Exhibit 2.5
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
MARCLIFF CORPORATION
▇▇▇▇▇▇ CREATIVE FASTENER, INC.
STOCK PURCHASE AGREEMENT
SALE OF STOCK
BY
THE STOCKHOLDERS OF
MARCLIFF CORPORATION
TO
KAYNAR TECHNOLOGIES, INC.
DATED: AS OF OCTOBER 27, 1998
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
STOCK PURCHASE AND SALE AGREEMENT
TABLE OF CONTENTS
ARTICLE 1. REDEMPTION AND PURCHASE AND SALE OF SHARES........................................1
1.1 REDEMPTION...............................................................................1
1.2 PURCHASE AND SALE........................................................................2
ARTICLE 2. PURCHASE PRICE FOR THE PURCHASE SHARES............................................2
2.1 PURCHASE PRICE AND PAYMENT...............................................................2
2.2 DETERMINATION OF CLOSING NET BOOK VALUE; ADJUSTMENT OF THE AGGREGATE
PURCHASE PRICE...............................................................................3
ARTICLE 3. THE CLOSING.......................................................................5
3.1 TIME AND PLACE OF CLOSING................................................................5
3.2 DELIVERY OF THE REDEMPTION SHARES........................................................5
3.3 DELIVERY OF THE PURCHASE SHARES..........................................................5
3.4 SATISFACTION OF SENIOR DEBT..............................................................5
3.5 FURTHER ASSURANCES.......................................................................5
ARTICLE 4. THE SELLERS' REPRESENTATIVE........................................................6
4.1 APPOINTMENT OF THE SELLERS' REPRESENTATIVE................................................6
4.2 ACCEPTANCE OF APPOINTMENT................................................................6
4.3 APPOINTMENT INDEPENDENT, SEVERABLE AND BINDING...........................................7
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE SELLERS......................................7
5.1 ORGANIZATION AND QUALIFICATION OF MARCLIFF AND ITS SUBSIDIARIES..........................7
5.2 SUBSIDIARIES; SECURITIES OWNED...........................................................8
5.3 CAPITAL STOCK............................................................................8
5.4 AUTHORITY................................................................................9
5.5 TITLE TO SHARES.........................................................................10
5.6 MARCLIFF BOARD APPROVAL.................................................................10
5.7 COMPLIANCE WITH CHARTER, OBLIGATIONS AND LAWS...........................................10
5.8 NO CONFLICT.............................................................................10
5.9 FINANCIAL STATEMENTS....................................................................10
5.10 ABSENCE OF CERTAIN CHANGES OR EVENTS...................................................11
5.11 TAX MATTERS............................................................................12
5.12 TITLE TO PROPERTIES; LIENS.............................................................14
5.13 COLLECTIBILITY OF ACCOUNTS RECEIVABLE..................................................16
5.14 INVENTORIES............................................................................16
5.15 INTELLECTUAL PROPERTY RIGHTS...........................................................16
5.16 MATERIAL CONTRACTS.....................................................................16
5.17 LABOR AND EMPLOYEE RELATIONS...........................................................17
5.18 EMPLOYEE BENEFIT PLANS.................................................................18
5.19 ENVIRONMENTAL MATTERS..................................................................20
5.20 PERMITS................................................................................21
5.21 LITIGATION; PRODUCT LIABILITY CLAIMS...................................................21
5.22 FINDER'S FEE...........................................................................22
5.23 TRANSACTIONS WITH INTERESTED PERSONS...................................................22
5.24 NO UNDISCLOSED LIABILITIES OR CONTINGENCIES............................................22
5.25 CONDUCT OF BUSINESS....................................................................22
5.26 INSURANCE..............................................................................24
5.27 CUSTOMERS AND SUPPLIERS................................................................24
i
5.28 DISCLOSURE.............................................................................24
5.29 KNOWLEDGE..............................................................................24
5.30 SOLE REPRESENTATIONS AND WARRANTIES....................................................25
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER......................................25
6.1 ORGANIZATION OF THE BUYER...............................................................25
6.2 AUTHORITY...............................................................................25
6.3 NO CONFLICT.............................................................................25
6.4 INFORMED BUYER..........................................................................25
6.5 LITIGATION..............................................................................26
6.6 FINANCIAL RESOURCES; OTHER MATTERS......................................................26
6.7 FINDER'S FEE............................................................................26
6.8 SOLE REPRESENTATIONS AND WARRANTIES.....................................................26
ARTICLE 7. COVENANTS OF THE SELLERS.........................................................26
7.1 CONDUCT OF BUSINESS.....................................................................26
7.2 DUE DILIGENCE...........................................................................28
7.3 WAIVERS, CONSENTS AND APPROVALS.........................................................28
7.4 BREACH OF REPRESENTATIONS AND WARRANTIES................................................28
7.5 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT...................................................................28
7.6 CONSUMMATION OF AGREEMENT...............................................................29
7.7 NONDISCLOSURE OF PROPRIETARY DATA.......................................................29
ARTICLE 8. COVENANTS OF BUYER...............................................................29
8.1 WAIVERS CONSENTS AND APPROVALS..........................................................29
8.2 BREACH OF REPRESENTATIONSAND WARRANTIES.................................................29
8.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT...................................................................29
8.4 CONSUMMATION OF AGREEMENT...............................................................30
8.5 RESTRICTIONS AS TO CERTAIN POST-CLOSING ENVIRONMENTAL REMEDIAL ACTIONS..................30
ARTICLE 9. CONDITIONS TO OBLIGATIONS OF THE BUYER...........................................30
9.1 REPRESENTATIONS; WARRANTIES; COVENANTS..................................................30
9.2 RESIGNATIONS............................................................................30
9.3 HSR ACT.................................................................................31
9.4 OPINIONS OF COUNSEL; ADDITIONAL DOCUMENTS...............................................31
9.5 NATIONSCREDIT PAY-OFF LETTER............................................................31
9.6 NO INJUNCTION...........................................................................31
9.7 EMPLOYMENT AND NONCOMPETITION AGREEMENTS................................................31
9.8 REDEMPTION..............................................................................31
9.9 TERMINATION OF STOCKHOLDERS AGREEMENT; WAIVER OF RIGHTS.................................31
9.10 TERMINATION OF STOCK RESTRICTION AGREEMENT.............................................31
9.11 ESCROW AGREEMENT.......................................................................32
9.12 THE BUYER'S FRUSTRATION OF CLOSING CONDITIONS..........................................32
ARTICLE 10. CONDITIONS TO OBLIGATIONS OF THE SELLERS........................................32
10.1 REPRESENTATIONS; WARRANTIES; COVENANTS.................................................32
10.2 HSR ACT................................................................................32
10.3 ADDITIONAL DOCUMENTS...................................................................32
10.4 PREPAYMENT OF ▇▇▇▇▇ AND ▇▇▇▇▇▇▇ NOTES..................................................32
10.5 NO INJUNCTION..........................................................................32
10.6 ESCROW AGREEMENT.......................................................................32
10.7 THE SELLERS'FRUSTRATION OF CLOSING CONDITIONS..........................................32
ARTICLE 11. TERMINATION OF AGREEMENT........................................................33
ii
11.1 TERMINATION............................................................................33
11.2 EFFECT OF TERMINATION..................................................................33
11.3 RIGHT TO PROCEED.......................................................................33
ARTICLE 12. INDEMNIFICATION.................................................................33
12.1 DEFINITIONS............................................................................33
12.2 SURVIVAL OF WARRANTIES.................................................................34
12.3 INDEMNIFICATION BY THE SELLERS.........................................................34
12.4 INDEMNIFICATION BY THE BUYER...........................................................35
12.5 DEFENSE OF THIRD PARTY ACTIONS.........................................................36
ARTICLE 13. GENERAL PROVISIONS..............................................................37
13.1 FEES AND EXPENSES......................................................................37
13.2 NOTICES................................................................................37
13.3 PUBLICITY AND DISCLOSURES..............................................................39
13.4 FURTHER ASSURANCES.....................................................................39
13.5 ENTIRE AGREEMENT.......................................................................39
13.6 SEVERABILITY...........................................................................40
13.7 ASSIGNABILITY..........................................................................40
13.8 AMENDMENT..............................................................................40
13.9 COUNTERPARTS...........................................................................40
13.10 EFFECT OF TABLE OFCONTENTS AND HEADINGS...............................................40
13.11 GOVERNING LAW.........................................................................40
SIGNATURES
LIST OF SCHEDULES
iii
STOCK PURCHASE AGREEMENT
AGREEMENT entered into as of the 27th day of October, 1998, between
Kaynar Technologies Inc., a Delaware corporation with its principal place of
business at ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ ("the Buyer"), Marcliff Corporation, a Delaware corporation with its
principal place of business at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Marcliff"), each of those stockholders of Marcliff Corporation listed on
Schedule 1 hereto (each of such stockholders being referred to individually
herein as a "Seller" and collectively as the "Sellers") and Orion Capital
Partners, L.P. as the Sellers' Representative (the "Sellers' Representative").
RECITALS:
WHEREAS, each Seller holds of record and beneficially those shares of
the common stock and preferred stock of Marcliff listed opposite his or its name
on Schedule 1 hereto, which shares of common and preferred stock constitute all
of the issued and outstanding shares of the capital stock of Marcliff or holds
of record and beneficially options to purchase those shares of common stock of
Marcliff listed opposite his or its name on Schedule 1 hereto, which options
constitute all of the issued and outstanding options to purchase shares of the
capital stock of Marcliff (such shares and the shares to be issued upon exercise
of such options being referred to collectively as the "Shares");
WHEREAS, Marcliff holds of record and beneficially all of the issued
and outstanding shares of the capital stock of ▇▇▇▇▇▇ Creative Fastener, Inc., a
Delaware corporation ("▇▇▇▇▇▇");
WHEREAS, Marcliff will redeem certain of the Shares of its Common Stock
(the "Redemption Shares") from the Sellers in exchange for certain Excluded
Assets (as defined in Section 1.1 hereof);
WHEREAS, the Buyer is prepared to purchase, and the Sellers are
prepared to sell, all of the Shares other than the Redemption Shares (the
"Purchase Shares") subject to the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE 1. REDEMPTION AND PURCHASE AND SALE OF SHARES.
1.1 REDEMPTION . Subject to the provisions of this Agreement, Marcliff
hereby agrees to redeem, and each of the Sellers agrees to tender for
redemption, at the Closing (as defined in Section 3.1 hereof), those Redemption
Shares listed opposite the name of such Seller on Schedule 1.1, free and clear
of any and all liens, pledges, security interests, claims, charges, restrictions
or encumbrances of any kind or nature whatsoever, in exchange for (i) all of the
1
issued and outstanding membership interests (the "LLC Membership Interests") in
Chelsea Crescent, LLC, a Massachusetts limited liability company ("Chelsea
Crescent"), the membership interests of which are currently held by Marcliff and
▇▇▇▇▇▇; (ii) prepaid items outstanding as of the Closing (the "C&L Prepaid
Items") related to certain vacant land in Chelsea, Massachusetts (the "C&L Real
Estate") held by C&L Realty Trust, a trust the beneficial interest of which is
wholly-owned by ▇▇▇▇▇▇ ("C&L Realty Trust"); (iii) the promissory notes payable
to Marcliff by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ in the original principal
amounts of $59,940 and $99,900, respectively, both duly endorsed for transfer,
(together, the "▇▇▇▇▇ and ▇▇▇▇▇▇▇ Notes"); (iv) interest receivable outstanding
as of the Closing with respect to the ▇▇▇▇▇ and ▇▇▇▇▇▇▇ Notes (the "▇▇▇▇▇ and
▇▇▇▇▇▇▇ Interest Receivable"); and (v) subject to the Sellers' obligations under
Section 13.1 hereof, the $75,000 deposit paid to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co.
and any other prepaid items outstanding as of the Closing relating to fees and
expenses to be paid to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. or to legal counsel
retained by the Sellers or the Sellers' Representative in connection with the
transactions contemplated by this Agreement (the "BHC Deposit and Prepaid Items"
and collectively with the LLC Membership Interests, the C&L Prepaid Items, the
▇▇▇▇▇ and ▇▇▇▇▇▇▇ Notes and the ▇▇▇▇▇ and ▇▇▇▇▇▇▇ Interest Receivable, the
"Excluded Assets"). At the Closing, Marcliff shall transfer the Excluded Assets
to the Sellers' Representative (as defined in Section 4.1 hereof) who shall hold
the Excluded Assets for the benefit of the Sellers, either directly or through a
holding company, liquidating trust or other entity which it may establish for
the purpose. The Sellers' Representative shall use all reasonable efforts to
liquidate the Excluded Assets as soon as possible and, after making provision
for the payment of all fees and expenses to be borne by the Sellers, as provided
in Section 13.1 hereof, the Sellers' Representative shall distribute the
proceeds received upon liquidation of the Excluded Assets to the Sellers in
proportion to the number of Redemption Shares tendered by each of them.
1.2 PURCHASE AND SALE. Subject to the provisions of this Agreement,
each of the Sellers agrees to sell, and the Buyer agrees to purchase, at the
Closing (as defined in Section 3.1 hereof), those Purchase Shares listed
opposite the name of such Seller on Schedule 1.2 hereto, in each case free and
clear of any and all liens, pledges, security interests, claims, charges,
restrictions and encumbrances of any kind or nature whatsoever, other than
restrictions on transfer arising under federal and state securities laws.
ARTICLE 2 PURCHASE PRICE FOR THE PURCHASE SHARES.
2.1 PURCHASE PRICE AND PAYMENT. The aggregate purchase price to be paid
by the Buyer to the Sellers in consideration of the sale of the Purchase Shares
(the "Aggregate Purchase Price") shall be equal to Thirty Four Million Dollars
($34,000,000) minus the aggregate principal amount of all of the indebtedness of
Marcliff and its Subsidiaries (as defined in Section 5.2 hereof) to
NationsCredit Commercial Corporation ("NationsCredit") outstanding as of the
date of the Closing and any accrued and unpaid interest and any fees thereon
(the "Senior Debt"). The Senior Debt represents all of the indebtedness of
Marcliff and its Subsidiaries for money borrowed. The Aggregate Purchase Price
shall be subject to adjustment pursuant to Section 2.2 hereof. At the Closing,
the Buyer shall pay the Aggregate Purchase Price, less One Million Dollars
($1,000,000), to the Sellers' Representative by wire transfer of immediately
available
2
funds and shall pay One Million Dollars ($1,000,000) by wire transfer of
immediately available funds to Brown, Rudnick, Freed & Gesmer, as escrow agent
(the "Escrow Agent"), to be held in an interest-bearing account (such amount,
together with interest accrued thereon, the "Hold Back Amount") pending any
adjustments and payments to be made pursuant to Section 2.2 hereof and the
Escrow Agreement annexed hereto as Schedule 2.1(b) (the "Escrow Agreement").
