DON'S BUILDING SUPPLY L.L.P.
PURCHASE AGREEMENT
Between
ISG RESOURCES, INC.
ISG MANUFACTURED PRODUCTS, INC.
As Purchasers
And
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
As Sellers
Dated as of March 2, 2000
TABLE OF CONTENTS
Article I - Sale of Purchased Interests; Closing ..............................1
Purchase and Sale .............................................................1
Purchase Price ................................................................1
Closing .......................................................................3
Payment of Purchase Price......................................................3
Post Closing Payment...........................................................4
Article II - Representations and Warranties of the Sellers.....................4
Organization ..................................................................4
Equity Ownership ..............................................................5
Authority Relative to This Agreement...........................................5
Affiliates; Company; Business..................................................5
No Conflicts ..................................................................5
Governmental Approvals and Filings.............................................6
Books and Records .............................................................6
Financial Statements...........................................................6
Absence of Changes.............................................................7
No Undisclosed Liabilities.....................................................8
Taxes .........................................................................8
Legal Proceedings ............................................................10
Compliance with Laws and Orders...............................................11
Benefit Plans; ERISA..........................................................11
Real Property ................................................................12
Tangible Personal Property....................................................13
Intellectual Property Rights..................................................14
Contracts ....................................................................14
Licenses .....................................................................15
Insurance ....................................................................15
Affiliate Transactions........................................................16
Employees; Labor Relations....................................................16
Environmental Matters.........................................................16
Substantial Customers and Suppliers...........................................19
Accounts Receivable...........................................................19
Other Negotiations; Brokers...................................................19
Holding Company Act and Investment Company Act Status.........................19
Bank and Brokerage Accounts...................................................20
Exemption from Registration...................................................20
Disclosure ...................................................................20
Survival of Representations and Warranties of Purchaser.......................20
Article III - Representations and Warranties of Purchaser
Organization and Qualification................................................20
Authority Relative to this Agreement..........................................21
No Conflicts .................................................................21
Governmental Approvals and Filings............................................21
Legal Proceedings ............................................................21
Brokers.......................................................................22
Purchase for Investment.......................................................22
Disclosure ...................................................................22
Survival of Representations, Warranties, Covenants and Agreements.............22
Article IV - Covenants by the Sellers.........................................22
Noncompetition; Nonsolicitation...............................................22
Regulatory and Other Approvals................................................24
Investigation by Purchaser....................................................24
Article V - Closing Conditions
Condition to the Obligations of the Purchaser.................................24
Conditions to the Obligations of the Sellers..................................26
Article VI - Termination......................................................27
Termination Events............................................................27
Effect of Termination.........................................................28
Article VII - Indemnification; Tax Matters....................................28
Survival .....................................................................28
Indemnification ..............................................................29
Method of Asserting Claims....................................................29
Tax Liability ................................................................31
Tax Contests .................................................................31
Cooperation Regarding Tax Matters.............................................33
Payment of Transfer Taxes and Fees............................................33
Other Tax Covenants...........................................................33
Conflict .....................................................................34
Article VIII - Definitions....................................................34
Definitions ..................................................................34
Interpretation of Agreement...................................................41
Article IX - Miscellaneous....................................................41
Notices ......................................................................41
Entire Agreement .............................................................43
Expenses .....................................................................43
Confidentiality ..............................................................43
Further Assurances; Post-Closing Cooperation..................................43
Waiver .......................................................................43
Amendment ....................................................................44
No Third Party Beneficiary....................................................44
No Assignment; Binding Effect.................................................44
Headings .....................................................................44
Invalid Provisions............................................................44
Governing Law ................................................................44
Limited Recourse .............................................................44
Counterparts .................................................................45
Article X - Mediation.........................................................45
Exhibits
Exhibit A - Disclosure Schedule
Exhibit B - Sellers' Closing Certificate
Exhibit B-1-a - Copy of Limited Liability Partnership Agreement
Exhibit B-1-b - Schedule of Officers of Company
Exhibit C - Closing Certificate of President of Sellers
Exhibit D - Opinion of ▇▇▇▇▇▇▇▇▇▇▇ & Price, LLP
Exhibit E - Purchaser's Officers' Certificates
Exhibit F - Opinion of Counsel of Purchaser
Exhibit G - Escrow Agreement for the benefit of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Exhibit H - Escrow Agreement for the benefit of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is dated March 2, 2000, between
ISG Resources, Inc., a Utah corporation ("Resources") and ISG Manufactured
Products, Inc., a Utah corporation (Products") (Resources and Products may be
referred to herein individually as "Resources" or "Products", respectively, or
collectively as "Purchaser"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individuals
residing in the state of Texas (individually a "Seller" and collectively the
"Sellers").
RECITALS
The Sellers own and desire to sell to Purchaser, and Purchaser desires to
purchase from the Sellers a Texas registered limited liability partnership known
as Don's Building Supply L.L.P., f/k/a Don's Building Supply, Inc. (the
"Company").
The partnership interests of the Company are referred to herein as the
"Purchased Interests".
Resources shall acquire one percent of the Purchased Interests and Products
shall acquire ninety-nine percent of the Purchased Interests.
Unless otherwise defined in this Agreement, the capitalized terms used in
this Agreement have the meanings given in Article VIII below.
In consideration of the mutual covenants and agreements set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as set forth herein.
ARTICLE I
1 SALE OF PURCHASED INTERESTS; CLOSING
1.1 Purchase and Sale. At the Closing, on the terms and conditions set forth in
this Agreement, (i) the Sellers will sell to Resources, and Resources shall
purchase from the Sellers, one percent of the Purchased Interests, and (ii) the
Sellers will sell to Products, and Products shall purchase from the Sellers,
ninety-nine percent of the Purchased Interests.
1.2 Purchase Price.
1.2.1 The purchase price (the "Purchase Price") for the Purchased Interests is
six million dollars ($6,000,000.00) payable in cash, subject to adjustment as
set forth in Sections 1.2.2 and 1.2.3 below. Except for the items listed in
Sections 1.2.1.1, 1.2.1.2 and 1.2.1.3 below, (i) the Purchase Price is for a
debt free balance sheet, and (ii )all debt and accrued interest will be
discharged by the Sellers prior to or contemporaneous with the Closing.
1.2.1.1 Accrued liabilities and accounts payable;
1.2.1.2 A note payable to Toyota Motor Credit for the purchase of two
forklifts in the principal amount, as of December 31, 1999, of $26,084.58;
and,
1.2.1.3 The remaining balance on a purchase money promissory note, for the
purchase of real property adjoining the Company, dated April 20, 1999,
payable to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, having an original principal balance of
$136,400.00 with a principal balance, as of December 31, 1999, of
$127,306.64.
1.2.2 The Purchase Price is contingent upon the EBITDA (earnings before interest
expense, taxes, depreciation and amortization) of the Company for the twelve
month period ending on December 31, 1999 being at least $1,200,000.00. In the
event that the EBITDA of the Company for the twelve month period ending on
December 31, 1999 is less than $1,200,000.00, the Purchase Price shall be
reduced by a sum equal to five (5) times the difference between the EBITDA for
such period and $1,200,000.00. Conversely, in the event that the EBITDA of the
Company for the twelve month period ending on December 31, 1999 is more than
$1,200,000.00, the Purchase Price shall be increased by a sum equal to five (5)
times the difference between the EBITDA for such period and $1,200,000.00. For
purposes of computing the Company's EBITDA, (i) taxes will be considered to
include Texas franchise tax, and (ii) gains and losses from sales of fixed
assets and investments will be excluded from the calculation of EBITDA.
1.2.3 In addition, the Purchase Price will increase or decrease, on a
dollar-for-dollar basis, by the amount in which the working capital of the
Company (total current assets less total current liabilities) exceeds or is less
than, respectively, the sum of $1,150,000.00 calculated as of February 29, 2000.
For purposes of computing working capital of the Company, the funds held in
trust by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustees of Don's Building
Supply Irrevocable Trust, consisting of $100,000 of trust principal and
undistributed accrued interest thereon, shall be treated as current assets of
the Company.
1.2.4 To determine whether an adjustment is appropriate pursuant to either
Section 1.2.2 and/or Section 1.2.3, Purchaser shall (within sixty days of the
Closing Date) provide the Sellers with financial statements of the Company
indicating the EBITDA of the Company for the twelve month period ending on
December 31, 1999 as well as the working capital as of February 29, 2000 (the
"Purchaser's Calculation"). If the Sellers (within thirty days of receiving the
Purchaser's Calculation") disagree with Purchaser's Calculation, then the
Sellers will promptly engage an independent accounting firm to review the
financial condition of the Company as of the Closing in accordance with GAAP, on
a basis consistent with the Financial Statements. Within forty-five (45) days
after the matter is referred to the accounting firm, the accounting firm will
prepare and deliver a report to all parties which will detail whether a Purchase
Price adjustment is necessary. The report will be final and binding on both
parties, absent fraud or clear error.
1.3 Closing. The Closing (the "Closing") of the purchase and sale of the
Purchased Interests will take place in Dallas, Texas at the offices of
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P. at 2:00 P.M. on March 2, 2000, or at such other
place and time as Purchaser and the Sellers shall mutually agree.
1.4 Payment of Purchase Price. At the Closing, the Purchase Price will be paid
to the Sellers in accordance with the following procedure:
1.4.1 Of the total Purchase Price, $201,666.75 will be paid by Purchaser
directly to ▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇▇▇▇▇ ("JWG"), ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, as a payment of accrued interest and principal on the promissory note
owed to him by the Company. Sellers and Purchaser agree that such payment to JWG
(the "JWG Payment") will be deemed to be a payment made by Purchaser of part of
the Purchase Price to the Sellers who in turn are deemed to contribute the JWG
Payment to the Company as a capital contribution to allow the Company to pay
such payment to JWG. As a result, the Company will be deemed to pay the JWG
Payment to JWG.
1.4.2 The remainder of the Purchase Price, or $5,798,333.25 (the "Remaining
Price"), will be paid in cash to the various Sellers so that each Seller
receives the same dollar amount of the Remaining Price for each unit owned by
such Seller (as set forth in Section 2.2 hereof).
1.4.3 At the Closing:
1.4.3.1 The Purchaser will pay the portions of the Remaining Price due to (i)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (ii) ▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and (iii) ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ by wire transfer to such account(s) as such Sellers may direct;
1.4.3.2 The Purchaser will pay the portion of the Remaining Price due to ▇▇▇▇▇
▇. ▇▇▇▇▇▇ to the Escrow Account established for the benefit of such Seller
pursuant to the Escrow Agreement attached hereto as Exhibit G, by wire transfer
to such Escrow Account;
1.4.3.3 The Purchaser will pay the portion of the Remaining Price due to ▇▇▇▇▇▇
▇. ▇▇▇▇▇ to the Escrow Account established for the benefit of such Seller
pursuant to the Escrow Agreement attached hereto as Exhibit H, by wire transfer
to such Escrow Account;
1.4.3.4 The Sellers will sell and convey to Purchaser, in the percentages set
forth herein, the Purchased Interests free and clear of all Liens, except as
disclosed in Section 2.4 of the Disclosure Schedule with reference to ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇; and
1.4.3.5 The parties will deliver the opinions, certificates, contracts,
documents and instruments to be delivered pursuant to this Agreement.
1.5 Post Closing Payment.
1.5.1 If the Sellers agree with the Purchaser's Calculation, then, within twenty
(20) days after delivery of the Purchaser's Calculation, (i) if the report
indicates that an upward adjustment is appropriate, the Purchaser will deliver
to the Sellers cash in the amount of the adjustment specified in the report,
absent fraud or clear error; or (ii) if the report indicates that an downward
adjustment is appropriate, the Sellers will deliver to the Purchaser cash in the
amount of the adjustment specified in the report, absent fraud or clear error.
1.5.2 If the Sellers disagree with the Purchaser's Calculation then, within
twenty (20) days after delivery of the report by the independent accounting firm
referred to in Section 1.2.4: (i) if the report indicates that an upward
adjustment is appropriate, the Purchaser will deliver to the Sellers cash in the
amount of the adjustment specified in the report, absent fraud or clear error;
or (ii) if the report indicates that an downward adjustment is appropriate, the
Sellers will deliver to the Purchaser cash in the amount of the adjustment
specified in the report, absent fraud or clear error.
