1
EXHIBIT 10.6
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ACQUISITION AGREEMENT
BY AND AMONG
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP, L.P.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ CHARITABLE REMAINDER TRUST,
GREENWOOD PIPE AND THREADING COMPANY,
EDCO DRILLING COMPANY INC.
AND
IRI INTERNATIONAL CORPORATION
DATED AS OF
MARCH 20, 1997
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2
TABLE OF CONTENTS
(Not a part of the Agreement)
Page
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1. PURCHASE AND SALE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PURCHASE AND SALE OF GREENWOOD AND EDCO ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Acquisition of ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. PAYMENT OF PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Organization; Power; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Binding Agreement and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4 No Violation or Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.6 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 Title to and Condition of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.13 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.14 Transactions with Interested Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.15 Employee and Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.16 Customer Accounts Receivable; Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.17 Non-Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.18 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.19 Sufficiency of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.21 Accounts; Safe Deposit Boxes; Powers of Attorney;
Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.22 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.23 Product warranty and Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.24 Backlog Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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4.25 Supply Requirement Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.26 Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.27 1996 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.28 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.29 Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.30 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.31 CIL's Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.32 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5. 1 Organization; Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Binding Agreement and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.4 Financial Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5 ▇▇▇▇▇▇▇ Denver Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.6 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.7 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.8 Accuracy of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2 Nondisclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Regulatory Filings; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Operation of the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5 Satisfaction of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.7 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.8 Other Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.9 Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.10 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.11 Disclosure Schedule Updates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.12 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.13 CILB Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.14 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Conditions Precedent to the Obligations of the
Sellers and the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Additional Conditions Precedent to the Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.1 Compliance with Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.2 Resolutions of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.3 Delivery of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.4 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2.5 Release of Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3 Additional Conditions Precedent to Obligations of the Buyer . . . . . . . . . . . . . . . . . . . . 32
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7.3.1 Compliance with Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3.2 Resolutions of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3.3 Delivery of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3.4 Delivery of Bills of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3.5 Delivery of Real Property Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3.6 Release of Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3.7 Actual or Threatened Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3.8 Absence of Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3.9 Regulatory Approvals; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3.10 Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3.11 Insurable Title to Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3.12 Certain Records; Director Resignations . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3.13 Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3.14 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3.15 Intellectual Property Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3.16 Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3.17 CIL's Net Worth as of February 28, 1997 . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3.18 CIL's Net Worth as of the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3.19 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3.20 Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3.21 Opinion of Sellers' Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.1 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2 Documents to be Delivered by the Sellers at Closing . . . . . . . . . . . . . . . . . . . . . 35
8.3 Documents to be Delivered by the Buyer at Closing . . . . . . . . . . . . . . . . . . . . . . 36
9. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.2 Sellers' Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.3 Buyer's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.4 Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.5 Survival Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.6 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.7 Adjustment to Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10. POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1 Limitation on Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.2 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.1 Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
12.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.4 Amendments and Waivers and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.5 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.7 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.9 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.12 Certain Interpretive Matters and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.13 Arbitration; Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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TABLE OF SCHEDULES
(Not a part of the Agreement)
SCHEDULES TITLE
--------- -----
Schedule 2. 1(a) Tangible Personal Property
Schedule 2. 1(b) ▇▇▇▇▇▇▇ Denver Inventory
Schedule 2. 1(d)(i) Owned Real Property
Schedule 2. 1(d)(ii) Leased Real Property
Schedule 2.1(e) Intellectual Property
Schedule 2.1(f) Asset Contracts
Schedule 2.4 ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property
Schedule 4.1 Foreign Qualifications
Schedule 4.2 Capitalization
Schedule 4.4(a) Consents
Schedule 4.5 Financial Statements
Schedule 4.6(a) Occurrence of Certain Changes Since October 31, 1996
Regarding CIL
Schedule 4.6(b) Occurrence of Certain Changes Since October 31, 1996 Regarding CIL
Schedule 4.6(c) Occurrence of Certain Changes Since October 31, 1996 Regarding CIL
Schedule 4.7 Contracts
Schedule 4.8(c) Tax Filings
Schedule 4.8(d) Certain Jurisdictions
Schedule 4.8(h) Tax Waivers or Extensions
Schedule 4.8(m) Adjusted Basis
Schedule 4.9(a) CIL Real Property Currently Owned Or Leased
Schedule 4.9(b) Greenwood Real Property
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Schedule 4.9(c) Edco Real Property
Schedule 4.9(e) Real Property Previously Owned or Leased
Schedule 4. 10(a) Personal Property
Schedule 4.10(b) Title to Property
Schedule 4. 10(c) Condition of Assets
Schedule 4. 11 Litigation
Schedule 4. 12(a) Compliance With Laws
Schedule 4.12(b) Compliance With Environmental Laws
Schedule 4.12(c) Storage/Disposal of Hazardous Materials
Schedule 4.13 Intellectual Property
Schedule 4.14 Transactions with Interested Persons
Schedule 4.15(a)(i) Employee Benefit Plans
Schedule 4.15(a)(ii) Employee Benefit Arrangements
Schedule 4.15(d) Actions or Claims Related to Employee Benefit Plans or Arrangements
Schedule 4.15(i) Severance and Accelerated Compensation
Schedule 4.15(k) Employee Leaves of Absence
Schedule 4.15(l) Collective Bargaining Agreements
Schedule 4. 15(m) The Companies' Employees
Schedule 4.17 Disposition of Non-Current Assets
Schedule 4.18 Suppliers
Schedule 4.20 Insurance Policies
Schedule 4.21 Accounts; Safe Deposit Boxes; Powers of Attorney; Officers and
Directors
Schedule 4.22 Liabilities
Schedule 4.23(a) Product Warranty Claims
Schedule 4.23(b) Product Liability Claims
Schedule 4.24 Backlog Contracts
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Schedule 4.25 Supply Requirement Contracts
Schedule 4.26 Government Contracts
Schedule 4.28 Debt Obligations
Schedule 4.29 Contingent Liabilities
Schedule 4.30 Brokerage Commissions
Schedule 5.3 Buyers Consents
Schedule 6.4 Operation of Business
Schedule 6. 12 Guaranties
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TABLE OF EXHIBITS
(Not a part of the Agreement)
EXHIBITS TITLE
-------- -----
Exhibit A Restructured Pro Forma EBITDA
Exhibit B Employment Agreement
Exhibit C Assignment Agreements
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TABLE OF DEFINED TERMS
(Not a part of the Agreement)
Page
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ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Assignment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Backlog Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Benefit Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Bills of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Buyer's Board Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Buyer's Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Buyer's Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
CERCI-A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
CIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CIL Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
CIL Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Collective Bargaining Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Competitive Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Confidential Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Consent Decrees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Direct Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Director Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Edco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Edco Board Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Edco Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Employee Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Environmental Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Evidence of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Evidence of Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FMLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
▇▇▇▇▇▇▇ Denver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ix
11
▇▇▇▇▇▇▇ Denver Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Greenwood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Greenwood Board Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Greenwood Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Guaranty Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indemnifiable Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Indemnity Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Limited Partnership Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Limited Partnership Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Notice of Claim for Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Post-Closing Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Pre-Closing Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Restructured Pro Forma EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Scheduled IP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 1445(b)(2) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Supply Requirement Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
tax returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
▇▇▇▇▇▇▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
▇▇▇▇▇▇▇▇▇▇▇▇ Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
▇▇▇▇▇▇▇▇▇▇▇▇ Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Third Party Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Third Party Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Threat of Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
x
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Transfer Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Trust Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Trust Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
xi
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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT, made and entered into as of this 20th day
of March, 1997 (this "Agreement") by and among ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇, an individual
residing at ▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇▇▇"),
▇▇▇▇▇▇▇▇▇▇▇▇ Family Limited Partnership, L.P., a Kansas limited partnership
(the "Limited Partnership"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust
(the "Trust" and with ▇▇▇▇▇▇▇▇▇▇▇▇ and the Limited Partnership, collectively,
"ACT"), Greenwood Pipe and Threading Company, a Kansas corporation
("Greenwood"), Edco Drilling Company Inc., a Kansas corporation ("Edco" and
with ACT and Greenwood, collectively, the "Sellers"), and IRI International
Corporation, a Delaware corporation (the "Buyer").
WHEREAS, each of the Limited Partnership and the Trust are the record
and beneficial owner of one half of the issued and outstanding shares of common
stock, par value $1.00 per share, of ▇▇▇▇▇▇▇▇ International Ltd., a Kansas
corporation ("CIL") (the "Shares");
WHEREAS, CIL, Greenwood and Edco (collectively, the "Companies") are
engaged in the business of manufacturing, selling and/or servicing oil drilling
and service rigs and equipment (the "Business");
WHEREAS, the Limited Partnership and the Trust desire to sell, assign
and deliver to the Buyer, and the Buyer desires to purchase and accept from the
Limited Partnership and the Trust, the Shares on the terms and subject to the
conditions hereinafter set forth;
WHEREAS, Greenwood and Edco desire to sell, assign and deliver to the
Buyer, and the Buyer desires to purchase and accept from Greenwood and Edco,
certain assets of Greenwood and Edco as described in this Agreement, in each
case on the terms and subject to the conditions hereinafter set forth;
WHEREAS, ▇▇▇▇▇▇▇▇▇▇▇▇ desires to sell, assign and deliver to the
Buyer, and the Buyer desires to purchase and accept from ▇▇▇▇▇▇▇▇▇▇▇▇, certain
reel property of ▇▇▇▇▇▇▇▇▇▇▇▇ described in this Agreement on the terms and
subject to the conditions hereinafter set forth; and
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree as follows:
14
1. PURCHASE AND SALE OF SHARES.
1.1 SHARES. On the terms and subject to the conditions
set forth in this Agreement, at the Closing (as hereinafter defined), each of
the Limited Partnership and the Trust will sell, assign and deliver to the
Buyer, and the Buyer will purchase and accept from each of the Limited
Partnership and the Trust, the respective number of Shares owned by each of the
Limited Partnership and the Trust, as set forth opposite each of the Limited
Partnership's and the Trust's name on Schedule 4.2.
2. PURCHASE AND SALE OF GREENWOOD AND EDCO ASSETS
2. 1 PURCHASE AND SALE OF ASSETS. On the terms and subject
to the conditions set forth in this Agreement, Greenwood and Edco will sell,
assign and deliver to the Buyer, and the Buyer will purchase and accept from
Greenwood and Edco, as the case may be, all of Greenwood's and Edco's right,
title and interest in and to the Assets (as hereinafter defined). For purposes
of this Agreement, the term "Assets" means the assets and properties of
Greenwood and Edco described in the following paragraphs (a) through (f):
(a) all of the vehicles, spare parts, tools, dies,
patterns, machinery, equipment, computers, furnishings, furniture, office
supplies and other tangible personal property set forth on Schedule 2.1(a)
hereto;
(b) all ▇▇▇▇▇▇▇ Denver inventory, including, without
limitation, bearings, power swivels and parts, related equipment and the other
inventory set forth on Schedule 2. 1(b) hereto;
(c) all items of inventory relating to the Business,
including, without limitation, raw materials, work-in-process, finished goods,
supplies, spare parts and samples (including any of the aforementioned owned by
Greenwood or Edco but in the possession of manufacturers, suppliers, dealers or
others, or in transit);
(d) the owned real property set forth on Schedule
2.1(d)(i) hereto and the leased reel property set forth on Schedule 2. 1(d)(ii)
hereto (collectively, the "Real Property"), including all buildings located
thereon, any fixtures attached thereto and any transferable Permits (as
hereinafter defined) relating thereto;
(e) all Intellectual Property (as hereinafter defined)
including, without limitation, as set forth on Schedule 2.1(e) hereto, and any
rights to ▇▇▇ for, and remedies against, past, present and
2
15
future infringements thereof, and rights of priority and protection of
interests therein under the Laws (as hereinafter defined) of all jurisdictions
throughout the world;
(f) all rights under all the contracts, leases, licenses
and other agreements relating to the Assets set forth on Schedule 2.1(f)
hereto.
2.2 EXCLUDED ASSETS. Notwithstanding anything in this
Agreement to the contrary, Greenwood, Edco and the Buyer expressly agree that
neither Greenwood nor Edco is hereunder selling, assigning or delivering to the
Buyer and the Buyer is not purchasing or accepting any of Greenwood's or Edco's
right, title or interest in or to any asset, property, right, contract,
agreement or claim not described in Section 2.1 hereof (collectively, the
"Excluded Assets").
2.3 RETAINED LIABILITIES. Notwithstanding anything in
this Agreement to the contrary, Greenwood and Edco will retain, and the Buyer
will not assume or in any way be liable or responsible for any Liabilities (as
hereinafter defined) of Greenwood and Edco whatsoever (the "Retained
Liabilities"). By way of example, and not by way of limitation, Retained
Liabilities will include:
(a) all Liabilities relating to or arising from the
Excluded Assets; and
(b) all Liabilities relating to or arising from events
occurring prior to the Closing, including any claims with respect to the
Assets.
For purposes of this Agreement, the term "Liabilities" means
any liability, claim, demand, expense, cost, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise.
2.4 ACQUISITION OF ▇▇▇▇▇▇▇▇▇▇▇▇ REAL PROPERTY. On the
terms and subject to the conditions set forth in this Agreement, ▇▇▇▇▇▇▇▇▇▇▇▇
will sell, assign and deliver to the Buyer, and the Buyer will purchase and
accept from ▇▇▇▇▇▇▇▇▇▇▇▇, all of ▇▇▇▇▇▇▇▇▇▇▇▇'▇ right, title and interest in
and to the owned real property set forth on Schedule 2.4 hereto (the
"▇▇▇▇▇▇▇▇▇▇▇▇ Real Property"), including all buildings located thereon, any
fixtures attached thereto and any transferable Permits relating thereto.
3
16
3. PAYMENT OF PURCHASE PRICE.
3.1 PURCHASE PRICE. The aggregate purchase price for the
Shares, the Assets and the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property shall be $12,000,000 (the
"Purchase Price") payable by the Buyer to the Sellers in accordance with
Section 3.2 hereof.
3.2 PAYMENT OF PURCHASE PRICE. The Purchase Price shall
be paid as follows:
(a) $3,000,000 shall be paid by the Buyer to the Limited
Partnership on the Closing Date (as hereinafter defined) by bank wire transfer
of immediately available funds to a bank account designated by the Limited
Partnership.
(b) $3,000,000 shall be paid by the Buyer to the Trust on
the Closing Date by bank wire transfer of immediately available funds to a bank
account designated by the Trust.
(c) $5,225,000 shall be paid by the Buyer to Greenwood on
the Closing Date by bank wire transfer of immediately available funds to a bank
account designated by Greenwood.
(d) $750,000 shall be paid by the Buyer to Edco on the
Closing Date by bank wire transfer of immediately available funds to a bank
account designated by Edco.
