Exhibit 2.1
STOCK PURCHASE AGREEMENT
dated April 9, 1999
by and among
APOGEE ENTERPRISES, INC.
as Seller
and
CH HOLDINGS, INC.,
as Purchaser
TABLE OF CONTENTS
ARTICLE I SALE OF SHARES AND CLOSING...................................1
1.01 Purchase and Sale of Shares at Closing.......................1
1.02 Excluded Assets..............................................1
1.03 Liabilities..................................................3
1.04 Purchase Price...............................................4
1.05 Closing ....................................................4
1.06 Adjustment to Purchase Price.................................6
1.07 Section 338(h)(10) Election and Allocation...................8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER.....................9
2.01 Corporate Existence; Organization; Good Standing, and
Power and Authority..........................................9
2.02 Due Execution and Authorization of the Transaction...........9
2.03 No Conflicts.................................................9
2.04 Governmental Approvals and Filings..........................10
2.05 Financial Statements........................................10
2.06 Events Subsequent to Unaudited Financial Statement Date.....11
2.07 Taxes.......................................................12
2.08 Legal Proceedings...........................................12
2.09 Compliance With Laws and Orders.............................12
2.10 Employee Benefits...........................................13
2.11 Real Property...............................................14
2.12 Tangible Personal Property..................................15
2.13 Contracts...................................................15
2.14 Affiliate Transactions......................................16
2.15 Brokers.....................................................16
2.16 Accounts Receivable.........................................16
2.17 Inventories.................................................16
2.18 Intellectual Property.......................................17
2.19 Warranty and Related Matters................................17
2.20 Employees; Labor Matters....................................17
2.21 Registrations and Permits...................................18
2.22 Environmental, Health and Safety Matters....................19
2.23 Leased Equipment............................................19
2.24 Shares......................................................20
2.25 Disclaimer of Other Representations and Warranties..........20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER.................21
3.01 Corporate Existence.........................................21
3.02 Authority...................................................21
3.03 No Conflicts................................................21
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3.04 Governmental Approvals and Filings..........................22
3.05 Legal Proceedings...........................................22
3.06 Brokers.....................................................22
3.07 Financing and Bonding Commitment............................22
ARTICLE IV COVENANTS OF SELLER.........................................23
4.01 Investigation by Purchaser..................................23
4.02 Conduct of Business.........................................23
4.03 Fulfillment of Conditions...................................24
4.04 Notice of Developments......................................24
4.05 Exclusivity.................................................24
4.06 New Transferred Projects and Bids...........................24
4.07 Covenant Not to Compete.....................................24
4.08 Casualty or Condemnation....................................24
4.09 Coverage Under Various Plans................................25
4.10 Certain Pre-Closing Transactions............................25
4.11 Administrative Services Agreement...........................25
4.12 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.......................................25
4.13 Funding of Business from Date of Closing to Effective
Date........................................................26
ARTICLE V COVENANTS OF PURCHASER......................................26
5.01 Notice of Developments......................................26
5.02 Fulfillment of Conditions...................................26
5.03 Sales Taxes.................................................26
5.04 Payment and Performance Bonds...............................26
5.05 Offer of Employment to Business Employees...................26
5.06 Employees Generally.........................................27
5.07 Employee Benefits...........................................27
5.08 Warranty and Other Work.....................................27
5.09 Accounting and Payroll/▇▇▇▇▇▇▇/Norshield Administrative
Services Agreement..........................................27
5.10 Multi-Employer Plan.........................................27
5.11 Administrative Services Agreement...........................27
5.12 Vehicle Leasing Program.....................................27
5.13 Separation of PENTA Agreement...............................28
5.14 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.......................................28
5.15 Customs Bond................................................28
5.16 Replacement of Letters of Credit............................28
5.17 Payment of Loans............................................28
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER......................28
6.01 Representations and Warranties..............................29
6.02 Performance.................................................29
6.03 Orders and Laws.............................................29
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6.04 Regulatory Consents and Approvals...........................29
6.05 Opinions of Counsel.........................................29
6.06 Officer's Certificate.......................................29
6.07 Covenant Not to Compete; License Agreement and Escrow
Agreement...................................................29
6.08 No Material Adverse Change..................................29
6.09 Closing Documents...........................................29
6.10 Director Resignations.......................................29
6.11 Intercompany Debt...........................................29
6.12 Administrative Services Agreement...........................29
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER.........................29
7.01 Representations and Warranties..............................30
7.02 Performance.................................................30
7.03 Officer's Certificates......................................30
7.04 Orders and Laws.............................................30
7.05 Regulatory Consents and Approvals...........................30
7.06 Opinion of Counsel..........................................30
7.07 Covenant Not to Compete; License Agreement and
Escrow Agreement............................................30
7.08 Payment of Purchase Price...................................30
7.09 Bonding Condition...........................................30
7.10 Closing Documents...........................................30
7.11 Mutual Release..............................................30
7.12 Administrative Services Agreement...........................30
ARTICLE VIII SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS, INDEMNIFICATION.................................31
8.01 Survival of Representations, Warranties, Covenants and
Agreements..................................................31
8.02 Indemnification by Seller...................................31
8.03 Indemnification by Purchaser................................32
8.04 Method of Asserting Claims..................................33
ARTICLE IX TERMINATION.................................................34
9.01 Termination.................................................34
9.02 Effect of Termination.......................................35
9.03 Escrow Deposit..............................................35
ARTICLE X DEFINITIONS.................................................35
10.01 Definitions.................................................35
ARTICLE XI MISCELLANEOUS...............................................42
11.01 Notices ...................................................42
11.02 Entire Agreement............................................43
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11.03 Expenses....................................................43
11.04 Public Announcements........................................43
11.05 Confidentiality.............................................43
11.06 Further Assurances; Post-Closing Cooperation................44
11.07 Waiver ...................................................45
11.08 Amendment...................................................45
11.09 No Third Party Beneficiary..................................45
11.10 No Assignment; Binding Effect...............................45
11.11 Headings....................................................46
11.12 Invalid Provisions..........................................46
11.13 Incorporation of Exhibits and Schedules.....................46
11.14 Consent to Jurisdiction.....................................46
11.15 Governing Law...............................................46
11.16 Counterparts................................................47
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SCHEDULES
Schedule 1.02(d) Certain Excluded Assets Used in Other Businesses
Schedule 1.02(o) Certain Other Excluded Assets
Schedule 1.03 Certain Transferred Projects/Warranty Claims
Schedule 1.07 Allocation of Purchase Price
Schedule 2.01 Corporate Existence; Organization; Good Standing and
Power and Authority of Seller
Schedule 2.03 Conflicts
Schedule 2.04 Required Governmental Approvals and Filings
Schedule 2.05 Financial Statements
Schedule 2.06 Events Subsequent to the Unaudited Financial
Statement Date
Schedule 2.08 Legal Proceedings
Schedule 2.09 Noncompliance with Laws and Orders
Schedule 2.10 Benefit Plans
Schedule 2.11 Real Property
Schedule 2.12 Tangible Personal Property
Schedule 2.13(a) Contracts
Schedule 2.13(b) Contract Breaches and Defaults
Schedule 2.14 Affiliate Transactions
Schedule 2.15 Brokers
Schedule 2.16 Accounts Receivable
Schedule 2.17 Inventory Locations
Schedule 2.18 Intellectual Property
Schedule 2.18(a) Material Intellectual Property Used in Business
Schedule 2.18(b) Various Adverse Matters Pertaining to Intellectual
Property
Schedule 2.18(c) Intellectual Property Contracts
Schedule 2.19 Warranty and Related Matters
Schedule 2.20 Employees, Labor Matters
Schedule 2.21 Permit Matters
Schedule 2.22 Environmental Matters
Schedule 2.23 Leased Equipment
Schedule 2.24 Shares Issued and Outstanding
Schedule 3.03 Conflicts
Schedule 3.04 Required Governmental Approvals and Filings
Schedule 3.06 Brokers
Schedule 3.07 Financing and Bonding Commitment
Schedule 5.04 Bonding Condition
Schedule 5.05 Retained Employees
Schedule 5.09 ▇▇▇▇▇▇▇/Norshield Administrative Services Agreement
Schedule 10(A) Certain Transferred Projects
Schedule 10(B) Certain Transferred Projects
Schedule 10(C) Certain Transferred Projects
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EXHIBITS
Exhibit A License Agreement
Exhibit B [Intentionally Omitted]
Exhibit C Purchase Money Note
Exhibit D Subordinated Loan and Security Agreement
Exhibit E Noncompetition Agreement
Exhibit F Pro Forma Balance Sheet of the Company as of January 30, 1999
Exhibit G Form of Corporate Guaranty for ▇▇▇▇▇▇▇ Products, Inc.,
▇▇▇▇▇▇▇ International, Inc. and the Company
Exhibit H Form of Subordinated Security Agreement for ▇▇▇▇▇▇▇ Products,
Inc., ▇▇▇▇▇▇▇ International, Inc. and ▇▇▇▇▇▇, Ltd.
Exhibit I Administrative Services Agreement among the Company, Seller
and ▇▇▇▇▇▇, Inc.
Exhibit J Transfer Agreement re: Apogee Enterprises, Inc. Retirement
Plan
Exhibit K Transfer Agreement re: Apogee Enterprises, Inc. Tax Relief
Investment Plan
Exhibit L Calculation of Estimated Net Working Capital
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STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT dated April 9, 1999 is made and entered
into by and between CH HOLDINGS, INC. a Missouri corporation ("Purchaser") and
APOGEE ENTERPRISES, INC., a Minnesota corporation ("Seller"). Capitalized terms
not otherwise defined herein have the meanings set forth in Section 10.01.
STATEMENT OF PURPOSE
WHEREAS, Seller owns all of the outstanding capital stock of ▇▇▇▇▇▇,
Ltd., a Minnesota corporation (the "Company");
WHEREAS, the Company is engaged in the architectural and other
curtainwall business as conducted by the Company, including but not limited to
the promotion, sale, design, engineering, project management, provision of
materials and installation, within the United States of standard and custom
curtainwall systems to the non-residential construction market (the "Business");
and
WHEREAS, Purchaser desires to purchase from Seller, and Seller desires
to sell to Purchaser, all of the outstanding capital stock of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
1.01 Purchase and Sale of Shares. Seller agrees to sell to Purchaser,
and Purchaser agrees to purchase from Seller, all of the right, title and
interest of Seller in and to all of the outstanding shares of capital stock of
the Company (collectively, the "Shares") on the terms and subject to the
conditions set forth in this Agreement.
1.02 Excluded Assets. Notwithstanding any other provision of this
Agreement, neither Purchaser nor the Company shall have any right, title or
interest in, and prior to the Effective Date (or after the Effective Date upon
the request of the Seller) the Company shall distribute, assign or transfer to
Seller or an Affiliate of Seller as designated by Seller, the following assets,
properties and rights (the "Excluded Assets"):
(a) all inter-company Contracts with Affiliates that do not
relate to the Transferred Projects,
(b) any and all Cash reflected on the Books and Records of the
Company as of any date on or prior to the Closing Date;
(c) all inter-company receivables payable to the Company;
(d) all assets primarily used in any other business of Seller
as set forth on Schedule 1.02(d), including but not limited to (i)
assets primarily used in the manufacture, integration and construction
of security and detention systems; and (ii) assets located outside the
United States.
(e) all insurance policies maintained by Seller which covers
the assets of the Company;
(f) all refunds or credits, if any, of taxes owed to Seller or
the Company;
(g) any rights of the Company (including indemnification,
claims for recovery under litigation, including but not limited to, the
claims for recovery listed on Parts 2 and 3 of Schedule 2.08, and
rights to uncollected retainages for projects other than Transferred
Projects) against third parties arising out of or relating either to
events prior to Closing or to Seller Liabilities (as hereinafter
defined), except to the extent rights relate to Transferred Projects
(other than rights relating to warranty claims for which Seller has
Liability under Section 1.03);
(h) the rights of the Company in, to and under all Contracts
and agreements of any nature, kind or character or obligations of the
Company which are related to Seller Liabilities or under which Seller
Liabilities have arisen;
(i) all bank accounts and boxes, credit card accounts and all
related records;
(j) Books and Records of the Company related to any Seller
Liabilities or projects other than Transferred Projects;
(k) the capital stock of ▇▇▇▇▇▇ Contract, Inc., ▇▇▇▇▇▇ Europe
S.A. and ▇▇▇▇▇▇ Contract Asia, Ltd. and the capital stock of any and
all direct and indirect subsidiaries of any of the foregoing
corporations;
(l) any and all right, title or interest in "Burnsville Family
Housing Limited Partnership", a Minnesota limited partnership;
(m) any and all rights to the names "▇▇▇▇▇▇, Ltd." or "▇▇▇▇▇▇,
Inc." or any derivation thereof except as otherwise provided herein
below;
(n) all rights of in and to any Benefit Plan; and
(o) other excluded assets listed on Schedule 1.02(o) hereto.
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Notwithstanding that the names, "▇▇▇▇▇▇, Ltd.: or "▇▇▇▇▇▇, Inc." or any
derivations thereof are Excluded Assets and no assignment, transfer or
conveyance thereof shall be made to Purchaser, Seller shall license Purchaser to
use the name "▇▇▇▇▇▇", "▇▇▇▇▇▇, Ltd." and any derivations thereof (other than
"▇▇▇▇▇▇, Inc."), including by way of illustration, but not limitation,
"▇▇▇▇▇▇-▇▇▇▇▇▇▇" pursuant to a royalty free, perpetual license in form and
substantial substantially identical to Exhibit A hereto (the "License
Agreement"); provided however, in no event, shall Purchaser or the Company have
the right or license to use the logo, ▇▇▇▇, or trademark of ▇▇▇▇▇▇, Inc.
notwithstanding any current use by the Company.
