Company to the effect that the
conditions set forth in Sections 7.03(a) through 7.03(d), have been satisfied;
6
(iv) the opinion of counsel set forth in Section 7.03(e);
(v) the executed Collateral Agreements to which any of them is a party;
(vi) evidence of the consents required pursuant to Section 7.03(i); and
(vii) notice of transfer of the Shares from the Stockholders addressed
to the Company.
SECTION 2.03 DELIVERIES BY THE COMPANY TO THE BUYER. At or prior to
Closing, the Company shall issue and deliver to the Buyer:
(i) certificates representing 3,608 Company Shares;
(ii) the executed Collateral Agreements to which it is a party; and
(iii) all necessary corporate resolutions to validly issue and deliver
3,608 Company Shares to the Buyer.
SECTION 2.04 DELIVERIES BY THE BUYER
(a) At or prior to the Closing, the Buyer shall deliver to the
Stockholders by wire transfer in immediately available fends to the
Stockholders, the payment described in Section 1.03(b)(ii) - the Accounts
indicated in Schedule 2.04(;a)(i);
(i) by wire transfer in immediately available funds to the
Stockholders, the payment described in Section 1.03(b)9ii) in the Accounts
indicated in SCHEDULE 2.04(A)(I);
(ii) a certified copy of all necessary corporate action on the
Buyer's behalf approving the execution, delivery and performance of this
Agreement pursuant to Section 7.02(a);
(iii) a certificate executed by an authorized officer of the
Buyer on behalf of the Buyer to the effect that the conditions set forth in
Sections 7.02(b) and 7.02(c) have been satisfied;
(iv) the opinion of counsel set forth in Section 7.02(d); and
(v) the executed Collateral Agreements to which it is a party;
(vi) the Letter of Credit set forth in Section 1.05.
(b) At or prior to Closing, the Buyer shall deliver to the Company
7
(i) as a capital contribution, the payment described in
Section 1.03(b)(i) by wire transfer immediately available funds in the account
indicated in SCHEDULE 2.04(B)(I);
(ii) a certified copy of all necessary corporate action on the
Buyer's behalf approving the execution, delivery and performance of this
Agreement pursuant to Section 7.02 (a);
(iii) a certificate executed by an authorized officer of the
Buyer on behalf of the Buyer to the effect that the conditions set forth in
Sections 7.02 (b) and 7.02 (c) have been satisfied; and
(iv) the opinion of counsel set forth in Section 7.02 (d).
SECTION 2.05 TERMINATION IN ABSENCE OF CLOSING.
If by the close of business on August 31, 1998 (the "Termination
Date"), the Closing has not occurred, then any party hereto may thereafter
terminate this Agreement by written notice to such effect to the other parties
hereto, without liability of or to any Party to this Agreement or any
shareholder, director, officer, employee or representatives of such party unless
the reason for Closing having not occurred is (i) such party's willful breach of
the provisions of this Agreement, or (ii) if all of the conditions to such
party's obligations set forth in Article VII have been satisfied or waived in
writing by the date scheduled for the Closing pursuant to Section 2.01, the
failure of such party to perform its obligations under this Article 11 on such
date; provided, however, that the provisions of Sections 14, 15 and 16 of that
certain letter of intent (the "Letter of Intent") dated March 26, 1998 between
the Buyer, the Company and the Stockholders shall survive any such termination;
and provided further, however, that any termination pursuant to this Section
2.05 shall not relieve any party hereto who was responsible for Closing having
not occurred as described in clauses (i) or (ii) above of any liability for (x)
such party's willful breach of the provisions of this Agreement, or (y) if all
of the conditions to such party's obligations set forth in Article VII have been
satisfied or waived in writing by the date scheduled for the Closing pursuant to
Section 2.01, the failure of such party to perform its obligations under this
Article 11 on such date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders,- severally but not jointly, represent and warrant to
the Buyer that:
SECTION 3.01 CORPORATE EXISTENCE, AND QUALIFICATION: CORPORATE
DOCUMENTS
(a) Each of the Company and its Controlled and Related Companies, as
defined in (e) hereinbelow, is a corporation duly organized, validly existing
and in good standing under the laws of their respective place of incorporation,
and is not required to be qualified to do business as a
8
foreign corporation in any other jurisdiction where the failure to so qualify
would have a material adverse effect on the Company or its Controlled and
Related Companies. Each of the Company and its Controlled and Related Companies
has all required corporate power and authority to own its properties and to
carry on its business as presently conducted. The Company has all required
corporate power and authority to execute and deliver this Agreement and the
documents, instruments and agreements contemplated hereby. The By-laws of the
Company and its Controlled and Related Companies ("Estatutos"), copies of which
are attached as Schedule 3.01(a), are complete and reflect all amendments
thereto through the date hereof.
(b) The stock registry and minutes books of the Company and its
Controlled and Related Companies that have been made available to the Buyer for
review contain a complete and accurate record of all stockholders of the Company
and its Controlled and Related Companies, and all material actions of the
stockholders and directors (and any committees thereof) of the Company and its
Controlled and Related Companies.
(c) Except for the Controlled Companies and the Related Companies (as
defined hereinbelow) , the Company does not have any subsidiaries, participate
in any partnership or joint venture, or own any outstanding capital stock of any
other corporation. For purposes of this Agreement, "Controlled Companies" shall
mean Bahian S.A. and Sullair San ▇▇▇▇ S.A., and "Related Companies" shall mean
Sullair do Brasil Ltda.
SECTION 3.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has
been duly executed and delivered by the Company, and the Company has all
requisite power and legal authority to execute and deliver this Agreement and
all Collateral Agreements executed and delivered or to be executed and delivered
in connection with the transactions provided for hereby, to consummate the
transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. This
Agreement and each Collateral Agreement to which the Company is a party
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of the Company, enforceable in accordance with its terms,
except as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, and except as the availability of
equity remedies may be limited by the application of general principles of
equity (regardless of whether such equitable principles are applied in a
proceeding at law or in equity).
SECTION 3.03 CAPITALIZATION AND OWNERSHIP. As of the date of this
Agreement, the entire authorized capital stock of the Company consists of 86,000
shares. The issued and outstanding Stockholder Shares are owned by the
Stockholders shown on EXHIBIT A hereof All of the presently outstanding shares
of capital stock of the Company have been validly issued and are fully paid and
nonassessable. The Company has not issued any other shares of its capital stock
and there are no outstanding options, warrants, subscriptions or other rights or
obligations to purchase or acquire any of such shares, capital contributions nor
any outstanding securities convertible into or exchangeable for such shares,
Except as disclosed on SCHEDULE 1.03 (B)(II) or as contemplated under this
Agreement, there are no agreements to which the Company is a party or has
knowledge regarding the issuance, registration, voting or transfer of its
outstanding shares
9
of its capital stock. Except as set forth on SCHEDULE 3.03, no dividends are
accrued but unpaid on any capital stock of the Company. Upon delivery of and
payment for the Company Shares to be issued by the Company and subscribed by the
Buyer hereunder, the Buyer will acquire good and valid title thereto, free and
clear of any lien or other encumbrance.
SECTION 3.04 PREEMPTIVE RIGHTS: REGISTRATION RIGHTS. There are no
preemptive rights affecting the issuance or sale of the Company's capital stock,
except as established (i) under Argentine Law, and (ii) under the Shareholders'
Agreement attached hereto as Schedule 1.03(b)(ii). Immediately following the
Closing, the Company will not be under any contractual obligation to register
(in compliance with the filing requirements and being deemed effective under any
applicable federal or state securities laws and the rules and regulations
promulgated thereunder) any of its presently outstanding securities or any of
its securities which may hereafter be issued.
SECTION 3.05 NO COMPANY DEFAULTS OR CONSENTS. Except as otherwise set
forth in SCHEDULE 3.05 attached hereto, neither the execution and delivery of
this Agreement nor the carrying out of the transactions contemplated hereby
will:
(i) violate or conflict with any of the terms, conditions or provisions
of the bylaws of the Company and/or its Controlled and Related Companies;
(ii) violate any Legal Requirements applicable to the Company and/or
its Controlled Companies;
(iii) violate, conflict with, result in a breach of, constitute a
default under (whether with or without notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance required by, or give
any other party the right to terminate, any Contract or Permit applicable to the
Company and/or its Controlled Companies;
(iv) result in the creation of any lien, charge or other encumbrance on
the shares of capital stock or any Property of the Company and/or its Controlled
Companies; or
(v) require any of the Stockholders or the Company to obtain or make
any waiver, consent, action, approval or authorization to or registration,
declaration, notice or filing with, any private nongovernmental third party or
any Governmental Authority. Any and all consents required to be obtained by the
Company and/or its Controlled Companies as set forth in Schedule 3.05 shall be
obtained and copies thereof delivered to the Buyer upon execution of this
Agreement;
except in the case of each of clauses (ii)-(v) for any such conflicts,
violations, breaches, defaults or other occurrences which would not individually
or in the aggregate, result in a material adverse effect on the Company and/or
its Controlled Companies.
SECTION 3.06 NO PROCEEDINGS. No suit, action or other proceeding is
pending or, to the Knowledge of the Company, threatened before any Governmental
Authority seeking to restrain
10
any of the Stockholders or prohibit their entry into this Agreement or prohibit
the Closing, or seeking damages against the Company, or its Properties, as a
result of the consummation of this Agreement.
SECTION 3.07 FINANCIAL STATEMENTS. Attached as Schedule 3.07 are true
and correct copies of the Company's unaudited consolidated balance sheets at
March 31, 1998 (the "Interim Balance Sheet") and the related statements of
income, stockholders' equity and cash flow for the three months then ended (the
"Interim Financial Statements"), as well as the Company's and the Controlled and
Related Companies' balance sheets and statements of income, stockholders' equity
and cash flow as of and for the year ended December 31, 1997 (the "Audited 1997
Financial Statements"). The foregoing financial statements (collectively the
"Financial Statements") (i) have been prepared from the books and records of the
Company and the Controlled and Related Companies, (ii) present fairly the
financial condition of the Company and the Controlled and Related Companies and
their results of operations as at and for the respective periods then ended, and
(iii) have been prepared in accordance with GAAP in force in the place of
incorporation of the Company and the Controlled and Related Companies (except
for the omission of footnotes in the Interim Financial Statements).