(c) $25,000 shall be paid by the Buyer to ▇▇▇▇▇▇▇▇▇▇▇▇ on
the Closing Date by bank wire transfer of immediately available funds to a bank
account designated by ▇▇▇▇▇▇▇▇▇▇▇▇.
(f) The Purchase Price shall be allocated by the Buyer
and the Sellers among the Shares, the Assets and the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property
as follows:
(i) $6,000,000 for the Shares;
(ii) $5 ,225 ,000 for that portion of the Assets
purchased from Greenwood;
(iii) $750,000 for that portion of the Assets
purchased from Edco; and
(iv) $25,000 for the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property;
provided, however, that the allocation of $6,000,000 among the
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Assets and the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property shall be subject to the
results of Buyer's appraisal thereof. It is the intention and
agreement of the parties that the Buyer be able to account for the
acquisition of the Assets and the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property using the
purchase method of accounting.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the
Sellers, jointly and severally, represents and warrants to the Buyer as
follows:
4.1 ORGANIZATION; POWER; GOOD STANDING. Each of the
Sellers (other than ▇▇▇▇▇▇▇▇▇▇▇▇) is duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation or
formation, as the case may be, and has the requisite corporate, partnership or
trust, as the case may be, power and authority to own, lease, operate and
otherwise hold its assets owned, leased, operated or otherwise held by it and
to carry on the Business as now being conducted. Each of the Sellers (other
than ▇▇▇▇▇▇▇▇▇▇▇▇) is duly qualified to do business as a foreign corporation,
partnership or trust, as the case may be, in each jurisdiction set forth under
such Seller's name on Schedule 4. 1 and is in good standing under the laws of
each such jurisdiction. There is no other jurisdiction in which the nature of
the business of any of the Sellers (other than ▇▇▇▇▇▇▇▇▇▇▇▇) or the character
or location of any of their assets, properties or operations requires
qualification.
4.2 CAPITALIZATION. Each of the Limited Partnership and
the Trust own free and clear of any mortgages, liens, security interests,
pledges, charges, restrictions or other encumbrances (collectively, "Liens")
the number of Shares listed opposite its name on Schedule 4.2 and has good and
marketable title to such Shares and at Closing will deliver its entire right,
title and interest in and to the Shares to the Buyer. The Shares listed on
Schedule 4.2 represent all of the issued and outstanding shares of capital
stock of CIL and upon the Closing the Buyer will own such Shares free and clear
of any liens. The Shares are duly authorized, validly issued and outstanding,
fully paid and nonassessable. Except as set forth on Schedule 4.2, CIL does
not, directly or indirectly, own (beneficially or of record) any stock or other
ownership interests in, or control, any other entity. Except for the Shares
and except as set forth on Schedule 4.2, there are no shares of capital stock
of CIL authorized, issued or outstanding and there are no outstanding
subscriptions, options, warrants, rights, convertible securities or any other
agreements or commitments of any character relating to the issued or unissued
stock or other securities of CIL obligating CIL to issue,
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18
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock of CIL or obligating CIL to grant, issue, extend or enter into
any subscription, option. warrant, right. convertible security or other similar
agreement or commitment. Except as set forth on Schedule 4.2, there are no
voting trusts or other agreements or understandings to which CIL, the Limited
Partnership or the Trust is a party with respect to the voting of the capital
stock of CIL.
4.3 BINDING AGREEMENT AND AUTHORITY. Each of the Sellers
(other than ▇▇▇▇▇▇▇▇▇▇▇▇) has the requisite corporate, partnership or trust, as
the case may be, power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. All corporate, partnership
or trust, as the case may be, action required to be taken for the due
authorization of the execution and delivery of this Agreement by each of the
Sellers (other than ▇▇▇▇▇▇▇▇▇▇▇▇) and the performance by each of the Sellers
(other than ▇▇▇▇▇▇▇▇▇▇▇▇) of the obligations hereunder has been duly taken by
each of the Sellers (other than ▇▇▇▇▇▇▇▇▇▇▇▇). This Agreement has been duly
executed and delivered by each of the Sellers and, assuming the due execution
and delivery by the Buyer, constitutes the valid and binding obligation of each
of the Sellers enforceable against each of them in accordance with its terms.
4.4 NO VIOLATION OR BREACH. The execution and delivery
of this Agreement by each of the Sellers do not, and the consummation by each
of them of the transactions contemplated hereby, will not:
(a) require the consent, waiver, approval, license, order
or authorization of, or the registration, declaration or filing of any document
or report with, any person, entity or Governmental Entity (as hereinafter
defined) other than (i) filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act") and
(ii) as described on Schedule 4.4(a);
(b) with or without the giving of notice or the passage
of time or both, conflict with or violate any domestic or foreign statute, law,
ordinance, rule, regulation, order, judgment, decree or common law obligation
in effect as of the date hereof ("Law") of any domestic or foreign court,
government, governmental agency, authority, entity, instrumentality or
political subdivision thereof ("Governmental Entity") applicable to the Sellers
or CIL;
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(c) with or without the giving of notice or the passage
of time or both, conflict with or result in any breach or violation of any
provision of, or constitute a default under, or give rise to a right of
termination, cancellation or acceleration of the performance of or the loss of
a material benefit under, any Contract (as hereinafter defined) or Permit, to
which any of the Sellers or CIL is a party or to which any of the Sellers or
CIL or any of their assets are subject, or result in the creation of any Lien
upon any of the assets of any of the Sellers or CIL;
(d) conflict with or violate the Certificate of
Incorporation, as amended (if applicable), or By- Laws of any of the Companies;
or
(e) conflict with or violate the limited partnership
agreement of the Limited Partnership, dated as of September 4, 1996, by and
among The ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ Revocable Living Trust and The ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇▇ Revocable Living Trust, as amended or the trust agreement of the
Trust, dated as of November I 1996, by and among ▇▇▇▇▇▇▇▇▇▇▇▇, grantor. and
▇▇▇▇▇▇▇▇▇▇▇▇, trustee, as amended.
4.5 FINANCIAL STATEMENTS. Attached as Schedule 4.5 are
the audited balance sheets of CIL as of December 31, 1993, December 31, 1994,
December 31, 1995 and October 31, 1996, and the unaudited balance sheet of CIL
as of December 31, 1996 and the related audited statements of operations and
retained earnings and of cash flows for the periods then ended, or in the case
of the unaudited balance sheet of CIL as of December 31, 1996, for the period
then ended (collectively with their related notes, the "Financial Statements").
The Financial Statements present fairly in all material respects the financial
position of CIL as of their respective dates and the results of their
operations and cash flows for the years then ended, or the period then ended,
in conformity with United States generally accepted accounting principles
("GAAP") consistently applied except as otherwise noted therein, subject, with
respect to the unaudited balance sheet of CIL as of December 31, 1996 and the
related unaudited statements of operations and retained earnings and of cash
flows, to normal, recurring year-end adjustments. For the purposes of this
Agreement, the term "CIL Balance Sheet" means the unaudited balance sheet of
CIL as of December 31, 1996.
4.6 ABSENCE OF CERTAIN CHANGES. (a) Except as set forth
in Schedule 4.6(a), since October 31, 1996, (i) to the knowledge of the
Sellers, there has not been any material adverse change in CIL's relations with
any of its suppliers or customers, (ii) there has not
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been any material adverse change in the financial position, results of
operations, cash flows, Business or prospects of CIL and (iii) CIL has
conducted its Business in the ordinary course consistent with past practice,
including without limitation, billing, shipping and collection practices,
marketing and sales practices, inventory transactions and payment of accounts
payable;
(b) Without limiting the generality or effect of the
foregoing, except as set forth on Schedule 4.6(b), since October 31, 1996, CIL
has not: (i) declared, set aside or paid any dividend or made any distribution
on or with respect to shares of its capital stock; (ii) made any cash payments
to any Seller or any Affiliate or Subsidiary (each as hereinafter defined) of
any Seller other than pursuant to, and in accordance with the terms of, a
Contract listed on Schedule 4.7; (iii) entered into any agreement or letter of
intent relating to any merger, consolidation, recapitalization or other
business combination or reorganization of CIL; (iv) sold, transferred,
licensed, failed to keep in effect or otherwise disposed of any Intellectual
Property; (v) waived, released, granted or transferred any rights of material
value or modified or changed in any material respect any existing Contract,
other than in the ordinary course of business consistent with past practice;
(vi) failed to continue its existing practices, or to change such practices if
required to comply with applicable Law, relating to repair and maintenance of
the assets owned, leased or otherwise held by CIL; (vii) purchased, sold,
leased or disposed of, or subjected to lien, any assets owned, leased or
otherwise held by CIL other than in the ordinary course of business of the
Business consistent with past practice; (viii) created, incurred or assumed any
indebtedness for borrowed money (other than in the ordinary course of business
consistent with past practice; provided, however, that a loan from a bank or
other financial institution shall not constitute an ordinary course
transaction) unless repaid in full prior to Closing; (ix) assumed, guaranteed,
endorsed or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations or liabilities of any other
person or entity in excess of $25,000, except for endorsements of negotiable
instruments in the ordinary course of business consistent with past practice;
(x) granted any severance or termination pay or benefit in excess of $25,000,
other than in accordance with policies or agreements of CIL in effect on the
date hereof; (xi) adopted, enacted, authorized, ratified, approved, caused or
suffered to exist any material increase in the compensation or benefits of any
employee, former employee, independent contractor, director or former director
of CIL (other than normal periodic increases in the ordinary course of business
that are made in accordance with established policies of CIL
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or as required pursuant to any Contract listed on Schedule 4.7); (xii) adopted,
enacted, authorized, ratified, approved, caused or suffered to exist any
material amendment, modification, implementation or termination of any Employee
Benefit Plan or Benefit Arrangement (each as hereinafter defined) (other than
any such amendment, modification, implementation or termination required under
applicable Law or the terms of an Employee Benefit Plan or a Benefit
Arrangement or a Collective Bargaining Agreement (as hereinafter defined));
(xiii) adopted, enacted, authorized, ratified, approved, caused or suffered to
exist any material amendment, modification, implementation or termination of
any Collective Bargaining Agreement (other than any such amendment,
modification, implementation or termination required under applicable Law or
under the terms of any Employee Benefit Plan, Benefit Arrangement or Collective
Bargaining Agreement); (xiv) made commitments for any single capital project
which would exceed $25,000 in capital expenditures; (xv) entered into any
employment Contract with respect to the performance of personal services which
is not terminable at will without liability or penalty; (xvi) entered into any
Contract with respect to any of the foregoing or (xvii) undertaken any action
or activity or failed to take any action which would result in any violation or
breach of any representation, warranty or covenant of any of the Sellers
contained herein.
(c) Without limiting the generality or effect of the
foregoing, except as set forth on Schedule 4.6(c), since October 31, 1996, CIL
has not: (i) amended its Certificate of Incorporation or By-Laws; (ii) granted,
sold, assigned or pledged any shares of, or rights of any kind to acquire any
shares of, the capital stock of CIL, or purchased, redeemed or otherwise
acquired any shares of such capital stock; (iii) made any change in any method
of accounting or accounting practice, except as may be required by Law or by
GAAP; (iv) made, changed or revoked any election with respect to taxes except
where the election (A) does not affect CIL; or (B) was consistent with prior
practice and will not adversely affect the Buyer or CIL after the Closing; (v)
entered into any closing or other agreement or settlement with respect to
taxes; (vi) made any loans, advances or capital contributions to or investments
in any person or entity, other than to any supplier or customer as an extension
of credit in the ordinary course of business consistent with past practice;
(vii) entered into any Contact with respect to any of the foregoing.
4.7 CONTRACTS. Except as described on Schedule 4.7, CIL
is not a party to or bound by any contract, agreement, lease commitment or
arrangement or other legally binding contractual right or
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obligation (collectively ~Contracts") that is of a type described below:
(a) Any employment, severance or consulting Contract, or
any distributorship, agency or manufacturer's representative Contract, that is
not terminable at will by CIL without liability or penalty;
(b) Any Collective Bargaining Agreement with any
collective bargaining group or labor union;
(c) Any indenture, mortgage, loan or credit Contract
under which CIL has borrowed any money or issued any note, bond, indenture or
other evidence of indebtedness for borrowed money, or guaranteed indebtedness
for money borrowed by others, other than such of the foregoing under which CIL
has no current or future obligation or liability;
(d) Any open sales order or contract for more than
$100,000 ("Backlog Contracts");
(e) Any purchase order or requirements contract for more
than $50,00() ("Supply Requirement Contracts");
(f) Any equipment lease requiring annual expenditures of
more than $25,00();
(g) Any vehicle lease requiring annual expenditure of
more than $10,000;
(h) Any Contract with respect to a joint venture or
partnership arrangement;
(i) Any Contract granting a power of attorney;
(j) Any Contract with respect to letters of credit,
surety or other bonds or pursuant to which CIL's assets are or are to be
subjected to a Lien;
(k) Any Contract limiting or restricting the ability of
CIL from entering into or engaging in any market or line of business;
(l) Any Contract including a provision regarding
confidentiality or a covenant not to compete;
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(m) Any guarantee, indemnity or similar Contract pursuant
to which CIL could (whether or not subject to contingencies) be required to
make payments with respect to or as a result of losses, costs or expenses paid
or incurred by another person or entity;
(n) Any Contract with any Seller or any Affiliate or
Subsidiary of any Seller or to which any officer, director or employee of CIL
is a party;
(o) Any Contract regarding the filing of tax returns (as
hereinafter defined) or relating in whole or in part to the sharing of tax
benefits or liabilities (including tax indemnities);
(p) Any Contract relating to the release, transportation
or disposal of Hazardous Materials (as hereinafter defined) or the clean-up,
abatement or other action in connection with Environmental Conditions (as
hereinafter defined);
(q) Any Contract relating to Intellectual Property;
(r) Any Contract for capital expenditures or the
acquisition or construction of fixed assets which requires future payments in
excess of $25,000; or
(s) Any Contract other than the Contracts listed above
which (i) involves aggregate future payments by or to CIL in excess of $25,000
other than purchase or sales orders entered into in the ordinary course of the
conduct of the Business consistent with past practice or (ii) to the knowledge
of the Sellers, is otherwise material to CIL.
Except as set forth on Schedule 4.7, each Contract listed, referenced to or
described on Schedule 4.7 is a valid and binding obligation of CIL and is in
full force and effect. Except as set forth on Schedule 4.7, CIL has performed
the obligations required to be performed by it through the date hereof under
each of such Contracts and CIL is not (with or without the lapse of time or the
giving of notice or both) in breach or default thereunder. Except as described
on Schedule 4.7, to the knowledge of the Sellers, each other party to any such
Contract is not (with or without the lapse of time or the giving of notice or
both) in breach or default under any such Contract. Except as set forth on
Schedule 4.7, with regard to each Contract, there are no material disputes or
disagreements pending or threatened between CIL and any other party with regard
to such Contracts, nor, to the knowledge of the Sellers, is there a basis for
any such dispute.