1.03 Liabilities. On and subject to the terms and conditions of this
Agreement, on and after the Date of Closing, Purchaser shall become, and the
Company shall remain, responsible and obligated for and timely pay and discharge
all of the Liabilities of the Company relating to the Business, including but
not limited to:
(a) all Liabilities reflected on the face of the Closing Date
Balance Sheet;
(b) all obligations under the agreements, contracts,
indentures, mortgages, instruments, liens, guarantees, leases,
subleases, licenses and other similar arrangements of the Company
arising on or after the Closing Date (including but not limited to, all
obligations under the Administrative Services Agreement described in
Section 5.09 hereof); and
(c) all Liabilities arising or resulting from or related to
the Transferred Projects, including but not limited to completion of
such projects and all warranty claims with respect to such projects
regardless of whether or not such warranty claims relate to work
performed prior to the Closing Date;
provided however, that neither Purchaser nor the Company shall be
responsible or obligated for (and the Closing Date Balance Sheet shall
not include liabilities for) any of the following Liabilities, all of
which shall constitute "Seller Liabilities" and shall be the sole
responsibility of and shall be paid, performed or discharged by Seller:
(i) warranty claims relating to the Transferred Projects identified on
Schedule 1.03, (ii) claims for personal injury or casualty property
damage occurring prior to the Date of Closing, (iii) any liability of
Seller or the Company for unpaid Taxes relating to the Business for
periods prior to Date of Closing; (iv) any Liability of the Company for
the unpaid Taxes of any Person, whether under Treasury Regulation
ss.1.502-6 (or any similar provision of the state, local or foreign
law) as a transferee or a successor, by contractual obligation or
otherwise; (v) Liabilities of the Company arising prior to the Closing
Date to the extent that Seller is reimbursed therefor under Seller's
insurance policies; (vi) Liabilities of the Company for Indebtedness
(including capitalized lease obligations); (vii) any Liability of the
Company for income, transfer, sales, use and other taxes arising in
connection with the consummation of the transactions contemplated
hereby, (viii) the debt to Seller or any of its Affiliates shown as
"Intercompany Debt" on the balance sheets for the Business referred to
in Section 2.05(a), (ix) any obligation of the Company to indemnify any
Person by reason of the fact that such Person was a director, officer,
employee or agent of the Company or was serving at the request of the
Company as a partner, trustee, director, officer, employee, or agent of
another
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entity, (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses
or otherwise, and whether such indemnification is pursuant to any
statute, charter document, bylaw, agreement or otherwise), (x) any
liability of the Company for costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby, (xi) any
Liability of the Company as a result of litigation commenced and
pending against the Company upon the Date of Closing; (xii) any
Liability or obligation of either Company or the Seller under that
certain Stock Purchase Agreement dated November 10, 1998 by and among
the Seller and Compudyne Corporation, provided however, Purchaser shall
become, and the Company shall remain, responsible and obligated for and
timely pay and discharge all obligations under the Administrative
Services Agreement described in Section 5.09 hereof as provided in
subsection 1.03(a) hereof; (xiii) any Liability of the Company
resulting from projects completed prior to the Closing Date and thereby
not constituting Transferred Projects; (xiv) any Liability arising or
resulting from ownership of subsidiaries; (xv) any Liability or
obligation of the Company under this Agreement or under any other
contractual obligation between Purchaser, Seller or the Company entered
into on or after the date of this Agreement; (xvi) any Liability or
obligation of the Company to ▇▇▇▇▇ ▇. ▇▇▇▇ relating to consulting
services provided to the Company prior to the Closing Date; and (xvii)
any Liabilities with respect to a Benefit Plan except as otherwise
provided in Section 4.09(b).
1.04 Purchase Price. Subject to the adjustment under Section 1.06, the
purchase price for the Shares is U.S. $12,000,000 (the "Purchase Price"). On the
Effective Date, Purchaser shall deliver to Seller the Purchase Price in the
manner provided in Section 1.05.
1.05 Closing.
(a) The Closing will take place at the offices of ▇▇▇▇▇, ▇▇▇▇ &
Fingersh, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ or at such
other place as Purchaser and Seller mutually agree, at 10:00 A.M. local time, on
the Closing Date.
(b) Notwithstanding anything contained herein to the contrary, the
parties hereby acknowledge and agree that:
(i) On the date of Closing, the parties have executed and
delivered in escrow to ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇.▇., pursuant to a
letter agreement of even date herewith by and between ▇▇▇▇▇, Rice &
▇▇▇▇▇▇▇▇, ▇.▇., Seller and Purchaser (the "Document Escrow Agreement")
the following documents, instruments and certificates:
(1) the promissory note of Purchaser in form and
substance substantially identical to Exhibit C
attached hereto (the "Purchase Money Note") but in an
amount equal to the Adjusted Purchase Price less the
Cash Portion of the Purchase Price, which Purchase
Money Note shall be secured by a security interest
and liens granted on all of the assets of Purchaser
and the Company pursuant to the terms and conditions
of the Subordinated Loan and Security Agreement (as
defined in Subsection (ii)(1) below)
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and shall be further secured by the Affiliate
Guarantees (as defined in Subsection (ii)(3) below);
(2) stock certificate(s) representing 4,400 shares of the
capital stock of ▇▇▇▇▇▇, Ltd., accompanied by duly
executed stock powers.
(3) the indemnity bonds as described on Exhibit B
attached to the Document Escrow Agreement, which,
upon delivery, pursuant to the Document Escrow
Agreement, shall satisfy the Bonding Condition; and
(4) undated resignations of the Directors of the Company.
(ii) On the Date of Closing, the parties have executed and
delivered one to another the following agreements, documents,
instruments and certificates:
(1) a loan and security agreement in form and substance
substantially identical to Exhibit D attached hereto
(the "Subordinated Loan and Security Agreement");
(2) a noncompetition agreement in form and substance
substantially identical to Exhibit E attached hereto
(the "Noncompetition Agreement");
(3) a corporate guaranty in form and substance
substantially identical to Exhibit G attached hereto
(the "Affiliate Guarantee") executed by each of the
Company, ▇▇▇▇▇▇▇ Products, Inc. ("▇▇▇▇▇▇▇ Products"),
and ▇▇▇▇▇▇▇ International, Inc. ("▇▇▇▇▇▇▇
International"), which Affiliate Guarantees shall be
secured by a grant of a security interest on the
assets of each of the Company, ▇▇▇▇▇▇▇ Products and
▇▇▇▇▇▇▇ International pursuant to the terms and
provisions of the Affiliate Security Agreements (as
defined in subpart (4) below);
(4) a security agreement in form and substance
substantially identical to Exhibit H attached hereto
(the "Affiliate Security Agreement") executed by each
of the Company, ▇▇▇▇▇▇▇ Products and ▇▇▇▇▇▇▇
International;
(5) the License Agreement attached hereto as Exhibit A;
(6) the Administrative Services Agreement in form and
substance substantially identical to Exhibit I
attached hereto (the "Administrative Services
Agreement") among the Company, Seller and ▇▇▇▇▇▇,
Inc.;
(7) the Transfer Agreement re: Apogee Enterprises, Inc.
Retirement Plan in form and substance substantially
identical to Exhibit J attached hereto (the
"Retirement Plan Transfer Agreement");
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(8) the Transfer Agreement re: Apogee Enterprises, Inc.
Tax Relief Investment Plan in form and substance
substantially identical to Exhibit K attached hereto
(the "Tax Relief Transfer Agreement"); and
(9) all other opinions, agreements, documents,
certificates and instruments of conveyance to be
delivered pursuant hereto.
(iii) On the Date of Closing, the Cash Portion of the Purchase Price
has been funded into escrow pursuant to an escrow agreement of even date
herewith by and between Union Planters Bank, N.A., Seller and Purchaser and such
Cash Portion of the Purchase Price will be disbursed as provided therein.
(c) Notwithstanding the deliveries into escrow described in Section
1.05(b) hereof, it is the intent of the parties that the consummation of the
transaction contemplated hereby shall not be effective, or deemed effective,
until (i) the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act has expired or (ii)
the date of receipt of a notice from the United States Department of Justice or
Federal Trade Commission that early termination has been granted (the "Effective
Date"). The parties further acknowledge, however, that only such expiration or
termination of the waiting period and the satisfaction of the other conditions
specifically set forth in Article VI or VII hereof are the only remaining
conditions to the effectiveness of the consummation of the transactions
contemplated hereby. It is the further intentions of the parties that, as of the
Closing Date, all profits and losses, benefits and Liabilities (except as
otherwise specifically set forth herein), and any and all occurrences, events or
matters affecting the Company after the Closing Date shall be for the benefit or
burden of the Purchaser, subject only to the consummation of the transaction
contemplated hereunder becoming effective on the Effective Date. Purchaser shall
not be entitled to exercise any control over the management of the Company
unless and until the occurrence of the Effective Date.
1.06 Adjustment to Purchase Price.
(a) Seller has prepared and delivered to Purchaser a
calculation ("Calculation of Estimated Working Capital") of the Net
Working Capital (as defined below) estimated as of the opening of
business on the Closing Date (the "Estimated Net Working Capital"), a
copy of which is attached hereto as Exhibit L. The Estimated Net
Working Capital set forth therein has been calculated in accordance
with GAAP, as applied on a consistent basis with the Financial
Statements provided to Purchaser pursuant to Section 2.05 hereof (the
"Working Capital Balance Sheets"); provided however, no reserve or
accrual for warranty claims related to projects for which Seller is
liable pursuant hereto is included therein and the Excluded Assets are
excluded therefrom. As used herein, the term "Net Working Capital"
shall mean an amount equal to the excess of total current assets (other
than and exclusive of Cash and other Excluded Assets constituting
current assets) over total current liabilities (other than current
liabilities constituting Seller Liabilities) of the Business calculated
in accordance with GAAP on a consistent basis with the Working Capital
Balance Sheet.
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(b) If Estimated Net Working Capital is less than negative
$500,000 ("Minimum Target Net Working Capital"), then the Purchase
Price shall be reduced by an amount equal to the amount of such deficit
(the "Estimated Working Capital Deficit Adjustment"). If Estimated Net
Working Capital is greater than positive $500,000 (the "Maximum Target
Net Working Capital"), then the Purchase Price shall be increased by an
amount equal to the amount of such excess (the "Estimated Working
Capital Surplus Adjustment"). It is the intent of the parties that
there shall only be an adjustment to the Purchase Price, if and to the
extent, Net Working Capital is less than negative $500,000 or more than
positive $500,000. The Purchase Price as either increased or decreased
under this Section 1.06(b) shall be the "Adjusted Purchase Price."
(c) Within 30 days after the Effective Date, the Purchaser
will prepare and deliver to the Seller (i) a draft consolidated balance
sheet (the "Draft Closing Date Balance Sheet") for the Business as of
the Closing Date, and (ii) a computation and determination of the Net
Working Capital as of the Closing Date, and (iii) a computation and
determination of the Final Purchase Price.
(d) If Seller has any objections to the Draft Closing Date
Balance Sheet, Seller will deliver a detailed statement describing such
objections and the reasons therefor to the Purchaser within thirty (30)
days of receipt thereof. Purchaser and Seller will use reasonable
efforts to resolve any such objections among themselves. If the parties
do not obtain a final resolution of all objections within thirty (30)
days after Purchaser has received the statement of objections,
Purchaser and Seller will select an independent "Big 5" accounting firm
mutually acceptable to them to resolve any remaining objections. If
Purchaser and Seller are unable to agree on the choice of an accounting
firm, they will select by lot a nationally-recognized accounting firm
which is not then currently and has not provided the principal outside
auditing services to any of the parties hereto or any of their
Affiliates within the past three (3) years, which shall be jointly
instructed by the Purchaser, on the one hand, and the Seller, on the
other hand, to determine the Net Working Capital and the Adjusted
Purchase Price in accordance with this Agreement. (The accounting firm
selected by either mutual agreement or lot is herein referred to as the
"Accountant".) The Accountant shall deliver to each of Purchaser and
Seller its determinations within thirty (30) days after receiving the
joint instructions from Purchaser and Seller, and the determinations of
the Accountant will be set forth in writing and will be conclusive and
binding upon the parties. The expenses of the Accountant shall be borne
equally by Purchaser and Seller. The Purchaser will give the Seller the
Draft Closing Date Balance Sheet revised to reflect the Accountant's
determinations. The "Closing Date Balance Sheet" shall mean the Draft
Closing Date Balance Sheet, together with any revisions thereto
pursuant to this Section 1.06, including the determination of the
Accountant. The Final Purchase Price shall mean the Purchase Price,
together with all revisions thereto pursuant to this Section 1.06,
including subsection 1.06(f) and the determination of the Accountant.
(e) For purposes of Seller's review of the Closing Date
Balance Sheet and the Purchase Price, Purchaser will make reasonably
available to Seller and its accountants and other representatives the
work papers and backup materials used in preparing the Draft
7
Closing Date Balance Sheet at reasonable times and upon reasonable
notice at any time during (i) the preparation by Purchaser of the Draft
Closing Date Balance Sheet, (ii) the review by Seller of the Draft
Closing Date Balance Sheet, and (iii) the resolution by the parties of
any objections thereto.
