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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
AMONG
SIMCALA, INC.,
THE SELLERS NAMED HEREIN AND
SAC ACQUISITION CORP.
DATED AS OF: FEBRUARY 10, 1998
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS......................................................................1
1.1. Definitions.....................................................................1
ARTICLE 2 PURCHASE AND SALE OF SHARES AND OPTIONS..........................................7
2.1. Deemed Exercise of Options......................................................7
2.2. Purchase and Sale of Shares.....................................................7
2.3. Purchase Price..................................................................8
2.4. Payment of Purchase Price.......................................................8
2.5. Adjustment Amount...............................................................8
2.6. Adjustment Procedure............................................................8
2.7. Closing........................................................................10
2.8. Closing Deliveries by the Sellers..............................................10
2.9. Closing Deliveries by the Company..............................................10
2.10. Closing Deliveries by Buyer....................................................11
ARTICLE 3 PRE-CLOSING ESCROW..............................................................12
3.1 Pre-Closing Escrow.............................................................12
ARTICLE 4 ESCROW..........................................................................12
4.1. Deposit Into Escrow Account....................................................12
4.2. Disputes Regarding Adjustment Amounts..........................................12
4.3. Payments Relating to Adjustment Amount.........................................13
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................13
5.1. Incorporation; Qualification and Corporate Authority...........................13
5.2. Subsidiaries; Joint Ventures...................................................14
5.3. Financial Statements...........................................................14
5.4. Absence of Certain Changes or Events...........................................14
5.5. Capitalization.................................................................17
5.6. Options and Other Rights.......................................................17
5.7. Binding Obligation.............................................................17
5.8. No Defaults or Conflicts.......................................................18
5.9. No Governmental Authorization or Consents Required.............................18
5.10. Permits........................................................................18
5.11. No Actions, Suits or Proceedings...............................................18
5.12. Contracts......................................................................19
5.13. Title to Leased Real Property & Liens..........................................20
5.14. Intellectual Property..........................................................22
5.15. Employment Matters.............................................................22
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5.16. Environmental and OSHA Compliance...............................................23
5.17. Taxes...........................................................................25
5.18. Employee Benefits...............................................................26
5.19. No Other Broker.................................................................29
5.20. Inventories.....................................................................29
5.21. Accounts Receivable.............................................................29
5.22. Personal Property...............................................................30
5.23. Insurance.......................................................................30
5.24. Compliance with Laws............................................................31
5.25. Product Warranty................................................................31
5.26. Product Liability...............................................................31
5.27. Compliance with the Immigration Reform and Control..............................31
5.28. Transactions with Related Parties...............................................31
5.29. Corporate Records...............................................................32
5.30. Undisclosed Liabilities.........................................................32
5.31. Indebtedness....................................................................32
5.32. Correctness of Representations..................................................32
5.33. Definition of "Knowledge".......................................................33
5.34. Unclaimed Property..............................................................33
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SELLER.........................................33
6.1. Authority.......................................................................33
6.2. Title...........................................................................33
6.3. Broker or Finders...............................................................34
6.4. No Violation....................................................................34
6.5. Third Party Approvals...........................................................34
6.6. Sale of Shares..................................................................34
6.7. Foreign Status..................................................................34
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF BUYER..........................................35
7.1. Incorporation and Corporate Authority...........................................35
7.2. Binding Obligation..............................................................35
7.3. No Defaults or Conflicts........................................................35
7.4. No Governmental Authorization or Consents Required..............................35
7.5. No Actions, Suits or Proceedings................................................36
7.6. Investment Purpose..............................................................36
7.7. Sufficient Funds................................................................36
7.8. Solvency........................................................................36
7.9. No Broker.......................................................................36
ARTICLE 8 COVENANTS........................................................................36
8.1. Conduct of Business.............................................................36
8.2. Access to Information; Confidentiality..........................................37
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8.3. Further Assurances..............................................................38
8.4. Notice of Events................................................................38
8.5. Indemnification.................................................................39
8.6. Filings and Authorizations......................................................39
8.7. Tax Matters.....................................................................39
8.8. Severance.......................................................................42
8.9. Sales and Transfer Taxes........................................................42
8.10. Public Announcements............................................................42
8.11. Records.........................................................................43
8.12. No Section 338 Election; Certain Transactions Prohibited........................43
8.13. WARN Act Notice.................................................................43
8.14. Other Transactions..............................................................43
8.15. Supplemental Disclosure.........................................................43
8.16. Contracts and Capital Expenditures..............................................44
8.17. Discharge of Liens and Encumbrances.............................................44
8.18. Environmental Fines.............................................................44
8.19. Payment of Bonus................................................................44
8.20. Financing Cooperation...........................................................44
8.21. Asset Appraisal.................................................................45
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.....................................45
9.1. Representations and Warranties..................................................45
9.2. Performance.....................................................................45
9.3. Opinion of Counsel..............................................................45
9.4. HSR Act; Authorizations; Consents; Legal Prohibition............................45
9.5. Incumbency......................................................................46
9.6. Certified Resolutions...........................................................46
9.7. Basic Corporate Documents.......................................................46
9.8. No Adverse Change...............................................................46
9.9. Acquisition Documents...........................................................47
9.10. Releases........................................................................47
9.11. Termination of Agreements.......................................................47
9.12. Substitute Letter of Credit.....................................................47
9.13. FIRPTA Certificates.............................................................47
9.14. Comfort Letter..................................................................47
ARTICLE 10 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLER................47
10.1. Representations and Warranties Accurate.........................................48
10.2. Performance by Others...........................................................48
10.3. Opinion of Counsel for Buyer....................................................48
10.4. HSR Act; Authorization; Consents; Legal Prohibition.............................48
10.5. Acquisition Documents...........................................................49
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ARTICLE 11 TERMINATION OF AGREEMENT.........................................................49
11.1. Termination.....................................................................49
11.2. Survival After Termination......................................................49
ARTICLE 12 INDEMNIFICATION..................................................................50
12.1. Definitions.....................................................................50
12.2. Agreement of the Indemnitors to Indemnify.......................................51
12.3. Procedures for Indemnification..................................................51
12.4. Third Party Claims..............................................................52
12.5. Other Rights and Remedies.......................................................54
12.6. Duration........................................................................54
12.7. Limitations.....................................................................54
12.8. Subrogation.....................................................................55
12.9. Cooperation.....................................................................55
ARTICLE 13 MISCELLANEOUS....................................................................55
13.1. Expenses........................................................................55
13.2. Investigation...................................................................55
13.3. Governing Law...................................................................56
13.4. Binding Effect; Persons Benefiting; No Assignment...............................56
13.5. Amendments......................................................................57
13.6. Interpretation..................................................................57
13.7. Counterparts....................................................................57
13.8. Entire Agreement................................................................57
13.9. Severability....................................................................57
13.10. Waiver..........................................................................57
13.11. Notices.........................................................................57
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EXHIBITS
Exhibit A Agreement for Release of Claims
Exhibit B Escrow Agreement
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SCHEDULES
Schedule 1 Management Employees
Schedule 1.1A Modifications to Commitment
Schedule 1.1B Assumed Indebtedness
Schedule 2.2 Equity Ownership
Schedule 5.1A Jurisdictions Where Qualified As a Foreign Corporation
Schedule 5.1B Locations of the Company's Assets and Trade Names
Schedule 5.3A Financial Statements
Schedule 5.3B Accounting Deviations
Schedule 5.5 Capitalization
Schedule 5.8 Defaults or Conflicts
Schedule 5.9 Governmental Authorization; Consents
Schedule 5.10 Permits
Schedule 5.11 Actions, Suits or Proceedings
Schedule 5.12A Contracts
Schedule 5.12B Commitments
Schedule 5.12C Breaches, Terminations
Schedule 5.12D Customers
Schedule 5.13A Other Property Leases
Schedule 5.13B Title Policy
Schedule 5.14 Intellectual Property
Schedule 5.15A Employment Matters
Schedule 5.15B Severance Payments
Schedule 5.16A Environmental Assessments
Schedule 5.16B Environmental Matters
Schedule 5.16C Releases
Schedule 5.16D Tanks
Schedule 5.17 Taxes
Schedule 5.18 Employee Benefit Plans
Schedule 5.20 Liens on Inventory
Schedule 5.22A Personal Property
Schedule 5.22B Liens on Personal Property
Schedule 5.22C Personal Property Leases
Schedule 5.23A Insurance Policies
Schedule 5.23B Insurance Claims
Schedule 5.23C Self-Insurance Arrangements
Schedule 5.24 Compliance with Laws
Schedule 5.28 Transactions with Related Parties
Schedule 5.29 Corporate Records
Schedule 5.31 Indebtedness
Schedule 6.5 Third Party Approvals
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of February 10, 1998 (this
"Agreement"), by and among SIMCALA, INC., a Delaware corporation (the
"Company"), each of the individuals and entities listed under the heading
"Sellers" on the signature pages hereto (each being a "Seller", and all of them
together being the "Sellers"), and SAC ACQUISITION CORP., a Georgia corporation
(the "Buyer").
RECITALS:
The holders of (i) the Shares representing in the aggregate
100% of the issued and outstanding capital stock of the Company and (ii) the
outstanding Options (which are deemed exercised and converted to Option Shares
as described in Section 2.1), have executed this Agreement agreeing to the
purchase of their Shares for the Purchase Price and on the terms and conditions
set forth in this Agreement.
Concurrently herewith, the employees of the Company identified
on SCHEDULE 1 are entering into employment agreements with the Buyer which will
be effective upon and subject to the Closing, as defined herein.
NOW, THEREFORE, in consideration of and premised upon the
various representations, warranties, covenants and other agreements and
undertakings of Buyer, the Sellers and the Company contained in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Buyer, the Sellers and the Company agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Definitions
(a) The following terms, whenever used herein, shall
have the following meanings for all purposes of this Agreement (such definitions
to be equally applicable to both the singular and plural forms of the terms
herein defined):
"Accounts Receivable" means all accounts, notes and
other receivables of the Company.
"Affiliate" means as applied to any person, any other
person directly or indirectly controlling, controlled by, or under
common control with, that person; for 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, whether through the ownership of voting
securities, by contract or otherwise.
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"Antitrust Laws" means any federal or state law of
the United States governing competition, monopolies or restrictive
trade practices, including without limitation the ▇▇▇▇▇▇▇ Antitrust Act
(15 U.S.C. ss.1-7), the ▇▇▇▇▇▇▇ Act (15 U.S.C. ss.ss.12-27), the
Federal Trade Commission Act (15 U.S.C. ss.41-58) and the HSR Act, in
each case including any rules and regulations thereunder.
"Business Day" means any day that is not a Saturday,
Sunday or other day on which banking institutions in New York, New York
are authorized or required by law or executive order to close.
"Closing" means the completion of the purchase of the
Shares by Buyer.
"Closing Date" means the date the Closing takes place
in accordance with Section 2.7.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commitment" means the Commitment for Title Insurance
of Lawyers Title Insurance Corporation, dated December 15, 1997, case
no. 28885.
"Common Stock" means the common stock, par value $.01
per share, of the Company.
"Contract" or "Contracts" means, to the extent
permitted by applicable law, all of the contracts, leases, collective
bargaining agreements, warranties, commitments, agreements, credit
guaranties and purchase and sales orders, whether oral or written,
pursuant to which the Company enjoys any right or benefit.
"Environmental Law" means any United States (or other
applicable jurisdiction's) federal, state, local or municipal statute,
law, rule, regulation, ordinance, code or rule of common law and any
judicial interpretation thereof including any judicial or
administrative order or judgment relating to the environment, health or
safety, including, without limitation, the following: (i) the
Environmental Response, Compensation, and Liability Act (42 U.S.C.
▇▇.▇▇. 9601 et seq.); (ii) the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act (42 U.S.C. ▇▇.▇▇. 6901 et
seq.); (iii) the Emergency Planning and Community Right to Know Act (42
U.S.C. ▇▇.▇▇. 11001 et seq.); (iv) the Clean Air Act (42 U.S.C. ▇▇.▇▇.
7401 et seq.); (v) the Clean Water Act (33 U.S.C. I 1251 et seq.); (vi)
the Toxic Substances Control Act (15 U.S.C. I 2601 et seq.); (vii) the
Hazardous Materials Transportation Act (49 U.S.C. ▇▇.▇▇. 1801 et seq.);
(viii) the Safe Drinking Water Act (41 U.S.C. I 300f et seq.); (ix) any
state, county, municipal or local statutes, laws or ordinances similar
or analogous to the federal statutes listed in parts (i) - (viii) of
this subparagraph; (x) any amendments to the statutes, laws or
ordinances in effect at the time of the Closing Date listed in parts
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(i) - (ix) of this subparagraph, regardless of whether in existence on
the date hereof; and (xi) any rules, regulations, guidelines,
directives, orders or the like adopted pursuant to or implementing the
statutes, laws, ordinances and amendments listed in parts (i) - (x) of
this subparagraph.
"Equipment" means all machinery, equipment, tools,
computers, terminals, computer equipment, office equipment, business
machines, telephones and telephone systems, parts, accessories, and the
like, wherever located, and any and all warranties of third parties
with respect thereto owned by the Company or in which the Company has
an ownership or leasehold interest.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Financial Statements" means the audited balance
sheets of the Company as at December 31, 1997, 1996 and 1995, and the
related statements of operations, cash flows and changes in
shareholders' equity for the years ended December 31, 1997 and 1996,
certified by ▇▇▇▇▇, ▇▇▇▇▇▇ and Company LLP, and the period from
February 10, 1995 through December 31, 1995, certified by Ernst & Young
LLP, in each case, independent certified public accountants, whose
opinion thereon is included therewith, together with the notes and
schedules thereto.
"First Bank Credit Facility" means the Credit
Agreement by and between the Company and First Bank National
Association, dated April 10, 1997.
"Furniture and Fixtures" means all furniture,
fixtures, and leasehold improvements wherever located, and any and all
assignable warranties covering such furniture, fixtures, and leasehold
improvements owned by the Company or in which the Company has an
interest.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof, any
entity exercising executive, legislative, judicial, regulatory or
administration functions of or pertaining to government, including any
government authority, agency, department, board, commission or
instrumentality of the United States, any foreign government, any State
of the United States or any political subdivision thereof, and any
court, tribunal or arbitrator(s) of competent jurisdiction.
"Hazardous Materials" shall mean any chemical,
substance, waste or material defined as or deemed hazardous, toxic, a
pollutant, a contaminant under any Environmental Law, including, but
not limited to, petroleum and petroleum products, waste oil,
halogenated and non-halogenated solvents, PCBs, and exposed and friable
asbestos containing material.
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"▇▇▇ ▇▇▇" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder.
"Indebtedness" means all outstanding bank
indebtedness, capital leases, bond indebtedness related to the Leased
Real Property and all other funded indebtedness, including interest
payable thereon, of the Company for borrowed money as listed on
SCHEDULE 5.31 attached hereto, including fees and costs, if any,
payable in connection with prepayment of the First Bank Credit
Facility.
"Intellectual Property" means all patents, art work,
labels, designs, specifications, designs-in-progress, formulations,
know-how, prototypes, inventions, trademarks, trade names, trade
styles, service marks, and copyrights; all registrations and
applications therefor, both registered and unregistered, foreign and
domestic; all trade secrets, technology or processes; all computer
software (including documentation and related object and, if
applicable, source codes); and all confidential or proprietary
information that are either (i) owned by or negotiated in the name of
the Company or (ii) as to which the Company has rights as licensee,
constituting all of the intellectual property of the Company.
"Inventory" means all raw materials,
work-in-progress, finished goods, goods held for resale, spare parts,
waste materials, scrap, samples, promotional literature, and supplies
wherever located.
"IRS" means the United States Internal Revenue
Service.
"Leased Real Property" means all of the Company's
rights in, to and under the real estate leases (including, without
limitation, any assignment of a real estate lease or sublease) to which
the Company is a party, which are listed on SCHEDULE 5.13A, together
with all of the Company's right, title, and interest in the buildings,
fixtures and improvements, including construction-in-progress, and
appurtenances thereto, located on the real property subject to such
real estate leases, and any and all warranties of third parties with
respect thereto.
"Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of common
law, rule, regulation, statute, or treaty.
"Material Adverse Effect" means a material adverse
effect upon the business, operations, properties, assets or condition
(financial or otherwise) or prospects of the Company, without regard to
changes in conditions generally applicable to the industries in which
the Company is involved or general economic conditions.
"Options" means the options to purchase shares of
Common Stock outstanding on the Closing Date, which options are deemed
exercised as described in Section 2.1 prior to the Closing.
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"Permits" means, to the extent permitted under
applicable law or regulation, all licenses, franchises, permits,
certificates, consents, and other governmental or quasi-governmental
authorizations of the Company.
"Permitted Encumbrances" means (i) exceptions set
forth in the Commitment (subject to the modifications set forth in
SCHEDULE 1.1A); (ii) liens of current Taxes not yet due and payable or
the liens of Taxes the validity of which is being contested in good
faith by appropriate proceedings and which are set forth on SCHEDULE
5.17 hereto; (iii) liens related to Indebtedness outlined on SCHEDULE
1.1B attached hereto; and (iv) such minor imperfections of title
(excluding monetary liens) which do not materially and adversely
interfere with the present use of the Leased Real Property.
"Professional Fees" means the fees and disbursements
of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ in
connection with the transactions contemplated by this Agreement, to the
extent not paid prior to the Closing.
"Purchase Price Per Share" means the amount
determined by dividing (a) the sum of (i) the Purchase Price plus (ii)
the aggregate exercise price of all Options outstanding as of the
Closing Date plus (iii) the aggregate exercise price received by the
Company of all Options exercised from the date hereof to the Closing
Date by (b) the sum of (i) the number of shares of Common Stock
outstanding and (ii) the number of shares of Common Stock subject to
Options as of the Closing Date.
"Release" shall have the meaning found in 42
▇.▇.▇.▇▇. 9601 (22) and shall include migration.