The Sellers' Representative shall make provision for the payment of all fees
and expenses to be borne by the Sellers, as provided in Section 13.1 hereof,
and the payment of all real estate and other taxes and maintenance and other
expenses to be reasonably anticipated in connection with the disposition of
the C&L Real Estate and shall thereafter promptly distribute to the Sellers
as indicated in Schedule 2.1(a) hereto all of the Aggregate Purchase Price
other than the Hold Back Amount.
2.2 DETERMINATION OF CLOSING NET BOOK VALUE; ADJUSTMENT OF THE
AGGREGATE PURCHASE PRICE.
(a) Promptly following the Closing, the Sellers' Representative and the
Buyer shall direct Marcliff's independent public accountants, KPMG Peat Marwick,
to prepare at Marcliff's expense and to deliver to both the Buyer and the
Sellers' Representative within sixty (60) days following the Closing an audited
consolidated balance sheet (the "Closing Balance Sheet") of Marcliff and its
Subsidiaries which shall reflect the book value of the assets and liabilities of
Marcliff and its Subsidiaries as of the date of the Closing immediately prior to
the Closing provided, however, that the Closing Balance Sheet shall include a
liability of $31,382, which reflects the parties' agreement as to the
appropriate adjustment as of the Closing for the Company's underaccrual of its
pension obligations under the Retirement Plan for Employees of ▇▇▇▇▇▇
Corporation and ▇▇▇▇▇▇ Fastener Corporation and shall exclude (i) the Excluded
Assets, and (ii) any of the fees or expenses of KPMG Peat Marwick incurred in
connection with the preparation of the Closing Balance Sheet. The Closing
Balance Sheet shall indicate the difference between the aggregate net book value
of those assets of Marcliff and its Subsidiaries shown on the Closing Balance
Sheet and the aggregate consolidated net book value of those liabilities of
Marcliff and its Subsidiaries shown on the Closing Balance Sheet (the "Closing
Net Book Value"). The Closing Balance Sheet shall be prepared on a basis
consistent with the preparation of the consolidated balance sheet of Marcliff
and its Subsidiaries dated May 25, 1998 and otherwise in accordance with
generally accepted accounting principles ("GAAP"). To the extent that the
Closing Net Book Value differs from $10,525,000 (which was the consolidated net
book value of Marcliff and its Subsidiaries excluding the book value of the
Excluded Assets, as derived from the consolidated balance sheet of Marcliff and
its Subsidiaries dated May 25, 1998), then the Aggregate Purchase Price shall be
adjusted on a dollar for dollar basis by the amount of such difference as
hereinafter set forth.
(b) In the event that the Closing Net Book Value is greater than
$10,525,000, then within ten (10) days following the later of (x) the date of
delivery of the Closing Balance Sheet to the Buyer and the Sellers'
Representative or (y) the resolution of any dispute with respect to the Closing
Balance Sheet as provided in paragraph (e) of this Section 2.2, the Buyer shall
pay to the Sellers' Representative in immediately available funds by federal
funds wire transfer an amount equal to such difference, together with interest
on the amount of such difference at the rate of ten
3
percent (10%) per annum calculated from the date of the Closing to the date of
payment. Such amount shall then promptly be distributed by the Sellers'
Representative to the Sellers in the same proportions as the payments paid to
the Sellers at the Closing in respect of their Shares of Common Stock (Voting
and Non-Voting) as indicated on Schedule 2.1(a) hereof, and the Hold Back Amount
shall be paid by the Escrow Agent to the Sellers' Representative in immediately
available funds by federal funds wire transfer in accordance with the Escrow
Agreement, also for distribution by the Sellers' Representative to the Sellers
in the same proportions as the payments paid to the Sellers at the Closing in
respect of the Shares of Common Stock (Voting and Non-Voting) as indicated on
Schedule 2.1(a) hereof.
(c) In the event that the Closing Net Book Value is less than
$10,525,000, then the Escrow Agent shall pay from the Hold Back Amount to the
Buyer in immediately available funds by federal funds wire transfer in
accordance with the Escrow Agreement an amount equal to such difference,
together with interest on the amount of such difference at the rate of ten
percent (10%) per annum calculated from the date of the Closing to the date of
payment, and, in the event that the Hold Back Amount is insufficient to pay such
amount in full, then the Sellers shall pay the balance of such amount to the
Buyer in immediately available funds by federal funds wire transfer, such
balance to be paid by each of the Sellers in same proportions as the payments
paid to the Sellers at the Closing in respect of their Shares of Common Stock
(Voting and Non-Voting) as indicated on Schedule 2.1(a) hereof. In the event
that the amount of such payment is less than the Hold Back Amount, then,
promptly following such payment, the Escrow Agent shall pay the balance of the
Hold Back Amount to the Sellers' Representative in immediately available funds
by federal funds wire transfer in accordance with the Escrow Agreement for
distribution by the Sellers' Representative to the Sellers in the same
proportions as the payments paid to the Sellers at the Closing in respect of
their Shares of Common Stock (Voting and Non-Voting) as indicated on Schedule
2.1(a) hereof.
(d) In the event that the Closing Net Book Value is equal to
$10,525,000, then there shall be no post-closing adjustment to the Purchase
Price pursuant to this Section 2.2 and the Escrow Agent shall pay the Hold Back
Amount to the Sellers' Representative in immediately available funds by federal
funds wire transfer in accordance with the Escrow Agreement for distribution by
the Sellers' Representative to the Sellers in the same proportions as the
payments paid to the Sellers at the Closing in respect of their Shares of Common
Stock (Voting and Non-Voting) as indicated on Schedule 2.1(a) hereof.
(e) In the event that any dispute shall arise as to the manner of
preparation or the accuracy of the Closing Balance Sheet, the Buyer or the
Sellers' Representative may elect, by notice given at any time prior to its
receipt of the Closing Balance Sheet or within twenty (20) days following such
receipt, to object to the manner of preparation or accuracy of the Closing
Balance Sheet, which notice shall set forth in reasonable detail the nature of
the objection and the matters in dispute. Promptly following receipt of any such
objection, the Buyer and the Sellers' Representative shall use commercially
reasonable efforts to address and resolve the objection to the Closing Balance
Sheet. In the event, however, that the Buyer and the Sellers' Representative
have not been able to resolve such objection to their mutual satisfaction within
fifteen (15) days following the delivery of the original notice of objection,
then the Buyer and the Sellers'
4
Representative shall submit the dispute to PricewaterhouseCoopers LLP. The
determination of such dispute by PricewaterhouseCoopers LLP shall be final and
binding on the parties. All fees and expenses of PricewaterhouseCoopers LLP
charged or incurred in connection with the determination of such dispute shall
be borne between the Buyer and the Sellers on a proportionate basis, determined
by reference to the relative differences between (i) the proposed Closing Net
Book Values as asserted by the Buyer and the Sellers' Representative in the
dispute and (ii) the Closing Net Book Value as finally determined by
PricewaterhouseCoopers LLP. The apportionment of such fees and expenses between
the Buyer and the Sellers shall be determined by PricewaterhouseCoopers LLP and
such apportionment shall also be final and binding upon the parties.
ARTICLE 3 THE CLOSING.
3.1 TIME AND PLACE OF CLOSING. The closing of the purchase and sale of
the Shares provided for in this Agreement (herein called the "Closing") shall be
held at the offices of Brown, Rudnick, Freed & Gesmer, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ at 10:00 a.m. on October 27, 1998 or at such other place,
date or time as may be fixed by mutual agreement of the parties.
3.2 DELIVERY OF THE REDEMPTION SHARES . At the Closing, each of the
Sellers shall deliver or cause to be delivered to Marcliff, against Marcliff's
transfer of the Excluded Assets to the Sellers' Representative, certificates
representing the Redemption Shares, duly endorsed in blank or with a stock power
duly endorsed in blank and Marcliff shall immediately cancel the Redemption
Shares.
3.3 DELIVERY OF THE PURCHASE SHARES. At the Closing, each of the
Sellers shall deliver or cause to be delivered to the Buyer, against the Buyer's
tender of the Aggregate Purchase Price to the Sellers' Representative and the
Hold Back Amount to the Escrow Agent, certificates representing the Purchase
Shares duly endorsed in blank or with a stock power duly endorsed in blank,
together with such other documents as the Buyer may reasonably request to
evidence the transfer to the Buyer of good and marketable title in and to such
Purchase Shares, free and clear of all liens, pledges, security interests,
claims, charges, encumbrances and restrictions on transfer, other than
restrictions on transfer arising under federal and state securities laws.
3.4 SATISFACTION OF SENIOR DEBT. At the Closing, the Buyer shall also
pay, on behalf of Marcliff and its Subsidiaries, all of the outstanding Senior
Debt to NationsCredit.
3.5 FURTHER ASSURANCES. From time to time after the Closing at the
request of the Buyer and without further consideration, the Sellers shall
execute and deliver further instruments of transfer and assignment (in addition
to those delivered under Section 3.3 hereof) and shall take such other action as
the Buyer may reasonably require to effectively transfer the Redemption Shares
to Marcliff and the Purchase Shares to the Buyer, in each case free and clear of
any and all liens, pledges, security interests, claims, charges, restrictions or
encumbrances of any kind or nature whatsoever, other than restrictions on
transfer arising under federal and state securities laws.
5
ARTICLE 4 THE SELLERS' REPRESENTATIVE
4.1 APPOINTMENT OF THE SELLERS' REPRESENTATIVE. By the execution and
delivery of this Agreement, each of the Sellers hereby irrevocably constitutes
and appoints Orion Capital Partners, L.P. as his or its true and lawful agent
and attorney-in-fact (the Sellers' Representative), with full power of
substitution in the premises, (i) to receive the Excluded Assets, to hold the
Excluded Assets either directly or through a holding company, liquidating trust
or other entity, to take any and all such actions as it may deem necessary or
appropriate to liquidate the Excluded Assets, to make provision for the payment
of, and to pay, all fees and expenses for real estate and other taxes and
maintenance and other fees and expenses which may be incurred in connection with
the ownership and liquidation of the Excluded Assets and to distribute the
remaining balance of the proceeds of the Excluded Assets as provided in Article
1 of this Agreement; (ii) to receive the Aggregate Purchase Price, to make
provision for the payment of, and to pay, all fees and expenses to be borne by
the Sellers as provided in Section 13.1 hereof from the proceeds of the
Aggregate Purchase Price, to effect adjustments to the Aggregate Purchase Price
and distribute the same in accordance with Article 2 of this Agreement and the
Escrow Agreement; (iii) to waive or modify any condition to the obligations of
the Sellers to consummate the transactions contemplated by this Agreement; (iv)
to execute and deliver all ancillary agreements, certificates and documents, and
to make any representations or warranties therein, which the Sellers'
Representative may deem necessary or appropriate in connection with the
consummation of the transactions contemplated by this Agreement; (v) to do or to
refrain from doing any act or deed on behalf of the Sellers which the Sellers'
Representative may, in its sole discretion, deem necessary or appropriate in
order to consummate the transactions contemplated by this Agreement, as fully
and as completely as each such Seller could do if personally present; and (vi)
to receive all notices on behalf of the Sellers under or in connection with this
Agreement. Each of the Sellers hereby acknowledges and agrees that, while the
Sellers' Representative shall act on behalf of the Sellers in the manner which
the Sellers' Representative believes to be in the best interest of the Sellers
and consistent with their obligations under this Agreement, the Sellers'
Representative shall not be responsible to the Sellers for any loss or damage
which any of the Sellers may suffer by reason of the exercise by the Sellers'
Representative of its rights or the performance of its duties under this
Agreement, other than such loss or damage arising from gross negligence or
willful misconduct in the exercise of such rights or performance of such duties.
Further, the Sellers hereby agree, severally and not jointly, to indemnify the
Sellers' Representative from and against any loss, damage, cost or expense,
including attorneys fees or expenses, which the Sellers' Representative may
incur or suffer which arise out of or relate to the exercise of its rights or
the performance of its duties under this Agreement, other than such losses,
damages, costs or expenses, which the Sellers' Representative may incur or
suffer as a direct consequence of the Sellers' Representative's gross negligence
or willful misconduct in the exercise of such rights or performance of such
duties.
4.2 ACCEPTANCE OF APPOINTMENT. By execution and delivery of this
Agreement, Orion Capital Partners, L.P. hereby accepts appointment as the
Sellers' Representative and acknowledges and agrees that it shall exercise its
rights and perform its duties under this Agreement in good faith and in the
manner which it believes to be in the best interest of the
6
Sellers and consistent with their obligations under this Agreement. The Sellers'
Representative also agrees to provide the Sellers with such information as they
may reasonably request from time to time regarding the transactions contemplated
by this Agreement and the performance by the Sellers' Representative of its
duties hereunder, including, without limitation, the liquidation of the Excluded
Assets, the payment of fees and expenses to be paid as provided in Section 13.1
and any adjustments to, and the distribution of, the Aggregate Purchase Price
under this Agreement.
4.3 APPOINTMENT INDEPENDENT, SEVERABLE AND BINDING. The provisions of
this Article 4 are independent and severable, shall constitute an irrevocable
power of attorney, coupled with an interest and surviving death or dissolution,
granted by the Sellers to the Sellers' Representative and shall be binding upon
the heirs, legal representatives, successors and assigns of each of the Sellers.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
As a material inducement to the Buyer to enter into this Agreement and
to consummate the transactions contemplated hereby, each of the Sellers,
severally and not jointly, hereby make to the Buyer the following
representations and warranties; provided that the representations and warranties
set forth in Sections 5.4 and 5.5 are only made by each Seller with respect to
himself or itself and not with respect to any other Seller.