ARTICLE II
2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby represent and warrant to Purchaser, and each of
them, as follows:
2.1 Organization. The Company is a registered limited liability partnership
organized, validly existing and in good standing under the laws of the state of
Texas and has full power and authority to conduct its business as and to the
extent now conducted and to own, use and lease its Assets. The Company is duly
qualified, licensed or admitted to do business and is in good standing in each
jurisdiction in which the ownership, use or leasing of its Assets, or the
conduct or nature of its business, makes such qualification, licensing or
admission necessary, except for such failures to be so qualified, licensed or
admitted and in good standing which, individually or in the aggregate, (i) are
not having and could not be reasonably expected to have a material adverse
effect on the business or condition of the Company, and (ii) could not be
reasonably expected to have a material adverse effect on the validity or
enforceability of this Agreement or any other agreement to which it is a party
or on the ability of the Sellers or the Company to perform their obligations
hereunder or thereunder. The Sellers have delivered to Purchaser true and
complete copies of the limited liability partnership agreement(s) (or other
comparable organizing documents) of the Company, including all amendments
thereto effected through the Closing Date.
2.2 Equity Ownership. The Sellers own the Purchased Interests as follows:
Name Number of Units Owned
----- ---------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 66
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 48
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 2
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 2
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 2
---
120
The Purchased Interests constitute all of the partnership (or other ownership)
interests of the Company. There are no outstanding rights, warrants, options or
agreements with respect to the Purchased Interests (or other form of ownership)
of the Company or agreements, arrangements or understandings to issue or grant
any rights, warrants, options or agreements with respect to the Purchased
Interests (or other form of ownership) of the Company. Except as set forth in
Section 2.2 of the Disclosure Schedule, the Purchased Interests are free and
clear of all Liens, security interests, encumbrances, adverse claims, pledges,
equities, and other restrictions whatsoever. Except as set forth in Section 2.2
of the Disclosure Schedule, the assignment to Purchaser of the Purchased
Interests will transfer to Purchaser good and valid title to the Purchased
Interests and after such transfer no Seller nor any other Person (other than the
Purchaser) will have any rights whatsoever with respect to the Purchased
Interests or to any other ownership interest in or to the Company.
2.3 Authority Relative to This Agreement. The Sellers have full authority to
enter into this Agreement, to perform their obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Sellers and constitutes the legal,
valid and binding obligations of the Sellers, enforceable against them in
accordance with its terms.
2.4 Affiliates; Company; Business. Section 2.4 of the Disclosure Schedule (the
Disclosure Schedule is attached hereto as Exhibit A) lists all lines of business
in which the Company is participating or engaged or has participated or engaged
in the preceding three years. The name of each partner and officer of the
Company, and the position with the Company held by each, are listed in Section
2.4 of the Disclosure Schedule. The Company holds no equity, partnership, joint
venture or other interest in any Person.
2.5 No Conflicts. The execution and delivery by the Sellers of this Agreement
does not, and the consummation of the transactions contemplated hereby will not:
2.5.1 conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the partnership agreement of the Company (or other
comparable organizing documents) of the Company;
2.5.2 subject to obtaining the consents, approvals and actions, making the
filings and giving the notices referred to in Section 2.6 below or disclosed in
Section 2.6 of the Disclosure Schedule, if any, conflict with or result in a
violation or breach of any term or provision of any Laws or Order applicable to
any of the Sellers or to the Company, or any of their Assets; or
2.5.3 except as disclosed in Section 2.5 of the Disclosure Schedule, (i)
conflict with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require any of
the Sellers or the Company to obtain any consent, approval or action of, make
any filing with or give any notice to any Person as a result or under the terms
of, (iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (v) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (f) result in the creation or
imposition of any Lien upon the Company or any of its Assets under, any Contract
or License to which any of the Sellers or the Company is a party or by which any
of their respective Assets is bound except for such conflicts, violations,
breaches, defaults, consents, approvals, actions, filings, notices,
terminations, cancellations, accelerations, modifications, additional rights or
entitlements or Liens that, individually or in the aggregate, (A) could not be
reasonably expected to result in a Liability in excess of $10,000.00, and (B)
could not be reasonably expected to have a material adverse effect on the
validity or enforceability of this Agreement or on the ability of any of the
Sellers or the Company to perform its obligations hereunder.
2.6 Governmental Approvals and Filings. Except as disclosed in Section 2.6 of
the Disclosure Schedule, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority on the part of the Sellers or
the Company is required in connection with the execution, delivery and
performance of this Agreement or the consummation of transactions contemplated
herein.
2.7 Books and Records. The minute books, partnership books, and other similar
records of the Company to be provided to Purchaser upon execution of this
Agreement contain a true and complete record, in all material respects, of all
actions taken by the Sellers, the committees, officers and agents (or other
similar governing entities or persons) of the Company.
2.8 Financial Statements. The Sellers have caused the Company to furnish to
Purchaser true and complete copies of the unaudited financial statements of the
Company for the period ending December 31, 1999 certified as in accordance with
the Books and Records of the Company by the President of the Company. All of
these statements (collectively referred to herein as the "Financial Statements")
are in accordance with the Books and Records of the Company and fairly and
accurately present, in all material respects, the financial position of the
Company as of the dates thereof, for the periods covered thereby and the results
of operations and cash flows of the Company for the periods set forth therein,
all in conformity with GAAP, except that no statements of cash flow or notes to
the Financial Statements are provided.
2.9 Absence of Changes. Except as set forth in Section 2.9 of the Disclosure
Schedule, since December 31, 1999, there has not been any material adverse
change or any event or development, which, individually or together with other
such events, could reasonably be expected to result in a material adverse
change, in the business or condition of the Company. In addition, except as
expressly contemplated hereby and except as disclosed in Section 2.9 of the
Disclosure Schedule, there has not occurred since December 31, 1999:
2.9.1 any declaration, setting aside or payment of any dividend or other
distribution in respect of the Purchased Interests (or other equity interests)
of the Company or any direct or indirect redemption, purchase or other
acquisition by the Company of any such Purchased Interests of the Company;
2.9.2 any authorization, issuance, sale or other disposition by the Company of
any ownership interest (or other equity interests), or any modification or
amendment of any right of any holder of any outstanding ownership interest (or
other equity interests) of the Company;
2.9.3 (i) any increase in salary, rate of commissions or rate of consulting fees
of any employee or consultant of the Company; (ii) any payment of consideration
of any nature whatsoever (other than salary, commissions or consulting fees paid
to any employee or consultant of the Company) to any officer, director, partner,
owner, employee or consultant of the Company; (iii) any establishment or
modification of (A) targets, goals, pools or similar provisions under any
Benefit Plan, employment contract or other employee compensation arrangement or
(B) salary ranges, increase guidelines or similar provisions in respect of any
Benefit Plan, employment contract or other employee compensation arrangement; or
(iv) any adoption, entering into, amendment, modification or termination
(partial or complete) of any Benefit Plan;
2.9.4 (i) incurrences by the Company of Indebtedness or (ii) any voluntary
purchase, cancellation, prepayment or complete or partial discharge in advance
of a scheduled payment date with respect to, or waiver of any right of the
Company under, any Indebtedness of or owing to the Company;
2.9.5 any physical damage, destruction or other casualty loss (whether or not
covered by insurance) affecting any of the Assets of the Company in an aggregate
amount exceeding $10,000;
2.9.6 any write-off or write-down of or any determination to write off or write
down any of the Assets of the Company, other than write-offs and/or write-downs
of accounts receivable or inventory occurring in the ordinary course of
business;
2.9.7 any purchase of any Assets of any Person or disposition of, or incurrence
of a Lien on, any Company Assets, other than acquisitions or dispositions of
inventory in the ordinary course of business by the Company consistent with past
practice;
2.9.8 other than in the ordinary course of business, any entering into,
amendment, modification, termination (partial or complete) or granting of a
waiver under or giving any consent with respect to (i) any Contract which is
required (or had it been in effect on the date hereof would have been required)
to be disclosed in the Disclosure Schedule pursuant to Section 2.18.1, (ii) any
License held by the Company, or (iii) any intellectual property rights owned by
the Company;
2.9.9 any capital expenditures or commitments for additions to property, plant
or equipment of the Company constituting capital assets in an aggregate amount
exceeding $10,000;
2.9.10 any commencement, termination or change by the Company of any line of
business;
2.9.11 any transaction by the Company with any of its officers, partners,
owners, or Affiliates, other than pursuant to a Contract or arrangement in
effect on December 31, 1999 and disclosed to Purchaser pursuant to Section
2.18.1 or other than pursuant to any Contract of employment and listed pursuant
to Section 2.18.1 of the Disclosure Schedule;
2.9.12 any entering into of an agreement to do or engage in any of the
foregoing, including without limitation with respect to any merger, sale of
substantially all assets or other business combination not otherwise restricted
by the foregoing paragraphs; or
2.9.13 any change in the accounting methods or procedures of the Company or any
other material transaction involving or material development affecting the
Company outside the ordinary course of business.
2.10 No Undisclosed Liabilities. Except as reflected or reserved against in the
December 31, 1999 balance sheet included in the Financial Statements or as
disclosed in Section 2.10 of the Disclosure Schedule, the Company has no
Liabilities, nor are there any Liabilities relating to or affecting the Company
or any of its Assets, other than Liabilities incurred in the ordinary course of
business since December 31, 1999.
2.11 Taxes.
2.11.1 Except as disclosed in Section 2.11 of the Disclosure Schedule, all Tax
Returns required to have been filed by or with respect to the Company with any
Taxing Authority have been duly and timely filed, and each such Tax Return
correctly and completely reflects the income, franchise or other Tax liability
and all other information required to be reported thereon. The Company is not
and has never been a member of any affiliated, combined, consolidated, unitary
or similar group with respect to the filing of tax returns or otherwise with
respect to any Taxing Authority. All Taxes that are due and payable by the
Company (whether or not shown on any Tax Return) have been timely paid. All
Taxes related to the income, operations or assets of the Company that are due
and payable by the Sellers (whether or not shown on any Tax Return) have been
timely paid. All monies required to be withheld by the Company from employees,
independent contractors, creditors or other third parties for Taxes have been
collected or withheld, and either duly and timely paid to the appropriate Taxing
Authority or (if not yet due for payment) set aside in accounts for such
purposes. Neither the Company nor the Sellers has any liability for Taxes for
any Person other than the Company (i) solely as a present or former member of a
consolidated group, (ii) as a transferee or successor, (iii) by Contract or (iv)
otherwise.
2.11.2 The Company is not a party to any agreement extending, or having the
effect of extending, the time within which to file any Tax Return or the period
of assessment or collection of any Taxes. The Company has not received any
written ruling of a Taxing Authority related to Taxes or entered into any
written and legally binding agreement with a Taxing Authority relating to Taxes.
2.11.3 No Taxing Authority is now asserting or threatening to assert against the
Company any deficiency, claim or liability for additional Taxes or any
adjustment of Taxes, and there is no reasonable basis for any such assertion of
which any of the Sellers or the Company is or reasonably should be aware. No
issues have been raised in any examination by any Taxing Authority with respect
to the Company which, by application of similar principles, reasonably could be
expected to result in a proposed deficiency for any other period not so
examined. The federal income Tax Returns of the Company disclose (in accordance
with the Code) all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of the Code. No claim
has ever been made by any Taxing Authority in a jurisdiction in which the
Company does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. Section 2.11 of the Disclosure Schedule lists all federal,
state, local and foreign income Tax Returns filed by or with respect to the
Company for all taxable periods ended on or after December 31, 1996, indicates
those Tax Returns, if any, that have been audited, and indicates those Tax
Returns that currently are the subject of audit. The Sellers have delivered to
Purchaser complete and correct copies of all federal, state, local and foreign
income Tax Returns filed by or with respect to, and all Tax examination reports
and statements of deficiencies assessed against or agreed to by, the Company
since January 1, 1997. There are no Liens for Taxes upon the Assets of the
Company, except for statutory liens for current taxes not yet due, but which
have been accrued for on the Books and Records of the Company.
2.11.4 The Company is, and at all times since January 1, 1988, has been,
properly characterized, for federal income tax purposes, as a corporation that
has elected to be taxed as an S corporation. From its formation through December
31, 1998, the Company was properly characterized as a corporation for state and
local income tax purposes. Since December 31, 1998, the Company has been
properly characterized as a partnership for state and local income tax purposes.
