STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement ("Agreement") is made and entered into as of
February 1, 1996, by and among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇, being all of the shareholders (collectively, "Sellers") of Arkgalv,
Inc., d/b/a Arkansas Galvanizing, an Arkansas corporation (the "Company"), and
Aztec Manufacturing Co., a Texas corporation ("Purchaser").
R E C I T A L S:
- - - - - - - -
Reference is made to the following:
A. The Company is engaged in the business of galvanizing under the name
of Arkansas Galvanizing, Inc. (the "Business"). The Company's issued and
outstanding capital stock consists of 750 shares of common stock, $1.00 par
value (the "Company Stock") of which all 750 shares are owned by the Sellers.
B. Purchaser is engaged, in part, in the business of galvanizing.
C. Subject to the terms and conditions hereinafter set forth, the Sellers
desire to sell and Purchaser desires to purchase the Business by purchasing all
the Company Stock from Sellers.
NOW, THEREFORE, in consideration of the foregoing recitals and of the
respective covenants, representations, warranties and agreements herein
contained, and intending to be legally bound hereby, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I -- PURCHASE AND SALE
1.1 Agreement to Sell. At the Closing (as defined in Section 2.1 hereof),
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Sellers shall sell, convey, transfer and deliver to Purchaser, upon and subject
to the terms and conditions of this Agreement, free and clear of all liens,
security interests, pledges, encumbrances, restrictions upon transfer, and
adverse claims and demands of any kind, character, or description whatever, and
Purchaser shall purchase from Sellers, the Company Stock.
1.2 The Purchase Price.
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1.2.1 Purchase Price. The Purchase Price to be paid by Purchaser
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to Sellers shall be an amount equal to:
(a) $4,000,000.00;
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(b) plus one-half (1/2) the amount, if any, by which the
Company's Net Book Value at the close of business on January 31, 1996
(the "Transfer Date") determined from the 1996 Balance Sheet (as
defined in Section 1.2.4), exceeds the Company's Net Book Value at the
close of business on October 31, 1995, determined from the Adjusted
1995 Balance Sheet (as defined in Section 1.2.3 hereof);
(c) less the amount, if any, by which the Company's Net Book
Value as of the Transfer Date, determined from the 1996 Balance Sheet,
decreases from the Company's Net Book Value at close of business on
October 31, 1995, determined from the Adjusted 1995 Balance Sheet; and
(d) less the amount equal to the Company's outstanding
accounts receivable aged greater than 180 days as of the Transfer
Date.
(e) plus an amount, not to exceed $100,00.00, equal to the
principal and interest due and owing by the Sellers on the note
receivable to the Company as of January 31, 1996, less an amount equal
to the principal and interest due and owing by the Company on the loan
between the Company and the Arkansas Development Finance Authority, as
of the Closing Date.
Calculation of the Purchase Price is illustrated by the Purchase Price
Adjustment Schedule included as part of the attached Disclosure Statement.
The Purchase Price to be paid pursuant to this Agreement is separate and
apart from any amounts to be paid pursuant to the agreements to be executed
pursuant to Section 6.1.7.
1.2.2 Net Book Value. For purposes of this Agreement, the
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"Company's Net Book Value" means the amount determined by subtracting the
total liabilities of the Company from the total assets of the Company, as
reflected on the balance sheet of the Company from which such determination
is being made.
1.2.3 Adjustments to 1995 Balance Sheet. Sellers have previously
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provided Purchaser with a copy of the unaudited balance sheet of the
Company dated as of October 31, 1995 ("1995 Balance Sheet"). Sellers shall
use their best efforts to deliver to Purchaser by February 15, 1996, true
and complete copies of the Company's balance sheet dated October 31, 1995,
and the related statements of income, cash flow and changes in shareholder
equity for the period then ended, certified by the Company's auditors as
having been prepared in accordance with generally accepted accounting
principles consistently applied throughout the period involved except where
otherwise noted in the financial statements.
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The 1995 Balance Sheet will be adjusted as follows:
(i) to conform to the audited balance sheet dated as of October 31,
1995;
(ii) to reflect the Company's transfer to Sellers of two vehicles
described in the Disclosure Statement ("Vehicles") by reducing the
Company's Net Book Value by the aggregate net cost basis of the
Vehicles as of the Transfer Date, provided, such reduction will not
exceed $50,000.00;
Solely for the purpose of calculating the Purchase Price and not for the
purpose of any representation or warranty contained herein, the 1995
Balance Sheet will not be adjusted pursuant to Section 1.2.3(i) to reflect
the accrual of deferred taxes. The adjustments to the 1995 Balance Sheet
are illustrated by the Purchase Price Adjustment Schedule included as part
of the attached Disclosure Statement. As adjusted, the 1995 Balance Sheet
will be referred to herein as the "Adjusted 1995 Balance Sheet."
1.2.4 1996 Balance Sheet Within ten (10) days after the Transfer
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Date, Sellers shall deliver to Purchaser a true and correct copy of an
unaudited balance sheet of the Company dated as of January 31, 1996
prepared in accordance with generally accepted accounting principles on the
accrual method. Thereafter, Purchaser will cause its auditors to perform a
review of this balance sheet. The reviewed balance sheet dated as of
January 31, 1996, will be referred to herein as the "1996 Balance Sheet."
Solely for the purpose of calculating the Purchase Price and not for the
purpose of any representation or warranty contained herein, the 1996
Balance Sheet will be adjusted to remove any accrual made for deferred
taxes. In addition, solely for the purpose of calculating the Purchase
Price, the assets on the 1996 Balance Sheet will be increased to reflect
the amount of the finished goods inventory valued at invoice and the fair
market value of the dross and ash located at the Company at the Transfer
Date.
1.2.5 Payment of Purchase Price. On the Closing Date, Purchaser
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shall pay (i) to Sellers, on account of the Purchase Price, the amount
determined in accordance with Section 1.2.1, less an amount equal to ten
percent (10%) of the Guaranteed Accounts Receivable as defined in Section
8.2, and less the additional sum of $52,500.00 (collectively, the "Seller
Closing Payment") by wire transfer of immediately available funds to such
account as Sellers shall designate, and (ii) to the Escrow Agent under the
Escrow Agreements substantially in the form attached hereto as Exhibit "A"
(the "Escrow Agreement"), on account of the Purchase Price, the sum of
$52,500.00, plus an amount equal to ten percent (10%) of the Guaranteed
Accounts Receivable (the "Escrow Closing Payment").
1.2.6 Stock Ownership and Purchase Price Allocation. The total
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number of shares of Company Stock owned by each Seller and the percentage
of the total amount
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of the Purchase Price to be paid to each such Seller, subject to the
adjustments set forth in Section 1.2.1, is as follows:
Number of Percentage of
Seller Shares owned Purchase Price
--------------------------- ------------ ---------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 250 33.33%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 250 33.33%
▇▇▇▇ ▇▇▇▇▇▇ 250 33.33%
ARTICLE II -- CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY CONSENTS,
CHANGE IN NAME AND FURTHER ASSURANCES
2.1 Closing. The closing (the "Closing") of the sale and purchase of the
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Company Stock shall take place at a mutually agreeable time on or before
February 29, 1996, or on such other date as may be mutually agreed upon in
writing by Purchaser and Sellers at the offices of Shannon, Gracey, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.P., 500 Throckmorton, Suite 1600, Bank ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇. The date of the Closing is sometimes herein referred to as the "Closing
Date."