"Securities Act" means the Securities Act of 1933 or
any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"Shares" means the Common Stock representing 100% of
the issued and outstanding capital stock of the Company, including,
without limitation, those shares of Common Stock issued upon the deemed
exercise of the Options as described in Section 2.1.
"Tax Returns" means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
"Taxes" means all taxes, however denominated,
including, without limitation, any federal, state, local or foreign
income, gross receipts, payroll, employment, excise, stamp, franchise,
profits, business license, occupation, environmental, withholding,
social security (or similar), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added,
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customs duties, alternative or add-on minimum or estimated tax, and
other obligations of the same or of a similar nature to any of the
foregoing, including any interest, penalty, or addition thereto,
whether disputed or not.
"Vehicles" means all motor vehicles, trucks,
forklifts, and other rolling stock, and all warranties of third parties
related thereto.
(b) The following terms shall have the meaning
specified in the indicated section of this Agreement.
Term Section
---- -------
Accountants...........................................Section 4.2(b)
Acquisition Documents.................................Section 5.7
Acquisition Proposal..................................Section 8.14
Adjustment Amount.....................................Section 2.5
Agreement.............................................Preamble
Benefit Plans.........................................Section 5.18(a)
Bonus.................................................Section 2.6(c)
Buyer.................................................Preamble
Buyer Indemnitees.....................................Section 12.1(e)
Buyer Opinion.........................................Section 2.10(a)(iv)
CERCLA................................................Section 5.16(b)(i)
Closing Balance Sheet.................................Section 2.6
Closing Payment.......................................Section 2.4
Company...............................................Preamble
Company Opinion.......................................Section 2.9(c)
Confidentiality Agreement.............................Section 8.2(b)
▇▇▇▇▇ ▇▇▇▇▇▇..........................................Section 4.2
D&T...................................................Section 2.6
Disputing Sellers.....................................Section 4.2(b)
Employees.............................................Section 5.18(a)
Environmental Audit Report............................Section 9.19
Environmental Fines...................................Section 8.18
Environmental Permits.................................Section 5.16(b)(v)
ERISA Affiliate.......................................Section 5.18(b)(vi)
Escrow Account........................................Section 2.4
Escrow Agent..........................................Section 2.10(b)
Escrow Agreement......................................Section 2.8(e)
Escrowed Funds........................................Section 2.4
Estimated Indebtedness................................Section 2.4
GAAP..................................................Section 2.5
IDB...................................................Section 5.13
Immigration Laws......................................Section 5.27
Indemnification Claim.................................Section 12.1(a)
Indemnitee............................................Section 12.1(b)
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Indemnitor............................................Section 12.1(c)
Information...........................................Section 8.2(b)
Knowledge.............................................Section 5.33
Lease.................................................Section 5.13(a)
Liens.................................................Section 5.8
Loan Agreement........................................Section 9.12
Losses................................................Section 12.1(d)
Maximum Amount........................................Section 12.7(a)
Negotiation Period....................................Section 12.3(c)
Net Assets............................................Section 2.5
New Options...........................................Section 5.4
Option Shares.........................................Section 2.1
Permits...............................................Section 5.10
Person................................................Section 13.6
Plant.................................................Section 5.13
Policy................................................Section 5.13(a)
Pre-Closing Escrow Agreement..........................Section 3.1
Proceeding............................................Section 5.11
Purchase Price........................................Section 2.3
Qualified Plan........................................Section 5.18(b)(ii)
Related Party(ies)....................................Section 5.28(a)
Releases..............................................Section 2.8(b)
Seller(s).............................................Preamble
Threshold Amount......................................Section 12.7(a)
Third Party Claim.....................................Section 12.1(f)
(c) All references herein to dollars or "$" shall
be to United States dollars.
ARTICLE 2
PURCHASE AND SALE OF SHARES AND OPTIONS
2.1. Deemed Exercise of Options. On the Closing Date, each
Option shall, effective immediately prior to the Closing, without any action on
the part of the holder thereof but upon notice by the Company, be deemed
exercised pursuant to the terms thereof and such that the holders of Options
shall become owners of the Shares issuable upon exercise of such Options
("Option Shares"), no exercise price shall be payable to the Company in respect
thereof.
2.2. Purchase and Sale of Shares. Upon the terms and subject
to the conditions contained herein, at the Closing each Seller shall sell,
assign, transfer, convey and deliver to Buyer, and Buyer shall purchase and
accept from each Seller, such Seller's Shares (including the Option Shares) each
in an amount set forth next to such Seller's name on SCHEDULE 2.2 hereto.
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2.3. Purchase Price. The purchase price (the "Purchase Price")
for the Shares will be Eighty Two Million Dollars ($82,000,000), (a) less an
amount equal to the Indebtedness outstanding as of the Closing Date, (b) less
the outstanding amount of Professional Fees, and (c) less $1,009,423 and (i) if
the Adjustment Amount (as defined below) is a positive number, plus the
Adjustment Amount, and (ii) if the Adjustment Amount is a negative number, minus
the Adjustment Amount.
2.4. Payment of Purchase Price. At the Closing: (i) the funds
necessary to pay off all Indebtedness owed with respect to the First Bank Credit
Facility shall be paid by the Buyer; (ii) the funds necessary to pay the
Professional Fees shall be paid by the Buyer; (iii) an aggregate amount equal to
the Purchase Price (calculated (A) as if the Adjustment Amount is zero, (B)
based upon the Company's good faith estimate of the outstanding Indebtedness as
of the Closing Date (which good faith estimate shall include "payoff
information" related to the First Bank Credit Facility and shall have been
delivered to Buyer no less than four (4) Business Days prior to the Closing)
(the "Estimated Indebtedness"), and (C) by reducing the Purchase Price by
$4,000,000 (the "Escrowed Funds")), shall be paid at the Closing by Buyer by
wire transfer of immediately available funds to an account or accounts which are
designated in writing by each Seller at least two (2) Business Days prior to the
Closing Date (the "Closing Payment") as follows: (X) in respect of each Share
that is not an Option Share, at the Purchase Price Per Share (assuming the
foregoing calculations) and (Y) in respect of each Option Share, the excess of
such Purchase Price Per Share over the exercise price per Share of the Option
related to such Option Share; and (iv) the Escrowed Funds shall be paid by Buyer
into an escrow account ("Escrow Account") as provided for in Section 4.1. The
Adjustment Amount, which shall be deemed additional Purchase Price or a
reduction of the Purchase Price, shall be paid by Buyer to Sellers or refunded
to Buyer by the Escrow Agent as provided in Section 4.3.
2.5. Adjustment Amount. The "Adjustment Amount" (which may be
a positive or negative number) will be equal to (a) the audited Net Assets (as
adjusted as described herein) as of the Closing Date determined as provided in
Section 2.6 below, minus (b) (i) the Net Assets as shown on the audited December
31, 1997 balance sheet of the Company attached to SCHEDULE 5.3A plus (ii)
$1,009,423.00. "Net Assets" means (y) the value of all of the total assets of
the Company minus (z) the total liabilities of the Company other than
Indebtedness, all as determined in accordance with generally accepted accounting
principles applied on a consistent basis ("GAAP"), as adjusted (in the case of
the Closing Date) for the specific policies in Section 2.6. In computing the
Adjustment Amount, the amount, if any, by which (i) Estimated Indebtedness
exceeds Indebtedness reflected on the Closing Balance Sheet shall be added to
Net Assets as of the Closing Date or (ii) Indebtedness reflected on the Closing
Balance Sheet exceeds Estimated Indebtedness shall be subtracted from Net Assets
as of the Closing Date.
2.6. Adjustment Procedure.
(a) The Company will prepare and will cause
Deloitte & Touche LLP ("D&T"), Buyer's certified public accountants, to audit
the balance sheet of
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the Company as of the Closing Date (the "Closing Balance Sheet"), including a
computation of Net Assets as of the Closing Date. The Closing Balance Sheet
shall be prepared in accordance with GAAP consistently applied on the same basis
as the Company's financial statements for the year ended December 31, 1997. The
following specific policies will be followed in preparing the computation of Net
Assets as of the Closing Date:
(i) The fair market value of the Common Stock as
of the date of the grant for all of the Options granted to the various employees
during 1995 and 1996 shall be deemed to be equal to the original capital
contributed by the stockholders of the Company on the day the Company began
operations (i.e., $100 per share);
(ii) Accrued vacation pay for salaried employees
will not be accrued;
(iii) The purchase accounting allocations in the
February 10, 1995 opening balance sheet including costs allocated to intangible
assets and property plant and equipment will not be adjusted;
(iv) Stores and supplies inventory will not be
capitalized; and
(v) The ratable portion of the 1999 Alabama
franchise taxes shall be accrued;
(vi) All unpaid costs and expenses associated
with this transaction that the Company will pay on behalf of the Sellers
(including all legal, accounting, broker, finder and investment banker fees)
shall be accrued other than Professional Fees paid at Closing;
(vii) The approximate $160,000 liability related
to remaining tax liabilities assumed with respect to Simetco as set forth on
SCHEDULE 5.17 shall be accrued;
(viii) To the extent deferred tax assets as of the
Closing Date exceed such assets as of December 31, 1997, the excess, if any,
will not be recorded; and
(ix) An amount equal to the tax refund receivable
as a result of the carryback of tax losses will be reflected as a liability
payable to the Sellers and the corresponding refund will be reflected as an
asset.
(b) The Closing Balance Sheet will further include all
accruals and pre-paid expenses that would normally be included pursuant to
year-end closing procedures calculated on a pro rata basis from January 1, 1998
through the Closing Date.
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(c) The Closing Balance Sheet will include an
accrual for compensation to employees for the special one time bonus (the
"Bonus") equal to $1,486,000 or such other amount as may be agreed upon by the
Buyer and the Sellers prior to Closing.
(d) The Adjustment Amount will be finalized, and
the Purchase Price will be adjusted as provided for in Sections 2.3, 4.3 and
4.4.
2.7. Closing. The Closing shall take place at the offices
of ▇▇▇▇▇▇ & Bird, One Atlantic Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., local time, on March 31, 1998, or, at such other
place, time and date as the parties hereto may agree in writing.
2.8. Closing Deliveries by the Sellers. At the Closing,
each of the Sellers shall deliver, or cause to be delivered, to Buyer:
(a) one or more stock certificates representing
those Shares owned by such Seller duly endorsed in blank or accompanied by stock
powers duly executed in blank, in proper form for transfer;
(b) an executed agreement for the mutual release
of claims in substantially the form of EXHIBIT A hereto (the "Releases");
(c) the opinions, certificates and other
documents required to be delivered by or on behalf of such Seller pursuant to
Article 9;
(d) copies of the consents, waivers and
approvals described in Section 6.5 hereof;
(e) the executed escrow agreement in
substantially the form of EXHIBIT B hereto (the "Escrow Agreement"); and
(f) any other items specifically identified in
this Agreement.
The documents and certificates to be delivered
hereunder or on behalf of the Sellers on the Closing Date, shall be in form and
substance reasonably satisfactory to Buyer and its counsel.
2.9. Closing Deliveries by the Company. The Company shall
deliver to Buyer the following:
(a) the written resignation of each of the
directors and officers of the Company;
(b) the opinions, certificates and other
documents required to be delivered by or on behalf of the Company pursuant to
Article 9;
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(c) the opinions of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP and ▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, P.C., counsel to the Company, in customary form for transactions
of this nature (collectively, the "Company Opinion");
(d) copies of the consents, waivers and approvals
described in Section 5.9 hereof;
(e) satisfactory evidence of the discharge of Liens
described in Section 8.17 hereof;
(f) certified copy of the Company's Certificate of
Incorporation and certificates of existence or certificates of good standing of
the Company, as of a date within twenty (20) days prior to the Closing Date,
from the State of Delaware and each jurisdiction listed in SCHEDULE 5.1A hereto;
(g) the executed Escrow Agreement;
(h) the executed Releases; and
(i) any other items specifically identified in this
Agreement.
The documents and certificates to be delivered
hereunder by or on behalf of the Company on the Closing Date shall be in form
and substance reasonably satisfactory to Buyer and its counsel.
2.10. Closing Deliveries by Buyer.
(a) At the Closing, Buyer shall deliver to, or to
the order of, each of the Sellers or the Company, as applicable:
(i) an amount equal to such Seller's portion
of the Closing Payment as calculated pursuant to Section 2.4;
(ii) the opinions, certificates and other
documents required to be delivered by or on behalf of Buyer pursuant to Article
10;
(iii) the executed Escrow Agreement;
(iv) the opinion of ▇▇▇▇▇▇ & Bird LLP, counsel
to Buyer, in customary form for transactions of this nature (the "Buyer
Opinion");
(v) the executed Releases; and
(vi) any other items specifically identified in
this Agreement.
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(b) At the Closing, Buyer shall deliver to SunTrust
Bank, Atlanta (the "Escrow Agent"), in accordance with the Escrow Agreement, the
Escrowed Funds by wire transfer in immediately available funds to the account
designated by the Escrow Agent.
The documents and certificates to be delivered hereunder by or
on behalf of Buyer on the Closing Date shall be in form and substance reasonably
satisfactory to the Company, the Sellers and their counsel.
ARTICLE 3
PRE-CLOSING ESCROW
3.1. Pre-Closing Escrow. On the date of this Agreement, Buyer
has deposited Five Hundred Thousand Dollars ($500,000) into an escrow account,
which shall be governed by the terms of the escrow agreement dated the date
hereof by and among Buyer, the Company and the Escrow Agent (the "Pre-Closing
Escrow Agreement").
ARTICLE 4
ESCROW
4.1. Deposit Into Escrow Account. At the Closing, Buyer shall
deposit the principal amount of the Escrowed Funds into the Escrow Account,
which shall be governed by the terms of the Escrow Agreement.
4.2. Disputes Regarding Adjustment Amounts.
(a) Within thirty (30) days after the Closing Date, Buyer
will deliver a final draft of the Closing Balance Sheet, calculation of Net
Assets and Adjustment Amount calculation to the Sellers and ▇▇▇▇▇, ▇▇▇▇▇▇ and
Company LLP ("▇▇▇▇▇ ▇▇▇▇▇▇"). ▇▇▇▇▇ ▇▇▇▇▇▇ shall be provided with reasonable
access to (i) the workpapers of D&T supporting the audit of the Closing Balance
Sheet and the computation of Net Assets as of the Closing Date, (ii) management
of the Company and (iii) the books and records of the Company.
(b) To the extent that Sellers owning two-thirds of the
aggregate of the Shares and Option Shares dispute (the "Disputing Sellers")
either the amount of, or basis for, the Adjustment Amount or object to the
Closing Balance Sheet, then, within thirty (30) days from the date of receipt by
▇▇▇▇▇ ▇▇▇▇▇▇ and the Sellers of the Closing Balance Sheet, the Disputing Sellers
shall provide joint written notice thereof to Buyer, stating any objection and
the basis for such objection. If the Adjustment Amount is a negative number and
the Sellers do not timely deliver a notice of objection to Buyer, Buyer and each
of the Sellers shall jointly and immediately provide notice to the Escrow Agent
of the final Adjustment Amount. If any amount claimed as an Adjustment Amount is
timely disputed in a notice of objection delivered to Buyer, then the parties
shall undertake to resolve the amount so disputed. If the Buyer and the
Disputing Sellers
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are able to agree on a final Adjustment Amount and the final Adjustment Amount
is a negative number, Buyer and each of the Sellers shall jointly and
immediately provide notice to the Escrow Agent of the agreed-upon final
Adjustment Amount. If the Buyer and the Disputing Sellers are unable to resolve
any part of the amount so disputed within thirty (30) days from the date of
Buyer's receipt of the Disputing Sellers' notice of objection, then the issues
in dispute will be submitted to the Birmingham, Alabama office of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, certified public accountants (the "Accountants"), for resolution.
If issues in dispute are submitted to the Accountants for resolution, (x) each
party will furnish to the Accountants such workpapers and other documents and
information relating to the disputed issues as the Accountants may request and
are available to that party (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating to
the determination and to discuss the determination with the Accountants; (y) the
determination by the Accountants, as set forth in a notice delivered to Buyer,
each of the Sellers and the Escrow Agent (if the Adjustment Amount is a negative
number) by the Accountants, will be binding and conclusive on the parties; and
(z) Buyer and the Sellers will each bear 50% of the fees of the Accountants for
such determination. Until resolution of the disputed Adjustment Amount, the
disputed amount thereof will not be disbursed by the Escrow Agent.
4.3. Payments Relating to Adjustment Amount. Within ten (10)
business days following a final determination of the Adjustment Amount as
provided in Section 4.2, (i) if the Adjustment Amount is a positive number,
Buyer will pay the Adjustment Amount to the Sellers, or (ii) if the Adjustment
Amount is a negative number, the Escrow Agent will pay the Adjustment Amount to
Buyer. Payments to the Sellers will be made in the manner and will be allocated
in the proportions set forth in Section 2.4 and SCHEDULE 2.2. Payments to Buyer
will be made by wire transfer to such bank account as Buyer will specify. If the
parties are disputing the final determination of the Adjustment Amount, to the
extent part of any payment that would be payable pursuant to Section 4.2 is not
in dispute, the payor shall pay the amount not in dispute within three (3)
Business Days of the determination that no such dispute exists.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer as follows:
5.1. Incorporation; Qualification and Corporate Authority. The
Company has been duly incorporated and is validly existing and in good standing
under the laws of the State of Delaware with corporate power and authority to
conduct its business in all material respects as presently conducted. The
Company is duly qualified to transact business as a foreign corporation and is
in good standing in each jurisdiction set forth on SCHEDULE 5.1A, which
(together with the locations set forth on SCHEDULE 5.1B) constitute all of the
jurisdictions where the Company owns or leases property, and there exists no
other jurisdictions in which a failure to qualify to do business would have a
Material Adverse Effect. SCHEDULE 5.1B hereto contains the address (including
city, county, state, or other jurisdiction and zip code) of each location where
any of the
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Company's assets are located and each trade name under which the Company
operates at each such address and any additional business and trade names under
which the Company has operated at each such address.