2.11.5 Except as disclosed in Section 2.11 of the Disclosure Schedule, the
Company is not (i) a party to or bound by any obligations under any tax sharing,
tax indemnity or similar agreement or arrangement, (ii) subject to any election
under sections 338(e) or 341(f) of the Code or the regulations thereunder, (iii)
required to make, or reasonably expects that it might have to make, any
adjustment under section 481 of the Code (or any comparable provision of state,
local or foreign law) by reason of a change in accounting method or otherwise,
(iv) subject to any agreement or arrangement that could result separately or in
the aggregate in the payment of any "excess parachute payments" within the
meaning of section 280G of the Code, (v) and at no time has ever been, a "United
States real property holding corporation" within the meaning of section
897(c)(2) of the Code, (vi) a party to any "safe harbor lease" that is subject
to the provisions of section 168(f)(8) of the Internal Revenue Code as in effect
prior to the Tax Reform Act of 1986 or to any "long-term contract" within the
meaning of section 460 of the Code, (vii) a party to any joint venture,
partnership (except for its own partnership agreement) or other arrangement that
is treated as a partnership for federal income Tax purposes, or (viii) nor has
it ever been, a member of any affiliated, consolidated, combined, unitary or
similar group for any Tax purpose.
2.12 Legal Proceedings.
2.12.1 Except as disclosed in Section 2.12 of the Disclosure Schedule (with
paragraph references corresponding to those set forth below):
2.12.1.1 there are no Actions or Proceedings pending or, to the knowledge
of the Sellers or the Company, threatened against, relating to or affecting
the Company, or any of its Assets which (A) could reasonably be expected to
result in the issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal any of the transactions contemplated by this
Agreement or otherwise result in a material diminution of the benefits
contemplated by this Agreement to Purchaser, or (B) if determined adversely
to the Company, could reasonably be expected to result in (x) any
injunction or other equitable relief against the Company, or (y) Losses by
the Company, individually or in the aggregate with Losses in respect of
other such actions or proceedings, exceeding $10,000;
2.12.1.2 there are no facts or circumstances known to the Sellers or to the
Company that could reasonably be expected to give rise to any action or
proceeding that would be required to be disclosed pursuant to clause
2.12.1.1 above;
2.12.1.3 neither the Sellers nor the Company has received notice, or is
aware of any Orders or lawsuits outstanding against the Company; and
2.12.1.4 neither the Sellers nor the Company has received notice or is
aware of any defects, dangerous or substandard conditions in the products
or materials manufactured, sold, distributed, or to be manufactured, sold
or distributed by the Company that could cause bodily injury, sickness,
disease, death, or damage to property, or result in loss of use of
property, or any claim, suit, demand for arbitration or notice seeking
damages for bodily injury, sickness, disease, death, or damage to property,
or loss of use or property.
2.12.2 Prior to the execution of this Agreement, the Company has delivered all
Counsel Responses, as hereinafter defined, received by the Company prior to the
date hereof. For purposes hereof, "Counsel Responses" means responses of counsel
for the Company to auditors' requests for information regarding Actions or
Proceedings pending or threatened against, relating to or affecting the Company
during the period from January 1, 1996 to the date hereof. Section 2.12.2 of the
Disclosure Schedule sets forth all Actions or Proceedings relating to or
affecting the Company or its Assets during the period from January 1, 1996 to
the date hereof.
2.13 Compliance with Laws and Orders. Except as disclosed in Section 2.13 of the
Disclosure Schedule, neither the Sellers nor the Company has received, at any
time since January 1, 1996, any notice that the Company is or has been at any
time since such date, in violation of or in default under, any Law or Order
applicable to the Company or any of its Assets. In furtherance and not
limitation of the foregoing, neither the Sellers nor the Company has violated
any federal or state securities law in connection with the offer, sale or
purchase of any securities.
2.14 Benefit Plans; ERISA. All Benefit Plans maintained by the Company are
listed in Section 2.14 of the Disclosure Schedule, and copies of all such
Benefit Plans have been delivered or made available to Purchaser (including
copies of written Benefit Plans, written descriptions of oral Benefit Plans, the
latest summary plan descriptions, trust agreements, the three most recent annual
returns, employee communications during the last three years, and IRS
determination letters). Except as disclosed in Section 2.14 of the Disclosure
Schedule:
2.14.1 to the knowledge of Sellers, each Benefit Plan, including each Benefit
Plan intended to qualify under section 401(a) of the Code , complies, and has at
all times been maintained and administered in compliance, with the requirements
of all applicable Laws, including ERISA and the Code, except where any such
noncompliance could not reasonably be expected to result in a material adverse
change in the financial condition of the Company;
2.14.2 no Benefit Plan has incurred any "accumulated funding deficiency" within
the meaning of section 302 of ERISA or section 412 of the Code;
2.14.3 no direct, contingent or secondary liability has been incurred or is
expected to be incurred by the Company under Title IV of ERISA to any party with
respect to any Benefit Plan, or with respect to any other Plan presently or
heretofore maintained or contributed to by any ERISA affiliate;
2.14.4 the "amount of unfunded benefit liabilities" within the meaning of
section 4001(a)(18) of ERISA does not exceed zero with respect to any Benefit
Plan subject to Title IV of ERISA;
2.14.5 no "reportable event" (within the meaning of section 4043 of ERISA) has
occurred with respect to any Benefit Plan or any Plan maintained by an ERISA
affiliate since the effective date of said section 4043;
2.14.6 no Benefit Plan is a multiemployer plan within the meaning of section
3(37) of ERISA;
2.14.7 to the knowledge of the Sellers, no event has occurred which creates, and
no circumstances exist pursuant to which the Company could reasonably be
expected to incur, any material liability for any Tax imposed under section 4971
through 4980B of the Code or civil liability under section 502(i) or (l) of
ERISA;
2.14.8 no severance pay or "excess parachute payment" (within the meaning of
Section 280G of the Code), will be established or become accelerated, vested or
payable by reason of any transaction contemplated under this Agreement;
2.14.9 no Tax has been incurred under section 511 of the Code with respect to
any Benefit Plan (or trust or other funding vehicle pursuant thereto);
2.14.10 no Benefit Plan provides health or death benefit coverage beyond the
termination of an employee's employment, except as required by Part 6 of
Subtitle B of Title I of ERISA or section 4980B of the Code or any state laws
requiring continuation of benefits coverage following termination of employment;
2.14.11 no suit, actions or other litigation (excluding claims for benefits
incurred in the ordinary course of plan activities) have been brought or, to the
knowledge of any Seller or the Company, threatened against or with respect to
any Benefit Plan and there are not facts or circumstances known to any the
Sellers or the Company that could reasonably be expected to give rise to any
such suit, action or other litigation; and
2.14.12 all contributions to Benefit Plans that were required to be made under
such Benefit Plans have been made, and all benefits accrued under any unfunded
Benefit Plan have been paid, accrued or otherwise adequately reserved in
accordance with GAAP, all of which accruals under unfunded Benefit Plans are as
disclosed in Section 2.14 of the Disclosure Schedule, and the Company has
performed all material obligations required to be performed under all Benefit
Plans.
2.15 Real Property.
2.15.1 Section 2.15.1 of the Disclosure Schedule contains a true and correct
list of (i) each parcel of real property owned (the "Owned Real Property") by
the Company, (ii) each parcel of real property leased or subleased or otherwise
occupied by the Company as tenant or subtenant (the "Leased Real Property";
together with the Owned Real Property, the "Real Property") together with a true
and correct list of all such leases, subleases or other similar agreements and
any amendments, modifications or extensions thereto (the "Real Property
Leases"), and (iii) all Liens relating to or affecting any parcel of Real
Property, in each case identifying the owner, lessor and lessee thereof.
2.15.2 The Company has good and indefeasible fee simple title to its Owned Real
Property, free and clear of all Liens, other than as specifically listed in
Section 2.15.2 of the Disclosure Schedule.
2.15.3 Subject to the terms of its leases, the Company has a valid and
subsisting leasehold estate in and the right to quiet enjoyment to the Leased
Real Property for the full term of the lease thereof. Each Real Property Lease
is a legal, valid and binding agreement, enforceable in accordance with its
terms, of the Company and of each other Person that is a party thereto, and
except as set forth in Section 2.15.3 of the Disclosure Schedule, there is no,
and neither the Sellers nor the Company, have knowledge of any, or has received
any, notice of any uncured default (or any condition or event which, after
notice or lapse of time or both, would constitute a default) thereunder. The
Company has not assigned, sublet, transferred, hypothecated or otherwise
disposed of its interest in any Real Property Lease. No penalties are accrued
and unpaid under any Real Property Lease.
2.15.4 The Sellers shall deliver to Purchaser upon the execution of this
Agreement true and complete copies of all (i) title policies, mortgages, deeds
of trust, deeds, leases, easements, restrictive covenants, certificates of
occupancy, and similar documents, and all amendments thereto concerning the
Owned Real Property, and (ii) Real Property Leases and, to the extent reasonably
available, all other documents referred to in clause (i) of this paragraph with
respect to the Leased Real Property.
2.15.5 Except as disclosed in Section 2.15.5 of the Disclosure Schedule, the
improvements on the Real Property are in good operating condition and in a state
of good maintenance and repair, ordinary wear and tear excepted, are adequate
and suitable for the purposes for which they are presently being used and, to
the knowledge of each of the Sellers and of the Company, there are no
condemnation or appropriation proceedings pending or threatened against Real
Property or the improvements thereon.
2.15.6 Neither the Sellers nor the Company has any knowledge of any claim,
action or proceeding, actual or threatened, against the Company or the Real
Property by any Person which would materially affect the future use, occupancy
or value of the Real Property or any part thereof.
2.16 Tangible Personal Property. The Company is in possession of and has good
and marketable title to, or has valid leasehold interests in or valid rights
under contract to use, all tangible personal property used in the conduct of its
business, including all tangible personal property reflected on the Financial
Statements and tangible personal property acquired since December 31, 1999 other
than property disposed of since such date in the ordinary course of business
consistent with past practice and the terms of this Agreement. All such tangible
personal property is free and clear of all Liens, other than Liens disclosed in
Section 2.16 of the Disclosure Schedule, and, as of the Closing Date, is
adequate and suitable for the conduct by the Company of the business presently
conducted by it, and is in good working order and condition, ordinary wear and
tear excepted, and its use complies in all material respects with all applicable
Laws.
2.17 Intellectual Property Rights. The Company has interests in or uses only the
intellectual property described in Section 2.17 of the Disclosure Schedule. The
Company either has all right, title and interest in or a valid and binding
license to use such intellectual property. No other intellectual property is
used in or necessary to the conduct of the business of the Company. All
registrations, pending applications, registered rights and executed agreements
related to intellectual property are listed in Section 2.17 of the Disclosure
Schedule. Except as disclosed therein, (i) the Company has the right to use the
intellectual property described therein, (ii) all registrations on behalf of the
Company with and applications to Governmental or Regulatory Authorities in
respect of such intellectual property are valid and in full force and effect and
are not subject to the payment of any Taxes or maintenance fees or the taking of
any other actions by the Company to maintain their validity or effectiveness,
(iii) all copyrightable materials used by the Company are works-for-hire and are
owned by the Company, (iv) there are no restrictions on the direct or indirect
transfer of any License, or any interest therein, held by the Company in respect
of such intellectual property, (v) the Sellers have delivered, or have caused
the Company to deliver, to Purchaser prior to the execution of this Agreement
documentation with respect to any invention, process, design, computer program
or other know-how or trade secret included in such intellectual property, which
documentation is accurate and complete and sufficient in detail and content to
identify and explain such invention, process, design, computer program or other
know-how or trade secret, (vi) the Sellers and the Company have taken reasonable
security measures to protect the secrecy, confidentiality and value of their
trade secrets, (vii) neither the Sellers nor the Company is or has received any
notice that it is in default (or with the giving of notice or lapse of time or
both, would be in default) under any License to use such intellectual property
and (viii) neither the Sellers nor the Company has any knowledge that such
intellectual property is being infringed by any other Person. To the knowledge
of the Sellers and the Company, the Company is not infringing any intellectual
property of any Person, and no litigation is pending and no claim has been made
or, to the knowledge of any the Sellers or of the Company, has been threatened
to such effect.
2.18 Contracts.
2.18.1 Section 2.18.1 of the Disclosure Schedule contains a true and complete
list of every Contract or other arrangement (true and complete copies, or, if
none, reasonably complete and accurate written descriptions of which, together
with all amendments and supplements thereto and all waivers of any terms
thereof, of which have been delivered to Purchaser prior to the execution of
this Agreement), to which the Company is a party, a guarantor or by which any of
its Assets is bound.
2.18.2 Each Contract disclosed in Section 2.18.1 of the Disclosure Schedule is
in full force and effect and constitutes a legal, valid and binding agreement,
enforceable in accordance with its terms, of each party thereto; and except as
disclosed in Section 2.18.2 of the Disclosure Schedule, neither the Company nor,
to the knowledge of any the Sellers, any other party to such Contract is, or has
received notice that it is, in violation or breach of or default under any such
Contract (or with notice or lapse of time or both, would be violation or breach
of or default under any such Contract).
