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Exhibit 10.21
ASSET PURCHASE AGREEMENT
among
WATERLINK, INC.,
as "BUYER"
GREAT LAKES ENVIRONMENTAL, INC.,
as "SELLER"
▇▇▇▇▇▇▇▇ FIELD
and
▇▇▇▇▇ ▇▇▇▇▇
August 28, 1995
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TABLE OF CONTENTS
Omitted
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made effective
August 31, 1995, among WATERLINK, INC., a Delaware corporation ("Buyer"), GREAT
LAKES ENVIRONMENTAL, INC., an Illinois corporation ("Seller"), ▇▇▇▇▇▇▇▇ FIELD,
and ▇▇▇▇▇ ▇▇▇▇▇ (each a "Shareholder" and, collectively, the "Shareholders"),
who together own a majority of the shares of Seller.
BACKGROUND INFORMATION
----------------------
A. Seller and the Shareholders are engaged in the development,
manufacture, distribution and sale of water treatment systems (the "Great Lakes
Environmental Business"); and
B. Seller and the Shareholders desire to sell, and Buyer desires to
purchase, on the terms and conditions set forth in this Agreement, substantially
all the assets and properties of Seller used in connection with and relating to
the Great Lakes Environmental Business.
STATEMENT OF AGREEMENT
----------------------
The parties to this Agreement (the "Parties") hereby acknowledge the
accuracy of the above Background Information and agree as follows:
ARTICLE I
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ASSETS TO BE PURCHASED
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Section 1.1 SALE AND PURCHASE OF ASSETS. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing (as defined in
Section 1.6), Seller shall convey, sell, transfer, assign and deliver to Buyer,
and Buyer shall purchase from Seller, all right, title and interest of Seller at
the Closing in and to the following assets, properties, and rights of Seller:
(a) All leases of real property and improvements entered into by
Seller listed on Schedule 1.1(a), along with all appurtenant rights, easements
and privileges appertaining or relating thereto, and all buildings, fixtures and
improvements located thereon and therein (the "Real Property Leases");
(b) All good and usable inventory and work-in-progress of Seller that
has not been written off by Seller, all machinery, equipment, tooling, parts,
molds, jigs, dies, furniture, office supplies, magnetic tapes, software
materials, discs and other programming and computer materials and other tangible
personal property used or usable in connection with the conduct of Seller's
business, including, without limitation, the items listed on Schedule 1.1(b)
(the "Personal Property");
(c) All automobiles and other vehicles listed on Schedule 1.1(c) (the
"Vehicles");
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(d) All franchises, licenses, permits, consents and certificates of
any regulatory, administrative or other government agency or body issued to or
held by Seller necessary or incidental to the conduct of Seller's business (to
the extent the same are transferable), including, without limitation, the items
listed on Schedule 1.1(d) (the "Permits");
(e) All inventions, trade secrets, proprietary rights, proprietary
knowledge, know-how, software, trademarks, names, trade names, marks, symbols,
advertising materials, packaging, service marks, logos, and copyrights, and all
applications therefor, registrations thereof and licenses in respect thereof,
including, without limitation, all rights in and to the name "Great Lakes
Environmental, Inc." and any substantially similar names and marks and further
including, without limitation, the patents and trademarks listed on Schedule
1.1(e) (collectively, the "Proprietary Rights");
(f) All leases of equipment, vehicles or other tangible personal
property used at or in connection with Seller's business, including, without
limitation, the leases of equipment and vehicles listed on Schedule 1.1(f) (the
"Equipment Leases");
(g) All contracts, agreements, contract rights, license agreements,
franchise rights and agreements, insurance policies, and purchase and sales
orders; and report on current backlog and open quotation listing, whether oral
or written, listed on Schedule 1.1(g) (the "Contracts");
(h) All books of account, customer lists, files, papers and records
relating to Seller's business, which shall be subject to Seller's right to
reasonably inspect and copy;
(i) All deposits related to Seller's business and listed on Schedule
1.1(i);
(j) All goodwill of Seller's business; and
(k) All telephone and facsimile numbers for Seller's offices and
facilities, including, without limitation, the telephone numbers listed on
Schedule 1.1(k).
All of the assets, properties and business to be conveyed, sold, transferred,
assigned and delivered to Buyer pursuant to this Section 1.l are hereinafter
collectively referred to as the "Property."
Section 1.2 EXCLUDED ASSETS. There shall be excluded from the assets,
properties, rights and business of Seller to be conveyed, sold, transferred, and
assigned to Buyer under this Agreement, all accounts receivable, notes
receivable and investments, including cash, all causes of action, judgments and
claims or demands arising out of or relating to the Property prior to the
Closing, all corporate minute books, stock records, corporate seals, treasury
shares and tax returns and supporting schedules of Seller (which shall be
subject to Buyer's right to inspect and copy) and those items listed on Schedule
1.2. All of the assets which shall be retained by the Seller pursuant to this
Section 1.2 are hereinafter collectively referred to as the "Excluded Property."
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Section 1.3 NON-ASSIGNMENT OF CERTAIN CONTRACTS. Notwithstanding
anything to the contrary in this Agreement, to the extent that the assignment
hereunder of any item listed on Schedule 1.3 of this Agreement shall require the
consent of any other party (or in the event that any of the same shall be
non-assignable), neither this Agreement nor any action taken pursuant to its
provisions shall constitute an assignment or an agreement to assign if such
assignment or attempted assignment would constitute a breach thereof or result
in the loss or diminution thereof; provided, however, that in each such case,
Seller shall use its best efforts to obtain the consent of such other party to
an assignment to Buyer. If such consent is not obtained, Seller shall cooperate
with Buyer in any reasonable arrangement designed to provide for Buyer the
benefits under any such lease, agreement, contract, contractual right, claim,
cause of action or the like, as the case may be, including enforcement, for the
account and benefit of Buyer, of any and all rights of Seller against any other
person arising out of the breach or cancellation by such other person or
otherwise.
Section 1.4 PURCHASE PRICE. Upon the terms and subject to the
conditions contained in this Agreement, in consideration for the Property and in
full payment therefor (a) Buyer shall assume the Assumed Liabilities as provided
in Section 2.1 at the Closing, (b) Buyer shall remit to Seller a cash payment
(the "Cash Payment") at the Closing in immediately available funds in the amount
of Five Million Dollars ($5,000,000.00), plus an amount equal to the value at
the Closing of the good and usable inventory and work-in-progress of Seller that
has not been written off by Seller, valued in accordance with past practice; (b)
a promissory note at the Closing in the amount of One Million Five Hundred
Thousand Dollars ($1,500,000.00) in the form attached to this Agreement as
Exhibit A (the "Buyer Note") payable to the Seller in accordance with its terms;
and (c) such number of shares of common stock in Waterlink, Inc., a Delaware
corporation ("Waterlink") and the sole shareholder of Buyer (the "Waterlink
Shares") as will, when valued per share at the price at which the most recent
equity investment in Waterlink by ▇▇▇▇▇▇▇▇ Venture Partners, LLP, was made, be
valued at Five Hundred Thousand Dollars ($500,000).
Section 1.5 PURCHASE PRICE ALLOCATION. Seller and Buyer hereby agree
that the aggregate purchase price for the Property shall be allocated for
purposes of this Agreement and for federal, state and local tax purposes as set
forth on Schedule 1.5. Buyer and Seller covenant and agree to file all federal,
state, local and foreign tax returns in accordance with the foregoing
allocation.
Section 1.6 CLOSING. The "Closing" shall mean the deliveries to be
made by Buyer, Seller and the Shareholders, respectively, in accordance with
this Agreement and shall take place at 10:00 a.m., local time on August 31,
1995, at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, 3200 National City Center, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or at such other place or date as may be
agreed upon from time to time in writing by Buyer and the Seller (the "Closing
Date").