2.2 Items to be Delivered at Closing. At the Closing and subject to the
--------------------------------
terms and conditions herein contained:
(a) Sellers shall deliver to Purchaser all instruments and documents
necessary to carry out the terms and provisions of the Agreement including,
but not limited to, the following:
(i) the certificate or certificates evidencing the Company Shares
being sold by Sellers to Purchaser, duly endorsed in blank or
accompanied by a stock power or powers executed in blank, with all
signatures guaranteed by a domestic commercial bank or trust company
satisfactory to Purchaser and with all necessary transfer tax and
revenue stamps, acquired at Seller's expense, affixed and canceled;
(ii) the closing certificate described in Section 6.1.3;
(iii) certificates from appropriate state officials, dated not
earlier than ten (10) days prior to the Closing Date, reflecting that
the Company is in existence and good standing under the laws of the
jurisdiction of its incorporation and qualified to do business and in
good standing under the laws of any other jurisdiction in which the
nature of its business or the ownership of its property makes
qualification necessary;
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(iv) the written resignation, effective the Closing Date, of all
of the officers and directors of the Company;
(v) documentation reflecting that all Taxes, as defined in
Section 3.1.6, that are due and owing as of the Closing Date have been
paid;
(vi) the executed shareholder agreements described in Section
6.1.7;
(vii) a Title Policy issued through the Title Company by an
insurer satisfactory to Purchaser, in an amount equal to the appraised
value of the Real Property, insuring the Company's title to the Real
Property subject only to the Permitted Exceptions (defined in Section
5.3).
and simultaneously with such delivery, all such steps will be taken as may be
required to put Purchaser in actual possession and operating control of the
Company.
(b) Purchaser shall, in accordance with Section 1.2.5, deliver to (i)
Sellers, the Seller Closing Payment, (ii) to the Escrow Agent, the Escrow
Closing Payment, and (iii) the titles to the Vehicles, free and clear of
all liens and encumbrances.
2.3 Stock Transfer. Sellers shall cause a duly authorized representative
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of the Company to be present at the Closing with all necessary records and
documents so that the Company Stock purchased by Purchaser may be immediately
transferred to and reissued in the name of Purchaser.
2.4 Further Assurances. Sellers shall from time to time at Purchaser's
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request execute, acknowledge and deliver to Purchaser such other instruments of
conveyance and transfer and will take such other actions and execute and deliver
such other documents, certifications and further assurances as Purchaser may
reasonably deem necessary or desirable to effectuate the transaction
contemplated hereby.
ARTICLE III -- REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Sellers. Sellers hereby represent
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and warrant to Purchaser that, except as set forth on a Disclosure Schedule
attached hereto, each of which exceptions will specifically identify the
relevant subsection hereof to which it relates and will be deemed to be
representations and warranties as if made hereunder, that all of the statements
contained in this Section 3.1 and all of its subsections are in all respects
true and correct, and complete as of the Takeover Date, and Sellers agree that
all of the statements contained in this Section 3.1 and all of its subsections
will be true, correct, and complete as of the Closing Date with the same force
and effect as if made on and as of the Closing Date.
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3.1.1 Corporate Existence. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Company is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction where the conduct of the Business by it requires it to be so
qualified, all of which jurisdictions are listed on the Disclosure
Schedule.
3.1.2 Authorization; Enforceable Obligations. This Agreement and
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the other agreements, documents and instruments required to be delivered by
Sellers in accordance with the provisions hereof (the "Seller's Documents")
are legal, valid and binding obligations of each Seller.
3.1.3 Validity of Contemplated Transactions, Etc. The execution,
-------------------------------------------
delivery and performance of this Agreement by each Seller does not and will
not violate, conflict with or result in the breach of any term, condition
or provision of, or require the consent of any other person under, (a) any
existing law, ordinance, or governmental rule or regulation to which the
Company or any Seller is subject, (b) any judgment, order, writ,
injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which is applicable to the Company
or any Seller, (c) the charter documents of the Company or any securities
issued by the Company, or (d) any mortgage, indenture, agreement, contract,
commitment, lease, plan, Authorization (hereinafter defined in Section
3.1.10), or other instrument, document or understanding, oral or written,
to which the Company or any Seller is a party, by which the Company or any
Seller may have rights or by which any of the assets of the Company may be
bound or affected, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of the Company or any Seller thereunder. No authorization,
approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is required in
connection with the execution, delivery or performance of this Agreement by
any Seller.
3.1.4 Financial Statements. The 1995 Balance Sheet and related
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notes have been prepared in accordance with accounting principles
consistently applied throughout the period involved. The Adjusted 1995
Balance Sheet and the 1996 Balance Sheet and related notes will be prepared
in accordance with generally accepted accounting principles consistently
applied throughout the period involved. The 1995 Balance Sheet does, and
the Adjusted 1995 Balance Sheet and the 1996 Balance Sheet will, fairly
present the financial position, assets and liabilities (whether accrued,
absolute, contingent or otherwise) of the Company at the date indicated.
The related statements of income, cash flow and changes in shareholders'
equity to the 1995 Balance Sheet do, and the Adjusted 1995 Balance Sheet
and the 1996 Balance Sheet will, fairly present the results of operations,
cash flow and changes in shareholders equity of the Company for the period
indicated. Sellers have also delivered to Purchaser true and complete
copies of the accounts receivable ledgers reflecting all current and past
accounts receivable of the Company and a true and complete list of all
prospective customers of the Company.
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3.1.5 Inventory. All inventory of the Company used in the conduct
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of the Business, including without limitation raw materials, work-in
process and finished goods, reflected on the 1995 Balance Sheet or
acquired since the date thereof was acquired and has been maintained in
the ordinary course of business; is of good and merchantable quality;
consists substantially of a quality, quantity and condition usable,
leasable or saleable in the ordinary course of the business; and is not
subject to any write-down or write-off.