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Except as set forth on Schedule 4.4(a), no consent, waiver, approval, license
or authorization of any person, entity or Governmental Entity is required under
any Contract to which CIL is a party or is bound in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
4.8 TAXES. (a) For purposes of this Agreement, the term
"tax" (including, with correlative meaning, the terms "taxes" and "taxable")
means all federal, state, local, and foreign income, profits, franchise, gross
receipts, payroll, sales, employment, use, property, withholding, excise,
alternative minimum, gains, transfer, documentary, stamp, and other taxes,
duties, or assessments of any nature whatsoever, together with all interest,
penalties, and additions imposed with respect to such amounts.
(b) For purposes of this Agreement, the term "tax
returns" means all returns, reports, statements, forms, or other documents or
information required to be filed with a taxing authority with respect to the
taxes of CIL.
(c) Except as set forth on Schedule 4.8(c), CIL has filed
all tax returns that it was required to file (including estimated tax returns),
such tax returns were correct and complete in all respects, and all taxes owed
by CIL (whether or not shown on any tax return) have been paid.
(d) A claim has never been made by an authority in a
jurisdiction where CIL has never filed tax returns that CIL is or may be
subject to taxation by that jurisdiction. Schedule 4.8(d) hereto lists all of
the jurisdictions in which CIL has ever done business, been authorized to do
business, owned or leased property, had employees or customers, employed
capital, or solicited or made sales.
(e) The Financial Statements reflect an adequate reserve
for all taxes payable by CIL accrued through the date of such Financial
Statements. All deficiencies for any taxes that have been proposed, asserted,
or assessed against CIL have been fully paid, or are fully reflected as a
liability in such Financial Statements, or are being contested and an adequate
reserve therefor has been established and is fully reflected in such Financial
Statements.
(f) No deficiency for any taxes has been proposed,
asserted, or assessed with respect to CIL, no audit or other examination of the
tax returns of CIL is currently in progress, and no
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facts exist that constitute grounds for the assessment of any additional taxes
with respect to CIL.
(g) There are no Liens for taxes (other than for current
taxes not yet due and payable) on the assets of CIL, the Shares, the
▇▇▇▇▇▇▇▇▇▇▇▇ Real Property or any of the Assets.
(h) The federal, state, local, and foreign income tax
returns of CIL have been examined by and settled with the Internal Revenue
Service and other applicable taxing authorities, or the statutes of limitations
with- respect to such years have expired, for all years through 1992. Except as
set forth on Schedule 4.8(h), there has been no waiver or extension of the
statute of limitations for the assessment of any tax for any taxable year, and
CIL currently is not the beneficiary of any extension of time within which to
file any tax returns.
(i) CIL is not a party to, or bound by, any agreement
providing for the allocation or sharing of taxes.
(j) CIL has not filed a consent pursuant to, or agreed to
the application of, Section 341(f) of the Internal Revenue Code of 1986, as
amended (the "Code").
(k) CIL has not made any payments, is not obligated to
make any payments, and is not a party to any agreement that could obligate it
to make any payments, the deductibility of which would be disallowed (in whole
or in part) under Section 280G of the Code.
(l) None of the Companies has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code. No Seller is a foreign person within the meaning of, and no tax is
required to be withheld as a result of the transfer contemplated by this
Agreement pursuant to, Section 1445 or any other provision of the Code or of
any other state, local or foreign laws.
(m) Schedule 4.8(m) hereto sets forth CIL's adjusted
basis in its assets for federal income tax purposes.
CIL has disclosed on its federal income tax returns
all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Section 6662 of the
Code.
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(o) All taxes that are required by Law to be withheld or
collected by CIL have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Entity or properly
deposited as required by applicable Law.
(p) CIL (i) has not been a member of an affiliated group
filing a consolidated federal income tax return (other than a group the common
parent of which was one of the Companies), or (ii) does not have any liability
for the taxes of any other person under Treas. Reg. Section 1. 1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by Contract or otherwise.
(q) CIL has not, and with respect to the Assets and the
▇▇▇▇▇▇▇▇▇▇▇▇ Real Property none of the Companies nor ▇▇▇▇▇▇▇▇▇▇▇▇ has, executed
or entered into any closing agreement pursuant to Section 7121 of the Code, or
any predecessor provision thereof, or any similar provision of state or local
law.
(r) None of the assets owned by CIL and neither the
Assets nor the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property is property that is required to be
treated as owned by any-other person pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, as in effect immediateLy prior to
the enactment of the Tax Reform Act of 1986, or is "tax-exempt use property"
within the meaning of Section 168(h) of the Code.
(s) The consummation of the transactions contemplated by
this Agreement will not result in any taxes being imposed by the United States,
any state or political subdivision thereof, or any foreign country on the
stockholders of CIL as a result of CIL's ownership of any interest in real
property.
4.9 REAL PROPERTY. (a) Schedule 4.9(a) contains a
complete list and description of all real estate owned by CIL and of all leases
of real property to which CIL is a party or to which it is bound. True and
correct copies of all such leases have previously been delivered by CIL to the
Buyer. The real estate owned and the leaseholds described in Schedule 4.9(a)
represent all of the real estate interests used, owned or occupied by CIL as of
the date hereof. CIL has good and marketable title to such real estate and
leaseholds and has full and exclusive right to the occupation and use of the
real estate interests described on Schedule 4.9(a), subject only to the terms
of the applicable leases. Except as set forth on Schedule 4.9(a), each lease
listed and described on Schedule 4.9(a) is a valid and binding obligation of
CIL and is in full force and effect. Except
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as set forth on Schedule 4.9(a), CIL has performed the obligations required to
be performed by it through the date hereof under each of such leases and CIL is
not (with or without the lapse of time or the giving of notice or both) in
breach or default thereunder. Except as described on Schedule 4.9(a), each
other party to any such lease, other than CIL, is not (with or without the
lapse of time or the giving of notice or both) in breach or default under any
such lease.
(b) Greenwood has good and marketable title to the Real
Property that Greenwood is Selling to the Buyer pursuant to Section 2.1(d) and
has full and exclusive right to occupation and use of such Real Property.
Except as set forth on Schedule 4.9(b), each lease listed and described on
Schedule 2. 1(d)(ii) under which Greenwood is the lessee is a valid and binding
obligation of Greenwood and is in full force and effect. Except as set forth
on Schedule 4.9(b), Greenwood has performed the obligations required to be
performed by it through the date hereof under each of such leases and Greenwood
is not (with or without the lapse of time or the giving of notice or both) in
breach or default thereunder. Except as described on Schedule 4.9(b), each
other party to any such lease, other than Greenwood, is not (with or without
the lapse of time or the giving of notice or both) in breach or default under
any such lease.
(c) Edco has good and marketable title to the Real
Property that it is selling to the Buyer pursuant to Section 2.1(d) and has
full and exclusive right to the occupation and use of such Real Property.
Except as set forth on Schedule 4.9(c), each lease listed and described on
Schedule 2. 1(d)(ii) under which Edco is the lessee is a valid and binding
obligation of Edco and is in full force and effect. Except as set forth on
Schedule 4.9(c), Edco has performed the obligations required to be performed by
it through the date hereof under each of such leases and Edco is not (with or
without the lapse of time or the giving of notice or both) in breach or default
thereunder. Except as described on Schedule 4.9(c), each other party to any
such lease, other than Edco, is not (with or without the lapse of time or the
giving of notice or both) in breach or default under any such lease.
(d) ▇▇▇▇▇▇▇▇▇▇▇▇ has good and marketable title to the
▇▇▇▇▇▇▇▇▇▇▇▇ Real Property and has full and exclusive right to the occupation
and use of such ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property.
(e) Attached as Schedule 4.9(e) is a complete list of the
real property previously owned or leased by CIL at any time during the last ten
years.
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4.10 TITLE TO AND CONDITION OF PROPERTIES. (a) Schedule 4.
10(a) lists all of the machinery, equipment, vehicles, tools, office furniture
and other tangible personal property, owned, leased or used by CIL or that are
included in the Assets which have a net book value or replacement cost in
excess of $25,000.
(b) Except as set forth in Schedule 4. 10(b), the
Companies and ▇▇▇▇▇▇▇▇▇▇▇▇ have good and marketable title to all of the real
estate and leasehold properties listed under their respective names on
Schedules 4.9(a)-(e) free and clear of all Liens, and the Companies have good
and marketable title to all their personal property and other assets, free and
clear of all liens.
(c) To the knowledge of the Sellers, except as set forth
on Schedule 4. 10(c), the tangible personal property assets owned, leased or
used by CIL or included in the Assets are in useable operating condition,
normal wear and tear excepted; provided, however, the Sellers make no
representations or warranties to the Buyer regarding the condition of such
assets and the Buyer is purchasing such assets "as is, where is."
4.11 Litigation. (a) Except as set forth on Schedule
4.11, there are (i) no claims, suits, investigations, administrative
proceedings, arbitrations or other proceedings (u~gal Proceedings") pending
against CIL, or any judgment, order, writ, injunction or decree of any
Governmental Entity ("Orders") to which CIL is subject and (ii) to the
knowledge of the Sellers, no Legal Proceedings threatened against CIL by any
person, entity or Governmental Entity.
(b) CIL is not in default under, and has not failed to
comply with, the terms of (i) any Orders. (ii) any Contract entered into with
any Governmental Entity to settle any claim of alleged non-compliance with
applicable Law (collectively, "Consent Decrees"), or (iii) any settlement that
is binding upon CIL. Schedule 4. 11 sets forth a list of all Orders, Consent
Decrees and settlements that are binding upon CIL and that remain in effect as
of the date hereof.
4.12 COMPLIANCE WITH LAWS. (a) Except as set forth on
Schedule 4. 12(a), and except with respect to the environmental matters covered
by Section 4. 12(b) and (c), none of the Sellers or CIL is in violation of any
Order or in violation of any Law.
(b) Except as set forth on Schedule 4. 12(b), neither
▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) nor any
of the Companies has any liability under any
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Environmental Law (as hereinafter defined) (including without limitation any
obligation to remediate any Environmental Condition) applicable to the
currently or previously owned or leased real property of ▇▇▇▇▇▇▇▇▇▇▇▇ (to the
extent relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) or any of the Companies or
any facilities or operations thereon. Except as set forth in Schedule 4. 12(b),
(i) ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) and
each of the Companies is in compliance with all Environmental Laws and there
exist no Environmental Conditions with respect to ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent
relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) or the Companies or any currently
or previously owned or leased properties of ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent
relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) or any of the Companies or any
facilities or operations thereon; (ii) neither ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent
relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) nor any of the Companies has
generated, manufactured, refined, transported, treated, stored, handled,
disposed, transferred, produced, or processed any Hazardous Material or any
solid waste, except as in compliance with all applicable Environmental Laws,
nor has any reportable Release or Threat of Release (each as hereinafter
defined) of any Hazardous Material occurred, except as set forth in Schedule
4.12(b); (iii) no Lien has been imposed on any assets of ▇▇▇▇▇▇▇▇▇▇▇▇ (to the
extent relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) or of any of the Companies
by any Governmental Entity at the federal, state, or local level in connection
with the presence of any Hazardous Material; (iv) except as set forth in
Schedule 4. 12(b), neither ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent relating to the
▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) nor any of the Companies has since 1981(A) entered
into or been subject to any Order with respect to Environmental Laws; (B)
received any notice under the citizen suit provision of any Environmental Law;
(C) received any written request for information, notice, demand letter,
administrative inquiry, or formal complaint or claim with respect to any
Environmental Condition; or (D) been subject to or threatened with any
governmental or citizen enforcement action, and there is no state of facts or
events with respect to which there exists a substantial likelihood that any of
the matters described above in Section 4.12(b)(iv)(A)-(D) will he forthcoming;
(v) ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) and
each of the Companies have currently in effect, and in the name of each
applicable party, all Permits required for the operation and conduct of the
Business, which Permits are listed on Schedule 4. 12(b) and are fully
transferable to the Buyer with the consent of the issuing body to the extent
required by any applicable Law, and each of the Sellers and CIL is in
compliance with all such Permits; (vi) neither ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent
relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) nor any of the Companies is in
violation
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of or has violated in the past any applicable Laws relating to asbestos, lead
based paints or solvents, and (vii) except to the extent in compliance with
applicable Law, no polychlorinated biphenyls are currently used, stored or have
been disposed at any of the currently or previously owned or leased real
properties of ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real
Property) or any of the Companies.
(c) Without limiting the generality or effect of the
foregoing, Schedule 4. 12(c) lists or describes (i) all on-site and off-site
locations where ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real
Property) or any of the Companies has stored, disposed or arranged for the
storage or disposal of any Hazardous Materials and (ii) all underground and
above ground storage tanks located at any of the currently or previously owned
or leased real properties of ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent relating to the
▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) or any of the Companies and the contents of such
tanks. Except with respect to those matters set forth on Schedule 4.12(c), each
of the currently owned and leased real properties of ▇▇▇▇▇▇▇▇▇▇▇▇ (to the
extent relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) and each of the Companies,
all facilities and operations thereon and all alterations and improvements
thereto, comply with any and all Contracts, Permits and Orders of all
Governmental Entities regarding any Environmental Condition.
(d) For purposes of this Agreement, the following terms
have the following meanings:
"ENVIRONMENT" means soil, surface waters, groundwaters, land,
stream sediments, surface or subsurface strata, ambient air or any other
environmental medium.
"ENVIRONMENTAL CONDITION" means any condition with respect to
the Environment on or off-site, or health or safety, whether or not yet
discovered, which has resulted in the past or does result in the future in any
damage, loss, cost, expense, claim, demand, order, or liability to or against
any of the Sellers, CIL or the Buyer by any third party (including, without
limitation, any Government Entity), including without Limitation any condition
resulting from the operation of the Business prior to the date of the Closing
by any of the Sellers or CIL or any activity or operation formerly conducted by
any of the Sellers or CIL.
"ENVIRONMENTAL LAW" means any federal, state or local
environmental or health and safety-related Law, whether existing as of
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31
the date hereof, previously enforced or subsequently enacted and all rules and
regulations thereunder, including without limitation the Resource Conservation
and Recovery Act (42 U.S.C. 6901 et seq.), as amended, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. 9601 et
seq.), as amended ("CERCLA"), the Federal Clean Water Act (33 U.S.C. 1251 et
seq.), as amended, The Occupational Safety and Health Act (29 U.S.C. 651 et
seq.), as amended, or any other federal, state or local environmental, health
and safety Law, whether existing as of the date hereof, previously enforced or
subsequently enacted.
"HAZARDOUS MATERIAL" means any pollutant, toxic substance,
hazardous waste, hazardous material, hazardous substance or oil as defined in
or regulated pursuant to any Environmental Law.