5.1 ORGANIZATION AND QUALIFICATION OF MARCLIFF AND ITS SUBSIDIARIES.
Marcliff and each of its Subsidiaries, other than Chelsea Crescent and C&L
Realty Trust, is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated, which
jurisdictions are listed on Schedule 5.1 hereto, and has full corporate power
and authority to own or lease its properties, to conduct its business in all
material respects in the names and in the places where such properties are owned
or leased or such business is conducted by it and to consummate the transactions
contemplated by this Agreement. Chelsea Crescent is a limited liability company
duly formed under the laws of the Commonwealth of Massachusetts and C&L Realty
Trust is a Massachusetts business trust duly formed under the laws of the
Commonwealth of Massachusetts. Each of Chelsea Crescent and C&L Realty Trust has
full power and authority to own or lease its properties, to conduct its business
in all material respects in the names and in the places where such properties
are owned or leased or such business is conducted by it and to consummate the
transactions contemplated hereby. Marcliff and its Subsidiaries are duly
qualified or licensed to do business in those jurisdictions listed on Schedule
5.1 and there is no other jurisdiction in which the properties owned or leased
by Marcliff or any of its Subsidiaries or the business conducted by Marcliff or
any of its Subsidiaries makes such qualification or licensing to do business
necessary, except where the failure to be so qualified or licensed would not
have a material adverse effect on the properties, assets, financial condition,
business or results of operation of Marcliff and its Subsidiaries taken as a
whole or that would materially impair the ability of the Sellers to perform
their obligations hereunder (a "Material Adverse Effect").
7
5.2 SUBSIDIARIES; SECURITIES OWNED. ▇▇▇▇▇▇ is a wholly-owned subsidiary
of Marcliff and ▇▇▇▇▇▇ Canada, Inc. ("▇▇▇▇▇▇ Canada") is a wholly-owned
subsidiary of ▇▇▇▇▇▇. The LLC Membership Interests of Chelsea Crescent are owned
ninety-nine percent (99%) by ▇▇▇▇▇▇ and one percent (1%) by Marcliff. The
beneficial interest in C&L Realty Trust is wholly-owned by ▇▇▇▇▇▇. (▇▇▇▇▇▇,
▇▇▇▇▇▇ Canada, Chelsea Crescent and C&L Realty Trust are sometimes referred to
collectively herein as the "Subsidiaries"). Except as noted on Schedule 5.2
hereto, neither Marcliff nor ▇▇▇▇▇▇ has any other subsidiaries or owns any
securities issued by any other corporation, business organization or
governmental authority other than U.S. government securities, bank certificates
of deposit and money market accounts acquired as short-term investments in the
ordinary course of business.
5.3 CAPITAL STOCK. The total authorized capital stock of Marcliff
consists of 1,000,000 shares of Voting Common Stock, $.01 par value per share,
of which 151,274.510 shares are issued and outstanding, 500,000 shares of
Non-Voting Common Stock, $.01 par value per share, of which 48,725.490 shares
are issued and outstanding, 1,000,000 shares of Preferred Stock, $1.00 par value
per share, of which 200,000 shares are issued and outstanding and 1,000,000
shares of Senior Pay-In-Kind Preferred Stock, $1.00 par value per share, of
which 22,000 shares are issued and outstanding. ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. holds a
non-qualified option to purchase 1,005.025 shares of Voting Common Stock, $.01
par value per share, at a price of $10.00 per share. Other than the option held
by ▇▇. ▇▇▇▇▇▇, there are no outstanding subscriptions, options, warrants,
commitments, preemptive rights, agreements or arrangements of any kind issued or
granted by Marcliff for, or relating to the issuance or sale of, any shares of
the capital stock or other securities of Marcliff or any equity interests or
similar rights therein (collectively, "Marcliff Securities"). There are no
contractual or other outstanding obligations of Marcliff to repurchase, redeem
or otherwise acquire any Marcliff Securities or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity. The total authorized capital stock of ▇▇▇▇▇▇ consists of 1,000
shares of Common Stock $1.00 par value per share, of which 1,000 shares are
issued and outstanding and are held of record and beneficially by Marcliff, free
and clear of any and all liens, pledges, security interests, claims, charges,
restrictions or encumbrances of any kind or nature whatsoever. There are no
outstanding subscriptions, options, warrants, commitments, preemptive rights,
agreements or arrangements of any kind for, or relating to the issuance or sale
of, any shares of the capital stock or other securities of ▇▇▇▇▇▇ or any equity
interests or similar rights therein (collectively, "▇▇▇▇▇▇ Securities"). There
are no contractual or other outstanding obligations of Marcliff or ▇▇▇▇▇▇ to
repurchase, redeem or otherwise acquire any ▇▇▇▇▇▇ Securities or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any other entity. ▇▇▇▇▇▇ Canada has an unlimited number of Common
Shares authorized, of which 1,000 shares are issued and outstanding and are held
of record and beneficially by ▇▇▇▇▇▇, free and clear of any and all liens,
pledges, security interests, claims, charges, restrictions or encumbrances of
any kind or nature whatsoever. There are no outstanding subscriptions, options,
warrants, commitments, preemptive rights, agreements or arrangements of any kind
for, or relating to the issuance or sale of, any shares of the capital stock or
other securities of ▇▇▇▇▇▇ Canada or any equity interest or similar rights
therein (collectively, "▇▇▇▇▇▇ Canada Securities"). There are no contractual or
other outstanding obligations of Marcliff, ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Canada to
repurchase, redeem or otherwise acquire any ▇▇▇▇▇▇ Canada Securities or to
8
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any other entity. There are no outstanding
subscriptions, options, warrants, commitments, preemptive rights, agreements or
arrangements of any kind for, or relating to the sale of, (i) any membership
interests in Chelsea Crescent or other securities of Chelsea Crescent or any
equity interest or similar rights therein (collectively "Chelsea Crescent
Securities") or (ii) any beneficial interest in C&L Realty Trust or other
securities of C&L Realty Trust or any equity interest or similar rights therein
(collectively, the "C&L Securities"). There are no contractual or other
outstanding obligations of Marcliff, ▇▇▇▇▇▇ or Chelsea Crescent to repurchase,
redeem or otherwise acquire any Chelsea Crescent Securities or to provide funds
to or make any investment (in the form of a loan, capital contribution or
otherwise) in any other entity. There are no contractual or other outstanding
obligations of Marcliff, ▇▇▇▇▇▇ or C&L Realty Trust to repurchase, redeem or
otherwise acquire any C&L Securities or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity.
5.4 AUTHORITY. As to each Seller who is an individual, such Seller has
full right, power, authority and capacity to enter into this Agreement and each
agreement, document and instrument to be executed and delivered by him or on his
behalf pursuant to, or as contemplated by, this Agreement and to consummate the
transactions contemplated hereby and thereby. As to each Seller who is not an
individual, such Seller has full right, power and authority to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by it or on its behalf pursuant to, or as contemplated by, this
Agreement and to carry out the transactions contemplated hereby and thereby and
the execution and delivery by such Seller of this Agreement and each such other
agreement, document and instrument, and the performance by such Seller of its
obligations hereunder and thereunder, has been duly authorized by all necessary
corporate and other action, and no other action is required. This Agreement and
each agreement, document and instrument executed and delivered by such Seller
pursuant to, or as contemplated by, this Agreement constitute, or when executed
and delivered will constitute, valid and binding obligations of such Seller,
enforceable in accordance with their respective terms, subject to laws of
general application affecting creditors' rights generally. Each Seller hereby
waives any preemptive rights, rights of first refusal and any rights to receive
accrued or set aside dividends which such Seller may have in regards to the
Redemption Shares and the Purchase Shares. Neither the execution and delivery by
such Seller of this Agreement and each agreement, document and instrument to be
executed and delivered by such Seller pursuant to, or as contemplated by, this
Agreement nor the performance by such Seller of his or its obligations
thereunder, (i) violates, with respect to each Seller who is not an individual,
any provision of the certificate of incorporation, the certificate of limited
partnership, the limited partnership agreement or other relevant constitutive or
organizational document of such Seller; (ii) violates any laws of the United
States or laws of any state or other jurisdiction applicable to such Seller or
requires such Seller to obtain any approval, consent or waiver of, or make any
filing with, any person or entity (governmental or otherwise) that has not been
obtained or made; (iii) results in a breach of, or constitute a default under,
any agreement, indenture note, bond, license, permit or instrument to which such
Seller is a party or by which such Seller is bound; or (iv) results in the
creation or imposition of any lien, pledge, security interest, claim, charge or
encumbrance on any of the Shares.
9
5.5 TITLE TO SHARES. Each Seller holds of record and beneficially those
Shares listed opposite his or its name on Schedule 1 hereto, in each case free
and clear of all liens, pledges, marital rights, security interests, claims,
charges, restrictions and encumbrances, other than those as are listed on
Schedule 5.5 hereto.
5.6 MARCLIFF BOARD APPROVAL. This Agreement and the consummation of the
transactions contemplated hereby have been approved by the Marcliff Board of
Directors.
5.7 COMPLIANCE WITH CHARTER, OBLIGATIONS AND LAWS. True, correct and
complete copies of the certificates of incorporation or articles of organization
and other relevant constitutive or organizational documents (the "Charters") and
the By-laws, as amended and in effect as of the date hereof of Marcliff and its
Subsidiaries have been made available to the Buyer and the Charter and the
By-laws of Marcliff and each of its Subsidiaries remains in full force and
effect. None of Marcliff or any of its Subsidiaries is (i) in violation of its
Charter or By-laws as amended and in effect as of the date hereof; (ii) in
breach of, or default under, any agreement, lease, indenture, note, bond,
license, permit or instrument to which it is a party or by which it is bound
which could reasonably be expected to have a Material Adverse Effect; or (iii)
in violation of the laws of the United States or the laws of any state
applicable to it or its business or assets or any regulation, administrative
order, or judicial order or decree applicable to it or its business or assets,
which violation could reasonably be expected to have a Material Adverse Effect.
Since January 1, 1995, neither Marcliff nor any of its Subsidiaries has received
notice of any revocation or modification of any federal, state, local or foreign
governmental license, certification, tariff, permit, authorization or approval
material to Marcliff or its Subsidiaries.
5.8 NO CONFLICT. Neither the execution and delivery of this Agreement
by the Sellers or any of the agreements, documents or instruments to be executed
and delivered by the Sellers pursuant to, or as contemplated by, this Agreement,
nor the performance by any of the Sellers of their obligations hereunder or
thereunder, will (i) result in a violation by Marcliff or any of its
Subsidiaries of its Charter or By-laws as amended and in effect as of the date
hereof, (ii) constitute a breach of, or default under, any agreement, lease,
indenture, note, bond, license, permit or instrument to which Marcliff or any of
its Subsidiaries is a party or by which Marcliff or any of its Subsidiaries is
bound, (iii) result in the loss of any material benefit or give rise to any
right of termination, amendment, acceleration or cancellation under any
agreement, lease, indenture, note, bond, license, permit or instrument to which
Marcliff or any of its Subsidiaries is a party or by which Marcliff or any of
its Subsidiaries is bound, (iv) result in the creation of any lien or other
encumbrance upon the assets of Marcliff or any of its Subsidiaries, or (v)
result in a violation of the laws of the United States or the laws of any state
applicable to Marcliff or any of its Subsidiaries or their respective businesses
or assets or any regulation, administrative order or judicial order or decree
applicable to Marcliff or any of its Subsidiaries or their respective businesses
or assets.
5.9 FINANCIAL STATEMENTS.
(a) Attached as Schedule 5.9 hereto are the following
financial statements of Marcliff and its Subsidiaries:
10
(i) Audited consolidated balance sheets of Marcliff and
its Subsidiaries with respect to the fiscal years
ended December 31, 1995, December 31, 1996 and
December 31, 1997 and audited consolidated statements
of income, retained earnings and cash flows for the
period then ended, with all required footnotes,
certified by KPMG Peat Marwick, independent public
accounts (the "Audited Financial Statements"); and
(ii) An unaudited consolidated balance sheet of ▇▇▇▇▇▇ and
▇▇▇▇▇▇ Canada as of May 25, 1998 (the "Base Balance
Sheet") and consolidated statements of income,
retained earnings and cash flows for the five (5)
months then ended, certified by ▇▇▇▇▇▇'▇ treasurer
(the "Unaudited Financial Statements").
Said financial statements have been prepared in accordance with GAAP applied
consistently during the periods covered thereby, are complete and correct in all
material respects and present fairly in all material respects the financial
condition of Marcliff and its Subsidiaries and ▇▇▇▇▇▇ and ▇▇▇▇▇▇ Canada,
respectively, at the dates of said statements and the results of their
operations and cash flows for the periods covered thereby, except that the
Unaudited Financial Statements do not contain the materials and disclosures to
be found in notes to financial statements prepared in accordance with GAAP nor
do they reflect certain non-recurring or year-end adjustments.
(b) As of the date of the Base Balance Sheet, none of Marcliff
or its Subsidiaries had any material liabilities of any nature, whether accrued,
absolute, contingent or otherwise, except liabilities stated or adequately
reserved against on the Base Balance Sheet or reflected in Schedules (including
the Audited Financial Statements) furnished to the Buyer hereunder as of the
date hereof and except for any liabilities not required under GAAP, applied
consistently with the past practice, to be disclosed as a liability on a balance
sheet of Marcliff or its Subsidiaries or in the footnotes thereto.
5.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Base
Balance Sheet Marcliff and each of its Subsidiaries has conducted its business
only in the ordinary course and in a manner consistent with past practice, and
since such date, except as noted on Schedule 5.10, there has not been (i) any
change in the financial condition, results of operations, assets, business or
operations of Marcliff and its Subsidiaries which has had, or could reasonably
be expected to have, a Material Adverse Effect, (ii) any condition, event or
occurrence which, individually or in the aggregate, would have a Material
Adverse Effect, (iii) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of Marcliff or its Subsidiaries which has
had, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, (iv) any change by Marcliff or its Subsidiaries in
its accounting methods, principles or practices, (v) any revaluation by Marcliff
or its Subsidiaries of any of its material assets, including but not limited to
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business, (vi) any entry outside the
ordinary course of business by Marcliff or its Subsidiaries into any commitments
or
11
transactions material, individually or in the aggregate, to Marcliff or its
Subsidiaries, (vii) any redemption, purchase or other acquisition by Marcliff or
its Subsidiaries of any of its securities, (viii) any issuance of any shares of
capital stock of Marcliff or its Subsidiaries or any grant or issuance of any
options, calls, warrants, or other rights, agreements, arrangements or
commitments of any kind or character relating to the issuance of capital stock
of Marcliff or its Subsidiaries, (ix) any increase in, establishment of or
amendment of any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including without limitation the
granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan or
agreement or arrangement, or any other increase in the compensation payable or
to become payable to any present or former directors, officers or key employees
of Marcliff or its Subsidiaries, except for increases in compensation in the
ordinary course of business consistent with past practice, or, any entry into,
or amendment of, any employment, consulting or severance agreement or
arrangement with any such present or former directors, officers or key
employees, (x) any obligation or liability incurred by Marcliff or any of its
Subsidiaries with respect to the business of Marcliff or any of its
Subsidiaries, other than obligations and liabilities incurred in the ordinary
course of business, or (xi) any change with respect to the management or
supervisory personnel of Marcliff or any of its Subsidiaries.