(f) If Net Working Capital as of the Closing Date is less than
the Minimum Target Net Working Capital by more than the Estimated
Working Capital Deficit Adjustment, the Purchase Money Note shall be
reduced by an amount equal to the amount of such deficit over the
Estimated Working Capital Deficit Adjustment plus, if any, the
Estimated Net Working Capital Surplus Adjustment. If the Net Working
Capital as of the Closing Date is less than the Minimum Target Net
Working Capital by less than the Estimated Working Capital Deficit
Adjustment, the Purchase Money Note shall be increased by the
difference between such actual deficit and the Estimated Working
Capital Deficit Adjustment. If Net Working Capital as of the Closing
Date exceeds the Maximum Target Net Working Capital by more than the
Estimated Working Capital Surplus Adjustment, the Purchase Money Note
shall be increased by an amount equal to the amount of such excess over
the Estimated Working Capital Surplus Adjustment plus, if any, the
Estimated Working Capital Deficit Adjustment. If Net Working Capital as
of Closing Date exceeds the Maximum Target Net Working Capital by less
than the Estimated Working Capital Surplus Adjustment, the Purchase
Money Note shall be reduced by an amount equal to the difference
between the Estimated Working Capital Surplus Adjustment and such
actual excess amount. All adjustments to the Purchase Money Note
provided for in this subsection 1.06(f) shall be affected by Purchaser
executing and delivering to Seller a new, substitute Purchase Money
Note, and Seller accepting the same (and upon acceptance thereof,
returning to Purchaser the Purchase Money Note delivered to Seller at
Closing) no later than five (5) business days after the earliest to
occur of (i) the 30th day after the Draft Closing Date Balance Sheet
shall have been given by Purchaser to Seller, if Seller shall not have
objected to the Draft Closing Date Balance Sheet within such period;
(ii) the first business day after which the Purchaser and Seller have
resolved any objection raised by Seller; or (iii) the first business
day after the date on which the determination of the Accountant
referred to in Section 1.06(d) above is given to Purchaser and Seller.
(g) Attached hereto as Exhibit F is a pro forma balance sheet
of the Company as of January 30, 1999. The aforedescribed pro forma
balance sheet has been attached hereto solely to demonstrate the method
of preparing the Closing Date Balance Sheet agreed to by Purchaser and
Seller.
1.07 Section 338(h)(10) Election and Allocation.
(a) Seller and Purchaser agree to make a joint election under
Section 338(h)(10) of the Code (and any corresponding election under
state and local law) to treat the sale of the Shares as a sale of the
assets of the Company to Purchaser (the "Section 338(h)(10) Election").
Seller and Purchaser anticipate that, pursuant to the Section
338(h)(10) Election, the transaction will be treated, for income tax
purposes, as though
8
the Company sold all of its assets to Purchaser. Seller agrees to pay
all federal and state income taxes on the gains associated with such
deemed asset sales.
(b) The Final Purchase Price under this Agreement shall be
allocated in accordance with Schedule 1.07 hereto. After the Effective
Date, the parties shall make consistent use of the allocations
specified in Schedule 1.07 for all Tax purposes and any and all
filings, declarations, and reports with the IRS in respect thereof,
including the reports to be filed under Section 1060 of the Code, if
applicable, it being understood that Purchaser shall prepare and
deliver IRS Forms 8594 and 8023 to Seller within ninety (90) days after
the Effective Date for Seller's review and approval if such forms are
required to be filed with the IRS.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser (and with respect to
Section 2.25, Purchaser acknowledges and agrees) as follows:
2.01 Corporate Existence; Organization; Good Standing, and Power and
Authority. Seller is a corporation validly existing and in good standing under
the laws of the state of Minnesota. The Company is a corporation validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has the power and authority to own, lease and operate its
assets and properties and to conduct its business as now being conducted. Except
as set forth in Schedule 2.01, the Company is licensed and qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the operation of its business or the ownership of its properties requires
such license or qualification, except where the failure to be licensed or
qualified will not have a Material Adverse Effect on the Business.
2.02 Due Execution and Authorization of the Transaction. This Agreement
has been duly and validly executed and delivered by Seller and constitutes a
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms. Without limiting the generality of the foregoing, the
board of directors of Seller has duly authorized the execution, delivery, and
performance of this Agreement.
2.03 No Conflicts. The execution and delivery by Seller of this
Agreement does not, and the performance by Seller of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of the
articles of incorporation or bylaws of Seller;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Schedule 2.03,
conflict with or result in a violation or breach of any Law or Order
applicable to Seller or the Company other than such conflicts,
violations or breaches (i) which could not in the aggregate reasonably
be expected to have a
9
Material Adverse Effect on the Business or (ii) as would occur as a
result of the identity or the legal or regulatory status of Purchaser
or any of its Affiliates; or
(c) except as disclosed in Schedule 2.03, (i) conflict with or
result in a violation, right of termination or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default
under, (iii) require Seller, to obtain any consent, approval or action
of, make any filing with or give any notice to any Person as a result
or under the terms of, or (iv) result in the creation or imposition of
any Lien upon the assets of the Company under, any Contract or License
to which Seller or the Company is a party or by which Seller or the
Company are bound and which, individually or in the aggregate with
other such Contracts and Licenses, would in the aggregate be reasonably
expected to have a Material Adverse Effect on the Business; or (v)
result in any Person having the right to enjoin, rescind or otherwise
prevent or impede the transactions contemplated hereby.
2.04 Governmental Approvals and Filings. Except as disclosed in
Schedule 2.04, no consent, approval or action of, filing or registration with or
notice to any Governmental or Regulatory Authority on the part of Seller or the
Company is required in connection with the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated hereby,
except (i) where the failure to obtain any such consent, approval or action, to
make any such filing or to give any such notice could not reasonably be expected
to materially and adversely affect the validity or enforceability of this
Agreement or to have a Material Adverse Effect on the Business, and (ii) those
as would be required solely as a result of the identity or the legal or
regulatory status of Purchaser or any of its Affiliates.
2.05 Financial Statements. Prior to the execution of this Agreement,
Seller has delivered to Purchaser true and complete copies of the following
financial statements, which are attached hereto as Schedule 2.05:
(a) The unaudited balance sheets of the Business dated as of
January 30, 1999; and
(b) The unaudited statements of income for the Business for
year ended February 28, 1998 and the eleven months ended January 30,
1999.
Except as set forth on Schedule 2.05, all such financial statements were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods and present fairly the financial condition and results of operations of
the Business, as of the respective dates thereof and for the respective periods
covered thereby except for the absence of footnotes and normal year-end
adjustments which an audit would reveal and which adjustments are not
individually or in the aggregate material. Since the Unaudited Financial
Statement Date, there has been no significant change in the accounting methods
or practices of the Company.
2.06 Events Subsequent to Unaudited Financial Statement Date. Except
for the execution and delivery of this Agreement and the transactions to take
place pursuant hereto on or prior to the Closing Date or as disclosed in
Schedule 2.06, since the Unaudited Financial Statement Date to the date hereof:
10
(a) There has not been any Material Adverse Change in the
Business, other than those occurring as a result of general economic or
financial conditions or other developments which are not unique to the
Business but also effect other Persons who participate or engage in
lines of business similar to the Business.
(b) The Company has not sold, leased, transferred, or assigned
any assets used in the Business outside the Ordinary Course of Business
for less than fair consideration.
(c) No Person has accelerated, terminated, modified, or
cancelled any Contract (other than Contracts which are included in
Seller Liabilities) to which the Company is a party or by which the
Company is bound and relating to the Business (i) pursuant to the terms
of which, payment by or to the Company of more than $150,000 would be
required, and (ii) outside the Ordinary Course of Business.
(d) There has not been any Material Adverse Change in the
business relationship of the Company with any major customer or
supplier of the Business, nor to Seller's Knowledge, has there been any
development with respect to any major customer or major supplier of the
Business having a Material Adverse Effect or which could reasonably be
expected to have a Material Adverse Effect on the Business.
(e) The Company has not experienced any damage, destruction,
or loss (whether or not covered by insurance) relating to the Business
or assets used in the Business in excess of $150,000.
(f) There has not been granted any increase in the base
compensation of any Employees of the Business outside the Ordinary
Course of Business.
(g) The Company has not adopted, amended, modified, or
terminated any bonus, profit sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors
or officers or the Employees (or taken any such action with respect to
any other Benefit Plan) except in the Ordinary Course of Business.
(h) There has not been any other change in employment terms,
including compensation and benefits, for any Employees outside the
Ordinary Course of Business.
(i) The Company has not granted any license or sublicense of
any material rights under or with respect to any Intellectual Property
(other than Intellectual Property constituting Excluded Assets).
(j) The Company has not agreed, consented or committed to any
of the foregoing.
2.07 Taxes. The Company or its Affiliates have duly filed or caused to
be filed (or obtained valid, currently effective extensions for filing) all
federal, state, local and foreign income, franchise, excise, payroll, sales and
use, property, provider, withholding and other tax returns,
11
reports, estimates and information and other statements or returns (collectively
"Tax Returns") which relate to the Business and which are required to be filed
by or on behalf of it pursuant to any applicable federal, state, local or
foreign tax laws for all years and periods for which such Tax Returns have
become due. All such Tax Returns were correct in all respects as filed and
reflect in all respects the federal, state, local and foreign income, franchise,
excise, payroll, sales and use, property, provider, withholding and other taxes,
duties, fees, imposts and governmental charges (and charges in lieu of any
thereof), together with interest, any additions to tax and penalties
(collectively "Taxes") required to be paid or collected by (or allocable to) the
Company. The Company or its Affiliates (i) have paid or caused to be paid all
Taxes due and payable as shown on Tax Returns filed by it or on any assessment
received by it (except for those Taxes, if any, that are being contested in good
faith and for which the Company has established adequate reserves as required by
GAAP) and (ii) have properly and fully recorded as accrued or deferred
liabilities on all Taxes resulting from the Business for any period from the
date of the last reporting period covered by such Tax Returns. The Company has
not received any written notice of any audit, or any dispute or claim being
threatened by any relevant taxing authority concerning any Tax Return or
liability for Taxes. There are no liens for Taxes upon the Business or any of
its assets (other than assets included in Excluded Assets) except liens for
current taxes not yet due.
2.08 Legal Proceedings. Except as disclosed in Schedule 2.08, there are
no Actions or Proceedings pending or, to Seller's Knowledge, threatened against
or directly affecting the Company or the Business. The Company has not been
charged with, nor to Seller's Knowledge, is the Company under investigation with
respect to, any charge which has not been resolved concerning any material
violation of any Law or Permit. Except as disclosed on Schedule 2.08, no
judgment, order, writ, injunction, decree or assessment or other command of any
Governmental Authority or arbitrator affecting the Company or the Business or
its operations has been entered which is presently in effect, the effect of
which, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Business. There is no Action or Proceeding
pending or, to Seller's Knowledge, threatened against the Company which
challenges the validity of this Agreement or the transactions contemplated
hereunder, or otherwise seeks to prevent, directly or indirectly, the
consummation of such transactions.
2.09 Compliance With Laws and Orders. To the Knowledge of Seller,
except as disclosed in Schedule 2.09, the Company is not in violation of or in
default under any Law or Order applicable to the Business, the effect of which,
individually or in the aggregate with other such violations and defaults, would
reasonably be expected to have a Material Adverse Effect on the Business.
2.10 Employee Benefits.
(a) Schedule 2.10 attached hereto lists each employee benefit
plan within the meaning of section 3(3) of ERISA (excluding, however,
any multiemployer plan as defined in Section 3(37) of ERISA) maintained
by the Company or its Affiliates on behalf of Employees of the Business
or to which the Company or its Affiliate of the Company contributes on
behalf of Employees of the Business or is required to contribute on
behalf of Employees of the Business or, to the Knowledge of Seller, in
which any Employee of the Business participates (a "Benefit Plan").
Prior to execution of this Agreement, Seller
12
delivered to Purchaser true and complete copies of the Benefit Plans.
Each Benefit Plan has been operated and administered in all material
respects in accordance with applicable laws, including but not limited
to ERISA and the Code. There are no pending or, to the Knowledge of
Seller, threatened claims by any employee or beneficiary covered under
such Benefit Plan or otherwise involving any such Benefit Plan or any
of its fiduciaries (other than for routine claims for benefits).
(b) Schedule 2.10 lists, as a separate category, each of the
Multiemployer Plans to which the Company contributes or has any
obligation to contribute.
(c) Each of Seller's Defined Contribution Plans complies in
form and in operation in all respects with the applicable requirements
of ERISA, the Code, and other applicable laws.
(d) All required reports and descriptions (including Form 5500
Annual Reports, summary annual reports, and summary plan descriptions)
have been timely filed and distributed appropriately with respect to
each of Seller's Defined Contribution Plans.
(e) All contributions which are due as of the Closing Date
have been paid to each such Multiemployer Plan and all of Seller's
Defined Contribution Plans and all contributions for any period ending
on or before the Closing Date which are not yet due have been paid or
accrued to each such Multiemployer Plan and each of the Seller'sDefined
Contribution Plans.
(f) Each of Seller's Defined Contribution Plans meets the
requirements of a tax qualified plan under Code Section 401(a), has
received, a favorable determination letter from the Internal Revenue
Service that it is a tax qualified plan, and Seller is not aware of any
facts or circumstances that could result n the revocation of such
determination letter.
(g) No Prohibited Transaction has occurred or is continuing
with respect to any of Seller's Defined Contribution Plans. Seller's
Defined Contribution Plans have not been terminated. None of the
Company or any of the Company's ERISA Affiliates has completely or
partially withdrawn under Section 4201 or 4204 of ERISA from any
Multiemployer Plan (or is liable for any complete or partial withdrawal
which occurred prior to or as of the Closing). Each of the Company and
its ERISA Affiliates has met its minimum funding requirements under
ERISA with respect to the Seller's Defined Contribution Plans. No
withdrawal liability with respect to any Multiemployer Plan shall occur
as a result of the Closing.