"PERMIT" means any permit, license, approval, consent,
certificate or authorization issued by a Governmental Entity.
"RELEASE" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping into the Environment.
"THREAT OF RELEASE" means a substantial likelihood of a
Release which requires action to prevent or mitigate damage to the Environment
which may result from such Release.
(e) Sellers representations and warranties contained in
Section 4. 12(b) and (c) are made to the knowledge of the Sellers. Solely for
purposes of Section 4. 12(b) and (c), a representation or warranty contained
herein shall be breached if such representation or warranty shall prove to be
incorrect and any Seller either (i) had knowledge (as defined in Section 12.12)
of facts or circumstances which if disclosed would have made the representation
true and correct, or (ii) should have had such knowledge.
4.13 INTELLECTUAL PROPERTY. Schedule 4.13 contains a
complete list of all trade names, trademarks, service marks, registered
copyrights, patents, patent applications, patent drawing, engineering drawings,
technology, computer software that is not commercially available and royalty
rights used in or necessary for the conduct of the Business as of the date
hereof and all licenses pertaining to any of the foregoing (collectively, the
"Scheduled IP", and, together with all trade secrets, unregistered copyrights,
know-how and technology used in or necessary for the conduct of the Business as
of the date hereof, collectively, the "Intellectual
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32
Property"). No Intellectual Property is used by any of the Companies pursuant
to a license from a third party or is licensed by any of the Companies to a
third party except pursuant to a license listed on Schedule 4.13. Except as set
forth on Schedule 4.13, one or more of the Companies (i) owns free and clear of
all Liens all of the Scheduled IP (other than the Scheduled IP that issued
pursuant to a license disclosed on Schedule 4.13), (ii) has the legal right to
use all of the Scheduled IP that is used pursuant to a license, (iii) owns,
free and clear of all Liens, or has the legal right to use, all of the other
Intellectual Property as it is used as of the date hereof and (iv) has paid all
required filing and registration fees in connection with the Scheduled IP.
Except as set forth on Schedule 4.13, none of the Sellers nor CIL has received
any written notice (that has not been subsequently satisfied or withdrawn) nor
has there been any assertion against any of the Sellers or CIL of any
infringement, dilution, unfair competition or material conflict with the
asserted rights of others in connection with the use by any of the Companies of
any of the Intellectual Property in the conduct of the Business. All of the
patents, copyright registrations and trademark and servicemark registrations
listed in Schedule 4.13 are valid and in full force and effect, are held of
record in the name of one of the Companies free and clear of any Liens, and,
except as set forth in schedule 4.13, are not subject to any pending
cancellation or reexamination proceeding or other proceeding or written claim
challenging their extent or validity. With respect to the Scheduled IP, except
as described on Schedule 4.13, one or more of the Companies is the applicant of
record in all pending patent applications and all applications for trademark,
service ▇▇▇▇ or copyright registration, and no action of opposition or
interference or final refusal has been received by any of the Companies in
connection with any such application. Except as disclosed on Schedule 4.13,
none of the Companies is a party to or bound by any Contract or Order which
limits the use by any of the Companies of any Intellectual Property.
4.14 TRANSACTIONS WITH INTERESTED PERSONS. Except as set
forth on Schedule 4. 14, CIL has no obligation to indemnify, or to make any
payment of money to, any Seller, any Affiliate or Subsidiary of any Seller or
CIL, or to any person who is or was an officer, partner, director or employee
of CIL or any Affiliate or Subsidiary of CIL, except for salaries for services
rendered and expenses (including employee benefits and other related benefits)
previously incurred in the ordinary course of business consistent with past
practice. Schedule 4. 14 sets forth each Contract to which CIL is a party or is
bound entered into with any Seller, any Affiliate or Subsidiary of any
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33
Seller or any person who is or was an officer, partner, director or employee of
CIL or any Affiliate or Subsidiary of CIL.
4.15 EMPLOYEE AND EMPLOYEE BENEFIT MATTERS. (a) Schedule
4. 15(a)(i) lists each employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which
covers any current or former employee of any of the Companies and which is or
was maintained or contributed to by any of the Companies or any ERISA Affiliate
(as hereinafter defined) and as to which there may be further liabilities or
obligations by any of the Companies (an "Employee Benefit Plan"). For purposes
of this Agreement, "ERISA Affiliate" means any entity, trade or business
(whether or not incorporated) the employees of which would be treated with the
employees of any of the Companies as employed by a single employer for purposes
of Section 4001(b)(1) of ERISA or Section 414(b)~ (c) or (m) of the Code.
Schedule 4. 15(a)(ii) lists each employment or severance contract or
arrangement, each stock option plan, stock appreciation right plan, executive
compensation practice and other executive perquisite, each plan or arrangement
providing for insurance coverage, severance, termination or similar coverage
and each written compensation policy and practice which covers any current or
former employee, director or agent of any of the Companies, which is or was
maintained or contributed to by any of the Companies or any ERISA Affiliate,
and which is not an Employee Benefit Plan (a "Benefit Arrangement").
(b) Each Employee Benefit Plan (other than a
multiemployer plan) and each Benefit Arrangement complies in all material
respects, and has been operated, administered and, where applicable, amended,
in all material respects, in accordance with its terms and all applicable Laws,
and no "reportable event" (other than those for which the 30-day notice to the
Pension Benefit Guaranty Corporation has been waived) or "prohibited
transaction" (oar than those for which there is an available exemption) (as
such terms are defined in ERISA and the Code, as applicable) has occurred with
respect to any Employee Benefit Plan during the five years preceding the
Closing Date. Each Employee Benefit Plan (other than a multiemployer plan)
intended to qualify under Section 401(a) of the Code has received a
determination letter concluding that such plan so qualifies, and to the
knowledge of the Sellers and CIL, no event has occurred, amendment been adopted
or action been taken which would cause such determination letter to he revoked.
(c) Each of the Companies delivered or made available to
the Buyer complete and correct copies of each Employee Benefit Plan,
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34
each Benefit Arrangement any trust agreements funding agreements or insurance
contracts relating thereto and, if applicable (i) the most recent actuarial
valuation report, (ii) the last filed Form 5500 or 5500-C and Schedules A and B
thereto, (iii) the summary plan description currently in effect and all
material modifications thereto, (iv) the last financial statements, and (v) the
most recent determination letter issued with respect to each such plan or
arrangement.
(d) Except as set forth on Schedule 4. 15(d), there are
no actions or claims existing or pending (other than routine claims for
benefits) or threatened with respect to any Employee Benefit Plan (other than a
multiemployer plan) or Benefit Arrangement.
(e) All contributions required to be made by any of the
Companies under applicable Law or the terms of any Employee Benefit Plan (other
than a multiemployer plan), Benefit Arrangement or Collective Bargaining
Agreement to each Employee Benefit Plan and each Benefit Arrangement have been
made within the time prescribed by such Law, plan, arrangement or Collective
Bargaining Agreement. There does not exist any accumulated funding deficiency
within the meaning of either Section 412 of the Code or Section 302 of ERISA as
to any Employee Benefit Plan. There has not been issued any waiver of the
minimum funding standards imposed by the Code with respect to any such Employee
Benefit Plan.
(f) No Employee Benefit Plan that is or was subject to
Title IV of ERISA (a "Pension Plan") has been terminated; no proceeding has
been initiated to terminate any Pension Plan; and none of the Companies has
incurred or are reasonably expected to incur any liability, whether to the
Pension Benefit Guaranty Corporation or otherwise, except for required premium
payments, which payments have been made when due, and benefit payments payable
in the ordinary course.
(g) No Employee Benefit Plan or Benefit Arrangement
provides medical or death benefits (whether or not insured) with respect to
current or former employees of any of the Companies beyond their retirement or
other termination of service (other than (i) coverage mandated by Law, provided
solely at the former employee's cost, or (ii) death benefits under any Pension
Plan).
The present value of all "benefit liabilities"
(whether or not vested) (as defined in Section 4001(a)(16) of ERISA) under each
Pension Plan did not exceed as of the most recent plan actuarial
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35
valuation date, and will not exceed as of the Closing Date, the then current
fair market value of the assets of such plan. For purposes of determining the
present value of benefit liabilities under any such plan, the actuarial
assumptions and methods used under such plan for the most recent plan actuarial
valuation shall be used and all benefits provided under such plan shall be
deemed to be fully vested.
(i) Except as disclosed on Schedule 4.15(i) and except
for any actions (Including, without limitation, with respect to employment,
termination, severance payments or obligations, employee benefits, employee
benefit plans and arrangements (including Employee Benefit Plans, Benefit
Arrangements, Pension Plans and multiemployer plans) and salaries) of the Buyer
with respect to any current or former director, officer, independent contractor
or employee of any of the Companies, the execution of this Agreement and
performance of the transactions contemplated by this Agreement will not
accelerate the time of payment or vesting, or increase the amount of any
compensation due to any current or former officer, employee, independent
contractor or director of any of the Companies.
(j) No Employee Benefit Plan is a "multiple employer
plan" or a "multiemployer plan", within the meaning of the Code or ERISA or the
regulations promulgated thereunder, and none of the Companies, (i) has made any
contributions to or participated in any such multiple employer plan or
multiemployer plan, or (ii) has any liability with respect to any such plan,
which liability has not been fully paid as of the date hereof. As of the
Closing Date, none of the Companies, (i) will have completely or partially
withdrawn from any Employee Benefit Plan which is a multiemployer plan, or (ii)
will be subject to any withdrawal liability as described in Section 4201 of
ERISA for any withdrawal from any Employee Benefit Plan which occurred on or
prior to the Closing Date (including, without limitation, any withdrawal deemed
to have occurred as a result of the transactions contemplated by this
Agreement).
(k) Each of the Companies (except as a result of any
actions taken by the Buyer) (i) is in compliance with all applicable Laws
respecting employment, employment practices, terms and conditions of employment
and wages and hours (including, but not limited to, the Worker Adjustment
Retraining Notification Act, the Americans with Disability Act of 1990 and the
Family and Medical Leave Act of 1993 ("FMLA")), in each case, with respect to
current and former officers, employees, independent contractors and directors
of each of the Companies (ii) has withheld all amounts required by Law or by
agreement to be withheld from the wages, salaries and other payments
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36
to such officers, employees, independent contractors and directors of each of
the Companies, (iii) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing, and (iv) is not liable
for any payment to any trust or other fund or to any Governmental Entity, with
respect to unemployment compensation benefits, social security or other
benefits for current and former officers, employees, independent contractors or
directors of each of the Companies. Schedule 4. 15(k) sets forth a list of all
persons who are on leave as of the Closing Date and identifies which persons
are on leave covered by the FMLA and which persons are on leave not covered by
the FMLA.
(l) Schedule 4. 15(l) sets forth each collective
bargaining or labor agreement or memorandum of understanding which covers
current or former employees of each of the Companies (a "Collective Bargaining
Agreement"). Except as set forth on Schedule 4. 15(l) hereto, (i) there is no
union organizational activity currently underway at any of the Companies, (il)
none of the Companies is engaged in or has received any written notice during
the current or preceding year of, any unfair labor practice, and no such
complaint is pending before the National Labor Relations Board or any other
agency having jurisdiction thereof, and (iii) during the immediately preceding
twelve calendar months there has not been any, and there is no threatened,
labor strike, work stoppage or slowdown pending against any of the Companies
and no pending lockout by any of the Companies. Each of the Companies has
satisfied and performed fully its obligations under each Collective Bargaining
Agreement, and under any order, conciliation contract or settlement contract by
which any of the Companies is bound or to which any of the Companies is subject
concerning employment related matters.
(m) Schedule 4. 15(m) sets forth a complete and accurate
list of all persons currently employed by any of the Companies, together with
the amount of the annual compensation (separating base salary and other forms
of compensation) of each such person, the date used as the commencement of
employment and for the vesting of benefits for such person and the accrued
vacation days for such person. The appropriate Company has paid in full to such
employees all wages, commissions, bonuses and other compensation for all
services performed by them to date (other than amounts accrued since the end of
the last pay period) and none of the Companies is subject to any claim for
non-payment or non- performance of any of the foregoing.
4.16 CUSTOMER ACCOUNTS RECEIVABLE; INVENTORIES. (a) All
customer accounts receivable reflected in the CIL Balance Sheet or
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arising thereafter, have arisen from bona fide transactions in the ordinary
course of business with persons or entities other than the Sellers or any
Affiliates or Subsidiaries of the Sellers or CIL. To the knowledge~of the
Sellers, all customer accounts receivable (and interest thereon) reflected on
the CIL Balance Sheet are good and collectible at the aggregate recorded
amounts thereof, net of any applicable reserves for doubtful accounts reflected
on the CIL Balance Sheet. To the knowledge of the Sellers, all customer
accounts receivable (and interest thereon) acquired since December 31, 1996 are
good and collectible at the aggregate recorded amounts thereof, net of any
applicable reserves for doubtful accounts. The Sellers have provided to the
Buyer a true and correct aging of all accounts receivable of CIL as of the
cycle billing dates during the month immediately preceding the date of this
Agreement.
(b) The inventories of CIL are of a quality and quantity
usable and salable during a period consistent with past practices, at customary
gross margins consistent with past practice in the ordinary course of business.
The inventories of CIL are reflected on the CIL Balance sheet and in the books
and records of CIL in accordance with GAAP adjusted on a basis consistent with
the practices and procedures described on Schedule 4.5. Since December 31,
1996, CIL has not discounted inventory except in the ordinary course of
business consistent with past practice.
(c) The inventories of Greenwood are of a quality and
quantity usable and salable during a period consistent with past practices of
CIL in the ordinary course of business. The inventories of Greenwood consist
only of recently acquired ▇▇▇▇▇▇▇ Denver inventories. In the course of its
business, Greenwood has sold these inventories only to CIL and not to outside
customers.
4.17 NON-CURRENT ASSETS. Since October 31, 1996, CIL has
only disposed of non-current assets that were obsolete or that are disclosed on
Schedule 4.17 in the ordinary course of business consistent with past practice;
provided, however, that the aggregate book value as of January 31, 1999 of all
such disposed non-current assets does not exceed in the aggregate $25,000.
4.18 SUPPLIERS. CIL is not involved in any disputes with
any of its suppliers except in the ordinary course of business in respect to
adjustments relating to shipping deficiencies or defective goods. Schedule 4.18
sets forth all suppliers which account for 5% or more of CIL's orders for the
purchase of merchandise during the 12-month period ended as of December 31,
1996 and the amounts paid by CIL
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to such suppliers during such period. CIL has not received notice from, or
otherwise has knowledge of, any such supplier or suppliers accounting
collectively for more than 5 % of such orders to CIL refusing to deal with CIL
as of the date hereof.