5.2. Subsidiaries; Joint Ventures. The Company does not own,
directly or indirectly, any capital stock or other proprietary interest, in any
corporation, association, trust, partnership, joint venture or other legal
entity, and has no agreement to acquire any such capital stock or proprietary
interest.
5.3. Financial Statements. Attached as SCHEDULE 5.3A are true,
correct and complete copies of the Financial Statements, which have been
prepared from the books and records of the Company. The balance sheets included
in the Financial Statements present fairly the financial position of the Company
as of their respective dates, the deferred tax assets recorded on the December
31, 1997 balance sheet of the Company are available for utilization, and the
other related statements included in the Financial Statements present fairly the
results of operations and cash flows for the periods indicated, in each case in
accordance with GAAP, applied on a consistent basis, with only such deviations
from such accounting principles and/or their consistent application as are
referred to in SCHEDULE 5.3B hereto. Except as set forth in Schedule 5.3B, the
Company has not received any advice or notification from its independent
certified public accountants that the Company has used any improper accounting
practice that would have the effect of not reflecting or incorrectly reflecting
in the Financial Statements or the books and records, any properties, assets,
liabilities, revenues, or expenses. The books, records, and accounts of the
Company in all material respects accurately and fairly reflect, in reasonable
detail, the transactions and the assets and liabilities of the Company.
5.4. Absence of Certain Changes or Events. Except with respect
to (i) the grant of authorized but unissued options (the "New Options") to
purchase up to 109 shares of Common Stock, (ii) the deemed exercise of the
currently outstanding Options and the New Options as described in Section 2.1,
(iii) the Bonus to be paid by the Company in connection with the exercise of the
New Options and the Options as described in Section 2.6(c) and Section 8.19, and
(iv) the costs and expenses relating to this Agreement and the transactions
contemplated by this Agreement, since December 31, 1997, there has not been any
transaction or occurrence in which the Company has:
(a) suffered any material adverse change in its business,
operations, financial condition, liabilities, assets, or earnings nor has there
been any event which has had or may reasonably be expected to have a Material
Adverse Effect;
(b) incurred any obligations or liabilities of any nature
other than items incurred in the regular and ordinary course of business,
consistent with past practice, or increased (or experienced any change in the
assumptions underlying or the methods of calculating) any bad debt, contingency,
or other reserve, other than in the ordinary course of business consistent with
past practice;
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(c) except for the prepayment of Indebtedness incurred in
connection with the First Bank Credit Facility on the Closing Date, paid,
discharged, or satisfied the principal amount of any Indebtedness (if such
payment would result in Indebtedness on the Closing Date being less than
Indebtedness on the December 31, 1997 balance sheet), or paid, discharged, or
satisfied interest not otherwise due and payable;
(d) paid, discharged, or satisfied any non-Indebtedness
related claim, lien, encumbrance, obligation, or liability (whether absolute,
accrued, contingent, and whether due or to become due), other than the payment,
discharge, or satisfaction in the ordinary course of business consistent with
past practice of claims, liens, encumbrances, obligations, or liabilities of the
type reflected or reserved against in the Financial Statements or which were
incurred in the ordinary course of business consistent with past practice;
(e) permitted, allowed, or suffered any of its properties
or assets (real, personal or mixed, tangible, or intangible) to be subjected to
any mortgage, pledge, lien, encumbrance, restriction, or charge of any kind,
other than Permitted Encumbrances;
(f) written down or written up the value of any Inventory
(including write-downs by reason of shrinkage or markdowns), determined as
collectible any Accounts Receivable or any portion thereof which were previously
considered uncollectible, or written off as uncollectible any Accounts
Receivable or any portion thereof, except for write-downs, write-ups, and
write-offs in the ordinary course of business consistent with past practice;
(g) canceled any debts or waived any claims or rights
other than in the ordinary course of business consistent with past practice;
(h) disposed of or permitted to lapse any right to the
use of any material patent, trademark, assumed name, service ▇▇▇▇, trade name,
copyright, license, or application therefor or disposed of or disclosed to any
person not authorized to have such information any trade secret, proprietary
information, formula, process, or know-how not previously a matter of public
knowledge or existing in the public domain;
(i) except for the capital expenditure commitments
described on SCHEDULE 5.12B and the capital expenditures related to the gantry
crane, made any significant capital expenditure or commitment for additions to
property, plant, equipment, intangible, or capital assets or for any other
purpose in excess of $25,000, other than for emergency repairs or replacement;
(j) except for indebtedness incurred under the First Bank
Credit Facility to pay liabilities incurred in the ordinary course of business,
which indebtedness will be repaid prior to Closing, incurred any long term
indebtedness;
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(k) paid, loaned, distributed, or advanced any amounts
to, sold, transferred, or leased any properties or assets (real, personal or
mixed, tangible or intangible) to, purchased, leased, licensed, or otherwise
acquired any properties or assets from, or entered into any other agreement or
arrangement with (i) any stockholder, officer, employee, or director of the
Company, (ii) any corporation or partnership in which any Affiliate is an
officer, director, or holder directly or indirectly of five percent (5%) or more
of the outstanding equity or debt securities of the Company, or (iii) any person
controlling, controlled by, or under common control with any such partner,
stockholder, officer, director, or Affiliate except for compensation or fees not
exceeding the 1997 rate of compensation or fees or as permitted by Section
5.4(p) and for routine travel expenses to officers, employees, directors and
stockholders;
(l) declared, set aside or paid any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Shares, or made any redemption, purchase or other acquisition of any of its
equity securities;
(m) made or instituted any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities or business, except insofar as may have been required by a change in
GAAP;
(n) entered into any collective bargaining or labor
agreement (oral and legally binding or written), or experienced any organized
slowdown, work interruption, strike, or work stoppage;
(o) sold, transferred, or otherwise disposed of any of
the Company's assets except in the ordinary course of business consistent with
past practice;
(p) granted or incurred any obligation for any increase
in the compensation of any officer or employee of the Company (including,
without limitation, any increase pursuant to any bonus, pension, profit-sharing,
retirement, or other plan or commitment) except for raises to employees in the
ordinary course of business consistent with past practice and bonuses for the
year ending December 31, 1997;
(q) suffered any casualty loss or damage in excess of
$100,000 in the aggregate (whether or not insured against);
(r) agreed to make charitable contributions in excess of
$20,000;
(s) amended any provision of its Certificate of
Incorporation or Bylaws or changed any of its authorized or issued capital
stock, except as specifically required by this Agreement;
(t) taken any other action neither in the ordinary course
of business and consistent with past practice nor provided for in this
Agreement; or
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(u) agreed, so as to legally bind the Company whether in
writing or otherwise, to take any of the actions set forth in this Section 5.4
and not otherwise permitted by this Agreement.
5.5. Capitalization.
(a) SCHEDULE 5.5 sets forth the authorized, issued,
outstanding and treasury capital stock of the Company, as of the date hereof.
Each Seller is the record owner of the Shares set forth opposite his or its name
on SCHEDULE 2.2.
(b) All of the issued and outstanding shares of Common
Stock have been duly authorized and validly issued and are fully paid and
non-assessable.
(c) Except as set forth on SCHEDULE 5.5, no other shares
of capital stock have been issued and remain outstanding, no other class of
capital stock is authorized or outstanding, and the Sellers executing this
Agreement on the date hereof represent all of the holders of capital stock or
rights to acquire shares of capital stock of the Company. None of the
outstanding shares of capital stock of the Company was issued in violation of
the Securities Act or any other material Legal Requirement.
5.6. Options and Other Rights. Except for ownership of the
Options as set forth on SCHEDULE 2.2 and as otherwise set forth in SCHEDULE 5.5,
there are (a) no outstanding options, warrants, agreements, calls, conversion
rights, exchange rights, preemptive rights or other rights to subscribe for,
purchase or otherwise acquire, or any other agreements or commitments of any
character relating to the sale, issuance or voting of, any shares of capital
stock of the Company, whether issued or unissued, or any securities convertible
into or evidencing the right to purchase any shares of capital stock of the
Company to which the Company is a party, and (b) no existing agreements,
options, commitments or rights with, of or to any person to acquire any of the
Company's assets, properties or rights or any interest therein, other than sales
of the goods and services of the Company in the ordinary course of business
consistent with past practices.
5.7. Binding Obligation. The Company has full power and
authority to enter into this Agreement and the agreements to which it is a party
contemplated hereby, or executed in connection herewith (collectively, this
Agreement, the Pre-Closing Escrow Agreement and the Escrow Agreement shall be
referred to hereinafter as the "Acquisition Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Company of each of the Acquisition Documents to which the
Company is a party have been duly and validly authorized and approved by all
necessary action on the part of the Company. Each of the Acquisition Documents
to which the Company is a party, assuming each of the Acquisition Documents
constitutes a valid and binding obligation of the other parties thereto,
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except to the extent that the
enforceability thereof may be limited by: (i) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws from time to
time in effect affecting generally
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the enforcement of creditors' rights and remedies; and (ii) general principles
of equity, including, without limitation, principles of reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in equity or
at law).
5.8. No Defaults or Conflicts. Other than as listed in
SCHEDULE 5.8, the execution and delivery of any of the Acquisition Documents by
the Company and the performance by the Company of its obligations hereunder (i)
does not and, on the Closing Date, will not result in any violation of the
charter or by-laws of the Company; (ii) does not and, on the Closing Date, will
not conflict with, or result in a breach of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien, claim, charge, encumbrance or other security interest (collectively
referred to herein as "Liens"), upon any property or assets of the Company
under: (A) any indenture, mortgage, lease or loan agreement or any other
agreement or instrument to which the Company is a party or by which it may be
bound or to which any of its respective properties may be subject; or (B) any
existing applicable law, rule, regulation, judgment, order or decree of any
Governmental Authority to which the Company or any of its properties is subject,
other than such conflicts, breaches and defaults as would be waived or avoided
by the consents, approvals, authorizations, filings or notices described in
Section 5.9; and (iii) does not and, on the Closing Date, will not result
pursuant to the terms of any Contract to which the Company is a party in the
acceleration of the maturity of any payment date of, or increase or adversely
affect, any liability of the Company other than Indebtedness paid in connection
herewith.
5.9. No Governmental Authorization or Consents Required.
Other than as listed in SCHEDULE 5.9, no consent, authorization or approval or
other action by, and no notice to or declaration, filing or registration with,
any Governmental Authority or any third party will be required to be obtained or
made by the Company in connection with the due execution and delivery and
performance by the Company or the Sellers of this Agreement or the consummation
by the Company or the Sellers of the transactions contemplated hereby.
5.10. Permits. SCHEDULE 5.10 lists and Buyer has been
furnished access to all material Federal, state, local and foreign governmental
approvals, consents, authorizations, orders, certificates, filings, franchises,
licenses, notices, permits and rights (collectively, "Permits") which the
Company has obtained. Except as set forth on SCHEDULE 5.10, there are no other
Permits that are required for the conduct of the business of the Company as
presently conducted and its business as presently conducted. There has occurred
no default under any Permit. There are no proceedings relating to the
suspension, revocation or modification of any Permit.
5.11. No Actions, Suits or Proceedings. Except as disclosed on
SCHEDULE 5.11, (i) there is no action, suit or proceeding (a "Proceeding")
pending against, nor, to the Company's knowledge, threatened or alleged against,
the Company, and to the Company's knowledge no basis exists for any claim
relating to any Antitrust Law as to which the Company would be responsible.
There is no Proceeding pending or, to the
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knowledge of the Company threatened, which questions the validity or legality of
this Agreement or of the transactions contemplated hereby or which seeks to
prevent the consummation of the transactions contemplated hereby or which if
decided adversely to the Company could reasonably be expected to have a Material
Adverse Effect and (ii) the Company (or any officer thereof in such capacity) is
not subject to any judgment, decree, writ, injunction or order of any
Governmental Authority.
5.12. Contracts.
(a) SCHEDULE 5.12A contains a true and correct list of
all Contracts not otherwise listed on SCHEDULE 5.13A, 5.15A, 5.15B, 5.18, 5.22C,
5.23A, 5.23C, 5.28 or 5.31, including but not limited to the following:
(i) any Contract with any present or former
employee or consultant or for the employment of any person, including any
consultant;
(ii) any Contract for the future purchase of, or
payment for, supplies or products, or for the performance of services by a third
party involving in any one case $50,000 or more;
(iii) any Contract to sell or supply products or to
perform maintenance, services or similar duties involving in any one case
$50,000 or more;
(iv) any distribution, marketing, dealer,
representative, or sales agency Contract;
(v) any lease under which the Company is lessor
relating to the assets of the Company or any property at which assets of the
Company are located;
(vi) any note, debenture, bond, equipment trust
agreement, letter of credit agreement, loan agreement, or other Contract for the
borrowing or lending of money or agreement or arrangement for a line of credit
or guarantee, pledge, or undertaking of the indebtedness of any other person;
(vii) any Contract for any charitable or political
contribution;
(viii) any Contract limiting or restraining the
Company, its business or any successor thereto from engaging or competing in any
manner or in any business, nor, to the Company's knowledge, is any employee of
the Company engaged in the conduct of the Company's business subject to any such
agreement, contract, or commitment;
(ix) any Contract that has a duration of twelve
(12) months or more; or
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(x) any agreement, contract or transaction with
any officer, stockholder, director or Affiliate of the Company.
(b) SCHEDULE 5.12B contains a true and correct list of
all commitments for capital expenditures that have been approved by the Board of
Directors of the Company prior to the date of this Agreement in excess of
$50,000 by the Company and that remain outstanding as of the date hereof.
(c) Except for the potential unenforceability of the
Cahaba Woodchip agreement listed on SCHEDULE 5.12A, each of the Contracts is in
full force and effect and there exists no breach or violation of or default
under any of such Contracts by the Company or, to the knowledge of the Company,
any other party to such Contracts or any event which, with notice or the lapse
of time, or both, will create a breach or violation thereof or default
thereunder by the Company or, to the knowledge of the Company, any other party
to such Contracts.
(d) Except as indicated on SCHEDULE 5.12C, there exists
no actual or, to the best knowledge of the Company, any threatened termination,
cancellation, or limitation of, or any material amendment, modification, or
change to any Contract, including without limitation, (i) the business
relationship of the Company with any customer, distributor, or related group of
customers or distributors whose purchases individually or in the aggregate are
material to the operations and financial condition of the Company, (ii) the
requirements of any customer or related group of customers of the Company whose
purchases individually or in the aggregate are material to the operations and
financial condition of the Company, or (iii) the business relationship of the
Company with any material supplier to the Company.
(e) As of the Closing, the Company has not granted any
power of attorney affecting or with respect to the Company, its business or its
assets that remains outstanding.
(f) SCHEDULE 5.12D contains a true and correct list of
customers which collectively accounted for eighty percent (80%) of the Company's
revenues during the fiscal year ended December 31, 1997, and for the period
commencing January 1, 1998 through the last day of the month preceding the date
hereof, together with the dollar amount of sales made to each customer for each
such period.
5.13. Title to Leased Real Property & Liens.
(a) The Company does not own any real property. With
respect to the real and personal property constituting the Company's physical
plant (the "Plant"), the Company leases the Plant from The Industrial
Development Board of the City of ▇▇▇▇▇▇▇▇▇▇ (the "IDB") under the Consolidated,
Amended and Restated Lease Agreement dated as of January 1, 1995 (the "Lease")
between the IDB and the Company. SCHEDULE 5.13A lists the only real estate
leases of the Company. Pursuant to the terms of the Lease taken as a whole, the
Company is deemed to be the owner of the Plant for
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federal tax purposes. The leases of the Company listed on SCHEDULE 5.13A are in
full force and effect and, to the knowledge of the Company, there is no existing
actual or claimed default or event of default or event which with notice or
lapse of time or both would constitute a default thereunder by the Company or
any other party to such leases. Attached as SCHEDULE 5.13B hereto is the
Leasehold Owner's Title Policy issued by Lawyers Title Insurance Corporation on
February 10, 1995 (the "Policy") insuring the Company's interest in the Plant,
subject to the exceptions described in Schedule B, Part I of the Policy. To the
knowledge of the Company, except for the Permitted Encumbrances, the Leased Real
Property is free and clear of any Lien, and is not subject to any deeds of
trust, assignments, subleases, or rights of any third parties known to or
created or permitted by the Company other than the lessors thereof, and to the
Company's knowledge, there are no defaults with respect to any leases of real
property under which the Company is lessee or lessor which, in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(b) To the knowledge of the Company, all improvements on
the Leased Real Property conform to all applicable state and local laws, use
restrictions, building ordinances, and health and safety ordinances the
noncompliance of which would have a Material Adverse Effect on the Company's
current ownership or use of such property by the Company.
(c) Other than as may be set forth in the Permitted
Encumbrances, the Company has received no written notice of any pending or
threatened condemnations, planned public improvements, annexation, special
assessments, zoning or subdivision changes, or other adverse claims affecting
the Leased Real Property.
(d) Other than may be set forth in the Permitted
Encumbrances, to the knowledge of the Company, there is no private restrictive
covenant or governmental use restriction (including zoning) on all or any
portion of the Leased Real Property which prohibits the current use of the
Leased Real Property.
(e) To the knowledge of the Company, all licenses,
permits and approvals required for the occupancy and operation of the Leased
Real Property (with appurtenant parking uses) as presently being used have been
obtained and are in full force and effect and the Company has received no
notices of violations in connection with such items.
(f) Except as may have been disclosed to Buyer or
contained in any report prepared for the Benefit of Buyer, the Company does not
have in its possession any studies or reports which indicate any material
defects in the design or construction of any of the improvements on the Leased
Real Property.