(h) The Company is not a party to any pay equity plan,
vacation or vacation pay policy, employee insurance, hospital or
medical expense program or pension, retirement, profit sharing, stock
bonus, supplementary retirement or unemployment benefits, disability
insurance, dental or other employee benefit plan, program or
arrangement or to any executive or key personnel incentive or other
compensation arrangement, in each instance relating to the Employees,
other than those listed in Schedule 2.10. Except as disclosed in
Schedule 2.10, there are no written employment contracts entered into
with any of the
13
Employees. All accruals for unpaid vacation pay, premiums for
unemployment insurance, health insurance premiums, pension plan
premiums, accrued wages, salaries and commissions and employee benefit
plan payments in each instance relating to the Employees, have been
properly reflected in the Books and Records of the Business.
2.11 Real Property.
(a) Schedule 2.11 contains a true and correct list of each
parcel of real property leased by or to the Company, as lessor or
lessee, and used in the Business ("Leased Business Real Property").
(b) Except for the real property disclosed in Schedule
1.02(o), the Company does not own any real property.
(c) With respect to the Leased Business Real Property except
as set forth on Schedule 2.11, (i) the lease or sublease for such real
property is legal, valid, binding, enforceable and in full force and
effect in all material respects, (ii) the Company is not in breach or a
default under such lease or sublease and, to the Knowledge of Seller,
no other party to such lease or sublease is in breach or default, no
event has occurred which, with notice or lapse of time, would
constitute a material breach or default or permit termination,
modification of acceleration thereunder; (iii) Seller has delivered or
caused to be delivered to Purchaser correct and complete copies of each
lease or sublease for such real property (including all amendments
thereto); (iv) each such lease or sublease has not been modified or
amended except as disclosed on Schedule 2.11; (v) no rent has been paid
more than one month in advance by or on behalf of the tenant under any
such lease or sublease; and (vi) the Leased Business Real Property
constitutes all material real property leased by the Company with
respect to the Business.
(d) With respect to the Leased Business Real Property, to the
Knowledge of Seller, there are no material disputes, oral agreements or
forbearance programs in effect as to the lease or sublease.
(e) The real property listed on Schedule 2.11 constitutes all
real property necessary to operate the Business as currently conducted.
2.12 Tangible Personal Property. Schedule 2.12 contains a true and
correct list of all of the tangible personal property used in the Business and
owned by the Company [other than: (i) inventory and supplies [whether finished
goods or raw materials]; or (ii) Excluded Assets] having a net book value in
excess of $10,000, including all furnishings, office equipment, machinery, tools
and other equipment; provided however, that the aggregate net book value of all
tangible assets (other than Excluded Assets) not listed on Schedule 2.12 shall
not exceed $150,000. The Company is in possession of and has good title to, or
has valid leasehold interests in or valid rights under Contract to use the
assets used in the Business. All such tangible personal property owned by the
Company (other than the Excluded Assets) are free and clear of all Liens, other
than Permitted Liens and Liens disclosed in Schedule 2.12. All such tangible
personal property (other than
14
Excluded Assets) has been maintained in accordance with normal industry practice
and is in good operating condition and repair (subject to normal wear and tear).
2.13 Contracts.
(a) Schedule 2.13(a) contains a true and complete list of each
of the following Contracts (true and complete copies or, if none,
reasonably complete and accurate written descriptions of which,
together with all amendments and supplements thereto, have been
delivered to or made available to Purchaser prior to the execution of
this Agreement) relating to the Business and to which the Company is a
party to or by which its assets are bound:
(i) all Contracts (excluding Benefit Plans) providing
for a commitment of employment with the Business or
consultation services to the Business for a specified or
unspecified term, the name, position and rate of compensation
of each Person party to such a Contract and the expiration date
of each such Contract;
(ii) all Contracts for Transferred Projects that are
in effect on the date hereof (other than Contracts for
Transferred Projects listed under the category "Other" on
Schedule 1.03) and all bids outstanding on the date hereof
which if awarded to the Company would be contracts for
Transferred Projects;
(iii) all partnership, joint venture, shareholders'
or other similar Contracts with any Person;
(iv) all Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or franchisees
relating to the Business and which involve the payment,
pursuant to the terms of any such Contract, by or to the
Company of more than $150,000;
(v) all Contracts relating to the future disposition
or acquisition of any assets individually or in the aggregate
material to the Business, other than dispositions or
acquisitions of inventory in the Ordinary Course of Business;
(vi) all Contracts relating to the Business and
between or among the Company on the one hand, or any officer,
director or Affiliate of the Company, on the other hand;
(vii) all collective bargaining or similar labor
agreements relating to Employees; and
(viii) all other Contracts relating to the Business
[other than contracts pertaining to the leasing of equipment
in connection with Transferred Projects] that (X) involve the
payment or potential payment, pursuant to the terms of any
such Contract, by or to the Company of more than $150,000
annually and (Y) cannot be
15
terminated within ninety (90) calendar days after giving
notice of termination without resulting in any material cost
or penalty to the Company.
(b) Each Contract required to be disclosed in Schedule 2.13(a)
is in full force and effect and constitutes a legal, valid and binding
agreement, enforceable in accordance with its terms, against the
Company, as applicable, and each other party thereto; and except as
disclosed in Schedule 2.13(b), the Company is not, and to the Knowledge
of Seller, no other party to any such Contract is in violation or
breach of or default under any such Contract (or with notice or lapse
of time or both, would be in violation or breach of or default under
any such Contract), the effect of which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect on the Business.
2.14 Affiliate Transactions. Except as disclosed in Schedule 2.14, no
Affiliate of the Company provides or causes to be provided any assets, services
or facilities to the Business which are necessary for the operation of the
Business.
2.15 Brokers. Except as set forth on Schedule 2.15, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried out by Seller directly with Purchaser without the intervention of any
Person on behalf of Seller in such manner as to give rise to any valid claim by
any Person against Purchaser or Seller for a finder's fee, brokerage commission
or similar payment.
2.16 Accounts Receivable. Except as disclosed on Schedule 2.16, the
accounts or loans receivable of the Business have arisen in the Ordinary Course
of Business and are valid and enforceable claims. Schedule 2.16 sets forth an
aging of accounts or loans receivable of the Business as of January 30, 1999
which aging is true and complete in all material respect. Since the Unaudited
Financial Statement Date, the Business has not changed its normal credit and
collection practices. Except to the extent reserved against the accounts or
loans receivable and as set forth on Schedule 2.16, no counterclaims or
offsetting claims with respect to the accounts or loans receivable are pending
or, to the Knowledge of Seller, threatened.
2.17 Inventories. Except as described on Schedule 2.17, the inventory
of the Company used in the Business is located at one or another of the
addresses listed on Schedule 2.17, consists of raw materials and supplies,
manufactured and processed parts, work in process and finished goods, all of
which is merchantable and fit for the purpose for which it was procured or
manufactured, and none of which is slow moving, obsolete, damaged or defective,
subject only to the reserve for inventory write-down included in the Unaudited
Financial Statement Date referred to in Section 2.05(a), as adjusted for
operations and transactions through the Closing Date in accordance with the past
custom and practice of the Company. The Company is not committed to purchase
inventories in amounts greater than are reasonably expected to be usable in the
Ordinary Course of Business.
2.18 Intellectual Property.
(a) Schedule 2.18(a) lists or identifies all Intellectual
Property (other than immaterial software licenses) and except as
described on Schedule 2.18(b) hereto: (i) the
16
Company has ownership of or licenses to use, all material Intellectual
Property used in the Business as presently conducted; and (ii) there
are no actual or, to the Knowledge of Seller, threatened claims or
demands of any other person pertaining to any of such Intellectual
Property and no proceedings have been instituted, or are pending or, to
the Knowledge of Seller, threatened, which challenge the rights of
Seller in respect thereof.
(b) Except as set forth on Schedule 2.18(b) hereto, to the
Knowledge of Seller, the Company has sufficient title or adequate
rights or licenses to use the Intellectual Property material to and
used in the Business as presently conducted, free and clear of any
attachments, liens, encumbrances (including payment of royalties) or
adverse claims and, to the Knowledge of Seller, the present activities
of the Business do not infringe any such patent, trade name, trademark
or other proprietary rights of others. Except as set forth on Schedule
2.18(b) hereto, (a) none of the Intellectual Property listed on
Schedule 2.18(a) hereto is subject to any outstanding order, decree,
judgment or stipulation or, to the Knowledge of Seller, is being
infringed by others, (b) the consummation of the transactions
contemplated hereby will not alter or impair any of the Intellectual
Property, except where such alteration or impairment will not have a
Material Adverse Effect on the Business, (c) no proceeding charging the
Company with infringement of any adversely held Intellectual Property
has been filed or, to the Knowledge of Seller, is threatened to be
filed, and (d) the Company has not received notice of any such
proceeding.
(c) All Contracts under which the Company has been granted
rights in any material Intellectual Property relating to the Business
are listed on Schedule 2.18(c) hereto. All said Contracts are in full
force and effect and, to the Knowledge of Seller, there is no material
default by any party thereto.
2.19 Warranty and Related Matters. To the Knowledge of Seller, there
are no material product liability, warranty or other similar claims against the
Company relating to the Transferred Projects except as disclosed on Schedule
2.19 hereto.
2.20 Employees; Labor Matters. Schedule 2.20 sets forth a complete and
accurate list of all Employees (other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Wiebye,
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ Conboye, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, who are currently, or
on the Effective Date will become, employees of the Seller) showing for each:
name, date of hire, current job title or description, current salary level and
any bonus, commission or other remuneration paid during the most recently
completed fiscal year. The Company is not delinquent in payments to any of the
Employees for any wages, salaries, commissions, bonuses, severance, termination
pay or other direct compensation for any services performed for the Business to
the date hereof or amounts required to be reimbursed to such employees. Except
as set forth on Schedule 2.20 hereto, there is no policy, practice, plan or
program of paying severance pay or any form of severance compensation in
connection with the termination of employment of Employees, and the consummation
of the transactions contemplated by this Agreement will not (either alone or
together with any other acts or events) result in any payment, benefit or other
right becoming due to any current or former Employee, nor accelerate the timing
or vesting of any such payment, benefit or right, nor otherwise increase the
amount of compensation due to any such person. The Company is in material
compliance with all applicable
17
laws and regulations respecting labor, employment, labor and union relations,
fair employment practices, safety and health, terms and conditions of
employment, and wages and hours, in each instance relating to the Employees,
except to the extent that any such non-compliance would not in the aggregate
reasonably be expected to have a Material Adverse Effect on the Business. Except
as set forth on Schedule 2.20, no charges of employment discrimination or unfair
labor practices relating to any of the Employees have been brought against the
Company, nor are there any strikes, slowdowns, stoppages of work, or any other
concerted interference with normal operations of the Business existing, pending,
or, to the Knowledge of Seller, threatened against or involving the Business.
Except as set forth on Schedule 2.20 attached hereto, the Company has not
received notice of any impending, strikes, slowdowns, concerted interference
with normal operations of the Business or union organization activities relating
to the Employees. Except as set forth on Schedule 2.20 hereto, there are no
grievances, complaints or charges that have been filed and are currently pending
against the Company with respect to current or former employees of the Business
under any dispute resolution procedure (including, but not limited to, any
proceedings under any dispute resolution procedure under any collective
bargaining agreement). Except as set forth on Schedule 2.20 hereto, no
collective bargaining agreements are in effect or are currently being or are
about to be negotiated by the Company with respect to the Employees.
2.21 Registrations and Permits. Set forth on Schedule 2.21 is a
complete and correct list of all franchises, licenses, Permits, certificates,
authorizations, rights and other approvals of governmental entities ("Permits")
necessary for the conduct of the Business except for Permits as to which the
failure to obtain would not have a Material Adverse Effect on the Business.
Except as set forth on Schedule 2.21, the Company or its Affiliates has made all
required registrations and filings with and submissions to all applicable
governmental entities relating to the Business as currently conducted, except
where the failure to make such registrations or filings or submissions would not
in the aggregate reasonably be expected to have a Material Adverse Effect on the
Business. Except as set forth on Schedule 2.21, all such registrations, filings
and submissions were in material compliance with all legal requirements and
other requirements when filed, no material deficiencies have been asserted by
any governmental entities with respect to such registrations, filings or
submissions. Except as set forth on Schedule 2.21, the Company or its Affiliates
possess and are operating in compliance in all material respects with Permits
necessary for the conduct of the Business, except where the failure to so
possess or operate would not have a Material Adverse Effect on the Business. All
Permits relating to the Business have been lawfully and validly issued, and no
proceeding is pending or, to the Knowledge of Seller, threatened looking toward
the revocation, suspension or limitation of any of the Permits.
2.22 Environmental, Health and Safety Matters.
(a) Except as set forth on Schedule 2.22, the Company is in
compliance with all Environmental, Health and Safety Requirements,
except for such non-compliance as would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Business.
(b) The Company has not received any written notice or report
regarding the Business of any actual or alleged violation of
Environmental, Health and Safety Requirements or any liabilities or
potential liabilities including any investigatory, remedial
18
or corrective obligations relating to the Business or its facilities,
the subject of which would reasonably be expected to have a Material
Adverse Effect on the Business.
(c) The Company has not, and to the Knowledge of Seller, no
predecessor in interest or an adjacent land owner, has buried, dumped,
spilled, released, stored, installed, manufactured, disposed of, or
used any Hazardous Material on or at any Hazardous Waste Site in
violation of any Environmental Health and Safety Requirements except
where any such violation would not have a Material Adverse Effect on
the Business.