SECTION 3.08 LIABILITIES AND OBLIGATIONS. The Financial Statements
reflect all liabilities of the Company and the Controlled Companies as
determined in accordance with GAAP in force in the place of incorporation of the
Company and the Controlled Companies arising out of transactions effected or
events occurring on or prior to the date of the Interim Balance Sheet, except
for liabilities not exceeding U.S.$10,000 in the aggregate. All reserves shown
in the Financial Statements are appropriate and reasonable to provide for losses
thereby contemplated. Except as set forth in the Financial Statements, each of
the Company and the Controlled Companies is not liable upon or with respect to,
or obligated in any other way to provide funds in respect of or to guarantee or
assume in any manner, any debt, obligation or dividend of any person,
corporation, association, partnership, joint venture, trust or other entity.
SECTION 3.09 ACCOUNTS RECEIVABLE. The accounts receivable reflected on
the Interim Balance Sheet and all accounts receivable arising between March 31,
1998 and the date hereof, arose from bona fide transactions in the ordinary
course of business are collectible and duly recorded according to the Company's
and the Controlled Companies' accounting practices, and no further filings (with
Governmental Authorities, insurers or others) are required to be made, no father
goods are required to be provided and no further services are required to be
rendered in order to complete the sales and fully render the services and to
entitle the Company and the Controlled Companies to collect the accounts
receivable in full. Except as otherwise set forth in SCHEDULE 3.09, no such
account has been assigned or pledged to any other person, firm or corporation,
and, except only to the extent fully reserved against as set forth in the
Interim Balance Sheet, no defense or setoff to any such account has been
asserted by the account obligor.
SECTION 3.10 EMPLOYEE MATTERS.
(a) (i) SCHEDULE 3.10(A)(I) sets forth the name, date of employment,
date of inception of benefits, job title, monthly compensation, and eligibility
for prizes of each regular, full time or
11
part time employee of the Company and the Controlled Companies (the
"EMPLOYEES"), including every employee of the Company and the Controlled
Companies on authorized leave of absence who has a right to return to
employment, and the organizational charts of the Company and the Controlled
Companies;
(ii) SCHEDULE 3..10(*)(II) sets forth each and every collective
bargaining, union, or other employee association agreement; employment,
managerial, advisory, and consulting agreements; employee confidentiality OR
other agreements ("Employment Agreements") executed by the Company and the
Controlled Companies. The Company and the Controlled Companies represent and
warrant to Buyer that no employee handbooks) published by the Company and/or the
Controlled Companies is currently outstanding;
(iii) SCHEDULE 3.10(G)(III) contains a complete and accurate list of
the names, titles and compensation of all executive officers of the Company and
the Controlled Companies, regardless of compensation levels, and other employees
who are currently compensated at a rate in excess of U.S.$50,000 per year
(including any reasonably anticipated bonus) or who earned in excess of
U.S.$50,000 during the year ended December 31, 1997 (collectively, the "Key
Employees"),
(b) Neither the Company nor the Controlled Companies sponsor, maintain
or make contribution to, or are required to, sponsor, maintain or make
contribution to, any pension, retirement, savings, profit sharing, bonus,
deferred compensation, incentive compensation, excess benefit, supplemental
retirement, stock purchase, stock option, severance, hospitalization, medical,
life insurance, dental, vision, disability, salary continuation, supplemental
unemployment and fringe benefit plan, orally other agreement or plan or funding
arrangement (such plans are referred to collectively as the "PLANS"; except as
required under Argentine Social Security Laws;
(c) The Company has provided the Buyer with a complete and accurate
list of all significant employee policies and procedures.
(d) To the Knowledge of the Company and the Controlled Companies, no
unwritten material amendments have been made, whether by oral communication,
pattern of conduct or otherwise, with respect to any Plans, Employment
Agreements or employee policies and procedures.
(e) Each of the Company and its Controlled Companies (i) has been and
is in material compliance with all laws, rules, regulations and ordinances
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and (ii) are not liable in any material amount
for any arrears of wages or penalties for failure to comply with any of the
foregoing. Each of the Company and its Controlled Companies has not engaged in
any unfair labor practice or discriminated on the basis of race, color,
religion, sex., national origin, age or handicap in its employment conditions or
practices. To the Knowledge of the Company and the Controlled Companies, there
are no (i) material unfair labor practice charges or complaints or racial,
color, religious, sex, national origin, race or handicap discrimination charges
or complaints pending or threatened against the Company and the Controlled
Companies before the Labor Authorities or any similar state or foreign
commission or agency, or (ii) existing or threatened
12
material labor strikes, disputes, grievances, controversies or other labor
troubles affecting the Company and the Controlled Companies.
(f) no agreement (including any collective bargaining agreement) or
order which is binding on the Company and the Controlled Companies in any way
limits or restricts the Company and the Controlled Companies from relocating or
closing any of its operations, or terminating any of its employees;
(g) the execution and delivery of this Agreement by the Company, and
the consummation of the transactions contemplated hereby will not result in,
accelerate or increase any obligation or liability (with respect to termination
payments, accrued benefits, or otherwise) to any Plan or to any employee or
former employee of the Company and the Controlled Companies or cause, or be
deemed to cause, the termination of any employee, except for officers whose
resignations will be tendered at the Closing;
(h) except to the extent (if any) to which provisions have been made in
the Balance Sheets of the Company and the Controlled Companies: (1) no liability
has been incurred by the Company and/or the Controlled Companies for breach of
any employment agreement, for redundancy payments or for compensation for
wrongful dismissal or for failure to comply with any order for the re-engagement
of any employee or for any other liability accruing from the termination or
variation of any contract of employment; (2) no gratuitous payment has been made
or promised by the Company and/or the Controlled Companies in connection with
the actual or proposed termination or suspension of employment or variation of
any contract of employment of any employee or former employee; (3) no liability
has been incurred by the Company and the Controlled Companies for accident or
injury to any of their employees; (4) no liability has been incurred by the
Company and/or the Controlled Companies for any tax contribution and/or
retention of salaries and other remuneration of personnel pertaining to their
indirect or alleged employment relationships with the Company and/or the
Controlled Companies; and (5) all withholding taxes, social security
contributions and respective employees contributions have been made by the
Company and/or the Controlled Companies as per their respective due dates for
all employees.
(i) SCHEDULE 3.10(I) lists all labor proceedings currently pending
against the Company and/or the Controlled Companies.
(j) No member of executive management of the Company and/or the
Controlled Companies has indicated his or her desire or intent to terminate
employment with the Company and/or the Controlled Companies, and each of the
Company and/or the Controlled Companies has no present intent of terminating any
member of management.
SECTION 3. 11 EMPLOYEE BENEFIT MATTERS. Each Plan that is required
by applicable Law to be funded is so funded, and if a Plan is not required to be
funded, the benefits payable under such Plan are adequately reserved for in the
Interim Balance Sheet; and there are no actions, suits or claims (other than
routine claims for benefits in the ordinary course) pending or threatened with
13
respect to any Plan, and there are no facts which could give rise to any such
actions, suits or claims (other than routine claims for benefits -M the ordinary
course).
SECTION 3.12 ABSENCE OF CERTAIN CHANGES. Except as set forth in
SCHEDULE 3.12, from the date of the Interim Balance Sheet to the date of this
Agreement, each of the Company and/or the Controlled Companies has not:
(a) suffered any material adverse change, whether or not caused by any
deliberate act or omission of the Company and for the Controlled Companies or
any stockholder of the Company and/or the Controlled Companies, in its condition
(financial or otherwise), operations, assets, liabilities, business or
prospects;
(b) contracted for the purchase of any capital assets having a cost in
excess of $50,000 or paid any capital expenditures in excess of $50,000, except
in the ordinary course of business consistent with past practices;
(c) incurred any indebtedness for borrowed money or issued or sold any
debt securities, except in the ordinary course of business;
(d) incurred or discharged any liabilities or obligations except in the
ordinary course of business;
(e) paid any amount on any indebtedness prior to the due date, forgiven
or canceled any debts or claims or released or waived any rights or claims,
except in the ordinary course of business;
(f) mortgaged, pledged or subjected to any security interest, lien,
lease or other charge or encumbrance any of its Properties or Company or
Controlled Companies Assets, except in the ordinary course of business;
(g) suffered any damage or destruction to or loss of any Company or
Controlled Companies Assets (whether or not covered by insurance) that has
materially adversely affected, or could materially adversely affect, its
business;
(h) acquired or disposed of any Company or Controlled Companies Assets
except in the ordinary course of business;
(i) written up or written down the carrying value of any of the Company
or Controlled Companies Assets, except in the ordinary course of business;
(j) changed any accounting principles, methods or practices followed or
changed the costing system or depreciation methods of accounting for the Company
or Controlled Companies Assets;
(k) waived any material rights or forgiven any material claims;
14
(l) lost, terminated or experienced any change in the relationship with
any employee, customer, joint venture partner or supplier, which termination or
change has materially and adversely affected, or could reasonably be expected to
materially and adversely affect, its business or Company or Controlled Companies
Assets;
(m) increased the compensation of any director or officer;
(n) increased the compensation of any employee except in the ordinary
course of business;
(o) made any payments to or loaned any money to any person or entity
except in the ordinary course of business;
(p) formed or acquired or disposed of any interest in any corporation,
partnership, joint venture or other entity;
(q) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock or
securities or any rights to acquire such capital stock or securities, or agreed
to change the terms and conditions of any such rights or, except pursuant to the
terms of existing preferred stock of the Company or the Controlled Companies,
paid any dividends or made any distribution to the holders of the Company's or
the Controlled Companies' capital stock:
(r) entered into any material agreement with any person or group, or
modified or amended in any material respect the terms of any material existing
agreement except in the ordinary course of business;
(s) entered into, adopted or amended any Employee benefit Plan;
(t) entered into any agreement (written or oral) to do any of the
foregoing, except in the ordinary course of business consistent with past
practice.