5.11 TAX MATTERS.
(a) For purposes of this Agreement, "Taxes" shall mean all United
States federal, state, local and foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, real estate, excise, value
added, estimated, stamp, alternative or add-on minimum, environmental,
withholding and any other taxes, duties or assessments, together with all
interest, penalties and additions imposed with respect to such amounts, and "Tax
Return" shall mean 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.
(b) Other than those Tax Returns referred to on Schedule 5.11(b), as to
which the Orion Sellers have provided indemnification under Section 12.3(a)(iv)
hereof, all Tax Returns required to be filed by or with respect to Marcliff and
its Subsidiaries have been timely filed, and all such Tax Returns are complete
and correct in all material respects. Marcliff and its Subsidiaries have timely
paid all Taxes that are due, have been claimed or asserted by any taxing
authority to be due or could be due from or with respect to them for all
periods. Marcliff and its Subsidiaries file Tax Returns in all jurisdictions
where required to file Tax Returns.
(c) There are no liens or other encumbrances with respect to Taxes upon
any of the assets or properties of Marcliff and its Subsidiaries, other than
with respect to Taxes not yet due and payable.
(d) Except as noted in Schedule 5.11(d), the Tax Returns of Marcliff
and its Subsidiaries have not been audited or examined by any taxing authority.
Except as noted in Schedule 5.11(d), since December 31, 1995 no issue relating
to Marcliff or its Subsidiaries has
12
been raised in writing by any taxing authority in any audit or examination
which, by application of the same or similar principles, would reasonably be
expected to result in a material deficiency for any subsequent period (including
periods subsequent to the Closing). There are no outstanding agreements, waivers
or arrangements extending the statutory period of limitation applicable to any
claim for, or the period for the collection or assessment of, Taxes due from or
with respect to Marcliff or its Subsidiaries for any taxable period, and no
power of attorney granted by or with respect to Marcliff or its Subsidiaries
relating to Taxes is currently in force. No closing agreement pursuant to
section 7121 of the Internal Revenue Code of 1986, as amended, or any
predecessor provision (the "Code") or any similar provision of any state, local,
or foreign law has been entered into by or with respect to Marcliff or its
Subsidiaries and no ruling has been received by Marcliff or its Subsidiaries
from any taxing authority.
(e) Neither Marcliff nor any of its Subsidiaries is subject to
liability for Taxes to any person other than Marcliff or its Subsidiaries,
including, without limitation, liability arising from the application of
Treasury Regulation Section 1.1502-6 or any analogous provision of state, local
or foreign law.
(f) Except as noted in Schedule 5.11(f), no audit or other proceeding
by any court, governmental or regulatory authority, or similar person is pending
or threatened with respect to any Taxes due from or with respect to Marcliff or
its Subsidiaries or any Tax Return filed by or with respect to Marcliff or its
Subsidiaries. No assessment of Tax not yet paid or accrued in the Base Balance
Sheet has been proposed in writing against Marcliff or its Subsidiaries or any
of their assets or properties.
(g) No consent to the application of section 341(f)(2) of the Code has
been made or filed by or with respect to Marcliff or its Subsidiaries or any of
their assets or properties. None of the assets or properties of Marcliff or its
Subsidiaries is (A) an asset or property that is or will be required to be
treated as described in section 168(f)(8) of the Internal Revenue Code of 1954,
as amended and in effect immediately before the enactment of the Tax Reform Act
of 1986, or (B) tax-exempt use property within the meaning of section 168(h)(1)
of the Code.
(h) Neither Marcliff nor its Subsidiaries has been or is currently in
material violation (or, with or without notice or lapse of time or both, would
be in material violation) of any applicable law or regulation relating to the
payment or withholding of Taxes. Marcliff and its Subsidiaries have in all
material respects duly and timely withheld from employee salaries, wages and
other compensation and paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable laws and regulations.
(i) Neither Marcliff nor its Subsidiaries is a party to, is bound by or
has any obligation under any Tax sharing agreement or similar contract or
arrangement or any agreement that obligates any of them to make any payment
computed by reference to the Taxes, taxable income or taxable losses of any
other person.
(j) There is no contract or agreement, plan or arrangement by Marcliff
or its Subsidiaries covering any person that, individually or collectively,
could give rise to the payment
13
of any amount that would not be deductible by Marcliff or its Subsidiaries by
reason of section 280G of the Code.
(k) Except as noted on Schedule 5.11(k), neither Marcliff nor its
Subsidiaries is a shareholder of a "controlled foreign corporation" as defined
in section 957 of the Code, is a member of a partnership or other pass-through
entity or is a "personal holding company" as defined in section 542 of the Code.
5.12 TITLE TO PROPERTIES; LIENS .
(a) None of Marcliff or any of its Subsidiaries owns any real property
other than the beneficial interest in the C&L Real Estate to be included among
the Excluded Assets. Schedule 5.12(a) contains a complete and correct list of
all real property leased by Marcliff and its Subsidiaries (the "Leased Real
Property") setting forth the address, landlord and tenant for each lease.
Correct and complete copies of all such leases (the "Real Estate Leases") have
been made available to the Buyer. Each Real Estate Lease is the legal, valid and
binding obligation of Marcliff or one of its Subsidiaries and, to the knowledge
of the Sellers, of each other party thereto and, to the knowledge of the
Sellers, is in full force and effect. None of Marcliff or its Subsidiaries, nor,
to the knowledge of the Sellers, any other party is in material default,
violation or breach in any respect under any such Real Estate Lease, and no
event has occurred and is continuing that constitutes or, with notice or the
passage of time or both, would constitute a material default, violation or
breach in any respect by Marcliff or any of its Subsidiaries or, to the
knowledge of the Sellers, any other party, under any such Real Estate Lease.
Marcliff and its Subsidiaries enjoy peaceful and undisturbed possession under
such Real Estate Leases for the Leased Real Property sufficient for current use
and operations.
(b) There are no eminent domain, condemnation or other similar
proceedings pending or, to the Sellers' knowledge, threatened affecting any
portion of the Leased Real Property. There is no writ, injunction, decree, order
or judgment outstanding, nor any action, claim, suit or proceeding pending or,
to the Sellers' knowledge, threatened relating to the ownership, lease, use or
occupancy by Marcliff or its Subsidiaries of any of the Leased Real Property.
(c) To the Sellers' knowledge, the current use of the Leased Real
Property in the conduct of the business of Marcliff and its Subsidiaries does
not violate in any material respect any instrument of record or agreement
affecting the Leased Real Property. To the Sellers' knowledge, there is no
material violation of any covenant, condition, restriction, easement or order of
any governmental authority having jurisdiction over such property or of any
other person entitled to enforce the same affecting the Leased Real Property or
the use or occupancy thereof.
(d) To the Sellers' knowledge, the Leased Real Property is in
compliance in all material respects with all applicable building, zoning,
subdivision and other land use and similar applicable laws, rules and
regulations affecting the Leased Real Property, and neither Marcliff nor its
Subsidiaries has received any notice of any material violation or claimed
violation of any such laws, rules and regulations within the past three years
which have not been resolved.
14
(e) Marcliff or its Subsidiaries has a valid and binding leasehold
interest in the Leased Real Property free and clear of all liens and
encumbrances except (i) liens for Taxes, assessments and other governmental
charges not yet due and payable; (ii) mechanics', workmen's, repairmen's,
warehousemen's, carriers', or other like liens arising or incurred in the
ordinary course of business; (iii) easements, quasi-easements, licenses,
covenants, rights-of-way and other similar restrictions which would be shown by
a current title report; (iv) zoning, building and other similar restrictions;
and (v) subleases and licenses by Marcliff or its Subsidiaries to third parties
listed on Schedule 5.12(e), correct and complete copies of which have been made
available to the Buyer.
(f) The facilities of Marcliff and its Subsidiaries are currently
served by all utility services, including sewer, water, gas and electric power
and telephone service, that are necessary for the operation of the business as
currently conducted thereon. All installation and connection charges for such
facilities are paid in full. The facilities of Marcliff and its Subsidiaries are
in a condition suitable for the operation of the business as currently conducted
thereon. Neither Marcliff nor its Subsidiaries has received notice from any
insurance company providing insurance coverage or from any board of fire
underwriters or other body exercising similar functions that require or
recommend the performance of any repairs or alternations to the facilities of
Marcliff or its Subsidiaries which have not been performed heretofore.
(g) Set forth on Schedule 5.12(g) hereto is (i) a description of all
items of the machinery, equipment and other personal property owned and used by
Marcliff or its Subsidiaries in the operation of its business and having a value
of $50,000 or more ("Machinery and Equipment"). Neither Marcliff nor its
Subsidiaries leases any item of machinery, equipment or other personal property
with respect to which is obligated to make lease, rental or other payments of
$50,000 or more per year. Each lease under which Marcliff or any of its
Subsidiaries lease machinery, equipment or other personal property is a legal,
valid and binding obligation of Marcliff or one of its Subsidiaries and, to the
knowledge of the Sellers, of each other party thereto and, to the knowledge of
the Sellers, is in full force and effect. None of Marcliff or its Subsidiaries,
nor, to the knowledge of the Sellers, any other party is in material default,
violation or breach in any respect under any such lease, and no event has
occurred and is continuing that constitutes or, with notice or the passage of
time or both, would constitute a material default, violation or breach in any
respect by Marcliff or any of its Subsidiaries or, to the knowledge of the
Sellers, any other party, under any such lease.
(h) Marcliff or its Subsidiaries has good title to all of its tangible
personal property, free and clear of all liens and encumbrances except (i) as
set forth in Schedule 5.12(h); (ii) liens for Taxes, assessments and other
governmental charges not yet due and payable; (iii) mechanics', workmen's,
repairmen's, warehousemen's, carriers', or other like liens arising or incurred
in the ordinary course of business; and (iv) subleases and licenses by Marcliff
or its Subsidiaries to third parties listed on Schedule 5.12(h), correct and
complete copies of which have been made available to the Buyer. The machinery
and equipment of Marcliff and its Subsidiaries is, in the aggregate, in a
condition suitable for operation and use in the ordinary course of the business
of Marcliff and its Subsidiaries as presently conducted.
15
5.13 COLLECTIBILITY OF ACCOUNTS RECEIVABLE. To the knowledge of the
Sellers, all of the accounts receivable of ▇▇▇▇▇▇ and ▇▇▇▇▇▇ Canada shown or
reflected on the Base Balance Sheet, less a reserve for bad debts in the amount
shown on the Base Balance Sheet, are, and those existing at the time of Closing,
less the reserve to be shown on the Closing Balance Sheet, will be, (i) valid
and enforceable claims which arose out of transactions with independent third
parties in the ordinary course of business, (ii) fully collectible in the
ordinary course of business, (iii) subject to no set-off or counterclaim, and
(iv) not subject to any pending bankruptcy or insolvency proceedings.
5.14 INVENTORIES. To the knowledge of the Sellers, all material items
contained in the inventories of ▇▇▇▇▇▇ and ▇▇▇▇▇▇ Canada reflected on the Base
Balance Sheet, net of the reserves stated in the Base Balance Sheet, are of a
quality and quantity saleable in the ordinary course of business and do not
include any obsolete items, and those material inventory items existing at the
Closing, net of the reserves stated in the Closing Balance Sheet, will be, of a
quality and quantity saleable in the ordinary course of business and will not
include any obsolete items. The values of the inventories stated in the Base
Balance Sheet reflect the normal inventory valuation policies of ▇▇▇▇▇▇ and
▇▇▇▇▇▇ Canada and were determined in accordance with GAAP. Since the date of the
Base Balance Sheet, no inventory has been sold or disposed of except through
sales in the ordinary course of business. All markings or other identification
of the inventories are, in all material respects, in accordance with industry
standards.
5.15 INTELLECTUAL PROPERTY RIGHTS.
(a) Set forth on Schedule 5.15 hereto is a true and complete
list of all patents, patent applications, trademarks, service marks, trademark
and service ▇▇▇▇ applications, trade names, and copyrights (all of the foregoing
collectively referred to as "Intellectual Property") presently owned or held by
Marcliff or its Subsidiaries and all licenses of or other rights with respect to
Intellectual Property which are used in connection with the business of Marcliff
or its Subsidiaries. Marcliff or its Subsidiaries own or possess all of the
Intellectual Property which are reasonably necessary to the conduct of the
business of Marcliff and its Subsidiaries as presently conducted and, to the
Sellers' knowledge, the operation of the business as presently conducted by
Marcliff and its Subsidiaries does not infringe any patent, trademark, service
▇▇▇▇, trade name or copyright of any other person.
(b) To the Sellers' knowledge, Marcliff and its Subsidiaries
have the right to use, free and clear of claims or rights of others, all trade
secrets, customer lists and proprietary information required for or incident to
the operation of their business, and to the knowledge of the Sellers, the
business as presently conducted by Marcliff and its Subsidiaries does not cause
Marcliff or any of its Subsidiaries to infringe or violate any intellectual
property rights of any other person.
5.16 MATERIAL CONTRACTS .
Except for contracts, agreements and licenses described in
Schedule 5.16 hereto (the "Material Contracts"), none of Marcliff or any of its
Subsidiaries is a party to or subject to:
16
(i) any contract or agreement for the purchase of any
commodity, material, equipment or asset having a purchase price of $50,000 or
more, except purchase orders for raw materials inventory in the ordinary course;
(ii) any other contracts or agreements creating any
obligations of Marcliff or its Subsidiaries after the date of the Base Balance
Sheet of $50,000 or more, other than sales and purchase commitments in the
ordinary course of business;
(iii) any contract or agreement creating any
obligations of Marcliff or its Subsidiaries in excess of $50,000, other than
purchase orders for raw materials inventory in the ordinary course and sales and
purchase commitments in the ordinary course of business;;
(iv) any contract or agreement for the sale or lease
of inventories or equipment not made in the ordinary course;
(v) any contract or agreement containing covenants
limiting the freedom of Marcliff or its Subsidiaries to compete in any line of
business or with any person or entity;
(vi) any franchise contract, agreement or license,
whether as franchisor or franchisee or licensor or licensee;
(vii) any contract or agreement under which any
person would acquire a security interest in, or lien on the assets of Marcliff
or any of its Subsidiaries, other than purchase money security interests or
liens or mechanics', workmen's, repairmen's, warehousemen's, carriers' or other
like liens arising or incurred in the ordinary course of business; or
(viii) any contract or agreement to loan or advance
to, to invest in, or to guarantee any indebtedness or obligation of, or to
borrow from, any individual, partnership, joint venture, corporation, trust,
unincorporated organization or other entity.