2.23 Leased Equipment. Set forth on Schedule 2.23 is a complete and
correct description of all furniture, machinery, equipment, fixtures, trade
fixtures, leasehold improvements, shelving, dispensing equipment, tools, spare
parts, piping, motors, electronic equipment and signs leased or subleased by the
Company or an Affiliate of the Company and used in the Business where the
remaining rental payments under the equipment leases pertaining thereto exceeds
$50,000 and the remaining lease term thereunder exceeds six (6) months (the
"Leased Equipment"). Schedule 2.23 further sets forth a complete and correct
listing of all leases under which the Company or an Affiliate of the Company
leases Leased Equipment for use in the Business and where the remaining rental
payments thereunder after the date hereof exceed $50,000 and the remaining term
exceeds six (6) months (the "Equipment Leases").
(a) The Equipment Leases have not been modified or amended
except as disclosed on Schedule 2.23 and each such Equipment Lease is
valid and enforceable against the Company in accordance with its term
and is in full force and effect and, to Seller's Knowledge, each of the
Equipment Leases constitutes a legal, valid and binding obligation of
the other parties thereto enforceable against them in accordance with
its terms.
(b) The Company has delivered or caused to be delivered or
made available to Purchaser correct and complete copies of each
Equipment Lease (including all amendments thereto).
(c) Except as set forth on Schedule 2.23, the Company is not
in default under any of the Equipment Leases, and, to the Knowledge of
Seller, except as set forth on Schedule 2.23, the other parties to the
Equipment Leases are not in default thereunder.
(d) There are no setoffs, counterclaims or disputes existing
or asserted with respect to any Equipment Lease except as set forth on
Schedule 2.23.
(e) The Company has not made any agreement with any lessor or
sublessor under any Equipment Lease for any deduction from or increase
to the rents or other amounts payable thereunder except as set forth on
Schedule 2.23.
(f) Except as set forth on Schedule 2.23, none of the lessors
or sublessors under any of the Equipment Leases are Affiliates of the
Company.
(g) Except as set forth on Schedule 2.23, no rent has been
paid by or on behalf of the Company under any Equipment Lease more than
thirty (30) days in advance.
19
(h) The Leased Equipment is not operating in material
violation of any applicable Equipment Lease or leased or on loan by the
Company to any third party except as set forth on Schedule 2.23.
2.24 Shares. Seller possesses good and marketable title to the Shares.
The issued and outstanding Shares of the Company are set forth on Schedule 2.24.
The Shares have been duly authorized and validly issued, are fully paid and
non-assessable, have not been issued in violation of any preemptive rights and
constitute 100% of the issued and outstanding shares of stock in the Company.
There are no existing liens or encumbrances, or options on the Shares. There are
no: (i) outstanding securities of the Company convertible into or evidencing the
right to purchase or subscribe for any Shares of the Company; (ii)
subscriptions, rights, commitments or any other agreements of any character
obligating the Company to issue any Shares or any securities convertible into or
evidencing the right to purchase or subscribe for any Shares; or (iii)
agreements or understandings with respect to the voting, sale (including an
option or similar arrangement) or transfer of any Shares
2.25 Disclaimer of Other Representations and Warranties. Except as
expressly set forth in this Article II, Seller makes no representation or
warranty, express or implied, at law or in equity, in respect to either Seller,
the Company, the Business or any of the assets, Liabilities or operations of
either Seller, the Company or the Business, including without limitation, with
respect to merchantability or fitness for any particular purpose, and any such
representations and warranties are hereby expressly disclaimed. Purchaser hereby
acknowledges and agrees that, except to the extent specifically set forth in
this Article II, Purchaser is purchasing the Shares on a AS IS and WHERE IS
basis. Without limiting the generality of the foregoing, Purchaser acknowledges
that it has not relied upon any representation, estimate, projection or
statement made by or on behalf of Seller as to the future profitability of
either the Company , the Business, or the Transferred Projects and Purchaser
shall make no claim (whether for indemnification or otherwise) against Seller or
any of its Affiliates as to any projection, representation, estimate or
statement made by or on behalf of Seller as to the future profitability of
either the Company, the Business or the Transferred Projects and Seller
specifically disclaims any representations or warranties as to any such
representation, estimate, projection or statement. Purchaser further
acknowledges and agrees that, notwithstanding anything to the contrary contained
herein (and notwithstanding anything contained in any agreement, document or
instrument delivered pursuant hereto), all representations and warranties of
Seller set forth in this Agreement are made as of the date of execution hereof,
the Closing Date, and not stated or made as to any period of time subsequent
thereto (including but not limited to the period of time from the Closing Date
to the Effective Date) and Seller is under no obligation, and does not intend
to, restate such representations or warranties at any or as to any point of time
subsequent to the Closing Date nor is Seller under any obligation (and does not
intend) to provide any further information as disclosures (whether by way of
amendment or supplement to the Disclosure Schedules or otherwise) with respect
to the representations and warranties or with respect to the Business or the
Company or any other matter.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
20
Purchaser hereby represents and warrants to Seller as follows:
3.01 Corporate Existence. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Missouri.
Purchaser has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
3.02 Authority. The execution and delivery by Purchaser of this
Agreement, and the performance by Purchaser of its obligations hereunder, have
been duly and validly authorized by the board of directors of Purchaser, no
other corporate action on the part of Purchaser or its stockholders being
necessary. This Agreement has been duly and validly executed and delivered by
Purchaser and constitutes a legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.
3.03 No Conflicts. The execution and delivery by Purchaser of this
Agreement do not, and the performance by Purchaser of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of
the articles of incorporation or by-laws of Purchaser;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Schedule 3.03
hereto, conflict with or result in a violation or breach of any Law or
Order applicable to Purchaser or any of its Assets and Properties
(other than such conflicts, violations or breaches which could not in
the aggregate reasonably be expected to materially and adversely affect
the validity or enforceability of this Agreement); or
(c) except as disclosed in Schedule 3.03 hereto, (i) conflict
with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require
Purchaser to obtain any consent, approval or action of, make any filing
with or give any notice to any Person as a result or under the terms
of, or (iv) result in the creation or imposition of any Lien upon
Purchaser or any of its assets or properties under, any Contract or
License to which Purchaser is a party or by which any of its assets and
properties is bound and which, individually or in the aggregate with
other such Contracts and Licenses, would in the aggregate be reasonably
expected to have a Material Adverse Effect on the Business.
3.04 Governmental Approvals and Filings. Except as disclosed in
Schedule 3.04 hereto, no consent, approval or action of, filing with or notice
to any Governmental or Regulatory Authority on the part of Purchaser is required
in connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby except where the
failure to obtain any such consent, approval or action, to make any such filing
or to give any such notice could not reasonably be expected to materially and
adversely affect the
21
validity or enforceability of this Agreement or the performance by Purchaser of
its obligations under this Agreement.
3.05 Legal Proceedings. There are no Actions or Proceedings pending or,
to Purchaser's Knowledge, threatened against or directly affecting Purchaser or
the Business. Purchaser has not been charged with, nor to Purchaser's Knowledge,
is under investigation with respect to, any charge which has not been resolved
concerning any material violation of any Law or Permit. No judgment, order,
writ, injunction, decree or assessment or other command of any Governmental
Authority or arbitrator affecting Purchaser or the Business or its properties or
operations has been entered which is presently in effect. There is no Action or
Proceeding pending or, to Purchaser's Knowledge, threatened against Purchaser
which challenges the validity of this Agreement or the transactions contemplated
hereunder, or otherwise seeks to prevent, directly or indirectly, the
consummation of such transactions.
3.06 Brokers. Except as set forth on Schedule 3.06, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried out by Purchaser directly with Seller without the intervention of any
Person on behalf of Purchaser in such manner as to give rise to any valid claim
by any Person against Purchaser or Seller for a finder's fee, brokerage
commission or similar payment.
3.07 Financing and Bonding Commitment. [Intentionally omitted].
3.08 Disclaimer of Other Representations and Warranties. Seller
acknowledges and agrees that, notwithstanding anything to the contrary contained
herein (and notwithstanding anything contained in any agreement, document or
instrument delivered pursuant hereto), all representations and warranties of
Purchaser set forth in this Agreement are made as of the date of execution
hereof, the Closing Date, and not stated or made as to any period of time
subsequent thereto (including but not limited to the period of time from the
Closing Date to the Effective Date) and Purchaser is under no obligation, and
does not intend to, restate such representations or warranties at any or as to
any point of time subsequent to the Closing Date nor is Purchaser under any
obligation (and does not intend) to provide any further information as
disclosures (whether by way of amendment or supplement to the Disclosure
Schedules or otherwise) with respect to the representations and warranties or
with respect to the Business or the Company or any other matter.
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that, at all times from and
after the Closing Date until the Effective Date, Seller will comply with all
covenants and provisions of this Article IV, except to the extent Purchaser may
otherwise consent or waive in writing.
4.01 Investigation by Purchaser. Seller will (a) provide Purchaser and
its officers, employees, counsel, accountants, financial advisors, consultants,
lenders, and other representatives (together, "Representatives") with reasonable
access, upon reasonable prior notice and during normal business hours, to all
officers, employees, agents and accountants of the Business and to the
22
Books and Records related thereto, but only to the extent that such access does
not unreasonably interfere with the business and operations of the Company or
the Business, and (b) furnish Purchaser with all such information and data
(including without limitation copies of Contracts, Benefit Plans and other Books
and Records) concerning the business and operations of the Business as Purchaser
reasonably may request in connection with the transactions contemplated by this
Agreement, except to the extent that furnishing any such information or data
would violate any Law, Order, Contract or License applicable to Seller or the
Company or the Business or by which any of their respective assets and
properties are bound.
4.02 Conduct of Business.
(a) Seller will cause the Company to continue to operate and
conduct the Business in substantially the same manner as the same is
currently being operated and conducted on the date hereof. Except in
the Ordinary Course of Business, the Company will not (and will not
agree to), directly or indirectly, by operation of law or otherwise,
sell, exchange, hypothecate, pledge, encumber, lease or otherwise
dispose of any material assets of the Company without Purchaser's prior
written consent, which consent may be given or withheld in Purchaser's
sole discretion. The Company will, with respect to the Business: (i)
adequately maintain their respective assets (including the expenditure
of adequate amounts for maintenance) consistent with Seller's pattern
and practice of maintenance of such assets and maintain such assets in
as favorable a condition as the same are in on the date hereof, except
for normal wear and tear; (ii) maintain insurance covering their
respective properties and assets comparable to that in effect on the
date hereof; (iii) reapply for necessary Permits in the Ordinary Course
of Business; (iv) replace in accordance with past practice inoperable,
worn-out, obsolete or destroyed assets; (v) make timely payments on
accounts payable and other Liabilities, or contest such obligations in
good faith; (vi) make no change to the method by which its books,
records and accounts are maintained from the usual and regular method
consistent with prior years; (vii) deliver or cause to be delivered to
Purchaser, promptly after receipt of the same, copies of all notices of
violation of any Law or Order issued by any Governmental Authority with
respect to the Business and received by Seller or by any Affiliate of
Seller after the date of this Agreement. The Company may not, without
the prior written consent of Purchaser (which consent may be given or
withheld in Purchaser's sole discretion), directly or indirectly, by
operation of law or otherwise, (i) merge or consolidate with any other
Person; (ii) engage in any discussions, or solicit or encourage any
discussions, regarding the sale, purchase or lease of the Business or
material assets used therein (other than sales, purchases and leases of
assets in the Ordinary Course of Business); or (iii) agree to do any of
the foregoing.
(b) Notwithstanding anything contained herein to the contrary,
the Company shall neither bid upon or sign any new contracts having a
value of $10,000,000 or more without the prior written approval of
Purchaser, which approval shall not be unreasonably withheld.
4.03 Fulfillment of Conditions. [Intentionally omitted].
4.04 Notice of Developments. [Intentionally omitted].
23
4.05 Exclusivity. Seller will not solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of the shares or substantially all of the assets (including any acquisition
structured as a merger, consolidation, or share exchange) of the Company and
neither Seller, its officers or any other representatives of Seller shall
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek any of the
foregoing.
4.06 New Transferred Projects and Bids. After the date hereof until the
Effective Date, Seller will promptly notify Purchaser of (a) any bid made by the
Company that would be a Transferred Project if such bid was accepted and (b) the
acceptance or award of any bid made by the Company which shall become a
Transferred Project.
4.07 Noncompetition Agreement. [Intentionally omitted].
4.08 Casualty or Condemnation. If, after the Closing Date but prior to
the Effective Date, any assets of the Company is damaged, destroyed or lost by
fire or other casualty (a "Casualty") Seller will immediately notify Purchaser
of such event. The consummation of transactions hereunder shall, notwithstanding
said Casualty, still be effective on the Effective Date but Purchaser shall
receive all insurance proceeds or awards (collectively the "Proceeds") payable
as the result of such Casualty, if any (including any such Proceeds paid to or
for the account of Seller or any Affiliate of Seller prior to the Effective
Date, whether or not such Proceeds then constitute assets of the Company).
Seller agrees to execute such assignment documents as Purchaser may reasonably
require to effect the assignment to Purchaser of the Proceeds required by this
Section.
4.09 Coverage Under Various Plans.
(a) Benefit Plans. Effective as of 12:01 AM CST on the Effective Date,
Employees of the Business shall cease to participate in, accrue benefits under
or be entitled to benefits from every Benefit Plan. With respect to each Benefit
Plan that is an employee welfare benefit plan, all claims incurred by each
Employee of the Business as of that time shall be paid by those Benefit Plans.
For this purpose, a medical claim shall be deemed to have been incurred if the
covered goods or services have been provided as of the relevant time. With
respect to each Benefit Plan that is one of Seller's Defined Contribution Plans,
each Employee of the Business (who continues his or her employment with the
Company on or after Effective Date) shall be fully (100%) vested without regard
to his or her age or length of service.