SECTION 3.13 COMMITMENTS. Except the material contracts, agreements,
commitments and other arrangements, whether oral or written, to which each of
the Company and the Controlled Companies is a party (the "Contracts") set forth
in SCHEDULE 3.13, each of the Company and the Controlled Companies has not
entered into, nor is the capital stock, the assets or the business of the
Company or the Controlled Companies bound by, whether or not in writing any
(i) partnership or joint venture agreement;
(ii) deed of trust or other security agreement, except in the ordinary
course of business;
15
(iii) guaranty or suretyship, indemnification or contribution agreement
or performance bond;
(iv) debt instrument, loan agreement or other obligation realting to
indebtedness for borrowed money or money lent or to be lent to another, except
in the ordinary course of business;
(v) deed or other document evidencing an interest in or contract to
purchase or sell real property;
(vi) agreement with dealers or sales or commission agents, investment
bankers, financial advisors, business brokers, public relations or advertising
agencies, accountants or attorneys, except with respect to confidentiality
agreements;
(vii) lease of real or personal property, whether as lessor, lessee,
sublessor or sublessee, except in the ordinary course of business;
(viii) agreement between the Company and any Controlled and/or Related
Company;
(ix) agreement relating to any material matter or transaction in which
an interest is held by a person or entity that is a Controlled Company or
affiliate of the Company;
(x) any agreement for the acquisition of services, supplies, equipment
or other personal property and involving more than $50,000 in the aggregate,
except in the ordinary course of business;
(xi) powers of attorney;
(xii) contracts containing noncompetition covenants;
(xiii) any other contract or arrangement that involves either an
unperformed commitment in excess of $50,000 or that terminates more than thirty
(30) days after the date hereof, except in the ordinary course of business;
(xiv) agreement relating to any material matter or transaction in which
an interest is held by any person or entity referred to in SECTION 3.27;
(xv) agreement providing for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product
where such product accounts for more than 10% of the Company's gross inventory;
or
(xvi) any other agreement or commitment not made in the ordinary course
of business that is material to the business or financial condition of the
Company and the Controlled Companies.
16
True, correct and complete copies of the written Contracts, and true,
correct and complete written descriptions of the oral Contracts, have heretofore
been delivered or made available to the Buyer. There are no existing material
defaults, material events of default or events, occurrences, acts or omissions
that, with the giving of notice or lapse of time or both, would constitute
material defaults by the Company and the Controlled Companies, and no material
penalties have been incurred nor are amendments pending, with respect to the
Contracts. The Contracts are in full force and effect and are valid and
enforceable obligations of the Company and the Controlled Companies, except as
such enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and except as the availability of equity remedies
may be limited by the application of general principles of equity (regardless of
whether such equitable principles are applied in a proceeding at law or in
equity). Each of the Company and the Controlled Companies has not received
notice of any material default with respect to any Contracts. For the purposes
of this Section 3.13(a), the term "material" shall mean a condition the
existence or breach of which could result in damage or loss to the Company and
the Controlled Companies valued in excess of $50,000 individually or $150,000 in
the aggregate.
(b) Except as contemplated hereby, each of the Company and the
Controlled Companies has not received notice of any plan or intention of any
other party to any Contract to exercise any right to cancel or terminate any
Contract. Each of the Company and the Controlled Companies does not currently
contemplate, or have reason to believe any person or entity currently
contemplates, any amendment or change to any Contract. None of the customers,
joint venture partners or suppliers of the Company and the Controlled Companies
has refused, or communicated that it will or may refuse, to purchase or supply
goods or services, as the case may be, or has communicated " it will or may
substantially reduce the amounts of goods or services that it is willing to
purchase from, or sell to, the Company and the Controlled Companies.
SECTION 3.14 INSURANCE. Each of the Company and the Controlled
Companies has previously delivered or made available to the Buyer all insurance
policies of the Company and the Controlled Companies. All of such policies are
valid and enforceable against the Company and the Controlled Companies, except
as such enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and except as the availability of equity remedies
may be limited by the application of general principles of equity (regardless of
whether such equitable principles are applied in a proceeding at law or 'm
equity).
SECTION 3.15 USE OF NAME AND LOGO.
(a) Each of the Company and the Controlled Companies (if applicable)
has an authorization, in full force and effect, from Sullair Corporation to use
the latter's corporate name and logo in the Company's and the Controlled
Companies' business and in all the Company's and the Controlled Companies'
business correspondence and papers, as provided under the License Agreement
between Sullair Corporation and Sullair Argentina S.A., attached as SCHEDULE
3.15 hereto (the "License Agreement"). That authorization does not infringe or
violate the rights of any third parties and its use is not subject to any
further consent either of Sullair Corporation or
17
of any other third party. No proceedings have been instituted, are pending or,
to the knowledge of the Company and the Controlled Companies (if applicable) are
threatened, that challenge the rights of the Company and the Controlled
Companies (if applicable) to use the corporate name and logo of Sullair
Corporation.
SECTION 3.16 TRADE SECRETS AND CUSTOMER LISTS. Each of the Company and
the Controlled Companies has the right to use, free and clear of any claims or
rights of others, all trade secrets, customer lists and proprietary information
required for the marketing of all merchandise and services presently sold or
marketed by the Company or the Controlled Companies, as provided under the
License Agreement. Each of the Company or the Controlled Companies is not using
or in any way making use of any confidential information or trade secrets of any
third party, including without limitation any past or present employee of the
Company or the Controlled Companies.
SECTION 3.17 TITLE TO ASSETS; CONDITION OF ASSETS.
(a) A description of all interests in real property owned by the
Company and the Controlled Companies is set forth in Schedule 3.17(a).
(b) Except as disclosed on Schedule 3.17(b), each of the Company and
the Controlled Companies has good and marketable title to the Company and the
Controlled Companies Assets, including, without limitation, those reflected on
the Interim Balance Sheet (other than those since disposed of in the ordinary
course of business), free and clear of all security interests, liens, charges
and other encumbrances, except for (i) liens for taxes not yet due and payable
or being contested in good faith in appropriate proceedings, and (ii)
encumbrances that are incidental to the conduct of its business or ownership of
property, not incurred in connection with the borrowing of money or the
obtaining of credit, and which do not in the aggregate materially detract from
the value of the assets affected or materially impair their use by the Company
or the Controlled Companies. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company or the
Controlled Companies are in good operating condition and repair (it being
understood that a certain portion of the rental fleet is constantly being
repaired), normal wear and tear excepted, are adequate and sufficient for the
Company's and the Controlled Companies' business and conform in all material
respects with all applicable ordinances, regulations and laws relating to their
use and operation.
(c) Neither the Company nor the Controlled Companies are currently
lessees of any real estate property.
SECTION 3.18 COMPLIANCE WITH LAWS. Each of the Company and the
Controlled Companies has all material franchises, Permits, licenses and other
rights and privileges necessary to permit it to own its properties and to
conduct its business as Presently conducted. The business and operations of the
Company and the Controlled Companies have been and are being conducted in
accordance in all material respects with all applicable laws, rules and
regulations, and each of the Company and the Controlled Companies is not in
violation of any judgment, law or regulation except where any such violation
would not have a material adverse effect on the
18
Company's or the Controlled Companies' results of operations, business, assets
or financial condition.
SECTION 3.19 LITIGATION., DEFAULT. Except as otherwise set forth in
Schedule 3.19, there are no claims, actions" suits, investigations or
proceedings against the Company or the Controlled Companies pending or, to the
Knowledge of the Company or the Controlled Companies, threatened in any court or
before or by any Governmental Authority, or before any arbitrator, that could
reasonably be expected to have a material adverse effect (whether covered by
insurance or not) on the business, operations, prospects, Properties, securities
or financial condition of the Company or the Controlled Companies. Except as
otherwise set forth in Schedule 3.19, each of the Company or the Controlled
Companies is not in default under, and no condition exists (whether covered by
insurance or not) that with or without notice or lapse of time or both would (i)
constitute a default under, or breach or violation of, any Legal Requirement,
Permit or Contract applicable to the Company, or (ii) accelerate or permit the
acceleration of the performance required under, or give any other party the
right to terminate, any Contract applicable to the Company or the Controlled
Companies, other than defaults, breaches, violations or accelerations that would
not have a material adverse effect on the business, operations, prospects,
Properties, securities or financial condition of the Company or the Controlled
Companies.
SECTION 3.20 ENVIRONMENTAL MATTERS. The Company and the Controlled
Companies have conducted all their operations in compliance with the
requirements set forth in the Argentine Hazardous Waste Law Nbr. 24,051 ("HWL").
To the extent of this agreement "Hazardous Material" shall have the meaning
ascribed thereto in the HWL. Neither the Company nor the Controlled Companies
has received notice of any resolution stating the violation of Argentine
environmental, health and safety laws. There has been no release or threat of
release of any Hazardous Material at any other location for which the Company or
the Controlled Companies may be held responsible. There are no administrative or
judicial fines, or claims pending resulting from any safety liabilities or
arising under Argentine law which may be deemed significant.
SECTION 3.21 BANKS. SCHEDULE 3.21 sets forth the name of each bank,
trust company or other financial institution and stock or other broker with
which the Company or the Controlled Companies has an account, credit line or
safe deposit box or vault.