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ARTICLE II
ASSUMPTION OF OBLIGATIONS
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Section 2.1 ASSUMPTION OF CERTAIN OBLIGATIONS. Subject to the
provisions of this Agreement, from and after the Closing, Buyer shall assume the
following obligations of Seller, to the extent the same have not been discharged
or satisfied prior to the Closing: (i) all liabilities and obligations arising
out of or relating to the Real Property Leases, the Permits, the Contracts, and
the Equipment Leases to the extent such liabilities and obligations arise or are
first required to be performed after the Closing, (ii) all liabilities and
obligations arising out of those matters listed on Schedule 2.1 hereto to the
extent such liabilities and obligations arise or are first required to be
performed after the Closing, and (iii) all policies of insurance currently
maintained by Seller, which shall insure against loss, damage or diminution in
value to the Great Lakes Environmental Business. All of the liabilities to be
assumed by Buyer pursuant to this Section 2.1 are hereinafter collectively
referred to as the "Assumed Liabilities."
Section 2.2 DISCLAIMER OF CERTAIN OBLIGATIONS. With the exception of
the Assumed Liabilities, Buyer shall not by the execution and performance of
this Agreement, or otherwise, assume or otherwise be responsible for any
liability or obligation of any nature of Seller or of the Shareholders, or
claims of such liability or obligation, matured or unmatured, liquidated or
unliquidated, fixed or contingent, or known or unknown, whether arising out of
occurrences prior to, at or after the date hereof, including, by way of example
and not of limitation, all liabilities for the payment of money listed on the
balance sheet of Seller as at June 30, 1995 (the "June 30 Balance Sheet") and
for the twelve-month period ended December 31, 1994, copies of which are
attached to this Agreement as Exhibit B, and all current liabilities of Seller
for the payment of money incurred in or as a result of the conduct of Seller's
business prior to the Closing. All of the liabilities which shall be retained by
the Seller pursuant to this Section 2.2 are hereinafter collectively referred to
as the "Retained Liabilities."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer hereby represents and warrants to Seller and the Shareholders
that the statements contained in this Article II [sic] are true, correct and
complete:
Section 3.1 ORGANIZATION AND STANDING. Buyer is a corporation duly
formed, validly existing and in good standing under the Laws of the State of
Delaware with full power and authority, to own, lease, use, and operate its
properties and to conduct its business as and where now owned, leased, used,
operated and conducted.
Section 3.2 POWER AND AUTHORITY. Buyer has all requisite corporate
power and authority to enter into this Agreement and to perform its obligations
under this Agreement. This Agreement and the
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transactions contemplated by this Agreement have been duly and validly
authorized by all necessary action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer and constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
Section 3.3 CONFLICTS; CONSENTS AND APPROVALS. Neither the execution
and delivery of this Agreement by Buyer nor the consummation of the transactions
contemplated by this Agreement will:
(a) Violate, or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with the giving of notice, the
passage of time, or both, would constitute a default) under, or entitle any
third party (with the giving of notice, the passage of time, or both) to
terminate, accelerate or call a default under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Buyer under any of the terms, conditions or provisions of the articles
of incorporation or code of regulations of Buyer, or any note, bond, mortgage,
indenture, deed of trust, license, contract, undertaking, agreement, lease, or
other instrument or obligation which would have a material adverse effect on the
ability of Buyer to consummate the transactions contemplated by this Agreement;
(b) Violate any order, writ, injunction, decree, statute, rule, or
regulation applicable to Buyer or its properties or assets which would have a
material adverse effect on the ability of Buyer to consummate the transactions
contemplated by this Agreement; or
(c) Require Buyer to obtain any action or consent or approval of, or
review by, or registration with any third party, court or governmental body or
other agency, instrumentality or authority.
Section 3.4 LITIGATION. There is no suit, claim, action, proceeding,
or investigation pending or, to the best knowledge of Buyer, threatened against
Buyer which is reasonably likely to have a material adverse effect on the
ability of Buyer to consummate the transactions contemplated by this Agreement.
Section 3.5 BROKERAGE AND FINDER'S FEES. Neither Buyer nor any of its
members or employees has incurred, or will incur, on behalf Buyer, any
brokerage, finder's or similar fee in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SELLER AND THE SHAREHOLDERS
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Seller and each Shareholder hereby jointly and severally represent and
warrant to Buyer that the statements contained in this Article IV are true,
correct, and complete:
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Section 4.1 ORGANIZATION AND STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois with full power and authority (corporate and other) to own, lease, use,
and operate its properties and to conduct its business as and where now owned,
leased, used, operated, and conducted.
Section 4.2 SUBSIDIARIES. Seller has no subsidiaries. Neither
Shareholder controls any companies. As used herein, a "subsidiary" shall mean a
corporation of which Seller owns directly or indirectly more than fifty percent
(50%) of the outstanding securities entitled generally to vote for the election
of directors.
Section 4.3 CORPORATE POWER AND AUTHORITY. Seller has all requisite
corporate power and authority to enter into and perform this Agreement and to
carry out its obligations under this Agreement.
This Agreement and the transactions contemplated by this Agreement have been
duly and validly authorized by all necessary corporate action on the part of
Seller. This Agreement has been duly executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
Section 4.4 CONSENTS AND APPROVALS. Except as set forth in Schedule
4.4, neither the execution and delivery of this Agreement by Seller or either
Shareholder nor the consummation of the transactions contemplated by this
Agreement requires or will require any action or consent or approval of, or
review by, or registration with any third party, court or governmental body or
other agency, instrumentality or authority.
Section 4.5 FINANCIAL STATEMENTS.
(a) Seller has furnished to Buyer (i) the consolidated balance
sheets of Seller as of and for the years ended December 31, 1994,
December 31, 1993, and December 31, 1992, and the related consolidated
statements of income, retained earnings, and changes in financial
position for the years then ended, which have been examined by and
accompanied by the report of ▇▇▇▇▇▇ ▇. ▇▇▇▇ and Company, Ltd. (the
"Audited Financial Statements"), and (ii) the consolidated balance
sheet of Seller at June 30, 1995, and the related consolidated
statements of income, retained earnings, and consolidated changes in
financial position for the six (6) month period then ended (the
"Interim 1995 Financial Statements"). As soon as practicable after the
Closing, Seller will deliver the consolidated balance sheet of Seller
as of the Closing, and the related consolidated statements of income,
retained earnings, and consolidated changes in financial position for
the eight (8) month period then ended (the "Closing Financial
Statements") (the Audited Financial Statements, the Interim 1995
Financial Statements and the Closing Financial Statements are
hereinafter sometimes collectively referred to as the "Financial
Statements"). The Financial Statements have been initialed for
identification by the president of Seller, have been prepared from and
are in accordance with the books and records of Seller, and have
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been prepared in conformity with generally accepted accounting
principles applied on a consistent basis, and fairly present the
financial condition of Seller as of the dates stated and the results
of operations of Seller for the periods then ended in accordance with
such practices.
(b) The Closing Financial Statements shall be accompanied by the
report of ▇▇▇▇▇▇ ▇. ▇▇▇▇ and Company, shall have been prepared from
and be in accordance with the books and records of Seller and in
accordance with generally accepted accounting principles applied on a
basis consistent with that used in the Audited Financial Statements
(including the taking and valuation of a physical inventory), and
shall fairly present the financial condition of Seller as of such date
and the results of operations of Seller for such period then ended in
accordance with such practices.
Section 4.6 INVENTORIES. Except as set forth in such Schedule 4.6: (a)
all of the inventories of Seller consist of a quality and quantity usable and
merchantable in the ordinary and usual course of business, except for obsolete,
damaged, or slow-moving items or items of below-standard quality, all of which
have been written off or written down to fair market value prior to the
Financial Statements, or, to the extent there are obsolete or damaged items or
items of below-standard quality which have not been so written off or written
down, there is a valid and fully collectible claim by Seller against the
manufacturer or supplier thereof for an amount adequate to compensate fully
Seller therefor; (b) all individual items of inventory valued in excess of
$1,000 not written off Seller's books are at the net realizable value and are
expected to be used in the ordinary course within twelve months, and have been
priced at actual cost; and (c) the quantities of each type of inventory are not
excessive, but are reasonable and warranted in the present circumstances of
Seller's business.