(b) Transfer of Certain Accounts from Seller's Defined Contribution
Plans. As soon as may be practicable after the Effective Date, Seller and
Purchaser shall take such actions as may be reasonably required to transfer the
total accounts of all Employees of the Business who are participants in the
Seller's Defined Contribution Plans from those plans to the Purchaser's Defined
Contribution Plans. Except as may be required in the normal course of plan
operations, distributions shall not be made from the Seller's plans on account
of the transaction contemplated by this Agreement. In connection with this
transaction, the Purchaser and the
24
Seller have executed and delivered the two (2) Transfer Agreements attached
hereto as Exhibits J and K. Further, Seller and Purchaser shall undertake to
adopt all amendments of the Seller's Defined Contribution Plans and the
Purchaser's Defined Contribution Plans, respectively, give such notifications
and make all filings as may be reasonably required to complete these transfers
of assets and liabilities without exposing any such plan to any material risk of
plan disqualification. Seller will provide Purchaser with a copy of the most
recent determination letters with respect to each of the Seller's Defined
Contribution Plans. Purchaser will provide Seller with a copy of the most recent
determination letters with respect to each of the Purchaser's Defined
Contribution Plans.
4.10 Certain Pre-Closing Transactions. [Intentionally omitted].
4.11 Administrative Services Agreement. [Intentionally omitted].
4.12 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. As soon as practicable after the date of
this Agreement, Seller and Purchaser agree to make any filings required under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. Seller will furnish to Purchaser such necessary
information and reasonable assistance as Purchaser may reasonably request in
connection with its preparation of any additional necessary filings or
submissions to any governmental agency, including, without limitation, any
additional filings necessary under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
4.13 Funding of Business from Date of Closing to Effective Date. Seller
agrees that from the Date of Closing to the Effective Date, to the extent the
Ordinary Course of Business of the Company requires working capital in excess of
working capital generated by the Ordinary Course of Business of the Company,
Seller shall loan such excess requirements to the Company. Purchaser shall, or
cause the Company to, immediately reimburse Seller for such loans within three
(3) Business Days after the Effective Date by wire transfer of immediately
available funds to Seller or at its direction.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that Purchaser will comply
with all covenants and provisions of this Article V, except to the extent Seller
may otherwise consent or waive in writing.
5.01 Notice of Developments. [Intentionally omitted].
5.02 Fulfillment of Conditions. [Intentionally omitted].
5.03 Sales Taxes. Purchaser shall pay any sales, use or transfer taxes
imposed upon Purchaser arising in connection with the transactions contemplated
hereby.
5.04 Payment and Performance Bonds. [Intentionally omitted].
25
5.05 Offer of Employment to Business Employees. Seller intends, as of
the Effective Date, to offer to employ (on substantially similar terms as such
Employees are currently employed by the Company) all of the employees of the
Business listed on Schedule 5.05 hereto for a limited period of time to complete
certain projects which do not constitute Transferred Projects (the "Retained
Employees"). Purchaser hereby consents to such offer of employment and
employment by Seller. During their employment by Seller, Seller shall satisfy
all liability under any employment contracts with such Retained Employees. Upon
completion of the projects for which Seller has employed the Retained Employees,
Seller shall promptly notify Purchaser thereof and Purchaser shall promptly
offer employment to the Retained Employees, on substantially similar terms as
such employees are currently employed by the Company or its Affiliates.
5.06 Employees Generally. Purchaser shall not terminate an Employee
(except for cause) for a period of sixty (60) days after the Effective Date.
Notwithstanding anything contained herein to the contrary, Purchaser shall be
under no obligation to continue employment to any Person who is not residing in
the United States and is not a citizen of the United States.
5.07 Employee Benefits. Purchaser shall provide the Employees with the
same employee benefits as provided to its other employees which shall be
reasonably comparable to the employee benefits provided under the Benefit Plans.
Purchaser will insure that such benefits provided to the Employees treat
employment with the Company or its Affiliates prior to the Effective Date the
same as employment from and after the Effective Date for purposes of
eligibility, vesting and benefit accrual under such benefit plans.
5.08 Warranty and Other Work. For a period of 5 years after the Closing
Date and upon the request of Seller, Purchaser agrees to perform warranty work
or repairs on any project of the Company that is not a Transferred Project and
on those Transferred Projects listed on Schedule 1.03. Purchaser will promptly
and diligently perform any such warranty work or repairs requested by Seller.
Purchaser will charge Seller and Seller will pay Purchaser for any such warranty
work or repairs performed by Purchaser the actual cost (under Purchaser's
customary costing formula) incurred by Purchaser to perform such work or repairs
plus 5% thereof.
5.09 Accounting and Payroll/▇▇▇▇▇▇▇/Norshield Administrative Services
Agreement Purchaser agrees to fully perform and discharge all obligations and
covenants of the Company or Seller or its Affiliates under that certain
Administrative Services Agreement, dated November 28, 1998, by and between the
Company and ▇▇▇▇▇▇▇ Industries, Inc. and Norshield Corp., a copy of which is
attached hereto as Schedule 5.09.
5.10 Multi-Employer Plan. At the Effective Date, the Company is legally
obligated to make contributions to several defined benefit pension plans that
are multiemployer plans within the meaning of Section 3(37) of ERISA
("Multiemployer Plans"). It is the intent of the parties that the Company's
obligation to make contributions (including employer withdrawal liability
contributions) shall not be affected by this Agreement.
5.11 Administrative Services Agreement. [Intentionally omitted].
26
5.12 Vehicle Leasing Program. Purchaser agrees to, or cause the Company
to, fully perform and discharge all obligations and covenants of the Seller
under that certain Motor Vehicle Lease Agreement dated April 10, 1980, as
amended, by and between Seller and Automotive Rentals, Inc. ("ARI"), a copy of
which is attached to Schedule 2.13(a)(viii) to this Agreement. In addition, as
soon as is reasonably practicable, but in no event later than 45 days after the
Effective Date, Purchaser will cause the Company to enter into a new lease
agreement with ARI for the leased vehicles covered under said vehicle lease
agreement.
5.13 Separation of PENTA Agreement. At the Effective Date, Purchaser
agrees to, or cause the Company to and Seller agrees to, or cause ▇▇▇▇▇▇, Inc.
and ▇▇▇▇▇▇▇ Industries, Inc. to, equitably apportion their rights and
obligations under that certain PENTA Applications Software License Agreement
dated June 30, 1998, as amended (the "PENTA Agreement"), by and among the
Company, ▇▇▇▇▇▇, Inc., ▇▇▇▇▇▇▇ Industries, Inc. and Penta Technologies, Inc.
After the Effective Date, such parties will diligently negotiate individual
agreements with PENTA that accurately reflects the division of rights and
obligations under the PENTA Agreement.
5.14 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. As soon as practicable after the date of
this Agreement, Seller and Purchaser agree to make any filings required under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. Purchaser will furnish to Seller such necessary
information and reasonable assistance as Seller may reasonably request in
connection with its preparation of any additional necessary filings or
submissions to any governmental agency, including, without limitation, any
additional filings necessary under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
5.15 Customs Bond. After the Effective Date, Purchaser will obtain the
release and surrender to Seller of that certain Customs Bond No. 50-13808-99-5
executed on March 30, 1999 (the "Customs Bond").
5.16 Replacement of Letters of Credit. Within five (5) Business Days
after the Effective Date, Purchaser will obtain the release and surrender to
Seller of the $300,000 Materials Storage Standby Letter of Credit dated December
8, 1998, issued to the account of the Company for the benefit of ▇▇▇▇ Companies
US, Inc. (the "$300,000 LOC") and the $500,000 Materials Storage Standby Letter
of Credit dated January 12, 1999, issued to the account of the Company for the
benefit of ▇▇▇▇ Companies US, Inc. (the "$500,000 LOC" together with the
$300,000 LOC, collectively referred to herein as the "Letters of Credit"), or
make such other arrangements as are satisfactory to Seller, in its sole
discretion.
5.17 Payment of Loans. Notwithstanding anything contained herein to the
contrary (or anything to the contrary contained in any agreement, document or
instrument delivered pursuant hereto), within three (3) Business Days of the
Effective Date, Purchaser shall pay to Seller or cause the Company to pay to
Seller, in immediately available funds by wire transfer to Seller or at its
direction, all loans made by Seller to the Company pursuant to Section 4.13
hereof.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
27
The obligations of Purchaser hereunder are subject to the fulfillment,
at or before the effectiveness of the Closing on the Effective Date, of each of
the following conditions (all or any of which may be waived in whole or in part
by Purchaser in its sole discretion):
6.01 Representations and Warranties. [Intentionally omitted].
6.02 Performance. [Intentionally omitted].
6.03 Orders and Laws. There shall not be in effect on the Effective
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement nor shall there be any Action or Proceeding pending or threatened by
or before any arbitrator of Governmental Authority to enjoin, restrain or
prohibit, or which is related to or arises out of, this Agreement or the
consummation of the transactions contemplated hereby.
6.04 Regulatory Consents and Approvals. Expiration of the waiting
period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or grant of early termination thereof.
6.05 Opinions of Counsel. [Intentionally omitted].
6.06 Officer's Certificate. [Intentionally omitted].
6.07 Noncompetition Agreement; License Agreement and Escrow Agreement.
[Intentionally omitted].
6.08 No Material Adverse Change. [Intentionally omitted].
6.09 Closing Documents. [Intentionally omitted].
6.10 Director Resignations. [Intentionally omitted].
6.11 Intercompany Debt. [Intentionally omitted].
6.12 Administrative Services Agreement. [Intentionally omitted].
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the fulfillment, at
or before the effectiveness of the Closing on the Effective Date, of each of the
following conditions (all or any of which may be waived in whole or in part by
Seller in its sole discretion):
7.01 Representations and Warranties. [Intentionally omitted].
7.02 Performance. [Intentionally omitted].
28
7.03 Officer's Certificates. [Intentionally omitted].
7.04 Orders and Laws. There shall not be in effect on the Closing Date
any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement.
7.05 Regulatory Consents and Approvals. Expiration of the waiting
period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or grant of early termination thereof.
7.06 Opinion of Counsel. [Intentionally omitted].
7.07 Noncompetition Agreement; License Agreement and Escrow Agreement.
[Intentionally omitted].
7.08 Payment of Purchase Price. [Intentionally omitted].
7.09 Bonding Condition. [Intentionally omitted].
7.10 Closing Documents. [Intentionally omitted].
7.11 Mutual Release. [Intentionally omitted].
7.12 Administrative Services Agreement. [Intentionally omitted].
29
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS, INDEMNIFICATION
8.01 Survival of Representations, Warranties, Covenants and Agreements.
The representations and warranties of Seller and Purchaser contained in this
Agreement will survive the Closing (unless the party asserting a breach thereof
or misrepresentation thereunder knew of the misrepresentation or breach at the
time of Closing) and remain in full force and effect until the second
anniversary of the Closing, and no suit or claim for indemnification hereunder
with respect to a breach of such representations or warranties or for any other
matter entitled to indemnification hereunder shall be brought thereafter
provided, however, that (i) the representations and warranties of Seller
contained in Sections, 2.01, 2.02, 2.15 and 2.24 and the representations and
warranties of Purchaser in Sections 3.01, 3.02 and 3.06 shall survive the
Closing and remain in full force and effect without time limit and (ii) the
representations and warranties of the Seller contained in Sections 2.07, 2.08,
2.10 and 2.22 shall survive the Closing until the expiration of any applicable
statutes of limitations (as the same may be extended from time to time) and
indemnification with respect to the representations and warranties set forth in
clauses (i) and (ii) hereof may be brought hereunder within the time limits, if
any, specified in such clauses. The covenants and agreements of the parties
contained in this Agreement shall survive the Closing unless and until they are
otherwise terminated pursuant to their terms or as a matter of applicable laws.
8.02 Indemnification by Seller.
(a) Subject to the effectiveness of the Closing upon the
Effective Date and the limitations of Section 8.02(b) and the
adjustments provided for in Section 8.02(c), Seller will hold harmless
the Purchaser, its successors, and assigns and their respective
officers, directors, employees, agents, shareholders and Affiliates
(collectively, the "Purchaser Indemnified Parties") against any loss,
liability, deficiency, damage, expense or costs (including reasonable
legal fees and expenses) (collectively, "Losses"), which Purchaser
Indemnified Parties may suffer, sustain, or become subject to, (i)
prior to any applicable termination date, as a result of any
misrepresentation in any of the representations and warranties of
Seller contained in this Agreement or in any exhibits, schedules,
certificates or documents delivered or to be delivered by or on behalf
of Seller pursuant to the terms of this Agreement (the "Related
Documents"), (ii) any Claims or threatened Claims arising out of the
actions or inactions of the Company with respect to the Business prior
to the Date of Closing, excluding however, any Claims arising or
resulting from or related to the Transferred Projects (other than
warranty claims with respect to the Transferred Projects identified in
Schedule 1.03) regardless of whether such Claims result from actions or
inactions of Seller or the Company taken or failed to be taken prior to
Closing or from actions or inactions of Purchaser or Seller (other than
actions of Seller in violations of Article IV hereof) taken or failed
to be taken after the Date of Closing, or (iii) as the result of any
breach of, or failure to perform any agreement of the Seller contained
in this Agreement (the Losses described in clauses (i) through (ii)
hereof are collectively referred to herein as "Purchaser Losses").
30
(b) Seller shall be liable to the Purchaser Indemnified
Parties for any Purchaser Losses only if the aggregate amount of all
Purchaser Losses exceeds $200,000 (the "Deductible"), in which case
Seller shall only be obligated to indemnify Purchaser for Purchaser
Losses in excess of the Deductible and, then, only to the extent
indemnification payable by Seller under this Section 8.02 does not in
the aggregate exceed $4,000,000.