SECTION 3.22 SUPPLIERS AND CUSTOMERS SALES. SCHEDULE 3.22 sets forth
all the Company's and the Controlled Companies' material suppliers during the
twelve month period ended December 31, 1997, together with the dollar amount of
goods purchased by the Company or the Controlled Companies from each such
supplier during the twelve month period ended December 3 1, , as well as each of
the principal customers of the Company and the Controlled Companies during the
twelve month period ended December 31, 1997. Except as otherwise set forth in
SCHEDULE 3.22, since December 31, 1997, there has been no material adverse
change in the business relationship of the Company and the Controlled Companies
with any supplier or customer named in SCHEDULE 3.22. No customer or supplier
named in SCHEDULE 3.22 has terminated or materially altered, or notified the
Company or the Controlled Companies of any intention to terminate or materially
alter, its relationship with the Company or the Controlled
19
Companies, and each of the Company and the Controlled Companies has no reason to
believe that any such customer or supplier will terminate or materially alter
its relationship with the Company or the Controlled Companies or to materially
decrease its services or supplies to the Company or the Controlled Companies or
its direct or indirect usage of the services or products of the Company or the
Controlled Companies. For purposes of SECTIONS 3.22 and 3.25, "material
suppliers" refers to suppliers from whom Company or the Controlled Companies
purchased five percent (5%) or more of the total amount of the goods purchased
by the Company or the Controlled Companies during the twelve month period ended
December 31, 1997, and "principal customers" refers to customers who accounted
for 5% or more of the Company's or the Controlled Companies' total revenues
during the twelve month period ended DECEMBER 31, 1997.
SECTION 3.23 BROKERAGE. There are no claims for brokerage commissions,
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by the
Company.
SECTION 3.24 DISCLOSURE; DUE DILIGENCE. This Agreement and the Exhibits
and Schedules hereto, when taken as a whole with other documents and
certificates furnished by the Company to the Buyer or its counsel, do not
contain any untrue statement of material fact or omit any material fact
necessary in order to make the statements therein not misleading. ▇▇▇▇ hereby
states that it has been provided ample opportunity to conduct due diligence in
the Company to its satisfaction.
SECTION 3.25 OWNERSHIP INTERESTS OF INTERESTED PERSONS. No director or
executive officer of the Company or the Controlled Companies or their respective
spouses or children, owns directly or indirectly, on an individual or joint
basis, any material interest in, or serves as an officer or director of, any
principal customer or material supplier which has a business relationship with
the Company or the Controlled Companies or any organization that has a material
contract or arrangement with the Company or the Controlled Companies.
SECTION 3.26 INVESTMENTS IN COMPETITORS. NO director or executive
officer of the Company or the Controlled Companies owns directly or indirectly
any material interests or has any investment equal to 5% or more of the
outstanding voting securities in any corporation, business or other person that
is a direct competitor of the Company or the Controlled Companies.
SECTION 3.27 CERTAIN PAYMENTS. To the Knowledge of the Stockholders,
neither the Company nor the Controlled Companies, nor any director, officer or
employee of the Company or the Controlled Companies, has paid or caused to be
paid, directly or indirectly, in connection with the business of the Company or
the Controlled Companies: (a) to any government or agency thereof or any agent
of any supplier or customer any bribe, kick-back or other similar payment; or
(b) any material contribution to any political party or candidate (other than
from personal funds of directors, officers or employees not reimbursed by their
respective employers or as otherwise permitted by applicable law).
SECTION 3.28 GOVERNMENT INQUIRIES. There have been no material
inspection reports, questionnaires, inquiries, demands or requests for
information received by the Company or the
20
Controlled Companies from, or any material statement, report or other document
filed by the Company or the Controlled Companies with, the national government
or any national administrative agency or the corresponding country (including
but not limited to, the Tax and Social Security Authority, Ministry of Labor, or
any local or provincial tax authority), except for those customarily required by
the corresponding Tax and Social Security Authority, Ministry of Labor or any
other governmental authority.
SECTION 3.29 OTHER TRANSACTIONS. Each of the Company and the Controlled
Companies has not entered into any agreements or arrangements and there are no
pending offers or discussions concerning or providing for the merger or
consolidation of the Company or the Controlled Companies or all or any
substantial portion of its assets, the sale by the Company or the Controlled
Companies or any stockholder of the Company or the Controlled Companies of any
securities of the Company or the Controlled Companies or any similar transaction
affecting the Company or the Controlled Companies or their respective
securityholders.
SECTION 3.30 TAX MATTERS. Except as provided in Schedule 3.30: (i) Each
of the Company and the Controlled Companies has filed or has caused to be filed
all federal, provincial and municipal tax returns and reports of the
corresponding country, which tax returns are correct and complete, and has paid
and discharged all taxes required to be paid and has paid all applicable
federal, provincial and municipal, ad valorem taxes as are due; (ii) neither the
DGI nor any other tax or similar national, provincial or municipal authority or
agency of the corresponding country has asserted or is now asserting or
threatening to assert against the Company or the Controlled Companies any
deficiency or claim for the assessment or collection of additional taxes,
interest thereon or penalties in connection therewith; (iii) there is no audit
or examination pending by any Tax Authority of the corresponding country of the
tax returns, business, assets or properties of the Company or the Controlled
Companies. The Company or the Controlled Companies, whether explicitly or
implicitly, has not granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment of, any federal,
provincial, municipal or foreign income tax of the corresponding country; and
(iv) the accruals and reserves for taxes reflected in the Interim Balance Sheet
are adequate to cover all taxes accruable through such date (including interest
and penalties thereon, if any) in accordance with the respective country's GAAP.
For purposes of this Agreement, the word "Tax" shall mean any tax, including,
but not limited to levies, duties, charges, canon, services or charges for use
of municipal properties, services, deductions, withholdings or liabilities
imposed by any federal, provincial or municipal authority of the corresponding
country and any other taxes of any nature imposed in any name and under any
form, including social security withholdings and contributions as well as any
other charges imposed similarly to taxes, such as the joint and several
contribution (contribucion solidaria") and the mandatory saving ("ahorro
forzoso"), and any and all such taxes and contributions which should have been
collated and paid pursuant to any regulation, to any governmental body or to any
other entity on behalf of third parties, including with respect to each item any
interest, adjustments, penalties or additions.
21
SECTION 3.31 APPLICABILITY OF THE REPRESENTATIONS AND WARRANTIES.
Except as otherwise expressly indicated, the representations and warranties
contained in this Article III shall not be applicable to the Related Companies.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Each Stockholder represents and warrants to the Buyer as follows:
SECTION 4 01 TITLE OF THE SHARES. As of the Closing Date, such
Stockholder shall own free and clear of any lien, option or other encumbrance,
and shall have full power and authority to convey free and clear of any liens or
other encumbrances, the Stockholder Shares set forth opposite such Stockholders'
name on EXHIBITS A hereof, and, upon delivery of and payment for such shares as
herein provided, such Stockholder will convey to the Buyer good and valid title
thereto, free and clear of any lien or other encumbrance.
SECTION 4.02 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Such
Stockholder has the full legal right and power and all authority and approval
required to enter into, execute and deliver this Agreement and to perform fully
such Stockholders' obligations hereunder. This Agreement has been duly executed
and delivered by such Stockholder and is a valid and binding obligation of such
Stockholder enforceable in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and except as the availability of equity remedies
may be limited by the application of general principles of equity (regardless of
whether such equitable principles are a lied in a proceeding at law or in
equity). The execution and delivery by such Stockholder of this Agreement and
the performance by such Stockholder of this Agreement in accordance with its
terms and conditions will not (i) require the approval or consent of any
foreign, federal, state, county, local or other governmental or regulatory body
or the approval or consent of any other person,- (ii) conflict with or result in
any breach or violation of any of the terms and conditions of, or constitute (or
with notice or lapse of time or both constitute) a default under, any statute,
regulation, order, judgment or decree applicable to such Stockholder or to the
Stockholder Shares, held by such Stockholder, or any instrument, contract or
other agreement to which such Stockholder is a party or by or to which such
Stockholder is or the Stockholder Shares, held by such Stockholder arc bound or
subject; or (iii) result in the creation of any lien or other encumbrance on the
Stockholder Shares held by such Stockholder.
SECTION 4.03 NO STOCKHOLDERS DEFAULTS OR CONSENTS. Except as otherwise
set forth in Schedule 3.05 the execution and delivery Of this Agreement and the
Collateral Agreements by each Stockholder and the performance by each
Stockholder who is a party thereto of his, her or its obligations hereunder and
thereunder will not violate any provision of law or any judgment, award or
decree or any indenture, agreement or other instrument to which such Stockholder
is a party, or by which such Stockholder or any properties or assets of such
Stockholder is bound or affected, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default -under, any such
indenture, agreement or other instrument, or result in the creation
22
or imposition of any lien., charge, security interest or encumbrance of any
nature whatsoever upon any of the properties or assets of such Stockholder. Any
and all consents required to be obtained by such Stockholder shall be obtained
and copies thereof delivered to the Buyer upon execution of this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and wan-ants to the Stockholders and to the
Company that:
SECTION 5.01 CORPORATE EXISTENCE AND QUALIFICATION. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware; has the corporate power to own, manage, lease and hold
its Properties and to carry on its business as and where such Properties are
presently located and such business is presently conducted; and is duly
qualified to do business and is in good standing as a foreign corporation in
each of the jurisdictions where the character of its Properties or the nature of
its business requires it to be so qualified.
SECTION 5.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has
been duly executed and delivered by the Buyer and the Buyer has all requisite
corporate power and legal capacity to execute and deliver this Agreement and all
Collateral Agreements executed and delivered or to be executed and delivered by
the Buyer in connection with the transactions provided for hereby, to consummate
the transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. The
execution and delivery of this Agreement and the Collateral Agreements and the
performance of the transactions contemplated hereby and thereby have been duly
and validly authorized and approved by all corporate action necessary on behalf
of the Buyer. This Agreement and each Collateral Agreement to which the Buyer is
a party constitutes, or upon execution and delivery will constitute, the legal,
valid and binding obligation of the Buyer, enforceable in accordance with its
terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization., moratorium or other similar laws
affecting the enforcement of creditors, rights generally, and except as the
availability of equity remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principles are
applied in a proceeding at law or in equity).