All manufacturer chargebacks known to Seller have been properly
claimed, accounted for and received by Seller. Neither Seller nor any
Shareholder has received from any manufacturer any notice or claim of any
non-reversals or other discrepancies with respect to any chargebacks, and all
chargeback payments received by Seller have been and will be retained by Seller.
Section 4.7 UNDISCLOSED LIABILITIES. Except as disclosed in Schedule
4.7 and Schedule 4.20, Seller has no liability or obligation of any nature
(whether liquidated, unliquidated, accrued, absolute, contingent or otherwise
and whether due or to become due) that is not being assumed by Seller as
provided in Section 2.1, except those set forth in the Financial Statements and
those arising after the date of this Agreement under agreements or other
commitments specifically identified in Schedule 4.20.
Section 4.8 ABSENCE OF CERTAIN CHANGES. Except as set forth in
Schedule 4.8, since June 30, 1995, there has not been:
(a) Any material adverse change in the business, operations, assets,
properties, customer base, prospects, rights or condition (financial or
otherwise) of Seller or any occurrence,
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circumstance, or combination thereof which reasonably could be expected to
result in any such material adverse change (a "Material Adverse Effect"),
including without limitation any material adverse change relating to Seller's
relationship with any customer or supplier;
(b) Any increase in any benefits granted under any bonus, stock
option, profit-sharing, pension, retirement, severance, deferred compensation,
insurance, or other direct or indirect benefit plan, payment or arrangement made
to, with or for the benefit of any such person;
(c) Any transaction entered into or carried out by Seller other than
in the ordinary and usual course of Seller's business consistent with past
practices, or any material change in Seller's method of doing business or any
change in its accounting principles or practices or its method of application of
such principles or practices;
(d) Any borrowing or agreement to borrow funds by Seller, any
incurring by Seller of any other obligation or liability (contingent or
otherwise), except liabilities incurred in the usual and ordinary course of
Seller's business (consistent with past practices), or any endorsement,
assumption or guarantee of payment or performance of any loan or obligation of
any other person by Seller;
(e) Any mortgage, pledge, lien, security interest, hypothecation,
charge or other encumbrance imposed or agreed to be imposed on or with respect
to the property or assets of Seller, or any sale, lease or other disposition of,
or any agreement to sell, lease or otherwise dispose of any of the properties or
assets of Seller, other than sales of inventory in the usual and ordinary course
of business for fair equivalent value;
(f) Any purchase of or any agreement to purchase assets (other than
inventory purchased in the ordinary course of business consistent with past
practices) for an amount in excess of $5,000 for any one purchase made by Seller
or any lease or any agreement to lease, as lessee, any capital assets with
payments over the term thereof to be made by Seller exceeding an aggregate of
$5,000;
(g) Any loan or advance made by Seller to any person other than loans
made to Seller's customers in the ordinary course of business consistent with
past practices not exceeding $5,000, in the aggregate, to any customer;
(h) Any modification, waiver, change, amendment, release, rescission
or termination of, or accord and satisfaction with respect to, any material
term, condition or provision of any contract, agreement, license or other
instrument to which Seller is a party, other than any satisfaction by
performance in accordance with the terms thereof in the usual and ordinary
course of business; or
(i) Any labor dispute or disturbance adversely affecting the business
operations or condition (financial or otherwise) of Seller, including without
limitation the filing of any petition
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or charge of unfair labor practice with any governmental or regulatory
authority, efforts to effect a union representation election, actual or
threatened employee strike, work stoppage or slow down.
Section 4.9 TAXES.
(a) Seller has duly paid all taxes, assessments, fees and other
governmental charges (hereinafter, simply "taxes") payable by Seller.
Seller has duly filed all federal, state, local and foreign tax
returns and tax reports required to be filed by it, all such returns
and reports are true, correct and complete, none of such returns and
reports have been amended, and all taxes, arising under or reflected
on such returns and reports have been fully paid or shall be fully
accrued as liabilities in the Financial Statements and shall be timely
paid. No claim has been made by authorities in any jurisdiction where
Seller did not file tax returns that it is or may be subject to
taxation therein.
(b) Seller has delivered to Buyer copies of all federal, state,
local, and foreign income tax returns filed with respect to Seller for
taxable periods ended on or after December 31, 1992. Schedule 4.9
includes a list of all states, territories and jurisdictions to which
any tax is properly payable by Seller. Schedule 4.9 sets forth the
dates and results of any and all audits conducted by taxing
authorities within the last five years or otherwise with respect to
any tax year for which assessment is not barred by any applicable
statute of limitations. No waivers of any applicable statute of
limitations for the filing of any tax returns or payment of any taxes
or assessments of any deficient or unpaid taxes are outstanding. All
deficiencies proposed as a result of any audits have been paid or
settled. There is no pending or, to the best knowledge of Seller and
the Shareholders, threatened federal, state, local or foreign tax
audit or assessment of Seller and no agreement with any federal,
state, local or foreign taxing authority that may affect the
subsequent tax liabilities of Seller.
(c) All taxes attributable to the existence or operation of
Seller as at or through the Closing Date shall, to the extent not
already paid, be paid by Seller and the Shareholders, as the case may
be.
(d) Except as set forth in Schedule 4.9, there exists no
tax-sharing agreement or arrangement pursuant to which Seller is
obligated to pay the tax liability of any other person, or to
indemnify any other person with respect to any tax.
(e) Seller is a duly-qualified subchapter "S" corporation under
the Internal Revenue Code of 1986, as amended.
Section 4.10 COMPLIANCE WITH LAW. Seller has complied and is in
compliance in all material respects with all laws, statutes, ordinances, orders,
rules, regulations, policies and guidelines promulgated, and all judgments,
decisions and orders entered, by any federal, state, local or
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foreign court or governmental authority or instrumentality which are applicable
or relate to Seller or its business or properties and relate directly or
indirectly to the protection, preservation, conservation, restoration, or
quality of the environment (collectively, the "Applicable Environmental Laws"),
and Seller has complied and is in compliance in all material respects with all
other laws, statutes, ordinances, orders, rules, regulations, policies, and
guidelines promulgated, and all judgments, decisions and orders entered, by any
federal, state, local or foreign court or governmental authority or
instrumentality which are applicable or relate to Seller or its business or
properties (collectively, with the Applicable Environmental Laws, the
"Applicable Laws"). Seller has all franchises, licenses, permits, covenants,
authorizations, approvals and certifications necessary or appropriate for the
operation of its business or the ownership of its properties. Schedule 4.10
includes a list of all material franchises, licenses, permits, consents,
authorizations, approvals and certificates owned by Seller (collectively, the
"Permits"), each of which is currently valid and in full force and effect.
Except as set forth in Schedule 4.10, Seller is not in violation of any of the
Permits, and there is no pending nor, to the best knowledge of Seller and the
Shareholders, any threatened proceeding which could result in the revocation,
cancellation or inability of Seller to renew any Permit. Seller has not been
charged with or given notice of any violation of any of the Applicable Laws
which violation has not been remedied in full (without any remaining liability
of Seller).
Section 4.11 PROPRIETARY RIGHTS. Except as set forth in Schedule
1.1(e), Seller is the sole and exclusive owner of all right, title and interest
in and to all Proprietary Rights free and clear of all liens, claims, charges,
equities, rights of use, encumbrances and restrictions whatsoever, and there is
not pending or, to the best knowledge of Seller and the Shareholders, threatened
any investigation, proceeding, inquiry or other review by any federal, state,
local or foreign regulatory, administrative or governmental office or offices
with respect to Seller's right, title or interest in any Proprietary Right.