2.18.3 Except as disclosed in Section 2.18.3 of the Disclosure Schedule, the
Company is not a party to or bound by any Contract that has been or could
reasonably be expected to be, individually or in the aggregate with any other
such Contracts, materially adverse to the business or condition of the Company.
2.18.4 To the extent any of the guaranties for the benefit of the Company or any
of its Assets are not integrated with Contracts disclosed in Section 2.18.1 to
the Disclosure Schedule, each such guaranty is in full force and effect and
constitutes a legal, valid and binding agreement, enforceable in accordance with
its terms, or each party thereto; and neither the guarantor thereunder nor, to
the knowledge of the Sellers or the Company or any other party to such guaranty
is, or has received notice that it is, in violation or breach of or default
under any such guaranty (or with notice or lapse of time or both, would be in
violation or breach of default under any such guaranty).
2.19 Licenses. Section 2.19 of the Disclosure Schedule contains a true and
complete list of all Licenses used in and material to the business or operations
of the Company, setting forth the owner, the function and the expiration and
renewal date of each. Prior to the execution of this Agreement, the Sellers or
the Company have delivered to Purchaser true and complete copies of all such
Licenses. Except as disclosed in Section 2.19 of the Disclosure Schedule:
2.19.1 the Company owns or validly holds all Licenses that are material to its
respective
business or operations;
2.19.2 each license listed in Section 2.19 of the Disclosure Schedule is valid,
binding and in full force and effect;
2.19.3 neither the Sellers nor the Company is, or has received any notice that
it is, in default (or with the giving of notice of lapse of time or both, would
be in default) under any such License; and
2.19.4 the transactions contemplated in this Agreement will not violate any such
License or give any other party thereto rights to terminate the License or
change the material terms thereof.
2.20 Insurance. Section 2.20 of the Disclosure Schedule contains a true and
complete list (including the names of the insurers, the expiration dates
thereof, the period of time covered thereby and a brief description of the
interests insured thereby) of all liability, property, workers' compensation,
directors' and officers' liability and other insurance policies currently in
effect that insure the business, operations or employees of the Company or
affect or relate to the ownership, use or operation of any of the Assets of the
Company and that (i) have been issued to the Company, or (ii) have been issued
to any Person (other than the Company) for the benefit of the Company. Each
policy listed in Section 2.20 of the Disclosure Schedule is valid and binding
and in full force and effect, all premiums due thereunder have been paid when
due and neither the Sellers nor the Company or the Person to whom such policy
has been issued has received any notice of cancellation or termination in
respect of any such policy or is in default thereunder, and the Company does not
know of any reason or state of facts that could lead to the cancellation of such
policies. With the exception of insurance policies which insure employees of the
Company, the insurance policies listed in Section 2.20 of the Disclosure
Schedule (i) in light of the business, operations and Assets of the Company are
in amounts and have coverages that are reasonable and customary for Persons
engaged in such business and operations and having such Assets and (ii) are in
amounts and have coverages as required by any Contract to which the Company is a
party. Section 2.20 of the Disclosure Schedule contains a list of all claims
made under any insurance policies covering the Company since January 1, 1995.
Neither the Sellers nor the Company have received notice that any insurer under
any policy referred to in this Section is denying liability with respect to a
claim thereunder or defending under a reservation of rights clause. Since
January 1, 1995, the Company has maintained, in light of its business, location,
operations and Assets, at all times, without interruption appropriate insurance,
in scope and amount of coverages that are reasonable and customary for Persons
engaged in such business and operations and having such Assets.
2.21 Affiliate Transactions. Except as disclosed in Section 2.21 of the
Disclosure schedule, (i) there are no Liabilities between the Company and any
current or former officer, director, stockholder, Affiliate of the Company or
any Affiliate of any such officer, director, stockholder or Affiliate, and (ii)
the Company does not provide or cause to be provided any assets, services or
facilities to any such current or former officer, director, stockholder or
Affiliate.
2.22 Employees; Labor Relations. The Company is not engaged in any unfair labor
practice. There is (i) no unfair labor practice complaint pending or, to the
knowledge of the Sellers or the Company, threatened against the Company before
the National Labor Relations Board or comparable or similar state agency, and no
grievance or arbitration proceeding arising out of under collective bargaining
agreements is pending or, to the knowledge of the Sellers or of the Company,
threatened against the Company, (ii) no strike, labor dispute, slowdown or
stoppage is pending or, to the knowledge of the Sellers or the Company,
threatened against the Company, and (iii) no union representation question
exists with respect to the employees of the Company or, to the knowledge of the
Sellers or the Company, no union organization activities are taking place.
2.23 Environmental Matters.
2.23.1 The Company has obtained and holds all necessary Environmental Permits.
2.23.2 Except as disclosed in Section 2.23.2 of the Disclosure Schedule:
2.23.2.1 The Company is, and at all times has been, in full compliance with, and
has not been and is not in violation of or liable under, any Environmental Law.
Neither the Sellers nor the Company has any basis to expect, nor has any of them
or any other Person for whose conduct they may be held to be responsible
received, any actual or threatened Order, notice, or other communication from
(A) any Governmental Body or private citizen acting in the public interest, or
(B) the current or prior owner or operator of any Facilities, of any actual or
potential violation or failure to comply with any Environmental Law, or of any
actual or threatened obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which the Company has had an interest, or with respect to any property or
Facility at or to which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, or processed by the Company or any other
Person for whose conduct they are or may be held responsible, or from which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
2.23.2.2 There are no pending or, to the knowledge of the Sellers or the
Company, threatened claims, encumbrances, or other restrictions of any nature,
resulting from any Environmental, Health, and Safety Liabilities or arising
under or pursuant to any Environmental Law, with respect to or affecting any of
the Facilities or any other properties and assets (whether real, personal, or
mixed) in which the Sellers or the Company has or had an interest.
2.23.2.3 Neither the Sellers nor the Company has knowledge of or any basis to
expect, nor has any of them or any other Person for whose conduct they are or
may be held responsible received any citation, directive, inquiry, notice,
Order, summons, warning, or other communications that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or any other Assets
in which the Company had an interest, or with respect to any Facility to which
Hazardous Materials generated, manufactured, refined, transferred, imported,
used, or processed by the Sellers, the Company, or any other Person for whose
conduct it or they are or may be held responsible, have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
2.23.2.4 Neither the Company nor any other Person for whose conduct it may be
held responsible, has any Environmental, Health, and Safety Liabilities with
respect to the Facilities or with respect to any other Assets (whether real,
personal, or mixed) in which the Company (or any predecessor thereof), has or
had an interest, or at any property geologically or hydrologically adjoining the
Facilities or any such Assets.
2.23.3 Except as disclosed in Section 2.23.3 of the Disclosure Schedule, there
are no Hazardous Materials resulting from or related to any conduct of the
Sellers or the business of the Company at the Facilities that are present on or
in the Environment at the Facilities or to the knowledge of the Sellers or the
Company at any geologically or hydrologically adjoining property, including any
Hazardous Materials contained in barrels, above or underground storage tanks,
landfills, land deposits, dumps, equipment (whether moveable or fixed) or other
containers, either temporary or permanent, and deposited or located in land,
water, sumps, or any other part of the Facilities or such adjoining property, or
incorporated into any structure therein or thereon. Neither the Company nor any
other Person for whose conduct it may be held responsible, or any other Person,
has permitted or conducted, or is aware of, any Hazardous Activity conducted
with respect to the Facilities or any other properties or assets (whether real,
personal, or mixed) in which the Sellers or the Company has or had an interest
except in full compliance with all applicable Environmental Laws.
2.23.4 Except as disclosed in Section 2.23.4 of the Disclosure Schedule, there
has been no Release or, to the knowledge of the Sellers or of the Company, any
threat of Release of any Hazardous Materials at or from the Facilities or at any
other locations where any Hazardous Materials were generated, manufactured,
refined, transferred, produced, imported, used, or processed from or by the
Facilities, or from or by any other properties and assets (whether real,
personal, or mixed) in which the Company has or had an interest, or any
geologically or hydrologically adjoining property.
2.23.5 The Sellers have delivered to Purchaser true and complete copies and
results of any reports, studies, analyses, tests, and monitoring possessed or
initiated by the Sellers or the Company pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning compliance
by the Sellers, the Company or any other Person for whose conduct it or they are
or may be held responsible, with Environmental Laws.
2.23.6 There are no Liens arising under or pursuant to any Environmental Law on
any Owned Real Property or Leased Real Property and there are no facts,
circumstances, or conditions that could reasonably be expected to restrict,
encumber, or result in the imposition of special conditions that could
reasonably be expected to restrict, encumber, or result in the imposition of
special conditions under any Environmental Law with respect to the ownership,
occupancy, development, use, or transferability of any Real Property.
2.23.7 Except as disclosed in Section 2.23.7 of the Disclosure Schedule, there
are no (i) underground storage tanks, active or abandoned, (ii) polychlorinated
biphenyl containing equipment, or (iii) asbestos containing material, at any
Real Property.
2.23.8 There have been no environmental investigations, studies, audits, tests,
reviews or other analyses conducted by, on behalf of, or which are in the
possession of the Sellers or the Company with respect to any Asset of, or
property that is adjacent to an Asset of the Company which have not been
delivered to Purchaser prior to execution of this Agreement.
2.24 Substantial Customers and Suppliers. Section 2.24.1 of the Disclosure
Schedule lists the ten (10) largest customers of the Company on the basis of
revenues for goods sold or services provided for the twelve month period ending
December 31, 1999. Section 2.24.2 of the Disclosure Schedule lists the ten (10)
largest suppliers of the Company on the basis of cost of goods or services
purchased during the twelve month period ending December 31, 1999. Except as
disclosed in Section 2.24.3 of the Disclosure Schedule, to the knowledge of the
Sellers and the Company, no such customer or supplier is insolvent or threatened
with bankruptcy or insolvency.
2.25 Accounts Receivable. Except as set forth in Section 2.25 of the Disclosure
Schedule, the accounts and notes receivable of the Company reflected on the
balance sheets included in the Financial Statements for the period ended
December 31, 1999, and all accounts and notes receivable arising subsequent to
such date, (i) arose from bona fide sales transactions in the ordinary course of
business consistent with past practice and are payable on ordinary trade terms,
(ii) are legal, valid and binding obligations of the respective debtors
enforceable in accordance with their respective terms, (iii) are not subject to
any valid set-off or counterclaim, (iv) do not represent obligations for goods
sold on consignment, on approval or on a sale-or-return basis or subject to any
other repurchase or return arrangements, and (v) are not subject of any Actions
or Proceedings brought by or on behalf of the Company. Section 2.25 of the
Disclosure Schedule sets forth (x) a description of any security arrangements
and collateral securing the repayment or other satisfaction of receivables of
the Company and (y) all jurisdictions in which the records relating to accounts
and notes receivable are located.
2.26 Other Negotiations; Brokers. Neither the Sellers, nor the Company, nor any
of their respective Affiliates (nor any investment banker, financial advisor,
attorney, accountant or other Person retained by or acting for or on behalf of
the Sellers or the Company or any such Affiliate) have entered into any
agreement or had any discussions with any third party regarding any transaction
involving the Company which could result in the Company, Purchaser or its
stockholders, or any officer, director, employee, agent or Affiliate of any of
them, being subject to any claim for liability to said third party as a result
of entering into this Agreement or consummating the transactions contemplated
hereby or thereby. No agent, broker, finder, investment banker, financial
advisor or other similar Person will be entitled to any fee, commission or other
compensation in connection with the transactions contemplated by this Agreement
on the basis of any act or statement made by the Sellers, the Company or any of
their respective Affiliates, or any investment banker, financial advisor,
attorney, accountant or other Person retained by or acting for or on behalf of
the Sellers, the Company, or any such Affiliate.
2.27 Holding Company Act and Investment Company Act Status. The Company is not a
"holding company" or a "public utility company" as such terms are defined in the
Public Utility Company Act of 1935, as amended. The Company is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
2.28 Bank and Brokerage Accounts. Section 2.28 of the Disclosure Schedule sets
forth (a) a list of the names and locations of all banks, securities brokers and
other financial institutions at which the Company has an account or safe deposit
box or maintains a banking, custodial, trading or other similar relationship;
and (b) a true and complete list and description of each such account, box and
relationship, indicating in each case the account number and the names of all
persons having signatory power and respect thereto.