SECTION 5.03 NO DEFAULT OR CONSENTS. Neither the execution and delivery
of this Agreement nor the carrying out of the transactions contemplated hereby
will:
(i) violate or conflict with any of the terms, conditions or provisions
of the Buyer's articles of incorporation or bylaws;
(ii) violate any Legal requirements applicable to the Buyer;
23
(iii) violate, conflict with, result in a breach of, constitute a
default under (whether with or without notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance required by, or give
any other party the right to terminate, any contract or Permit applicable to the
Buyer;
(iv) result in the creation of any lien, charge or other encumbrance on
the shares of capital stock or any Property of the Buyer; or
(v) require the Buyer to obtain or make any waiver, consent, action,
approval or authorization of, or registration, declaration, notice or filing
with, any private nongovernmental third party or any Governmental Authority.
SECTION 5.04 NO PROCEEDINGS. No suit, action or other proceeding is
pending or, to the Buyer's knowledge, threatened before any Govemmental
Authority seeking to restrain the Buyer or prohibit its entry into this
Agreement or prohibit the Closing, or seeking Damages against the Buyer or its
Properties as a result of the consummation of this Agreement.
SECTION 5.05 BROKERAGE. There are no claims for brokerage commissions,
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by the
Company.
ARTICLE VI
OBLIGATIONS PRIOR TO CLOSING
SECTION 6.01 BUYER'S ACCESS TO INFORMATION AND ASSETS. The Company has
permitted the Buyer and its authorized employees, agents, accountants, legal
counsel and other representatives, at Buyer's own expense, reasonable access to
the books, records, employees, counsel, accountants, and other representatives
of the Company when reasonably requested by the Buyer for the purpose of
conducting an investigation of each of the Company's financial condition,
corporate status, operations, business and Properties. The Company has made
available to the Buyer for examination, at Buyer's own expense, certain
documents and data relating to the Company in possession or control of, or
subject to reasonable access by, the Stockholders or the Company and relating to
the Company Assets (whether stored in paper, magnetic or other storage media)
and all agreements, instruments, contracts, assignments, certificates, orders,
and amendments thereto. Also, the Company has allowed the Buyer, at Buyer's own
expense, access to, and the right to inspect, the Company Assets, except to the
extent that such Company Assets are operated by a third-party operator, in which
case the Company has used its best efforts to cause the operator of such Company
Assets to allow the Buyer access to, and the right to inspect, such Company
Assets. The Buyer undertakes to keep confidential all information received
pursuant to this Section 6.01.
From the date of this Agreement through the Closing:
24
SECTION 6.02 COMPANY'S CONDUCT OF BUSINESS AND OPERATIONS. COMPANY
shall keep the Buyer advised as to all material operations and proposed material
operations relating to the Company or the Company Assets. The Company shall (a)
conduct its business in the ordinary course, (b) use its reasonable efforts to
keep available to the Company the services of present employees, (c) maintain
and operate Company Assets in a good and workmanlike manner, (d) pay or cause to
be paid all costs and expenses (including but not limited to insurance premiums)
incurred in connection therewith in a timely manner, (e) use reasonable efforts
to keep all Contracts listed or required to be listed on Schedule 3.13 in full
force and effect, (f) comply with all of the covenants contained in all such
material Contracts, (g) maintain in force until the Closing Date insurance
policies (subject to the provisions of Section 6.07) equivalent to those in
effect on the date hereof, and (h) comply in all material respects with all
applicable Legal Requirements. Except as otherwise contemplated in this
Agreement, the Company shall use ITS best efforts to preserve the present
relationships of the Company with persons having significant business relations
therewith.
SECTION 6 03 GENERAL RESTRICTIONS. Except as otherwise expressly
permitted in this Agreement, without the prior written consent of the Buyer, the
Company will not:
(i) (x) declare, set aside or pay any dividends on, or make any other
distribution (whether in cash, stock or property) in respect of, any of its
capital stock, other than a one-time cash dividend to the Stockholder in the
aggregate amount of U.S.$3,500,000, of which US $787,500 are still to be paid to
Sullair Corporation, (y) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of, in
view of or in substitution for shares of its capital stock, or (z) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities;
(iii) amend its By-laws;
(iv) acquire or agree to acquire (x) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other manner,
any business of any corporation, partnership, joint venture, association or
other business organization or division thereof or (y) any assets that are
material, individually or in the aggregate, to the Company, except purchases of
assets in the ordinary course of business consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber or otherwise
dispose of, or agree to sell, transfer, lease., mortgage, encumber or otherwise
dispose of, any Properties except (i) in the ordinary course of business
consistent with past practice, or (ii) pursuant to any Contract;
25
(vi) (y) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company,
guarantee any debt securities of another person, enter into any "keep well" or
other agreements to maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of the foregoing,
except for borrowings incurred in the ordinary course of business consistent
with past practice, or (z) make any loans, advances or capital contributions to,
or investments in, any other person;
(vii) make or agree to make any new capital expenditure or expenditures
which, in the aggregate, are in excess of $50,000 (other than those required
pursuant to currently outstanding Contracts or in the ordinary course of
business consistent with past practice)
(viii) make any material tax election or settle or compromise any
material tax liability;
(ix) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in the
accordance with their terms, of liabilities reflected or reserved against in, or
contemplated by, the Financial Statements (or the notes thereto) or incurred in
the ordinary course of business consistent with past practice, or waive any
material benefits of, or agree to modify in any material respect, any
confidentiality, standstill or similar agreements to which the Company is a
party;
(x) except in the ordinary course of business consistent with past
practice, modify, amend or terminate any Contract;
(xi) except in the ordinary course of business consistent with past
practice, enter into any contracts, agreements, arrangements or understandings
relating to the rental, distribution, sale or marketing by third parties of the
Company's rental equipment, inventory or other products;
(xii) except as required to comply with applicable law (A) adopt, enter
into, terminate or amend any Plan or other arrangement for the benefit or
welfare of any director, officer or current or former employee, (B) increase in
any manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee (except for normal increases or bonuses in the
ordinary course of business consistent with past practice), (c) pay any benefit
not provided for under any Plan, (D) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Plan
(including the grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units or restricted stock, or the removal of
existing restrictions in any Plans or agreement or awards made thereunder) or
(E) take any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or Plan;
(xiii) make any change in any method of accounting or accounting
practice or policy other than those required by generally accepted accounting
principles; or
(xiv) authorize any of, or commit or agree to take any of, the
foregoing actions.
26
SECTION 6.04 NOTICE REGARDING CHANGES. The Stockholders shall promptly
inform the Buyer in writing of any change in facts and circumstances that could
render any of the representations and warranties made herein by the Stockholders
inaccurate or misleading if such representations and warranties had been made
upon the occurrence of the fact or circumstance in question. The Buyer shall
promptly inform the Stockholders in writing of any change in facts and
circumstances that could render any of the representations and warranties made
herein by it inaccurate or misleading if such representations and warranties had
been made upon the occurrence of the fact or circumstance in question.
SECTION 6.05 PREFERENTIAL PURCHASE RIGHTS. To the extent there are any
parties entitled or who may become entitled to exercise preferential purchase or
consent rights with respect to the transactions contemplated hereby, the
Stockholders shall promptly obtain the agreement in writing of such parties to
waive or not exercise such rights, which request and agreement shall be in form
and substance reasonably satisfactory to and approved by the Buyer.
SECTION 6.06 CONSENTS AND BEST EFFORTS. Each of the parties hereto
shall use all commercially reasonable good faith efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations, and consult and fully
cooperate with and provide reasonable assistance to each other party and their
respective representatives in order to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable
hereafter, including without limitation, (i) using all commercially reasonable
good faith efforts to make all filings, applications, notifications, reports,
submissions and registrations with, and to obtain all consents, approvals,
authorizations or permits of, governmental entities or other persons or entities
as are necessary for the consummation of the in transactions contemplated by
this Agreement, and (ii) taking such actions and doing such things as any other
party hereto may reasonably request in order to cause any of the conditions to
such other party's obligation to consummate the transactions contemplated hereby
as specified in Article VII of this Agreement to be fully satisfied.
SECTION 6 07 TERMINATION OF INSURANCE POLICIES. The Company shall take
all actions necessary or appropriate to cause any and all insurance coverage
currently carried by or for the benefit of the Company to remain in full force
and effect.
SECTION 6.08 CASUALTY LOSS. If, between the date of execution of this
Agreement and the Closing, any of the Properties of the Company shall be
destroyed or damaged in whole or in part by fire, earthquake, flood, other
casualty or any other cause, then the Company shall, at the Buyer's election,
(i) cause such Properties to be repaired or replaced prior to the Closing with
Property of substantially the same condition and function, (ii) deposit in a
separate account an amount sufficient to cause such Property to be so repaired
or replaced, or (iii) enter into contractual arrangements satisfactory to the
Buyer so that the Company will have at the Closing the same economic value as if
such casualty had not occurred.
SECTION 6 09 EMPLOYEE MATTERS. The Company shall take all actions
necessary or appropriate to cause each Plan or Benefit Program or Agreement in
effect on the date of this
27
Agreement to remain in full force and effect until the Closing Date; provided,
however, that to the extent requested in writing by the Buyer at least ten (10)
days prior to the Closing Date, the Company shall cease to sponsor, maintain or
contribute to any plan or benefit program or agreement specified by the Buyer in
such written request and the Stockholders shall further assume all past, present
and future obligations and liabilities of the Company (including contingent
liabilities) with respect to each such plan or benefit program or agreement
effective as of the last business day prior to the Closing Date. In no event,
the Company shall cease to sponsor, maintain or contribute to any plan or
benefit program if it contradicts any legal provision.