Other than those Proprietary Rights listed in Schedule 1.1(e), no
name, patent, invention, trade secret, customer list, proprietary right,
computer software, trademark, trade name, service ▇▇▇▇, logo, copyright,
franchise, license, sublicense, or other such right is necessary for the
operation of the business of Seller in substantially the same manner as such
business is presently conducted. The business of Seller has not been and are not
being conducted in material contravention of any trademark, copyright or other
proprietary right of any person.
Except as set forth in Schedule 1.1(e), none of the Proprietary
Rights: has been hypothecated, sold, assigned or licensed by Seller, or to the
best knowledge of Seller and the Shareholders, any person; infringe upon or
violate the rights of any person; are subject to challenge, claims of
infringement, unfair competition or other claims; or are being infringed upon or
violated by any person. Except as set forth in Schedule 1.1(e), Seller has not
given any indemnification against patent, trademark or copyright infringement as
to any equipment, materials, products, services or supplies, which Seller uses,
licenses or sells; no product, process, method or operation presently sold,
engaged in or employed by Seller infringes upon any rights owned by any other
person; and there is no pending or, to the best knowledge of Seller and the
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Shareholders, threatened any claim or litigation against Seller contesting the
right of Seller to sell, engage in or employ any such product, process, method,
or operation.
Section 4.12 RESTRICTIVE DOCUMENTS OR LAWS. With the exception of the
matters listed in Schedule 4.12, Seller is not a party to or bound under any
mortgage, lien, lease, agreement, contract, instrument, law, order, judgment or
decree, or any similar restriction not of general application which materially
and adversely affects, or reasonably could be expected to so affect (a) the
business, operations, assets, properties, prospects, rights, or condition
(financial or otherwise) of Seller; (b) the continued operation by Buyer of
Seller's business after the Closing Date on substantially the same basis as such
business is currently operated; or (c) the consummation of the transactions
contemplated by this Agreement.
Section 4.13 CONTRACTS AND COMMITMENTS. There are no contracts,
commitments, leases, permits, and other instruments (written or oral) binding
upon Seller with respect to the Property or the business or operations of Seller
except as set forth in Schedules 1.1(f ) and (g). Prior to Closing, Seller shall
have delivered to Buyer true and complete copies of all items listed on
Schedules 1.1(f) and (g) and any amendments thereof. All of such contracts,
commitments, leases, permits and instruments are in full force and effect and
are valid, binding and enforceable with their respective provisions, and Seller
is not in default nor has there occurred an event or condition which, with the
passage of time or giving of notice (or both), would constitute a default with
respect to the payment or performance of any obligation thereunder; and no claim
of such a default has been asserted and there is no basis upon which such a
claim could validly be made. No notice has been received by Seller claiming any
such default by Seller or indicating the desire or intention of any other party
thereto to amend, modify, rescind or terminate the same.
Section 4.14 PERSONAL PROPERTY. Schedules 1.1(b), (c) and (f) hereto
contain a complete list of all tangible personal property owned by Seller and
used in connection with the operation of Seller's business.
Section 4.15 REAL PROPERTY. Neither the Seller nor any Subsidiary of
the Seller owns any interest in any real property.
Section 4.16 TITLE TO THE PROPERTY. Seller has good and marketable
title to the Property, free and clear of all mortgages, pledges, liens,
encumbrances, security interests, equities, charges, clouds and restrictions of
any nature whatsoever, except those securing liabilities assumed by Buyer
pursuant to this Agreement, those permitted under Section 6.2(a), those set
forth on Schedule 4.16 or those approved in writing by Buyer prior to the
Closing. Except as set forth in Schedule 4.16, no financing statement under the
Uniform Commercial Code or similar law naming Seller or any of its predecessors
has been filed in any jurisdiction, and Seller is not a party to or bound under
any agreement or legal obligation authorizing any party to file any such
financing statement. By virtue of the deliveries made at the Closing, Buyer will
obtain good and marketable title to the Property, free and clear of all liens,
mortgages, pledges, encumbrances, security interests, charges and equities of
any nature whatsoever, except as set forth above.
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Except as set forth in Schedule 4.16, all real property, plants and
structures and all machinery and equipment and tangible personal property owned,
leased or used by Seller and material to the operation of its business are
suitable for the purpose or purposes for which they are being used and are in
good condition and repair, ordinary wear and tear excepted. To the best of
Seller's knowledge, there are no material structural defects in the exterior
walls or the interior bearing walls, the foundation or the roof of any plant,
building, garage or other such structure owned, leased, or used by Seller, and
the electrical, plumbing, heating systems, and air conditioning systems, of any
such structure are in good operating condition, ordinary wear and tear excepted.
The utilities servicing the real properties owned, leased, or used by Seller are
adequate to permit the continued operation of its business and there are no
pending or, to the best knowledge of Seller and the Shareholders, threatened
zoning, condemnation or eminent domain proceedings, building, utility or other
moratoria, or injunctions or court orders which would materially affect such
continued operation. Schedule 4.16 lists, and Seller and the Shareholders have
furnished or made available to Buyer, copies of all engineering, geologic and
environmental reports prepared by or for Seller, or with respect to the real
property owned, leased or used by Seller, if any.
Except as set forth in Schedule 4.16, to the best of Seller's
knowledge, no real or personal property owned, leased, or used by Seller has
been used to produce, process, store, handle, or transport any hazardous or
toxic substance or waste (as those terms are defined or described in the
Applicable Environmental Laws), except to the extent immaterial quantities of
hazardous substances are used as an incidental aspect of the operation of
Seller's business. No hazardous or toxic substance or waste has been
disposed of or discharged on, leaked from, or has otherwise contaminated any
real property owned, leased or used by Seller. No asbestos or substances
containing material quantities of asbestos have, been installed in any such
property. There are no oil or gas ▇▇▇▇▇ capped or uncapped or piping,
structures, fixtures or other appliances relating thereto an or about any such
property and no such property has been used as a landfill.
Section 4.17 BROKERS, FINDERS. There is no investment banker, broker,
finder, or other intermediary which has been retained by or is authorized to act
on behalf of Seller or either Shareholder, or which has submitted the
transactions contemplated by this Agreement to Seller or either Shareholder, and
which is or might be entitled to any fee, commission, or other payment from
Seller as a direct or indirect result of the transactions contemplated by this
Agreement or any other transaction for the contemplated sale of any assets of
Seller or any capital stock in Seller.
Section 4.18 LEGAL PROCEEDINGS, ETC. Except as described in Schedule
4.18: (a) there are no (and over the last five years there have been no) claims,
proceedings, suits, or investigations (collectively, "actions") pending or, to
the best knowledge of Seller and the Shareholders, threatened against or
relating to Seller (or any of its officers or directors in connection with the
business or affairs of Seller), before any federal, state, local or foreign
court or governmental body; and (b) to the best knowledge of Seller and the
Shareholders, there exist no disputes, conflicts, or circumstances providing the
basis for a dispute or conflict which could result in
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any such action. There are no actions pending or to the best knowledge of Seller
and the Shareholders, threatened for the purpose of enjoining or preventing this
Agreement of any other transaction contemplated by this Agreement or otherwise
challenging the validity or propriety of the transactions contemplated by this
Agreement. Except as disclosed in such Schedule 4.18, Seller is not subject to
any judgment, order or decree, or any governmental restriction, which has a
reasonable probability of having a Material Adverse Effect or which may
materially adversely affect the ability of Seller to acquire any property or
conduct business in any area.
Section 4.19 ERISA.
(a) Schedule 4.19 identifies each "employee benefit plan," as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974 ("ERISA") which (i) is subject to any provision of ERISA and
(ii) is or was at any time during the last 5 years maintained,
administered or contributed to by Seller or any affiliate (as defined
below) and covers any employee or former employee of Seller or any
affiliate or under which Seller or any affiliate has any liability.