2.29 Exemption from Registration. The offer and sale of the Purchased Interests
made pursuant to this Agreement are exempt from the registration requirements of
the Securities Act. Neither any the Sellers, nor the Company nor any Person
authorized to act on behalf of any of the foregoing has, in connection with the
offering of the Purchased Interests, engaged in (i) any form of general
solicitation or general advertising (as those terms are used within the meaning
of Rule 501(c) under the Securities Act), (ii) any action involving a public
offering within the meaning of section 4(2) of the Securities Act, or (iii) any
action that would require the registration under the Securities Act of the
offering and sale of the Purchased Interests pursuant to this Agreement or that
would violate applicable state securities or "blue sky" laws.
2.30 Disclosure. The representations and warranties contained in this Agreement,
and the statements contained in the Disclosure Schedule, responsive to the
representations and warranties in this Article II, or in the certificates, lists
and other writings furnished to Purchaser pursuant to any provision of this
Agreement (including the Financial Statements), when taken together, do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements herein and therein, in the light of
the circumstances under which they were made, not misleading.
2.31 Survival of Representations, Warranties, Covenants and Agreements. Even
though the Purchaser may investigate the affairs of the Company and attempt to
confirm the accuracy of the representations and warranties of the Sellers, the
Purchaser, nonetheless, shall have the right to rely fully upon the
representations, warranties, covenants and agreements of the Sellers contained
in this Agreement. All such representations, warranties, covenants and
agreements will survive the Closing.
ARTICLE III
3 REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser, and each of them, represents and warrants to the Sellers as
follows:
3.1 Organization and Qualification. Resources and Products are corporations duly
organized, validly existing and in good standing under the laws of the state of
Utah. Resources and Products are duly qualified, licensed or admitted to do
business and are in good standing in each jurisdiction in which the ownership,
use or leasing of their Assets, or the conduct or nature of their business,
makes such qualification, licensing or admission necessary, except for such
failures to be so qualified, licensed or admitted and in good standing which,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on the validity or enforceability of this Agreement or
on the ability of either of them to perform their obligations hereunder.
3.2 Authority Relative to this Agreement. Resources and Products have full
corporate power and authority to enter into this Agreement and to perform their
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Resources and
Products and the consummation by Resources and Products of the transactions
contemplated hereby have been duly and validly approved by their respective
boards of directors and no other corporate proceedings on the part of Resources
or Products or their stockholders are necessary to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby by either of them. This Agreement has been duly
and validly executed and delivered by Resources and Products and constitutes a
legal, valid and binding obligation of Resources and Products enforceable
against Resources and Products in accordance with its terms.
3.3 No Conflicts. The execution and delivery by Resources and Products of this
Agreement does not, and the performance by them of their obligations under this
Agreement and the consummation of the transactions contemplated hereby, do not
and will not:
3.3.1 conflict or result in a violation or breach of any of the terms,
conditions or provisions of the certificate of incorporation or by-laws of
Resources and Products;
3.3.2 subject to obtaining the consents, approvals and actions, making the
filings and giving the notices disclosed in Section 3.4 of the Disclosure
Schedule, if any, conflict with or result in a violation or breach of any term
or provision of any Law or Order applicable to Resources and Products or their
Assets; or
3.3.3 except as disclosed in Section 3.3.3 of the Disclosure Schedule, (i)
conflict with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, or (iii) require
Resources or Products to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of,
any Contract or License to which Resources or Products is a party, or by which
they are bound.
3.4 Governmental Approvals and Filings. Except as disclosed in Section 3.4 of
the Disclosure Schedule, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority on the part of Resources or
Products is required in connection with the execution, delivery and performance
of this Agreement to which it is a party or the consummation of the transactions
contemplated herein.
3.5 Legal Proceedings. There are no Actions or Proceedings pending or, to the
knowledge of Resources or Products, threatened against, relating to or affecting
Resources or Products or any of their Assets which (i) could reasonably be
expected to result in the issuance of an Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement, or (ii) could reasonably be
expected, individually or in the aggregate with other such Actions or
Proceedings, to have a material adverse effect on the business or condition of
Resources or Products.
3.6 Brokers. No agent, broker, finder, investment banker, financial advisor or
other similar Person will be entitled to any fee, commission or other
compensation in connection with any of the transactions contemplated by this
Agreement on the basis of any act or statement made by Resources or Products.
3.7 Purchase for Investment. The Purchased Interests will be acquired by
Purchaser for its own account for the purpose of investment and not with a view
to the resale or distribution of all or any part of the Purchased Interests in
violation of the Securities Act.
3.8 Disclosure. The representations and warranties contained in this Agreement,
and the statements contained in the Disclosure Schedule, responsive to the
representations and warranties in this Article III, or in the certificates,
lists and other writings furnished to Sellers pursuant to any provision of this
Agreement, when taken together, do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements herein and therein, in the light of the circumstances under which
they were made, not misleading.
3.9 Survival of Representations, Warranties, Covenants and Agreements. Even
though the Sellers may investigate the affairs of the Purchaser and confirm the
accuracy of the representations and warranties of the Purchaser contained in
this Agreement, the Sellers, nonetheless, shall have the right to rely fully
upon the representations, warranties, covenants and agreements of the Purchaser
contained in this Agreement. All such representations, warranties, covenants and
agreements will survive the Closing.
ARTICLE IV
4 COVENANTS BY THE SELLERS
4.1 Noncompetition; Non Solicitation.
4.1.1 For a period of three (3) years from the Closing Date, each of the
Sellers, alone or in conjunction with any other Person, or directly or
indirectly through their present or future Affiliates, will not directly or
indirectly own, manage, operate, join, be employed by (except by Purchaser),
have a financial interest in, control or participate in the ownership,
management, operation or control of, or use or permit his name to be used in
connection with, or be otherwise connected in any manner with any business or
enterprise engaged in the design, development, manufacture, distribution or sale
of any products, or the provision of any services related to those which the
Company was designing, developing, manufacturing, distributing, selling or
providing at any time prior to and up to and including the Closing Date anywhere
in the states of Texas, Oklahoma, New Mexico and/or Louisiana; provided,
however, that the foregoing restrictions shall not limit participation in any
capacity in any business that involves either (i) the design, development,
manufacture, distribution or sale of products of a kind customarily purchased by
the Company or (ii) the purchase of products of a kind customarily sold by the
Company, and further, provided that the foregoing restriction shall not be
construed to prohibit the ownership, in the aggregate, of not more than two
percent (2%) of any class of securities of any corporation which is engaged in
any of the businesses or enterprises described above, having a class of
securities registered pursuant to the Securities Exchange Act of 1934, as
amended, which securities are publicly owned and regularly traded on any
national exchange or in the over-the-counter market. 4.1.2 For a period of three
(3) years from the Closing Date, the Sellers shall not directly or indirectly,
or through an Affiliate, (i) influence any individual who was an employee or
consultant of the Company at any time, to terminate his or her employment or
consulting relationship with the Company, (ii) interfere in any other way with
the employment, or other relationship, of any employee or consultant of the
Company or (iii) cause or attempt to cause (or participate in any way in any
discussion or negotiation concerning) (x) any client, customer or supplier of
the Company or (y) any prospective client, customer or supplier of the Company
from engaging in business with the Company.
4.1.3 The Sellers agree that Purchaser's remedies at law for any breach or
threat of breach by it of any of the provisions of this Section 4.1 will be
inadequate, and that, in addition to any other remedy to which Purchaser may be
entitled at law or in equity, Purchaser shall be entitled to a temporary or
permanent injunction or injunctions or temporary restraining orders or orders to
prevent breaches of the provisions of this Section 4.1 and to enforce
specifically the terms and provisions hereof, in each case without the need to
post any security or bond. Nothing herein contained shall be construed as
prohibiting Purchaser from pursuing, in addition, any other remedies available
to it for such breach or threatened breach. A waiver by the Purchaser of any
breach of any provision hereof shall not operate or be construed as a waiver of
a breach of any other provisions of this Agreement or of any subsequent breach
thereof.
4.1.4 The parties hereto consider the restrictions contained in this Section 4.1
hereof to be reasonable for the purpose of preserving the goodwill, proprietary
rights and going concern value of the Company, but if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in this Section 4.1 is an unenforceable
restriction on the Sellers' activities, the provisions of this Section 4.1 shall
not be rendered void but shall be deemed amended to apply as to such maximum
time and territory and to such other extent as such court may judicially
determine or indicate to be reasonable. Alternatively, if the court referred to
above finds that any restriction contained in this Section 4.1 or any remedy
provided herein is unenforceable, and such restriction or remedy cannot be
amended so as to make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained therein or the
availability of any other remedy. The provisions of this Section 4.1 shall in no
respect limit or otherwise affect the Sellers's obligations under other
agreements with the Company.
4.1.5 The parties agree that $10,000.00 of the Purchase Price is paid to the
Sellers as consideration in exchange for the covenants of the Sellers set forth
in this Section 4.1.
4.2 Regulatory and Other Approvals. The Sellers shall, and shall cause the
Company to, (a) take all necessary or desirable steps and proceed diligently and
in good faith and use diligent efforts, as promptly as practicable, to obtain
all consents, approvals or actions of, to make all filings with and to give all
notices to, Governmental or Regulatory Authorities or any other Person required
to consummate the transactions contemplated hereby and those described in
Sections 2.5 and 2.6 of the Disclosure Schedule, (b) provide such other
information and communications to such Governmental or Regulatory Authorities or
other Persons as Purchaser or such Governmental or Regulatory Authorities or
other Persons may reasonably request and (c) cooperate with Purchaser as
promptly as practicable in obtaining all consents, approvals or actions of,
making all filings with and giving all notices to, Governmental or Regulatory
Authorities or other Persons required of Purchaser to consummate the
transactions contemplated hereby. The Sellers will provide prompt notification
to Purchaser when any such consent, approval, action, filing or notice referred
to in clause (a) above is obtained, taken, made or given, as applicable, and
will advise Purchaser of any communications (and, unless precluded by Law,
provide copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement.
4.3 Investigation by Purchaser.
From the date of this Agreement until the date on which either Party
provides the other Party with written notice that this Agreement is terminated
(the "Termination Date"), or until the Closing, whichever is earlier, the
Sellers will afford Purchaser its employees, agents, accountants and other
representatives access to the Books and Records of the Company, as well as
employee files and records.
ARTICLE V
5 CLOSING CONDITIONS
5.1 Condition to the Obligations of the Purchaser. The obligations of Purchaser
hereunder to purchase the Purchased Interests are subject to the fulfillment, at
or prior to the Closing, of the following conditions precedent (any or all of
which may be waived in whole or in part by Purchaser in its sole discretion):
5.1.1 Representations and Warranties. Each of the representations and warranties
made by the Sellers in this Agreement shall, unless waived, be true and correct
in all material respects as of the date of this Agreement and on and as of the
Closing Date as though each such representation and warranty was made on and as
of the Closing Date, except to the extent the representation or warranty is
expressly limited by its terms to another date.
5.1.2 Performance. The Sellers shall have performed and complied with, unless
waived, each agreement, covenant and obligation required by this Agreement to be
so performed or complied with by them at or before the Closing.
5.1.3 Orders and Laws. There shall not be pending, threatened or in effect on
the Closing Date any Order or Law restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or which could reasonably be expected to
otherwise result in a material diminution of the benefits of the transactions
contemplated by this Agreement to Purchaser. 5.1.4 Regulatory Consents and
Approvals. All consents, approvals and actions of, filings with and notices to
any Governmental or Regulatory Authority necessary to permit Purchaser and the
Sellers to perform their obligations under this Agreement and to consummate the
transactions contemplated hereby (i) shall have been duly obtained, made or
given, (ii) shall be in form and substance reasonably satisfactory to Purchaser,
(iii) shall not impose any limitations or restrictions on Purchaser, (iv) shall
not be subject to the satisfaction of any condition that has not been satisfied
or waived, and (v) shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation for the transactions contemplated by
this Agreement shall have occurred.
5.1.5 Third Party Consents. Any consents (or waivers) identified in Section 2.5
of the Disclosure Schedule, and all other consents (or waivers) to the
performance by the Purchaser of its obligations under this Agreement, or to the
consummation for the transactions contemplated hereby as are required under any
Contract or License to which the Purchaser is a party or by which any of its
Assets are bound and where the failure to obtain any such consent (or in lieu
thereof waiver) could reasonably be expected, individually or in the aggregate
with other such failures, to materially adversely affect the Purchaser or the
business or condition of the Company or otherwise result in a material
diminution of the benefits of the transactions contemplated by this Agreement to
the Purchaser in its sole discretion, (i) shall have been obtained, (ii) shall
be in form and substance satisfactory to the Purchaser in its sole discretion,
(iii) shall not be subject to the satisfaction of any condition that has not
been satisfied or waived and (iv) shall be in full force and effect.