(c) Notwithstanding anything contained herein to the contrary,
the amount for which a Purchaser Indemnified Party is entitled to
indemnification hereunder for Purchaser's Losses shall be reduced by
the amount of any and all actual tax benefits, amounts recovered under
insurance policies, insurance loss funds or insurance deposits (net of
deductibles and incidental expenses) and further reduced by recovery of
any setoffs or counterclaims realized by the Purchaser Indemnified
Party that are measurable in dollars with reasonable certainty (net of
cost and expenses of recovering such amounts).
(d) For the purposes of determining Purchaser Losses, the
Seller's representations and warranties in Article II hereof, shall be
deemed to be made without reference to any materiality qualifications,
including, without limitation Material Adverse Effect qualifications.
(e) Seller hereby agrees to indemnify Purchaser from the
Seller Liabilities set forth in Section 1.03 hereof without regard to
the limitations set forth in subsection 8.02(b) or to the time limits
specified in Section 8.01 hereof.
8.03 Indemnification by Purchaser. Purchaser agrees to indemnify in
full Seller and hold it and its officers, directors, employees, agents,
shareholders and Affiliates (collectively the "Seller Indemnified Parties")
harmless against any Losses which the Seller Indemnified Parties may suffer,
sustain or become subject to as a result of (i) any misrepresentation in any of
the representations and warranties of Purchaser contained in this Agreement or
in any of the Related Documents, (ii) any breach of, or failure to perform, any
agreement of Purchaser contained in this Agreement or any of the Related
Documents, (iii) any Claims or threatened Claims against Seller arising out of
the actions or inactions of Purchaser or Seller (other than actions of Seller in
violation of Article IV hereof) with respect to the Business after the Date of
Closing or (iv) any Claims arising or resulting from or related to the
Transferred Projects (other than warranty claims with respect to the Transferred
Projects identified on Schedule 1.03 and personal injury or casualty property
damage occurring prior to the Closing) regardless of whether such Claims arise
or result from action or inaction of either Seller taken or failed to be taken
prior to Closing or from actions or inactions of Purchaser taken or failed to be
taken after Closing.
8.04 Method of Asserting Claims. As used herein, an "Indemnified Party"
shall refer to a Purchaser Indemnified Party or a Seller Indemnified Party, as
applicable; the Notifying Party shall refer to the party hereto whose
Indemnified Parties are entitled to indemnification hereunder; and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
31
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or
administrative, instituted by any third party for the liability or the
costs or expenses of which are Losses (any such third party action or
proceeding being referred to as a "Claim"), the Notifying Party shall
give the Indemnifying Party prompt notice thereof. The failure to give
such notice shall not affect any Indemnified Party's ability to seek
reimbursement unless such failure has materially and adversely affected
the Indemnifying Party's ability to defend successfully a Claim. The
Indemnifying Party shall be entitled to contest and defend such Claim;
provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently
contests and defends such Claim. Notice of the intention so to contest
and defend shall be given by the Indemnifying Party to the Notifying
Party within 20 business days after the Notifying Party's notice of
such Claim (but, in all events, at least five business days prior to
the date that an answer to such Claim is due to be filed). Such contest
and defense shall be conducted by reputable attorneys employed by the
Indemnifying Party. The Notifying Party shall be entitled at any time,
at its own cost and expense (which expense shall not constitute a Loss
unless the Notifying Party reasonably determines that the Indemnifying
Party is not adequately representing or, because of a conflict of
interest, may not adequately represent, any interests of the
Indemnified Parties, and only to the extent that such expenses are
reasonable) to participate in such contest and defense and to be
represented by attorneys of its or their own choosing. If the Notifying
Party elects to participate in such defense, the Notifying Party will
cooperate with the Indemnifying Party in the conduct of such defense.
Neither the Notifying Party nor the Indemnifying Party may concede,
settle or compromise any Claim without the consent of the other party,
which consents will not be unreasonably withheld. Notwithstanding the
foregoing, (i) if a Claim seeks equitable relief or (ii) if the subject
matter of a Claim relates to the ongoing business of any of the
Indemnified Parties, which Claim, if decided against any of the
Indemnified Parties, would materially and adversely affect the ongoing
business or reputation of any of the Indemnified Parties, then, in each
such case, the Indemnified Parties alone shall be entitled to contest,
defend and settle such Claim in the first instance and, if the
Indemnified Parties do not contest, defend or settle such Claim, the
Indemnifying Party shall then have the right to contest and defend (but
not settle) such Claim.
(b) In the event any Indemnified Party shall have a claim
against any Indemnifying Party that does not involve a Claim, the
Notifying Party shall deliver a notice of such claim with reasonable
promptness to the Indemnifying Party. If the Indemnifying Party
notifies the Notifying Party that it does not dispute the claim
described in such notice or fails to notify the Notifying Party within
30 days after delivery of such notice by the Notifying Party whether
the Indemnifying Party disputes the claim described in such notice, the
Loss in the amount specified in the Notifying Party's notice will be
conclusively deemed a liability of the Indemnifying Party and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has timely disputed its
Liability with respect to such claim, the chief executive officers of
each of the Indemnifying Party and the Notifying Party will proceed in
good faith to negotiate a resolution of such dispute, and if not
32
resolved through the negotiations of such Chief Executive Officers
within 60 days after the delivery of the Notifying Party's notice of
such claim, such dispute shall be resolved fully and finally in
Chicago, Illinois or some other site mutually agreed to by the Parties
by an arbitrator selected pursuant to, and an arbitration governed by,
the Commercial Arbitration Rules of the American Arbitration
Association. The arbitrator shall resolve the dispute within 30 days
after selection and judgment upon the award rendered by such arbitrator
may be entered in any court of competent jurisdiction.
(c) After the Date of Closing, the rights set forth in this
Article VIII shall be each party's sole and exclusive remedies against
the other party hereto for misrepresentations or breaches of covenants
contained in this Agreement and the Related Documents. Notwithstanding
the foregoing, nothing herein shall prevent any of the Indemnified
Parties from bringing an action based upon actual and knowing fraud or
other intentional breach of an obligation of or with respect to either
party in connection with this Agreement and the Related Documents. In
the event such action is brought, the prevailing party's attorneys'
fees and costs shall be paid by the nonprevailing party.
(d) Any indemnification payable under Section 8.02 shall be,
to the extent permitted by law, an adjustment to Purchase Price.
(e) If at any time Purchaser is entitled to indemnification
from Seller hereunder and amounts remain outstanding under the Purchase
Money Note, any indemnification payable by Seller shall be effected by
setoff against amounts owed by Purchaser to Seller under the Purchase
Money Note with such setoff being credited against installments due
thereunder in inverse order of maturity.
ARTICLE IX
TERMINATION
9.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Effective Date, by mutual written
agreement of Seller and Purchaser;
(b) at any time before the Effective Date, by Seller or
Purchaser, in the event that any Order or Law becomes final which
effectively restrains, enjoins or otherwise prohibits or makes illegal
the consummation of any of the transactions contemplated by this
Agreement upon notification of the non-terminating party by the
terminating party; or
(c) at any time after May 27, 1999 by Seller or Purchaser upon
notification to the non-terminating party by the terminating party if
the Effective Date shall not have occurred on or before such date.
33
9.02 Effect of Termination. Upon termination pursuant to Section 9.01,
this Agreement will forthwith become null and void, and there will be no
liability or obligation on the part of either Seller or Purchaser (or any of
their respective officers, directors, employees, agents or other representatives
or Affiliates), except that (i) the provisions with respect to expenses in
Section 11.03 and confidentiality in Section 11.05 will continue to apply
following any such termination and (ii) no such termination shall relieve a
defaulting party of its liabilities for damages resulting from such party's
default.
9.03 Escrow Deposit. [Intentionally deleted].
ARTICLE X
DEFINITIONS
10.01 Definitions.
(a) As used in this Agreement, the following defined terms
shall have the meanings indicated below:
"Actions or Proceedings" means any action, suit, proceeding,
hearing, arbitration or Governmental or Regulatory Authority
investigation.
"Adjusted Purchase Price" has the meaning ascribed to it in
Section 1.06(b).
"Administrative Services Agreement" has the meaning ascribed
to it in Section 4.11.
"Affiliate" means (i) any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is
under common control with the Person specified; (ii) any Person who is
a director or officer of any Person in clause (i) above or of the party
for whom an affiliate is being determined. For purposes of this
definition, control of a Person means the power, direct or indirect, to
direct or cause the direction of the management and policies of such
Person whether by Contract or otherwise and, in any event and without
limitation of the previous sentence, any Person owning more than 50% of
the voting securities of a second Person shall be deemed to control
that second Person.
"Affiliate Guarantees" has the meaning ascribed to it in
Section 1.05.
"Affiliate Security Agreements" has the meaning ascribed to it
in Section 1.05.
"Agreement" means this Stock Purchase Agreement, the exhibits
and the schedules hereto and the certificates delivered in accordance
with the terms hereof, as the same shall be amended from time to time.
"Benefit Plan" has the meaning ascribed to it in Section
2.10(a).
34
"Bonding Condition" means the replacement of all payment and
performance bonds as set forth on Schedule 5.05.
"Books and Records" means all files, documents, instruments,
papers, books and records, including without limitation financial
statements, budgets, pricing guidelines, ledgers, journals, deeds,
title policies, Licenses, customer lists, computer files and programs,
retrieval programs, operating data and plans, invoices, correspondence,
memoranda, change orders, maintenance records, advertising and
promotional material and other printed or written or electronic
materials and environmental studies and plans.
"Business" has the meaning ascribed to it in the forepart of
this Agreement.
"Business Day" means a day other than Saturday, Sunday or any
day on which commercial banks are authorized or required to close under
the laws of the United States or the State of Minnesota.
"Business or Condition of" means the business, financial
condition or results of operations of the referenced company.
"Cash" means cash and cash equivalents, including marketable
securities and short term investments, calculated in accordance with
GAAP applied on a basis consistent with the preparation of the
Financial Statements.
"Cash Portion of the Purchase Price" means $2,000,000.
"Claim" has the meaning ascribed to it in Section 8.04.
"Closing" means the closing of the transactions contemplated
by Section 1.05.
"Closing Date" or "Date of Closing" means April 9, 1999, the
date of execution hereof.
"Closing Date Balance Sheet" has the meaning ascribed to it in
Section 1.06(d).
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"Contract" means any agreement, lease, sublease, evidence of
Indebtedness, mortgage, indenture, security agreement or other similar
arrangements of the Company other than any of the foregoing
constituting or under which material rights arise with respect to
Excluded Assets or Seller Liabilities.
"Customs Bond" has the meaning ascribed to it in Section 5.16.
"Deductible" has the meaning ascribed to it in Section
8.02(b).
35
"Draft Closing Date Balance Sheet" has the meaning ascribed to
it in Section 1.06(c)
"Effective Date" means the earliest of the date upon which (i)
the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act has expired or (ii)
early termination has been granted.
"Employee" means any Person employed by the Company on the
Closing Date including those persons who are on sick leave, military
leave or other duly authorized leave of absence.
"Environmental, Health and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, and ordinances
concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including without
limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials,
substances or wastes, as such requirements are enacted and in effect on
or prior to the Closing Date.
"Equipment Leases" has the meaning ascribed to it in Section
2.23.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means as to any Person, any trade or
business (irrespective of whether incorporated) which is a member of a
group of which such Person is a member and thereafter treated as a
single employer under ss.414(b), (c), (m) or (o) of the Code or
applicable Treasury Regulations.
"Escrow Agreement" has the meaning ascribed to it in Section
1.04.
"Estimated Net Working Capital" has the meaning ascribed to it
in Section 1.06(a).
"Estimated Working Capital Deficit Adjustment" has the meaning
ascribed to it in Section 1.06(b).
"Estimated Working Capital Surplus Adjustment" has the meaning
ascribed to it in Section 1.06(b).
"Excluded Assets" has the meaning ascribed to it in Section
1.02.
"Final Purchase Price" has the meaning ascribed to it in
Section 1.06(d).
"Financial Statements" means the financial statements of the
Business delivered to Purchaser pursuant to Section 2.05.
36
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the
immediately prior comparable period as applied, in the United States.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, Canada or any state, county, city
or other political subdivision.
"Hazardous Material" means any substance which is defined as a
"Hazardous Waste" or "Hazardous Substance" under any Environmental
Health or Safety Requirement.
"Hazardous Waste Site" means any site or location wherever
located (including any well, pit, pond, lagoon, tailings pile, spoil
pile, impoundment, ditch, trench, drain, landfill, warehouse or waste
storage container) where Hazardous Material has been deposited, stored,
treated, reclaimed, disposed of, placed or otherwise came to be
located.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"Indebtedness" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds,
debentures or similar instruments, (iii) for the deferred purchase
price of goods or services (other than trade payables or accruals
incurred in the ordinary course of business), (iv) under capital
leases, (v) all obligations of liabilities of others secured by a lien
on any asset owned by such person, whether or not such obligation is
expressly assumed by such person, and (vi) in the nature of guarantees
of the obligations described in clauses (i) through (v) above of any
other Person.
"IRS" means the United States Internal Revenue Service.
"Intellectual Property" means any and all of the following
owned by the Company or its Affiliates and used in the Business but
excluding any of the following which are used primarily in businesses
other than the Business: (i) trademarks; (ii) tradenames; (iii)
inventions (whether patentable or unpatentable and whether or not
reduced to practice) and all improvements thereto; (iv) patents, patent
applications, patent disclosures and inventions upon which patent
applications have not yet been filed, together with all reissuances,
continuations, continuations-in-part, revisions, extension and
reexaminations thereof and the right to file therefor; (v)
copyrightable works, copyrights and all applications, registrations and
renewals in connection therewith; (vi) mask works and all applications,
registrations and renewals in connection therewith; (vii) computer
software, including source and object codes, management information
systems, computer printouts, data bases and related documentation;
(viii) trade secrets and confidential business information, including
ideas, research and development, know-how formulas (secret or
otherwise), compositions of matter, manufacturing and product processes
and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, business and
marketing plans and proposals, discoveries, test procedures and
specifications, shop rights and other similar intangible property; (ix)
other proprietary
37
rights; (x) copies and tangible embodiments of any of the foregoing, in
whatever form or medium; (xi) goodwill associated with any of the
foregoing; (xii) licenses and sublicenses granted or obtained with
respect to any of the foregoing; (xiii) rights under any of the
foregoing; and (xiv) rights to protection or extension of interest in
any of the foregoing under all application laws.