Each of the Material Contracts is valid and in full force and effect and no
default exists under any Material Contract other than those which could not
reasonably be expected to have a Material Adverse Effect.
5.17 LABOR AND EMPLOYEE RELATIONS.
(a) Except as shown on Schedule 5.17 hereto, there are no
consulting or employment agreements or other material agreements currently in
effect between Marcliff or its Subsidiaries and its individual employees or
consultants, other than oral employment arrangements between Marcliff or its
Subsidiaries and their respective employees entered into in the ordinary course
of business with respect to the at-will nature of the employment of such
employees by Marcliff or its Subsidiaries. Complete and accurate copies of all
of the written agreements and summaries of all of the oral agreements listed on
Schedule 5.17 have been
17
delivered to the Buyer. Schedule 5.17 also sets forth the names and rates of
compensation (including all bonus compensation) of each person currently
employed by Marcliff or its Subsidiaries whose total compensation for the year
ended December 31, 1997 exceeded $50,000.
(b) None of the employees of Marcliff or its Subsidiaries is
covered by any collective bargaining agreement with any trade or labor union,
employees' association or similar association. To the Sellers' knowledge,
Marcliff and each of its Subsidiaries has complied in all material respects with
applicable laws, rules and regulations relating to the employment of its
personnel, including without limitation those relating to wages, hours, unfair
labor practices, discrimination, and payment of social security and similar
taxes. Except as disclosed in Schedule 5.17, neither Marcliff nor its
Subsidiaries has closed any plant or facility, effectuated any layoffs of
employees or implemented any early retirement, separation or window program
within the past three (3) years, nor has Marcliff or its Subsidiaries announced
any such action or program for the future. Neither Marcliff nor its Subsidiaries
has incurred any liability under, and Marcliff and each of its Subsidiaries has
complied in all material respects with, the Worker Adjustment Retraining
Notification Act of 1988 ("WARN"). Marcliff and each of its Subsidiaries is in
compliance in all material respects with all other notification and bargaining
obligations arising under any collective bargaining agreement or applicable
laws, rules and regulations relating to the employment of its personnel. There
are no representation elections, arbitration proceedings, labor strikes,
slowdowns or stoppages or material grievances pending, or, to the knowledge of
the Sellers, overtly threatened, with respect to the employees of Marcliff or
any of its Subsidiaries.
5.18 EMPLOYEE BENEFIT PLANS.
(a) Schedule 5.18(a) contains a true and complete list of each
"employee benefit plan" (within the meaning of section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), stock purchase,
stock option, severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation and other
employee benefit plans or written agreements or policies, whether or not subject
to ERISA, under which any employee or former employee of the Company has any
present or future right to any material benefits or under which the Company has
any material liability for present or future payments or benefits. All such
plans, agreements, programs and policies shall be collectively referred to as
the "Plans."
(b) With respect to each Plan, ▇▇▇▇▇▇ has made available to the Buyer a
current, accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable, (i) any related
trust agreement, annuity contract or other funding instrument; (ii) the most
recent determination letter; (iii) any summary plan description and other
written summaries (or a description of any Plan not in writing) by Marcliff or
its Subsidiaries to its employees concerning the extent of the benefits provided
under a Plan; and (iv) for the three most recent years: (1) the Form 5500 and
attached Schedules; (2) audited financial statements; and (3) actuarial
valuation reports.
18
(c) (i) Except as set forth on Schedule 5.18(c) each Plan has been
established and administered in accordance with its terms, and in compliance
with the applicable provisions of ERISA, the Code and other applicable laws,
rules and regulations and if intended to be qualified within the meaning of
section 401(a) of the Code has received a favorable IRS determination letter (or
is eligible to apply for a letter within the remedial amendment period of
section 401(b) of the Code) that it is so qualified and since the date of such
letter the Sellers have no knowledge of any event that would adversely affect
such qualification; (ii) with respect to any Plan, no actions, audits,
investigations, suits or claims (other than routine claims for benefits in the
ordinary course) are pending or, to the Sellers' knowledge, threatened which
could, if adversely determined, result in liability; (iii) none of Marcliff, its
Subsidiaries or any other party has engaged in a prohibited transaction, as such
term is defined under section 4975 of the Code or section 406 of ERISA, which
would subject Marcliff or its Subsidiaries to any taxes, penalties or other
liabilities under section 4975 of the Code or sections 409 or 502(i) of ERISA;
and (iv) no Plan document provides for an increase in benefits on or after the
Closing; except, with respect to items (i) through (iv), to the extent that any
liability arising therefrom, individually or in the aggregate, would not have a
Material Adverse Effect.
(d) (i) No Plan has incurred any "accumulated funding deficiency" as
such term is defined in section 302 of ERISA and section 412 of the Code
(whether or not waived); (ii) except as set forth on Schedule 5.18(d), no
reportable event within the meaning of section 4043 or ERISA has occurred which
could reasonably be expected to result in a material liability to Marcliff or
any member of its Controlled Group (defined as any organization which is a
member of a controlled group of organizations within the meaning of sections
414(b), (c), (m) or (o) of the Code) and no condition exists which could
reasonably be expected to subject Marcliff or any member of its Controlled Group
to a material fine under section 4071 of ERISA; (iii) neither Marcliff nor any
member of its Controlled Group has engaged in a transaction which could
reasonably be expected to subject it to material liability under section 4069 of
ERISA; and (iv) other than premiums owed to the Pension Benefit Guaranty
Corporation and except as noted on Schedule 5.18(e), there is no outstanding
liability under Title IV of ERISA.
(e) Except as noted on Schedule 5.18(e), with respect to each of the
Plans which is not a multiemployer plan within the meaning of section 4001(a)(3)
of ERISA but is subject to Title IV of ERISA, the assets of each such Plan are
at least equal in value to the present value of the accrued benefits (vested and
unvested) of the participants in such Plan on a termination basis, based on the
actuarial methods and assumptions indicated in the most recent actuarial
valuation reports.
(f) Neither Marcliff nor any member of its Controlled Group has any
liability, contingent or otherwise, for, or contributes to, any multiemployer
plans within the meaning of Section 3(37) of ERISA.
(g) Except as specifically set forth on Schedule 5.18(g), no Plan
exists which could result in the payment to any employee of Marcliff or its
Subsidiaries of a material amount of money or other property or rights or
accelerate or provide any other material rights or benefits to any such employee
as a result of the transactions contemplated by this Agreement.
19
(h) Except as required by section 4980B of the Code, neither Marcliff
nor any member of its Controlled Group has promised any former employee or other
individual not employed by Marcliff or any member of its Controlled Group
medical or other benefit coverage and neither Marcliff nor any member of its
Controlled Group maintains or contributes to any plan or arrangement providing
medical or life insurance benefits to former employees, their spouses or
dependents or any other individual not employed by Marcliff or any member of its
Controlled Group.
(i) With respect to each Plan, Marcliff or its Subsidiaries has
performed its obligations under such Plans in all material respects in
accordance with ERISA and the Code.
(j) ▇▇▇▇▇▇ Canada previously had a pension plan for its employees which
was subsequently wound up effective December 31, 1996 by ▇▇▇▇▇▇ Canada. The
Pension Commission of Ontario effectively consented to the distribution of the
surplus of such plan to ▇▇▇▇▇▇ Canada on April 22, 1998. Such wind up and
distribution was in accordance with the terms of such plan and in compliance
with the applicable provisions of the Pension Benefits Act of the province of
Ontario and other applicable laws, rules and regulations.
5.19 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in Schedule 5.19 hereto:
(i) Marcliff and each of its Subsidiaries is, and within the
period of all applicable statutes of limitation has been, in compliance
with all applicable Environmental Laws (as defined below);
(ii) Marcliff and each of its Subsidiaries holds all
Environmental Permits (as defined below) (each of which is in full
force and effect) required for any of its current operations and for
any property owned, leased, or otherwise operated by it, and Marcliff
and each of its Subsidiaries is, and within the period of all
applicable statutes of limitation have been, in compliance with all
such Environmental Permits;
(iii) no review by, or approval of, any governmental authority
or other person is required under any Environmental Law in connection
with the execution or delivery of this Agreement;
(iv) neither Marcliff nor any of its Subsidiaries has received
any Environmental Claim (as defined below), and, to the knowledge of
the Sellers, no such Environmental Claim is being threatened; and
(v) Hazardous Materials (as defined below) are not present on
or in any property owned, leased, or operated by Marcliff or its
Subsidiaries, that would be reasonably likely to form the basis of any
Environmental Claim against any of them; and, no Hazardous Materials
are present on any other property that would be reasonably likely to
form the basis of any Environmental Claim against Marcliff or its
Subsidiaries (including, without
20
limitation, any Environmental Claim against any person whose liability
Marcliff or its Subsidiaries has or may have retained or assumed,
whether contractually, by operation of law or otherwise, or against any
real or personal property formerly owned, leased or operated in whole
or in part, by Marcliff or its Subsidiaries).
(b) For purposes of this Agreement, the terms below shall have the
following meanings:
"Environmental Claim" means any written claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or notice
of noncompliance, violation, or liability, by any person asserting liability or
potential liability (including without limitation liability or potential
liability for enforcement, investigatory costs, cleanup costs, governmental
response costs, natural resource damages, property damage, personal injury,
fines or penalties) arising out of, relating to, based on or resulting from (i)
the presence, discharge, emission, release or threatened release of any
Hazardous Materials at any location, (ii) any violation or alleged violation of
any Environmental Law or Environmental Permit, or (iii) otherwise relating to
obligations or liabilities under any Environmental Law.
"Environmental Laws" means all foreign, federal, state and local
statutes, rules, regulations, ordinances, orders, decrees and common law
regulating in any manner pollution or protection of the environment (including
without limitation indoor air, ambient air, surface water, groundwater, land
surface, subsurface strata, or plant or animal species) or of human health as it
may be affected by exposure to any pollutant, contaminant or similar substance
or by any condition in the environment.
"Environmental Permits" means all permits, licenses, registrations,
exemptions and other filings with or authorizations by any governmental
authority under any Environmental Law.
"Hazardous Materials" means all hazardous or toxic substances, wastes,
materials or chemicals, petroleum (including crude oil or any fraction thereof),
petroleum products, asbestos, asbestos-containing materials, pollutants,
contaminants, radioactivity, and all other materials and forces, whether or not
defined as such, that are regulated pursuant to any Environmental Law or that
could result in liability under any Environmental Law.
5.20 PERMITS. Marcliff and each of its Subsidiaries holds all material
licenses, permits and franchises which are required to permit it to operate its
business as presently conducted, and all such licenses, permits and franchises
are listed on Schedule 5.20 hereto.
5.21 LITIGATION; PRODUCT LIABILITY CLAIMS.
(a) There is no suit, claim, action, proceeding or governmental
investigation pending or, to the Sellers' knowledge, threatened, against
Marcliff or any of its Subsidiaries, before any court or any governmental
agencies or regulatory authorities which could reasonably be expected to have a
Material Adverse Effect or which seeks to enjoin or otherwise hinder or prevent
the consummation of the transactions contemplated by this Agreement and none of
Marcliff or any
21
of its Subsidiaries, is subject to any court or governmental order, decree,
writ, injunction, determination or award relating to or affecting Marcliff or
any of its Subsidiaries or their respective properties, assets, financial
condition or business other than those of general application.
(b) There is no suit, claim, action, proceeding or governmental
investigation pending or, to the Sellers' knowledge, threatened against Marcliff
or any of its Subsidiaries before any court or any governmental agencies or
regulatory authorities which are based upon, arise out of, or relate to, product
liability claims or other claims that any of the products sold by Marcliff or
its Subsidiaries are defective or failed to meet express or implied warranties.
5.22 FINDER'S FEE. None of the Sellers, Marcliff or its Subsidiaries
has incurred or become liable for any broker's commission or finder's fee
relating to or in connection with the transactions contemplated by this
Agreement, other than a fee to be paid by the Sellers to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
& Co..
5.23 TRANSACTIONS WITH INTERESTED PERSONS. Except as shown on Schedule
5.23, no Seller nor any officer, supervisory employee, director or stockholder
of Marcliff or any of its Subsidiaries or any of their respective affiliates, or
their respective spouses or children, (i) owns, directly or indirectly, on an
individual or joint basis, any material interest in, or serves as an officer or
director of, any customer, competitor or supplier of Marcliff or any of its
Subsidiaries or any organization which has a material contract or arrangement
with Marcliff or any of its Subsidiaries or (ii) has any contract or agreement
with Marcliff or any of its Subsidiaries.
5.24 NO UNDISCLOSED LIABILITIES OR CONTINGENCIES. To the knowledge of
the Sellers, neither Marcliff nor its Subsidiaries has any liabilities of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due, probable of assertion or not, except liabilities that (i) are
reflected or disclosed in the Audited Financial Statements or the Unaudited
Financial Statements referred in Section 5.9 above or (ii) were incurred after
the date of the Base Balance Sheet in the ordinary course of business and are
consistent in amount and nature with past practice over comparable periods.
5.25 CONDUCT OF BUSINESS. Except as indicated on Schedule 5.25, since
the date of the Base Balance Sheet, neither Marcliff nor its Subsidiaries has:
(a) Granted, incurred or suffered any mortgage, security interest lien
or pledge of, or other encumbrance against, any of its assets or any other
change in condition (financial or otherwise), liabilities or business except
changes in the ordinary course of business which have not had a Material Adverse
Effect;
(b) Made any sale, lease, abandonment or disposition, other than in the
ordinary course of business, of any assets;
22
(c) Disposed of or knowingly permitted to lapse any rights to the use
of any Intellectual Property;
(d) Made or become obligated to make, any material loans or advances
(other than advances in respect of expenses in the ordinary course of business)
to any director, officer, or employee of Marcliff or its Subsidiaries;
(e) Canceled any debts owed to or claims held by Marcliff or its
Subsidiaries, including the settlement of any claims or litigation, or waived
any other rights held by Marcliff or its Subsidiaries other than in the ordinary
course of business consistent with past practice or in an amount not in excess
of $50,000 in the aggregate;
(f) Paid any claims against Marcliff or its Subsidiaries, including the
settlement of any claims or litigation against Marcliff or its Subsidiaries or
the payment or settlement of any obligations or liabilities of Marcliff or its
Subsidiaries, other than in the ordinary course of business consistent with past
practice or in an amount not in excess of $50,000 in the aggregate;
(g) Created, incurred or assumed, or agreed to create, incur or assume,
any indebtedness for borrowed money or entered into, as lessee, any capitalized
lease obligations (as defined in Statement of Financial Accounting Standards No.