5.1.6 Purchaser's Investigation. Purchaser shall not have discovered, as a
result of its investigation and review pursuant to Section 4.3 hereof, any
condition (financial, legal or otherwise) relating in any way to the Company,
its Assets, business or prospects, that convinces Purchaser, in its sole
discretion, that it is not advisable to complete the Closing.
5.1.7 Sellers' Certificates. The Sellers shall have delivered to Purchaser (i)
certificates, dated the Closing Date and executed by an executive officer of the
Company, substantially in the form and to the effect of Exhibit B hereto and
(ii) certificates, dated the Closing Date and executed by the President of the
Company, substantially in the form of Exhibit C hereto.
5.1.8 Resignations of Officers. The Sellers shall have delivered to Purchaser
the resignations of all current officers of the Company, effective as of the
Closing Date.
5.1.9 Opinion of Counsel. Purchaser shall have received the opinion of
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P., counsel to the Company in connection with this
Agreement, dated the Closing Date, substantially in the form and to the effect
of Exhibit D hereto, and to such further effect as Purchaser may reasonably
request.
5.1.10 Disclosure Schedule. The Sellers shall have delivered to Purchaser a copy
of the Disclosure Schedule, updated and current through the Closing Date.
5.1.11 Good Standing Certificates. The Sellers shall have delivered to Purchaser
(i) copies of the certificate (or other comparable organizing documents),
including all amendments thereto of the Company certified by the applicable
Secretary of State or other appropriate governmental official, (ii) certificates
from the applicable Secretary of State or other appropriate governmental
official listing all charter documents of the Company on file and the Company's
registration as a registered limited liability partnership.
5.1.12 Receipt of Purchased Interests. Assignments shall have been executed by
all Sellers transferring ownership of the Purchased Interests to Purchaser in
accordance with the terms of this Agreement.
5.1.13 No Adverse Change. There shall have occurred no material adverse change
in the business or financial condition of the Company between December 31, 1999
and the Closing Date.
5.1.14 Employment Agreements. Purchaser shall have received Employment
Agreements satisfactory to Purchaser, between the Company, as employer, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as employees.
5.2 Conditions to the Obligations of the Sellers. The obligations of the Sellers
hereunder to sell the Purchased Interests to the Purchaser are subject to the
fulfillment, at or prior to the Closing, of the following conditions precedent
(any or all of which may be waived in whole or in part by the Sellers in theirs
sole discretion):
5.2.1 Representations and Warranties. Each of the representations and warranties
made by Purchaser in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and on and as of the Closing Date as
though each such representation and warranty was made on and as of the Closing
Date.
5.2.2 Performance. Purchaser shall have performed and complied with, in all
material respects, each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Purchaser at or before the
Closing.
5.2.3 Orders and Laws. There shall not be pending, threatened or in effect on
the Closing Date any Orders or Laws restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement.
5.2.4 Regulatory Consents and Approvals. All consents, approvals and actions of,
filings with and notices to any Governmental or Regulatory Authority necessary
to permit Purchaser and the Sellers to perform their obligations under this
Agreement and to consummate the transactions contemplated hereby (i) shall have
been duly obtained, made or given, (ii) shall not be subject to the satisfaction
or any condition that has not been satisfied or waived, and (iii) shall be in
full force and effect, and all terminations or expirations of waiting periods
imposed by any Governmental or Regulatory Authority necessary for the
consummation of the transactions contemplated by this Agreement shall have
occurred.
5.2.5 Officers' Certificates. Purchaser shall have delivered to the Sellers a
certificate, dated the Closing Date and executed by the president or
vice-president or other officer of Purchaser, substantially in the form and to
the effect of Exhibit E hereto.
5.2.6 Employment Agreements. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall have
entered into Employment Agreements with the Company that are satisfactory to the
Purchaser.
5.2.7 Opinion of Counsel. Purchaser shall have furnished to Sellers an opinion
of counsel, dated the Closing Date, substantially in the form and to the effect
of Exhibit F hereto, and to such further effect as Sellers may reasonably
request.
ARTICLE VI
6 TERMINATION
6.1 Termination Events. This Agreement may, by notice given prior to or at the
Closing, be terminated:
6.1.1 by Purchaser or by the Sellers if a material breach of any provision of
this Agreement has been committed by the other party and such breach has not
been waived;
6.1.2 (i) by Purchaser if any of the conditions in Section 5.1 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Purchaser to comply with
its obligations under this Agreement) and Purchaser has not waived such
condition on or before the Closing Date, or (ii) by the Sellers, if any of the
conditions in Section 5.2 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of the Sellers to comply with his obligations under this Agreement)
and the Sellers has not waived such condition on or before the Closing Date;
6.1.3 by mutual consent of Purchaser and the Sellers; or
6.1.4 by Purchaser or by the Sellers if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) on or before March 31, 2000, or
such later date as the parties may agree upon.
6.2 Effect of Termination. Each party's right of termination under Section 6.1
is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 6.1, all further
obligations of the parties under this Agreement will terminate, except that the
obligations in this Section and in Sections 9.3, 9.4, 9.13 and Article X will
survive; provided, however, that if this Agreement is terminated by a party
because of a breach of the Agreement by the other party or because one or more
of the conditions to the terminating party's obligations under this Agreement is
not satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies (including specific performance) will survive such termination
unimpaired.
ARTICLE VII
7 INDEMNIFICATION; TAX MATTERS
7.1 Survival.
7.1.1 The representations and warranties of the Sellers shall survive the
Closing and shall continue in full force and effect for the periods specified
below (the Sellers' "Survival Period"):
7.1.1.1 The representations and warranties of the Sellers contained in
Sections 2.1, 2.2, 2.3, 2.11, 2.15, and 2.23 shall survive indefinitely;
and
7.1.1.2 All other representations and warranties of the Sellers contained
in this Agreement (including any certificate delivered in connection
herewith, or therewith) shall survive until the second anniversary of the
Closing, at which time such representations and warranties shall expire.
7.1.2 The representations and warranties of the Purchaser contained in this
Agreement (including any certificate delivered in connection herewith, or
therewith) shall survive (the Purchaser's "Survival Period") until the second
anniversary of the Closing, at which time such representations and warranties
shall expire.
7.1.3 Anything to the contrary notwithstanding, the Survival Period shall be
extended automatically to include any time period necessary to resolve a claim
for indemnification which was made before the expiration of the respective
Survival Period for such claim but not resolved prior to its expiration, and any
such extension shall apply only as to the claims asserted and not so resolved
within the Survival Period. Liability for any such item shall continue until
such claim shall have been finally settled, decided or adjudicated.
7.2 Indemnification.
---------------
7.2.1 The Sellers will indemnify the Company, Resources and Products and their
respective stockholders and the officers, directors, employees, agents and
Affiliates of each of them (collectively the "Purchaser Indemnitees") in respect
of, and hold each of them harmless from and against, any and all Losses
suffered, incurred or sustained by any of them or to which any of them becomes
subject, resulting from, arising out of relating to any misrepresentation or
breach of warranty or nonfulfillment of or failure to perform any covenant or
agreement on the part of the Sellers contained in this Agreement (including,
without limitation, any certificate delivered in connection herewith or
therewith); provided, however, that Sellers shall have no liability to the
Purchaser Indemnitees for breaches of representations or warranties unless and
solely to the extent that the aggregate amount of damages resulting therefrom
exceeds $50,000.00 and, after such $50,000.00 threshold is met, Sellers shall
have no liability to the Purchaser Indemnitees for additional damages resulting
from such breaches with respect to individual items that are less than $1,000.00
unless such individual items exceed $10,000.00 in the aggregate, provided that
such limitations shall not apply to damages from breaches of representations and
warranties constituting fraud or intentional misrepresentation .
7.2.2 Resources and Products will indemnify the Sellers in respect of, and hold
them harmless from and against, any and all Losses suffered, incurred or
sustained by them or to which they become subject, resulting from, arising out
of or relating to any misrepresentation or breach of warranty or nonfulfillment
of or failure to perform any covenant or agreement on the part of Purchaser
contained in this Agreement (including, without limitation, any certificate
delivered in connection herewith or therewith).
7.3 Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under Section 7.2 will be asserted and resolved as follows:
7.3.1 In order for an Indemnified Party to be entitled to any indemnification
provided for under Section 7.2 in respect of, arising out of or involving a
claim or demand made by any Person not a party to this Agreement against the
Indemnified Party (a "Third Party Claim"), the Indemnified Party shall deliver a
Claim Notice to the Indemnifying Party promptly after receipt by such
Indemnified Party of written notice of the Third Party Claim; provided, that
failure to give such Claim Notice shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure.
7.3.2 If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Party, which counsel must be reasonably satisfactory to the
Indemnified Party. Should the Indemnifying Party so elect to assume the defense
of a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnified Party for legal expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof, but shall continue to pay for any
expenses of investigation or any Loss suffered. If the Indemnifying Party
assumes such defense, the Indemnified Party shall have the right to participate
in the defense thereof and to employ counsel, at its own expense, separate from
the counsel employed by the Indemnifying Party. If (i) the Indemnifying Party
shall not assume the defense of a Third Party claim with counsel satisfactory to
the Indemnified Party within twenty Business Days of any Claim Notice, or (ii)
legal counsel for the Indemnified Party notifies the Indemnifying Party that
there are or may be legal defenses available to the Indemnifying Party or to
other Indemnified Parties which are different from or additional to those
available to the Indemnified Party, which, if the Indemnified Party and the
Indemnifying Party were to be represented by the same counsel, would constitute
a conflict of interest for such counsel or prejudice prosecution of the defenses
available to such Indemnified Party, or (iii) if the Indemnifying Party shall
assume the defense of a Third Party Claim and fail to diligently prosecute such
defense, then in each such case the Indemnified Party, by notice to the
Indemnifying Party, may employ its own counsel and control the defense of the
Third Party Claim and the Indemnifying Party shall be liable for the reasonable
fees, charges and disbursements of counsel employed by the Indemnified Party,
and the Indemnified Party shall be promptly reimbursed for any such fees,
charges and disbursements, as and when incurred. Whether the Indemnifying Party
or the Indemnified Party control the defense of any Third Party Claim, the
parties hereto shall cooperate in the defense thereof. Such cooperation shall
include the retention and provision to the counsel of the controlling party of
records and information which are reasonably relevant to such Third Party Claim,
and making employees available on a mutually convenient basis to provide
additional information and explanation or any material provided hereunder. The
Indemnifying Party shall have the right to settle, compromise or discharge a
Third Party Claim (other than any such Third Party Claim in which criminal
conduct is alleged) without the Indemnified Party's consent if such settlement,
compromise or discharge (i) constitutes a complete and unconditional discharge
and release of the Indemnified Party, and (ii) provides for no relief other than
the payment of monetary damage and such monetary damages are paid in full by the
Indemnifying Party.
7.3.3 In the event any Indemnified Party should have a claim under Section 7.2
against any Indemnifying Party that does not involve a Third Party Claim, the
Indemnified Party shall promptly deliver an Indemnity Notice to the Indemnifying
Party. The failure by any Indemnified Party to give the Indemnity Notice shall
not impair such party's rights hereunder except to the extent that an
Indemnifying Party demonstrates that it has been prejudiced thereby. If the
Indemnifying Party notifies the Indemnified Party that it does not dispute the
claim described in such Indemnity Notice or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes the
claim described in such Indemnity Notice, the Loss in the amount specified in
the Indemnity Notice will be conclusively deemed a liability of the Indemnifying
Party under Section 7.2 and the Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. If the Indemnifying Party has notified
the Indemnified Party within the Dispute Period that it disputes its liability
(or the amount of such liability) with respect to such claim, the Indemnifying
Party and the Indemnified Party will proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through negotiations within
thirty (30) days, such dispute shall be resolved as provided in Article X
hereof.