"Knowledge of Seller" means the actual knowledge of ▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and
the actual knowledge of any other officer of Seller without imputation
of notice or knowledge of any other source or Person.
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the
United States, Canada, any other foreign country or any domestic or
foreign state, county, city or other political subdivision or of any
Governmental or Regulatory Authority.
"Leased Equipment" has the meaning ascribed to it in Section
2.23.
"Letters of Credit" has the meaning ascribed to it in Section
7.13.
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed
or otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises,
variances and similar consents granted or issued by any Governmental or
Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other
encumbrance.
"Losses" has the meaning ascribed to it in Section 8.02(a).
"Material Adverse Effect" means, with respect to an entity,
business, or assets, any condition, event, change or occurrence that
would reasonably be expected to have, a material adverse effect on the
assets, business, operations, results of operations, value or financial
condition of such business, entity or assets.
"Maximum Target Net Working Capital" has the meaning ascribed
to it in Section 1.06(b).
"Minimum Target Net Working Capital" has the meaning ascribed
to it in Section 1.06(b).
"Multiemployer Plans" has the meaning ascribed to it in
Section 5.10.
38
"Net Working Capital" has the meaning ascribed to it in
Section 1.06(a).
"Option" with respect to any Person means any security, right,
subscription, warrant, option, or other Contract that gives the right
to purchase or otherwise receive or be issued any shares of capital
stock of such Person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock of such
Person.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such
case whether preliminary or final).
"Ordinary Course of Business" means the ordinary operations of
the Business, consistent with its historical custom and practice
(including with respect to quantity and frequency).
"Permits" has the meaning ascribed to it in Section 2.21.
"Permitted Lien" means (i) any Lien for Taxes not yet due and
payable or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP,
(ii) any statutory Lien arising in the ordinary course of business by
operation of Law with respect to a Liability that is not yet due and
payable; (iii) those Liens, covenants, restrictions and easements and
other exceptions set forth on the Title Commitment; and (iv) with
respect to any real property, any minor imperfection of title or
similar Lien which individually or in the aggregate with other such
Liens does not materially adversely affect the value of the real estate
or materially impair the use of the real property.
"Person" means any natural person, corporation, general
partnership, limited partnership, proprietorship, limited liability
company, other business organization, trust, union, association or
Governmental or Regulatory Authority.
"Prohibited Transaction" means any transaction described in
Section 406 of ERISA or Section 4975 of the Code, for which an
exemption does not apply.
"Purchase Price" has the meaning ascribed to it in Section
1.04.
"Purchaser" has the meaning ascribed to it in the forepart of
this Agreement.
"Purchaser's Defined Contribution Plans" means the defined
contribution plans already in existence or to be established by the
Purchaser (or a subsidiary of the Purchaser) for the purpose of
receiving the transfer of assets and liabilities from the Seller's
Defined Contribution Plans as provided in Section 4.09(b) of this
Agreement.
"Representative" has the meaning ascribed to it in Section
4.01.
"Related Documents" has the meaning ascribed to it in Section
8.02(a).
39
"Retained Employees" has the meaning ascribed to it in Section
5.06.
"Seller" has the meaning ascribed to it in the forepart of
this Agreement.
"Seller Indemnified Parties" has the meaning ascribed to it in
Section 8.03.
"Seller's Defined Contribution Plans" means the defined
contribution plans previously established by the Seller and described
in Section 4.09(b) of this Agreement.
"Subsidiaries" means any Persons in which the Business,
directly or indirectly through Subsidiaries or otherwise, beneficially
owns more than 50% of either the equity interests in, or the voting
control of, such Persons.
"Tax Returns" has the meaning ascribed to it in Section 2.07.
"Taxes" has the meaning ascribed to it in Section 2.07.
"Transferred Projects" means projects of the Business which:
(i) are in process on the date hereof as listed on Schedule 10(A), (ii)
have been awarded or contracted as of the date hereof for bids
submitted prior to the date hereof but have not yet been commenced as
listed on Schedule 10(B), (iii) are awarded or contracted after the
date hereof for bids that have been submitted as of the date hereof as
listed on Schedule 10(C) and (iv) subject to the limitations of Section
4.02, are bid in the Ordinary Course of Business after the date hereof
and awarded or contracted, whether before or after the Effective Date.
"Unaudited Financial Statement Date" means January 30, 1999.
"Working Capital Balance Sheets" has the meaning ascribed to
it in Section 1.06(a).
(b) Unless the context of this Agreement otherwise requires,
(i) words of any gender include each other gender; (ii) words using the
singular or plural number also include the plural or singular number,
respectively; (iii) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement; (iv) the
terms "Article" or "Section" refer to the specified Article or Section
of this Agreement; and (v) the phrase "ordinary course of business"
refers to the Business as conducted by the Business. All accounting
terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP. Any representation or warranty
contained herein as to the enforceability of a Contract shall be
subject to the effect of any bankruptcy, insolvency, reorganization,
moratorium or other similar law affecting the enforcement of creditors'
rights generally and to general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at Law).
ARTICLE XI
MISCELLANEOUS
40
11.01 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to Purchaser, to:
CH Holdings, Inc.
c/▇ ▇▇▇▇▇▇▇ Products, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, CEO
with a copy to:
▇▇▇▇▇, Rice & ▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to Seller, to:
Apogee Enterprises, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Financial Officer
and
Apogee Enterprises, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General Counsel
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given when sent,
41
verification received, and (iii) if delivered by United States mail, first class
postage prepaid, in the manner described above to the address as provided in
this Section, be deemed given three days after deposited in the United States
mail, and (iv) if delivered by overnight courier service, be deemed given one
business day after delivery to the overnight courier service with payment
provided (in each case regardless of whether such notice is received by any
other Person to whom a copy of such notice, request or other communication is to
be delivered pursuant to this Section). Any party from time to time may change
its address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other party hereto.
11.02 Entire Agreement. This Agreement and all documents executed and
delivered in connection therewith supersedes all prior discussions and
agreements between the parties with respect to the subject matter hereof,
including without limitation the letter of intent dated August 25, 1998 between
Purchaser and Seller, and the confidentiality agreement dated May 21, 1998
between Purchaser and Seller, and contains the sole and entire agreement between
the parties hereto and their Affiliates with respect to the subject matter
hereof.
11.03 Expenses. Except as otherwise expressly provided in this
Agreement whether or not the transactions contemplated hereby are consummated,
each party will pay its own costs and expenses incurred in connection with the
negotiation, execution and closing of this Agreement and the transactions
contemplated hereby.
11.04 Public Announcements. At all times at or before the Effective
Date, Seller and Purchaser will not issue or make any reports, statements or
releases to the public or generally to the employees, customers, suppliers or
other Persons to whom the Business sells goods or provides services or with whom
the Business otherwise has significant business relationships with respect to
this Agreement or the transactions contemplated hereby without the consent of
the other. If either party is unable to obtain the approval of its public
report, statement or release from the other party and such report, statement or
release is, in the opinion of legal counsel to such party, required by Law in
order to discharge such party's disclosure obligations, then such party may make
or issue the legally required report, statement or release and promptly furnish
the other party with a copy thereof. Seller and Purchaser will also obtain the
other party's prior approval of any press release to be issued immediately
following the Effective Date announcing the consummation of the transactions
contemplated by this Agreement.
11.05 Confidentiality. Each party hereto will hold, and will use its
best efforts to cause its Affiliates and, in the case of Purchaser, any Person
who has provided, or who is considering providing, financing to Purchaser to
finance all or any portion of the Purchase Price or to provide bonding to
satisfy the Bonding Condition and their respective Representatives to hold, in
strict confidence from any Person (other than any such Affiliate, Person who has
provided, or who is considering providing, financing or Representative), unless
(i) compelled to disclose by judicial or administrative process (including
without limitation in connection with obtaining the necessary approvals of this
Agreement and the transactions contemplated hereby of Governmental or Regulatory
Authorities) or by other requirements of Law or (ii) disclosed in an Action or
Proceeding brought by a party hereto in pursuit of its rights or in the exercise
of its remedies hereunder, all documents and information concerning the other
party or any of its Affiliates furnished to it by the other party or such other
party's Representatives in connection with this
42
Agreement or the transactions contemplated hereby, except to the extent that
such documents or information can be shown to have been (a) previously known by
the party receiving such documents or information, (b) in the public domain
(either prior to or after the furnishing of such documents or information
hereunder) through no fault of such receiving party or (c) later acquired by the
receiving party from another source if the receiving party is not aware that
such source is under an obligation to another party hereto to keep such
documents and information confidential; provided that following the Effective
Date the foregoing restrictions will not apply to Purchaser's use of documents
and information concerning the Business furnished by Seller hereunder. In the
event the transactions contemplated hereby are not consummated, upon the request
of the other party, each party hereto will, and will cause its Affiliates, any
Person who has provided, or who is providing, financing to such party and their
respective Representatives to, promptly (and in no event later than five days
after such request) redeliver or cause to be redelivered all copies of
confidential documents and information furnished by the other party in
connection with this Agreement or the transactions contemplated hereby and
destroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon prepared by the
party furnished such documents and information or its Representatives.
11.06 Further Assurances; Post-Closing Cooperation.
(a) Subject to the terms and conditions of this Agreement, at
any time or from time to time after both the Closing Date and the
Effective Date, each of the parties hereto shall execute and deliver
such other documents and instruments, provide such materials and
information and take such other actions as may reasonably be necessary,
proper or advisable, to the extent permitted by Law, to fulfill its
obligations under this Agreement. To the extent that an asset of the
Company (which is not an Excluded Assets) is not properly titled,
registered or otherwise listed under the name of the Company, Seller
shall (or Seller shall cause its Affiliates to) take all commercially
reasonable steps to assign, transfer, entitle or otherwise provide the
Company with all anticipated rights, benefits and privileges flowing
therefrom.
(b) Following the Closing, each party will afford the other
party, its counsel and its accountants, during normal business hours,
reasonable access to the books, records and other data relating to the
Business in its possession with respect to periods prior to the Closing
and the right to make copies and extracts therefrom, to the extent that
such access may be reasonably required by the requesting party in
connection with (i) the preparation of Tax Returns, (ii) the
determination or enforcement of rights and obligations under this
Agreement, (iii) compliance with the requirements of any Governmental
or Regulatory Authority or (iv) in connection with any actual or
threatened Action or Proceeding. Further, each party agrees for a
period extending six years after the Effective Date not to destroy or
otherwise dispose of any such books, records and other data unless such
party shall first offer in writing to surrender such books, records and
other data to the other party and such other party shall not agree in
writing to take possession thereof during the ten day period after such
offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or
Regulatory Authorities or its financial statements
43
or to fulfill its obligations hereunder, it is necessary that a party
be furnished with additional information, documents or records relating
to the Business not referred to in paragraph (b) above, and such
information, documents or records are in the possession or control of
the other party, such other party agrees to use commercially reasonable
efforts to furnish or make available such information, documents or
records (or copies thereof) at the recipient's request, cost and
expense. Any information obtained by Seller in accordance with this
paragraph shall be held confidential by Seller in accordance with
Section 11.05.
(d) In the event and for so long as any party hereto is
actively contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement
or (ii) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or
transaction involving the Business, the other parties will cooperate
with the contesting or defending party and its counsel in the contest
or defense, reasonably make available its personnel, and provide such
testimony and access to its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor under Section 8
above).
11.07 Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
11.08 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
11.09 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person,
including but not limited to, employees of the Company or ▇▇▇▇▇▇, Inc.
11.10 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void, except for assignments and transfers by operation of Law.
Subject to the preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
11.11 Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
11.12 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party
44
hereto under this Agreement will not be materially and adversely affected
thereby, (a) such provision will be fully severable, (b) this Agreement will be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof, (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom and (d)
in lieu of such illegal, invalid or unenforceable provision, there will be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
11.13 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
11.14 Consent to Jurisdiction. Each party hereby (a) irrevocably and
unconditionally submits to the exclusive jurisdiction of the courts of the State
of Minnesota and of the United States of America located in the State of
Minnesota with respect to all actions and proceedings arising out of or relating
to this Agreement and the transactions contemplated hereby, (b) agrees that all
claims with respect to any such action or proceeding shall be heard and
determined in such Minnesota State or Federal court and agrees not to commence
any action or proceeding relating to this Agreement or the transactions
contemplated hereby except in such courts, (c) irrevocably and unconditionally
waives any objection to the laying of venue of any action or proceeding arising
out of this Agreement or the transactions contemplated hereby and irrevocably
and unconditionally waives the defense of an inconvenient forum, (d) consents to
service of process upon him, her or it by mailing or delivering such service to
the address set forth in Section 11.01 hereof, and (e) agrees that a final
judgement in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
11.15 Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Minnesota applicable to a contract
executed and performed in such State without giving effect to the conflicts of
laws principles thereof.
11.16 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
45
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officer of each party hereto as of the date first above
written.
SELLER:
APOGEE ENTERPRISES, INC.
By:
-----------------------------------
Its:
---------------------------------
PURCHASER:
CH HOLDINGS, INC.
By:
-----------------------------------
Its:
---------------------------------
46