3.1.6 Tax and Other Returns and Reports. All federal, state,
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local and foreign tax returns, reports, statements and other similar
filings required to be filed by the Company (the "Tax Returns") with
respect to any federal, state, local or foreign taxes, assessments,
interest, penalties, deficiencies, fees and other governmental charges or
impositions, (including without limitation all income tax, unemployment
compensation, social security, payroll, sales and use, excise, privilege,
property, ad valorem, franchise, license, school and any other tax or
similar governmental charge or imposition under laws of the United States
or any state or municipal or political subdivision thereof or any foreign
country or political subdivision thereof) (the "Taxes") have been filed
with the appropriate governmental agencies in all jurisdictions in which
such Tax Returns are required to be filed, and all such Tax Returns
properly reflect the liabilities of the Company for Taxes for the periods,
property or events covered thereby. All Taxes heretofore or hereafter
claimed to be due by any taxing authority from the Company, have been
properly accrued or paid. The accruals for Taxes contained in the Adjusted
1995 Balance Sheet and the 1996 Balance Sheet are adequate to cover the
tax liabilities of the Company with respect to the Business as of that
date and include adequate provision for all deferred taxes, and nothing
has occurred subsequent to that date to make any of such accruals
inadequate. the Company has not extended, or waived the application of,
any statute of limitations of any jurisdiction regarding the assessment or
collection of any Taxes. There are no tax liens (other than any lien for
current taxes not yet due and payable) on any of the assets or properties
of the Company. Within ten (10) days after the execution of this
Agreement, Sellers shall provide Purchaser with true and correct copies of
the Company's Tax Returns, as filed with the appropriate governmental
agencies, for the years 1993, 1994 and 1995, as well as all reports and
documents relating to prior tax audits of the Company by the Internal
Revenue Service.
3.1.7A Existing Condition. Since October 31, 1995, the Company with
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respect to the Business has not:
(a) sold, encumbered, assigned or transferred any assets or
properties, except for the sale of inventory in the ordinary course of
business consistent with past practice and the transfer of the
Vehicles to Sellers as provided in Section 1.2.3;
(b) created, incurred, assumed or guaranteed any
indebtedness for money borrowed, or mortgaged, pledged or subjected
any of its assets to any
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mortgage, lien, pledge, security interest, conditional sales contract
or other encumbrance of any nature whatsoever, except for Permitted
Liens (hereinafter defined in Section 3.1.8);
(c) made or suffered any amendment or termination of any
material agreement, contract, commitment, lease or plan to which it is
a party or by which it is bound, or cancelled, modified or waived any
substantial debts or claims held by it or waived any rights of
substantial value, whether or not in the ordinary course of business;
(d) declared or made, or agreed to declare or make, any
dividend payments or distribution of its assets of any kind to
Shareholders (except as provided in Section 1.2.3);
(e) except in accordance with normal and usual practice,
increased the rate of compensation payable to any of its employees;
(f) suffered any damage, destruction or loss, whether or not
covered by insurance, (i) materially and adversely affecting the
Business, operations, assets, properties or prospects or (ii) of any
item or items carried on the Company's books of account individually
or in the aggregate at more than $1,000, or suffered any repeated,
recurring or prolonged shortage, cessation or interruption of supplies
or utility or other services required to conduct its business and
operations;
(g) suffered any material adverse change in its business,
operations, assets, properties, prospects or condition (financial or
otherwise); and
(h) incurred or allowed a release or spill of any Hazardous
Substances, as hereafter defined, on any property owned by the
Company; nor is any release of a Hazardous Substance threatened on,
at, from, or near any property owned or operated by the Company.
Hazardous Substances means, without limitation, any explosives,
asbestos, petroleum and petroleum products, zinc and any other
hazardous materials and hazardous wastes.
3.1.7B Existing Condition. Since January 31, 1996, the Company with
------------------
respect to the Business has not:
(a) made any accrual or arrangement for payment of bonuses
or special compensation of any kind or any severance or termination
pay to any of its present or former officers; and
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(b) made commitments or agreements for capital expenditures
or capital additions or betterments exceeding in the aggregate $1,000
except such as may be involved in ordinary repair, maintenance or
replacement of its assets.
3.1.8 Title to Properties. The Company has good, valid and
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marketable title to all of its properties and assets, real, personal and
mixed, which its purports to own, including without limitation all
properties and assets reflected in the 1995 Balance Sheet (except for
inventory sold since the date thereof in the ordinary course of business
consistent with past practice and the Vehicles transferred pursuant to
Section 1.2.3) free and clear of all mortgages, liens, pledges, security
interests, charges, claims, restrictions and other encumbrances and defects
of title of any nature whatsoever, except for (i) liens for current real or
personal property taxes not yet due and payable, (ii) liens disclosed in
the Disclosure Schedule in response to this Section, and (iii) liens that
are immaterial in character, amount, and extent, and which do not detract
from the value or interfere with the present or proposed use of the
properties they affect ("Permitted Liens").
3.1.9 Condition of Tangible Assets. No person other than the
----------------------------
Company owns any equipment or other tangible assets or properties situated
on the premises of the Company or necessary to the operation of the
business of the Company, except for leased items disclosed in the
Disclosure Schedule and for items of immaterial value.
3.1.10 Compliance with Law; Authorizations. To the best of Sellers'
-----------------------------------
knowledge, the Company owns, holds, possesses or lawfully uses in the
operation of its business all licenses, permits, easements, rights,
applications, filings, registrations and other authorizations
("Authorizations") which are in any manner necessary for it to conduct its
business as or previously conducted or for the ownership and use of the
assets owned or used by the Company in the conduct of the business of the
Company, free and clear of all liens, charges, restrictions and
encumbrances and in compliance with all regulations. All Authorizations are
renewable by their terms or in the ordinary course of business without the
need to comply with any special qualification procedures or to pay any
amounts other than routine filing fees. None of Authorizations will be
adversely affected by consummation of the transactions contemplated hereby.
3.1.11 Litigation. No litigation, including any arbitration,
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investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority, is pending or
threatened against the Company or which relates to the Business or the
transactions contemplated by this Agreement, nor does the Company or any
Seller know of any reasonable likely basis for any such litigation,
arbitration, investigation or proceeding, the result of which could
adversely affect the Company, its assets or the transactions contemplated
hereby.
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3.1.12 Contracts and Commitments. The Company is not a party to any
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written or oral:
(a) agreement, contract or commitment with any present or
former employee or consultant or for the employment of any person,
including any consultant, who is engaged in the conduct of the
Business;
(b) agreement, contract or commitment to sell or supply
products ("Goods Contracts") or to perform services ("Services
Contracts") in connection with the Business involving in any one case
$1,000 or more;
(c) note, debenture, bond, equipment trust agreement, letter
of credit agreement, loan agreement or other contract or commitment
for the borrowing or lending of money relating to the Business or
agreement or arrangement for a line of credit or guarantee, pledge or
undertaking of the indebtedness of any other person relating to the
Business, other than those reflected on the 1995 Balance Sheet;
(d) commitment or agreement for any capital expenditure or
leasehold improvement in excess of $1,000 relating to the Business;
(e) agreement, contract or commitment limiting or restraining
the Company from engaging or competing in any manner or in any
business, nor, to any Seller's knowledge, is any employee of the
Company engaged in the conduct of the Business subject to any such
agreement, contract or commitment; and
(f) material agreement, contract or commitment relating to
the Business not made in the ordinary course of business.
Except as disclosed on the Disclosure Schedule, each Goods Contract
and each Service Contract is attached to the Disclosure Schedule.