Copies of such plans (and, if applicable, related trust agreements),
and all amendments thereto and written interpretations thereof have
been furnished to Buyer together with the three most recent annual
reports (Form 5500 and all related schedules) and actuarial valuation
reports, if any, prepared in connection with any such plan. Such plans
are referred to collectively herein as the "Employee Plans." For
purposes of this section, "affiliate" of any person or entity means
any other person or entity which, together with such person or entity,
would be treated as a single employer under Section 414 of the Code or
is an "affiliate," whether or not incorporated, as defined in Section
407(d) (7) of ERISA of such person or entity. The only Employee Plans
which individually or collectively would constitute an "employee
pension benefit plan" as defined in section 3(2) of ERISA (the
"Pension Plans") are identified as such on Schedule 4.19.
(b) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a
part thereof is exempt from tax pursuant to Sectior 501(a) of the
Code. Seller has furnished to Buyer copies of the most recent Internal
Revenue Service determination letters with respect to each such Plan.
Each Employee Plan has been maintained in compliance with its terms
and the requirements prescribed by any and all statutes, orders, rules
and regulations, including but not limited to ERISA and the Code,
which are applicable to such Plan.
(c) There is no contract, agreement, plan or arrangement covering
any employee or former employee of Seller or any affiliate that,
individually or collectively, could give rise to the payment of any
amount that would not be deductible pursuant to the terms of the Code.
(d) Schedule 4.19 identifies each employment, severance or other
similar contract, arrangement or policy and each plan or arrangement
(written or oral) providing
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for insurance coverage (including any self-insured arrangements),
workers' compensation, disability benefits, severance benefits,
supplemental unemployment benefits, vacation benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation or other forms of incentive compensation
or post-retirement insurance, compensation or benefits which (i) is
not an Employee Plan, (ii) is entered into, maintained or contributed
to, as the case may be, by Seller or any of its affiliates, and (iii)
covers any employee or former employee of Seller or any of its
affiliates. Such contracts, plans and arrangements as are described
above, copies or descriptions of all of which have been furnished
previously to Buyer, are referred to collectively herein as the
"Benefit Arrangements." Each Benefit Arrangement has been maintained
in substantial compliance with its terms and with requirements
prescribed by any and all statutes, orders, rules and regulations that
are applicable to such Benefit Arrangement.
(e) Except as set forth in Schedule 4.19, there is no liability
in respect of post-retirement health and medical benefits for retired
employees of Seller or any of its affiliates, determined using
assumptions that are reasonable in the aggregate, over the fair market
value of any fund, reserve or other assets segregated for the purpose
of satisfying such liability (including for such purposes any fund
established pursuant to Section 401(h) of the Code). Seller has
reserved its right to amend or terminate any Employee Plan or Benefit
Arrangement providing health or medical benefits in respect of any
active employee of Seller under the terms of any such plan and
descriptions thereof given to employees. With respect to any of
Seller's Employee Plans which are "group health plans" under Section
4980B of the Code and Section 607(l) of ERISA, there has been timely
compliance in all material respects with all requirements imposed
thereunder so that Seller and its affiliates have no (and will not
incur any) loss, assessment, tax penalty, or other sanction with
respect to any such plan.
(f) Except as set forth in Schedule 4.19, there has been no
amendment to, written interpretation or announcement (whether or not
written) by Seller or any of its affiliates relating to any Employee
Plan or Benefit Arrangement which would increase the expense of
maintaining such Employee Plan or Benefit Arrangement above the level
of the expense incurred in respect thereof for the fiscal year ended
immediately prior to the Closing Date.
(g) Except as set forth in Schedule 4.19, Seller is not a party
or subject to any union contract or any material employment contract
or arrangement providing for annual future compensation to any
officer, consultant, director or employee.
(h) The execution and consummation of the transactions
contemplated by this Agreement do not constitute a triggering event
under any Employee Plan, whether or not legally enforceable, which
(either alone or upon the occurrence of any additional or subsequent
event) will or may result in any payment (of severance pay or
otherwise), acceleration, increase in vesting, or increase in benefits
to any current or former
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participant, employee or director of Seller that has not been
specifically disclosed on Schedule 4.19 or which is not material to
the financial condition or business of Seller.
(i) Any reference to ERISA or the Code or any Section thereof
shall be construed to include all amendments thereto and applicable
regulations and administrative rulings issued thereunder.
Section 4.20 NO CONFLICT OR DEFAULT. Neither the execution and
delivery of this Agreement by Seller or either Shareholder, nor compliance by
Seller and the Shareholders with the terms and provisions of this Agreement,
including without limitation the consummation of the transactions contemplated
by this Agreement, will violate in any material manner any Applicable Laws or
Permits or conflict with or result in the breach of any term, condition or
provision of the articles of incorporation, bylaws, or other organizational
document of Seller, or of any material agreement, deed, contract, undertaking,
mortgage, indenture, writ, order, decree, restriction, legal obligation or
instrument to which Seller or either Shareholder is a party or by which Seller
or either Shareholder or any of their respective assets or properties are or may
be bound or affected, or constitute a default (or an event which, with the
giving of notice, the passage of time, or both, would constitute a default)
thereunder, or result in the creation or imposition of any lien, security
interest, charge or encumbrance, or restriction of any nature whatsoever with
respect to any material properties or assets of Seller or either Shareholder, or
give to others any interest or rights, including rights of termination,
acceleration or cancellation in or with respect to any of the material
properties, assets, contracts or business of Seller.
Section 4.21 BOOKS OF ACCOUNT; RECORDS. Seller's general ledgers,
stock record books, minute books and other material records relating to the
assets, properties, contracts and outstanding legal obligations of Seller are,
in all material respects, complete and correct, and have been maintained in
accordance with good business practices and the matters contained therein are
appropriate and accurately reflected in the Financial Statements.
Section 4.22 OFFICERS, EMPLOYEES, REPRESENTATIVES AND COMPENSATION.
Schedule 4.22 sets forth the names of all directors and officers of Seller, the
total salary, bonus, fringe benefits and perquisites each received in the fiscal
year ended December 31, 1994, and any changes to the foregoing which have
occurred subsequent to such fiscal year. Schedule 4.22 also lists and describes
the current compensation of the 10 most highly compensated managers of Seller
and any other employee of Seller whose total current salary and bonus exceeds
$50,000. Schedule 4.22 sets forth the names, addresses and phone numbers of the
top ten manufacturer's representatives used by Seller, ranked by commissions
earned in 1994 and separately by commissions earned to date in 1995, and the
amount of commissions earned and the region of the country represented by each
such representative in each such period, and includes an additional list of such
representatives that have terminated their relationships with Seller since June
30, 1995, or have notified Seller or either Shareholder since June 30, 1995,
that they intend to terminate their relationships with Seller. No changes will
be made by Seller in the amount or kind of any of the compensation being paid or
provided to any individual or company listed in Schedule
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4.22 from the amounts and kinds of compensation described therein prior to the
Closing without Buyer's prior written consent. Except as disclosed in Schedule
4.22, there are no other forms of compensation paid to any such director,
officer, employee or representative of Seller. Except as disclosed in Schedule
4.22, the amounts accrued on the books and records of Seller for vacation pay,
sick pay, and all commissions and other fees payable to agents, salesmen and
representatives of Seller will be adequate to cover Seller's liabilities for all
such items. Except as set forth in Schedule 4.22, Seller has not become
obligated, directly or indirectly, to any stockholder, director or officer of
Seller or any person related to such person by blood or marriage, except for
current liability for such compensation. Except as set forth in Schedule 4.22,
to the best knowledge of Seller and the Shareholders, no shareholder, director,
officer, agent or employee of Seller or any person related to such person by
blood or marriage holds any position or office with or has any material
financial interest, direct or indirect, in any supplier, customer or account of,
or other outside business which has material transactions with, Seller. Neither
Seller nor either Shareholder has any agreement or understanding with any
stockholder, director, officer, employee or representative of Seller which would
influence any such person not to become associated with Buyer from and after the
Closing or from serving Buyer after the Closing in a capacity similar to the
capacity presently held.