SECTION 6.10 NO SOLICITATION. The Stockholders and the Company and its
officers, directors, employees, representatives and agents shall immediately
cease any discussions or negotiations with any parties that may be ongoing with
respect to a Third Party Acquisition Proposal (as defined below). Neither the
Company nor any of the Stockholders shall, nor shall they permit any of their
Affiliates to, nor shall they authorize or permit any of their officers,
directors or employees or any investment banker, attorney or other advisor or
representatives retained by them or any of their Affiliates to, (i) solicit,
initiate or knowingly encourage the submission of, any Third Party Acquisition
Proposal, or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to, or take any
other action knowingly to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Third Party
Acquisition Proposal. For purposes of this Agreement, "Third Party Acquisition
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of all or a portion or more of the
assets of the Company or all or a portion any class of equity securities of the
Company or any offer to acquire or purchase that if consummated would result in
any person beneficially owning all or a portion of any class of equity
securities of the Company, or any merger, consolidation, business combination,
sale of assets, recapitalization, liquidation, dissolution or similar
transaction involving the Company, other than the transactions contemplated by
this Agreement, or any other transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay,
or dilute materially the benefits to the Buyer of the transactions contemplated
hereby.
SECTION 6.11 EMPLOYMENT AGREEMENT. On or before Closing, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ shall have entered into an employment agreement in the form of EXHIBIT
B (the "Employment Agreement"), to take effect on and after the Closing Date.
SECTION 6.12 STOCKHOLDERS' AGREEMENT. On or before Closing, the
Stockholders and the Buyer shall have entered into a stockholders' agreement in
the form of EXHIBIT C- (the "Stockholders' Agreement").
ARTICLE VII
CONDITIONS TO STOCKHOLDERS' AND BUYER'S OBLIGATIONS
28
SECTION 7.01 CONDITIONS TO OBLIGATIONS OF ALL PARTIES. The respective
obligations of each party to carry out the transactions contemplated by this
Agreement are subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) All filings with all Governmental Authorities required to be made
in connection with the transactions contemplated hereby shall have been made,
and all orders, permits, waivers, authorizations, exemptions, and approvals of
such entities required to be in effect on the date of the Closing connection
with the transactions contemplated hereby shall have been issued, all such
orders, permits, waivers, authorizations. exemptions or approvals shall be in
full force and effect on the date of the Closing; provided, however, that no
provision of this Agreement shall be construed as requiring any party to accept,
in connection with obtaining any other requisite approval, clearance or
assurance of non-opposition, avoiding any challenge, or negotiating settlements
any condition that would materially change or restrict the manner in which the
Company or the Buyer conducts or proposes to conduct its business.
(b) None of the parties hereto shall be subject to any statute, rule,
regulation, decree, ruling, injunction or other order issued by any Governmental
Entity of competent jurisdiction (collectively, an "Injunction") which
prohibits, restrains, enjoins or restricts the consummation of the transactions
contemplated by this Agreement.
SECTION 7.02 CONDITIONS TO OBLIGATIONS OR STOCKHOLDERS. The obligations
of the Stockholders to carry out the transactions contemplated by this Agreement
are subject, at the option of Stockholders, to the satisfaction, or waiver by
Stockholders, of the following conditions:
(a) The Buyer shall have farm-shed Stockholders and the Company with a
copy of all necessary corporate action on its behalf approving its execution,
delivery and performance of this Agreement.
(b) All representations and warranties of the Buyer contained in this
Agreement qualified by materiality shall be true and correct in all respects at
Closing and all other representations and warranties of the Buyer contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing, as if such representations and warranties were made at and as of
the Closing, except for changes contemplated by the terms of this Agreement
except as and to the extent that the facts and conditions upon which such
representations and warranties are based are expressly required or permitted to
be changed by the terms thereof and the Buyer shall have performed and satisfied
in all material respects all covenants and agreements required by this Agreement
to be performed and satisfied by the Buyer at or prior to the Closing; provided,
however, that no Stockholder or the Company shall be entitled to refuse to
consummate the transaction in reliance upon its own breach or failure to
perform.
(c) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by or on behalf of the Stockholders or the
29
Company) shall be pending or threatened before any Governmental Authority
seeking to restrain the Stockholders or the Company or prohibit the Closing or
seeking Damages against Stockholders or the Company as a result of the
consummation of this Agreement.
(d) The Stockholders shall have received the opinion of ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel to the Buyer, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Stockholders, as to the matters set
forth on EXHIBIT D. In rendering such opinion, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may rely as to
factual matters on certificates of officers and directors of the Buyer and on
certificates of governmental officials, and as to legal matters on opinions of
other counsel reasonably acceptable to Stockholders.
(e) The Buyer shall have executed and delivered to the Stockholders the
Collateral Agreements to which it is a party.
SECTION 7.03 CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligations of
the Buyer to carry out the transactions contemplated by this Agreement are
subject, at the option of the Buyer, to the satisfaction, or waiver by the
Buyer, of the following conditions:
(a) All representations and warranties of Stockholders and the Company
contained in this Agreement qualified by materiality shall be true and correct
in all respects at Closing and all other representations and warranties of the
Stockholders and the Company contained in this Agreement shall be true and
correct in all material respects at and as of the Closing as if such
representations and warranties were made at and as of the Closing, except for
changes contemplated by the terms of this Agreement except as and to the extent
that the facts and conditions upon which such representations and warranties are
based are expressly required or permitted to be changed by the terms thereof,
and the Stockholders and the Company shall have performed and satisfied in all
material respects all agreements and covenants required by this Agreement to be
performed and satisfied by Stockholders and the Company at or prior to the
Closing; provided, however, that the Buyer shall not be entitled to refuse to
consummate the transaction in reliance upon its own breach or failure to
perform.
(b) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by or on behalf of the Buyer) shall be
pending or threatened before any court or governmental agency seeking to
restrain the Buyer or prohibit the Closing or seeking Damages against the Buyer,
the Company or its Properties as a result of the consummation of this Agreement.
(c) All notices required to be given in connection with the
transactions contemplated by this Agreement shall have been duly and timely
given, and there shall not be any preferential purchase rights or consent
requirements with respect to the transactions contemplated by this Agreement
that have not expired or been waived.
(d) Since the date of the Interim Balance Sheet and up to and including
the Closing there shall not have been:
30
(i) any change in the business, operations, prospects or
financial condition of the Company that had or would reasonably be likely to
have a material adverse effect on the business, operations, prospects,
properties, securities or financial condition of the Company; and
(ii)any damage, destruction or loss to the Company (whether or
not covered by insurance) that had or would reasonably be likely to have a
material adverse effect on the business, operations, prospects, Properties,
securities or financial condition of the Company.
(e) The Buyer shall have received the opinion of the law firm Basilico,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company and the Stockholders, dated as
of the Closing Date, in form and substance reasonably satisfactory to the Buyer,
as to the matters set forth on EXHIBIT F. In rendering such opinion, Basilico,
Fernandez, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ may rely as to factual matters on certificates of
officers, directors and shareholders of the Company and on certificates of
governmental officials, and as to legal matters on opinions of other counsel
reasonably acceptable to the Buyer.
(f) The Stockholders and the Company shall have executed and delivered
to the Buyer the Collateral Agreements to which it is a party.
(g) The Buyer shall have received the resignation of all of the members
of the board of directors of the Company effective as of the Closing Date and
new members shall have been elected as provided in the Stockholders' Agreement.
(h) All proceedings to be taken by the Stockholders and the Company in
connection with the transactions contemplated hereby and all documents incident
thereto shall be satisfactory in form and substance to the Buyer and its
counsel, and the Buyer and said counsel shall have received all such counterpart
originals or certified or other copies of such documents as it or they may
reasonably request.
(i) The Buyer shall have received written evidence, in form and
substance satisfactory to the Buyer, of the consent to the transactions
contemplated by this Agreement of all governmental, quasi-governmental and
private third parties listed or required to be listed in Schedule 3.05 hereto
(including, without limitation, persons or other entities leasing real or
personal property to the Company, and in particular of the following: Banco Rio
de la Plata S.A., BankBoston, JLG Industries, Inc., Onan, Skytrack, Amida
Industries, Inc., Sullair Corporation, European Gas Turbines Ltd. and ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇▇), except where the failure to have obtained any such consent would
not have an adverse effect on the Company following the Closing.
(j) The Buyer shall have performed a due diligence process of the
Company and its Controlled Companies and shall be satisfied, at Buyer's sole and
absolute discretion, with the results of said due diligence process.
ARTICLE VII
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SURVIVAL
Notwithstanding any right of the Buyer fully to investigate the affairs
of the Company and notwithstanding any knowledge of facts determined or
determinable by the Buyer pursuant to such investigation or right of
investigation, the Buyer has the right to rely fully upon the representations,
warranties, covenants and agreements of the Company and the Stockholders
contained in this Agreement, or in any certificate delivered pursuant to any of
the foregoing; provided, that the Buyer shall not be entitled to rely on any
representation or warranty made by the Company or the Stockholders herein to the
extent that the Buyer has actual knowledge, and-the Company or the Stockholders
(or any of them) are not aware, that such representation or warranty is untrue
or incorrect in any material respect. All such representations, warranties,
covenants and agreements shall survive the execution and delivery of this
Agreement and the Closing hereunder. The representations and warranties of the
Company and the Stockholders related to tax matters, as defined in Section 3.30,
shall survive for a five (5) year period counted as from the Closing Date. All
other representations and warranties shall survive for a two (2) year period
counted as from the Closing Date.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 OBLIGATION OF THE STOCKHOLDERS TO INDEMNIFY.