4.19 SUFFICIENCY OF ASSETS. The properties and assets
owned by, or currently leased by the Sellers and being sold, assigned and
delivered to the Buyer hereunder comprise all of the properties and assets
currently used by the Companies in the Business and are sufficient for the
operation of the Business on a basis consistent with past practice.
4.20 INSURANCE. Each of the Companies maintains policies
of fire and casualty, liability and other forms of insurance in such amounts,
with such deductibles and against such risks and losses as are reasonable for
the business and assets of the Companies; a list of such insurance policies is
set forth on Schedule 4.20, together with the terms thereof and all deductible
amounts. None of such insurance policies has been cancelled or otherwise
unfavorably terminated and no notice of any such proposed action has been
received by any of the Companies, and such insurance/limits of liability as
were provided in the individual policies remain in full force and effect. True
and complete information detailing the type and amount of coverage of each such
policy has been made available to the Buyer. Except as set forth on Schedule
4.20, no such policies are subject to co-insurance amounts, and no coverages
will terminate as a result of the Closing. None of the Companies has failed to
pay any premium, or taken or failed to take any other action, which would
permit the insurers under any policy listed on Schedule 4.20 to terminate such
insurance.
4.21 ACCOUNTS; SAFE DEPOSIT BOXES; POWERS OF ATTORNEY;
OFFICERS AND DIRECTORS. Schedule 4.21 sets forth (a) a true and correct list
of all bank and savings accounts, certificates of deposit and safe deposit
boxes of CIL and those persons authorized to sign thereon, (b) true and correct
copies of all corporate borrowing, depository and transfer resolutions and
those persons entitled to act thereunder, (c) a true and correct list of all
powers of attorney granted by CIL and those persons authorized to act
thereunder, and (d) a true and correct list of all officers and directors of
CIL.
4.22 LIABILITIES. (a) Except as set forth on Schedule
4.22, CIL has no obligations or liabilities of any nature (whether known,
unknown, accrued, absolute, contingent, unliquidated or otherwise and
regardless of when such liability or obligation was or is asserted) arising out
of any action or inaction prior to the Closing Date, with
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39
respect to or based upon any transactions, occurrences or events occurring, or
facts or circumstances existing, at or prior to the Closing, except (i) those
liabilities reflected on or fully reserved against on the CIL Balance Sheet, or
(ii) liabilities which have arisen since December 31, 1996 in the ordinary
course of business consistent with past practice. Sellers-representations and
warranties contained in this Section 4.22 are made to the knowledge of the
Sellers. Solely for purposes of this Section 4.22, a representation or warranty
contained herein shall be breached if such representation or warranty shall
prove to be incorrect and any Seller either (i) had knowledge (as defined in
Section 12. 12) of facts or circumstances which if disclosed would have made
the representation true and correct, or (ii) should have had such knowledge.
4.23 PRODUCT WARRANTY AND PRODUCT LIABILITY. (a) Except as set
forth on Schedule 4.23(a), there are no product warranty claims pending or, to
the knowledge of the Sellers or CIL, threatened against CIL for amounts in
excess of $5,000 that are not fully reserved against on the CIL Balance Sheet
and, to the knowledge of the Sellers or CIL, there is no state of facts nor has
there occurred any event that could form the basis for any such product
warranty claim.
(b) Except as set forth on Schedule 4.23(b), there are no product
liability or other tort claims pending or, to the knowledge of the Sellers or
CIL, threatened against CIL. Schedule 4.23(b) sets forth a complete and
accurate summary of product liability claims made against CIL in the past five
years.
4.24 BACKLOG CONTACTS. Except as set forth on Schedule
4.24 hereto, CIL has a reasonable expectation of being able to meet its
obligations under the Backlog Contracts to which it is a party, in accordance
with the terms of such Backlog Contracts.
4.25 SUPPLY REQUIREMENT CONTRACTS. Except as set forth on
Schedule 4.25 hereto, each of the Supply Requirement Contracts is on
commercially reasonable terms and none of the Supply Requirement Contracts
require purchases by CIL in excess of its reasonably expected requirements.
4.26 GOVERNMENT CONTRACTS. Except as set forth on Schedule
4.26, CIL is not a party to any Contract with any Governmental Entity.
4.27 1996 RESULTS. CIL's Restructured Pro Forma EBITDA for
the fiscal year ended December 31, 1996 is not less than $2.6 million. "EBITDA"
means, in respect of CIL, earnings before interest income and
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40
expense, taxes based upon or measured by income, depreciation and amortization
as reflected on the financial statements of CIL prepared in accordance with
GAAP, consistently applied. "Restructured Pro Forma EBITDA" means, in respect
of CIL, the EBITDA of CIL increased by those amounts set forth on Exhibit A
attached hereto.
4.28 DEBT. Except as set forth on Schedule 4.28, CIL is
not a party to any indenture, mortgage, loan or credit Contract under which CIL
has borrowed any money or issued any note, bond, indenture or other evidence of
indebtedness for borrowed money, or guaranteed indebtedness for money borrowed
by others, other than such of the foregoing under which CIL has no current or
future obligation or liability (the "Debt Obligations").
4.29 CONTINGENT LIABILITIES. Except as set forth on
Schedule 4.29, CIL is not a party to any Contract with respect to letters of
credit, customer deposits, guaranties of indebtedness, performance bonds, bid
bonds or other bonds (the "Contingent Liabilities").
4.30 BROKERAGE. Except as set forth on Schedule 4.30, none
of the Sellers has made any agreement or taken any other action which might
cause the Buyer to become obligated to pay any broker's fee or commission or
other payment to any other person or entity as a result of the transactions
contemplated hereunder.
4.31 CIL'S NET WORTH. CIL's net worth (determined in
accordance with GAAP, consistently applied) was not less than $4 million as of
December 31, 1996.
4.32 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Sellers contained herein are true and
correct on the date hereof and will be true and correct on the Closing Date
with the same force and effect as if made on and as of the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The
Buyer represents and warrants to the Sellers as follows:
5.1 ORGANIZATION; POWER. The Buyer is duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Buyer has the requisite corporate power and authority to own, lease,
operate and otherwise hold its assets owned, leased or otherwise held by it.
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5.2 BINDING AGREEMENT AND AUTHORITY. The Buyer has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. All corporate action
required to be taken for the due authorization of the execution and delivery by
the Buyer of this Agreement and the consummation of the transactions
contemplated hereby have been duly taken by the Buyer. This Agreement has been
duly executed and delivered by the Buyer and, assuming the due execution and
delivery by the Sellers, constitutes the valid and binding obligation of the
Buyer, enforceable against it in accordance with its terms.
5.3 NO DEFAULTS. The execution and delivery of this
Agreement by the Buyer does not, and the consummation by the Buyer of the
factions contemplated hereby will not:
(a) require the consent, waiver, approval, license, order
or authorization of, or the registration, declaration or filing of any document
or report with, any person, entity or Governmental Entity other than (i)
filings under the HSR Act and (ii) as disclosed on Schedule 5.3;
(b) with or without the giving of notice or the passage
of time or both, conflict with or violate any Law of any Governmental Entity;
(c) with or without the giving of notice or the passage
of time or both, conflict with or result in any breach or violation of any
provision of, or constitute a default under, or give rise to a right of
termination, cancellation or acceleration of the performance of or the loss of
a material benefit under, any material contract, commitment, agreement,
understanding, arrangement, Permit or restriction of any kind to which the
Buyer is a party or to which the Buyer or any of their assets are subject or
result in the creation of any Lien upon any of the assets of the Buyer; or
(d) conflict with or violate the Certificate of
Incorporation or By-Laws of the Buyer.
5.4 FINANCIAL OBLIGATIONS. The Buyer is able to meet all
its financial obligations under this Agreement.
5.5 ▇▇▇▇▇▇▇ DENVER AGREEMENT. The Buyer has received a
copy of the Asset Purchase Agreement, dated as of July 10, 1995, by and between
Edco and ▇▇▇▇▇▇▇ Denver Machinery Inc. ("▇▇▇▇▇▇▇ Denver"), as amended by the
Amendment to the Asset Purchase Agreement, dated as of
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December 28, 1995, by and between Edco and ▇▇▇▇▇▇▇ Denver, and the Assignment,
dated January 1, 1996, by Edco to Greenwood and the ▇▇▇▇ of Sale, dated June 1,
19%, from Edco to Greenwood, (the "▇▇▇▇▇▇▇ Denver Agreement") and has reviewed
the ▇▇▇▇▇▇▇ Denver Agreement. The Buyer acknowledges that, with resect to the
▇▇▇▇▇▇▇ Denver inventory and the other assets purchased by Greenwood pursuant
to the ▇▇▇▇▇▇▇ Denver Agreement and being sold to Buyer hereunder, each of the
Sellers makes no greater representations and warranties to the Buyer with
respect thereto than those made by ▇▇▇▇▇▇▇ Denver in the ▇▇▇▇▇▇▇ Denver
Agreement.
5.6 DUE DILIGENCE. The Buyer has performed limited due
diligence and is continuing to perform due diligence in respect of the Assets,
CIL, the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property and the Business.
5.7 BROKERAGE. The Buyer has not made any agreement or
taken any other action which might cause any of the Sellers to become obligated
for any broker's fee or commission as a result of the transactions contemplated
hereunder.
5.8 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Buyer contained herein are true and
correct on the date hereof and will be true and correct on the Closing Date
with the same force and effect as ff made on and as of the Closing Date.
6. COVENANTS.
6.1 ACCESS. Prior to the Closing, upon reasonable notice
from the Buyer to the Sellers, the Sellers will (i) afford to the officers,
employees, attorneys, accountants, bankers or other authorized representatives
of the Buyer reasonable access during normal business hours to the properties,
facilities, books and records of ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent relating to the
▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) and each of the Companies and to the employees,
attorneys, accountants and other authorized representatives of ▇▇▇▇▇▇▇▇▇▇▇▇ (to
the extent relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) and each of the
Companies (collectively, the "Representatives") and (ii) cause the
Representatives to cooperate so as to afford the Buyer a reasonable opportunity
to make such review, examination and investigation of the Companies and the
▇▇▇▇▇▇▇▇▇▇▇▇ Real Property as Buyer may reasonably desire to make. The Buyer
will be permitted to make extracts from or to make copies of such books and
records as may be reasonably necessary. Prior to the Closing, the Sellers will
furnish to the Buyer, or cause to be furnished to the Buyer, such financial and
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operating data and other information pertaining to ▇▇▇▇▇▇▇▇▇▇▇▇ (to the extent
relating to the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property) and each of the Companies and the
operation of the Business, past and present, as the Buyer may reasonably
request.
6.2 NONDISCLOSURE. Prior to the Closing, none of the
Buyer, the Sellers nor CIL will, and the Buyer, the Sellers and CIL will
instruct their respective officers, directors, partners, employees, agents,
legal and financial advisors and other representatives not to, disclose to any
other person either the fact that this Agreement has been entered into nor any
of the terms, conditions or other facts with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the Buyer
(in the case of the Sellers or CIL) or the Sellers (in the case of the Buyer);
provided, however, that nothing herein will prohibit any party from issuing or
causing publication of any press release or public announcement to the extent
that such party determines such action to be required by Law or the regulations
of any stock exchange on which it is listed in which event the party making
such determination will allow the other parties reasonable time to comment on
such release or announcement in advance of its issuance.
6.3 REGULATORY FILINGS; CONSENTS. (a) Within 15 days
hereof, the Buyer and the Sellers will cause such filings to be made as may be
required by the HSR Act with respect to the consummation of the transactions
contemplated by this Agreement. Thereafter, the Buyer and the Sellers will
cause to be filed as promptly as practicable with the United States Federal
Trade Commission and the United States Department of Justice any supplemental
information which may be requested pursuant to the HSR Act with respect to the
consummation of the transactions contemplated by this Agreement. Al' filings
made pursuant to the HSR Act will comply in all material respects with the
requirements of the respective Laws pursuant to which they are made.
(b) Without limiting the generality or effect of Section
6.3(a), each of the parties will (i) use reasonable efforts to comply as
expeditiously as possible with all lawful requests of Governmental Entities for
additional information and documents pursuant to the HSR Act and (ii) not (A)
except as required by any Governmental Entity, extend any waiting period under
the HSR Act or (B)enter into any agreement with any Governmental Entity not to
consummate the transactions contemplated by this Agreement, except with the
prior consent of the other parties hereto.
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(c) Without limiting the generality or effect of Section
6.3(a) and (b), each of the Sellers and the Buyer, to the extent applicable,
will use its reasonable best efforts to obtain the governmental and other
approvals, consents or waivers listed on Schedule 4.4(a).
6.4 OPERATION OF THE BUSINESS. Except as set forth in
Schedule 6.4 or as otherwise consented to by the Buyer in writing, until the
Closing, ▇▇▇▇▇▇▇▇▇▇▇▇, the Limited partnership and the Trust will cause CIL to:
(a) (i) conduct its Business only in the ordinary course
consistent with past practice including without limitation billing, shipping
and collection practices, marketing and sales practices, inventory transactions
and payment of accounts payable, (ii) use its best efforts to preserve and
maintain its relations with its suppliers or customers, and (iii) use its best
efforts to preserve and maintain its financial position, results of operations,
cash flows, Business or prospects;
(b) refrain from doing any of the acts enumerated in
Sections 4.6(b) or 4.6(c).
6.5 SATISFACTION OF CONDITIONS. Without limiting the
generality or effect of any other provision hereof, prior to the Closing, each
of the parties hereto will use their best efforts with due diligence and in
good faith to satisfy promptly all conditions required hereby to be satisfied
by such party prior to the consummation of the transactions contemplated hereby
including without limitation causing all of their respective representations
and warranties to remain true and correct.
6.6 LITIGATION. CIL will promptly notify the Buyer of any
Legal Proceeding which after the date hereof is commenced against CIL or
against any director, officer, employee, consultant or agent thereof with
respect to the affairs of CIL or the Business.
6.7 ACQUISITION PROPOSALS. During the period (the
"Pre-Closing Period") between the date hereof and the earliest to occur of (a)
the Closing and (b)the termination of this Agreement, none of the Sellers nor
CIL will, and each of the Sellers and CIL will instruct their respective
officers, partners, directors, employees, agents, legal or financial advisors
or other representatives not to, solicit, initiate or consider any proposals or
offers from any person or entity relating to, or enter into (or continue) any
discussions, or deliver
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any information, concerning, any acquisition or purchase of all or a material
amount of the assets of, or any securities of, or any merger, consolidation or
other business combination with, any of the Companies (any such transaction, a
"Competitive Transaction"). During the Pre-Closing Period, each of the Sellers
and CIL will promptly notify the Buyer in the event of any proposal or offer in
respect of a Competitive Transaction.
6.8 OTHER TAX MATTERS. (a) Liability for Taxes and Related
Matters.