Section 4.23 LABOR RELATIONS. Seller has complied in all respects with
all applicable federal, state and local laws, rules, regulations and Executive
Orders relating to employment, and all applicable laws, rules and regulations
governing payment of minimum wages and overtime rates, and the withholding and
payment of taxes from compensation of employees and the payment of premiums and
benefits under applicable worker compensation laws. Except as set forth in
Schedule 4.23, there is no unfair labor practice complaint against Seller
pending before the National Labor Relations Board. There is no labor strike,
dispute, slowdown or stoppage, or any union organizing campaign, actually
pending or, to the best knowledge of Seller and the Shareholders, threatened
against or involving Seller. No labor grievance has been filed with Seller which
has had or may have a Material Adverse Effect, and no arbitration proceeding,
which has had or may have such an effect has arisen out of or under a collective
bargaining or other labor agreement and is pending and no claim therefor has
been asserted. No collective bargaining or other labor agreement is currently
being negotiated by Seller and no union or collective bargaining unit represents
any of Seller's employees.
Section 4.24 CUSTOMERS, SOURCES AND SUPPLIERS. Except as set forth in
Schedule 4.24, no supplier of Seller has indicated that it shall stop, or
decrease the rate of, or substantially increase its fees for, supplying products
or services to Seller either prior to, or following the consummation of, the
Closing. Schedule 4.24 sets forth Seller's ten top sources of revenue in 1994
and includes an additional list of such sources which have terminated their
relationships with Seller since June 30, 1995, or have notified Seller or either
Shareholder since June 30, 1995, that they intend to terminate their
relationships with Seller. Except as set forth in Schedule 4.24, neither Seller
nor either Shareholder knows of any such sources of revenue which have indicated
that they are considering or planning to (i) discontinue being associated with
Seller, (ii) discontinue being associated with Buyer or Seller after the
Closing, or (iii) substantially decrease
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the amount of their purchasing from or referrals to Seller or Buyer or
materially alter the terms of such business either before or after the Closing.
Schedule 4.24 also sets forth the terms and conditions of any credit, discount
or other terms given by any supplier to Seller outside the usual and ordinary
course of business or in excess of 45 days.
Section 4.25 SPECIAL TERMS; SERVICE OR PRODUCT WARRANTIES. Schedule
4.25 sets forth the terms and conditions of any credit, discount or other terms
given by Seller to any customer outside the usual and ordinary course of
business or in excess of 45 days. Except as set forth in Schedule 4.25, there
have been no product or service warranties or guaranties given by Seller to its
customers or others.
Section 4.26 INVESTMENT REPRESENTATIONS. The Seller represents and
warrants to Buyer that it is accepting the Waterlink Shares being delivered to
Seller pursuant to Article III for Seller's own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof. Seller further represents that it understands that (i) no
Waterlink Shares have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) thereof, (ii) the Waterlink Shares must be held indefinitely unless
a subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration, (iii) the Waterlink Shares will bear a legend to
such effect and (iv) Buyer will make a notation on its transfer books to such
effect. Seller further understands that the exemption from registration afforded
by Rule 144 under the Securities Act depends on the satisfaction of various
conditions and that, if applicable, Rule 144 affords the basis of sales of the
Waterlink Shares in limited amounts under certain conditions. Seller (i)
acknowledges that it has had a full opportunity to request from Buyer and to
review and has received all information which it deems relevant in making a
decision to accept the Waterlink Shares being delivered to it hereunder, (ii)
will comply with the restrictions on transferability of the Waterlink Shares
contained in the Stockholders Agreement, dated as of August 30, 1995, by and
among all of the stockholders of Buyer, (iii) is an accredited investor (as
defined pursuant to the Securities Act) and has the knowledge and experience in
financial and business matters to make its own evaluation of the merits and
risks of the investment, and (iv) is able to withstand the total loss of its
investment in Buyer.
Section 4.27 COMPLETE DISCLOSURE. No representation or warranty by
Seller or the Shareholders in this Agreement or the Seller Schedules contains,
or will contain as of the Closing Date, any untrue statement of a material fact
or omits, or will omit as of the Closing Date, a material fact necessary to make
the statements contained herein or therein not misleading.
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ARTICLE V
COVENANTS OF THE PARTIES
------------------------
Section 5.l MUTUAL COVENANTS.
(a) GENERAL. Each Party shall use all reasonable efforts to take
all actions and do all things necessary, proper or advisable to
consummate the Closing and the other transactions contemplated by this
Agreement, including without limitation using all reasonable efforts
to cause the conditions set forth in Article V of this Agreement for
which such Party is responsible to be satisfied as soon as reasonably
practicable and to prepare, execute, acknowledge or verify, deliver,
and file such additional documents, and take or cause to be taken such
additional actions, as any other Party may reasonably request to carry
out the purposes or intent of this Agreement.
(b) OTHER GOVERNMENTAL MATTERS. Each Party shall use all
reasonable efforts to take any additional action that may be
necessary, proper or advisable in connection with any other notices
to, filings with, and authorizations, consents and approvals of any
court, administrative agency or commission, or other governmental
authority or instrumentality that it may be required to give, make or
obtain.
Section 5.2 COVENANTS OF SELLER AND THE SHAREHOLDERS. Seller and each
Shareholder jointly and severally agree that:
(a) DISCLOSURES. After the date of this Agreement, neither Seller
nor either Shareholder shall: (i) disclose to any person (other than
Buyer or those designated in writing by Buyer) in any manner, directly
or indirectly, any proprietary information or data relevant to the
business of Seller, whether of a technical or commercial nature, other
than in the ordinary course of business, or (ii) use, or permit or
assist, by acquiescence or otherwise, any person (other than Buyer or
those designated in writing by Buyer) to use, in any manner, directly
or indirectly, any such information or data, excepting only (A) use of
such data or information as is at the time generally known to the
public and which did not become generally known through any breach of
any provision of this section by Seller or a Shareholder, and (B)
disclosures of information to employees of Seller who need to know
such information and use of such information by employees of Seller
who need to use such information, in each case only to the extent
necessary for the benefit of Seller or Buyer.
(b) EMPLOYEE RETENTION. Seller and the Shareholders understand
that in Buyer's view it is essential to the successful operation of
the business of Seller that Seller retain substantially unimpaired
their operating organization. At the Closing, Buyer shall enter into a
Consulting and Noncompetition Agreement in the form of Exhibit C
attached
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to this Agreement with ▇▇▇▇▇▇▇▇ Field, and an Employment and
Noncompetition Agreement in the form of Exhibit D attached to this
Agreement with ▇▇▇▇▇ ▇▇▇▇▇.
(c) INJUNCTIVE RELIEF. Seller and the Shareholders acknowledge
and agree that Buyer's remedies at law for any violation of any of
Seller's and the Shareholders' obligations under this Article V would
be inadequate, and agree that in the event of any such violation,
Buyer shall be entitled to a temporary restraining order, temporary
and permanent injunctions, and other equitable relief, without the
necessity of posting any bond or proving any actual damage, in
addition to all other rights and remedies which may be available to
Buyer from time to time.
ARTICLE VI
CONDITIONS
----------
Section 6.1 MUTUAL CONDITIONS. The obligations of each of the Parties
to consummate the Closing and the other transactions contemplated by this
Agreement shall be subject to fulfillment or waiver by each Party of all of the
following conditions:
(a) NO ADVERSE PROCEEDING. No temporary restraining order,
preliminary or permanent injunction or other order or decree which
prevents the consummation of the Closing or the other transactions
contemplated by this Agreement shall have been issued and remain in
effect, and no statute, rule or regulation shall have been enacted by
any state or federal government or governmental agency which would
prevent the Closing or the other transactions contemplated by this
Agreement.
(b) GOVERNMENTAL APPROVALS. Any governmental or other approvals
or reviews of this Agreement or the transactions contemplated by this
Agreement required under any applicable laws, statutes, orders, rules,
regulations, or policies, or any guidelines promulgated thereunder,
shall have been received.