3.1.13 Additional Information. The Disclosure Schedule contains
----------------------
accurate lists and summary descriptions of:
(a) all real property and interests in real property leased
by the Company in the conduct of the Business, specifying the identity
of the lessor, the rental rate and the unexpired term of the lease;
(b) the names and titles of and current annual base salary or
hourly rates for all employees of the Company engaged in the conduct
of the Business, together with a statement of the full amount and
nature of any other remuneration, whether in cash or kind, paid to
each such person during the past
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or current fiscal year or payable to each such person in the future
and the bonuses accrued for, the vacation and severance benefits to
which, each such person is entitled; and
(c) a complete and accurate copy of all contracts by which
the Company leases employees used in the operation of its Business,
together with a statement of the full amount and nature of any
remuneration paid to or on behalf of such leased employees pursuant to
such contract.
3.1.14 Employee Benefit Plans and Arrangements. The Disclosure
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Schedule contains a complete list of all employee benefit plans, whether
formal or informal, whether or not set forth in writing, and whether
covering one person or more than one person, sponsored or maintained by the
Company. Each plan providing benefits which are funded through a policy of
insurance is indicated by the word "insured" placed by the listing of the
plan in the Disclosure Schedule.
3.1.15 Intellectual Property Matters. The Company in the conduct of
-----------------------------
the Business did not and does not utilize, or infringe upon, any patent,
trademark, tradename, service ▇▇▇▇, copyright, software, trade secret or
know-how except for those listed on the Disclosure Schedule (the
"Intellectual Property"). All the Intellectual Property listed on the
Disclosure Schedule is owned by the Company free and clear of any liens,
claims or charges or encumbrances. The Disclosure Schedule lists all
confidentiality or non-disclosure agreements to which the Company or any of
the Company's employees engaged in the Business is a party which relates to
the Business.
3.1.16 Environmental Matters.
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(a) Except as set forth in the Disclosure Schedule, the
Company has obtained all permits, licenses, approvals, consents,
registrations and other authorizations which are required in
connection with the conduct of the Business under federal, state,
local environmental, land use, zoning, health, chemical use, safety
and sanitation laws, statutes, ordinances, regulations, codes and any
other rules (collectively, the "Environmental Regulations") relating
to pollution or protection of the environment, including those
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including without
limitation ambient air, surface water, groundwater, or land), or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances
or wastes;
(b) To the best of Sellers' knowledge and, except as set
forth in the Disclosure Schedule, the Company is in full compliance in
the conduct of the Business with all terms and conditions of the
required permits, licenses and
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authorizations, and is also in full compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in those
laws or contained in any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder;
(c) Except as set forth in the Disclosure Schedule, Sellers
are not aware of, and Company and Sellers have not received notice of,
any past, present or future events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere
with or prevent compliance of continued compliance with those laws or
any regulations, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, demand,
suit, proceeding, hearing, study or investigation, based on or related
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, release
or threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or
waste;
(d) Except as set forth in the Disclosure Schedule, there is
no civil, criminal or administrative action, suit, demand, claim,
hearing, notice or demand letter, notice of violation, investigation,
or proceeding pending or threatened against the Company in connection
with the conduct of the Business relating in any way to those laws or
any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder; and
(e) Sellers agree to cooperate with Purchaser in connection
with Purchaser's application for the transfer, renewal or issuance of
any permits, licenses, approvals or other authorizations or to satisfy
any regulatory require ments involving the Business.
3.1.17 Real Property.
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(a) Real Property Defined. All real property (including,
---------------------
without limitation, all interests in and rights to real property) and
improvements located thereon which are owned or leased by the Company
and used in connection with the Business are listed on the Disclosure
Schedule in response to this Section 3.1.17 (collectively, the "Real
Property");
(b) Title to Owned Real Property. With respect to the Real
----------------------------
Property that is owned by the Company, title to such Real Property is,
and at Closing shall be, good and marketable, fee simple absolute,
free and clear of all liens, adverse
12
claims and other matters affecting the Company's title to or
possession of such Real Property, excepting only such easements,
restrictions and covenants presently of record which will not, in
Purchaser's sole judgment, interfere with or impair Purchaser's
intended use of any of the Real Property, reduce the value of any of
the Real Property, or prevent Purchaser from obtaining financing of
Purchaser's acquisition of the Real Property, which easements,
restrictions and covenants are listed on the Disclosure Schedule in a
manner so that the Real Property to which they relate is readily
identifiable;
(c) Utility Services. The water, electric, gas and sewer
----------------
utility services and the septic tank and storm drainage facilities
currently available to the Real Property are adequate for the present
use of the Real Property by the Company in conducting the Business,
are being supplied to the Company by utility companies or
municipalities pursuant to valid and enforceable contracts, and there
is no condition which will result in the termination of the present
access from the Real Property to such utility services and other
facilities;
(d) Access. the Company has obtained all Authorizations and
------
rights-of-way, including proof-of-dedication, which are necessary to
ensure vehicular and pedestrian ingress and egress to and from the
Real Property. There are no restrictions on entrance to or exit from
the Real Property to adjacent public streets and no conditions which
will result in the termination of the present access from the Real
Property to existing highways and roads;
(e) Eminent Domain. the Company and Sellers have received
--------------
no notices, oral or written, and have no reason to believe, that any
governmental body having the power of eminent domain over the Real
Property has commenced or intends to exercise the power of eminent
domain or a similar power with respect to all or any part of the Real
Property; and
(f) Executory Contracts. The Disclosure Schedule includes
-------------------
a description of all executory contracts made by or on behalf of the
Company, or by which the Company is bound, with respect to the Real
Property ("Executory Contracts") including, without limitation,
operation, management, maintenance, utility, and construction
contracts. Within ten (10) days of the Takeover Date, Sellers shall
deliver to the Purchaser a true and complete copy of each of the
Executory Contracts.
3.1.18 Conditions Affecting the Company. To the best of Sellers'
--------------------------------
knowledge, there is no fact, development or threatened development with
respect to the markets, products, services, clients, customers, facilities,
vendors, suppliers, operations, assets or prospects of the Business which
are known to the Sellers which would materially adversely affect the
business, operations or prospects of the Company considered as a whole,
other than such conditions as may affect as a whole the economy generally.
The
13
Company has used its best efforts to keep available for Purchaser the
services of the employees, customers and suppliers of the Company active in
the conduct of the Business. The Company does not have any reason to
believe that any loss of any customer or supplier or other advantageous
arrangement will result because of the consummation of the transactions
contemplated hereby.
3.1.19 Company Shares Owned by Sellers. Sellers are the owners of
-------------------------------
record of the number of the Company Shares set forth next to his name in
Section 1.2.6, and each Seller has good and marketable title to those the
Company Shares and the absolute right to sell, assign, and transfer the
Company Shares to Purchaser, free and clear of all liens, security
interests, pledges, encumbrances, restrictions on transfers, taxes and
adverse claims and demands of any kind, character, or description whatever.
Except for this Agreement, neither Seller nor the Company is a party to any
option, warrant, purchase right, or any other contract or commitment under
which the Company or any Seller could be required to sell, transfer or
otherwise dispose of any capital stock of the Company, including the
Company Stock.