(i) Subject to the limitations contained in Article VIII and Article IX
hereof, the Stockholders, agree to indemnify, severally ' but not jointly,
defend and hold harmless the Buyer (and its directors, officers, affiliates,
successors and assigns) from and against all losses, liabilities, damages,
deficiencies, costs or expenses (including interest, penalties and reasonable
attorneys' fees and disbursements, but offset by any proceeds from insurance and
taking into account any tax savings to the Buyer or the Con3pany or the
Controlled Companies resulting from such losses, liabilities, damages,
deficiencies, costs or expenses) ("Loss" or "Losses") based upon, arising out of
or otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of the Stockholders contained in
this Agreement (other than in Article IV).
(ii) The indemnification obligations of the Stockholders contained in
paragraph (i) above, shall be limited (i) with regard to any inaccuracy in or
any breach of any representation, warranty, covenant or agreement related to the
Company and the Controlled Companies, to a maximum of 20% of the Stock Price;
and (ii) with regard to any inaccuracy in or any breach of any representation,
warranty, covenant or agreement related to the Related Companies, to a maximum
OF US$ 1,000,000.
(iii) Each Stockholder agrees to indemnify, defend and hold harmless
the Buyer (and its directors, officers, affiliates, successors and assigns) from
and against any Losses based upon, arising out of or otherwise in respect of any
inaccuracy in any representation or warranty of such Stockholder contained in
Article IV or in any document or other papers delivered pursuant to Article IV.
32
SECTION 9.02 OBLIGATION OF THE BUYER TO INDEMNIFY. The Buyer agrees to
indemnify, defend and hold harmless the Company and the Stockholders (and its
directors, officers, affiliates, successors and assigns)from and against any
Losses based upon, arising out of or otherwise in respect of any inaccuracy in
or any breach of any representation, warranty, covenant or agreement of the
Buyer contained in this Agreement.
SECTION 9.03 NOTICE AND OPPORTUNITY TO DEFEND.
(a) NOTICE OF ASSERTED LIABILITY. Promptly after receipt by any party
hereto (the "Indemnitee") of notice of any demand, claim or circumstances which,
with the lapse of time, would or might give rise to a claim or the commencement
(or threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss, the Indemnitee shall give
notice thereof (the "Claims Notice") to any other party (or parties) obligated
to provide indemnification pursuant to Section 9.01 or 9.02 (the "Indemnifying
Party"). The Claims Notice shall describe the Asserted Liability in reasonable
detail, and shall indicate the amount (estimated, if necessary and to the extent
feasible) of the Loss that has been or may be suffered by the Indemnitee. If the
Indemnitee fails to promptly render the Claims Notice on the Indemnifying Party,
such claim shall not be deemed an indemnifiable Asserted Liability. A Claims
Notice shall be deemed to have been promptly rendered if it gave reasonable time
to the Indemnifying Party to adequately defend itself in due course against any
such claim.
(b) OPPORTUNITY TO DEFEND. The Indemnifying Party may elect to
compromise or defend, at its own expense and by its own counsel, any Asserted
Liability. If the Indemnifying Party elects to compromise or defend such
Asserted Liability, it shall within ten (10) days (or sooner, if the nature of
the Asserted Liability so requires) notify the Indemnitee of its intent to do
so, and the .Indemnitee shall cooperate, and any reasonable expenses incurred by
the Indemnitee in the course of such cooperation shall be borne by the
Indemnifying Party, in the compromise of or defense against, such Asserted
Liability. If the Indemnifying Party elects not to compromise or defend the
Asserted Liability, fails to notify the Indemnitee of its election as herein
provided or contests its obligation to indemnify under this Agreement, the
Indemnity may pay, compromise or defend such Asserted Liability. Notwithstanding
the foregoing, neither the Indemnifying Party nor the Indemnitee may settle or
compromise any claim over the objection of the other, provided, however, that
consent to settlement or compromise shall not be unreasonably withheld. In any
event, the Indemnitee and the Indemnifying Party may participate, at their own
expense, in the defense of such Asserted Liability. If the Indemnifying Party
chooses to defend the claim, the Indemnitee shall make available to the
Indemnifying Party any books, records or other documents within its control that
are necessary or appropriate for such defense.
SECTION 9.04 SET-OFF RIGHTS.
(a) Each Stockholder specifically agrees that, subject to paragraphs
(b) and (c) of this Section 9.04, (i) any claims for indemnification by the
Buyer against the Stockholders (or any of them) hereunder may be satisfied
against the Earn-Out Amount, and (ii) that, to the extent that there remain
unsatisfied indemnification claims after the deductions and set-offs described
above,
33
the Buyer shall have full recourse against each of the Stockholders
(including their assets of whatsoever kind or nature) for payment of such
indemnification claims, subject to the limitations set forth in Section
9.01(ii).
(b) The Buyer shall give Stockholders not less than thirty (30) days'
notice (the "Buyer's Notice") of its intent-Ion to deduct or set-off any amounts
pursuant to this Section 9.04, including in such notice a description of the
Buyers Claims Notice. If none of the Stockholders object TO SUCH deduction or
set-off at least two business days prior to the date of the proposed set-off set
forth in the Buyer's Notice (the "Set-Off Date"), then such proposed deduction
or set-off shall become effective on such date and shall not be subject to
further review, challenge or adjustment absent fraud.
(c) If any of the Stockholders timely object to the set-off proposed in
the Buyer's Notice, and if the Buyer and the objecting Stockholder(s) are unable
to resolve such dispute on or prior to the Set-Off Date, then the proposed
deduction or set-off shall be effective only as to undisputed amounts. With
respect to a dispute among the parties pursuant to this Section 9.04(c), it
shall be settled according to the arbitration procedure set forth in Section 1
1.05 (c), notwithstanding the right of Buyer, if an indemnification were claimed
pursuant to Sections 9.01 and 9.02 hereinabove, to retain the disputed amount up
to a maximum amount of ten percent (10%) of the Earn Out Payments. The party who
is later determined to have been in error in attempting to enforce or disputing
the payment or set-off shall (i) pay the reasonable legal and accounting fees,
costs and expenses incurred by the prevailing party in presenting, arguing and
resolving such dispute and (ii) pay to the party to which such payment or
set-off is determined to be payable an amount sufficient to equal a return at
the rate of twelve and one half percent (12.5%) per annum on the disputed amount
from the date payment of such amount was originally due through the date payment
is actually made.
ARTICLE X
POST-CLOSING OBLIGATIONS
SECTION 10.01 FURTHER ASSURANCES. Following the Closing, each of the
Company, the Stockholders and the Buyer shall execute and deliver such
documents, and take such other action, as shall be reasonably requested by any
other party hereto to carry out the transactions contemplated by this Agreement.
SECTION 10.02 PUBLICITY. None of the parties hereto shall issue or
make, or cause to have issued or made, any public release or announcement
concerning this Agreement or the transactions contemplated hereby, without the
advance approval in writing of the form and substance thereof by each of the
other parties, and the parties shall endeavor jointly to agree on the text of
any announcement or circular so approved or required.
SECTION 10.03 ACCESS TO RECORDS. From and after the Closing, (i) each
of the Stockholders shall (A) permit the Buyer and its authorized employees,
agents, accountants, legal counsel and other representatives to have access to
the books, records, files, agreements and other information in the possession of
the Stockholders or their respective Affiliates, and (B) use
34
his best efforts to
permit the Buyer and its authorized employees, agents, accountants, legal
counsel and other representatives to have access to the employees, counsel,
accountants and other representatives of the Stockholders and their respective
Affiliates, in each case, to the extent and at all times reasonably requested by
the Buyer for the purpose of investigating or defending any claim made against
the Stockholders, or the Company in connection with periods ending on or before
the Closing Date and (ii) the Buyer shall use its best efforts to permit the
Stockholders and their respective authorized employees, agents, accountants,
legal counsel and other representatives to have access to the employees,
counsel, accountants and other representatives of the Buyer, the Company and
their Affiliates, in each case, to the extent and at all time reasonably
requested by the Stockholders, or any of them, for the purpose of investigating
or defending any claim made against the Stockholders in connection with Article
IX.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 SULLAIR NAME. Sullair Corporation hereby grants its
conformity to the continuation in the use of its corporate name and logo by the
Company, the Controlled Companies and the Related Companies. In the event that
Sullair Corporation ("Sullair") at any time after the Closing ceases to be a
Stockholder of the Company, the Company and the Controlled and/or Related
Companies and any other company controlled and/or related to the Company shall
change its/their name/s to delete any reference to Sullair within two (2) year's
following the written request of Sullair to effect such action.
SECTION 11.02 BROKERS. No brokers or intermediaries have been used by
none of the parties for this transaction, except for Merchant Bankers Asociados,
which commissions shall be borne exclusively by the Stockholder. To the extent
that any such broker or intermediary, apart from Merchant Bankers Asociados, has
been used, the commissions or other payments which such broker or intermediary
may have the right to claim, shall be borne exclusively by the party who used
said broker or intermediary.
SECTION 11.03 COSTS AND EXPENSES. Each of the parties to this Agreement
shaft bear its own expenses incurred in connection with the negotiation)
preparation, execution and closing of this Agreement and the transactions
contemplated hereby; provided that the Stockholders shall bear and pay any such
expenses incurred by the Company.
SECTION 11.04 NOTICES. Any notice, request, instruction, correspondence
or other document to be given hereunder by any party hereto to another (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed by registered or certified mail, postage prepaid and return receipt
requested, or by telecopier, as follows:
BUYER: ▇▇▇▇ Corp.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
35
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy No. - (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇.▇.▇▇▇▇ 1110 - Piso 13
Buenos Aires (1001)
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Cremaschi
Telecopy No: (▇▇-▇)▇▇▇-▇▇▇▇
THE COMPANY OR ANY Sullair Argentina, S.A.