(i) Sellers' Liability for Taxes. Each of the
Sellers, jointly and severally, shall be liable for and shall
indemnify in accordance with Sections 9.1 through 9.7 the Buyer for
all taxes (including without limitation any obligation to contribute
to the payment of a tax determined on a consolidated, combined or
unitary basis with respect to a group of corporations that includes or
included CIL) imposed on CIL or for which CIL may otherwise be liable
(1) for any taxable year or period that ends on or before the Closing
Date or (2) with respect to any taxable year or period beginning
before and ending after the Closing Date, the portion of such taxable
year or period ending on and including the Closing Date. Except as
set forth in clause (iii) of this Section 6.8(a), ▇▇▇▇▇▇▇▇▇▇▇▇ shall
be entitled to any refund of taxes of CIL attributable to such
periods.
(ii) Taxes for Short Taxable Year. Each of the
Sellers and the Buyer shall close the taxable period of CIL as of the
close of business on the Closing Date, unless such action is
prohibited by Law. In any case where applicable Law prohibits CIL
from closing its taxable year on the Closing Date then, for purposes
of clause (i) of this Section 6.8(a), the determination of the taxes
of CIL for the portion of the year or period ending on, and the
portion of the year or period beginning after, the Closing Date shall
be determined on the basis of an interim closing of the books as of
the close of business on
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the Closing Date, except that exemptions, allowances or deductions
that are calculated on an annual basis, such as the deduction for
depreciation, shall be ratably apportioned on a time basis.
(iii) Carryforwards of Losses. The Buyer is free to
cause CIL to elect, where permitted by Law, to carry forward any net
operating loss, net capital loss, charitable contribution or other
item arising before or after the Closing Date that would, absent such
election, be carried back to a taxable period of CIL ending on or
before the Closing Date. The Buyer shall be entitled to any refund of
income taxes paid by CIL before the Closing Date, to the extent that
such refund is attributable to losses or deductions of CIL that accrue
after the Closing Date.
(b) Assistance and Cooperation. After the Closing Date, each
of the Sellers shall:
(i) assist (and cause their respective Affiliates
and Subsidiaries to assist) the Buyer and its Affiliates in preparing
any tax returns or reports which the Buyer and its Affiliates are
responsible for preparing and filing;
(ii) cooperate fully in preparing for any audits of,
or disputes with taxing authorities regarding, any tax returns of CIL;
and
(iii) make available to the Buyer, the Buyer's
Affiliates and to any taxing authority as reasonably requested all
information, records and documents relating to taxes of CIL.
(c) Transfer Taxed. The Sellers shall be liable for, and
shall timely pay, any and all gains, transfer, sales, use, bulk sales,
recording, registration, documentary, stamp, and other taxes that may result
from, or be incurred in connection with, this Agreement. The Sellers shall, at
their own expense, properly complete, sign, and timely file any and all
required tax returns with respect to such taxes and, if required by applicable
Law, the Buyer will join in the execution of any such tax returns.
(d) Survival of Obligations. The obligations of the
parties set forth in this Section 6.8 shall be unconditional and absolute and
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shall remain in effect until the date sixty (60) days after the expiration of
the relevant statute of limitations applicable to the taxes at issue.
6.9 CORPORATE RECORDS. On the Closing Date, the Sellers
will deliver or cause to be delivered to the Buyer at CIL's headquarters (to
the extent they exist) all original agreements, documents, books, records and
files relating to the Business (collectively, the "Records") in the possession
or under the control of any of the Sellers or any of their Affiliates or
Subsidiaries other than CIL (collectively, "Post-Closing Affiliates") to the
extent not in the possession of CIL or the Buyer, subject to the following
exceptions:
(a) The Buyer recognizes that certain Records may contain
only incidental information relating to the Business or may primarily relate to
the Sellers or Post-Closing Affiliates, or the non-Business activities of the
Sellers or the Post-Closing Affiliates, and that the Sellers and the
Post-Closing Affiliates may retain such Records provided, however, that each of
the Sellers shall at the request of the Buyer made at any time specifying the
items needed, deliver appropriately excised copies of such Records; and
(b) The Sellers and the Post-Closing Affiliates may
retain any tax returns and related schedules or work papers, but will promptly
make available to the Buyer or the Buyer's representatives copies of such tax
returns and related schedules o~work papers or information appears on such tax
returns or in related documents which relates to any of the Companies or which
the Buyer reasonably requests to fulfill tax-related or financial obligations
or obligations under this Agreement.
6.10 EMPLOYEES. (a) Each of the Sellers and CIL
acknowledges that the Buyer has no obligation hereunder to offer employment to
any employee of Greenwood or Edco; however, the Buyer shall have the right to
hire such of the employees of Greenwood or Edco as are listed on Schedule
4.15(m) hereto as the Buyer may select.
6.11 DISCLOSURE SCHEDULE UPDATES. The Sellers shall at
least once, and may more than once, amend or supplement the schedules provided
hereunder with respect to any matter coming to the Sellers attention or arising
which, if known to any of them or existing prior to the date of this Agreement,
would have been required to be set forth therein or which is necessary or
desirable to complete or correct any information contained therein or in any
representation and
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warranty rendered inaccurate thereby. The Buyer shall notify the Sellers in
writing within 10 business days after its receipt of the amended or
supplemented schedules whether the Buyer accepts or rejects such amended or
supplemented schedules. If the Buyer rejects such amended or supplemented
schedules, the parties hereto shall endeavor to resolve their disagreement as
to such amended or supplemented schedules. If an agreement is not reached, the
Buyer may elect, subject to Section 6.14 hereunder, to terminate this Agreement
without any liability or further obligation to the Sellers, except for
obligations under Section 6.2, which obligations shall continue until the
second anniversary of the date hereof, and Section 12.7. If the Buyer
accepts the amended or supplemented schedules or fails to notify the Sellers in
writing within 10 business days after its receipt thereof of its acceptance or
rejection thereof, such amended or supplemented schedules shall be deemed, upon
the Closing, to be the schedules to this Agreement for all purposes hereunder,
as if such schedules had been provided on the date hereof.
6.12 GUARANTIES. The Buyer shall cause the guaranties made by
▇▇▇▇▇▇▇▇▇▇▇▇ and identified on Schedule 6. 12 (the "Guaranties") to be
released.
6.13 CIL BALANCE SHEET. As soon as it is available, but in
no event later than March 31, 1997, the Sellers shall deliver to the Buyer an
unaudited balance sheet of CIL as of February 28, 1997, prepared in accordance
with GAAP, consistently applied.
6.14 CONFIDENTIALITY. Prior to the Closing, the Buyer shall
treat confidentially any information that the Sellers furnish to the Buyer in
connection with the transactions contemplated hereby, whether furnished before,
on or after the date of this Agreement, including all notes, analyses,
compilations, studies or other documents furnished by the Sellers to the Buyer
which contain or otherwise reflect such information (collectively, the
"Confidential Material"); provided, however, Confidential Material shall not
include any information which (a) is or becomes generally available to the
public other than as a result of a disclosure by the Buyer or the Buyer's
employees, attorneys, accountants or other representatives of the Buyer
(collectively, the "Buyer's Representatives"), (b) was available to the Buyer
on a non confidential basis prior to its disclosure to the Buyer by the
Sellers, or (c) was or becomes available to the Buyer on a non-confidential
basis from a source other than the Sellers or any of the Sellers' employees,
attorneys, accountants or other representatives of any of the Sellers. The
Buyer agrees that the Confidential Material shall be used solely for the
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purpose of its due diligence review of the Assets, the ▇▇▇▇▇▇▇▇▇▇▇▇ Real
Property and CIL and not for any other purpose, and that any of such
information may be disclosed only to the Buyer's Representatives for such same
purpose. The Buyer agrees to inform the Buyer's Representatives of the
confidential nature of such information and shall direct them to treat such
information confidentially and not to use it other than for the purpose
described above. Except as described in the following two sentences, the Buyer
agrees to, and agrees to direct the Buyer's Representatives to, keep such
information strictly confidential and to not disclose such information to any
other person or entity without the prior written consent of CIL. In the event
that the Buyer is requested or required by Law or any Governmental Entity to
disclose any Confidential Material, the Buyer agrees to promptly provide CIL
with notice of such request or requirement so that CIL may have the opportunity
to either seek a protective order or agree to waive compliance with the
provisions of this Section 6.14. Notwithstanding anything contained herein to
the contrary, it is agreed that if the Buyer or any of the Buyer's
Representatives is required by Law or any Governmental Entity to disclose any
Confidential Material, the Buyer may disclose such information without
liability hereunder. The Buyer agrees that it will use the standard of care
with resect to the Confidential Material which it accords its own proprietary
and confidential information of like kind or character and shall not use or
rely on such Confidential Material except for the purpose of its due diligence
review. In addition to any other remedy which may be afforded by Law, the
Buyer acknowledges that any breach or threatened breach of this Section 6.14 by
the Buyer or the Buyer's Representatives may be prohibited by a restraining
order, injunction or other equitable remedy obtained by the Sellers. In the
event that this Agreement is terminated pursuant to Section 11, the Buyer shall
(x) promptly redeliver to CIL, and direct the Buyer's Representatives to
promptly redeliver to CIL, all Confidential Material and all copies, extracts
or other reproductions of all Confidential Material made by Buyer or Buyer's
Representatives and (y)promptly destroy, and direct the Buyer's Representatives
to promptly destroy, all written materials, memoranda, notes and other writings
or recordings prepared by it or the Buyer's Representatives based upon the
Confidential Material.
7. CONDITIONS TO CLOSING.
7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS AND
THE BUYER. The obligations of each of the Sellers and the Buyer under this
Agreement to consummate the transactions contemplated
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hereby are subject to the satisfaction on or prior to the Closing Date of the
following conditions: (a) there shall not have been entered a preliminary or
permanent injunction, temporary restraining order or other Order or decree in
any jurisdiction, the effect of which restrains or prohibits the Closing, and
(b) the waiting period (and any extension thereof) applicable to the
consummation of the transactions contemplated by this Agreement under the HSR
Act, if any, shall have expired or been terminated.
7.2 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
SELLERS. The obligations of the Sellers under this Agreement to consummate the
transactions contemplated hereby are subject to the satisfaction, at or prior to
the Closing, of all of the following conditions, any one or more of which may be
waived at the option of the Sellers in their sole discretion:
7.2.1 COMPLIANCE WITH AGREEMENT. (a) The Buyer
will have performed all obligations and agreements and complied in all material
respects with all covenants contained in this Agreement to be performed or
complied with by it at or prior to the Closing Date, (b)the representations and
warranties of the Buyer contained in this Agreement will be true and correct in
all material respects on the Closing Date with the same force and effect as if
made on the Closing Date and (c) there will have been delivered to the Sellers
a certificate signed by an officer of the Buyer (the "Buyer's Officer's
Certificate"), dated the Closing Date, to the foregoing effect.
7.2.2 RESOLUTIONS OF THE BOARD OF DIRECTORS. The
Sellers will have received from the Buyer certified copies of the resolutions
of the Board of Directors of the Buyer approving this Agreement and authorizing
the consummation of the transactions contemplated hereby (the "Buyer's Board
Resolutions").
7.2.3 DELIVERY OF PURCHASE PRICE. The Buyer will
have delivered to the Sellers the Purchase Price.
7.2.4 EMPLOYMENT AGREEMENT. The Buyer will have
delivered to ▇▇▇▇▇▇▇▇▇▇▇▇ the employment agreement, substantially in the form
attached hereto as Exhibit B and dated the Closing Date, by and between the
Buyer and ▇▇▇▇▇▇▇▇▇▇▇▇ (the "Employment Agreement").
7.2.5 RELEASE OF GUARANTIES. The Buyer will have
delivered to ▇▇▇▇▇▇▇▇▇▇▇▇ releases of the Guaranties (collectively, the
"Guaranty Releases").
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7.3 ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
BUYER. The obligations of the Buyer under this Agreement to consummate the
transactions contemplated hereby are subject to the satisfaction, at or prior
to the Closing, of all of the following conditions, any one or more of which
may be waived at the option of the Buyer in its sole discretion:
7.3. 1 COMPLIANCE WITH AGREEMENT. (a) Each of the
Sellers will have performed all obligations and agreements and complied in all
material respects with all covenants contained in this Agreement to be
performed or complied with by it at or prior to the Closing Date, (b)the
representations and warranties of the Sellers contained in this Agreement will
be true and correct in all material respects on the Closing Date with the same
force and effect as if made on the Closing Date, and (c) there will have been
delivered to the Buyer (i) a certificate signed by ▇▇▇▇▇▇▇▇▇▇▇▇ (the
"▇▇▇▇▇▇▇▇▇▇▇▇ Certificate"), (ii) a certificate signed by all the general
partners of the Limited Partnership (the "Limited Partnership Certificate");
(iii) a certificate signed by the trustee of the Trust (the "Trust
Certificate"); (iv) a certificate signed by an officer of Greenwood (the
"Greenwood Officer's Certificate"), and (v) a certificate signed by an officer
of Edco (the "Edco Officer's Certificate"), each dated the Closing Date to the
foregoing effect.
7.3.2 RESOLUTIONS OF THE BOARD OF DIRECTORS. The
Buyer will have received from the Limited Partnership, the Trust, Greenwood and
& Co certified copies of the resolutions of (a) of all the general partners of
the Limited Partnership approving this Agreement and authorizing the
consummation of the transactions contemplated hereby (the "Limited Partnership
Resolutions"), (b)the Board of Directors of the Trust approving this Agreement
and authorizing the consummation of the transactions contemplated hereby (the
"Trust Resolutions"), (c) the Board of Directors of Greenwood approving this
Agreement and authorizing the consummation of the transactions contemplated
hereby (the "Greenwood Board Resolutions"), and (d) the Board of Directors of
Edco approving this Agreement and authorizing the consummation of the
transactions contemplated hereby (the "Edco Board Resolutions").
7.3.3 DELIVERY OF STOCK CERTIFICATES. There will
be delivered to the Buyer by the Limited Partnership and the Trust certificates
representing the Shares, duly endorsed in blank for transfer or accompanied by
duly executed stock powers endorsed in blank to the Buyer (the "Share
Certificates").
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7.3.4 DELIVERY OF BILLS OF SALE. There will be
delivered to the Buyer by each of Greenwood and Edco a ▇▇▇▇ of sale, dated the
Closing Date, each in a form reasonably acceptable to the Buyer (collectively,
the "Bills of Sale").
7.3.5 DELIVERY OF REAL PROPERTY DEEDS. There will be
delivered to the Buyer by each of Greenwood, Edco and ▇▇▇▇▇▇▇▇▇▇▇▇ limited or
special warranty deeds, each dated the Closing Date and in a recordable form
reasonably acceptable to the Buyer (collectively, the "Deeds").