(g) Other than as may be set forth in the Permitted
Encumbrances, the Company has not granted to any person or entity, other than
Buyer, any right, agreement, commitment, option, or right of first refusal,
whether oral or written,
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with respect to the purchase, assignment or transfer of all or any portion of
the Leased Real Property.
(h) Other than as may be set forth in the Permitted
Encumbrances, to the knowledge of the Company, the Leased Real Property is not
subject to any special assessment for public improvements or otherwise, whether
or not presently a lien upon the Leased Real Property. The Company has made no
commitment to any governmental authority, utility company, school board, church
or other religious body, homeowner or homeowner's association or any other
organization, group or individual relating to the Leased Real Property which
would impose a material obligation upon the Company or its successors or assigns
to make any contributions or dedications of money or land, or to construct,
install or maintain any improvements of a public or private nature as part of
the Leased Real Property or upon separate lands. To the knowledge of the
Company, except under the Lease, no governmental authority has imposed any
requirement that the Company pay, directly or indirectly, any special fees or
contributions or incur any expenses or obligations in connection with the
development of the Leased Real Property or any portion thereof, other than the
Permitted Encumbrances. Other than as may be set forth in the Permitted
Encumbrances, the Company has not received written notice of any contemplated or
actual reassessment of the Leased Real Property or any portion thereof for
general real estate tax purposes.
(i) To the knowledge of the Company, there have been no
additional matters of title put of record from the effective date of the
Commitment (i.e., December 15, 1997) through the date hereof.
5.14. Intellectual Property. SCHEDULE 5.14 contains a true and
correct list of the material Intellectual Property used or owned by the Company.
None of the Intellectual Property listed on SCHEDULE 5.14 has been declared
invalid or is the subject of a pending or, to the knowledge of the Seller,
threatened action for cancellation or a declaration of invalidity, and there is
no pending judicial proceeding involving any claim, and the Company has not
received any written notice or claim of infringement, misuse or misappropriation
of such Intellectual Property by the Company.
5.15. Employment Matters. SCHEDULE 5.15A lists, and Buyer has
been furnished access to, all written or legally binding oral employment,
collective bargaining and consulting contracts to which the Company is a party
or by which it is bound, and, with respect to all such contracts, the Company is
not in material breach thereof or material default thereunder and there does not
exist under any such contract any event which, with the giving of notice or the
lapse of time, would constitute such a breach or default by the Company, except
for such breaches, defaults and events as to which requisite waivers or consents
have been obtained. The Company is in material compliance with all applicable
Legal Requirements concerning the employer-employee relationship and with all
agreements relating to the employment of the Company's employees, including
applicable wage and hour laws, fair employment laws, safety laws, worker
compensation statutes, unemployment laws, and social security laws. Except as
set forth on SCHEDULE 5.15A, the Company is not a party to nor does the Company
have any
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obligation pursuant to any other agreement with any party regarding the rates of
pay or working conditions of any of the employees of the Company, nor is the
Company obligated under any agreement to recognize or bargain with any labor
organization or union on behalf of such employees. The Company, since
incorporation, has not experienced any organized slowdown, work interruption,
strike, or work stoppage by employees of the Company. Except as described on
SCHEDULE 5.15B, there is no outstanding agreement or arrangement with respect to
severance payments with respect to any employee of the Company.
5.16. Environmental and OSHA Compliance.
(a) SCHEDULE 5.16A contains a true, complete and accurate
listing of, and the Company represents that it has delivered to the Buyer true
and complete copies of, all environmental site assessments, test results,
analytical data, boring logs, and other environmental reports and studies
conducted by, at the expense of, or on behalf of the Company or that are
otherwise in the Company's possession.
(b) Except as set forth on SCHEDULE 5.16B, the Company:
(i) is in compliance with all applicable
Environmental Laws. The Company has not (A) received written notice that it is
potentially liable under or (B) received any requests for information or other
correspondence concerning any site or facility under, nor has the Company
received any written notice that it is considered potentially liable under the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
▇▇.▇▇. 9601 et seq.), as amended ("CERCLA"), or any similar state law;
(ii) has accurately prepared and timely filed with
the appropriate Governmental Authorities all reports, notifications,
applications, and filings required pursuant to any applicable Environmental Law;
(iii) has not entered into or received any consent
decree, compliance order, administrative order, or settlement, indemnification,
or release agreement or proposed agreement from any Governmental Authority or
other third party relating to violations of Environmental Law;
(iv) has not entered into or received nor is the
Company in default under any judgment, order, writ, injunction or decree of any
federal, state, or municipal court or other Governmental Authority relating to
violations of Environmental Laws;
(v) has obtained all permits, licenses, approvals,
consents, orders, and authorizations required under Environmental Laws
("Environmental Permits") that are required to operate the Company's facilities,
assets and business. The Company is in compliance with each such Environmental
Permit. No Environmental Permit has a material effect on the Company's ability
to operate any equipment, facility, improvement or process covered by such
Environmental Permit as currently being conducted; and
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(vi) has not been, and currently is not, a
"generator" of "hazardous waste" (as those terms are defined by the Resource
Conservation and Recovery Act of 1976 and the regulations promulgated
thereunder), for the purposes of obtaining an EPA identification number under 40
C.F.R. ss.262.12(a) or complying with the manifest system under Subpart 8 of 40
C.F.R. Part 262.
(c) With respect to the Company,
(i) there are no actions, suits, claims,
arbitration proceedings, or complaints pending or threatened by any Governmental
Authority, municipality, community, citizen or citizen's group, or other entity,
against the Company relating to any violation of Environmental Laws;
(ii) except as set forth on SCHEDULE 5.16C, there
has been no disposal, Release, burial, or placement of any Hazardous Materials
by the Company or, to the Company's knowledge, by any other party on, in, at, or
about the Plant or any facilities used by the Company or in connection with its
business;
(iii) all active, inactive, closed, or abandoned
above-ground and underground storage tanks located at the Plant have been
identified on SCHEDULE 5.16D, together with a description of the materials
stored therein and a statement as to whether such tanks are currently used by
the Company, and all such tanks are in compliance with all Environmental Laws;
(iv) no lien has arisen on any of the Company's
assets under or as a result of any Environmental Law;
(v) no environmental audit or remedial
investigation has been conducted as to environmental matters at any of the
Company's properties by any Governmental Authority during or, to the best of the
Company's knowledge, prior to the period during which the Company owned, leased
or operated such properties; and
(vi) the Leased Real Property is not listed or
proposed for listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS, or on any other similar state environmental list of potentially
hazardous sites.
(d) The Company is in material compliance with all
applicable Legal Requirements relating to employee health and safety, and the
Company has not received any notice that past or present conditions of the
Company's assets violate any applicable Legal Requirements as of the Closing
Date.
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5.17. Taxes.
(a) Except as set forth on SCHEDULE 5.17: (i) all
United States federal income Tax Returns of the Company required by law to be
filed have been timely filed and all such federal income Taxes and assessments
(including penalties and interest in respect thereof, if any) that have become
or are due with respect to any period ended on or prior to the Closing Date
whether shown as due on such Returns or not have been paid except (x) Tax
assessments against which appeals have been or will be promptly taken in good
faith, in which event the Company has disclosed the details of such appeals on
SCHEDULE 5.17, and as to which adequate reserves have been provided in
accordance with GAAP and (y) Taxes to the extent accrued or reserved for in the
Financial Statements or included in current liabilities for purposes of
calculating Net Assets; (ii) all other Tax Returns of the Company required to be
filed pursuant to applicable foreign, state, local or other law have been timely
filed, and all such Taxes that have become or are due with respect to any period
ended on or prior to the Closing Date whether shown as due on such returns or
not have been paid except (x) Tax assessments against which appeals have been or
will be promptly taken in good faith, in which event the Company has disclosed
the details of such appeals on SCHEDULE 5.17, and as to which adequate reserves
have been provided in accordance with GAAP and (y) Taxes to the extent accrued
or reserved for in the Financial Statements or included in current liabilities
for purposes of calculating Net Assets; and (iii) the charges, accruals and
reserves on the books of the Company in respect of any Tax liability for any
years not finally determined or with respect to which the applicable statute of
limitations has not expired are believed to be adequate to meet any assessments
or re-assessments for additional income or corporate franchise tax for any such
years. All Tax Returns that have been filed by the Company are true, complete
and correct in all material respects for the periods covered thereby.
(b) SCHEDULE 5.17 provides a brief description of any
pending federal or state Tax dispute in which the Company is alleged to be
liable or in which the Company is claiming a refund, including the nature and
amount of the controversy, the respective positions of the parties as to any
amounts claimed to be due thereunder, and the current status thereof.
(c) All Taxes required to be withheld prior to the
Closing Date from employees, independent contractors, creditors, shareholders
and other third parties for income, social security, payroll or other Taxes have
been properly withheld and, if required prior to the Closing Date, have been
deposited with the appropriate governmental agency.
(d) No claim is pending, and, to the best of the
Company's knowledge, no investigation is pending or threatened and no claim is
threatened, by any state, local, or other jurisdiction alleging that the Company
has a duty to file Tax Returns and pay Taxes or is otherwise subject to the
taxing authority of any jurisdiction not included in SCHEDULE 5.17, nor, except
as set forth in SCHEDULE 5.17, has the Company received any notice or
questionnaire from any such jurisdiction which suggests or asserts
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that the Company may have a duty to file such Returns and pay such Taxes, or
otherwise is subject to the taxing authority of such jurisdiction.
(e) The Company has not granted any extension to any
Tax authority of the limitation period during which any Tax liability may be
asserted after the Closing Date. No Taxes of the Company will become due as a
result of the transactions contemplated by this Agreement. The Company is not a
party to any Tax sharing or Tax allocation agreement, understanding, arrangement
or commitment and, except as set forth on SCHEDULE 5.17, is under no contractual
obligation to pay the Tax liability of any other Person. The Company is not a
consenting corporation under Section 341(f) of the Code. The Company has not
agreed to, nor is it required to make, any adjustment under Code Section 481(a)
by reason of a change in accounting method or otherwise. All positions that
could give rise to substantial understatement penalties have been disclosed
under Section 6662 of the Code. The Company has not entered into any
compensatory agreements with respect to the performance of services that could
obligate it to make a payment that would be nondeductible pursuant to Section
280G of the Code.
(f) Each of the representations contained in this
Section 5.17 relates solely to operations and actions of the Company prior to or
on the Closing Date and in no way will be construed to relate to any period
following the Closing Date or create any liability of Sellers for actions taken
by Buyer or the Company consistent with prior practice but occurring following
the Closing Date.
(g) Each Seller is and shall be able to and will
deliver to Buyer a certificate substantially in the form required by Section
1.1445-2(b)(2)(iii) of the regulations under the Code.
5.18. Employee Benefits.
(a) SCHEDULE 5.18 contains a true and complete list
of all the following agreements or plans hereinafter collectively referred to as
the "Benefit Plans" which are presently in effect and which cover employees of
the Company ("Employees"):
(i) Any employee benefit plan as defined in
Section 3(3) of ERISA; or
(ii) Any other pension, profit sharing,
retirement, deferred compensation, stock purchase, stock option, stock
appreciation, phantom stock or other equity-based, incentive, bonus,
performance, vacation, termination, retention, change of control, severance,
"golden parachute," disability, hospitalization, medical, life insurance, or
other employee benefit plan, program, policy, or arrangement, which the Company
maintains or to which the Company has any outstanding, present, or future
obligations to contribute or make payments under, whether voluntary, contingent,
or otherwise.
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(b) With respect to all Benefit Plans, the Company
makes the following representations and warranties:
(i) The Benefit Plans have been made available
to Buyer for review, including correct and complete copies of: (A) all trust
agreements or other funding arrangements for such Benefit Plans (including
insurance contracts), and all amendments thereto, (B) all current determination
letters and, if any, rulings, opinion letters, information letters, or advisory
opinions issued by the IRS, the United States Department of Labor, or the
Pension Benefit Guaranty Corporation, (C) annual reports or returns, audited or
unaudited financial statements, actuarial valuations and reports, and summary
annual reports prepared for any Benefit Plan with respect to the most recent
three (3) plan years, and (d) the most recent summary plan descriptions and any
modifications thereto.
(ii) Except with respect to the failure to file
certain IRS Forms 5500 as referenced on SCHEDULE 5.17, all the Benefit Plans and
the related trusts subject to ERISA comply with and have been administered in
compliance with, (A) the applicable provisions of ERISA, (B) with respect to
each Benefit Plan that is intended to be a qualified plan under Section 401(a)
of the Code ("Qualified Plan"), all applicable provisions of the Code relating
to qualification and tax exemption under Code Sections 401(a) and 501(a) or
otherwise applicable to secure intended tax consequences, and (C) all other
applicable laws and collective bargaining agreements, and the Company has not
received any notice from any governmental authority questioning or challenging
such compliance. Each Benefit Plan that is a Qualified Plan either (I) has a
current determination letter from the IRS or (II) is a standardized, prototype
plan and the Company is permitted to rely on an opinion letter issued by the IRS
on the qualified status of the prototype plan. No event has occurred which will
or could reasonably be expected to give rise to disqualification of any such
plan or loss of intended Tax consequences under the Code or to any Tax under
Section 511 of the Code. Other than with respect to claims for benefits under
the Benefits Plans, no event has occurred which will or could reasonably be
expected to result in a liability in excess of $50,000.
(iii) No oral or written representation or
communication with respect to any aspect of the Benefit Plans has been made to
Employees prior to the date hereof that is not in accordance with the written or
otherwise preexisting terms and provisions of such plans. Neither the Company
nor any administrator or fiduciary of any Benefit Plan (or any agent of any of
the foregoing) has engaged in any transaction, or acted or failed to act in any
manner that could subject Buyer to any direct or indirect liability or excise
tax (by indemnity or otherwise) for breach of any fiduciary, co-fiduciary or
other duty under ERISA or prohibited transaction under Section 4975 of the Code
or Section 406 of ERISA. The representation in the preceding sentence is made
subject to the Company's knowledge when such representation is made with respect
to a non-employee of the Company. There are no unresolved claims or disputes
under the terms of, or in connection with, the Benefit Plans other than claims
for benefits which are payable in
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the ordinary course and no litigation has been commenced with respect to any
Benefit Plans.
(iv) Except with respect to the failure to file
certain IRS Forms 5500 as referenced on SCHEDULE 5.17, all Benefit Plan
documents and annual reports or returns, audited or unaudited financial
statements, actuarial valuations, summary annual reports, and summary plan
descriptions issued with respect to the Benefit Plans are correct and complete,
and, to the extent required under applicable law, have been timely filed with
the IRS and the United States Department of Labor, have been timely distributed
to participants in the Benefit Plans, and there have been no changes in the
information set forth therein.
(v) There has been no termination or partial
termination, withdrawal or partial withdrawal with respect to any of the Benefit
Plans.
(vi) Neither the Company nor any entity
aggregated with the Company under Code Section 414 (an "ERISA Affiliate") has at
any time sponsored, contributed to, or been obligated under Title I or Title IV
of ERISA to contribute to a "defined benefit plan" (as defined in ERISA 3(35)).
On or after September 26, 1980, neither the Company nor its ERISA Affiliates
have had an "obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)). The
Company has no liability under Title IV of ERISA either directly or through its
ERISA Affiliates.
(vii) The Company has neither maintained in the
past nor currently maintains a Benefit Plan providing welfare benefits (as
defined in ERISA Section 3(1)) to employees after retirement or other separation
of service except to the extent required under Part 6 of Title I of ERISA or
Code Section 4980B or their successors. No tax under Code Sections 4980B or 5000
has been incurred with respect to any Benefit Plan and to the best of the
Company's knowledge no circumstances exist which could reasonably be expected to
give rise to such taxes.
(viii) Except as disclosed on SCHEDULE 5.18
hereto, neither the execution and delivery of this Agreement or the Acquisition
Documents, nor the consummation of the transactions contemplated hereby or
thereby, will (i) entitle any current or former employee or director of the
Company to severance pay, unemployment compensation or any payment contingent
upon a change in control or ownership of the Company, (ii) increase or enhance
any benefits payable under any Benefit Plan, or (iii) accelerate the time of
payment or vesting, or increase the amount, of any compensation due to any such
employee or former employee.
(c) The Company has complied in all material respects
with the continuation coverage requirements of Section 1001 of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601
through 608. The Company shall be responsible for complying with the
requirements of Code Section 4980B and Part 6 of Title I of ERISA for its
employees and their "qualified beneficiaries"
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whose "qualifying event" (as such terms are defined in Code Section 4980B)
occurs on or prior to the Closing Date.
(d) The Company has complied in all material respects
with the Health Insurance Portability and Accountability Act of 1996, as amended
and ERISA Sections 700 et. seq.
5.19. No Other Broker. Other than ▇▇ ▇▇▇▇▇▇▇▇▇▇, a division
of BT Alex. ▇▇▇▇▇ Incorporated, the fees and expenses of which are payable by
the Company, no broker, finder, agent or similar intermediary has acted for or
on behalf of the Company or an Affiliate in connection with this Agreement, the
Acquisition Documents or the transactions contemplated hereby or thereby, and no
broker, finder, agent or similar intermediary is entitled to any broker's,
finder's or similar fee or other commission in connection therewith based on any
agreement, arrangement or understanding with the Company or an Affiliate or any
action taken by either of them.
5.20. Inventories. Except as described in SCHEDULE 5.1B, (a)
all Inventory, whether reflected on the Financial Statements or subsequently
acquired, is now and at the Closing Date will be located at the Plant consistent
with past practices, (b) has been or will be acquired by the Company only in
bona fide transactions entered into in the ordinary course of business, (c) is
of good and merchantable quality except to the extent adequately reserved for in
the Financial Statements, consistent with past practice, (d) is not now and at
the Closing Date will not be subject to any write-down or write-off in excess of
the reserves established based on past practice, and (e) is valued at the lesser
of cost or net realizable market value, with appropriate adjustments for
obsolete and slow moving Inventory in accordance with GAAP. Except as described
in SCHEDULE 5.20, the Company has now and on the Closing Date will have valid
legal title to its Inventory free and clear of any consignments, liens, claims,
charges, and encumbrances. The Company is not under any liability or obligation
with respect to the return of inventory in the possession of wholesalers,
retailers, or other customers which is not reserved against in the Financial
Statements.