(c) CONSULTING AND EMPLOYMENT AGREEMENTS. Buyer, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have executed and delivered
their respective Employment Agreements, and Buyer and ▇▇▇▇▇▇▇▇ Field
shall have executed and delivered the Consulting Agreement.
Section 6.2 CONDITIONS TO OBLIGATIONS OF SELLER AND THE SHAREHOLDERS.
The obligations of Seller and the Shareholders to consummate the Closing and the
other transactions contemplated by this Agreement shall be subject to the
fulfillment of all of the following conditions unless waived by Seller and the
Shareholders in writing:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer set forth in Article III of this Agreement shall
be true and correct in all material
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respects as of the date of this Agreement and as of the Closing as
though made at and as of the Closing.
(b) PERFORMANCE OF AGREEMENT. Buyer shall have performed and
observed in all material respects all obligations and conditions to be
performed or observed by it under this Agreement at or prior to the
Closing.
(c) CERTIFICATE. Buyer shall have furnished Seller and the
Shareholders with a certificate dated the Closing Date signed on its
behalf by its chairman, president or any vice president to the effect
that the conditions set forth in Section Section 6.2(a) and (b) have
been satisfied.
(d) OPINION OF COUNSEL. The Seller shall have received the legal
opinion, dated the Closing Date, of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to
Buyer, in substantially the form attached to this Agreement as Exhibit
E.
Section 5.3[sic] CONDITIONS TO OBLIGATIONS OF BUYER. The obligations
of Buyer to consummate the Closing and the other transactions contemplated by
this Agreement shall be subject to the fulfillment of all of the following
conditions unless waived by Buyer in writing:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller and the Shareholders set forth in Article IV of
this Agreement shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing as though made at
and as of the closing.
(b) PERFORMANCE OF AGREEMENT. Seller and the Shareholders shall
have performed and observed in all material respects all obligations
and conditions to be performed or observed by it under this Agreement
at or prior to the Closing.
(c) CERTIFICATE. Seller shall have furnished Buyer with a
certificate dated the Closing Date signed by each Shareholder and on
Seller's behalf by its chairman, president or any vice president to
the effect that the conditions set forth in Sections 5.3(a) and
(b) have been satisfied.
(d) OPINION OF COUNSEL. Buyer shall have received the legal
opinion, dated the Closing Date, of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to
Seller and the Shareholders, substantially in the form attached to
this Agreement as Exhibit F.
(e) MATERIAL ADVERSE CHANGES. Seller shall be free from any
agreements, restrictions, or conditions, which in the reasonable
opinion of Buyer would have a Material Adverse Effect; no agreement or
other document or restriction to which Seller is a party or is subject
shall be in default as of the Closing Date or be breached by the
transactions contemplated by this Agreement, which default or breach
would in the
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reasonable opinion of Buyer have a Material Adverse Effect; and there
shall have occurred no material adverse change in the operations,
prospects, assets, business, or condition (financial or otherwise) of
Seller.
(f) FINANCIAL STATEMENTS. Ernst & Young LLP shall have reviewed
the Financial Statements and shall have furnished Buyer with a written
report stating that there are no material inaccuracies in the
Financial Statements at least 5 days prior to the Closing (the "Ernst
& Young Report").
ARTICLE VII
INDEMNIFICATION
---------------
Section 7.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Subject to the limitations set forth in Section 7.3 of this Agreerent and
notwithstanding any investigation conducted at any time with regard thereto by
or on behalf of Buyer, all representations, warranties, covenants and agreements
of Seller and the Shareholders in this Agreement and in the Additional Documents
(as defined in Section 7.2(iii)) shall survive execution, delivery and
performance of this Agreement for a period of eighteen (18) months. All
representations and warranties of Seller and the Shareholders set forth in this
Agreement and in the Additional Documents shall be deemed to have been made
again by Seller and the Shareholders at and as of the Closing. All statements
contained in any Additional Document, Exhibit or Schedule hereto shall be deemed
representations and warranties of Seller set forth in this Agreement within the
meaning of this Article.
Section 7.2. INDEMNIFICATION.
(a) Subject to the limitations set forth in Section 7.3 of this
Agreement, Seller and the Shareholders hereby agree to jointly and
severally indemnify and hold harmless Buyer from and against any and
all losses, liabilities, damages, demands, claims, suits, actions,
judgments or causes of action, assessments, costs and expenses,
including, without limitation, interest, penalties, reasonable
attorneys' fees, any and all expenses incurred in investigating,
preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation (collectively, "Damages"),
asserted against, resulting to, imposed upon, or incurred or suffered
by Buyer, directly or indirectly, as a result of or arising from the
following (collectively, "Indemnifiable Claims"):
(i) Any inaccuracy in or breach or nonfulfillment of any of
the representations, warranties, covenants or agreements made by
Seller in this Agreement or any facts or circumstances
constituting such an inaccuracy, breach or nonfulfillment;
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(ii) Any liability imposed upon Buyer as transferee of the
business or operations of Seller or the Property, or otherwise,
except to the extent such liability may be expressly assumed by
Buyer pursuant to Section 2.1 hereof;
(iii) Any misrepresentation in or any omission from any
certificate or other document (collectively, the "Additional
Documents") furnished or to be furnished by or on behalf of
Seller under this Agreement; or
(iv) Seller's misapplication of the proceeds of the purchase
price of the Property in fraud of its creditors.
(b) For purposes of this Article, all Damages shall be computed
net of (i) any actual income tax benefit resulting therefrom to Buyer
which, and (ii) any insurance coverage with respect thereto which,
reduces the Damages that would otherwise be sustained; provided,
however, that, in all cases, the timing of the receipt or realization
of insurance proceeds or income tax benefits shall be taken into
account in determining the amount of reduction of Damages.
Section 7.3. LIMITATIONS ON INDEMNIFICATION. Except as otherwise
provided in Section 7.2(b) of this Agreement, Buyer's rights to indemnification
hereunder are subject to the limitation that Seller and the Shareholders will
not be liable to Buyer for any Damages until the aggregate amount of all Damages
equal or exceed a threshold limit of Twenty Thousand Dollars ($20,000), at which
time Buyer shall be entitled to indemnification with respect to all Damages,
including the first Twenty Thousand Dollars ($20,000) of Damages.
Section 7.4. PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD-PARTY
CLAIMS.
(a) If Buyer determines to seek indemnification under this
Article with respect to Indemnifiable Claims resulting from the
assertion of liability by third parties, it shall give notice to
Seller of any such Indemnifiable Claim or of facts upon which any such
Indemnifiable Claim will be based; the notice shall set forth such
information with respect thereto as is then reasonably available to
Buyer. In case any such liability is asserted against Buyer, and Buyer
notifies Seller thereof, Seller will be entitled, if it so elects by
written notice delivered to Buyer within twenty (20) days after
receiving Buyer's notice, to assume the defense thereof with counsel
satisfactory to Buyer. Notwithstanding the foregoing, (i) Buyer shall
also have the right to employ its own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of
Buyer, (ii) Buyer shall not have any obligation to give any notice of
any assertion of liability by a third party unless such assertion is
in writing, and (iii) the rights of Buyer to be indemnified hereunder
shall not be adversely affected by its failure to give notice pursuant
to the foregoing unless, and, if so, only to the extent that, Seller
is materially prejudiced thereby. With respect to any assertion of
liability by a third party that results in an Indemnifiable Claim,
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the parties hereto shall make available to each other all relevant
information in their possession material to any such assertion.
(b) In the event that Seller, within twenty (20) days after
receipt of the aforesaid notice of an Indemnifiable Claim, fails to
assume the defense of Buyer against such Indemnifiable Claim, Buyer
shall have the right to undertake the defense, compromise or
settlement of such action on behalf of and for the account and risk of
Seller.