7.3.6 RELEASE OF MORTGAGE. The Buyer will have received
evidence reasonably satisfactory to it that the Real Estate Mortgage and
Assignment of Rents and Leases, dated September 14, 1994, by Edco, as
Mortgagor, and ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇. as Mortgagee, pertaining to the real
property set forth on Schedule 2. 1(d)(i) has been released and fully
discharged of record (the "Evidence of Release").
7.3.7 ACTUAL OR THREATENED ACTIONS. There will not be any
actual or threatened action or proceeding by or before any court or other
individual, administrative or Governmental Entity which seeks to restrain,
prohibit or invalidate the transactions contemplated by this Agreement, which
could materially adversely affect CIL or the Business after the Closing Date,
or which could deny the Buyer any of the benefits of the transactions
contemplated hereby.
7.3.8 ABSENCE OF MATERIAL ADVERSE CHANGE. There will have
been no materially adverse change in the financial position, cash flows,
Business, properties or prospects of the Companies since October 31, 19%.
7.3.9 REGULATORY APPROVALS; CONSENTS. The Buyer will have
received evidence reasonably satisfactory to it that the governmental and other
approvals, consents or waivers listed on Schedule 4.4(a) shall have been
obtained and be in full force and effect as of the Closing (collectively, the
"Evidence of Consents").
7.3.10 RECEIPT. The Buyer will have received a receipt from
the Sellers for the payment of the Purchase Price (the "Receipt").
7.3.11 INSURABLE TITLE TO REAL PROPERTY. The Buyer will have
received, at its own cost, evidence reasonably satisfactory to it that a
reputable title insurance company has issued at ordinary rates its fee title
insurance policy effective the Closing Date with respect
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to the Real Property and the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property (the "Title
Insurance").
7.3.12 CERTAIN RECORDS; DIRECTOR RESIGNATIONS. The Buyer
will have received CIL's original minute books, stock certificate and corporate
record books (including unissued stock certificates and all cancelled stock
certificates), Certificate of Incorporation and By.Laws and all amendments
thereto (the "CIL Corporate Documents"), and the written resignation of each
director of CIL (collectively, the "Director Resignations").
7.3.13 CERTIFICATION. The Buyer will have received a
certification from each Seller under Section 1445(b)(2) of the Code and the
rules and regulations thereunder, in a form reasonably acceptable to the Buyer,
stating each Seller's taxpayer identification number and that each Seller is
not a foreign person (collectively, the "Section 1445(b)(2) Certificates").
7.3.14 TRANSFER TAXES. The Buyer will have received
properly completed all required transfer, sales, use, bulk sales, excise, stamp
and other similar tax returns duly executed by the appropriate Seller in a form
reasonably acceptable to the Buyer (collectively, the "Transfer Tax Returns"),
together with evidence reasonably satisfactory to the Buyer that the Sellers
shall have paid all transfer, sales, use, bulk sales, excise, stamp and other
similar taxes due or becoming due in connection with the transactions
contemplated hereby.
7.3.15 INTELLECTUAL PROPERTY ASSIGNMENTS. The Buyer will
have received an assignment of all of the Intellectual Property pursuant to
assignment agreements, dated the Closing Date, substantially in the form
attached hereto as Exhibit C (collectively, the "Assignment Agreements").
7.3.16 DUE DILIGENCE REVIEW. The Buyer shall be satisfied,
in its sole discretion, with the results of its due diligence investigation of
the Assets, CIL, the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property and the Business.
7.3.17 CIL'S NET WORTH AS OF FEBRUARY 28, 1997. CIL's net
worth as reflected on the unaudited balance sheet of CIL, prepared in
accordance with GAAP, consistently applied, as of February 28, 1997 delivered
by the Sellers to the Buyer pursuant to Section 6. 13 hereof shall be not less
than $4 million.
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7.3.18 CIL'S NET WORTH AS OF THE CLOSING DATE. The Buyer
shall be satisfied, in its sole discretion, that CIL's net worth (determined in
accordance with GAAP, consistently applied) is not less than $4 million as of
the Closing Date.
7.3.19 DEBT. The Buyer shall be satisfied, in its sole
discretion, that the Debt Obligations do not, in the aggregate, exceed $5
million as of the Closing Date.
7.3.20 CONTINGENT LIABILITIES. The Buyer shall be
satisfied, in its sole discretion, that CIL's obligations under Contingent
Liabilities do not exceed $5.5 million in the aggregate as of the Closing Date,
and CIL's obligations under such Contingent Liabilities are collateralized and
secured by a perfected and first priority lien and security interest on CIL's
cash or cash equivalents in an amount not less than $1,750,000.
7.3.21 OPINION OF SELLERS' COUNSEL. The Buyer will have
received an opinion of Kahrs, Nelson, Fanning, ▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., counsel
to the Sellers, satisfactory to the Buyer to the effect that (a) the written
waivers by each of CIL, the Limited Partnership and the Trust of the respective
time periods provided in paragraph Second of Schedule "A" of CIL's Certificate
of Incorporation, as amended, and Article X, Section II of CIL's By-Laws with
respect to their respective options to purchase Shares and (b)the written
elections of each of CIL, the Limited Partnership and the Trust not to exercise
such options to purchase Shares are in each case valid, binding and enforceable
against each of them and are in each case sufficient to bar any and all claims
that CIL, the Limited Partnership or the Trust may now or in the future have
against IRI in connection with the sale of the Shares hereunder to IRI (the
"Opinion").
8. CLOSING.
8.1 TIME AND PLACE. The closing of the purchase and sale of
the Shares, the Assets and the ▇▇▇▇▇▇▇▇▇▇▇▇ Real Property (the "Closing") will
take place by the simultaneous exchange of executed original counterparts of
this Agreement, delivery of the Shares, the Bills of Sale, the Deeds and the
Purchase Price (as provided in Section 3.2), together with all documents and
certificates contemplated hereby, at the offices of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ on such date or at such other place as
the parties hereto may mutually agree (the "Closing Date").
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8.2 DOCUMENTS TO BE DELIVERED BY THE SELLERS AT CLOSING. The
Sellers will deliver to the Buyer at the Closing the following:
(a) the ▇▇▇▇▇▇▇▇▇▇▇▇ Certificate;
(b) the Limited Partnership Certificate;
(c) the Trust Certificate;
(d) the Greenwood Officer's Certificate;
(e) the Edco Officer's Certificate;
(f) the Limited Partnership Resolutions;
(g) the Trust Resolutions;
(h) the Greenwood Board Resolutions;
(i) the Edco Board Resolutions;
(j) the Share Certificates;
(k) the Bills of Sale;
(l) the Deeds;
(m) the Evidence of Release;
(n) the Evidence of Consents;
(o) the Receipt;
(p) the CIL Corporate Documents;
(q) the Director Resignations;
(r) the Section 1445(b)(2) Certificates;
(s) the Transfer Tax Returns;
(t) the Assignment Agreements;
(u) the Opinion; and
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(v) such other agreements, documents or instruments
customary for the consummation of the transactions contemplated hereby.
8.3 DOCUMENTS TO BE DELIVERED BY THE BUYER AT CLOSING.
At the Closing the Buyer will deliver to the Sellers the following:
(a) the Buyer's Officer's Certificate;
(b) the Buyer's Board Resolutions;
(c) the Purchase Price;
(d) the Employment Agreement;
(e) the Guaranty Releases; and
(f) such other agreements, documents or instruments
customary for the consummation of the transactions contemplated hereby.
9. INDEMNIFICATION.
9.1 CERTAIN DEFINITIONS. For purposes of this Agreement,
(a) "Indemnity Payment" means any amount of Indemnifiable Losses (as
hereinafter defined) required to be paid pursuant to this Agreement,
(b)"Indemnitee" means any person or entity entitled to indemnification under
this Agreement, (c) "Indemnifying Party" means any person or entity required to
provide indemnification under this Agreement, (d) "Third Party Claim" means any
threat, demand, action, suit, administrative proceeding, investigation or audit
or other proceeding made or brought by any person or entity who or which is not
a party to this Agreement or an Affiliate or Subsidiary of a party to this
Agreement, (e) "Notice of Claim for Indemnity" means a written notice given in
accordance with this Agreement, which if based upon a Third Party Claim against
any Indemnitee, includes copies of all material notices and documents received
by the Indemnitee with respect to such Third Party Claim and indicates the
estimated amount, if reasonably practicable, of the Indemnifiable Loss that has
been or may be sustained by the Indemnitee, or if based upon an alleged breach
of a representation, warranty or covenant contained in this Agreement, which
does not relate to, result from or arise out of a Third Party Claim (a "Direct
Claim"), and which relates to, results from or arises out of an event or
circumstance discovered by the Indemnitee which constitutes a reasonable basis
for the Indemnitee to conclude that
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such event or circumstances will lead to the incurrence of an Indemnifiable
Loss by reason of such alleged breach, whether or not the Indemnifiable Loss is
actually suffered or sustained prior to the expiration of the applicable
survival period, includes in reasonable detail the event or circumstance which
gives rise to the claim for indemnification and indicates the estimate amount,
if reasonably practicable, of the Indemnifiable Loss that has nor maybe
sustained by the indemnitee, and(f) "Indemnifiable Losses" many and all loss,
liability, claim, demand, obligation, damage, deficiency, cost or expense
(including, without limitation, reasonable attorneys' fees and expenses),
including, without limitation, environmental damages, response costs (including
response costs under CERCLA or any comparable state, local or foreign law),
remediation expenses and disbursements incurred by an Indemnitee, and any of
the foregoing relating to, resulting from or arising out of any action, suit,
administrative proceeding, investigation, audit or other proceeding brought by
any person or entity or Governmental Entity and any settlement or compromise
thereof, in each case reduced by the amount of any Third-Party Recovery (as
hereinafter defined).
9.2 SELLERS' INDEMNIFICATION. Subject to Sections 9.4,
9.5, 9.6 and 9.7, the Sellers, jointly and severally, will indemnify, defend
and hold the Buyer, its Affiliates and Subsidiaries, and each of its respective
officers, directors, shareholders, employees, agents and representatives,
harmless from and against any and all Indemnifiable Losses relating to,
resulting from or arising out of (a) any inaccuracy m or breach by any Seller
of any of the representations or warranties of the Sellers contained in this
Agreement; (b)any breach by any Seller of any covenant of the Sellers contained
in this Agreement; and (c) the Retained Liabilities.
9.3 BUYER'S INDEMNIFICATION. Subject to Sections 9.4,
9.5, 9.6 and 9.7, the Buyer will indemnify, defend and hold each Seller, their
respective Affiliates and Subsidiaries, and each of its respective officers,
directors, shareholders, employees, agents and representatives, harmless from
and against any and all Indemnifiable Losses relating to, resulting from or
arising out of (a) any inaccuracy in or breach by the Buyer of any of the
representations or warranties of the Buyer contained in this Agreement; and (b)
any breach by the Buyer of any covenant of the Buyer contained in this
Agreement.
9.4 DEFENSE OF CLAIMS. (a) If any Indemnitee receives
notice of the assertion or commencement of any Third Party Claim against such
Indemnitee with respect to which an Indemnifying Party is
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or may be obligated to provide indemnification under this Agreement, the
Indemnitee will promptly give such Indemnifying Party a Notice of Claim for
Indemnity, which notice will in any event be given not later than 30 calendar
days after receipt of such notice of such Third Party Claim. If a Third Party
Claim is made against an Indemnified Party, the Indemnifying Party will be
entitled to participate in the defense thereof and, if the Indemnifying Party
so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Party. Should the indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party will not be liable to
the Indemnified Party for legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof. If the Indemnifying
Party assumes such defense, the Indemnified Party will have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Party. The Indemnifying
Party will be liable for the fees and expenses of counsel employed by the
Indemnified Party for any period during which the Indemnifying Party has not
assumed the defense of a Third Party Claim whether or not the Indemnifying
Party ultimately chooses to defend any such Third Party Claim. The parties
hereto will cooperate in the defense of any Third Party Claim whether or not
the Indemnifying Party chooses to defend any such Third Party Claim. Such
cooperation will include the retention and (upon the Indemnifying Party's
request) the provision to the Indemnifying Party of records and information
which are reasonably relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Neither the Indemnified Party
nor the Indemnifying Party will admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the prior written
consent of the other which consent will not be unreasonably withheld.
(b) Any Direct Claim may be asserted by giving the
Indemnifying Party a Notice of Claim for Indemnity.
(c) A failure to give timely notice (other than within
the time survival period specified herein) or to include any specified
information in any notice as provided in this Section 9 will not affect the
rights or obligations of any party hereunder except and only to the extent
that, as a result of such failure, the rights of the Indemnifying Party are
materially prejudiced.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an Indemnity Payment, is reduced by
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recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any claim, recovery, settlement against or with any person or
entity which is not an Affiliate or Subsidiary of the Indemnitee (a "Third
Party Recovery"), the amount of such reduction, in each case less any costs,
expenses, premiums or taxes incurred in connection therewith, together with
interest thereon from the date of payment thereof at the so-called "prime" or
"reference" rate of interest for the relevant period as reported in The Wall
Street Journal, will promptly be repaid by the Indemnitee to the Indemnifying
Party.
(e) Upon the payment in full (or other satisfaction) of
any Indemnifiable Loss hereunder and compliance by the Indemnifying Party with
its obligations under Section 9.2 or 9.3, as the case may be, in respect of
such Indemnifiable Loss, the Indemnifying Party shall, to the extent of such
Indemnity Payment, be subrogated to, and entitled to an assignment of, all of
the rights of the Indemnitee against any third person or entity (other than an
insurance company that provides insurance to the Indemnitee or an Affiliate or
Subsidiary of the Indemnitee) in respect of such Indemnifiable Loss, and the
Indemnitee shall, at the sole cost and expense of the Indemnifying Party,
execute such instruments and shall take such actions that may be reasonably
necessary to evidence and perfect such rights. Any recovery by the Indemnifying
Party in respect of such Indemnifiable Loss in excess of the amount of the
related Indemnity Payment to the Indemnitee shall be promptly paid by the
Indemnifying Party to the Indemnitee upon its receipt by the Indemnifying
Party.
9.5 SURVIVAL PERIOD. Each of the representations and
warranties contained in this Agreement or in any certificate or other
instrument delivered at Closing, will survive the Closing and remain operative
and in full force until the second anniversary of the Closing; provided,
however, the representations and warranties contained in Sections 4.2 shall
survive indefinitely, the representations and warranties contained in Sections
4. 12(b) and (c) shall survive the Closing for five years, and the
representations and warranties contained in Section 4.8 shall survive until the
date sixty (60) days after the expiration of the applicable statute of
limitation. The covenants and agreements contained in this Agreement will
survive the Closing and remain in effect indefinitely.