5.21. Accounts Receivable. All Accounts Receivable shown on
the Financial Statements represent, and the Accounts Receivable of the Company
outstanding on the Closing Date will represent, sales actually made or services
actually performed in the ordinary course of business in bona fide transactions
completed in accordance with the terms and provisions contained in any documents
relating thereto, if any, and, to the knowledge of the Company, are fully
collectible to the extent not reserved for in the Company's balance sheet as of
December 31, 1997 included in the Financial Statements. The reserves for
uncollectible Accounts Receivable reflected on the Financial Statements were
established in accordance with GAAP and are adequate in light of all the facts
then known to the Company and the Company's historical methods and practices in
establishing such reserves. The Accounts Receivable outstanding on the Closing
Date are subject to no defenses, counterclaims, or rights of setoff other than
those arising in the ordinary course of business and for which adequate reserves
have been established.
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5.22. Personal Property.
(a) As referenced in Section 5.13(a) and except as
set forth in Schedule 5.22C, all of the personal property comprising part of, or
situated at, the Plant is leased by the Company from the IDB under and pursuant
to the Lease. SCHEDULE 5.22A contains a true and correct list and a description
(including serial number, vehicle registration and tag number, if available) of
such personal property. The Company has good leasehold title to all of the
personal property listed in SCHEDULE 5.22A, free and clear of all Liens, except
as disclosed on SCHEDULE 5.22B.
(b) SCHEDULE 5.22C contains a list of all leases for
Vehicles, Equipment, Furniture and Fixtures, or other items of personal property
leased by the Company other than pursuant to the Lease (except miscellaneous
leases having an aggregate value, if capitalized, of less than $50,000). Each of
the leases described on SCHEDULE 5.22C is in full force and effect and there are
no existing defaults or events of default, real or claimed, or events which with
notice or lapse of time or both would constitute defaults, the consequences of
which, severally or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
5.23. Insurance.
(a) The Company and its assets are insured under
various policies of general liability and other forms of insurance which
policies are in amounts adequate in the reasonable judgment of the Sellers. Set
forth in SCHEDULE 5.23A is a true and complete list and description of all
insurance policies of the Company in force on the date hereof, together with a
statement of the aggregate amount of claims paid out, and claims pending, under
each such policy through the date hereof. All such policies are in full force
and effect, all premiums due thereon have been paid by the Company, and the
Company has complied in all material respects with the provisions of such
policies. The Company has not received any notice of cancellation or non-renewal
of any such policy, nor has the Company received any notice from any of its
insurance carriers that any insurance premiums will be increased in the future
or that any insurance coverage presently provided for will not be available to
the Company in the future on substantially the same terms as now in effect. Set
forth on SCHEDULE 5.23B is a true and complete list of all claims for medical
expenses in excess of $25,000 for any employee of the Company. The Company has
not been refused any insurance by any insurance carrier to which it has applied
for insurance since incorporation. There are no outstanding requirements or
recommendations by any current insurer or underwriter of the Company which
require or recommend changes in the conduct of the Company's business, or
require any repairs or other work to be done with respect to any of the
Company's assets or operations of the Company's business since incorporation.
(b) The Company has delivered to Buyer (i) true and
complete copies of all current policies of insurance to which either the Company
is a party or under which either the Company, or any director of the Company, is
or has been covered at any time since incorporation of the Company; and (ii) any
statement by the auditor of the
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Company's financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
(c) SCHEDULE 5.23C sets forth (i) any contract or
arrangement, other than a policy of insurance, for the transfer or sharing of
any risk by the Company or (ii) all obligations of the Company to third parties
with respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.
5.24. Compliance with Laws. Except as disclosed in SCHEDULE
5.24, the Company since its incorporation has not engaged in and is not engaging
in any activity or omitting to take any action that is or creates a violation of
any law, statute, ordinance, or regulation applicable to the Company, its
business or its assets.
5.25. Product Warranty. Each product manufactured, sold,
leased or delivered in connection with the operation of the Company's business
is in conformity with all applicable contracts and all express and implied
warranties, and the Company has no liability (and to the Company's knowledge
there is no basis for any assertion of liability) for replacement or repair
thereof or other damages in connection therewith.
5.26. Product Liability. The Company has no liability (and to
the Company's knowledge there is no basis for any assertion of liability)
arising from any claims related to the manufacture, sale or supply of the
Company's products, including, but not limited to, claims of professional
negligence, manufacturing negligence or improper workmanship, or claims in whole
or in part premised upon product liability.
5.27. Compliance with the Immigration Reform and Control. To
the knowledge of the Company, the Company is in full material compliance with
and has not materially violated the terms and provisions of the Immigration
Reform and Control Act of 1986, and all related regulations promulgated
thereunder (the "Immigration Laws"). With respect to each employee (as defined
in Section 274a.1(f) of Title 8, Code of Federal Regulations) of the Company for
whom compliance with the Immigration Laws by an employer (as defined in Section
274a.1(g) of Title 8, Code of Federal Regulations) is required, the Company,
upon request of Buyer, will make available to Buyer prior to the Closing Date
such employee's Form I-9 (Employment Eligibility Verification Form) and all
other records, documents or other papers which are retained with the Form I-9 by
the employer pursuant to the Immigration Laws.
5.28. Transactions with Related Parties. SCHEDULE 5.28 sets
forth all:
(a) Current agreements or transactions between the
Company and (i) any director, officer, stockholder or Affiliate of the Company,
or (ii) any relative or spouse (or relative of such spouse) of any such
director, officer, stockholder or Affiliate (such persons in (i) and (ii) being
referred to herein as a "Related Party" or collectively as the "Related
Parties").
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(b) To the Company's knowledge, no Related Party is a
director or officer of, or has any direct or indirect interest in (other than
the ownership of not more than 5% of the publicly traded shares of), any person
or entity which is a supplier, vendor, landlord, sales agent or competitor of
the Company;
(c) No Related Party owns or has any interest in,
directly or indirectly, in whole or in part, any tangible or intangible property
used in the conduct of the Company's business.
(d) Other than expense advance reimbursements not
exceeding $2,000 in the aggregate and compensation, no stockholder owes any
money or other amounts to, nor is any stockholder owed any money or other
amounts by, the Company;
(e) The Company does not currently, directly or
indirectly, guarantee or assume any indebtedness for borrowed money or otherwise
for the benefit of any Related Party; and
(f) The Company does not have an agreement to make any
loans, payments or transfers of the Company's assets to any Related Party.
5.29. Corporate Records. Attached to SCHEDULE 5.29 hereto are
true and complete copies of (i) the Certificate of Incorporation of the Company,
with all amendments thereto, certified by the appropriate official, and (ii) the
Bylaws of the Company, certified by the Secretary of the Company. The minute
books of the Company since incorporation, heretofore made available to Buyer for
examination, are complete and accurately reflect the stock ownership of the
Company, the transfer of any shares of capital stock of the Company, and all
proceedings of the shareholders and directors and all committees thereto of the
Company.
5.30. Undisclosed Liabilities. Except for (w) liabilities and
obligations which are insured against (subject to immaterial deductibles) or as
to which the Company is entitled to be indemnified, (x) liabilities and
obligations reflected on the Company's balance sheet as at December 31, 1997
included in the Financial Statements or the Schedules hereto, (y) obligations
arising in the ordinary course pursuant to Contracts (but excluding those
arising as a result of the breach of a Contract) and (z) liabilities and
obligations arising since December 31, 1997 in accordance with this Agreement,
the Company has no material liabilities or obligations of any kind, fixed, or
contingent.
5.31. Indebtedness. Except for the Indebtedness listed on
SCHEDULE 5.31, the Company has no liabilities or obligations in respect of
borrowed money.
5.32. Correctness of Representations. No representation or
warranty of the Company in this Agreement, the other Acquisition Documents, or
in any Exhibit or certificate or furnished pursuant hereto or thereto, contains,
or on the Closing Date will contain, any untrue statement of material fact or
omits, or on the Closing Date will omit,
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to state any fact necessary in order to make the statements contained therein
not misleading in any material respect, and all such statements,
representations, warranties, Exhibits, certificates, and Schedules shall be true
and complete in all material respects on and as of the Closing Date as though
made on that date. True copies of all written mortgages, indentures, notes,
leases, agreements, plans, Contracts, and other instruments listed on the
Schedules pursuant to this Agreement have been (or will be prior to the Closing
Date) delivered to Buyer.
5.33. Definition of "Knowledge". The phrases "to the knowledge
of the Company", "the Company has not received notice", "to the Company's
knowledge", "the Company has not been notified" and any other similar phrases as
used in this Article 5 refer to the knowledge, after due inquiry, of ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇.
5.34. Unclaimed Property. The Company has complied in all
material respects with any applicable unclaimed property escheat, or similar
law, and has no material liability under any such law.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller, severally but not jointly, represents and
warrants to Buyer as follows:
6.1. Authority. Such Seller has all requisite power and
authority or (in the case of any Seller who is a natural person) all requisite
capacity to enter into and perform its obligations under the Acquisition
Documents and to consummate the transactions contemplated therein, and each of
the Acquisition Documents to which such Seller is a party has been duly executed
and delivered by such Seller pursuant to any necessary authorization. Each of
the Acquisition Documents to which such Seller is a party constitutes the legal,
valid and binding obligation of such Seller enforceable against such Seller in
accordance with its terms, except to the extent that enforceability thereof may
be limited by: (i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws from time to time in effect affecting
generally the enforcement of creditors' rights and remedies; and (ii) general
principles of equity, including, without limitation, principles of
reasonableness, good faith and fair dealing (regardless of whether
enforceability is considered in a proceeding at law or in equity).
6.2. Title. Such Seller is, directly or indirectly, the record
and beneficial owner of the Shares and/or the Options set forth opposite such
Seller's name on SCHEDULE 2.2 free and clear of any Lien, and, upon delivery of
and payment for the Shares and/or the Options as herein provided, such Seller
shall convey to Buyer valid and marketable title thereto, free and clear of any
and all Liens. Such Seller has no interest in any shares of capital stock, or
any rights to acquire shares of capital stock, of the Company, except as set
forth on SCHEDULE 2.2. No other person or entity, including
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Affiliates of such Seller shall to the best knowledge of such Seller, as of the
Closing Date, have any rights in, to or under the Shares or the Options.
6.3. Broker or Finders. Except as set forth in Section 5.19,
no broker or finder is entitled to any brokerage or other fee from Buyer or the
Company based upon arrangements made by or on behalf of such Seller in
connection with the transactions contemplated hereby.
6.4. No Violation. The execution, delivery and performance by
the Sellers of this Agreement and the transactions contemplated hereby
(including under the Acquisition Documents), do not and will not conflict with
or result in, with or without the giving of notice or lapse of time or both, any
violation of or constitute a breach or default, or give rise to any right of
acceleration, payment, cancellation or termination, under (a) any agreement or
other instrument to which any Seller is a party or by which any Seller is bound,
or (b) any order, judgment or decree of any court or other governmental or
regulatory authority to which any Seller is bound or subject, or (c) any Legal
Requirement applicable to any Seller.
6.5. Third Party Approvals. Except as set forth on SCHEDULE
6.5, the execution, delivery and performance by the Sellers of this Agreement
and the transactions contemplated hereby (including under the Acquisition
Documents) do not require any consents, waivers, authorizations or approvals of
any third persons or entities which have not been obtained by the Sellers. Any
consent or approval required to be obtained from the Company to effect the
transfer of the Shares and Options in accordance with the terms of this
Agreement is hereby waived by the Sellers and the Company (including, without
limitation, the required consents and approvals under the Shareholders Agreement
dated February 9, 1995 by and among the Company, Capital One Investors, Charter
Oak Partners and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and the Subscription Agreements of the
Sellers), but such waiver is effective only in respect to the transfers
contemplated by this Agreement.
6.6. Sale of Shares. Except as otherwise expressly provided
for in this Agreement, such Seller will not, prior to termination of this
Agreement pursuant to the terms hereof or consummation of the transactions
contemplated herein, make or agree to any transfers of his or its respective
Shares or Options or exercise or agree to exercise his Options.
6.7. Foreign Status. Such Seller is not a "foreign person"
within the meaning of Section 1445(b)(2) of the Code and will deliver to Buyer
prior to Closing certification of non-foreign status meeting the requirements of
Treasury Regulation Section 1.1445-2(b)(2)(iii).
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ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Company and each
Seller that:
7.1. Incorporation and Corporate Authority. Buyer has been
duly incorporated and is validly existing and in good standing under the laws of
the State of Georgia with all requisite corporate power and authority to enter
into this Agreement and perform its obligations hereunder.
7.2. Binding Obligation. Buyer has full power and authority to
enter into each of the Acquisition Documents to which it is a party and to
consummate the transactions contemplated thereby. The execution, delivery and
performance by Buyer of each of the Acquisition Documents to which it is a party
have been duly and validly authorized and approved by all necessary action on
the part of Buyer. Each of the Acquisition Documents to which Buyer is a party,
assuming such Acquisition Document constitutes a valid and binding obligation of
the other parties thereto, constitutes the legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms, except
to the extent that the enforceability thereof may be limited by: (i) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws from time to time in effect affecting generally the enforcement of
creditors' rights and remedies; and (ii) general principles of equity,
including, without limitation, principles of reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in equity or at law).
7.3. No Defaults or Conflicts. The execution and delivery of
each of the Acquisition Documents to which Buyer is a party and performance by
Buyer of its obligations thereunder have been duly authorized by all necessary
corporate action on the part of Buyer and: (i) do not and, on the Closing Date,
will not result in any violation of the charter or by-laws or other constituent
documents of Buyer; and (ii) on the Closing Date, will not conflict with, or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of Buyer (except for such conflicts,
breaches or defaults or liens, charges or encumbrances as would not adversely
affect the consummation of the transactions contemplated hereby) under: (A) any
indenture, mortgage, lease or loan or any other agreement or instrument to which
the Buyer is a party or by which either of them may be bound or to which any of
their respective properties may be subject; or (B) any existing applicable law,
rule, regulation, judgment, order or decree of any Governmental Authority having
jurisdiction over Buyer or any of their respective properties, other than such
conflicts, breaches and defaults as would be waived or avoided by the consents,
approvals and notices, which are described in Section 7.4.
7.4. No Governmental Authorization or Consents Required. Other
than consents required under the HSR Act, as of the Closing Date, no consent,
authorization or approval or other action by, and no notice to or declaration,
filing or registration with, any
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Governmental Authority or any third party will be required to be obtained or
made by Buyer in connection with the due execution and delivery and performance
by Buyer of this Agreement or the consummation by Buyer of the transactions as
contemplated hereby.
7.5. No Actions, Suits or Proceedings. There is no action,
suit or proceeding pending against, nor, to Buyer's knowledge, threatened
against Buyer before any Governmental Authority which questions the validity or
legality of this Agreement or of the transactions contemplated hereby or which
seeks to prevent the consummation of the transactions contemplated hereby.
7.6. Investment Purpose. Buyer is buying the Shares for
investment only and not with a view to resale in connection with any
distribution of any of the Shares except in compliance with the Securities Act,
and all other applicable securities laws. Buyer understands that the Shares have
not been registered under the Securities Act or under the securities laws of any
state and that the Shares may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of in the absence of an effective
registration under the Securities Act except pursuant to a valid exemption from
such registration. Buyer is an "accredited investor" as defined in Rule 501(a)
under the Securities Act.
7.7. Sufficient Funds. Buyer will have on the Closing Date
sufficient funds to purchase all of the Shares in accordance with the terms of
this Agreement.
7.8. Solvency. Upon the consummation of the transactions
contemplated by this Agreement, neither Buyer nor the Company will be insolvent
and each of them will continue to be able to pay their respective debts as they
mature and will have sufficient capital to be engaged in their respective
businesses as presently conducted.
7.9. No Broker. No broker, finder, agent or similar
intermediary has acted for or on behalf of Buyer or an Affiliate in connection
with this Agreement, the Acquisition Documents or the transactions contemplated
hereby or thereby, and no broker, finder, agent or similar intermediary is
entitled to any broker's, finder's or similar fee or other commission in
connection therewith based on any agreement, arrangement or understanding with
Buyer or an Affiliate or any action taken by either of them.
ARTICLE 8
COVENANTS
The parties hereto covenant and agree as follows:
8.1. Conduct of Business. Except as contemplated by this
Agreement, during the period from the date of this Agreement to the Closing
Date, the Company shall:
(a) operate the business substantially as previously
operated and only in the regular and ordinary course;
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(b) not purchase or acquire any assets or properties,
whether real or personal, tangible or intangible, and not sell or otherwise
dispose of any real or personal property or asset, except in the ordinary course
of business and consistent with past practices;
(c) use reasonable efforts to maintain its assets in
their present order and condition, reasonable wear and use excepted;
(d) maintain all policies of insurance in amounts and on
terms substantially equivalent to those in effect on the date hereof;
(e) comply with all laws applicable to the Company and
the conduct of its business where the failure to so comply would have a Material
Adverse Effect;
(f) maintain the books and records of the Company in the
usual, regular, and ordinary manner and prepare and file all foreign, federal,
state, and local tax returns and amendments thereto required to be filed by the
Company after taking into account any extensions of time granted by such taxing
authorities on a basis consistent with past practices;
(g) use reasonable efforts to preserve the goodwill and
patronage of its customers, Employees, suppliers and others having a business
relationship with the Company;
(h) not, without the prior written consent of Buyer,
take any of the actions described in Section 5.4 hereof; and
(i) use reasonable efforts to obtain the consent of the
IDB to construct a fourth furnace.