7.4 Tax Liability. The Sellers agree that they shall be responsible, at their
sole expense, for the preparation and timely filing of all income Tax Returns of
the Company filed after the date this Agreement is executed for all periods
ending on or prior to the Closing Date, and that, except for non-income Tax
liabilities that are properly reflected as accrued liabilities on the Books and
Records as of the Closing, Sellers shall pay when due all Taxes properly payable
for the periods covered by such Tax Returns and shall be entitled to all refunds
allocable to such periods; provided that the Purchaser acknowledges and agrees
that the Company will sign and file all such Tax Returns of the Company filed
after the Closing. All items of income, gain, deduction and loss through the
close of business on the Closing Date shall be included in the Company's Federal
Income Tax Return for the period ending on the Closing Date. Purchaser agrees
that it shall be responsible, at its sole expense, for the preparation and
timely filing of all Tax Returns of the Company for all periods after the
Closing Date, and that Purchaser shall pay when due all Taxes properly payable
for the periods covered by such Tax Returns. For taxes based on income or
receipts, the amount of such taxes payable shall include amounts payable as if
the applicable taxable period ended on the close of business on the Closing
Date.
7.5 Tax Contests.
7.5.1 If any Taxing Authority or other Person asserts a Tax Claim, then the
party hereto first receiving notice of such Tax Claim shall promptly provide
written notice thereof to the other parties hereto. Such notice shall specify in
reasonable detail the basis for such Tax Claim and shall include a copy of any
relevant correspondence received from the Taxing Authority or other Person.
7.5.2 If, within 30 calendar days after any the Sellers receives or delivers, as
the case may be, notice of a Tax Claim, the Sellers provide to the Purchaser an
Election Notice, then subject to the provisions of this Section 7.4, the Sellers
shall defend or prosecute, at their sole cost, expense and risk, such Tax Claim
by all appropriate proceedings, which proceedings shall be defended or
prosecuted diligently by the Sellers to a Final Determination; provided, that
the Sellers shall not, without the prior written consent of the Company, enter
into any compromise or settlement of such Tax Claim that would result in any Tax
detriment to the Company. So long as the Sellers are defending or prosecuting a
Tax Claim, with respect to the Company, the Company shall provide or cause to be
provided to the Sellers any information reasonably requested by the Sellers
relating to such Tax Claim, and shall otherwise cooperate with the Sellers and
their representatives in good faith in order to contest effectively such Tax
Claim. The Sellers shall inform the Company of all developments and events
relating to such Tax Claim (including, without limitation, providing to the
Company copies of all written materials relating to such Tax Claim) and the
Company or its authorized representatives shall be entitled, at the expense of
the Company, to attend, but not to participate in or control, all conferences,
meetings and proceedings relating to such Tax Claim.
7.5.3 If, with respect to any Tax Claim, the Sellers fails to deliver an
Election Notice to the Company within the period provided in Section 7.5.2 or,
after delivery of such Election Notice to the Company, the Sellers fail
diligently to defend or prosecute such Tax Claim to a Final Determination, then
the Company shall at any time thereafter have the right (but not the obligation)
to defend or prosecute, at the sole cost, expense and risk of the Sellers, such
Tax Claim. The Company shall have full control of such defense or prosecution
and such proceedings, including any settlement or compromise thereof. If
requested by the Company, the Sellers shall cooperate in good faith with the
Company and its authorized representatives in order to contest effectively such
Tax Claim. The Sellers may attend, but not participate in or control, any
defense, prosecution, settlement or compromise of any Tax Claim controlled by
the Company pursuant to this Section 7.5.3, and shall bear their own costs and
expenses with respect thereto. In the case of any Tax Claim that is defended or
prosecuted by the Company pursuant to this Section 7.5.3, the Company shall,
from time to time, be entitled to receive current payments from the Sellers with
respect to costs and expenses incurred by the Company in connection with such
defense or prosecution (including, without limitation, reasonable attorneys',
accountants' and experts' fees and disbursements, settlement costs, court costs
and any other costs or expenses for investigating, defending or prosecuting such
Tax Claim, and any Taxes imposed on the Company as a result of receiving a
payment from the Sellers pursuant to this Section 7.5) (collectively "Associated
Costs").
7.5.4 In the case of any Tax Claim that is defended or prosecuted to a Final
Determination by the Sellers pursuant to this Section 7.5, the Sellers shall pay
to the appropriate Tax Indemnitees, in immediately available funds, the full
amount of any Tax arising or resulting from such Tax Claim within five Business
Days after such Final Determination. In the case of any Tax Claim that is
defended or prosecuted to a Final Determination by the Company pursuant to the
terms of this Section 7.5, the Sellers shall pay to the appropriate Tax
Indemnitee, in immediately available funds, the full amount of any Tax arising
or resulting from such Tax Claim, together with any Associated Costs that have
not theretofore been paid by the Sellers to the Company, within five Business
Days after such Final Determination. In the case of any Tax Claim not covered by
the two preceding sentences that is the subject of a Final Determination,
provided that the provisions of this Agreement are followed in the handling of
such Tax Claim, the Sellers shall pay to the Company, in immediately available
funds, the full amount of any Tax arising or resulting from such Tax Claim
(calculated after taking into account any actual reduction in the current
liability for Taxes of such Tax Indemnitee for Tax arising out of or resulting
from such payment or such Tax Claim), together with any Associated Costs that
have not theretofore been paid by the Sellers to the Company, at least five
Business Days before the date payment of such Tax is due from any Tax
Indemnitee.
7.5.5 Notwithstanding anything contained in this Article VII to the contrary,
the rights of the Sellers under this Section 7.5 to defend or prosecute, or to
control the defense or prosecution of, any Tax Claim shall be no greater than
those rights that the Company would have to defend or prosecute, or to control
the defense or prosecution of, such Tax Claim.
7.6 Cooperation Regarding Tax Matters. Each party hereto shall provide to the
other parties hereto and the Company such cooperation and information as any of
them reasonably may request related to the filing of any Tax Return, amended Tax
Return or claim for refund, determining a liability for Taxes or a right to
refund of Taxes or in conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing copies of all
relevant portions of relevant Tax Returns, together with relevant accompanying
schedules, workpapers and relevant documents relating to rulings or other
determinations by Taxing Authorities and relevant records concerning the
ownership and Tax basis of property, which any such party may possess. Each
party shall make its employees reasonably available on a mutually convenient
basis at its cost to provide explanation of any documents or information so
provided. Subject to the preceding sentence, each party required to file Tax
Returns pursuant to this Article VII shall bear all costs of filing such Tax
Returns.
7.7 Payment of Transfer Taxes and Fees. The Sellers shall pay all sales, use,
transfer, stamp, documentary or similar Taxes imposed upon or arising out of or
in connection with the transactions effected pursuant to this Agreement, and
shall indemnify, defend, and hold harmless the Purchaser, the Company and their
Affiliates with respect to such Taxes. The Sellers shall file all necessary
documentation and Tax Returns with respect to such Taxes and provide to
Purchaser copies of all such Tax Returns.
7.8 Other Tax Covenants.
7.8.1 Without the prior written consent of Purchaser, neither the Sellers nor
any Affiliate of any the Sellers shall, to the extent it may affect or relate to
the Company, make or change any tax election, change any annual tax accounting
period, adopt or change any method of tax accounting, file any amended Tax
Return, enter into any method of tax accounting, enter into any closing
agreement, settle any Tax Claim, assessment or proposed assessment, surrender
any right to claim a Tax refund, consent to any extension or waiver of the
limitation period applicable to any Tax Claim or assessment or take or omit to
take any other action, if any such action or omission would have the effect of
increasing any post-closing Tax Liability of the Purchaser, of the Company or
any Affiliate of Purchaser.
7.8.2 Without the prior written consent of the Sellers, neither the Purchaser
nor the Company shall, to the extent it may affect or relate to the Company,
settle any Tax claim, assessment or proposed assessment, surrender any right to
claim a Tax refund, consent to any extension or waiver of the limitation period
applicable to any Tax claim or assessment or take or omit to take any other
action, if any such action or omission would affect a Pre-Closing Tax Period,
unless required by applicable law.
7.8.3 So long as any books, records and files retained by the Sellers relating
to the business of the Company or the books, records and files delivered to the
control of the Purchaser pursuant to this Agreement to the extent they relate to
the operations of the Company prior to the Closing Date, remain in existence and
are available, each party (at its own expense) shall have the right upon prior
notice to inspect and to make copies of the same at any time during business
hours for any proper purpose. The Purchaser and the Sellers and their respective
Affiliates shall use reasonable efforts not to destroy or allow the destruction
of any such books, records and files without first providing 60 days' written
notice of intention to destroy to the other, and allowing such other party to
take possession of such records.
7.9 Conflict. In the event of a conflict between the provisions of Sections 7.4
through 7.8 of this Article VII and any other provision of this Agreement, such
provisions of this Article VII shall control.
ARTICLE VIII
8 DEFINITIONS
8.1 Definitions. As used in this Agreement, the following defined terms shall
have the meanings indicated below:
"Actions or Proceedings" means any action, suit, proceeding, arbitration or
Governmental or Regulatory Authority investigation or audit.
"Affiliate" means, as applied to any Person, (a) any other Person directly
or indirectly owning, owned by, controlling, controlled by or under common
control with, that Person, (b) any director, partner, officer, agent, employee
or relative of such Person. For the purposes of this definition, "control"
(including with correlative meanings, the terms "controlling", "controlled by",
and "under common control with") as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person.
"Agreement" means this Purchase Agreement, the Exhibits and the Disclosure
Schedule and the certificates delivered in connection herewith, as the same may
be amended from time to time in accordance with the terms hereof.
"Assets" of any Person means all assets and properties of every kind,
nature, character and description, including goodwill and other tangibles,
operated, owned or leased by such Person, including cash and cash equivalents,
investments, accounts and notes receivable, chattel paper, documents,
instruments, real estate, equipment, inventory, goods and intellectual property.
"Associated Costs" has the meaning ascribed to it in Section 7.5.3.
"Benefit Plan" means any Plan, existing at the Closing Date or prior
thereto, established or to which contributions have at any time been made by the
Company or under which any employee, former employee or director of the Company
or any beneficiary thereof is covered, is eligible for coverage or has benefit
rights.
"Books and Records" means all files, documents, instruments, papers, books
and records relating to the Company, including financial statements, Tax Returns
and related work papers and letters from accountants, attorneys, budgets,
pricing guidelines, ledgers, journals, deeds, title policies, minute books,
stock certificates and books, stock transfer ledgers, Contracts, Licenses,
customer lists, computer files and programs, legal files, retrieval programs,
operating data and plans and environmental studies and plans.
"Claim Notice" means written notification pursuant to Section 7.3.1 of a
Third Party Claim as to which indemnity under Section 7.2 is sought by an
Indemnified Party.
"Closing" and "Closing Date" have the meaning ascribed to them in Section
1.3.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Company" has the meaning ascribed to it in the first recital of this
Agreement (and shall include all predecessors and subsidiaries of the Company).
"Contract" means any written or oral agreement, lease, guaranty, evidence
of indebtedness, mortgage, indenture, security agreement or other contract of
any nature whatsoever.
"Disclosure Schedule" means the schedules delivered to Purchaser by or on
behalf of the Company and the Sellers, and the schedules delivered by or on
behalf of Purchaser, containing all lists, descriptions, exceptions and other
information and materials as are required to be included therein pursuant to
this Agreement.
"Dispute Period" means the period ending forty-five (45) calendar days
following receipt by an Indemnifying Party of either a Claim Notice or an
Indemnity Notice.
"Election Notice" means a written notice provided by the Sellers in respect
of a Tax Claim to the effect that (i) the Sellers acknowledge their indemnity
obligation under this Agreement with respect to such Tax Claim and (ii) the
Sellers elect to contest, and to control the defense or prosecution of, such Tax
Claim at their sole risk and sole cost and expense.
"Environment" means all air, surface water, groundwater, drinking water
supply, stream sediments, or land, including soil, land surface or subsurface
strata, all fish, wildlife, biota and all other environmental medium or natural
resources.
"Environmental, Health and Safety Liabilities" means any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
any Environmental Law or Occupational Safety and Health Law and consisting of or
relating to (i) any environmental, health or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products); (ii) fines, penalties,
judgments, awards, settlements, legal or administrative proceedings, damages,
losses, claims, demands and response, investigative, remedial, or inspection
costs and expenses arising under Environmental Law or Occupational Safety and
Health Law; (iii) financial responsibility under Environmental Law or
Occupational Safety and Health Law for clean-up costs or corrective action,
including any investigation, clean-up, removal, containment, or other
remediation or response actions required by Environmental Law or Occupational
Safety and Health Law (whether or not such clean-up has been required or
requested by any governmental body or any other Person) and for any natural
resource damages; or (iv) any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law. The terms "removal," "remedial," and "response action" include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended (CERCLA).
"Environmental Law" means all federal, state, local and foreign
environmental, health and safety laws, common law orders, decrees, judgments,
codes and ordinances and all rules and regulations promulgated thereunder, civil
or criminal, including, without limitation, Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Materials, pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the Environment or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, pollutants, contaminants, chemicals, or industrial, solid,
toxic or hazardous substances or wastes.