13) with aggregate payments exceeding $50,000 during the term of such lease;
(h) Accelerated or delayed collection of notes or accounts receivables
in advance of or beyond their regular due dates or the dates when the same would
have been collected in the ordinary course of business consistent with past
practice;
(i) Delayed or accelerated payment of any account payable or other
liability of Marcliff or its Subsidiaries beyond or in advance of its due date
or the date when such liability would have been paid in the ordinary course of
business consistent with past practice;
(j) Undertaken or committed to undertake any capital expenditures
exceeding $50,000 in the aggregate;
(k) Made or agreed to make any payment of cash or distribution of
assets to the Sellers, except for regular payments of wages, salary, and
employee benefits consistent with past practice and the distribution of the
Excluded Assets in redemption of Redemption Shares as provided in Section 1.1
hereof;
(l) Prepared or filed any Tax Return inconsistent with past practice
or, in any such Tax Return, taken any position, made any election or adapted any
method that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods; or
(m) Entered into any negotiations or contracts to accomplish any of the
items described in the preceding clauses (a) through (l).
23
5.26 INSURANCE.
(a) Schedule 5.26(a) sets forth a list and brief description of all
policies of insurance maintained, owned or held by or for the benefit of
Marcliff and its Subsidiaries on the date hereof. Marcliff and its Subsidiaries
has maintained, and has in effect, such policies of motor vehicle, property,
casualty, workers' compensation, product liability, general liability and other
insurance, including without limitation group insurance and any other life,
health, disability or other insurance for the benefit of employees or their
dependents or both, as are deemed by it to be appropriate. Neither Marcliff nor
its Subsidiaries has given or received any notices of cancellation or nonpayment
of the premiums for such policies and the premiums due thereon have been fully
paid.
(b) Except as set forth on Schedule 5.26(b) hereto, there are no past,
current or pending claims against Marcliff or its Subsidiaries for any workers'
compensation or federal or state occupational disease benefits made within the
past three years. Except as otherwise noted on Schedule 5.26(b), all such
benefits have been paid in full as due.
5.27 CUSTOMERS AND SUPPLIERS.
(a) Schedule 5.27(a) sets forth a list of names and addresses for the
fifteen largest customers (who maintain accounts with Marcliff and its
Subsidiaries as of December 31, 1997) and the ten largest suppliers (measured in
each case by dollar volume of purchases or sales during the year ended December
31, 1997) of Marcliff and its Subsidiaries and the dollar amount of purchase or
sales which each such customer or supplier represented during the fiscal year
ended December 31, 1997.
(b) Except as noted on Schedule 5.27(b), since December 31, 1997,
neither Marcliff nor its Subsidiaries has lost or been notified in writing that
it will lose any customer or group of related customers of Marcliff and its
Subsidiaries that generated (individually or as a related group) sales for the
year ended December 31, 1997 equal to or greater than $50,000.
5.28 DISCLOSURE. None of the representations and warranties of the
Sellers set forth in this Article 5 is false or misleading in any material
respect, or contains any misstatement of fact or, to the Sellers' knowledge,
omits to state any facts required to be stated to make such representations and
warranties not misleading in any material respect.
5.29 KNOWLEDGE. To the extent that any portion of the representations
and warranties made herein were made to the knowledge of the Sellers, such
knowledge shall be understood to mean, as to any Seller who is an individual,
the actual knowledge of such individual and shall mean, as to any Seller who is
not an individual, the actual knowledge of any of the senior executive officers
of such Seller, and in each case shall be qualified by and limited to such
actual knowledge; provided, however, that the actual knowledge of each of ▇▇▇▇
▇▇▇▇▇▇▇, the Chairman of the Board and the Chief Executive Officer of Marcliff
and ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., the Treasurer of ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, former
Vice President, Human Resources of ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Vice President, Sales of
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, National Sales Manager of ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇,
Operations Manager of ▇▇▇▇▇▇ shall be imputed to each of the Sellers.
24
5.30 SOLE REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in this Article 5 are the only representations and
warranties made by the Sellers in connection with the transactions contemplated
hereby and supersede any and all previous written or oral statements by the
Sellers or any of their agents to the Buyer or its agents.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
As a material inducement to the Sellers to enter into this Agreement
and to consummate the transactions contemplated hereby, the Buyer hereby makes
the following representations and warranties:
6.1 ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own or lease its
properties, to conduct its business in all material respects in the names and in
the places where such properties are owned or leased or such business is
conducted by it and to consummate the transactions contemplated by this
Agreement.
6.2 AUTHORITY. The Buyer has full right, power and authority to enter
into this Agreement and each agreement, document and instrument to be executed
and delivered by it or on its behalf pursuant to, or as contemplated by, this
Agreement and to carry out the transactions contemplated hereby and thereby. The
execution and delivery by the Buyer of this Agreement and each such other
agreement, document and instrument, and the performance by the Buyer of its
obligations hereunder and thereunder, has been duly authorized by all necessary
corporate action and no other action is required. This Agreement and each
agreement, document and instrument executed and delivered by the Buyer pursuant
to, or as contemplated by, this Agreement constitute, or when executed and
delivered will constitute, valid and binding obligations of the Buyer
enforceable in accordance with their respective terms, subject to laws of
general application affecting creditors' rights generally.
6.3 NO CONFLICT . Neither the execution and delivery of this Agreement
by the Buyer or any of the agreements, documents or instruments to be executed
and delivered by the Buyer pursuant to, or as contemplated by, this Agreement,
nor the performance by the Buyer of its obligations hereunder or thereunder,
will (i) result in a violation by the Buyer of its certificate of incorporation,
articles of organization or other relevant constitutive or organizational
documents or by-laws, as amended and in effect as of the date hereof, (ii)
constitute a breach of, or default under, any agreement, lease, indenture or
instrument to which the Buyer is a party or by which the Buyer is bound, (iii)
result in a violation of the laws of the United States or the laws of any state
or other jurisdiction applicable to the Buyer or (iv) require the Buyer to
obtain any approval, consent or waiver of, or making any filing with, any person
or entity (governmental or otherwise) that has not been obtained or made.
6.4 INFORMED BUYER. The Buyer and its senior executive officers are
sophisticated investors with experience in the acquisition and valuation of
securities, businesses and properties
25
and have been represented in the transactions contemplated hereby by experienced
independent legal counsel. The Buyer has been afforded a full and complete
opportunity to meet with and ask questions of the Sellers and the executive
officers of Marcliff and its Subsidiaries and acknowledges that it has received,
or has had access to, all books, records and other information regarding
Marcliff and its Subsidiaries and their respective properties, assets, financial
condition and business which the Buyer considers necessary or prudent to enable
it to make an informed investment decision concerning its purchase of the
Purchase Shares. The Buyer is purchasing the Purchase Shares for its own account
and not with any view to the resale thereof and understands that the Purchase
Shares are being sold without registration under the federal securities laws in
reliance upon such representation.
6.5 LITIGATION. There is no litigation pending or, to the knowledge of
the Buyer, threatened against the Buyer which seeks to enjoin or otherwise
hinder or prevent the consummation of the transactions contemplated by this
Agreement.
6.6 FINANCIAL RESOURCES; OTHER MATTERS. The Buyer has as of the date
hereof, and will have as of the date of the Closing, sufficient funds, including
cash on hand together with funds available under bank or other credit facilities
currently in place, to purchase and pay for the Purchase Shares pursuant to the
terms of this Agreement and to consummate the transactions contemplated hereby
in accordance with the terms hereof. To the extent that the Buyer will draw upon
funds under existing bank or other credit facilities in order to purchase and
pay for the Purchase Shares and to consummate the transactions contemplated by
this Agreement, the use of such funds for such purposes is permitted under the
terms of such bank or other credit facilities and all consents, waivers or
approvals required for such uses have been obtained. The Buyer is not aware of
any matter which would prevent it from fulfilling its obligations under the
Agreement or consummating the transaction contemplated hereby.
6.7 FINDER'S FEE. The Buyer has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
6.8 SOLE REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in this Article 6 are the only representations and
warranties made by the Buyer in connection with the transactions contemplated
hereby and supersede any and all previous written or oral statements by the
Buyer or its agents to the Sellers or their agents.
ARTICLE 7. COVENANTS OF THE SELLERS.
Each of the Sellers, severally and not jointly, hereby covenants and
agrees with the Buyer as follows:
7.1 CONDUCT OF BUSINESS. Between the date of this Agreement and the
Closing, Marcliff and each of its Subsidiaries shall:
26
(i) conduct its business only in the ordinary course on a
basis consistent with past practice;
(ii) refrain from making any purchase, sale or disposition of
any asset or property other than in the ordinary course of business, from
purchasing any capital asset, from closing any plant or facility, and from
mortgaging, pledging, subjecting to a lien or otherwise encumbering any of its
assets;
(iii) refrain from entering into any employment contract or
granting any bonus or otherwise making any change in the compensation payable or
to become payable to any of its employees, other than pursuant to compensation
programs existing on the date hereof;
(iv) use reasonable efforts to keep intact the business
organization of Marcliff and each of its Subsidiaries, to keep available to the
Buyer present employees of Marcliff and each of its Subsidiaries and to preserve
the goodwill of all suppliers to, and customers, of Marcliff and each of its
Subsidiaries;
(v) refrain from incurring any contingent liability as a
guarantor or otherwise with respect to the obligations of others, or incur any
other contingent or fixed obligations or liabilities except those that are usual
and normal in the ordinary course of business;
(vi) refrain from any merger, consolidation or other
combination with, and refrain from entering any agreement to merge, consolidate
or otherwise combine with, any other corporation, partnership, limited liability
company or other business organization;
(vii) refrain from authorizing for issuance, issuing, selling
or delivering any additional shares of capital stock or other securities or any
equity interests or other similar rights therein, other than shares of Voting
Common Stock of Marcliff which may be issued and delivered upon exercise of the
outstanding option listed on Schedule 1 hereto;
(viii) refrain from authorizing for issuance, issuing or
granting any option, warrant or other right to purchase any shares of capital
stock or other securities or any equity interests or other similar rights
therein;
(ix) refrain from any split, combination or reclassification
of any shares of capital stock or other securities or any equity interests or
other similar rights therein and from any redemption, repurchase or acquisition,
directly or indirectly any shares of capital stock or other securities or any
equity interests or other similar rights therein of any Subsidiary;
(x) refrain from making any change or incurring any obligation
to make any change in its Charter or By-laws;
(xi) refrain from making any changes in its accounting
methods, principles or practices;
27
(xii) maintain at all times all insurance of the type, in the
amounts and with the insurers listed in Schedule 5.26(a) or equivalent insurance
with any substitute insurers approved by the Buyer; or
(xiii) refrain from entering into any agreement or
understanding that would prohibit, restrict or interfere with the transactions
contemplated hereby.
7.2 DUE DILIGENCE. Such Seller shall take such action as may be
reasonably necessary to permit the Buyer and its authorized representatives to
have full access during normal business hours to all properties, assets,
records, tax returns, contracts and documents related to Marcliff and each of
its Subsidiaries and their respective assets and businesses and shall furnish to
the Buyer or its authorized representatives such financial and other information
with respect to Marcliff and its Subsidiaries and their respective assets and
its businesses as the Buyer may from time to time reasonably request.
7.3 WAIVERS, CONSENTS AND APPROVALS. Such Seller shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations on his
or its part to be performed and fulfilled hereunder and to obtain or make, or
cause to be obtained or made, prior to the date of the Closing all waivers,
consents, approvals and filings necessary to the performance of his or its
obligations under this Agreement, and to obtain or cause to be obtained such
other authorizations, waivers, consents, permits, licenses, approvals,
qualifications and orders of governmental authorities and parties to contact as
may be necessary to transfer to the Buyer and/or to retain in full force and
effect subsequent to the date of the Closing, all licenses, permits and
franchises applicable to the business of Marcliff and its Subsidiaries.
7.4 BREACH OF REPRESENTATIONS AND WARRANTIES. Promptly upon becoming
aware of the occurrence of any event which would constitute a material breach of
any of the representations and warranties of the Sellers contained in or
referred to in this Agreement, such Seller shall give detailed written notice
thereof to the Buyer and shall use commercially reasonable efforts to remedy the
same. The delivery of such notice shall not, however, limit or otherwise affect
the remedies available hereunder to the Buyer.
7.5 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT. In connection with the transactions
contemplated by this Agreement, the Sellers have previously caused Marcliff to
make certain filings as required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, (the "HSR" Act). Such Seller shall use
commercially reasonable efforts in his or its capacity as a stockholder of
Marcliff to cause Marcliff and its Subsidiaries to furnish to the Buyer such
information and commercially reasonable assistance as the Buyer may reasonably
request in connection with its preparation of any additional necessary filings
or submissions to any governmental agency, including, without limitation, any
additional filings necessary under the HSR Act. Such Seller shall use
commercially reasonable efforts in his or its capacity as a stockholder of
Marcliff to cause Marcliff and its Subsidiaries to keep the Buyer informed of
the status of any inquiries made of any such party by the Federal Trade
Commission, the Antitrust Division of the U. S. Department of Justice or any
other governmental agency or authority or members of their respective staffs
with respect to this Agreement or the transactions contemplated hereby.
28
7.6 CONSUMMATION OF AGREEMENT. Such Seller shall use all commercially
reasonable efforts to perform and fulfill all conditions and obligations on his
or its part to be performed and fulfilled under this Agreement, to the end that
the transactions contemplated by this Agreement shall be fully carried out.
7.7 NONDISCLOSURE OF PROPRIETARY DATA. Such Seller shall not, at any
time prior to or following the Closing, make use of, or except as required by
law, divulge or otherwise disclose, directly or indirectly, to any person other
than the Buyer, any trade secret or other confidential or proprietary data
(including, but not limited to, any confidential customer list, know-how, secret
processes, personnel information, technical data, record or financial
information) concerning the business or policies of Marcliff or any of its
Subsidiaries which may have been disclosed or made available to such Seller as a
shareholder, employee, officer or director of Marcliff or any of its
Subsidiaries. The foregoing covenant shall not, however, apply with respect to
any data or other information which is or becomes generally available to the
public other than as a result of disclosure by one of the Sellers.
ARTICLE 8. COVENANTS OF BUYER.