3.2 Representations and Warranties of Purchaser. Purchaser represents and
-------------------------------------------
warrants to Sellers as follows:
3.2.1 Corporate Existence. Purchaser is a corporation duly
-------------------
organized, validly existing and in good standing under the laws of the
State of its incorporation.
3.2.2 Corporate Power and Authorization. Purchaser has the
---------------------------------
corporate power, authority and legal right to execute, deliver and perform
this Agreement. The execution, delivery and performance of this Agreement
by Purchaser have been duly authorized by all necessary corporate action.
This Agreement has been duly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.
3.2.3 Validity of Contemplated Transactions, Etc. The execution,
-------------------------------------------
delivery and performance of this Agreement by Purchaser does not and will
not violate, conflict with or result in the breach of any term, condition
or provision of, or require the consent of any other party to, (a) any
existing law, ordinance, or governmental rule or regulation to which
Purchaser is subject, (b) any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory official, body
or authority which is applicable to Purchaser, (c) the charter documents or
By-laws of, or any securities issued by, Purchaser, or (d) any mortgage,
indenture, agreement, contract, commitment, lease, plan or other
instrument, document or understanding, oral or written, to which Purchaser
is a party or by which Purchaser is otherwise bound. Except as aforesaid,
no authorization, approval or consent of, and no registration or filing
with, any governmental or regulatory official, body or authority is
required in connection with the execution, delivery and performance of this
Agreement by Purchaser.
14
3.3 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made by the parties in this Agreement or in any certificate,
schedule, statement, document or instrument furnished hereunder or in connection
with negotiation, execution and performance of this Agreement, except for the
representation and warranty made in Section 3.1.6, will survive the Closing for
a period of two years from Closing Date, and, thereafter, to the extent a claim
is made prior to such expiration with respect to any breach of such
representation, warranty or agreement, until such claim is formally determined
or settled. Any claim, except a claim made pursuant to a breach of the
representation and warranty made in Section 3.1.6, not made within such two-year
period with respect to any breach of such representation, warranty or agreement
shall be waived. The representation and warranty made in Section 3.1.6 will
survive the Closing for a period of three years from the filing date of any Tax
Return filed by the Company with the appropriate authority prior to Closing
ARTICLE IV -- AGREEMENTS PENDING CLOSING
4.1 Agreements of Sellers Pending the Closing. Sellers covenant and agree
-----------------------------------------
that pending the Closing and except as otherwise agreed to in writing by
Purchaser:
4.1.1 Business in the Ordinary Course. The Business shall be
-------------------------------
conducted solely in the ordinary course consistent with past practice.
Sellers shall use their best efforts to cause the Business to be conducted
in such a manner that on the Closing Date the representations and
warranties of Sellers contained in this Agreement shall be true, as though
such representations and warranties were made on and as of such date.
4.1.2 Maintenance of Physical Assets. Sellers shall cause the
------------------------------
Company to continue to maintain and service the physical assets used in the
conduct of the Business in the same manner as has been its consistent past
practice.
4.1.3 Employees and Business Relations. Sellers shall use their
--------------------------------
best efforts to keep available the services of the present employees and
agents of the Business and to maintain the relations and goodwill with the
suppliers, customers, distributors and any others having business relations
with the Business.
4.1.4 Maintenance of Insurance. Sellers shall notify Purchaser of
------------------------
any changes in the terms of the insurance policies maintained by the
Company.
4.1.5 Compliance with Laws, Etc. Sellers shall cause the Company
--------------------------
to comply with all laws, ordinances, rules, regulations and orders
applicable to the Business, or the Company's operations, assets or
properties in respect thereof, the noncompliance with which might
materially affect the Business.
4.1.6 Update Schedules. Sellers shall promptly disclose to
----------------
Purchaser any information contained in their representations and warranties
or the Schedules which,
15
because of an event occurring after the date hereof, is incomplete or is no
longer correct as of all times after the date hereof until the Closing
Date; provided, however, that none of such disclosures shall be deemed to
modify, amend or supplement the representations and warranties of the
Sellers or the schedules hereto for the purposes of Article VI hereof,
unless Purchaser shall have consented thereto in writing.
4.1.7 Sale of Assets; Negotiations. Sellers and the Company shall
----------------------------
not, directly or indirectly, sell or encumber all or any part of the assets
of the Company, other than in the ordinary course of the Business
consistent with past practice, or initiate or participate in any
discussions or negotiations or enter into any agreement to do any of the
foregoing.
4.1.8 Access. Sellers shall give to Purchaser's officers,
------
employees, counsel, accountants and other representatives free and full
access to and the right to inspect, during normal business hours, all of
the premises, properties, assets, records, contracts and other documents
relating to the Business and shall permit them to consult with the
officers, employees, accountants, counsel and agents of the Company for the
purpose of making such investigation of the Business, as Purchaser shall
desire to make, provided that such investigation shall not unreasonably
interfere with the Company's business operations.
4.1.9 Press Releases. Except as required by applicable law,
--------------
neither the Company nor any of the Sellers shall give notice to third
parties or otherwise make any public statement or releases concerning this
Agreement or the transactions contemplated hereby except for such written
information as shall have been approved in writing as to form and content
by Purchaser, which approval shall not be unreasonably withheld.
4.2 Agreements of Purchaser Pending the Closing. Purchaser covenants and
-------------------------------------------
agrees that pending the Closing and except as otherwise agreed to in writing by
Sellers:
4.2.1 Actions of Purchaser. Purchaser will not knowingly take any
--------------------
action which would result in a breach of any of its representations and
warranties hereunder. Furthermore, Purchaser shall cooperate with the
Company and Sellers and use its best efforts to cause all of the conditions
to the obligations of Purchaser and Sellers under this Agreement to be
satisfied on or prior to the Closing Date.
4.2.2 Confidentiality. Unless and until the Closing has been
---------------
consummated, Purchaser will hold, and shall cause their counsel,
independent certified public accountants and appraisers to hold in
confidence any confidential data or information made available to Purchaser
in connection with this Agreement with respect to the Business using the
same standard of care to protect such confidential data or information as
is used to protect Purchaser's confidential information. If the
transactions contemplated by this Agreement are not consummated, Purchaser
agrees that it shall
16
return or cause to be returned to the Sellers all written materials and all
copies thereof that were supplied to Purchaser by the Sellers and that
contain any such confidential data or information.
4.2.3 Press Releases. Except as required by applicable law,
--------------
Purchaser shall not give notice to third parties or otherwise make any
public statement or releases concerning this Agreement or the transactions
contemplated hereby except for such written information as shall have been
approved in writing as to form and content by the Sellers, which approval
shall not be unreasonably withheld.
ARTICLE V -- TITLE, SURVEY AND ENVIRONMENTAL REPORT
5.1 Title Commitment; Exception Documents. After the Takeover Date,
-------------------------------------
Sellers, at Sellers' cost and expense, not in excess of $2,000.00, shall cause
to be prepared a current Commitment for Title Insurance (the "Title Commitment")
from a title company acceptable to Sellers and Purchaser ("Title Company"),
setting forth the status of the title of the Real Property and showing all
liens, claims, encumbrances, rights-of-way, encroachments, reservations,
restrictions and any other matters affecting the Real Property. Purchaser, at
Purchaser's sole cost and expense, shall provide Sellers with an appraisal on
the Real Property as soon as such appraisal is complete.