9.6 LIMITATIONS ON INDEMNIFICATION. (a) No Indemnitee
will be entitled to recovery under Sections 9.2 or 9.3 for an Indemnifiable
Loss unless and until the aggregate amount of claims which may be
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asserted for Indemnifiable Losses exceeds $125,000, and then only to the extent
of the excess.
(b) Notwithstanding any other provision of the Agreement
to the contrary, the indemnification obligations of the Sellers under Section
9.2 and the Buyer under Section 9.3 will not exceed $5,000,000.
(c) For purposes of this Section 9.6, Indemnifiable
Losses shall not include any individual loss, liability, claim, demand,
obligation, damage, deficiency, cost or expense less than $5,000.
9.7 ADJUSTMENT TO PURCHASE PRICE. Any payments made
pursuant to Sections 9.2 and 9.3 will be treated by the Buyer and the Sellers
as an adjustment to the Purchase Price unless a determination (as defined in
Section 1313 of the Code) with respect to the Indemnitee causes any such
payment not to constitute an adjustment to the Purchase Price for United States
federal income tax purposes.
10. POST-CLOSING COVENANTS.
10.1 LIMITATION ON COMPETITION. (a) For a period beginning
on the Closing Date and ending on the third year anniversary of the Closing
Date, none of the Sellers will, and each of the Sellers will cause their
Affiliates and Subsidiaries not to, directly or indirectly own, manage,
operate, finance, join, control or participate in the ownership, management,
operation, financing or control of, or be associated as an employee,
consultant, director, partner, representative or agent in connection with, any
profit or not-for-profit business or enterprise that competes with the Buyer or
its Affiliates or Subsidiaries in the conduct of the Business in the United
States or elsewhere. Nothing contained herein, however, shall prohibit the
Sellers or any Affiliate or Subsidiary of the Sellers from acquiring and
owning, for investment purposes only, up to five percent (5%) of the
outstanding equity securities of any entity engaged in a business that competes
with the Buyer if such equity securities of any such entity are available to
the general public for purchase on a national securities exchange. In the event
that this Section 10. 1 is determined by any court of competent jurisdiction to
be unenforceable by reason of its extending for too long a period of time or
over too large a geographical area or by reason of its being too extensive in
any other respect or for any other reason, it will be interpreted to extend
only over the longest period of time for which it may be enforceable, and/or
over the largest geographical area as to
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which it may be enforceable and/or to the maximum extent in Ill other aspects
as to which it may be enforceable, all as determined by such court in such
action. Each of the Sellers acknowledges that a breach of this Section 10. 1
will cause irreparable damage to CIL and the Buyer, the exact amount of which
will be difficult or impossible to ascertain, and that CIL's or the Buyer's
remedies at Law for any such breach will be inadequate. Accordingly, each of
the Sellers agrees that upon a breach of this Section 10.1, CIL and the Buyer
will be entitled, in addition to any other legal remedies available to it, to
apply in any court of competent jurisdiction for injunctive relief or any other
appropriate decree of specific performance in order to enjoin such breach or
threatened breach.
(b) For a period beginning on the Closing Date and ending
on the third anniversary of the Closing Date, none of the Sellers will, and
each of the Sellers will cause their Affiliates and Subsidiaries not to,
employ, solicit for employment or endeavor in any way to entice away from
employment by the Buyer or any of its Affiliates or Subsidiaries any person who
is employed by the Buyer or any of its Affiliates or Subsidiaries at any time
after the date hereof and prior to the third anniversary of the Closing Date.
10.2 RECORDS. (a) After the Closing Date, the Buyer will,
and will cause CIL to, and each of the Sellers will, and will cause the
Post-Closing Affiliates to, retain all Records required to be retained pursuant
to obligations imposed by any applicable Law. The Buyer will, and will cause
CIL to, and each of the Sellers will, and will cause the Post-Closing
Affiliates to, use all reasonable efforts to retain all Records for a period of
seven years after the Closing Date. After the end of such seven-year period,
before disposing, or permitting any Post-Closing Affiliate or CIL to dispose,
of any such Records, each of the Sellers or the Buyer, as the case may be, will
use their best efforts to give notice to such effect to the other party and to
give the other party, at such other party's cost and expense, an opportunity to
remove and retain all or any part of such Records as such other party may
elect.
(b) After the Closing Date, upon reasonable notice, each
of the Sellers and the Buyer will give, or cause to be given, to the
representatives, employees, counsel and accountants of the other access, during
normal business hours, to Records relating to periods prior to or including the
Closing Date and will permit such persons to examine and copy such Records, to
the extent reasonably necessary to the other party m connection with tax and
financial reporting matters (including without limitation any tax return
relating to state or
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local real property transfer or gains taxes), audits, governmental
investigations and other business purposes; provided, however, that nothing
herein will obligate any party to take actions that would unreasonably disrupt
the normal course of its business, violate the terms of any contract to which
it is a party or to which it or any of its assets is subject or grant access to
any of its proprietary, privileged or classified information. Each of the
Sellers and the Buyer will provide or will make available to such party access
to, and assistance from, employees of the other (including with respect to the
Buyer, CIL) whose assistance is reasonably required in connection with the
purposes described in the preceding sentence.
10.3 FURTHER ASSURANCES. At any time or from time to time
after the Closing, each of the Sellers and the Buyer will execute and deliver
such other documents or instruments and take all such further action as may be
reasonably requested by the other in order to evidence the consummation of the
transactions contemplated by this Agreement, including without limitation any
applicable notice, application, disclosure, recordation or remediation pursuant
to any Environmental Laws or any state property transfer Laws.
11. TERMINATION. Subject to Section 6.14 hereof, prior to the
Closing, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned (a) by the mutual consent of the Buyer and the Sellers;
(b)by the Buyer or any of the Sellers if the Closing does not occur on or prior
to April 20, 1997; (c) by the Buyer or the Sellers if any of either of them is
precluded by an Order from consummating the transactions contemplated hereby or
(d) by the Buyer if the Buyer rejects the amended or supplemented schedules
delivered by the Sellers pursuant to Section 6. 11 and a subsequent agreement
between the Buyer and the Sellers is not reached with respect thereto. In the
event of any termination pursuant to this Section 11, no party hereto (or any
of its directors, partners or officers) will have any liability or further
obligation hereunder to any other party hereto, except for obligations under
Section 6.2, which obligations shall continue until the second anniversary of
the date hereof, and Section 12.7. Nothing contained in this Section 11 shall
relieve any party hereto from liability for any breach of this Agreement.
12. MISCELLANEOUS.
12.1 JOINT AND SEVERAL LIABILITY. The Sellers will be jointly
and severally liable for all payments required to be made by the Sellers to the
Buyer or to any Governmental Entity pursuant to the terms of this Agreement.
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12.2 ASSIGNMENT. The Buyer may assign its rights and
obligations under this Agreement to an Affiliate or Subsidiary of the Buyer,
but such assignment will not release the Buyer from its obligations hereunder.
Except as provided in the immediately proceeding sentence, no assignment of
rights or obligations under this Agreement may be made by any party hereto
without the express written consent of the other parties hereto.
12.3 SEVERABILITY. Any provision of this Agreement held to be
invalid under applicable Law will not render this Agreement invalid as a whole
and in such event, such provision will be interpreted so as to best accomplish
the intent of the parties within the limits of applicable Law.
12.4 AMENDMENTS AND WAIVERS AND CONSENTS. No amendment
hereof will be effective unless evidenced by an instrument in writing duly
executed by the parties hereto. Either the Sellers or the Buyer by written
notice to the other may (a) extend the time for performance of any of the
obligations or other actions of the other under this Agreement, (b)waive any
inaccuracies in the representations or warranties of the other contained in
this Agreement, (c) waive compliance with any of the conditions or covenants of
the other contained in this Agreement, or (d) waive or modify performance of
any of the obligations of the other under this Agreement; provided, however,
that neither the Buyer nor the Sellers may, without the prior written consent
of the other parties hereto, make or grant such extension of time, waiver of
inaccuracies or compliance or waiver or modification of performance with
respect to its (or any of its Affiliates' or Subsidiaries') representations,
warranties, conditions or covenants hereunder. Except as provided in the
immediately preceding sentence, no action taken pursuant to this Agreement will
be deemed to constitute a waiver of compliance with any representations,
warranties or covenants contained in this Agreement and will not operate or be
construed as a waiver of any subsequent breach, whether of a similar or
dissimilar nature.
12.5 BENEFIT. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. This Agreement is not intended nor will it confer upon any other
person any rights or remedies.
12.6 NOTICES. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement will be in writing
and will be deemed duly given when delivered in person or when dispatched by
electronic facsimile transfer (upon confirmation of
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receipt by a facsimile operator, and confirmed in writing by postage prepaid
first class mail simultaneously dispatched) or three business days after having
been dispatched by a nationally recognized overnight courier service or seven
business days after having been deposited in the United States mail, postage
prepaid, addressed as follows:
IF TO THE SELLERS:
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Rural ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ Family Limited Partnership, L.P.
▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ Charitable Remainder Trust
Rural ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Greenwood Pipe and Threading Company
▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Edco Drilling Company Inc.
Rural ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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WITH A COPY TO:
Kahrs, Nelson, Fanning, ▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO CIL:
▇▇▇▇▇▇▇▇ International Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
IRI International Corporation
First Interstate Bank Plaza
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO THE BUYER:
IRI International Corporation
First Interstate Bank Plaza
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may designate in writing to the other
party.
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12.7 FEES AND EXPENSES. Except as otherwise provided in
Section 7.3. 11, each party will be obligated to pay its own fees and expenses
incurred with respect to the transactions contemplated by this Agreement.
12.8 HEADINGS. The headings employed in this Agreement
(including the Schedules and Exhibits hereto) are for the convenience of
reference only and do not form a part hereof and are not intended to affect the
meaning or interpretation of this Agreement.
12.9 CONSTRUCTION. This Agreement will be construed and
enforced in accordance with the laws of the State of Kansas, without giving
effect to the conflicts of laws provisions thereof.
12.10 COUNTERPARTS. This Agreement may be executed in
several counterparts, and as so executed will constitute one agreement, binding
on all of the parties hereto.
12.11 ENTIRE AGREEMENT. Each of the representations,
warranties, covenants and agreements of any party hereto contained in this
Agreement or any Schedule or Exhibit hereto or any certificate delivered by or
on behalf of such party pursuant to and which makes reference to this Agreement
will be deemed incorporated and contained in this Agreement and will constitute
representations and warranties of such party. This Agreement (including the
Schedules and Exhibits hereto) supersedes any other agreement, whether written
or oral, that may have been made or entered into by any party or any of their
respective Affiliates or Subsidiaries (or by any director, officer or
representative thereof) with respect to the subject matter hereof. This
Agreement (including the Schedules and Exhibits hereto) constitutes the entire
agreement by and among the parties hereto with respect to the subject matter
hereof and there are no agreements or commitments by or among such parties or
their Affiliates or Subsidiaries with respect to the subject matter hereof
except as expressly set forth herein. The Buyer agrees to notify the Sellers in
writing prior to the Closing of any facts the Buyer uncovers during the course
of its due diligence investigation that may constitute a breach by the Sellers
of any of the Sellers' representations or warranties contained in this
Agreement. Notwithstanding the immediately, preceding sentence, the Buyer shall
have no duty to uncover any such breach of the Sellers representations and
warranties, and no investigation or receipt of information by or on behalf of
the Buyer will diminish or obviate any of the representations, warranties,
covenants or agreements of the Sellers under this Agreement or the conditions
to obligations of the Buyer under this Agreement. No investigation or receipt
of information by or on behalf of the Sellers
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will diminish or obviate any of the representations, warranties, covenants or
agreements of the Buyer under this Agreement or the conditions to obligations
of the Sellers under this Agreement. Any information disclosed on any schedule
hereto shall be deemed to have been disclosed on all schedules hereto.
12.12 CERTAIN INTERPRETIVE MATTERS AND DEFINITIONS. (a) Unless the
context otherwise requires, (i) all references to Sections, Schedules or
Exhibits are to Sections, Schedules or Exhibits of or to this Agreement, (ii)
each term defined in this Agreement has the meaning assigned to it, (iii) "or"
is disjunctive but not necessary exclusive, (iv) words in the singular include
the plural and vice versa, (v) the terms "Affiliate" and "Subsidiary" have the
meanings given to such terms in Rule 405 of the Securities Act of 1933, as
amended; (vi) all references to a "business day" will be to any day other than
a weekend day or a day which is a holiday in the United States and (vii)
"knowledge of the Sellers" means to the best knowledge of ▇▇▇▇▇▇▇▇▇▇▇▇ or any
of the officers, partners or trustees, as applicable, of any of the Companies,
the Limited Partnership or the Trust, after due inquiry and (vii) any
information contained on any schedule hereto shall be deemed to be disclosed on
all schedules hereto. All references to "$" or dollar amounts will be to lawful
currency of the United States of America.
(b) No provision of this Agreement will be interpreted in favor
of, or against, any party hereto by reason of the extent to which any such
party or its counsel participated in the drafting thereof or by reason of the
extent to which any such provision is inconsistent with any prior draft hereof
or thereof.
12.13 ARBITRATION: EXCLUSIVE REMEDY. Any and all claims, disputes
or controversies involving the Sellers and the Buyer and arising under or in
connection with this Agreement (except those arising under Section 10.1 hereof)
which cannot be resolved amicably by the Sellers and the Buyer shall be
submitted to and finally settled by arbitration as provided in this Section
12.13. There shall be one arbitrator who shall be selected from a list of five
arbitrators who are experienced in the Business, two of whom shall be chosen by
the Buyer, two of whom shall be chosen by ▇▇▇▇▇▇▇▇▇▇▇▇ and one of whom shall be
chosen by the American Arbitration Association. The arbitrator shall be
selected from this list pursuant to the following procedure: ▇▇▇▇▇▇▇▇▇▇▇▇ and
the Buyer shall each alternately strike one person's name off the list until
there is only one name remaining, which person shall be the arbitrator. The
location of any such arbitration proceedings shall be in the city where the
arbitrator's office is
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located, and such proceedings shall be conducted in accordance with the
Arbitration Rules of the American Arbitration Association currently in effect
unless the parties mutually agree otherwise. The award rendered by the
arbitrator shall be final. An action or proceeding to enforce such award may
be brought in any court of competent jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
---------------------------------------
▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ FAMILY LIMITED
PARTNERSHIP, L.P.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ Revocable
Living Trust, a General Partner
By:
------------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ CHARITABLE
REMAINDER TRUST
By:
------------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Trustee
GREENWOOD PIPE AND THREADING COMPANY
By:
-------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: President
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EDCO DRILLING COMPANY INC.
By:
-------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: President
IRI INTERNATIONAL CORPORATION
By:
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
By:
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇, Hidayatallah
Title: Executive Vice President
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