8.2. Access to Information; Confidentiality.
(a) During the period from the date of this Agreement to
the Closing Date, the Company shall, during regular business hours and upon
reasonable written request, give Buyer, its lenders, counsel, accountants and
other authorized representatives reasonable access to all books and records,
offices, facilities, properties, vendors and customers of the Company, and shall
furnish such persons with all information (including financial and operating
data) concerning the Company as they reasonably may request; provided, however,
that any such access shall not unreasonably interfere with the business or
operations of the Company. Requests for such information shall be coordinated
with the Company's designated representatives.
(b) Any information provided to or obtained by Buyer or
its financing sources, accountants counsel, representatives and agents pursuant
to paragraph (a) above shall be "Information" as defined under the
Confidentiality
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Agreement, dated October 1, 1997, between the Company and Buyer (the
"Confidentiality Agreement"), and shall be held by Buyer or its financing
sources, accountants counsel, representatives and agents in accordance with and
be subject to the terms of the Confidentiality Agreement.
(c) Buyer agrees to be bound by and comply with the
provisions set forth in the Confidentiality Agreement as if such provisions were
set forth herein, and such provisions are hereby incorporated herein by
reference.
(d) Buyer shall indemnify the Seller and the Company and
hold the Seller and the Company harmless from and against any and all claims,
demands, causes of action, losses, damages, liabilities, costs and expenses
(including, without limitation, attorneys' fees and disbursements) suffered or
incurred by the Sellers or the Company arising out of or in connection with any
inspection or other activities conducted by Buyer or Buyer's authorized
representatives pursuant to this Section 8.2.
8.3. Further Assurances. Each of the parties hereto shall
execute such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Subject to such party's right to terminate this Agreement
pursuant to Article 11 hereof, each party shall do all things reasonably
necessary to effect the consummation of the transactions contemplated by this
Agreement. Each such party shall, on or prior to the Closing, use its best
efforts to fulfill or obtain the fulfillment of the conditions precedent to the
consummation of the transactions contemplated hereby, including the execution
and delivery of any documents, certificates, instruments or other papers that
are reasonably required for the consummation of the transactions contemplated
hereby. Each party shall promptly notify each of the other parties of any
action, suit, or proceeding that shall be instituted or threatened against such
party to restrain, prohibit, or otherwise challenge the legality of any
transaction contemplated by this Agreement.
8.4. Notice of Events. During the period from the date of this
Agreement to the Closing Date, the Company shall give prompt notice to Buyer,
and Buyer shall give prompt notice to the Company, of: (i) the occurrence or
non-occurrence of any event of which it has knowledge, the occurrence or
non-occurrence of which would be likely to result in any of the conditions
specified in (x) in the case of the Buyer, Sections 9.1 and 9.4, or (y) in the
case of the Company, Sections 10.1 and 10.4, not being satisfied so as to permit
the consummation of the transfer of Shares in accordance with the time schedule
contemplated by this Agreement; and (ii) any material failure on its part, or on
the part of the other party hereto of which it has knowledge, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 8.4 shall not limit or otherwise affect the remedies available
hereunder to any party. Without in any way limiting the foregoing, during the
period from the date of this Agreement to the Closing Date, the Company shall
promptly notify Buyer in writing of any Material Adverse Effect, any material
damage to or loss of any of the Company's assets (whether owned or leased), or
the institution of or, if known by the Company, the overt threat in writing of
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institution of legal, administrative, or other proceedings against the Company,
except that if the Closing occurs and the Company or the Sellers have excluded
the matters covered by such notice from the coverage of the Certificates
delivered to Buyer pursuant to Section 9.1 or 9.2, Buyer shall have no available
remedy with respect to such matters.
8.5. Indemnification. Subject to obtaining Releases from all
current directors of the Company, and from all Sellers, Buyer agrees that all
rights to indemnification and exculpation from liability for acts or omissions
occurring prior to the Closing Date now existing in favor of the current or
former directors, officers or employees acting as fiduciaries for any 401(k)
plan of the Company, as provided in the certificate of incorporation or by-laws,
or under any document or agreement relating to any Benefit Plan to which it is a
party, shall survive the Closing Date and shall continue in full force and
effect in accordance with their respective terms for a period of not less than
three (3) years and six (6) months after the Closing Date. As of the Closing
Date, Buyer shall, without any further action, be jointly and severally liable
with the Company for all obligations of the Company with respect to such
indemnification and exculpation from liability as are provided for in this
Section 8.5.
8.6. Filings and Authorizations. Each of the Company and Buyer
within five (5) Business Days of the date hereof, shall, if required, file or
supply, or cause to be filed or supplied, all notifications and information
required to be filed or supplied pursuant to the HSR Act in connection with the
sale and transfer of the Shares pursuant to this Agreement and consummation of
the other transactions contemplated hereby, and request early termination of the
waiting period under the HSR Act. Each of the Company and Buyer, as promptly as
practicable, shall (a) make, or cause to be made, all such other filings and
submissions under laws, rules and regulations applicable to it, or to its
subsidiaries and Affiliates, as may be required for it to consummate the
transfer of Shares and other transactions contemplated hereby in accordance with
the terms of this Agreement; (b) use its best efforts to obtain, or cause to be
obtained, at its sole cost and expense, all authorizations, approvals, consents
and waivers from all persons and Governmental Authorities necessary or
appropriate (as determined in the reasonable judgment of the other party) to be
obtained by it, or its subsidiaries or Affiliates, in order for it so to
consummate such transactions; and (c) use its best efforts to take, or cause to
be taken, all other action necessary, proper or advisable in order for it to
fulfill its obligations hereunder. The Company, the Sellers and Buyer shall
coordinate and cooperate with one another in exchanging such information and
supplying such reasonable assistance as may be reasonably requested by each in
connection with the foregoing.
8.7. Tax Matters.
(a) Buyer will cause the Company to file a federal
income Tax Return for the period from January 1, 1998 through the Closing Date.
Buyer and the Company shall prepare or cause to be prepared and file or cause to
be filed all Tax Returns for the Company for all periods ending on or prior to
the Closing Date that are filed after the Closing Date. Buyer shall deliver to
Sellers drafts of each such Tax Return (and supporting work papers) at least 60
days prior to the due date for such Tax Return
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(provided that with respect to the Tax Return for 1997, if not previously filed,
and the period ending on the Closing Date, Buyer shall deliver to the Sellers
such draft within thirty (30) days after final determination of the Closing
Balance Sheet and the Adjustment Amount) and shall permit Sellers to review and
comment on each such Tax Return and shall not file any such Tax Return without
incorporating Sellers' reasonable requests for changes therein. Buyer shall
cause the Company to file such Tax Returns within fifteen (15) days after
agreement on such proposed changes. Sellers shall reimburse Buyer for (or Buyer
or the Company shall refund to Sellers the amount of) Taxes of the Company with
respect to such periods within fifteen (15) days after payment by Buyer or the
Company after the Closing Date of such Taxes (or within fifteen (15) days after
the date Buyer or the Company files such Tax Return) to the extent such Taxes
exceed (or are less than) the sum of (i) Taxes paid with respect to the periods
covered by such Tax Returns prior to or on the Closing Date and (ii) any accrual
or reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) contained
in the Closing Balance Sheet. Buyer, the Company and Sellers agree that all Tax
Returns filed pursuant to this paragraph (a) or the succeeding paragraph (b)
shall be filed on the basis that a compensation deduction relating to amounts
paid to employees in respect of the Option exercise and the Bonus shall be
allocable only to the period that ends on the Closing Date (or the portion
ending on the Closing Date of any period that includes, but does not end on, the
Closing Date).
(b) Buyer and the Company shall prepare or cause to be
prepared and file or cause to be filed any Tax Returns of the Company for Tax
periods which begin before the Closing Date and end after the Closing Date.
Buyer shall deliver to Sellers drafts of each such Tax Return (and supporting
work papers) at least 60 days prior to the due date of such Tax Return, and
shall permit Sellers to review and comment on each such Tax Return and shall not
file any such Tax Return without incorporating Sellers' reasonable requests for
changes therein. Sellers shall pay to Buyer (or Buyer or the Company shall
refund to Sellers) within fifteen (15) days after the date on which Taxes are
paid with respect to such periods an amount equal to the portion of such Taxes
which relates to the portion of such Taxable period ending on the Closing Date
to the extent such Taxes exceed (or are less than) (i) Taxes paid with respect
to the periods covered by such Tax Returns prior to or on the Closing Date and
(ii) any accrual or reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) shown on the face of the Closing Balance Sheet. For purposes of this
Section, in the case of any Taxes that are imposed on a periodic basis and are
payable for a Taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Taxable
period ending on the Closing Date shall (x) in the case of any Taxes other than
Taxes based upon or related to income or receipts, be deemed to be the amount of
such Tax for the entire Taxable period multiplied by a fraction the numerator of
which is the number of days in the Taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire Taxable period, and
(y) in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date. Any credit relating to a Taxable
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period that begins before and ends after the Closing Date shall be taken into
account as though the relevant Taxable period ended on the Closing Date. All
determinations necessary to give effect to the foregoing allocations shall be
made in a manner consistent with prior practice of the Company. On and after the
Closing Date, Buyer shall be liable for, and shall hold the Sellers harmless
against, any and all Taxes due or payable by the Company related to periods that
begin after the Closing Date and the portion beginning on the day after the
Closing Date of any period that includes (but does not end on) the Closing Date.
(c) (i) Buyer, the Company and Sellers shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably requested by another party and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Buyer, the
Company and Sellers agree (A) to retain all books and records with respect to
Tax matters pertinent to the Company relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations (and,
to the extent notified by Buyer or Sellers, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, the Company or
Sellers, as the case may be, shall allow the other party to take possession of
such books and records.
(ii) Buyer, the Company and Sellers further agree,
upon request, to use all commercially reasonable efforts to obtain any
certificate or other document from any governmental authority or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that could
be imposed (including, but not limited to, with respect to the transactions
contemplated hereby).
(iii) Buyer, the Company and Sellers further agree,
upon request, to provide the other party with all information that either party
may be required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
(d) To the extent the Tax Return for the period ending
on the Closing Date reflects a net operating loss, Buyer agrees to cause the
Company, to the maximum extent permitted by law, to carry-back any such net
operating loss and promptly seek a refund for Taxes for periods prior to the
Closing Date by preparing appropriate claims for refund. To the extent that such
claims for refund result in a refund by a taxing authority to the Company of any
amount, , the Company shall pay such amount to Sellers within five (5) days
after receipt thereof, together with any interest actually received from the
taxing authority.
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(e) Any payment by Sellers to Buyer pursuant to this
Section 8.7 shall be made from the Escrow Account and shall be subject to (and
included in) the Maximum Amount, but shall not be included in the Threshhold
Amount described in Section 12.7(a).
8.8. Severance. Buyer agrees that, for a period of one year
after the Closing Date, if any employee not covered by an existing collective
bargaining agreement with the Company other than an officer is (a) terminated as
determined in the Buyer's sole discretion (other than for cause relating to that
employee's failure to perform duties) or (b) resigns because such employee was
required to transfer to a work location more than 50 miles from that employee's
current work location, the employee shall receive, and the Buyer shall pay, as
severance the following: the greater of (a) one week of severance pay per year
of service, or (b) severance pay equal to payment of base pay (i.e., wages for
40 hours of employment per week based on the employee's wage scale as of the
employee's termination of employment) for the balance of the period until the
six month anniversary of the Closing Date. Health and life insurance programs
and pension benefit accruals will continue during the period of severance
payments to the extent permitted by law and by the terms of the applicable plan
documents and to the extent the terminated employee pays any insurance premiums
applicable to their continued participation in such plans. Any employee covered
by this Section 8.8 shall be an intended third party beneficiary of this
Agreement.
8.9. Sales and Transfer Taxes. All transfer taxes (including
all stock transfer taxes, if any) exclusive of income taxes incurred in
connection with this Agreement and the transactions contemplated hereby will be
borne fifty (50%) percent by Sellers and fifty (50%) percent by Buyer. Buyer and
Sellers shall cooperate to file all necessary tax returns and other
documentation with respect to all such transfer taxes and, if required by
applicable law, Buyer and Sellers shall join in the execution of any such tax
return or other documentation.
8.10. Public Announcements. The Company, the Sellers and Buyer
shall consult with each other before issuing any press release or otherwise
making any public statement or filings with governmental entities with respect
to this Agreement or the transactions contemplated hereby, and shall not issue
any such press release or make any such public statement or filing without prior
approval thereof by the other parties, which approval shall not be unreasonably
withheld or delayed. The parties shall not issue any press release or public
statement (other than pursuant to the HSR Act) prior to the Closing. In no event
shall Buyer disclose any of the terms or conditions of this Agreement
(including, without limitation, the identity of any of the Sellers or the
allocation of the Purchase Price among them, or any other matter relating to
their affairs) to anyone other than its lenders, advisors or representatives
without the prior written approval of the Company or the Sellers. Nothing in
this Section 8.10 shall prevent such disclosure by Buyer, and the Company or the
Sellers with respect to this Agreement and the transactions contemplated hereby
as Buyer, the Company or the Sellers may be required to make by applicable law;
provided, however, that the party required to make such
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disclosure shall give prompt notice to the other parties hereto of the nature of
the requirement, the identity of the person or persons to whom such disclosure
is required to be made and the information so disclosed.
8.11. Records. With respect to the financial books and records
and minute books of the Company relating to matters on or prior to the Closing
Date: (a) for a period of ten years after the Closing Date, Buyer shall not
cause or permit their destruction or disposal except for a transfer that may be
required in the event of a sale of stock of the Company to a party that will
assume Buyer's obligations under this Agreement, without first offering to
surrender them to the Sellers, and (b) where there is legitimate purpose,
including, without limitation, an audit of any of the Sellers by the IRS or any
other taxing authority, Buyer shall allow the Sellers and their respective
representatives or agents, during regular business hours, access to such books
and records and the ability to inspect and copy same or (if required) obtain the
originals thereof.
8.12. No Section 338 Election; Certain Transactions
Prohibited. Neither Buyer nor any Affiliate thereof shall make an election under
Section 338 of the Code or any similar provision of state or local law, in
respect of the purchase of the Shares or the other transactions contemplated by
this Agreement. In addition, neither Buyer nor any Affiliate thereof shall cause
the Company to engage in any transaction (including, without limitation, the
merger of the Company with a direct or indirect subsidiary of Buyer) that could
cause the purchase of the Shares or the other transactions contemplated by this
Agreement to be treated as a purchase or sale of assets of the Company.
8.13. WARN Act Notice. Buyer shall be solely responsible for
providing any notice required under the Worker Adjustment and Retraining
Notification Act and shall indemnify and hold Sellers harmless from any
liability arising from any failure of the Buyer to comply fully with the
requirements of such Act.
8.14. Other Transactions. The Company shall deal exclusively
and in good faith with Buyer with regard to the transactions contemplated by
this Agreement and will not, and will direct its officers, directors, financial
advisors, accountants, agents, and counsel not to, (i) solicit submission of
proposals or offers from any person other than Buyer relating to any acquisition
of all or any part of the Shares or the Options or any acquisition of
substantially all of the assets of the Company (an "Acquisition Proposal"), or
(ii) participate in any discussions or negotiations regarding, or furnish any
non-public information to any other person contemplating an Acquisition Proposal
regarding the Company or its business other than Buyer and its representatives
or otherwise cooperate in any way or assist, facilitate, or encourage any
Acquisition Proposal by any person other than Buyer.
8.15. Supplemental Disclosure. The Company shall have the
continuing obligation up to and including the Closing Date to supplement
promptly or amend the Schedules with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or listed in the Schedule; provided, however, that
for the purpose of the rights and obligations of the
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parties hereunder, any such supplemental disclosure shall not be deemed to have
been disclosed as of the date of this Agreement unless so agreed to in writing
by Buyer. A breach of this covenant shall not in and of itself constitute a
breach which would entitle the Buyer to terminate this Agreement pursuant to
Section 11.1(a)(iii) hereof.
8.16. Contracts and Capital Expenditures. Except for the
capital expenditures related to the gantry crane reflected on SCHEDULE 5.12B,
the Company shall cause its management to discuss with Buyer any significant
Contract to be executed, or any proposed significant capital expenditure to be
made prior to the Closing Date prior to entering into any contract (including
any Contract relating to any commitment described in SCHEDULE 5.12B other than
the commitments with respect to the gantry crane) or commitment for such capital
expenditure, other than emergency capital expenditures. No significant capital
expenditure (other than emergency capital expenditures and expenditures related
to the gantry crane) shall be made by the Company prior to the Closing Date
without the prior written consent of Buyer, which consent shall not be
unreasonably withheld or delayed. The Company will promptly notify Buyer of the
nature and extent of emergency capital expenditures or gantry crane capital
expenditures made by the Company without the prior written consent of Buyer.
8.17. Discharge of Liens and Encumbrances. All Liens that are
not Permitted Encumbrances, and all Liens that evidence Indebtedness which is to
be paid off at Closing, or the existence or persistence of which the Buyer
expressly waived in writing, shall be satisfied, terminated, and discharged by
the Company on or prior to the Closing Date and evidence reasonably satisfactory
to Buyer and its counsel of such satisfaction, termination, and discharge shall
be delivered to Buyer at or prior to the Closing.
8.18. Environmental Fines. The Company shall upon demand,
promptly (but not before due) pay all fines, penalties, and assessments due on
or before the Closing ("Environmental Fines") that the Company is not disputing
in good faith and by appropriate proceedings, and that are attributable to (a)
the Company's operation of Equipment which was not in compliance with applicable
Environmental Laws, (b) the Company's failure to possess all required
Environmental Permits, or (c) violation of applicable Environmental Laws; such
Environmental Fines shall be paid directly to any agency enforcing compliance
with such Environmental Laws and Environmental Permits.