5.2 Survey. After the Transfer Date, Sellers shall provide Purchaser with
------
a copy of any Survey (herein so called) of the Real Property Sellers possess.
Purchaser shall have the option to obtain a new Survey, at Purchaser's sole cost
and expense. The Survey shall be a new or recertified survey prepared by a
registered surveyor (the "Surveyor") acceptable to Purchaser and the Title
Company; it shall be currently dated; it shall show the location on the Real
Property of all improvements, fences, easements (identified by recording
information), roads, and rights-of-way; and shall contain a legal description of
the boundaries of the Real Property by metes and bounds or other appropriate
legal description. The Surveyor shall certify to Purchaser and to the Title
Company that the Survey was made on the ground of the Real Property; that the
Survey is correct; that there are no visible discrepancies, conflicts,
encroachments, overlapping of improvements, flood plain or flood hazard areas,
fences, easements, road, or rights-of-way except as shown on the Survey; and
that the Survey is a true, correct and accurate representation of the Real
Property and the improvements.
5.3 Review of Title Commitment and Survey; Sellers' Obligation to Cure.
------------------------------------------------------------------
If the Title Commitment or Survey fails to show marketable fee simple title to
the Real Property to be in the Company, free and clear of all encumbrances
except liens to be released and discharged on or before Closing and ad valorem
taxes not yet due and payable ("Permitted Exceptions"), then Purchaser shall
give to Sellers written notice thereof, specifying Purchaser's objections
("Objections"), if any. If Purchaser gives such notice to Sellers, Sellers
shall use their best efforts, not involving any expense to Sellers, to cure such
Objections.
17
5.4 Environmental Study. At any time after the Takeover Date, Purchaser,
-------------------
at Purchaser's sole cost and expense, may cause an environmental study
("Environmental Study") of the Real Property to be prepared by an environmental
engineering firm selected by Purchaser ("Consultants"). This Environmental
Study shall show that the Real Property and all operations thereon comply with
all applicable federal, state or local environmental laws and with any and all
court orders and administrative orders regarding the environmental condition of
the Real Property. The Environmental Study may be performed at any time or
times, except that entry upon the Real Property shall be on reasonable notice,
and under reasonable conditions established by Sellers which do not impede the
performance of the Environmental Study. The Consultants are hereby authorized
to enter upon the Real Property for such purposes and to perform such testing
and take such samples as may be necessary to conduct the Environmental Study in
the reasonable opinion of the Consultants. Sellers shall cooperate with the
Consultants and supply to the Consultants such historical and operational
information as may be reasonably requested by the Consultants.
ARTICLE VI -- CONDITIONS PRECEDENT TO THE CLOSING
6.1 Conditions Precedent to Purchaser's Obligations. All obligations of
-----------------------------------------------
Purchaser under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent:
6.1.1 Representations and Warranties True as of the Closing Date.
----------------------------------------------------------
The representations and warranties of Sellers contained in this Agreement
or in any schedule, certificate or document delivered by the Sellers to
Purchaser pursuant to the provisions hereof will have been true on the date
hereof and will be true on the Closing Date with the same effect as though
such representations and warranties were made as of such date.
6.1.2 Compliance with this Agreement. Sellers shall have performed
------------------------------
and complied with all agreements and conditions required by this Agreement
to be performed or complied with by them prior to or at the Closing.
6.1.3 Closing Certificate. Purchaser will have received a
-------------------
certificate from Sellers dated the Closing Date, certifying in such detail
as Purchaser may reasonably request that the conditions specified in
Sections 6.1.1 and 6.1.2 hereof have been fulfilled and certifying that the
Sellers have obtained all consents and approvals required by Section 6.1.6
hereof.
6.1.4 No Threatened or Pending Litigation. On the Closing Date, no
-----------------------------------
suit, action or other proceeding, or injunction or final judgment relating
thereto, shall be threatened or be pending before any court or governmental
or regulatory official, body or authority in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions
18
contemplated hereby, and no investigation that might result in any such
suit, action or proceeding shall be pending or threatened.
6.1.5 Consents and Approvals. Except for consents required by the
----------------------
terms of the contracts, commitments or agreements listed in Schedule 6.1.6
hereto, the holders of any indebtedness of the Company, the lessors or
lessees of any real or personal property or assets leased by the Company,
the parties (other than the Company) to any contract, commitment or
agreement to which the Company is a party or subject, any governmental or
regulatory official, body or authority and any governmental, judicial or
regulatory official, body or authority having jurisdiction over Sellers,
Company or Purchaser to the extent that their consent or approval is
required or necessary under the pertinent debt, lease, contract, commitment
or agreement or other document or instrument or under applicable orders,
laws, rules or regulations, for the consummation of the transactions
contemplated hereby in the manner herein provided, shall have granted such
consent or approval.
6.1.6 Material Adverse Changes. The business, operations, assets,
------------------------
properties or prospects of the Business will not have been and will not be
threatened to be materially adversely affected in any way as a result of
any event or occurrence.
6.1.7 Seller Agreements. The Sellers shall have executed and
-----------------
delivered to Purchaser, simultaneous with the execution of this Agreement,
an agreement substantially in the form of Exhibit "B" hereto. Each of the
Sellers shall have executed and delivered to Purchaser an agreement
substantially in the form of Exhibit "C" hereto.
6.1.8 Environmental and Title Matters. The Environmental Study
-------------------------------
shows the Real Property and all operations thereon comply with all
applicable Environmental Regulations. Sellers cure or Purchaser waives or
is deemed to waive each of Purchaser's Objections made in accordance with
Section 5.3.
6.1.9 Insurance. Sellers shall deliver evidence to Purchaser that
---------
the Company, at the time of Closing, has adequate liability insurance
coverage, and has had such coverage for a period of three (3) years prior
to the Closing Date. The determination as to whether the insurance is, and
has been, adequate will be determined solely by Purchaser.
6.1.10 Approval of this Agreement. The approval of the transaction
--------------------------
contemplated herein by (i) Purchaser's Board of Directors, (ii) Marine
Midland Business Loans, Inc., and (iii) the approval for the consummation
of the transaction contemplated herein by the Arkansas Development Finance
Authority prior to Closing.
6.2 Conditions Precedent to the Obligations of Sellers. All obligations
--------------------------------------------------
of the Sellers under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:
19
6.2.1 Representations and Warranties True as of the Closing Date.
----------------------------------------------------------
The representations and warranties of Purchaser contained in this Agreement
or in any schedule, certificate or document delivered by Purchaser to
Sellers pursuant to the provisions hereof will have been true on the date
hereof and will be true on the Closing Date with the same effect as though
such representations and warranties were made as of such date.
6.2.2 Compliance with this Agreement. Purchaser shall have
------------------------------
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the
Closing.