The Buyer hereby covenants and agrees with the Seller as follows:
8.1 WAIVERS CONSENTS AND APPROVALS. The Buyer shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations on its
part to be performed and fulfilled hereunder and to obtain or make, or cause to
be obtained or made, prior to the date of the Closing all waivers, consents,
approvals and filings necessary to the performance of its obligations under this
Agreement.
8.2 BREACH OF REPRESENTATIONS AND WARRANTIES. Promptly upon becoming
aware of the occurrence of any event which would constitute a material breach of
any of the representations and warranties of the Buyer, the Buyer shall give
detailed written notice thereof to the Sellers' Representative and shall use
commercially reasonable efforts to remedy the same. The delivery of such notice
shall not, however, otherwise affect the remedies available hereunder to the
Sellers.
8.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT. In connection with the transactions
contemplated by this Agreement, the Buyer has previously made certain filings as
required under the HSR Act. The Buyer shall furnish to the Sellers'
Representative such information and commercially reasonable assistance as the
Sellers' Representative may reasonably request in connection with its
preparation of any additional necessary filings or submissions to any
governmental agency, including, without limitation, any additional filings
necessary under the HSR Act. The Buyer shall keep the Sellers' Representative
informed of the status of any inquiries made of the Buyer by the Federal Trade
Commission, the Antitrust Division of the U. S. Department of Justice or any
other governmental agency or authority or members of their respective staffs
with respect to this Agreement or the transactions contemplated hereby.
29
8.4 CONSUMMATION OF AGREEMENT. The Buyer shall use all commercially
reasonable efforts to perform and fulfill all conditions and obligations on its
part to be performed and fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be fully carried out.
8.5 RESTRICTIONS AS TO CERTAIN POST-CLOSING ENVIRONMENTAL REMEDIAL
ACTIONS. During the three (3) year period following the date of the Closing,
neither the Buyer nor any of its affiliates, agents, employees, officers or
directors, acting on behalf of any of them, shall contact, or cause Marcliff or
any of its Subsidiaries to contact, without the prior written consent of the
Sellers' Representative, any foreign, federal, state or local authority for the
purpose of initiating any investigation or inquiry as to the compliance by
Marcliff or its Subsidiaries with Environmental Laws or Environmental Permits at
▇▇▇▇▇▇'▇ former facilities in either Wolcott, Connecticut or ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇; PROVIDED, HOWEVER that Buyer and any of its affiliates and
Marcliff and any of its Subsidiaries may take any such actions as they
reasonably believe necessary to comply with any foreign, federal, state or local
statutes, rules, regulations, ordinances, decrees or common law. The foregoing
restrictions shall not, however, be deemed to limit or in any way restrict the
right of the Buyer, or any of its affiliates or Marcliff or its Subsidiaries
from responding to, or participating in, inquiries or investigations initiated
by any federal, state or local governmental agencies or authorities or by third
parties. The foregoing restrictions shall also not prohibit Buyer from
initiating any inquiry or investigation, or from initiating or undertaking any
remedial action, under any Environmental Laws if such inquiry, investigation or
remedial action would not result in any Loss (as defined in Section 12.1) which
would be subject to indemnification under Section 12.3 hereof.
ARTICLE 9. CONDITIONS TO OBLIGATIONS OF THE BUYER.
The obligations of the Buyer to consummate the transactions
contemplated by this Agreement are subject to the fulfillment prior to or at the
Closing of the following conditions:
9.1 REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the representations
and warranties of the Sellers set forth in Article 5 hereof shall be accurate in
all material respects as if made on and as of the date of Closing as well as on
the date hereof, other than with respect to representations and warranties that
refer to or speak as of a certain date, except for changes contemplated by this
Agreement and occurring in the ordinary course of business since the date
hereof, none of which shall have had a Material Adverse Effect, and the Sellers'
Representative shall have certified to such effect to the Buyer in writing. The
Sellers shall have performed in all material respects all of those obligations,
and shall have complied in all material respects with those covenants, required
to be performed or observed at or prior to the Closing, and the Sellers'
Representative shall have certified to such effect to the Buyer in writing.
9.2 RESIGNATIONS. On the date of the Closing the Buyer shall have
received the resignation of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as directors
of Marcliff and ▇▇▇▇▇▇ and the resignation of such other officers and directors
of Marcliff, ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Canada as the Buyer may request.
30
9.3 HSR ACT. All filings required to be made under the HSR Act shall
have been made, and any applicable waiting period thereunder shall have expired.
9.4 OPINIONS OF COUNSEL; ADDITIONAL DOCUMENTS. On the date of the
Closing, the Buyer shall have received (i) an opinion of Brown, Rudnick, Freed &
Gesmer, counsel to the Orion Sellers and Marcliff and its Subsidiaries, dated as
of the Closing and addressed to the Buyer and substantially in the form of
Schedule 9.4.1 hereto, (ii) an opinion of ▇▇▇▇ & ▇▇▇▇▇▇, Canadian counsel, dated
as of the Closing and addressed to the Buyer, substantially in the form of
Schedule 9.4.2 hereto, (iii) evidence satisfactory to the Buyer of the due
authorization, execution and delivery of this Agreement and all related
agreements by each of the Sellers and (iv) such other certificates and documents
as the Buyer or its counsel may reasonably request.
9.5 NATIONSCREDIT PAY-OFF LETTER. On the date of the Closing, the Buyer
shall have received a pay-off letter from NationsCredit setting forth the
aggregate amount of the Senior Debt owed to NationsCredit by Marcliff and its
Subsidiaries as of the date of the Closing.
9.6 NO INJUNCTION. There shall not be any injunction, restraining order
or order of any nature issued by any court of competent jurisdiction which
enjoins or otherwise prohibits the consummation of the transactions contemplated
hereby.
9.7 EMPLOYMENT AND NONCOMPETITION AGREEMENTS. On the date of the
Closing, ▇▇▇▇ ▇▇▇▇▇▇▇ shall have executed and delivered to the Buyer both an
Employment Agreement and a Noncompetition Agreement in form and substance
reasonably satisfactory to ▇▇. ▇▇▇▇▇▇▇ and the Buyer.
9.8 REDEMPTION . On the date of the Closing, (i) Marcliff and ▇▇▇▇▇▇
shall have taken any and all such action as may be necessary to cause C&L Realty
Trust to be merged with and into Chelsea Crescent and the LLC Membership
Interests to be transferred to Marcliff by ▇▇▇▇▇▇ and by Marcliff to the Sellers
in connection with the redemption of the Redemption Shares in accordance with
Section 1.1 hereof; (ii) Marcliff shall have taken any and all such action as
may be necessary to release and terminate the pledge granted in favor of
Marcliff by ▇▇▇▇ ▇▇▇▇▇▇▇ under that certain Pledge Agreement dated as of July
18, 1996; and such pledge shall have been terminated; and (iii) the Sellers
shall have tendered for redemption, and Marcliff shall have redeemed and
cancelled, all of the Redemption Shares in exchange for the Excluded Assets in
accordance with Section 1.1 hereof.
9.9 TERMINATION OF STOCKHOLDERS AGREEMENT; WAIVER OF RIGHTS . On or
prior to the date of the Closing, that certain Stockholders' Agreement dated as
of June 26, 1995 shall have been terminated and the parties thereto shall have
waived all of their rights individually and jointly thereunder.
9.10 TERMINATION OF STOCK RESTRICTION AGREEMENT . On or prior to the
date of the Closing, the Stock Restriction Agreement dated May 14, 1997 by and
between Marcliff and ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. shall have been terminated and ▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. shall have waived all of his rights thereunder.
31
9.11 ESCROW AGREEMENT. On the date of the Closing, each of the Sellers
and the Escrow Agent shall have executed and delivered the Escrow Agreement.
9.12 THE BUYER'S FRUSTRATION OF CLOSING CONDITIONS. The Buyer may not
rely on the failure of any condition set forth in this Article 9 to be satisfied
if such failure was caused by the Buyer's failure to act in good faith or to use
all reasonable efforts to cause the Closing to occur, as required under Section
8.5 hereof.
ARTICLE 10. CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to consummate the transactions
contemplated by this Agreement are subject to the fulfillment prior to or at the
Closing of the following conditions:
10.1 REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of the Buyer contained in Article 6 hereof shall
be accurate in all material respects as if made on and as of the date of Closing
as well as on the date hereof, except for changes occurring in the ordinary
course of business since the date hereof, none of which shall be material and an
officer of the Buyer shall have certified to such effect to the Sellers'
Representative in writing. The Buyer shall have performed in all material
respects all of those obligations, and shall have complied in all material
respects with those covenants, required to be performed or observed at or prior
to the Closing, and an officer of the Buyer shall have certified to such effect
to the Sellers' Representative in writing.
10.2 HSR ACT. All filings required to be made under the HSR Act shall
have been made, and any applicable waiting period thereunder shall have expired.
10.3 ADDITIONAL DOCUMENTS. At the Closing, the Sellers shall have
received such other certificates and documents as the Sellers or their counsel
may reasonably request.
10.4 PREPAYMENT OF ▇▇▇▇▇ AND ▇▇▇▇▇▇▇ NOTES. At the Closing, the ▇▇▇▇▇
and ▇▇▇▇▇▇▇ Notes and ▇▇▇▇▇ and ▇▇▇▇▇▇▇ Interest Receivable shall be repaid in
full to the Sellers' Representative or, the Sellers' Representative shall have
received appropriate written authorization and direction from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇▇▇▇ to apply from their proportionate share of Aggregate Purchase
Price funds sufficient to repay the ▇▇▇▇▇ and ▇▇▇▇▇▇▇ Notes and the ▇▇▇▇▇ and
▇▇▇▇▇▇▇ Interest Receivable in full.
10.5 NO INJUNCTION. There shall not be any injunction, restraining
order or order of any nature issued by any court of competent jurisdiction which
enjoins or otherwise prohibits the consummation of the transactions contemplated
hereby.
10.6 ESCROW AGREEMENT. On the date of the Closing, the Buyer shall have
executed and delivered the Escrow Agreement.
10.7 THE SELLERS' FRUSTRATION OF CLOSING CONDITIONS. No Seller may rely
on the failure of any condition set forth in this Article 10 to be satisfied if
such failure was caused by the
32
failure of such Seller to act in good faith or to use reasonable efforts to
cause the Closing to occur, as required under Section 7.6 hereof.
ARTICLE 11. TERMINATION OF AGREEMENT.
11.1 TERMINATION. At any time prior to the Closing, this Agreement may
be terminated (i) by mutual consent of the Buyer and the Sellers'
Representative, (ii) by the Buyer if the conditions stated in Article 9 have not
been satisfied at or prior to the Closing, or (iii) by the Sellers'
Representative if the conditions stated in Article 10 have not been satisfied at
or prior to the Closing.
11.2 EFFECT OF TERMINATION. If this Agreement shall be terminated as
above provided, all obligations of the parties hereunder shall terminate but any
breaching party shall remain liable to the non-breaching party for its damages
and out-of-pocket expenses.
11.3 RIGHT TO PROCEED. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in Article 9 hereof have not
been satisfied, the Buyer shall have the right to waive the satisfaction of any
such condition and to proceed with the transactions contemplated hereby, and if
any of the conditions specified in Article 10 hereof have not been satisfied,
the Sellers' Representative shall have the right to waive the satisfaction of
any such condition and to proceed with the transactions contemplated hereby.
ARTICLE 12. INDEMNIFICATION
12.1 DEFINITIONS. For purposes of this Article 12:
"Losses" means all losses, damages (other than punitive,
incidental or consequential damages), liabilities, payments and obligations, and
all expenses related thereto. Losses shall include any legal fees and costs
incurred by any of the Indemnified Persons subsequent to the Closing in defense
of or in connection with any alleged or asserted liability, payment or
obligation, whether or not any liability or payment, obligation or judgment is
ultimately imposed against the Indemnified Persons and whether or not the
Indemnified Persons are made or become parties to any such action. The amount of
all Losses shall be calculated net of the tax benefits (assuming the highest
marginal tax rate) which such Losses would provide to a corporate taxpayer
(assuming no limitations based on lack of taxable income against which to deduct
such Losses).
The "Buyer's Indemnified Persons" means the Buyer and any
person that directly or indirectly controls, or is controlled by, or is under
common control with, the Buyer, and their respective directors, officers,
employees, stockholders and agents.
"Indemnified Person" means any person entitled to be
indemnified under this Article 12.
33
"Indemnifying Person" means any person obligated to indemnify
another person under this Article 12.
The "Sellers' Indemnified Persons" means each of the Sellers
and any person that directly or indirectly controls, or is controlled by, or is
under common control with, the Seller, and their respective general partners,
limited partners, directors, stockholders, officers, employees, and agents.
"Third Party Action" means any written assertion of a claim,
or the commencement of any action, suit, or proceeding, by a third party as to
which any person believes it may be an Indemnified Person hereunder.
12.2 SURVIVAL OF WARRANTIES. All representations, warranties,
agreements, covenants and obligations herein or in any Schedule, certificate or
financial statement delivered by either party to the other party incident to the
transactions contemplated hereby are material, shall be deemed to have been
relied upon by the other party and shall survive the Closing in accordance with
this Article 12, provided, however, that the covenants and agreements contained
herein to be performed or complied with prior to the Closing shall expire at the
Closing.
12.3 INDEMNIFICATION BY THE SELLERS.
(a) Subject to the limitations in paragraph (c) below, Orion
Capital Holdings, L.P. and M-K I Partnership, L.P. (together, the "Orion
Sellers"), jointly and severally, shall defend, indemnify and hold harmless the
Buyer's Indemnified Persons from and against all Losses directly or indirectly
incurred by or sought to be imposed upon any of them:
(i) resulting from or arising out of any breach of
any of the representations or warranties set forth in Article 5 hereof (other
than those in Sections 5.4, 5.5, 5.11 or 5.19);
(ii) resulting from or arising out of any breach of
any covenant or agreement made by the Sellers in or pursuant to this Agreement
(other than those set forth in Section 7.7 hereof);
(iii) resulting from or arising out of any breach of
the representations or warranties set forth in Section 5.19 hereof; or
(iv) resulting from or arising out of any breach of
the representations or warranties set forth in Section 5.11 hereof or resulting
from or arising out of ▇▇▇▇▇▇'▇ failure to file those franchise and/or income
tax returns referred to on Schedule 5.11(b) or to pay any taxes, penalties or
interest which may have been, or which may be, assessed in connection with such
tax returns; or
(b) Subject to the limitations in paragraph (c) below, each of
the Sellers shall indemnify, defend and hold harmless the Buyer's Indemnified
Persons from and against all
34
Losses directly or indirectly incurred by or sought to be imposed upon any of
them resulting from or arising out of any breach by such Seller of the
representations or warranties set forth in Sections 5.4 or 5.5 hereof or the
covenants set forth in Section 7.7 hereof.