8.19. Payment of Bonus. The Buyer shall pay the Bonus within
thirty (30) days of the Closing Date or such other date as mutually agreed upon
by the Buyer and the employees receiving any portion of the Bonus.
8.20. Financing Cooperation. The Company and management of the
Company shall cooperate (and the Sellers shall cause the Company and management
of the Company to cooperate) in all reasonable respects with the Buyer and the
Buyer's agents to facilitate the consummation of the financing conducted by
Buyer (the expense of such cooperation to be borne by the Buyer), including
without limitation, the preparation of any offering memorandum, any audited
financial statements, and any marketing efforts necessary in connection with the
financing.
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8.21. Asset Appraisal. Buyer shall deliver the asset appraisal
to the parties referenced in the commitment letter dated the date hereof between
Buyer and NationsBank, N.A. and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC on or
before March 13, 1998.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligation of Buyer under this Agreement to consummate the
purchase of the Shares and Options at the Closing shall be subject to the
satisfaction, at or prior to the Closing, of all of the following conditions,
any one or more of which (other than performance and compliance by all of the
Sellers as required by Section 9.2 which waiver requires the approval of the
other Sellers to be effective) may be waived in writing, in whole or in part, by
Buyer:
9.1. Representations and Warranties Accurate. All
representations and warranties of the Company and the Sellers contained in
Articles 5 and 6 shall be true and correct in all material respects (except that
representations and warranties qualified by materiality or Material Adverse
Effect shall be true and correct in all respects) on and as of the Closing Date
with the same force and effect as though such representations and warranties had
been made on and as of the Closing Date. Buyer shall have received certificates
dated as of the Closing Date executed by an authorized officer of the Company
(in the case of Article 5) and each of the Sellers (in the case of Article 6) to
such respective effect.
9.2. Performance. The Company and each of the Sellers,
respectively, shall have performed and complied with, in all material respects,
all agreements, covenants and conditions required by this Agreement to be
performed and complied with by them prior to or on the Closing Date, and Buyer
shall have received certificates, dated as of the Closing Date, executed by an
authorized officer of the Company and each of the Sellers, to such respective
effect.
9.3. Opinion of Counsel. Buyer shall have received the Company
Opinion dated the Closing Date.
9.4. HSR Act; Authorizations; Consents; Legal Prohibition.
(a) With respect to the transactions contemplated hereby,
all applicable waiting periods under the HSR Act shall have expired or been
terminated.
(b) Buyer shall have obtained all governmental
authorizations, approvals, orders, consents and waivers, the lack of which prior
to the Closing, under any applicable law, rule or regulation, would render
legally impermissible the purchase hereunder of the Shares by Buyer.
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(c) The Sellers and the Company shall have obtained or
made all governmental authorizations, approvals, orders, consents, waivers and
filings, the lack of which prior to the Closing, under any applicable law, rule
or regulation, would render legally impermissible the sale hereunder of the
Shares by the Sellers.
(d) Buyer shall have received a true and correct copy of
each consent and waiver identified on any Schedule hereto as being requested by
Buyer that is (i) required for the transfer of the Shares or (ii) otherwise
required for the execution, delivery and performance of this Agreement and the
other Acquisition Documents by the Company and the Sellers.
(e) On the Closing Date, there shall exist no, injunction
or other order issued by a court of competent jurisdiction, regulation or
legislation, which would prohibit the purchase and sale of any of the Shares
contemplated by this Agreement.
9.5. Incumbency. Buyer shall have received a certificate of
incumbency of the Company executed by an executive officer and Secretary or
Assistant Secretary of the Company listing the officers of the Company
authorized to execute this Agreement and the other Acquisition Documents to
which the Company is a party and all instruments on behalf of the Company and
certifying the authority of each such officer to execute the agreements,
documents, and instruments on behalf of the Company in connection with the
consummation of the transactions contemplated herein.
9.6. Certified Resolutions. Buyer shall have received a
certificate of the Secretary or Assistant Secretary of the Company containing a
true and correct copy of the resolutions duly adopted by the board of directors
of the Company, approving and authorizing this Agreement and each other
Acquisition Document to which the Company is a party and the transactions
contemplated hereby and thereby. The Secretary or Assistant Secretary of the
Company shall also certify that such resolutions have not been rescinded,
revoked, modified, or otherwise affected and remain in full force and effect.
9.7. Basic Corporate Documents. The Company shall have
delivered to Buyer on the Closing Date a certified copy from the Secretary of
State of Delaware of the Company's Certificate of Incorporation dated within
twenty (20) days prior to the Closing Date and certificates from the Secretaries
of State in each jurisdiction listed on SCHEDULE 5.1A, indicating that, as of a
date within twenty (20) days prior to the Closing Date, the Company was in good
standing and had paid all taxes required to have been paid as of such date.
9.8. No Adverse Change. Since December 31, 1997, there shall
not have been any change in the Company as would have a Material Adverse Effect,
and Buyer shall have received a certificate dated as of the Closing Date,
executed by an authorized officer of the Company to such effect.
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9.9. Acquisition Documents. Buyer shall have received the
Acquisition Documents to which the Company or the Sellers are a party, executed
by the Company and/or the Sellers as applicable.
9.10. Releases. Buyer shall have received executed
Releases from each of the Sellers and each of the current directors of the
Company.
9.11. Termination of Agreements. Buyer shall have received
executed written terminations of all guarantees of the Company and all
agreements between the Company and any Seller, any Affiliate of a Seller, or any
employee of the Company, including, without limitation the Contracts listed on
SCHEDULE 5.28 (except for the Company's agreement with ▇▇▇▇ ▇▇▇▇▇▇ dated January
27, 1998 and the Company's agreement with ▇▇▇▇ ▇▇▇▇▇ dated January 22, 1998).
9.12. Substitute Letter of Credit. Buyer shall have received
from the Trustee and the Bondholder a waiver of the timing requirements for
substitution of a letter of credit pursuant to Section 5.4 of the Loan Agreement
by and among State Industrial Development Authority, as lender, and SIMCALA,
Inc. and The Industrial Development Board of the City of ▇▇▇▇▇▇▇▇▇▇, as
borrowers, dated as of January 1, 1995, relating to $6,000,000 State Industrial
Development Authority Taxable Industrial Revenue Bonds (SIMCALA, Inc. Project)
Series 1995 (the "Loan Agreement"); provided, however, Buyer shall be
responsible for satisfying or causing to be satisfied the requirements of
Section 5.4(c) and (d) of the Loan Agreement.
9.13. FIRPTA Certificates. Each Seller shall deliver to Buyer
a duly executed certificate substantially in the form required by Section
1.1445-2(b)(2)(iii) of the Treasury Regulations promulgated under the Code.
9.14. Comfort Letter. The Buyer shall have received from ▇▇▇▇▇
▇▇▇▇▇▇ (at Buyer's expense and which amount shall not be included in
Professional Fees) a letter dated such date, together with signed or reproduced
copies of such letter, containing statements and information of the type
ordinarily included in an accountants' "comfort letter" to the initial purchaser
consistent with the provisions of SAS 72 (provided that the initial purchaser
provides a letter indicating that it is a party entitled to receive a comfort
letter under SAS 72) with respect to the financial statements audited by such
firm included in the Financial Statements and certain financial information with
respect to the periods covered thereby contained in a final offering memorandum
related to the Rule ▇▇▇▇/▇▇▇▇ ▇▇▇▇▇ financing obtained by Buyer.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY AND THE SELLERS
The obligations (i) of the Company to consummate the
transactions contemplated by this Agreement and (ii) of each of the Sellers
under this Agreement to consummate the sale of the Shares and Options owned by
such Seller at the Closing shall
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be subject to the satisfaction, at or prior to the Closing, of all of the
following conditions, any one or more of which (other than performance and
compliance by each of the other Sellers as required by Section 10.2) may be
waived in writing, in whole or in part, by the Company (on its own behalf or on
behalf of the Sellers) or the Sellers:
10.1. Representations and Warranties Accurate. All
representations and warranties of Buyer contained in Article 7 shall be true and
correct in all material respects (except that representations and warranties
qualified by materiality shall be true and correct in all respects), on and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date. Each
of the Company and the Sellers shall have received a certificate dated as of the
Closing Date executed by an authorized officer of Buyer to such effect.
10.2. Performance by Others. Buyer shall have performed and
complied with, in all material respects, all agreements, covenants and
conditions required by this Agreement to be performed and complied with by it
prior to or on the Closing Date, and each of the Company and the Sellers shall
have received a certificate, dated as of the Closing Date, executed by an
authorized officer of Buyer to such effect.
10.3. Opinion of Counsel for Buyer. Each of the Company and
the Sellers shall have received the Buyer Opinion, executed by ▇▇▇▇▇▇ & Bird,
counsel for Buyer, and dated the Closing Date.
10.4. HSR Act; Authorization: Consents; Legal Prohibition.
(a) With respect to the transactions contemplated hereby,
all applicable waiting periods under the HSR Act shall have expired or been
terminated.
(b) Buyer shall have obtained or made all governmental
authorizations, approvals, orders, consents, waivers and filings, the lack of
which prior to the Closing, under any applicable law, rule or regulation, would
render legally impermissible the purchase hereunder of the Shares by Buyer.
(c) The Company and the Sellers shall have received a
true and correct copy of each consent and waiver identified on any Schedule
hereto as being requested by the Company or the Sellers that is (i) required for
the transfer of the Shares or (ii) otherwise required for the execution,
delivery and performance of this Agreement and the other Acquisition Documents
by Buyer.
(d) On the Closing Date, there shall exist no injunction
or other order issued by a court of competent jurisdiction, regulation or
legislation, which would prohibit the purchase and sale of any of the Shares
contemplated by this Agreement.
(e) Each of the Sellers and the current directors of the
Company shall have received executed Releases from Buyer and the Company.
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10.5. Acquisition Documents. Sellers shall have received the
Acquisition Documents to which the Buyer is a party, executed by the Buyer.
ARTICLE 11
TERMINATION OF AGREEMENT
11.1. Termination.
(a) This Agreement may be terminated on or prior to the
Closing as follows:
(i) by consent of Buyer and the Company (acting on
its behalf and for the Sellers);
(ii) at the election of Buyer or the Company
(acting on its behalf and for the Sellers), if the Closing Date shall not have
occurred on or before March 31, 1998, because (A) the conditions thereto have
not been satisfied on or before that date unless the failure to consummate the
transactions contemplated hereby is the result of a breach of this Agreement by
the party seeking to terminate this Agreement or (B) the other party wrongfully
refuses to close the transactions contemplated hereby;
(iii) by Buyer if any condition in Article 9 becomes
impossible of performance or has not been satisfied in full or previously waived
by Buyer in writing at or prior to the Closing Date; and
(iv) by the Company or all of the Sellers if any
condition in Article 10 becomes impossible of performance or has not been
satisfied in full or previously waived by the Company or all of the Sellers, as
applicable in writing at or prior to the Closing Date.
(b) The termination of this Agreement shall be
effectuated by the delivery by the party terminating this Agreement to each
other party of a written notice of such termination. If this Agreement so
terminates, it shall become null and void and have no further force or effect,
except as provided in Section 11.2.
11.2. Survival After Termination. If this Agreement is
terminated in accordance with Section 11.1 hereof and the transactions
contemplated hereby are not consummated, this Agreement shall become void and of
no further force and effect, except that the provisions set forth in Section
3.1, Section 8.2(b), (c), (d), 8.20 and this Section 11.2 shall survive the
termination of this Agreement. None of the parties hereto shall have any
liability in respect of a termination of this Agreement, except with respect to
Section 8.2(b) and (c) of this Agreement and except to the extent that failure
to satisfy the conditions of Articles 9 or 10 result from a breach of or default
under any representation, warranty or covenant made by such party under this
Agreement or a breach of or default under the provisions of any agreement made
or to be made pursuant to this Agreement. In the event of a termination of this
Agreement based on a failure to satisfy one or more of
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the conditions of Article 10 (other than with respect to a failure to obtain
expiration or termination of the waiting periods under the HSR Act after filings
have been made) resulting from Buyer's breach of or default under any
representation, warranty or covenant made under this Agreement or a breach of or
default under the provisions of any agreement made or to be made pursuant to
this Agreement, the Company may exercise its rights under the Pre-Closing Escrow
Agreement. Such amount is being fixed as liquidated damages in any such event by
reason of the fact that the actual damages to be suffered by the Company and the
Sellers are by their nature uncertain and unascertainable with exactness. In the
event of a termination of this Agreement based on a failure to satisfy one or
more of the conditions of Article 9 (other than with respect to a failure to
obtain expiration or termination of the waiting periods under the HSR Act after
filings have been made) resulting from the Company's or a Seller's breach of or
default under any representation, warranty or covenant made by such party under
this Agreement or a breach of or default under the provisions of any agreement
made or to be made pursuant to this Agreement, liability of the Company and the
Sellers for such termination shall not exceed the lesser of (i) $500,000, or
(ii) Buyer's actual damages, costs and expenses related to the preparation of
the Acquisition Documents (including those related to the negotiations, due
diligence, and expenses related to obtaining financing). Except as set forth in
this Section 11.2, no party in relation to the termination of this Agreement
shall seek any money or other judgment against the other party, or against any
officer, director, shareholder or partner of any of them or against their
assets, and the sole recourse of the party seeking damages shall be to recover
damages in the foregoing amount.
ARTICLE 12
INDEMNIFICATION
12.1. Definitions.
For the purposes of this Article:
(a) "Indemnification Claim" shall mean a claim for
indemnification hereunder.
(b) "Indemnitee" shall mean the party or parties
seeking indemnification hereunder.
(c) "Indemnitor" shall mean the party or parties
against whom indemnification hereunder is sought.
(d) "Losses" shall mean any and all demands, claims,
actions or causes of action, assessments, losses, fines, judgments, costs,
damages (including consequential damages), liabilities, costs, removal and
remediation requirements and expenses, including without limitation, interest,
penalties, cost of investigation and defense, and reasonable attorneys' and
other professional fees and expenses.
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(e) "Buyer Indemnitees" shall mean Buyer, the Company
and Affiliates.
(f) "Third Party Claim" shall mean any claim, suit or
proceeding (including, without limitation, a binding arbitration or an audit by
any taxing authority) that is instituted against the Indemnitee which, if
prosecuted successfully, would result in a Loss for which the Indemnitee is
entitled to indemnification hereunder.
12.2 Agreement of the Indemnitors to Indemnify.
(a) Subject to the terms and conditions of this
Article 12, each Seller severally (in proportion of the percentage of the
Purchase Price paid to such Seller) but not jointly agrees to indemnify, defend
and hold harmless the Buyer Indemnitees from, against, for and in respect of any
and all Losses asserted against, paid, suffered or incurred by the Buyer
Indemnitees, or any of them, and resulting from, based upon, or arising out of:
(i) the breach of any representation or warranty
of the Company or a Seller contained in or made pursuant to this Agreement or
any other Acquisition Document or in any certificate, Schedule or Exhibit
furnished by the Company or such Seller in connection herewith or therewith; and
(ii) a breach of or failure to perform any
covenant or agreement of the Company or such Seller made pursuant to this
Agreement or any other Acquisition Document or any certificate, Schedule or
Exhibit furnished by the Company or such Seller in connection herewith or
therewith
(b) Subject to the terms and conditions of this
Article 12, Buyer agrees to indemnify, defend and hold harmless the Sellers
from, against, for and in respect of any and all Losses asserted against, paid,
suffered or incurred by any of the Sellers, and resulting from, based upon, or
arising out of:
(i) the breach of any representation or warranty
of Buyer contained in or made pursuant to this Agreement or any other
Acquisition Document or in any certificate, Schedule or Exhibit furnished by
Buyer in connection herewith or therewith; and
(ii) a breach of or failure to perform any
covenant or agreement of Buyer made pursuant to this Agreement or any other
Acquisition Document or in any certificate, Schedule or Exhibit furnished by
Buyer in connection herewith or therewith.
12.3. Procedures for Indemnification.
(a) An Indemnification Claim shall be made by the
Indemnitee, promptly upon becoming aware of such Indemnification Claim, by
delivery of a written
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notice to the Indemnitor requesting indemnification and specifying the basis on
which indemnification is sought and the amount of asserted Losses and, in the
case of a Third Party Claim, containing (by attachment or otherwise) such other
information as the Indemnitee shall have concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party
Claim, the procedures set forth in Section 12.4 hereof shall be observed by the
Indemnitee and the Indemnitor.
(c) If the Indemnification Claim involves a matter other
than a Third Party Claim, the Indemnitor shall have thirty (30) Business Days to
object to such Indemnification Claim by delivery of a written notice of such
objection to the Indemnitee specifying in reasonable detail the basis for such
objection. Failure to timely so object shall constitute a final and binding
acceptance of the Indemnification Claim by the Indemnitor, and the
Indemnification Claim shall be paid in accordance with Section 12.3(d) hereof.
If an objection is timely interposed by the Indemnitor, then the Indemnitee and
the Indemnitor shall negotiate in good faith for a period of sixty (60) business
days from the date (such period is hereinafter referred to as the "Negotiation
Period") the Indemnitee receives such objection prior to commencing any formal
legal action, suit or proceeding with respect to such Indemnification Claim.
(d) Upon determination of the amount of an
Indemnification Claim that is binding on both the Indemnitor and the Indemnitee,
the amount of such Indemnification Claim shall be paid within ten (10) Business
Days of the date such amount is determined. If the Indemnitor responsible for
payment of such Indemnification Claim is Buyer, such payment shall be made by
wire transfer to the Indemnitee to an account designated by the Indemnitee. If
the Indemnitor responsible for payment of such Indemnification Claim is a
Seller, and the payment relates to a Loss arising from a breach of any
representation, warranty or covenant of the Company, such payment shall be made
first by wire transfer by the Escrow Agent to an account designated by Buyer in
accordance with the terms of the Escrow Agreement until Seller's portion of the
Escrowed Funds is exhausted and such Loss shall be shared on a pro rata basis
among all Sellers. Such payment shall otherwise be made at the sole option of
Buyer either by wire transfer by the Escrow Agent to an account designated by
Buyer in accordance with the terms of the Escrow Agreement or by wire transfer
by the Seller to an account designated by Buyer.