6.2.3 Closing Certificates. Sellers will have received a
--------------------
certificate from Purchaser dated the Closing Date certifying in such detail
as Sellers may reasonably request the conditions specified in Sections
6.2.1 and 6.2.2 hereof have been fulfilled.
6.2.4 No Threatened or Pending Litigation. On the Closing Date, no
-----------------------------------
suit, action or other proceeding or injunction or final judgment relating
thereto, shall be threatened or be pending before any court or governmental
or regulatory official, body or authority in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or proceeding
shall be pending or threatened.
6.2.5 Consents Obtained. The Company shall have received, if
-----------------
necessary, written consent from the Arkansas Development Finance Authority
and the holders of the Arkansas Development Finance Authority Industrial
Revenue Bonds for the transaction contemplated hereby.
ARTICLE VII -- INDEMNIFICATION
7.1 General Indemnification Obligation of Sellers. From and after the
---------------------------------------------
Closing, each of Sellers, jointly and severally, shall reimburse, indemnify and
hold harmless Purchaser and its successors and assigns (an "Indemnified
Purchaser Party") against and in respect of:
(a) any and all damages, losses, deficiencies, liabilities,
costs and expenses incurred or suffered by any Indemnified Purchaser
Party that result from, relate to or arise out of any
misrepresentation, breach of warranty or non-fulfillment of any
agreement or covenant on the part of any Seller under this Agreement,
or from any misrepresentation in or omission from any certificate,
schedule, statement, document or instrument furnished to Purchaser
pursuant hereto or in connection with the negotiation, execution or
performance of this Agreement; and
20
(b) any and all actions, suits, claims, proceeding,
investigations, demands, assessments, audits, fines, judgments, costs
and other expenses (including, without limitation, reasonable legal
fees and expenses) incident to any of the foregoing or to the
enforcement of this Section 7.1.
Purchaser is not relying upon any representation or warranty by Sellers,
except those specifically set forth in this Agreement; and Sellers will not be
liable to Purchaser, by way of indemnity or otherwise, for the breach of any
representation or warranty, except those specifically set forth herein.
7.2 Other Rights and Remedies Not Affected. The indemnification rights of
--------------------------------------
Purchaser under this Article VII are independent of and in addition to such
rights and remedies as such party may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of Sellers, including without limitation the
right to seek specific performance, rescission or restitution, none of which
rights or remedies shall be affected or diminished hereby.
ARTICLE VIII -- POST CLOSING MATTERS
8.1 Use of Name. From and after the Closing Date, Sellers will not use
-----------
the name "Arkansas Galvanizing, Inc." or any names similar thereto or variants
thereof.
8.2 Guarantee of Accounts Receivable. Each Seller hereby guarantees the
--------------------------------
collectibility of the Company's accounts receivable which are outstanding and
aged less than 180 days as of the Takeover Date ("Guaranteed Accounts
Receivable"). To the extent that any of the Guaranteed Accounts Receivable are
not collected within 180 days of the invoice date, such account receivable will
be deemed uncollectible and Seller shall promptly pay to Purchaser the full
amount of the account receivable deemed uncollectible less the amount, if any,
payable to Purchaser pursuant to Section 8.4. Upon receipt of such payment from
Sellers, Purchaser shall assign to Sellers the right to collect the accounts
receivable deemed uncollectible.
8.3 Escrow for Taxes. To the extent that any liability relating to Taxes
----------------
for the tax years 1993, 1994, or 1995 is incurred by the Company, such liability
shall promptly be paid by the Escrow Agent out of that portion of the Escrow
Closing Payment made by Purchaser pursuant to Section 1.2.4, being $52,500.00
("Escrow Tax Payment"). Any amount payable on account of Taxes which exceeds
the Escrow Tax Payment shall be the sole responsibility of Sellers. If, at the
end of three (3) years from the filing date of the Company's 1993 Federal Income
Tax Return, no disbursement has been requested by Purchaser from the Escrow Tax
Payment, the Escrow Agent shall release to Sellers $17,500.00 of the Escrow Tax
Payment in accordance with instructions contained in the Escrow Agreement. If,
at the end of three (3) years from the filing date of the Company's 1994 Federal
Income Tax Return, no disbursement has been requested by Purchaser from the
Escrow Tax Payment, the Escrow Agent shall release to Sellers $17,500.00 of the
Escrow Tax Payment in accordance with instructions contained in
21
the Escrow Agreement. If, at the end of three (3) years from the filing date of
the Company's 1995 Federal Income Tax Return, no disbursement has been requested
by Purchaser from the Escrow Tax Payment, any funds remaining in the Escrow
Account which are attributable to the Escrow Tax Payment, together with any
interest thereon, shall be delivered by the Escrow Agent to Sellers in
accordance with instructions contained in the Escrow Agreement. If any
disbursement is made or requested by Purchaser for all or a portion of the
Escrow Tax Payment, the Escrow Agent shall not release any of the Escrow Tax
Payment to Sellers until all disbursements requested by Purchaser have been
made, any claim to such funds by the Purchaser has been resolved, or three (3)
years from the filing date of the Company's 1995 Federal Income Tax Return has
passed, whichever is later.
8.4 Escrow Account. Any amount payable to Purchaser pursuant to Section
--------------
8.2 will, to the extent of available funds, be paid first by the Escrow Agent
out of that portion of the Escrow Closing Payment made by Purchaser pursuant to
Section 1.2.4 and representing ten percent (10%) of the Guaranteed Accounts
Receivable. Any amount payable to Purchaser which exceeds that portion of the
Escrow Closing Payment shall be the sole responsibility of Sellers. If, at the
end of 180 days after the Closing Date, funds remain in the escrow account which
are attributable to that portion of the Escrow Closing Payment representing ten
percent (10%) of the Guaranteed Accounts Receivable, then the Escrow Agent shall
deliver such funds (together with any interest thereon) to Sellers in accordance
with instructions contained in the Escrow Agreement. If the Guaranteed Accounts
Receivables are collected by Purchaser within the allotted 180 days, Escrow
Agent shall deliver all the funds in the Escrow Account attributable to that
portion of the Escrow Closing Payment representing ten percent (10%) of the
Guaranteed Accounts Receivable (together with any interest thereon) to Sellers.
8.5 Utility Guaranty. The Company agrees that it will take all reasonable
----------------
action to cause ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ to be released and discharged from his
personal guaranty of the utility bills of the Company.
ARTICLE IX -- MISCELLANEOUS
9.1 Joint Management and Control of the Company. The parties agree and
-------------------------------------------
stipulate that the effective control and direction of the Company's operations
will transfer to Purchaser on the date of execution of this Agreement ("the
Takeover Date") subject to the terms and conditions of this Agreement. Unless
this Agreement is terminated in accordance with Section 9.2, from and after the
Takeover Date and until Closing (i) representatives of Purchaser will attend and
participate in management meetings of the Company; and (ii) all checks drawn or
fund transfers made by the Company will required the signature of ▇.▇. ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇.