(c) The right to indemnification under paragraphs (a) or (b)
above is subject to the following limitations:
(i) Neither of the Orion Sellers shall have any
liability under paragraph (a) unless one or more of the Buyer's Indemnified
Persons gives written notice to the Orion Sellers asserting a claim for Losses,
including reasonably detailed facts and circumstances pertaining thereto, before
the expiration of the period set forth below:
(A) for claims under clauses (i) or (ii) of
paragraph (a) above, a period of eighteen (18) months following the date of the
Closing;
(B) for claims under clause (iii) of
paragraph (a) above, a period of three (3) years following the date of the
Closing; and
(C) for all other claims, for so long as any
claim may be made in respect of such matters under any applicable statute of
limitations.
(ii) Indemnification for a Loss under paragraph (a)
above shall be payable by the Orion Sellers hereunder only if and to the extent
that the aggregate amount of all Losses incurred by the Buyer's Indemnified
Persons under paragraph (a) above exceeds One Hundred Seventy Five Thousand
Dollars ($175,000). The maximum aggregate liability of the Orion Sellers for
indemnification for Losses under paragraph (a) above shall not exceed Seven
Million Dollars ($7,000,000). The maximum liability of a Seller for
indemnification for Losses under paragraph (b) above shall not exceed the amount
which such Seller has received in payment for such Seller's Purchase Shares.
(c) The indemnification remedy provided to the Buyer and the
Buyer's Indemnified Persons shall be the exclusive remedy to which the Buyer and
the Buyer's Indemnified Persons shall be entitled after the Closing for any
breach of any representation or warranty or any covenant under this Agreement.
12.4 INDEMNIFICATION BY THE BUYER.
(a) Subject to the limitations in paragraph (b) below, the
Buyer shall defend, indemnify and hold harmless the Sellers' Indemnified Persons
from any and all Losses directly or indirectly incurred by or sought to be
imposed upon any of them:
(i) resulting from or arising out of any breach of
any of the representations or warranties set forth in Article 6 hereof; or
35
(ii) resulting from or arising out of any breach of
any covenant or agreement made by the Buyer in or pursuant to this Agreement.
(b) The right to indemnification under paragraph (a) above is
subject to the limitation that the Buyer shall have no liability under paragraph
(a) unless one or more of the Seller's Indemnified Persons gives written notice
to the Buyer asserting a claim for Losses, including reasonably detailed facts
and circumstances pertaining thereto, before the expiration of the eighteen (18)
month period following the date of the Closing.
(c) The indemnification remedy provided to the Sellers and the
Sellers' Indemnified Persons shall be the exclusive remedy to which the Sellers
and the Sellers' Indemnified Persons shall be entitled after the Closing for any
breach of any representation or warranty or any covenant under this Agreement.
12.5 DEFENSE OF THIRD PARTY ACTIONS.
(a) Promptly after receipt of notice of any Third Party
Action, any person who believes he or it may be an Indemnified Person shall give
notice to the potential Indemnifying Person of such action. The omission to give
such notice to the Indemnifying Person will not relieve the Indemnifying Person
of any liability hereunder unless the Indemnifying Person was prejudiced
thereby, nor will it relieve him or it of any liability which he or it may have
other than under this Article 12.
(b) Upon receipt of a notice of a Third Party Action, the
Indemnifying Person shall have the right, at his or its option and at his or its
own expense, to participate in and be present at the defense of such Third Party
Action, but not to control the defense, negotiation or settlement thereof, which
control shall remain with the Indemnified Person, unless the Indemnifying Person
makes the election provided in paragraph (c) below.
(c) By written notice within forty five (45) days after
receipt of a notice of a Third Party Action, an Indemnifying Person may elect to
assume control of the defense, negotiation and settlement thereof, with counsel
reasonably satisfactory to the Indemnified Person; provided, however, that the
Indemnifying Person agrees (i) to promptly indemnify the Indemnified Person for
its expenses to date, and (ii) to hold the Indemnified Person harmless from and
against any and all Losses caused by or arising out of any settlement of the
Third Party Action approved by the Indemnifying Person or any judgment in
connection with that Third Party Action. The Indemnifying Person shall not in
the defense of the Third Party Action enter into any settlement which does not
include as a term thereof the giving by the third party claimant of an
unconditional release of the Indemnified Person in form and substance reasonably
satisfactory to the Indemnified Person and his or its counsel, or consent to
entry of any judgment except with the consent of the Indemnified Person.
(d) Upon assumption of control of the defense of a Third Party
Action under paragraph (c) above, the Indemnifying Person will not be liable to
the Indemnified Person
36
hereunder for any legal or other expenses subsequently incurred in connection
with the defense of the Third Party Action, other than reasonable expenses of
investigation.
(e) If the Indemnifying Person does not elect to control the
defense of a Third Party Action under paragraph (c), the Indemnifying Person
shall promptly reimburse the Indemnified Person for expenses incurred by the
Indemnified Person in connection with defense of such Third Party Action, as and
when the same shall be incurred by the Indemnified Person.
(f) Any person who has not assumed control of the defense of
any Third Party Action shall have the duty to cooperate with the party which
assumed such defense.
ARTICLE 13. GENERAL PROVISIONS.
13.1 FEES AND EXPENSES. All fees and expenses incurred by the Buyer in
connection with the negotiation of this Agreement or the consummation of the
transactions contemplated hereby, including, without limitation, all fees
payable in connection with any filing to be made under the HSR Act, shall be
paid by the Buyer. All fees and expenses incurred by the Sellers or the Sellers'
Representative in connection with the negotiation of this Agreement or the
consummation of the transactions contemplated hereby, including, without
limitation, all fees payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Brown, Rudnick,
Freed & Gesmer, ▇▇▇▇ & ▇▇▇▇▇▇ and all other legal counsel retained by the
Sellers' Representative, shall be paid by the Sellers, such fees and expenses to
be borne among the Sellers in proportion to their ownership of Shares of Common
Stock (Voting and Non-Voting) listed on Schedule 1 hereto.
13.2 NOTICES. Any and all notices or other communications required or
permitted to be given in connection with this Agreement shall be in writing (or
in the form of a telegram or facsimile transmission) addressed as provided below
and shall be (i) delivered by hand, (ii) transmitted by telegram or facsimile
with transmission confirmed, (iii) delivered by overnight courier service with
confirmed receipt or (iv) mailed by first class U.S. mail, postage prepaid and
registered or certified, return receipt requested:
If to any of the Sellers to:
The address of such Seller as listed on Schedule 1.1 hereto
with copies to:
37
Orion Capital Partners, L.P.
The Wellesley Office Park
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Managing Director
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
Brown, Rudnick, Freed & Gesmer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Sellers' Representative to:
Orion Capital Partners, L.P.
The Wellesley Office Park
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Managing Director
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
Brown, Rudnick, Freed & Gesmer, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
38
If to the Buyer, to:
Kaynar Technologies Inc.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Jordan A. Law
Chairman of the Board
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
C. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
and in any case at such other address as the addressee shall have specified by
written notice. Any notice or other communication given in accordance with this
Section 13.2 shall be deemed delivered and effective upon receipt, except those
notices and other communications sent by mail, which shall be deemed delivered
and effective three (3) business days following deposit with the United States
Postal Service. All periods of notice shall be measured from the date of
delivery thereof.
13.3 PUBLICITY AND DISCLOSURES. No press releases or any public
disclosure, either written or oral, of the transactions contemplated by this
Agreement shall be made prior to the Closing without the prior knowledge and
written consent of both the Buyer and the Sellers' Representative.
Notwithstanding the foregoing, however, each party shall be entitled to make
such disclosures which it may determine in good faith to be required under
applicable federal and state securities laws. In the event that any party
determines in good faith that any such disclosure is required, it shall use its
best efforts to provide the other parties hereto with copies of such disclosure
prior to its release to the public.
13.4 FURTHER ASSURANCES. Each of the Sellers and the Buyer hereby
agrees to execute and deliver, both prior to or following the Closing, such
further certificates, agreements and other documents and take such other actions
as the other parties may reasonably request in order to consummate or implement
the transactions contemplated hereby or to evidence or confirm such events or
matters.
13.5 ENTIRE AGREEMENT. This Agreement (including all Schedules appended
to this Agreement, all of which are hereby incorporated herein by reference),
together with the Confidentiality Agreement dated May 21, 1998 between the Buyer
and ▇▇▇▇▇▇ (which is also hereby incorporated herein by reference), constitute
the entire agreement between the parties, and all promises, representations,
understandings, warranties and agreements with reference to the
39
subject matter hereof and inducements to the making of this Agreement relied
upon by any party hereto, have been expressed herein or in the documents
incorporated herein by reference.
13.6 SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision hereof.
13.7 ASSIGNABILITY. This Agreement may not be assigned otherwise than
by operation of law (i) by the Buyer without the prior written consent of the
Sellers' Representative, or (ii) by any of the Sellers without the prior written
consent of the Buyer, except that the Buyer may assign any and all of its rights
hereunder (including its right to indemnification) to General Electric Capital
Corporation or to any other lender and their respective successors and assigns,
and the Sellers hereby acknowledge such assignment by the Buyer to General
Electric Capital Corporation. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.
13.8 AMENDMENT. This Agreement may be amended only by a written
agreement executed by the Buyer and the Sellers' Representative.
13.9 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
13.10 EFFECT OF TABLE OF CONTENTS AND HEADINGS. The table of contents
and the titles of article and section headings herein contained has been
provided for convenience of reference only and shall not affect the meaning of
construction of any of the provisions hereof.
13.11 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware (other than the choice of
law principles thereof).
[SIGNATURE PAGES TO FOLLOW]
40
SIGNATURE PAGES
TO
MARCLIFF CORPORATION
▇▇▇▇▇▇ CREATIVE FASTENER, INC.
STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in multiple counterparts as of the date set forth above by their duly authorized
representatives.
KAYNAR TECHNOLOGIES INC.
By: /s/ Jordan A. Law
----------------------------
Jordan A. Law
Chairman of the Board
ORION CAPITAL HOLDINGS, L.P.
By: Orion Capital Partners, L.P.
Its General Partner
By: Eagle Capital Management Limited Partnership
Its General Partner
By: Eagle Capital Holdings, Inc.
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
M-K I PARTNERSHIP, L.P.
By: Orion Capital Partners, L.P.
Its General Partner
By: Eagle Capital Management Limited Partnership
Its General Partner
By: Eagle Capital Holdings, Inc.
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
SIGNATURE PAGES
TO
MARCLIFF CORPORATION
▇▇▇▇▇▇ CREATIVE FASTENER, INC.
STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in multiple counterparts as of the date set forth above by their duly authorized
representatives.
KAYNAR TECHNOLOGIES INC.
By:
----------------------------
Jordan A. Law
Chairman of the Board
ORION CAPITAL HOLDINGS, L.P.
By: Orion Capital Partners, L.P.
Its General Partner
By: Eagle Capital Management Limited Partnership
Its General Partner
By: Eagle Capital Holdings, Inc.
Its General Partner
By:
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
M-K I PARTNERSHIP, L.P.
By: Orion Capital Partners, L.P.
Its General Partner
By: Eagle Capital Management Limited Partnership
Its General Partner
By: Eagle Capital Holdings, Inc.
Its General Partner
By:
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
NATIONSCREDIT COMMERCIAL
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Authorized Signatory
ORION CAPITAL PARTNERS, L.P.
as the Sellers' Representative
By: Eagle Capital Management Limited Partnership
Its General Partner
By: Eagle Capital Holdings, Inc.
Its General Partner
By:
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
MARCLIFF CORPORATION
By:
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
NATIONSCREDIT COMMERCIAL
CORPORATION
By:
----------------------------
ORION CAPITAL PARTNERS, L.P.
as the Sellers' Representative
By: Eagle Capital Management Limited Partnership
Its General Partner
By: Eagle Capital Holdings, Inc.
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
MARCLIFF CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
STOCK PURCHASE AND SALE AGREEMENT
LIST OF SCHEDULES
Schedule 1 - Names and Addresses of Sellers and their Stock Ownership
Schedule 1.1 - Redemption Shares
Schedule 1.2 - Purchase Shares
Schedule 2.1(a) - Allocation and Distribution of Purchase Price
Schedule 2.1(b) Escrow Agreement
Schedule 5.1 - Jurisdictions of Organization of Marcliff and Its
Subsidiaries
Schedules 5.2 - Subsidiaries and Securities
Schedule 5.3 - Outstanding Marcliff Subscriptions, Options, Warrants,
Commitments, Preemptive Rights, Pledges, Restrictions and
Encumbrances
Schedule 5.5 - Pledges, Security Interests and Encumbrances Upon the
Shares
Schedule 5.9 - Financial Statements of Marcliff and its Subsidiaries;
Liabilities Not Reflected on the Base Balance Sheet
Schedule 5.10 - Certain Changes or Events
Schedule 5.11(b) - Tax Returns
Schedule 5.11(d) - Tax Audit History
Schedule 5.11(f) - Pending Audit
Schedule 5.11(k) - No "Controlled Foreign Corporation"
Schedule 5.12(a) - Real Property Leased by Marcliff and Its Subsidiaries
Schedule 5.12(e) - Liens, Encumbrances or Subleases on Leased Real Property
Schedule 5.12(g) - Machinery, Equipment and Other Property
Schedule 5.12(h) - Title to Machinery and Equipment
Schedule 5.15 - Intellectual Properties of Marcliff and its Subsidiaries
Schedule 5.16 - Material Contracts
Schedule 5.17 - Labor and Employee Relations
1
Schedule 5.18(a) - Employee Benefit Documentation
Schedule 5.18(c) - Employee Benefit Plans
Schedule 5.18(d) - Reportable Events
Schedule 5.18(e) - Underfunded Plans
Schedule 5.18(g) - Plan Payments or Other Rights on Closing
Schedule 5.19 - Environmental Matters
Schedule 5.20 - Permits
Schedule 5.23 - Transactions with Interested Persons
Schedule 5.25 - Changes Since May 25, 1998
Schedule 5.26(a) - Insurance Policies
Schedule 5.26(b) - Workers' Compensation and Occupational Benefits History
Schedule 5.27(a) - Customers and Suppliers
Schedule 5.27(b) - Loss of Major Customers
Schedule 9.4.1 - Opinion of Brown, Rudnick, Freed & Gesmer
Schedule 9.4.2 - Opinion of ▇▇▇▇ & ▇▇▇▇▇▇
2