12.4. Third Party Claims. The obligations and liabilities of
the Indemnitee and Indemnitor hereunder with respect to a Third Party Claim
shall be subject to the following terms and conditions:
(a) The Indemnitee seeking indemnification for such
Third Party Claim shall give the Indemnitor written notice of the Third Party
Claim promptly after receipt by the Indemnitee of notice thereof, and the
Indemnitor may undertake the defense, compromise and settlement thereof by
representatives of its own choosing reasonably acceptable to the Indemnitee. The
failure of the Indemnitee to notify the
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Indemnitor of such claim shall not relieve the Indemnitor of any liability that
the Indemnitor may have with respect to such claim except to the extent the
Indemnitor demonstrates that the defense of such claim is prejudiced by such
failure. The assumption of the defense, compromise and settlement of any such
Third Party Claim by the Indemnitor shall not be an acknowledgment of the
obligation of the Indemnitor to indemnify such Indemnitee with respect to such
claim hereunder. If the Indemnitee desires to participate in, but not control,
any such defense, compromise and settlement, it may do so at its sole cost and
expense. If, however, the Indemnitor fails or refuses to undertake the defense
of such Third Party Claim within fifteen (15) days after written notice of such
claim has been given to the Indemnitor by the Indemnitee, the Indemnitee shall
have the right to undertake the defense, compromise and settlement of such claim
with counsel of its own choosing. In the circumstances described in the
preceding sentence, the Indemnitee shall, promptly upon its assumption of the
defense of such claim, make an Indemnification Claim as specified in Section
12.3 which shall be deemed an Indemnification Claim that is not a Third Party
Claim for the purposes of the procedures set forth herein.
(b) If, in the reasonable opinion of the Indemnitee, any
Third Party Claim or the litigation or resolution thereof involves an issue or
matter which could reasonably be expected to have a material adverse effect on
the business, operations, assets, properties or prospects of the Indemnitee
(including, without limitation, the administration of the Tax Returns and
responsibilities under the Tax laws of the Indemnitee), the Indemnitee shall
have the right to control the defense, compromise and settlement of such Third
Party Claim undertaken by the Indemnitor, and the costs and expenses of the
Indemnitee in connection therewith shall not be included as part of the
indemnification obligations of the Indemnitor hereunder. If the Indemnitee
elects to exercise such rights, the Indemnitor shall have the right to
participate in, but not control, the defense, compromise and settlement of such
Third Party Claim at its sole cost and expense.
(c) No settlement of a Third Party Claim involving the
asserted liability of the Indemnitor under this Article 12 shall be made without
the prior written consent of the Indemnitor, which consent shall not be
unreasonably withheld or delayed. Consent shall be presumed in the case of
settlements of $100,000 or less where the Indemnitor has not responded within
thirty (30) business days of notice of a proposed settlement. If the Indemnitor
assumes the defense of such a Third Party Claim, (i) no compromise or settlement
thereof may be effected by the Indemnitor without the Indemnitee's consent
unless (A) there is no finding or admission of any violation of law or any
violation of the rights of any person and no effect on any other claim that may
be made against the Indemnitee, (B) the sole relief provided is monetary damages
that are paid in full by the Indemnitor, and (C) the compromise or settlement
includes, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnitee of a release, in form and substance satisfactory to
the Indemnitee, from all liability in respect of such Third Party Claim, and
(ii) the Indemnitee shall have no liability with respect to any compromise or
settlement thereof effected without its consent.
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(d) In connection with the defense, compromise or
settlement of any Third Party Claim, the Indemnitee and the Indemnitor shall
execute such powers of attorney as may reasonably be necessary or appropriate to
permit participation of counsel selected by such Indemnitee or Indemnitor and,
as may reasonably be related to any such Third Party Claim, shall provide access
to the counsel, accountants and other representatives of such Indemnitee or
Indemnitor during normal business hours to all properties, personnel, books, tax
records, contracts, commitments and all other business records of such
Indemnitee or Indemnitor and will furnish to such Indemnitee or Indemnitor
copies of all such documents as may reasonably be requested (certified, if
requested).
12.5. Other Rights and Remedies. Except for the rights of
Buyer described in Section 11.2 hereof, the rights of Buyer Indemnitees under
this Article 12 are the sole and exclusive rights and remedies of the Buyer
Indemnitees as to the Sellers for the inaccuracy or breach of any representation
or warranty of the Company or any Seller contained herein or in any certificate,
Schedule or Exhibit furnished by the Company or any Seller in connection
herewith, or for the failure of the Company or any Seller to perform any
agreement, covenant or undertaking required by the terms hereof to be performed
by the Company or any Seller. Except for the rights of the Company and/or the
Sellers described in Section 11.2 hereof, the rights and remedies of the Sellers
under this Article 12 are the sole and exclusive rights and remedies of such
parties for the inaccuracy or breach of any representation and warranty of Buyer
contained herein, or in any certificate, Schedule or Exhibit furnished by Buyer
in connection herewith, or for the failure of Buyer to perform any agreement,
covenant or undertaking required by the terms hereof to be performed by Buyer.
12.6 Duration. The indemnification rights of the parties
hereto for Losses resulting from a breach of representations and warranties or
for breaches of covenants contained in this Agreement or any other Acquisition
Document or in any certificate, Schedule or Exhibit furnished in connection
herewith or therewith (other than for tax matters) are subject to the condition
that the Indemnitor shall have received written notice of the Losses for which
indemnity is sought on or before the date which is eighteen (18) months from the
Closing Date. The indemnification rights of the parties hereto for Losses
resulting from a breach of representations and warranties or for breaches of
covenants that are related to tax, is subject to the condition that the
Indemnitor shall have received written notice of the Losses for which indemnity
is sought on or before September 15, 2002. The indemnification rights of the
parties hereto for Losses resulting from a breach of any representation and
warranty with respect to title to the Shares and Options shall be effective for
all purposes hereunder without limitation as to the time within which such
notice may be given.
12.7. Limitations.
(a) The Indemnitor shall be obligated to indemnify the
Indemnitee only when the aggregate of all Losses suffered or incurred by the
Indemnitee as to which a right of indemnification is provided under this Article
12 and Section 8.7
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exceeds Five Hundred Thousand Dollars ($500,000) (the "Threshold Amount"). After
the aggregate of all Losses suffered or incurred by the Indemnitee exceeds the
Threshold Amount, the Indemnitor shall be obligated to indemnify the Indemnitee
for all such Losses reduced by Two Hundred Fifty Thousand Dollars ($250,000).
Except with respect to a breach of any representation and warranty with respect
to title to any of the Company's assets and title to the Shares and Options, for
which the aggregate liability of the Sellers shall not exceed Seventy Six
Million Dollars ($76,000,000), in no event shall the aggregate liability of the
Sellers, or the aggregate liability of Buyer, under this Article 12 and Sections
8.7(a) or 8.7(b) (other than the last sentence of Section 8.7(b) thereof) exceed
Eight Million Two Hundred Thousand ($8,200,000) Dollars (the "Maximum Amount").
(b) The Indemnitor shall not be liable for damages in
excess of the actual damages suffered by the Indemnitee as a result of the act,
circumstance, or condition for which indemnification is sought net of any
insurance proceeds received by the Indemnitee or any tax benefits realized by
the Indemnitee as a result of the Losses for which indemnification is claimed.
12.8. Subrogation. Upon payment in full of any Indemnification
Claim, whether such payment is effected by set-off or otherwise, or the payment
of any judgment or settlement with respect to a Third Party Claim, the rights of
the Indemnitors shall be subrogated to the extent of such payment to the rights
of the Indemnitee against any person or entity with respect to the subject
matter of such Indemnification Claim or Third Party Claim.
12.9. Cooperation. The Company, the Sellers and Buyer shall
cooperate with each other in all reasonable respects in connection with the
defense of any claim, including making available records relating to such claim
and furnishing, without expense, management employees of the party as may be
reasonably necessary for the preparation of the defense of any such claim or for
testimony as a witness in any proceeding relating to such claim; provided,
however, that the foregoing right to cooperation shall not be exercisable by one
party in such a manner as to interfere unreasonably with the normal operations
and business of the other party.
ARTICLE 13
MISCELLANEOUS
13.1. Expenses. Each party to this Agreement shall pay its own
costs and expenses (including all legal, accounting, broker, finder and
investment banker fees) relating to this Agreement, the negotiations leading up
to this Agreement and the transactions contemplated by this Agreement; provided
that the Company shall pay the expenses of the Sellers.
13.2. Investigation. Buyer acknowledges that Buyer and its
representatives have received or been given access to all information, documents
and other materials concerning the Company which Buyer and its representatives
deem appropriate
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in the circumstances and have been afforded the opportunity to ask questions of
and receive answers from management employees of the Company regarding the
Company and its business in connection with Buyer's determination to enter into
this Agreement and to consummate the transactions contemplated hereby. Any
inspection, preparation, or compilation of information or Schedules, or audit of
the inventories, properties, financial condition, or other matters relating to
the Company conducted by or on behalf of Buyer pursuant to this Agreement shall
in no way limit, affect, or impair the ability of Buyer to rely on the
representations, warranties, covenants, and agreements of the Company and the
Sellers set forth herein, except that Buyer may not assert any claim hereunder
for a breach of or a default under any of the Company's or any of the Sellers'
representations, warranties or covenants if, prior to the Closing, Buyer knows
of such breach or default and such breach or default would have resulted in the
failure of Sellers to deliver the certificate described in Section 9.1 hereof,
and Buyer does not give to the Company or the Sellers notice thereof pursuant to
Section 8.4. Any disclosure made on one Schedule shall not be deemed made on any
other Schedule, unless appropriate cross-referencing is made. The covenants and
representations and warranties of the Company, the Sellers and Buyer shall
survive the Closing and the execution and delivery of all instruments for the
periods set forth in Section 12.6.
13.3. Governing Law.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflict of laws thereof.
(b) To the extent permitted by law, each of the Buyer,
the Sellers, and the Company hereby irrevocably submits to the jurisdiction of
any Delaware State court or United States federal court over any suit, action or
other proceeding brought by any party arising out of or relating to this
Agreement and each of the Company and the Buyer hereby irrevocably agrees that
all claims with respect to such suit, action or other proceeding shall be heard
and determined in such courts.
13.4. Binding Effect; Persons Benefiting; No Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and the respective successors and assigns of the parties and such persons.
Nothing in this Agreement is intended or shall be construed to confer upon any
entity or person other than the parties hereto and their respective successors
and permitted assigns any right, remedy or claim under or by reason of this
Agreement or any part hereof. Except as provided in this Section 13.4, prior to
the Closing, without the prior written consent of the parties hereto, this
Agreement may not be assigned by any of the parties hereto; provided, however,
that at the Closing, Buyer may assign all of its rights to be indemnified as
provided in Article 12 to any lender or lenders providing financing to Buyer
subject to all of the provisions hereof and all rights, remedies and defenses
that the Sellers or the Company could assert against Buyer. From and after any
such assignment, the word "Buyer" shall mean such assignee.
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13.5. Amendments. This Agreement may not be amended, altered
or modified except by a written instrument executed by all of the Sellers, Buyer
and the Company.
13.6. Interpretation. When a reference is made in this
Agreement to a Section or Schedule, such reference shall be to a Section of, or
a Schedule to, this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity.
13.7. Counterparts. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same instrument, and shall become effective when
one counterpart has been signed by each party and delivered to the other parties
hereto.
13.8. Entire Agreement. This Agreement, including the
Schedules, Exhibits, certificates and lists referred to herein, and any
documents executed by the parties simultaneously herewith or pursuant thereto,
constitute the entire understanding and agreement of the parties hereto with
respect to the subject matter hereof and supersede all other prior agreements
and understandings, written or oral, between the parties with respect to such
subject matter.
13.9. Severability. If any provisions of this Agreement, or
the application thereof to any person or circumstance, is invalid or
unenforceable in any jurisdiction, (i) a substitute and equitable provision
shall be substituted therefor in order to carry out, so far as may be valid and
enforceable in such jurisdiction, the intent and purpose of the invalid or
unenforceable provision; and (ii) the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability of such provision affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
13.10. Waiver. Waiver of any term or condition of this
Agreement by any party shall only be effective if in writing and shall not be
construed as a waiver of any subsequent breach or failure of the same term or
condition, or a waiver of any other term or condition of this Agreement.
13.11. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered
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(a) by hand, (b) by telex or telecopier (with receipt confirmed), provided a
copy is also sent by registered mail, return receipt requested, (c) by courier,
or (d) by overnight service, addressed as follows (or to such other address as a
party may designate by notice to the other):
(a) If to the Buyer:
SAC Acquisition Corp.
c/o CGW Southeast Partners III, L.P.
Twelve ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not constitute notice) to:
▇▇▇▇▇▇ & Bird
One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company:
SIMCALA, Inc.
▇.▇. ▇▇▇ ▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
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and copies (which shall not constitute notice) to:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
P. O. Box 231555 (36123-1555)
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to Charter Oak Partners:
▇.▇. ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(d) If to Capital One Investors:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(e) If to ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇:
c/o SIMCALA, Inc.
▇.▇. ▇▇ ▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(f) If to ▇▇▇▇▇▇ ▇. ▇▇▇▇:
c/o SIMCALA, Inc.
▇.▇. ▇▇▇ ▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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(g) If to R. ▇▇▇▇▇ ▇▇▇▇▇:
c/o SIMCALA, Inc.
▇.▇. ▇▇▇ ▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(h) If to ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.:
c/o SIMCALA, Inc.
▇.▇. ▇▇▇ ▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(The remainder of this page was intentionally left blank.)
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
SAC ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name:
Title:
SIMCALA, INC.
By: /s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name:
Title:
SELLERS:
Charter Oak Partners
--------------------
▇▇▇▇▇▇▇ ▇. Fine
Managing Partner of Fine Partners L.P.,
the Managing Partner of Charter Oak Partners
/s/ ▇▇▇▇▇▇▇ ▇. Fine
--------------------------------------------
Capital One Investors
---------------------
By: MCK Corporation, General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President of
MCK Corporation
By: Briseis Capital Corporation, General
Partner
By: /s/ ▇▇▇▇▇ ▇. Ireland III
-----------------------------------
▇▇▇▇▇ ▇. Ireland III, President of
Briseis Capital Corporation
69
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
R. ▇▇▇▇▇ ▇▇▇▇▇
--------------
/s/ R. ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
-------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
-----------------------------------------------
70
AMENDMENT
TO THE
STOCK PURCHASE AGREEMENT
AMENDMENT, dated as of March 4, 1998, to the Stock Purchase
Agreement, dated as of February 10, 1998 (the "Purchase Agreement"), by and
among SIMCALA, Inc., a Delaware corporation (the "Company"), each of the
individuals and entities listed under the heading "Sellers" on the signature
pages hereto (each being a "Seller", and all of them together being the
"Sellers"), and SAC ACQUISITION CORP., a Georgia corporation (the "Buyer").
WHEREAS, all capitalized terms used herein without definition
shall have their respective meanings in the Purchase Agreement;
WHEREAS, in connection with the acquisition of all of the
issued and outstanding capital stock of the Company pursuant to the Purchase
Agreement, the Buyer is proposing to issue certain debt securities (the "Debt
Financing") and merge into the Company (the "Merger");
WHEREAS, in connection with the Debt Financing, Deloitte &
Touche, LLP, the certified independent public accountants for the Buyer, has
audited new financial statements for the fiscal year ended December 31, 1997
(the "D&T Financial Statements") which differ from the Financial Statements,
including changes in the treatment of certain interest expenses, compensation
from employee options and tax reserves; and
WHEREAS, the parties desire to reaffirm certain aspects of the
Purchase Price adjustment and the adjustment procedures as set forth in the
Purchase Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Buyer hereby confirms that the use of the D&T Financial
Statements by the Company does not and will not constitute a breach of any
representation, warranty or covenant in the Purchase Agreement. Delivery by the
management of the Company of the representation letter relating to the D&T
Financial Statements shall not be used as evidence with respect to any claim by
the Buyer of a breach of any representation or warranty under the Purchase
Agreement. The foregoing shall in no other way affect or limit any rights of the
Buyer under the Purchase Agreement, including, without limitation, the right to
cite to any item disclosed by the D&T Financial Statements as a basis for a
claim of a breach of any representation or warranty in the Purchase Agreement.
2. The accounting principles, policies and estimates used by
the Company in preparing the December 31, 1997 Financial Statements audited by
▇▇▇▇▇ ▇▇▇▇▇▇ will be consistently used to determine the Adjustment Amount at the
Closing without regard to the D&T Financial Statements.
71
3. None of the differences between the Financial Statements
and the D&T Financial Statements will be used to revise the Adjustment Amount
pursuant to Section 2.6 of the Purchase Agreement.
4. The Sellers consent to the Merger. The Agreement, as
amended hereby, is in all respects ratified and confirmed, and shall continue to
be in full force and effect.
5. This Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflict of laws thereof.
6. This Amendment may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
[End of Text]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first written above.
SAC ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
Name:
Title:
SIMCALA, INC.
By: /s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name:
Title:
SELLERS:
CHARTER OAK PARTNERS
▇▇▇▇▇▇▇ ▇. Fine
Managing Partner of Fine Partners L.P.
the Managing Partner of Charter Oak Partners
CAPITAL ONE INVESTORS
By: MCK Corporation, General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
By: Briseis Capital Corporation, General Partner
By: /s/ ▇▇▇▇▇ ▇. Ireland III
------------------------------------------
▇▇▇▇▇ ▇. Ireland III, President
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------------
R. ▇▇▇▇▇ ▇▇▇▇▇
/s/ R. ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
--------------------------------------------------
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