(c) Notwithstanding anything in this Section to the contrary, (i)
if there is a reasonable probability that an Indemnifiable Claim may
materially and adversely affect Buyer, other than as a result of money
damages or other money payments, Buyer shall have the right, at its
own cost and expense, to defend, compromise or settle such
Indemnifiable Claim, and (ii) Seller shall not, without Buyer's
written consent, settle or compromise any Indemnifiable Claim or
consent to entry of any judgment in respect thereof unless such
settlement, compromise or consent includes as an unconditional term
thereof the giving by the claimant or the plaintiff to Buyer a release
from a liability in respect of such Indemnifiable Claim.
Section 7.5. PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO NON-THIRD
PARTY CLAIMS. In the event that Buyer asserts the existence of a claim giving
rise to Damages (but excluding claims resulting from the assertion of liability
by third parties), it shall give written notice to Seller specifying the nature
and amount of the claim asserted. If Seller, within twenty (20) days after the
mailing of notice by Buyer, shall not give written notice to Buyer announcing
its intent to contest such assertion of Buyer, such assertion shall be deemed
accepted and the amount of claim shall be deemed a valid claim. In the event,
however, that Seller contests the assertion of a claim by giving such written
notice to Buyer within said period, then if the parties hereto, acting in good
faith, cannot reach agreement with respect to such claim within ten (10) days
after such notice, the contested assertion of a claim shall be referred to
arbitration in Chicago, Illinois, or any other place mutually agreed upon by the
parties, in accordance with the rules then pertaining to the American
Arbitration Association. The determination made in accordance with such rules
shall be delivered in writing to the parties hereto and shall be final and
binding and conclusive upon the parties hereto and the amount of the claim, if
any, determined to exist shall be a valid claim. Each party shall pay its own
legal, auditing and other fees in connection with such a contest; provided,
however, that the fees of any arbitrator and expenses incurred by the arbitrator
shall be shared equally by the parties.
Section 7.6. SETOFF. Notwithstanding any other provision contained
herein, it is understood and agreed that at any time following the Closing Buyer
may set off from the Buyer Note an amount equal to any and all Damages which are
a result of or arise from or relate to any Indemnifiable Claim.
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ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.1 NOTICES. All notices and other communications under this
Agreement to any Party shall be in writing and shall be deemed given when
delivered personally to that Party, telecopied (with electronic confirmation) to
that Party at the telecopy number for that Party set forth below, mailed by
certified mail (postage prepaid and return receipt requested) to that Party at
the address for that Party set forth below, or delivered to Federal Express or
any similar express delivery service for delivery to that Party at that address:
(a) If to Buyer:
Waterlink, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
3200 National City Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Seller:
Great Lakes Environmental, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(c) If to the Shareholders, addressed to them at:
Great Lakes Environmental, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
in the case of (b) and (c), with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any Party may change its telecopy number or address for notices under this
Agreement at any time by giving the other Parties notice of such change.
Section 8.2 NON-WAIVER. No failure by any Party to insist upon strict
compliance with any term or provision of this Agreement or to seek any remedy
upon any default of any other Party shall affect, or constitute a waiver of, the
first Party's right to insist upon such strict compliance or seek that remedy
with respect to that default or any prior, contemporaneous, or subsequent
default.
Section 8.3 GENDERS AND NUMBERS. Where permitted by the context, each
pronoun used in this Agreement includes the same pronoun in other genders and
numbers, and each noun used in this Agreement includes the same noun in other
numbers.
Section 8.4 HEADINGS. The headings of the various articles and
sections of this Agreement are not part of the context of this Agreement, are
merely labels to assist in locating such articles and sections, and shall be
ignored in construing this Agreement.
Section 8.5 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same Agreement.
Section 8.6 ENTIRE AGREEMENT. This Agreement (including all exhibits,
schedules, and other documents referred to in this Agreement (the "Incorporated
Documents"), all of which are hereby incorporated by reference) constitutes the
entire agreement, and supersedes all prior discussions, negotiations, agreements
and understandings (both written and oral) among the Parties with respect to the
subject matter of this Agreement. All obligations of any Party under any
Incorporated Document shall constitute an obligation of such Party under this
Agreement. Any
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capitalized terms used in any Incorporated Document which are not otherwise
defined therein shall have the respective meanings given such terms in this
Agreement.
Section 8.7 NO THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement, expressed or implied, is intended or shall be construed to confer
upon or give to any person, firm, corporation or legal entity, other than the
Parties, any rights, remedies or other benefits under or by reason of this
Agreement.
Section 8.8 GOVERNING LAW. This Agreement shall be coverned by and
construed in accordance with the laws of the State of Ohio, without regard to
principles of conflicts of law. All rights and remedies of each Party under this
Agreement shall be cumulative and in addition to all other rights and remedies
which may be available to the Party from time to time, whether under this
Agreement or otherwise.
Section 8.9 BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon, inure to the benefit of and be enforceable by and against the
Parties and their respective heirs, personal representatives, successors, and
assigns. Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be transferred or assigned by any of the Parties
without the prior written consent of the other Parties. Notwithstanding the
foregoing, Buyer shall have the right to assign any of its rights, interests or
obligations under this Agreement, in whole or in part, to any affiliated person
or entity.
Section 8.10 EXPENSES. Subject to the following paragraph, and except
as otherwise specifically provided in this Agreement: (a) Buyer shall pay its
costs and expenses associated with the transactions contemplated by this
Agreement, including without limitation the fees and expenses of its legal
counsel, certified public accountants, and other financial advisors; and (b) the
Seller shall pay all costs and expenses of themselves and Seller and the
Shareholders associated with this Agreement or the transactions contemplated by
this Agreement, including without limitation the fees and expenses of legal
counsel, accountants, and financial advisors, including, without limitation, any
fees and expenses associated with the preparation of the Financial Statements.
Section 8.11 PUBLIC ANNOUNCEMENTS. Neither Seller, nor either of the
Shareholders shall, without the prior written consent of Buyer make any public
announcement or statement with respect to the transactions contemplated in the
Agreement, except as may be necessary to comply with applicable requirements of
the federal or state securities laws or any governmental order or regulation.
Section 8.12 SEVERABILITY. With respect to any provision of this
Agreement finally determined by a court of competent jurisdiction to be
unenforceable, such court shall have jurisdiction to reform such provision so
that it is enforceable to the maximum extent permitted by applicable law, and
the Parties shall abide by such court's determination. In the event that any
provision of this
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Agreement cannot be reformed, such provision shall be deemed to be severed from
this Agreement, but every other provision of this Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective representatives as of the day and year first above
written.
WATERLINK, INC. GREAT LAKES ENVIRONMENTAL, INC.
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------ -----------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, President
Chairman
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Attest: /s/ ▇▇▇▇▇▇▇▇ Field
------------------------------ -------------------------
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇▇ Field
--------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
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INDEX OF SELLER SCHEDULES
-------------------------
Schedule 1.1(a) Real Property Leases
Schedule 1.1(b) Personal Property
Schedule 1.1(c) Vehicles
Schedule 1.1(d) Permits
Schedule 1.1(e) Proprietary Rights
Schedule 1.1(f) Equipment Leases
Schedule 1.1(g) Contracts
Schedule 1.1(i) Prepaid Expenses
Schedule 1.1(k) Telephone Numbers for Seller's Offices and Facilities
Schedule 1.2 Certain Excluded Assets
Schedule 1.3 Non-Assignment of Certain Contracts
Schedule 1.5 Purchase Price Allocation
Schedule 2.1 Assumed Liabilities
Schedule 4.4 Consents and Approvals
Schedule 4.6 Inventory
Schedule 4.7 Undisclosed Liabilities
Schedule 4.8 Absence of Certain Changes
Schedule 4.9 Taxes
Schedule 4.10 Permits; Compliance with Laws
Schedule 4.12 Restrictive Documents or Laws
Schedule 4.16 Properties
Schedule 4.18 Legal Proceedings
Schedule 4.19 Employee Benefit Plans
Schedule 4.22 Officers, Employees, Representatives and
Compensation
Schedule 4.23 Labor Relations
Schedule 4.24 Customers, Sources and Suppliers
Schedule 4.25 Special Terms; Product Warranties
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