22
9.2 Termination. (a) Anything herein or elsewhere to the contrary
-----------
notwithstanding, this Agreement may be terminated by written notice of
termination at any time before the Closing Date only as follows:
(i) by mutual consent of Sellers and Purchaser;
(ii) by Purchaser, (A) at any time if the representations and
warranties of Sellers contained in Section 3.1 hereof were incorrect
in any material respect when made or at any time thereafter, or (B)
upon written notice to Sellers given at any time prior to Closing if
all of the conditions precedent set forth in Section 6.1 hereof have
not been met;
(iii) by Sellers, (A) at any time if the representations and
warranties of Purchaser contained in Section 3.2 hereof were incorrect
in any material respect when made or at any time thereafter, or (B)
upon written notice to Purchaser given at any time prior to Closing if
all of the conditions precedent set forth in Section 6.2 hereof have
not been met; or
(iv) automatically, if the transaction contemplated herein is
not completed on or prior to March 31, 1996.
(b) In the event of the termination and abandonment hereof pursuant
to the provisions of this Section 9.2, this Agreement (except for Section
4.2.2 which shall continue) will become void and have no effect, without
any liability on the part of any of the parties or their directors or
officers or stockholders in respect of this Agreement, unless the
termination was the result of the representations and warranties of a party
being materially incorrect when made or the material breach by such party
of a covenant hereunder in which event the party whose representations and
warranties were incorrect or who breached such covenant shall be liable to
the other party for all costs and expenses of the other party in connection
with the preparation, negotiation, execution and performance of this
Agreement.
9.3 Brokers' and Finders' Fees.
--------------------------
(a) Sellers each represent and warrant to Purchaser that all
negotiations relative to this Agreement have been carried on by Sellers
directly without the intervention of any person who may be entitled to any
brokerage or finder's fee or other commission in respect of this Agreement
or the consummation of the transactions contemplated hereby, and Sellers
agree to indemnify and hold harmless Purchaser against any and all claims,
losses, liabilities and expenses which may be asserted against or incurred
by it as a result of Seller's dealings, arrangements or agreements with any
such person; and
23
(b) Purchaser represents and warrants that all negotiations relative
to this Agreement have been carried on by it directly without the
intervention of any person who may be entitled to any brokerage or finder's
fee or other commission in respect of this Agreement or the consummation of
the transactions contemplated hereby, and Purchaser agrees to indemnify and
hold harmless Sellers, and each of them, against any and all claims,
losses, liabilities and expenses which may be asserted against or incurred
by any of them as a result of Purchaser's dealings, arrangements or
agreements with or any such person.
9.4 Sales, Transfer and Documentary Taxes, Etc. Sellers shall pay all
-------------------------------------------
federal, state and local sales, documentary and other transfer taxes, if any,
due as a result of the purchase, sale or transfer of the Company Stock in
accordance herewith whether imposed by law on Sellers or Purchaser, and Sellers
shall indemnify, reimburse and hold harmless Purchaser in respect of the
liability for payment of or failure to pay any such taxes or the filing of or
failure to file any reports required in connection therewith.
9.5 Expenses. Except as otherwise provided in this Agreement, each Seller
--------
and Purchaser shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
9.6 Contents of Agreement; Parties in Interest; Etc. This Agreement sets
------------------------------------------------
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby. It shall not be amended or modified except by
written instrument duly executed by each of the parties hereto. Any and all
previous agreements and understandings between or among the parties regarding
the subject matter hereof, whether written or oral, are superseded by this
Agreement.
9.7 Assignment and Binding Effect. This Agreement may not be assigned by
-----------------------------
any party hereto without the prior written consent of the other parties, except
Purchaser may assign its rights and obligations hereunder to a wholly-owned
subsidiary created for the purpose of consummating this transaction. Subject to
the foregoing, all of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the successors
and assigns of Sellers and Purchaser.
9.8 Waiver. Any term or provision of this Agreement may be waived at any
------
time by the party entitled to the benefit thereof by a written instrument duly
executed by such party.
9.9 Notices. Any notice, request, demand, waiver, consent, approval or
-------
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by a telegram or
by registered or certified mail, postage prepaid, as follows:
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If to Purchaser, to: Aztec Manufacturing Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇. ▇. ▇▇▇▇▇▇
With a required copy to: Shannon, Gracey, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
1600 Bank One Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to Sellers, to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
With a required copy to: Adams, Belanger, ▇▇▇▇▇▇▇▇ & ▇'▇▇▇▇▇, P.C.
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, telegraphed or mailed.
9.10 TEXAS LAW TO GOVERN. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------------
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
9.11 No Benefit to Others. The representations, warranties, covenants
--------------------
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and, in the case of Article VI hereof, any Indemnified Purchaser
Party, and their heirs, executors, administrators, legal representatives,
successors and assigns, and they shall not be construed as conferring any rights
on any other persons.
9.12 Headings, Gender and "Person". Section headings contained in this
-----------------------------
Agreement are for convenience of reference only, do not form any part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
25
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity.
9.13 Schedules and Exhibits. All Exhibits and Schedules referred to
----------------------
herein are intended to be and hereby are specifically made a part of this
Agreement.
9.14 Severability. Any provision of this Agreement which is invalid or
------------
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or un-enforceability without invalidity or rendering unenforceable
the remaining provisions hereof, and any such invalidity or un-enforceability in
any jurisdiction shall not be invalidate or render unenforceable such provision
in any other jurisdiction.
9.15 Counterparts. This Agreement may be executed in any number of
------------
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereto to
produce or account for any of the other counterparts.
9.16 Joinder of Spouses. Each respective spouse of a Seller joins in
------------------
this Agreement to evidence her consent to the sale of the Company Stock pursuant
to the Agreement and acknowledges that her interest in the Company Stock, to
whatever extent, if any, is subject to this Agreement. Such spouse hereby
appoints her husband as her agent and attorney-in-fact to act on her behalf and
for her in regard to transferring the Company Stock to the extent of her
interest, if any, therein at and upon Closing. The foregoing appointment is
irrevocable, coupled with an interest and will survive death or incapacity.
Notwithstanding anything in this Agreement to the contrary, each spouse's
liability, if any, under this Agreement will be limited to an action to compel
specific performance.
9.17 Merger. Purchaser and Sellers hereby agree that the Purchaser may, at
------
Purchaser's option, acquire the Company Stock as contemplated herein by means of
a "reverse triangular merger" in which a wholly-owned subsidiary of the
Purchaser shall merger into the Company, with the Company being the surviving
company. Sellers agree to execute and deliver any documents and take any action
reasonably necessary, but at no cost to Sellers, to consummate the merger as
contemplated in this Section 9.17. The merger shall not effect the Sellers
right to receive the Purchase Price, as calculated herein.
26
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the Takeover Date.
ATTEST: PURCHASER:
AZTEC MANUFACTURING CO.
By: By:
------------------------- -------------------------
Its: Its:
------------------------ ------------------------
SELLERS:
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Spouse
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Spouse
----------------------------
▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Spouse
puragmt.845
27