OF THE STOCKHOLDERS: Goncalvez ▇▇▇▇ 1145
Buenos Aires (I 2 76)
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇-▇) ▇▇▇-▇▇▇▇
With a copy to: Basilico, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇-▇) ▇▇▇-▇▇▇▇
Sullair Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Sundstrand Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Each of the above addresses for notice purposes may be changed by providing
appropriate notice hereunder. All notices shall be effective upon actual
receipt.. All Notices by telecopier shall be confirmed by the sender thereof
promptly after transmission in writing by registered mail or
36
personal delivery. Anything to the contrary contained herein notwithstanding,
notices to any party hereto shall not be deemed effective with respect to such
party until such Notice would, but for this sentence, be effective both as to
such party and as to all other persons to whom copies are provided above to be
given.
SECTION 11.05 GOVERNING LAW.
(a) The provisions of this agreement and the documents delivered
pursuant hereto shall be governed by and construed in accordance with the laws
of the Republic of Argentina (excluding any conflict of law rule or principle
that would refer to the laws of another jurisdiction).
(b) Except as provided for under Sections 1.04 (c) and 11-05 (c)
hereof, each party hereto irrevocably submits to the jurisdiction of the
Commercial Courts in Buenos Aires, Argentina, in any action or proceeding
arising out of or relating to this Agreement or any of the Collateral
Agreements, and each party hereby irrevocably agrees that all claims in respect
of any such action or proceeding must be brought and/or defended in such court,
and each party irrevocably waives, to the fullest extent each may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Any dispute related to the exercise by Buyer of the Sett-Off Rights
set forth in Section 9.04 hereof, shall be settled exclusively and finally by
arbitration- The arbitration shall be conducted in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of Commerce (the
"Chamber") as in effect on the date of this Agreement (the "Arbitration Rules"),
except to the extent the Arbitration Rules conflict with the provisions of this
Section 11.05, in which event the provisions of this Section 11.05 shall
control. The arbitral tribunal shall consist of three arbitrators. Each party
seeking arbitration shall appoint one arbitrator for each arbitration and the
arbitrators so appointed shall appoint the third arbitrator for such arbitration
who shall serve as Chair of the tribunal; provided, however, that if the two
arbitrators cannot agree, the third arbitrator shall be appointed by the Court
of Arbitration of the Chamber. All three arbitrators shall be impartial and
independent. In the event that there are more than two parties with different
interests as to any dispute, the arbitral tribunal shall nevertheless consist of
three arbitrators; the parties in dispute shall mutually agree to the
appointment of two arbitrators and the Court of Arbitration of the Chamber shall
appoint the third arbitrator. If the parties to the dispute are unable to agree
with respect to the appointment of two arbitrators, all three arbitrators shall
be appointed by the Court of Arbitration of the Chamber. The Court of
Arbitration of the Chamber shall appoint only persons who are attorneys or
former judges with experience in international commercial agreements for the
arbitration of any disputes hereunder. The seat of arbitration shall be Buenos
Aires, Argentina and the language of arbitration shall be Spanish. Any decision
of award of the arbitral tribunal shall be final and binding upon the parties.
The parties hereby waive, to the extent permitted by law, any rights to appeal
or to review of such award by any court or tribunal.
37
SECTION 11.06 REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of each of the parties to this Agreement shall be
deemed to have been made at the date hereof and at and as of the Closing Date.
SECTION 11.07 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Agreement,
together with all exhibits and schedules attached hereto, constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties.,
representations or other agreements between the parties in connection with the
subject matter hereof except as set forth specifically herein or contemplated
hereby. No supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (regardless of whether similar), nor shall any such
waiver constitute a continuing waiver unless otherwise expressly provided.
SECTION 11.08 BINDING EFFECT AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned, by operation of law
or otherwise, by any party hereto without the prior written consent of the other
party, provided, however, that nothing herein shall prohibit the assignment of
the Buyer's rights to any wholly-owned subsidiary of the Buyer. Nothing in this
Agreement express or implied, is intended to confer upon any person or entity
other than the parties hereto and their respective permitted successors and
assigns, any rights, benefits or obligations hereunder.
SECTION 11.09 REMEDIES. The rights and remedies provided by this
Agreement are cumulative, and the use of any one right or remedy by any party
hereto shall not preclude or constitute a waiver of its right to use any or all
other remedies. Such rights and remedies are given 'in addition to any other
rights and remedies a party may have by law, statute, or otherwise.
SECTION 11.10 EXHIBITS AND SCHEDULES. The exhibits and schedules
referred to herein are attached hereto and incorporated herein by this
reference. Disclosure of a specific item in any one schedule shall be deemed
restricted only to the Section to which such disclosure specifically relates
except where (i) there is an explicit cross-reference to another Schedule, and
(ii) the Buyer could reasonably be expected to ascertain the scope of the
modification to a representation intended by such cross-reference.
SECTION 11.11 MULTIPLE COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 11.12 REFERENCES. Whenever required by the context, and is used
in this Agreement, the singular number shall include the plural and pronouns and
any variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identification the person may require.
References to monetary amounts and specific named statutes are
38
intended to be and shall be construed as references to United States dollars and
statutes of the United States of the stated name, respectively, unless the
context otherwise requires.
SECTION 11.13 SURVIVAL. Any provision of this Agreement which
contemplates performance or the existence of obligations after the Closing Date,
and any and all representations and warranties set forth in this Agreement,
shall not be deemed to be merged into or waived by the execution and delivery of
the instruments executed at the Closing, but shall expressly survive Closing as
stated in Section 8.01 herein and shall be binding upon the party or parties
obligated thereby in accordance with the terms of this Agreement, subject to any
limitations expressly set forth in this Agreement.
SECTION 11.14 ATTORNEYS' FEES. In the event any suit or other legal
proceeding is brought for the enforcement of any of the provisions of this
Agreement, the parties hereto agree that the prevailing party or parties shall
be entitled to recover from the other party or parties upon final judgment on
the merits reasonable attorneys' fees (and sales taxes thereon, if any),
including attorneys' fees for any appeal, and costs incurred in bringing such
suit or proceeding.
SECTION 11.15 COMPLIANCE WITH CORPORATIONS LAW. This Agreement is
deemed to comply with the requisites set forth by Art. 186 of the Argentine
Corporations Law.
ARTICLE XII
DEFINITIONS
Capitalized terms used in this Agreement shall have the respective
meanings ascribed to such terms in THIS Article MI, unless otherwise defined in
this Agreement.
SECTION 12.01 AFFILIATE. The term "Affiliate" shall mean, with respect
to any Person, any other Person controlling, controlled by or under common
control with such Person. The term "Control" as used in the preceding sentence
means, with respect to a corporation, the right to exercise, directly or
indirectly, more than fifty percent (50%) of the voting rights attributable to
the shares of the controlled corporation and, with respect to any Person other
than a corporation, the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person.
SECTION 12.02 COLLATERAL AGREEMENTS. The term "Collateral Agreements"
shall mean any or all of the following agreements, the forms of which are
attached hereto as exhibits to this Agreement as indicated in parentheses:
Exhibit B - Employment Agreement between the Company and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Exhibit C - Shareholders' Agreement and any and all other agreements,
instruments or documents required or expressly provided under this Agreement to
be executed and delivered in connection with the transactions contemplated by
this Agreement.
39
SECTION 12.03 COMPANY ASSETS. The term "Company Assets" shall mean,
with respect to the Company, all of the Properties, Contracts, and Permits, that
were Used by the Company [or the Stockholders] as of the Interim Balance Sheet
Date and those Used by the Company at any time after that date until the Closing
Date.
SECTION 12.04 DAMAGES. The term "Damages" shall mean any and all
damages, liabilities, obligations, penalties, fines, Judgments, claims,
deficiencies, losses, costs, expenses and assessments (including without
limitation income and other taxes, interest, penalties and attorneys' and
accountants' fees and disbursements).
SECTION 12.05 GOVERNMENTAL AUTHORITIES. The term "Governmental
Authorities" shall mean any nation or country and any commonwealth, territory or
possession thereof and any political subdivision of any of the foregoing.,
including but not limited to courts, departments, commissions, boards, bureaus,
agencies, ministries or other instrumentalities.
SECTION 12.06 KNOWLEDGE. The term "Knowledge" shall mean the actual
knowledge of a party or, in the case of the Company or the Buyer, any of their
respective directors or executive officers with respect to the representation
being made, and such knowledge of any such persons as reasonably should have
obtained upon due investigation and inquiry into the representation being made.
SECTION 12.07 LEGAL REQUIREMENTS. The term "Legal Requirements", when
described as being applicable to any Person, shall mean any and all laws
(statutory, judicial or otherwise), ordinances, regulations, judgments, orders,
directives, injunctions, writs, decrees or awards of, and any Contracts with,
any Governmental Authority, in each me as and to the extent applicable to such
Person or such Person's business, operations or Properties.
SECTION 12.08 PERMITS. The term "Permits" shall mean any and all
permits or orders under any Legal Requirement or otherwise granted by any
Governmental Authority.
SECTION 12.09 PROPERTIES. The term "Properties" shall mean any and all
properties and assets (real, personal or mixed, tangible or intangible).
SECTION 12.10 PROPORTIONATE SHARE. The term "Proportionate Share" shall
mean each Common Stockholder's respective percentage ownership interest in the
Company as set forth on EXHIBIT A.
SECTION 12.11 USED. The term "Used" shall mean, with respect to the
Properties, Contracts or Permits of the Company, those owned, leased, licensed
or otherwise held by the Company which were acquired for use or held for use by
the Company in connection with the Company's business and operations, whether or
not reflected on the Company's books of account.
40
EXECUTED as of the date first written above.
BUYER:
▇▇▇▇ CORPORATION
By: ____________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
COMPANY:
SULLAIR ARGENTINA S.A.
By: ______________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
STOCKHOLDERS:
By: ______________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SULLAIR CORPORATION
By:_______________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
41