"Environmental Permit" means any federal, state, local, provincial, or
foreign permits, licenses, approvals, consent or authorizations required by any
Governmental or Regulatory Authority under or in connection with any
Environmental Law and includes any and all orders, consent orders or binding
agreements issued or entered into by a Governmental or Regulatory Authority
under any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Facilities" means any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures or equipment (including motor vehicles, tank cars and rolling
stock) currently or formerly owned or operated by the Company.
"Final Determination" means (i) a decision, judgment, decree or other Order
by any court of competent jurisdiction, which decision, judgment, decree or
other Order has become final after all allowable appeals by either party to the
action have been exhausted or the time for filing such appeals has expired, (ii)
a closing agreement entered into under Section 7121 of the Code or any other
settlement agreement entered into in connection with an administrative or
judicial proceeding, (iii) the expiration of the time for instituting suit with
respect to a claimed deficiency or (iv) the expiration of the time for
instituting a claim for refund, or if such a claim was filed, the expiration of
the time for instituting suit with respect thereto.
"Financial Statements" has the meaning ascribed to it in Section 2.8.
"GAAP" means generally accepted accounting principles applicable within the
United States, consistently applied.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing regulated by or subject to any
Environmental Law that increases the danger, or risk of danger, or poses an
unreasonable risk of harm to persons or property on or off the Facilities, or
that may affect the value of the Facilities or the Company.
"Hazardous Material" means (i) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls (PCBs);
(ii) any chemicals, materials, substances or wastes which are now or hereafter
become defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants" or words
of similar import, under any Environmental Law; and (iii) any other chemical,
material, substance or waste, exposure to which is now or hereafter prohibited,
limited or regulated by any Governmental or Regulatory Authority.
"Indebtedness" of any Person means all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases, (v) long term debt and (vi) in the nature of
guarantees of the obligations described in clauses (i) through (v) above of any
other Person.
"Indemnified Party" means any Person claiming indemnification under any
provision of Article VII.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article VII.
"Indemnity Notice" means written notification pursuant to Section 7.3.3 of
a claim for indemnity under Article VII by an Indemnified Party, specifying the
nature of and basis for such claim, together with the amount or, if not then
reasonably ascertainable, the estimated amount, determined in good faith, of
such claim.
"Laws" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"Leased Real Property" has the meaning ascribed to it in Section 2.15.
"Liabilities" means all Indebtedness, obligations and other liabilities (or
contingencies that have not yet become liabilities) of a Person (whether
absolute, accrued, contingent (or based upon any contingency), known or unknown,
fixed or otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest, lease,
lien, adverse claim, levy, charge or other encumbrance of any kind, or any
conditional sale Contract, title retention Contract or other Contract to give
any of the foregoing.
"Loss" means any and all damages, fines, fees, penalties, deficiencies,
diminution in value of investment, losses and expenses, including without
limitation, interest, reasonable expenses of investigation, court costs,
reasonable fees and expenses of attorneys, accountants and other experts or
other expenses of litigation or other proceedings or of any claim, default or
assessment (such fees and expenses to include all fees and expenses, such as
fees and expenses of attorneys, incurred in connection with (i) the
investigation or defense of any Third Party Claims or (ii) asserting or
disputing any rights under this Agreement against any party hereto or
otherwise).
"Occupational Safety and Health Law" means any Law designed to provide safe
and healthful working conditions and to reduce occupational safety and health
hazards, and any program made applicable to the Facilities by operation of Law,
whether governmental or private (including those promulgated or sponsored by
industry associations and insurance companies), designed to provide safe and
healthful working conditions.
"Option" with respect to any Person means any right, subscription, warrant,
option, "phantom" ownership right or other Contract that gives the right to (i)
purchase or otherwise receive or be issued any ownership interest in the Company
or other equity interests of such Person or any security of any kind convertible
into or exchangeable or exercisable for any ownership interest of such Person,
or (ii) receive any benefits or rights similar to those enjoyed by or accruing
to the holder of an ownership interest or other equity interests of such Person,
including without limitation, any rights to participate in the equity, income or
election of directors or officers of such Person.
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each such case whether preliminary
or final).
"Owned Real Property" has the meaning ascribed to it in Section 2.15.
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company or partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"Plan" means any bonus, compensation, pension, profit sharing, retirement,
stock purchase or cafeteria, life, health, accident, disability, workmen's
compensation or other insurance, severance, separation or other employee benefit
plan, practice, policy or arrangement of any kind, whether written or oral, or
whether for the benefit of a single individual or more than one individual
including, but not limited to, any "employee benefit plan" within the meaning of
Section 3(3) of ERISA.
"Post-Closing Period" means any taxable period or portion thereof beginning
after the Closing Date. If a taxable period begins on or before the Closing Date
and ends after the Closing Date, then the portion of the taxable period that
begins on the day following the Closing Date shall constitute a Post-Closing
Period.
"Pre-Closing Period" means any taxable period or portion thereof that is
not a Post-Closing Period.
"Purchase Price" has the meaning ascribed to it in Section 1.2.
"Purchased Interests" has the meaning ascribed to it on the first page of
this Agreement.
"Purchaser" has the meaning ascribed to it in the first paragraph of this
Agreement.
"Real Property" has the meaning ascribed to it in Section 2.15.
"Real Property Leases" has the meaning ascribed to it in Section 2.15.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing of a
Hazardous Material into the Environment.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Seller" and the "Sellers" have the meaning ascribed to them on the first
page of this Agreement.
"Subsidiary" means any Person in which another Person, directly or
indirectly through Subsidiaries or otherwise, beneficially owns at least fifty
percent (50%) of either the equity interest in, or the voting control of, such
Person, whether or not existing on the date hereof. Unless the context otherwise
requires a different interpretation, references to a "Subsidiary" mean a
Subsidiary of the Company.
"Tax" or "Taxes" means all federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, payroll, employment, excise, property, alternative or
add-on minimum, environmental or other taxes, assessments, duties, fees, levies
or other governmental charges of any nature whatever, whether disputed or not,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto.
"Tax Claim" means any written claim with respect to Taxes attributable to a
Pre-Closing Period made by any Taxing Authority or any Person that, if pursued
successfully, could serve as the basis for a claim for indemnification, under
this Agreement, of Purchaser, the Company and other Indemnified Parties
specified in Section 7.1 of this Agreement.
"Tax Indemnitee" means the Company, the Purchaser and their respective
stockholders, officers, directors, employees, agents and Affiliates of each of
them (other than the Sellers).
"Tax Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
"Third Party Claim" has the meaning ascribed to it in Section 7.3.
8.2 Interpretation of Agreement.
8.2.1 Unless the context of this Agreement otherwise requires, (i) words of any
gender include each other gender; (ii) words using the singular or plural number
also include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; (iv) the terms "Article" or "Section" refer to the specified
Article or Section of this Agreement; (v) the word "including" does not imply
any limitation to the item or matter mentioned; and (vi) the phrases "ordinary
course of business" and "ordinary course of business consistent with past
practice" refer to the business and practice of the Company. All accounting
terms used herein and not expressly defined herein shall have the meanings given
to them under GAAP.
8.2.2 When used herein, the phrase "to the knowledge of" any Person, "to the
best knowledge of" any Person or any similar phrase, means (i) with respect to
any Person who is an individual, the actual knowledge of such Person, (ii) with
respect to any other Person, the actual knowledge of the directors, officers,
managers, and other similar Persons in a similar position or having similar
powers and duties, and (iii) in the case of each of (i) and (ii), the knowledge
of facts that such individuals should have after reasonable inquiry.
ARTICLE IX
9 MISCELLANEOUS
9.1 Notices. All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally
or mailed by prepaid first class certified mail, return receipt requested, or
sent by prepaid courier, to the parties at the following addresses:
If to Resources and/or Products, to:
ISG Resources, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
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Attn.: Sr. Vice President and General Counsel
If to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇:
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With a copy (which shall not constitute notice to any Seller) to:
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P.
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
If to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇:
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With a copy (which shall not constitute notice to any Seller) to:
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P.
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by mail in the manner described above to the address
as provided in this Section, be deemed given upon receipt and (iv) if delivered
by courier to the address as provided for in this Section, be deemed given on
the earlier of the second business day following the date sent by such courier
or upon receipt. Any party from time to time may change its address or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
9.2 Entire Agreement. This Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter hereof and
thereof and contains the sole and entire agreement between the parties hereto
with respect to the subject matter hereof and thereof, provided that the
execution of this Agreement shall not affect the Confidentiality Agreement
currently in effect between the Company and the Purchaser.
9.3 Expenses. Except as otherwise expressly provided in this Agreement
(including without limitation as provided in Article VII), each party will pay
its own costs and expenses incurred in connection with this Agreement, and the
transactions contemplated hereby and thereby; provided, however, that, anything
in this Agreement to the contrary notwithstanding the costs and expenses of the
Company and/or the Sellers incurred in respect of the period prior to the
Closing in connection with this Agreement and the transactions contemplated
herein may be paid by the Company.
9.4 Confidentiality. Purchaser and the Sellers will hold in strict confidence
from any Person (other than its Affiliates or representatives) all documents and
information concerning the other party hereto or any of its Affiliates furnished
to it by or on behalf of the other party in connection with this Agreement or
the transactions contemplated hereby, except to the extent the disclosing party
can demonstrate that such documents or information was (a) previously known by
the party receiving such documents or information, (b) in the public domain
(either prior to or after the furnishing of such documents or information
hereunder) through no fault of such receiving party or (c) later acquired by the
receiving party from another source if the receiving party is not aware that
such source is under an obligation to another party hereto to keep such
documents and information confidential. Such covenant of confidentiality will
remain in effect unless a party is compelled to disclose by judicial or
administrative process (including in connection with obtaining the necessary
approvals of this Agreement and the transactions contemplated hereby of
Governmental or Regulatory Authorities) or by other requirements of Law.
9.5 Further Assurances; Post-Closing Cooperation. At any time or from time to
time after the Closing, the Purchaser or the Sellers shall execute and deliver
to the other party such other documents and instruments, provide such materials
and information and take such other actions as the other party may reasonably
request to consummate the transactions contemplated by this Agreement and
otherwise to cause the Purchaser or the Sellers to fulfill their obligations
under this Agreement.
9.6 Waiver. Any term or condition of this Agreement may be waived at any time by
the party that is entitled to the benefit thereof, but no such waiver shall be
effective unless set forth in a written instrument duly executed by or on behalf
of the party waiving such term or condition. No waiver by any party of any term
or condition of this Agreement, in any one or more instances, shall be deemed to
be or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement or
by Law or otherwise afforded, will be cumulative and not alternative.
9.7 Amendment. This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of the parties hereto.
9.8 No Third Party Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights, and this Agreement does not confer any
such rights, upon any other Person other than any Person entitled to indemnity
under Article VII.
9.9 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned (by operation of law or
otherwise) by either party without the prior written consent of the other
party(ies) and any attempt to do so will be void. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
9.10 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
9.11 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
9.12 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Texas, without giving effect
to any choice of law or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of Texas.
9.13 Limited Recourse. Regardless of anything in this Agreement to the contrary,
(i) obligations and liabilities of Purchaser hereunder shall be without recourse
to any stockholder of Purchaser or any of such stockholder's Affiliates,
directors, employees, officers or agents and shall be limited to the assets of
such party and (ii) the stockholders of Purchaser have made no (and shall not be
deemed to have made any) representations, warranties or covenants (express or
implied) under or in connection with this Agreement or any other Operative
Agreement.
9.14 Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
ARTICLE X
10 MEDIATION
In the event there is a dispute under this Agreement, the disagreeing
parties shall meet with one another and diligently attempt to resolve their
disagreements. If they are unable to do so, then upon request of either party to
the dispute made within twenty (20) days of the failure of negotiations, they
will mediate the dispute, utilizing an impartial mediator pursuant to the rules
of the American Arbitration Association ("AAA") or any other reputable
organization that sponsors mediation. If, after thirty (30) days the mediation
is not successful, or if no mediation has been elected, then any party to the
dispute may file a legal action in any court of competent jurisdiction to
resolve the dispute.
[Signature Page Follows}
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth on the first page hereof.
PURCHASER
ISG RESOURCES, INC. ISG MANUFACTURED PRODUCTS, INC.
/s/ /s/
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By: ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Secretary By: Secretary
SELLERS
/s/ /s/
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/s/ /s/
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/s/ /s/
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